<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 25, 1998
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
TRITON PCS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4812 23-2930873
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF IDENTIFICATION NO.)
CLASSIFICATION CODE NUMBER)
INCORPORATION OR
ORGANIZATION)
101 LINDENWOOD DRIVE
SUITE 125
MALVERN, PA 19355
(610) 651-5900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------
MICHAEL E. KALOGRIS
CHIEF EXECUTIVE OFFICER
TRITON PCS, INC.
101 LINDENWOOD DRIVE
SUITE 125
MALVERN, PA 19355
(610) 651-5900
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
--------------
COPIES TO:
JAMES F. ROGERS, ESQ. DAVID CLARK
LATHAM & WATKINS TRITON PCS, INC.
1001 PENNSYLVANIA AVENUE, N.W. 101 LINDENWOOD DRIVE
SUITE 1300 SUITE 125
WASHINGTON, DC 20004 MALVERN, PA 19355
(202) 637-2200 (610) 651-5900
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF AMOUNT AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED(1) PER NOTE OFFERING PRICE FEE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11% Senior Subordinated
Discount Notes due
2008................... $511,989,000 58.595% $300,000,000(2) $88,500
- ------------------------------------------------------------------------------------
Subsidiary Guarantees of
the 11% Senior
Subordinated Discount
Notes due 2008......... -- -- -- (3)
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) The "Amount to be Registered" with respect to the 11% Senior Subordinated
Discount Notes due 2008 represents the aggregate principal amount at
maturity of such notes.
(2) Represents gross proceeds from the initial private offering of the 11%
Senior Subordinated Discount Notes due 2008 by Triton.
(3) Pursuant to Rule 457(n), no separate registration fee is payable with
respect to the subsidiary guarantees.
--------------
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 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>
TRITON PCS, INC.
CROSS REFERENCE SHEET
PURSUANT TO RULE 404(A) AND ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF THE INFORMATION
REQUIRED BY PART I OF FORM S-4
<TABLE>
<S> <C>
1.Forepart of Registration
Statement and Outside Front Outside Front Cover Page; Cross Reference
Cover Page of Prospectus..... Sheet; Inside Front Cover Page
2.Inside Front and Outside Back Inside Front Cover Page; Outside Back Cover
Cover Pages of Prospectus.... Page
3.Risk Factors, Ratio of Earnings
to Fixed Charges and Other Prospectus Summary; Risk Factors; Selected
Information.................. Historical Financial Data
4.Terms of the Transaction....... The Exchange Offer; Certain United States
Federal Income Tax Consequences;
Description of Notes
5.Pro Forma Financial Prospectus Summary; Summary Unaudited Pro
Information.................. Forma Financial Data
6.Material Contacts with the
Company Being Acquired....... Not Applicable
7.Additional Information Required
for Reoffering by Persons and
Parties Deemed to be
Underwriters................. Not Applicable
8.Interests of Named Experts and
Counsel...................... Not Applicable
9.Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities.................. Not Applicable
10.Information with Respect to S-3
Registrants.................. Not Applicable
11.Incorporation of Certain
Information by Reference..... Not Applicable
12.Information with Respect to S-2
or S-3 Registrants........... Not Applicable
13.Incorporation of Certain
Information by Reference..... Not Applicable
14.Information with Respect to
Registrants Other Than S-3 or Prospectus Summary; Capitalization;
S-2 Registrants.............. Selected Historical Financial Data; Summary
Unaudited Pro Forma Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management; Security
Ownership; Certain Relationships and
Related Transactions; Description of Credit
Facility; Description of Notes; Description
of Capital Stock; Financial Statements
15.Information with Respect to S-3 Not Applicable
Companies....................
16.Information with Respect to S-2
or S-3 Companies............. Not Applicable
17.Information with Respect to
Companies Other Than S-2 or
S-3 Companies................ Not Applicable
18.Information if Proxies,
Consents or Authorizations
are to be Solicited
Authorizations are to be
Solicited.................... Not Applicable
19.Information if Proxies,
Consents or Authorizations
are not to be Solicited or in Management; The Exchange Offer; Certain
an Exchange Offer............ Relationships and Related Transactions
</TABLE>
<PAGE>
TRITON PCS, INC.
CROSS REFERENCE SHEET
PURSUANT TO RULE 404(A) AND ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF THE INFORMATION
REQUIRED BY PART I OF FORM S-1
<TABLE>
<S> <C>
1.Forepart of Registration
Statement and Outside Front Outside Front Cover Page; Cross Reference
Cover Page of Prospectus..... Sheet; Inside Front Cover Page
2.Inside Front and Outside Back Inside Front Cover Page; Outside Back Cover
Cover Pages of Prospectus.... Page
3.Summary Information Risk
Factors, and Ratio of
Earnings to Fixed Charges and Prospectus Summary; Risk Factors; Selected
Other Information............ Historical Financial Data
4.Use of Proceeds................ Use of Proceeds
5.Determination of Offering
Price........................ Not Applicable
6.Dilution....................... Not Applicable
7.Selling Security Holders....... Not Applicable
8.Plan of Distribution........... Plan of Distribution
9.Description of Securities to be
Registered................... Description of Notes
10.Interests of Named Experts and
Counsel...................... Not Applicable
11.Information with Respect to Prospectus Summary; Capitalization;
Registrant................... Selected Historical Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management; Security
Ownership; Certain Relationships and
Related Transactions; Description of
Credit Facility; Description of Notes;
Description of Capital Stock; Financial
Statements
12.Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities.................. Not Applicable
</TABLE>
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains a prospectus (the "Prospectus")
relating to the offer (the "Exchange Offer") for all outstanding 11% Senior
Subordinated Discount Notes due 2008 (the "Private Notes") of Triton PCS, Inc.
("Triton") in exchange for Triton's 11% Senior Subordinated Discount Notes due
2008 (the "Exchange Notes"). In addition, this Registration Statement contains
a prospectus (the "Market-Making Prospectus") relating to certain market-
making activities with respect to the Exchange Notes which may, from time to
time, be carried out by J.P. Morgan Securities Inc. ("JPMS") and Chase
Securities Inc. ("CSI" and, together with JPMS, the "Market Makers"). The two
prospectuses will be identical in all material respects except for the front
cover page and the Plan of Distribution and except for the fact that the
Market-Making Prospectus will not contain the information in the Prospectus
Summary relating to the Exchange Offer, the information under the caption "The
Exchange Offer" and "Certain United States Federal Tax Consequences--Exchange
of Private Notes for Exchange Notes" will be deleted and certain conforming
changes will be made to delete references to the Exchange Offer. The
Prospectus for the Exchange Offer follows immediately after this Explanatory
Note. Following such Prospectus are the form of alternative cover page and
Plan of Distribution section for the Market-Making Prospectus and alternative
pages covering conforming changes.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
, 1998
OFFER TO EXCHANGE
11% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2008
FOR ALL OUTSTANDING 11% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2008
OF
TRITON PCS, INC.
-----------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON , 1998
UNLESS EXTENDED.
Triton PCS, Inc., a Delaware corporation ("Triton"), is hereby offering (the
"Exchange Offer"), upon the terms and subject to the conditions set forth in
this Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), to exchange $1,000 principal amount of its 11% Senior
Subordinated Discount Notes due 2008 (the "Exchange Notes"), which exchange has
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to a registration statement of which this Prospectus is a part
(the "Registration Statement"), for each $1,000 principal amount of its
outstanding 11% Senior Subordinated Discount Notes due 2008 (the "Private
Notes"), of which $511,989,000 in aggregate principal amount at maturity was
issued on May 4, 1998 (the "Private Offering") and is outstanding as of the
date hereof. The form and terms of the Exchange Notes are the same as the form
and terms of the Private Notes except that (i) the exchange will have been
registered under the Securities Act, and, therefore, the Exchange Notes will
not bear legends restricting the transfer thereof and (ii) holders of the
Exchange Notes will not be entitled to certain rights of holders of the Private
Notes under the Registration Rights Agreement (as defined herein), which rights
will terminate upon the consummation of the Exchange Offer. The Exchange Notes
will evidence the same indebtedness as the Private Notes (which they replace)
and will be entitled to the benefits of an indenture dated as of May 4, 1998
governing the Private Notes and the Exchange Notes (the "Indenture"). The
Private Notes and the Exchange Notes are sometimes referred to herein
collectively as the "Notes." See "The Exchange Offer" and "Description of
Notes."
The Exchange Notes will bear interest at the same rate and on the same terms
as the Private Notes. Consequently, the Exchange Notes will be issued at a
substantial discount to their principal amount at maturity. The Exchange Notes
will accrete in value from and including the date of issuance of the Private
Notes (May 4, 1998) until May 1, 2003 at which time they will have an aggregate
principal amount of $511,989,000. Thereafter, cash interest will accrue on the
Exchange Notes and will be payable semiannually in arrears on May 1 and
November 1, commencing November 1, 2003, at a rate of 11% per annum. Holders
whose Private Notes are accepted for exchange will be deemed to have waived the
right to receive any interest accrued on the Private Notes.
SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION OF CERTAIN FACTORS
THAT INVESTORS SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER AND AN
INVESTMENT IN THE EXCHANGE NOTES.
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>
The Notes will be redeemable at the option of Triton, in whole or in part,
at any time on or after May 1, 2003, at the redemption prices set forth
herein, plus accrued and unpaid interest, if any, thereon to the date of
redemption. In addition, prior to May 1, 2001, Triton may redeem up to 35% of
the aggregate principal amount at maturity of the Notes with the net cash
proceeds received from one or more Equity Offerings (as defined herein) of
Triton, Triton PCS Holdings, Inc., a Delaware corporation, or a Special
Purpose Corporation (as defined herein) at a redemption price of 111% of the
Accreted Value (as defined herein) thereof, plus accrued and unpaid interest,
if any, to the redemption date; provided, however, that at least 65% in
aggregate principal amount at maturity of the Notes remains outstanding
immediately after any such redemption.
The Notes will be general unsecured obligations of Triton, will be
subordinated in right of payment to all Senior Debt (as defined herein) of
Triton, including all obligations under the Credit Facility (as defined
herein). The Notes will be guaranteed on a joint and several basis (the
"Guarantees") by all of the subsidiaries of Triton that are direct obligors
under, or in respect of, any Senior Credit Facilities (as defined herein) (the
"Guarantors"). The Guarantees will be unsecured obligations of the Guarantors,
subordinated in right of payment to all Senior Debt of the Guarantors,
including all of the Guarantors' obligations under the Credit Facility. As of
March 31, 1998, after giving pro forma effect to the Private Offering and the
application of the net proceeds therefrom, Triton and the Guarantors would
have had $75 million of Senior Debt outstanding.
Upon the occurrence of a Change of Control (as defined herein), Triton will
be required to make an offer to purchase all the outstanding Notes at 101% of
the Accreted Value thereof or the principal amount at maturity, as applicable,
together with accrued and unpaid interest to the purchase date. See
"Description of Notes."
Triton will accept for exchange any and all validly tendered Private Notes
not withdrawn prior to 5:00 p.m., New York City time, on , 1998 (the
"Expiration Date"), unless the Exchange Offer is extended by Triton in its
sole discretion. Tenders of Private Notes may be withdrawn at any time prior
to the Expiration Date. Private Notes may be tendered only in integral
multiples of $1,000. The Exchange Offer is subject to certain customary
conditions. See "The Exchange Offer--Conditions."
Based on an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters issued to third
parties (See e.g. Exxon Capital Holdings Corp., SEC No-Action Letter
(available April 13, 1989) and Morgan Stanley & Co. Inc., SEC No-Action Letter
(available June 5, 1991), collectively, the "No-Action Letters"), Triton
believes that the Exchange Notes issued pursuant to the Exchange Offer in
exchange for Private Notes may be offered for resale, resold and otherwise
transferred by a holder thereof (other than (i) a broker-dealer who purchases
such Exchange Notes directly from Triton to resell pursuant to Rule 144A or
any other available exemption under the Securities Act or (ii) a person that
is an affiliate of Triton 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 the holder is acquiring the
Exchange Notes in the ordinary course of its business and is not
participating, and had no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes. Holders who tender
their Private Notes in the Exchange Offer with the intention of participating
in a distribution of the Exchange Notes will not be able to rely on the No-
Action Letters or similar no-action letters. Holders of Private Notes wishing
to accept the Exchange Offer must represent to Triton, as required by the
Registration Rights Agreement, that such conditions have been met. Each
broker-dealer that receives Exchange Notes for its own account in exchange for
Private Notes, where such Private Notes were acquired by such broker-dealer as
a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. Triton believes that none of the registered holders of
the Private Notes is an affiliate (as such term is defined in Rule 405 under
the Securities Act) of Triton.
(Continued on next page)
i
<PAGE>
(Continued from previous page)
Prior to the Exchange Offer, there has been no public market for the Notes.
Triton does not intend to list the Exchange Notes on any securities exchange,
but the Private Notes are eligible for trading in the National Association of
Securities Dealers, Inc.'s Private Offerings, Resales and Trading through
Automatic Linkages (PORTAL) market. There can be no assurance that an active
market for the Notes will develop. To the extent that a market for the Notes
does develop, the market value of the Notes will depend on market conditions
(such as yields on alternative investments), general economic conditions,
Triton's financial condition and certain other factors. Such conditions might
cause the Notes, to the extent that they are traded, to trade at a significant
discount from face value. See "Risk Factors--bsence of Public Market for the
Notes; Restrictions on Transfer."
Each broker-dealer that receives Exchange 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 Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Private Notes where
such Private Notes were acquired by such broker-dealer as a result of market-
making activities or other trading activities. Triton has indicated its
intention to make this Prospectus (as it may be amended or supplemented)
available to any broker-dealer for use in connection with any such resale for
a period of 180 days after the Expiration Date. See "Plan of Distribution."
Triton will not receive any proceeds from, and has agreed to bear the
expenses of, the Exchange Offer. No underwriter is being used in connection
with this Exchange Offer. See "The Exchange Offer."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL TRITON ACCEPT SURRENDERS
FOR EXCHANGE FROM, HOLDERS OF PRIVATE NOTES IN ANY JURISDICTION IN WHICH THE
EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE EXCHANGE OFFER TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY TRITON. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE
ACCOMPANYING LETTER OF TRANSMITTAL, NOR ANY EXCHANGE MADE HEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
OFFERING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT PARTICIPATING IN
THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS IN CONNECTION
THEREWITH. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
The Exchange Notes will be available initially only in book-entry form.
Triton expects that the Exchange Notes issued pursuant to the Exchange Offer
will be issued in the form of one or more fully registered global notes that
will be deposited with, or on behalf of, the Depository Trust Company ("DTC"
or the "Depository") and registered in its name or in the name of Cede & Co.,
as its nominee. Beneficial interests in the global note representing the
Exchange Notes will be shown on, and transfers thereof will be effected only
through, records maintained by the Depository and its participants. After the
initial issuance of such global note, Exchange Notes in certificated form will
be issued in exchange for the global note only in accordance with the terms
and conditions set forth in the Indenture. See "The Exchange Offer--Book-Entry
Transfer" and "Book Entry; Delivery and Form."
(Continued on Next Page)
ii
<PAGE>
(Continued from Previous Page)
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL
FACTS INCLUDED IN THIS PROSPECTUS, INCLUDING WITHOUT LIMITATION, CERTAIN
STATEMENTS UNDER THE "PROSPECTUS SUMMARY," "THE COMPANY," "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND
"BUSINESS" AND LOCATED ELSEWHERE HEREIN REGARDING THE COMPANY'S FINANCIAL
POSITION AND BUSINESS STRATEGY, MAY CONSTITUTE FORWARD-LOOKING STATEMENTS.
ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-
LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH
EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE COMPANY'S EXPECTATIONS
("CAUTIONARY STATEMENTS") ARE DISCLOSED IN THIS PROSPECTUS, INCLUDING WITHOUT
LIMITATION IN CONJUNCTION WITH THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS
PROSPECTUS AND UNDER "RISK FACTORS." ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-
LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS BEHALF
ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
iii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 1
The Exchange Offer....................................................... 8
Risk Factors............................................................. 13
Use of Proceeds.......................................................... 30
Capitalization........................................................... 31
Selected Historical and Pro Forma Consolidated Financial Data............ 32
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 34
Business................................................................. 38
Management............................................................... 55
Security Ownership....................................................... 60
Certain Relationships and Related Transactions........................... 62
Description of Credit Facility........................................... 69
Description of Notes..................................................... 71
Description of Capital Stock............................................. 99
Certain United States Federal Income Tax Consequences.................... 101
Book-Entry; Delivery and Form............................................ 106
Plan of Distribution..................................................... 108
Legal Matters............................................................ 109
Experts.................................................................. 109
Available Information.................................................... 110
</TABLE>
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and the financial statements
and related notes appearing elsewhere in this Prospectus. As used herein, the
term "Triton" refers to Triton PCS, Inc., "Holdings" refers to Triton PCS
Holdings, Inc., the direct parent and sole stockholder of Triton, and "Company"
refers to Triton, Holdings and Triton's subsidiaries unless the context
indicates otherwise. Certain of the statements contained in this summary and
elsewhere in this Prospectus, including information with respect to the
Company's expected PCS operations and build-out, its strategy for its PCS
business and related financings, are forward-looking statements. The term
"Pops" means population equivalents as determined by Paul Kagan Associates,
Inc. ("Kagan") estimates of the 1997 population of a geographic area. See
"Glossary of Selected Terms," for definitions of certain terms used in this
Prospectus.
THE COMPANY
The Company intends to become a leading provider of wireless broadband
Personal Communications Services ("PCS") in the southeastern United States.
Triton was established by Michael Kalogris, Steven Skinner and other former
executives of Horizon Cellular Group ("Horizon"), along with various private
equity investors, with the intent to develop and operate a leading PCS network
in the Southeast. In October 1997, the Company entered into a joint venture
agreement with AT&T Wireless PCS, Inc. ("AT&T PCS"), a wholly-owned subsidiary
of AT&T Corp. ("AT&T Corp." and, together with its affiliates, "AT&T"), whereby
the Company will be the exclusive provider of wireless mobility services under
the AT&T consumer brand name in a contiguous area covering approximately 11
million Pops in the southeastern United States (the "Licensed Area"). AT&T PCS
contributed PCS licenses (the "PCS Licenses") to Triton covering the Licensed
Area in exchange for an equity interest in the Company. Additionally, the
Company is a party to agreements with AT&T that, among other things, allow the
Company to benefit from AT&T's nationwide wireless footprint and promotional
and marketing efforts and provide the Company with favorable roaming and long
distance rates for services on AT&T's wireless and long distance networks. See
"Certain Relationships and Related Transactions--The AT&T Agreements." The PCS
Licenses authorize the Company to provide PCS services to such major population
and business centers as Charleston, SC, Columbia, SC, Greenville/Spartanburg,
SC, Richmond, VA and Augusta, GA, as well as major destination resorts such as
Myrtle Beach, SC, Hilton Head, SC and Kiawah Island, SC. The Company expects to
commence commercial operations by the end of the first quarter of 1999 in an
initial area covering approximately 40% of the Pops in the Licensed Area (the
"Initial Configuration").
The Company believes the Licensed Area has outstanding demographic
characteristics, including strong population growth and favorable population
density and traffic patterns. According to Kagan, from 1995 to 2000, population
growth in the Company's markets is expected to be nearly double the national
average. Additionally, the population density in the Company's markets is 57%
above the national average, and traffic density in the Company's markets
(measured by daily car miles per interstate highway miles) is 7% above the
national average. See "Business--Summary Market Data." The Company believes
that its Licensed Area, together with AT&T's recently launched wireless systems
located in the adjacent cities of Washington, D.C., Charlotte, NC and Atlanta,
GA, creates a large, contiguous area which provides numerous cost and other
synergistic benefits.
The Company intends to offer customers affordable, reliable, high-quality
mobile telecommunications services. Specific service offerings will include
single number service and advanced features such as call screening and caller
ID. As the market for wireless telecommunications services and the Company's
technological capabilities continue to develop, the Company expects to offer
additional wireless applications such as high-speed data transmission to and
from computers, "wireless office," advanced paging, facsimile and Internet
access services.
1
<PAGE>
The Company has chosen to build its PCS network using Time Division Multiple
Access ("TDMA") technology based upon the IS-136 standard ("TDMA/IS-136") which
is the technology utilized by AT&T's nationwide wireless network, thus allowing
the Company's network to be compatible with AT&T's and other TDMA/IS-136
networks immediately upon launch of operations. TDMA/IS-136, among other
things, allows service providers to offer enhanced integrated services not
currently offered by traditional analog cellular providers, including
integrated voicemail, custom-calling and short-messaging. Currently three of
the top four wireless telecommunications companies in the U.S., based on
current customers, utilize TDMA/IS-136 technology. See "Business--TDMA Digital
Technology."
The Company has signed a purchase agreement to acquire an existing cellular
system (the "Myrtle Beach System"), which serves Myrtle Beach, SC and the
surrounding area (the "Myrtle Beach Acquisition"), from Vanguard Cellular
Systems of South Carolina, Inc. ("Vanguard") for a purchase price of
approximately $160 million. The Company believes it will seamlessly integrate
the Myrtle Beach System, which uses digital TDMA/IS-136 cellular technology,
into its planned PCS network as part of the Initial Configuration. Since the
Myrtle Beach System is within the Licensed Area, it will operate under the AT&T
Agreements (as defined herein). The Company expects that the Myrtle Beach
Acquisition will (i) provide the Company with a system that currently generates
positive cash flow, (ii) accelerate the ability of the Company to capture
roaming traffic generated by Myrtle Beach's highly transitory population, (iii)
accelerate the Company's time-to-market in South Carolina and (iv) render a PCS
build-out in the Myrtle Beach region unnecessary. The Myrtle Beach Acquisition
is subject to closing conditions typical in acquisitions of this nature. There
can be no assurance that the acquisition will be consummated on the terms
described herein or at all.
In addition to the contribution by AT&T PCS of the PCS Licenses, the Company
has raised $140 million of irrevocable equity commitments payable over a three-
year period (the "Cash Equity"), $45 million of which has been received by the
Company to date, from, or from entities managed by, Chase Capital Partners,
J.P. Morgan Investment Corporation, Desai Capital Management Incorporated,
Toronto Dominion Capital (USA), Inc., First Union Capital Partners, Inc. and
Duff Ackerman Goodrich & Assoc. L.P. (collectively, the "Cash Equity
Investors") and certain management stockholders, as well as a $425 million
Credit Facility (the "Credit Facility"). See "Certain Relationships and Related
Transactions--The Securities Purchase Agreement" and "Description of Credit
Facility." The Company has received additional equity commitments of $40
million (the "Myrtle Commitments" and, together with the contribution of the
PCS Licenses and the Cash Equity, the "Equity Investments") from certain of the
Cash Equity Investors in connection with the Myrtle Beach Acquisition, $8
million of which has been contributed to date. In addition, the Private
Offering, consummated on May 4, 1998, provided approximately $290 million of
net proceeds to the Company. The net proceeds from the Private Offering, in
conjunction with the Equity Investments and borrowings under the Credit
Facility, are expected to be sufficient to complete the planned build-out of
the Company's PCS network. See "Prospectus Summary--Network Build-Out and
Financing Plan."
STRATEGIC ALLIANCE WITH AT&T
AT&T holds FCC licenses to provide wireless telecommunications service in
areas covering more than 80% of the U.S. population. In order to effectively
and rapidly construct its PCS markets and commence offering wireless service,
AT&T has focused on building out selected cities within its coverage area,
while entering into agreements with certain independent wireless operators,
such as the Company, to build out and operate the remainder of its PCS markets.
AT&T contributed the PCS Licenses, covering 20 MHz of spectrum in the Licensed
Area, in exchange for an equity interest in the Company and certain other
rights including preemptive rights and the right to appoint one board member.
AT&T has retained 10 MHz of spectrum in the Licensed Area for use as a non-
mobile wireless provider. The terms of the joint venture between the Company
and AT&T are set forth in the AT&T Agreements described below. See "Certain
Relationships and Related Transactions--The AT&T Agreements."
2
<PAGE>
The Company believes its alliance with AT&T will enable the Company to
benefit from AT&T's brand name recognition and marketing efforts and provide
numerous other strategic advantages, including the following:
LICENSE RIGHTS. The Company will market its PCS services as "Member, AT&T
Wireless Services Network" and will use the globally recognized AT&T logo.
COMPANY EXCLUSIVITY. The Company will be AT&T's exclusive provider of
wireless mobility services for people residing within the Licensed Area.
AT&T EXCLUSIVITY. The Company will use AT&T as its provider of
telecommunications services, other than wireless mobility, for its ancillary or
bundled services, including long distance and, where applicable, local service
to the Company.
ROAMING. AT&T's and the Company's customers who own dual-band/dual-mode
phones will be able to roam on each other's mobile wireless systems. The
Company will be the preferred provider of mobile wireless telecommunications
for AT&T's wireless customers that roam in the Licensed Area.
PRODUCTS AND SERVICES. The Company has benefited and expects to continue to
benefit from AT&T-related discounts on such products and services as handsets,
infrastructure equipment and billing services. For example, the Company has
entered into an agreement with Ericsson Inc. ("Ericsson") to supply mobile
telephone equipment, software and services at the discounted prices set for
AT&T affiliates.
RESALE BY AT&T. The Company's network will be utilized by AT&T to provide
service to accounts that reside in the Licensed Area.
BUSINESS STRATEGY
The Company intends to become a leading provider of wireless broadband
communications services in its markets. To achieve its objective, the Company
will pursue the following business strategies:
LEVERAGE RELATIONSHIP WITH AT&T. The Company intends to capitalize on the
marketing opportunities derived from its relationship with AT&T, including (i)
co-branding with the AT&T logo, (ii) nationwide coverage, (iii) an expansive
home calling area and (iv) bundling of AT&T telecommunications products and
service offerings. The Company believes its affiliation with AT&T will also
yield the following benefits: (i) favorable vendor contracts, (ii) long-term
roaming arrangements with prescribed pricing, including preferred carrier
status for AT&T-affiliated roaming traffic, and (iii) availability of AT&T's
Network Operating Centers ("NOCs") and customer service centers.
EXECUTE INTEGRATED MARKETING PLAN. The Company intends to adopt a marketing
approach that leverages AT&T's nationwide presence and brand name. The Company
expects to capitalize on its regional focus and its ability, as a small,
entrepreneurial company, to respond quickly and creatively to changing customer
needs. In all of its marketing efforts, the Company intends to emphasize the
improved quality, enhanced features and favorable pricing of its PCS system.
Its marketing strategy has been designed to increase overall wireless
communications penetration with an emphasis on mass marketing concepts designed
to appeal to a broad demographic base.
CAPITALIZE ON EXTENSIVE TERRITORIAL REACH. The Licensed Area covers a
significant percentage of the population of Virginia, virtually all of South
Carolina, the Augusta region of northeast Georgia and large sections of the
eastern and western portions of North Carolina. The Company believes that it
will have an advantage over its competitors, which have less extensive and/or
non-contiguous coverage by offering regional and state-wide
3
<PAGE>
PCS services using 100% of its own network facilities. Thus, the Company will
not need to use a third party long-distance carrier, and will therefore be able
to complete almost any call, within its region, without incurring roaming
charges. The Company believes it can optimally design its network to minimize
its interconnect expenses and reduce infrastructure costs. In addition, the
Company expects to operate its entire system utilizing only two regional
offices, thereby reducing its general and administrative expenses.
PROVIDE SUPERIOR CUSTOMER SERVICE. The Company's strategy is predicated on
building strong, enduring relationships with customers. The Company is
developing an organization in which each employee views his or her function in
terms of their impact on the customer. In support of this strategy, the Company
is currently developing a compensation plan tied to the attainment of customer
quotas and customer retention rates. Furthermore, the Company intends to
effectively manage its customer relationships through the use of sophisticated
information systems that best meet the evolving needs of individual customers.
DEPLOY STATE-OF-THE-ART TECHNOLOGY. The Company's choice of TDMA technology
utilizing the IS-136 platform provides the Company with the opportunity to
capitalize on certain advantages, such as higher voice quality, greater
security and enhanced features, relative to analog cellular service providers.
This technology also provides for more powerful error correction, less
susceptibility to fading and reduced interference (which results in fewer
dropped calls) and increased customer capacity relative to a typical analog
system. In addition, the TDMA dual-band/dual-mode handsets provide operating
capability in both digital mode at 1900 MHz and 800 MHz and analog mode at 800
MHz, thereby increasing the customer's roaming capabilities. Furthermore, TDMA
utilizes a hierarchical cell structure that allows for cost-effective capacity
enhancement and greater customization of calling plans. See "Business--TDMA
Digital Technology."
EXECUTE HIGH QUALITY BUILD-OUT PLAN. The Company plans to construct a state-
of-the-art, high quality network. The Company's radio frequency ("RF") design
has a high density of cell sites which, together with the use of digital
technology, will allow the Company's system to handle higher traffic demand
than cellular operators, thereby allowing the Company to offer lower per-minute
rates. The Company's network design will also allow extensive use of micro- and
mini-cell sites to service expensive, difficult to reach locations and coverage
gaps within the Company's wireless network. See "--Network Build-Out and
Financing Plan."
POTENTIAL ACQUISITIONS
The Company has entered into a non-binding letter of intent with AT&T, dated
as of March 24, 1998, to acquire an additional 1.8 million Pops, located in the
Norfolk/Virginia Beach, VA region (the "Norfolk Pops"), and 1.9 million net
incremental Pops (2.4 million additional Pops less 0.5 million Pops located in
the Hagerstown, MD and Cumberland, MD BTAs that Triton will return to AT&T),
located primarily in Georgia and North Carolina (the "Georgia/North Carolina
Pops"), all of which are contiguous to the Licensed Area. The aggregate
consideration for the additional 3.7 million Pops is approximately $137
million, of which at least $32 million is expected to be represented by
additional non-cash equity interests in the Company issued to AT&T. The build-
out of the network for the Norfolk Pops, including the installation of a
switch, has been substantially completed. The Georgia/North Carolina Pops have
not yet been built, but the Company expects they will be subject to a build-out
plan similar to that developed for the Licensed Area. These potential
acquisitions are subject to conditions typical in acquisitions of this nature,
certain of which, including FCC consent, may be beyond the Company's control.
There can be no assurance, therefore, that these acquisitions will be
consummated on the terms described herein or at all. See "Risk Factors--Risks
Related to Potential Acquisitions."
NETWORK BUILD-OUT AND FINANCING PLAN
The Company expects to launch commercial operations in the Initial
Configuration, covering approximately 40% of the Pops and comprising 14 of the
largest cities in the Licensed Area (based on 1997 Pops), by the end
4
<PAGE>
of the first quarter of 1999. Upon completion of the Initial Configuration, the
Company intends to target the remaining cities, connecting highway corridors
and counties along the interstates with population densities of 50 or more per
square mile. The Company expects to extend its coverage to approximately 85% of
the Pops in the Licensed Area by the end of the fourth quarter of 2001, which
the Company believes will generally provide greater coverage than current
cellular operators in such markets.
The Company has contracted with several leading telecommunications equipment
manufacturers to construct its wireless network. Ericsson, the Company's
primary equipment supplier, and other vendors were selected based on their
extensive experience in wireless technology and their ability to assist the
Company in rapidly deploying a high quality network.
The Company has substantially completed its RF design for the build-out of
the Initial Configuration. The Company has also engaged two site acquisition
firms to implement its cell site acquisition strategy. As of March 31, 1998,
the Company had signed and/or fully negotiated leases or lease options for
approximately 20% of the 500 sites required for commencement of operations in
the Initial Configuration. See "Risk Factors--Network Build-Out and System
Implementation Risks."
Management estimates that the Company's total projected capital requirement
from inception through year-end 2001, when its network build-out is expected to
be completed, including the consummation of the Myrtle Beach Acquisition, is
approximately $859 million. These requirements include capital expenditures
related to the build-out of the network, customer acquisition costs, operating
losses incurred through the build-out phase, debt service and closing costs.
Management projects that it will invest approximately $47 per covered Pop in
system capital expenditures (excluding Myrtle Beach, an area that has already
been built out, assuming consummation of the Myrtle Beach Acquisition), which
will enable it to build a superior system resulting in better penetration and
higher usage. The Company believes that the proceeds from the Private Offering,
together with the availability under the Credit Facility and the Equity
Investments, provide the Company with funds sufficient to complete the build-
out of the Company's planned network within the Licensed Area.
The following table sets forth the Company's estimated sources and uses of
capital from inception through December 31, 2001, assuming the Company covers
approximately 85% of the Pops in the Licensed Area and consummates the Myrtle
Beach Acquisition, thereby completing the planned build-out of its PCS network.
See "Business--Network Build-Out" and "Description of Credit Facility."
<TABLE>
<CAPTION>
IN MILLIONS
<S> <C>
SOURCES
Credit Facility(1).................................................. $241.4
The Private Notes(2)................................................ 300.0
Cash Equity(3)...................................................... 175.0
Non-Cash Equity(4).................................................. 109.9
Operating Cash Flow................................................. 32.9
------
Total Sources..................................................... $859.2
======
USES
Acquisition of PCS Licenses......................................... $109.9
Myrtle Beach Acquisition............................................ 160.0
Capital Expenditures................................................ 449.3
Cash Interest....................................................... 77.2
Working Capital/Operating Cash Flow................................. 42.9
Closing Costs(5).................................................... 19.9
------
Total Uses........................................................ $859.2
======
</TABLE>
5
<PAGE>
- --------
(1) The Credit Facility provides for up to $425 million of term loan and
revolver financing. See "Description of Credit Facility."
(2) Consists of gross proceeds of the offering (the "Private Offering") by
Triton of the Private Notes on May 4, 1998.
(3) Holdings has issued preferred stock to the Cash Equity Investors in
exchange for their initial cash investments plus their commitments to
provide the balance of the Cash Equity. This table assumes that the Company
will draw upon only $35 million of the $40 million available under the
Myrtle Commitments. See "Certain Relationships and Related Transactions--
The Securities Purchase Agreement" and "--The Myrtle Equity Commitment."
(4) The Non-Cash Equity represents the initial negotiated value of the PCS
Licenses and related agreements with AT&T which were contributed to, or
entered into with, the Company in exchange for preferred stock issued by
Holdings. See "Certain Relationships and Related Transactions--The
Securities Purchase Agreement." On April 3, 1998, the PCS Licenses and
related agreements were valued for financial reporting purposes at $119
million by Kagan.
(5) Closing costs consist of costs incurred in connection with the formation of
the Company, the acquisition of the PCS Licenses, the Credit Facility, the
Myrtle Beach Acquisition and the Private Offering.
6
<PAGE>
CORPORATE STRUCTURE
All of the outstanding capital stock of Triton is held directly by Holdings.
Substantially all of the Company's operations will be conducted through
Property LLC, Equipment LLC, Operating LLC and License LLC (each as defined
herein). All of the PCS Licenses are held by License LLC. The following chart
illustrates the ownership structure of the Company.
LOGO
[Corporate Structure Chart Appears Here]
Triton is a Delaware corporation. All of Triton's executive operations are
conducted at Management Co. which has its principal executive offices at 101
Lindenwood Drive, Suite 125, Malvern, PA 19355. The telephone number at such
offices is (610) 651-5900.
7
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer...... The Company is hereby offering to exchange $1,000
principal amount at maturity of Exchange Notes for
each $1,000 principal amount at maturity of Private
Notes that are properly tendered and accepted. The
company will issue Exchange Notes on or promptly
after the Expiration Date. As of the date hereof,
there is $511,989,000 aggregate principal amount at
maturity of Private Notes outstanding. see "The
Exchange Offer."
Based on an interpretation by the staff of the
Commission set forth in No-Action letters issued to
third parties, the Company believes that the Exchange
Notes issued pursuant to the Exchange Offer in
exchange for Private Notes may be transferred by a
holder thereof (other than (i) a broker-dealer who
purchases such Exchange Notes directly from the
Company to resell pursuant to Rule 144a or any other
available exemption under the Securities Act or (ii)
a person that 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 the holder is acquiring Exchange Notes
in the ordinary course of its business and is not
participating, and had no arrangement or
understanding with any person to participate, in the
distribution of the Exchange Notes. (See e.g., Exxon
Capital Holdings Corp., SEC No-Action Letter
(available April 13, 1989) and Morgan Stanley & Co.,
Inc., Sec No-Action Letter (available June 5, 1991),
collectively, the "No-Action Letters"). holders who
tender their Private Notes in the Exchange Offer with
the intention of participating in a distribution of
the Exchange Notes will not be able to rely on the
No-Action Letters or similar No-Action Letters. each
broker-dealer that receives Exchange Notes for its
own account in exchange for Private Notes, where such
Private Notes were acquired by such broker-dealer as
a result of market-making activities or other trading
activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such
Exchange Notes. See "The Exchange Offer--Resale of
the Exchange Notes."
Registration Rights The Private Notes were sold by the Company on May 4,
Agreement.............. 1998 to J.P. Morgan Securities Inc., Chase Securities
Inc., and Lehman Brothers Inc. (the "Initial
Purchasers") pursuant to a Purchase Agreement, dated
April 29, 1998, by and among the Company and the
Initial Purchasers (the "Purchase Agreement").
pursuant to the Purchase Agreement, the Company and
the Initial Purchasers entered into a Registration
Rights Agreement, dated as of May 4, 1998 (the
"Registration Rights Agreement"), which grants the
holders of the Private Notes certain exchange and
registration rights. The Exchange Offer is intended
to satisfy such rights, which will terminate upon the
consummation of the Exchange Offer. the holders of
the Exchange Notes will not be entitled to any
exchange or registration rights with respect to the
Exchange Notes. See "The Exchange Offer--Termination
of Certain Rights."
Expiration Date......... The Exchange Offer will expire at 5:00 p.m., New York
City time, on , 1998, unless the Exchange Offer
is extended by the Company in its sole discretion, in
which case the term "Expiration Date"
8
<PAGE>
shall mean the latest date and time to which the
Exchange Offer is extended. See "The Exchange Offer--
Expiration Date; Extensions; Amendments."
Accrued Interest on the
Exchange Notes and the The Exchange Notes will accrete in value from and
Private Notes.......... including the date of issuance of the Private Notes
(May 4, 1998) until March 1, 2003 at which time they
will have an aggregate principal amount of
$511,989,000. Thereafter, cash interest will accrue
on the Exchange Notes and will be payable
semiannually in arrears on May 1 and November 1,
commencing November 1, 2003, at a rate of 11% per
annum. Holders whose Private Notes are accepted for
exchange will be deemed to have waived the right to
receive any interest accrued on the Private Notes.
see "The Exchange Offer--Interest on the Exchange
Notes."
Conditions to the
Exchange Offer......... The Exchange Offer is subject to certain customary
conditions that may be waived by the Company. The
Exchange Offer is not conditioned upon any minimum
aggregate principal amount at maturity of Private
Notes being tendered for exchange. see "The Exchange
Offer--Conditions."
Procedures for
Tendering Private Each holder of Private Notes wishing to accept the
Notes.................. Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein and
therein, and mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with such
Private Notes and any other required documentation,
to PNC Bank, National Association, as exchange agent
(the "Exchange Agent"), at the address set forth
herein. By executing the Letter of Transmittal, the
holder will represent to and agree with the Company
that, among other things, (i) the Exchange Notes to
be acquired by such holder of Private Notes in
connection with the Exchange Offer are being acquired
by such holder in the ordinary course of its
business, (ii) such holder has no arrangement or
understanding with any person to participate in a
distribution of the Exchange Notes, (iii) that if
such holder is a broker-dealer registered under the
Exchange Act or is participating in the Exchange
Offer for the purposes of distributing the Exchange
Notes, such holder will comply with the registration
and prospectus delivery requirements of the
Securities Act in connection with a secondary resale
transaction of the Exchange Notes acquired by such
person and cannot rely on the position of the staff
of the Commission set forth in no-action letters (see
"The Exchange Offer--Resale of Exchange Notes"), (iv)
such holder understands that a secondary resale
transaction described in clause (iii) above and any
resales of Exchange Notes obtained by such holder in
exchange for Private Notes acquired by such holder
directly from the Company should be covered by an
effective registration statement containing the
seller securityholder information required by Item
507 or Item 508, as applicable, of Regulation S-K of
the Commission and (v) such holder is not an
"affiliate," as defined in Rule 405 under the
Securities Act, of the Company. (See e.g., Exxon
Capital Holdings Corp., SEC No-Action Letter
(available April 13, 1989) and Morgan Stanley & Co.,
Inc., SEC No-Action Letter (available June 5, 1991),
collectively, the
9
<PAGE>
"No-Action Letters"). Holders who tender their
Private Notes in the Exchange Offer with the
intention of participating in a distribution of the
Exchange Notes will not be able to rely on the No-
Action Letters or similar no-action letters. if the
holder is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Private
Notes that were acquired as a result of market-making
activities or other trading activities, such holder
will be required to acknowledge in the Letter of
Transmittal that such holder will deliver a
prospectus in connection with any resale of such
Exchange Notes; however, by so acknowledging and by
delivering a prospectus, such holder will not be
deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. See "The Exchange
Offer--Procedures for Tendering."
Special Procedures for
Beneficial Owners...... Any beneficial owner whose Private Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and
who wishes to tender such Private Notes in the
Exchange Offer should contact such registered holder
promptly and instruct such registered holder to
tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own
behalf, such owner must, prior to completing and
executing the Letter of Transmittal and delivering
such owner's Private Notes, either make appropriate
arrangements to register ownership of the Private
Notes in such owner's name or obtain a properly
completed bond power from the registered holder. The
transfer of registered ownership may take
considerable time and may not be able to be competed
prior to the Expiration Date. See "The Exchange
Offer--Procedures for Tendering."
Procedures.............. Holders of Private Notes who wish to tender their
Private Notes and whose Private Notes are not
immediately available or who cannot deliver their
Private Notes, the Letter of Transmittal or any other
documentation required by the Letter of Transmittal
to the Exchange Agent prior to the Expiration Date
must tender their Private Notes according to the
guaranteed delivery procedures set forth under "The
Exchange Offer--Guaranteed Delivery Procedures."
Acceptance of the
Private Notes and Subject to the satisfaction or waiver of the
Delivery of the conditions to the Exchange Offer, the Company will
Exchange Notes......... accept for exchange any and all Private Notes that
are properly tendered in the Exchange Offer prior to
the Expiration Date. The Exchange Notes issued
pursuant to the Exchange Offer will be delivered on
the earliest practicable date following the
Expiration Date. See "The Exchange Offer--Terms of
the Exchange Offer."
Withdrawal Rights....... Tenders of Private Notes may be withdrawn at any time
prior to the Expiration Date. See "The Exchange
Offer--Withdrawal of Tenders."
Certain Federal Income
Tax Consequences....... For a discussion of certain material federal income
tax consequences relating to the exchange of the
Exchange Notes for the Private Notes, see "Certain
United States Federal Income Tax Consequences."
10
<PAGE>
THE EXCHANGE NOTES
The Exchange Offer applies to $511,989,000 in aggregate principal amount at
maturity of the Private Notes. The form and terms of the Exchange Notes are the
same as the form and terms of the Private Notes except that (i) the exchange
will have been registered under the Securities Act and, therefore, the Exchange
Notes will not bear legends restricting the transfer thereof and (ii) holders
of the Exchange Notes will not be entitled to certain rights of holders of the
Private Notes under the Registration Rights Agreement, which rights will
terminate upon consummation of the Exchange Offer. The Exchange Notes will
evidence the same indebtedness as the Private Notes (which they replace) and
will be issued under, and be entitled to the benefits of, the Indenture. For
further information and for definitions of certain capitalized terms used
below, see "Description of Notes."
Securities Offered...... $511,989,000 in aggregate principal amount at
maturity of 11% Senior Discount Notes due 2008.
Maturity Date........... May 1, 2008.
Yield and Interest...... 11% per annum (computed on a semiannual bond
equivalent basis) calculated from May 4, 1998. Cash
interest will not accrue prior to May 1, 2003.
Commencing on November 1, 2003, cash interest will be
payable semiannually on May 1 and November 1 (an
"Interest Payment Date").
Original Issue Each Note is being offered at an original issue
Discount............... discount for federal income tax purposes. Thus,
although cash interest will not accrue on the Notes
prior to May 1, 2003, original issue discount (i.e.,
the difference between the principal amount at
maturity and the issue price of such Notes) will
accrue from the issue date of such Notes up to May 1,
2003 and will be included as interest income
periodically in a holder's gross income for federal
income tax purposes in advance of receipt of the cash
payments to which the income is attributable. See
"Certain United States Federal Income Tax
Consequences."
Optional Redemption..... The Notes are not redeemable prior to May 1, 2003,
except as set forth below. The Notes will be
redeemable at the option of Triton, in whole or in
part, at any time on or after May 1, 2003, at the
redemption prices set forth herein, together with
accrued and unpaid interest to the redemption date.
In addition, prior to May 1, 2001, Triton may redeem
up to 35% of the aggregate principal amount at
maturity of the Notes with the net cash proceeds
received from one or more Equity Offerings of Triton,
Holdings or a Special Purpose Corporation at a
redemption price of 111% of the Accreted Value
thereof, plus accrued and unpaid interest, if any, to
the redemption date; provided, however, that at least
65% in aggregate principal amount at maturity of the
Notes remains outstanding immediately after any such
redemption.
Guarantee............... The Notes will be guaranteed on a joint and several
basis by all of Triton's subsidiaries that are direct
or indirect obligors under, or in respect of, any
Senior Credit Facilities. The Guarantees will be
unsecured obligations of the Guarantors, subordinated
in right of payment to all Senior Debt of the
Guarantors, including all of the Guarantors'
obligations under their guarantees of the Credit
Facility.
11
<PAGE>
Ranking................. The Notes will be general unsecured obligations of
Triton, subordinated in right of payment to all
Senior Debt of Triton, including all obligations
under the Credit Facility. The Guarantees will be
unsecured obligations of the Guarantors, subordinated
in right of payment to all Senior Debt of the
Guarantors, including all of the Guarantors'
obligations under their guarantees of the Credit
Facility. As of March 31, 1998, after giving pro
forma effect to the Private Offering and the
application of the net proceeds therefrom, Triton and
the Guarantors would have had $75 million of Senior
Debt outstanding. See "Description of Credit
Facility."
Change of Control.......
Upon a Change of Control, each holder of the Notes
may require the Company to repurchase such holder's
Notes, in whole or in part, at a purchase price equal
to 101% of the Accreted Value thereof or the
principal amount at maturity, as applicable plus
accrued and unpaid interest to the purchase date. See
"Description of Notes--Covenants--Change of Control."
The Credit Facility will prohibit the purchase of
outstanding Notes prior to repayment of the
borrowings under the Credit Facility. There can be no
assurance that upon a Change of Control the Company
will have sufficient funds to repurchase any of the
Notes. See "Description of Credit Facility."
Certain Covenants....... The Indenture contains certain covenants that, among
other things, limit the ability of Triton or any of
its Restricted Subsidiaries to incur additional
Indebtedness, make certain Restricted Payments and
Investments, create Liens, permit dividend or other
payment restrictions to apply to Subsidiaries, enter
into certain transactions with Affiliates or
consummate certain merger, consolidation or similar
transactions. In addition, in certain circumstances,
the Company will be required to offer to purchase the
Notes at 100% of the Accreted Value or principal
amount at maturity thereof, as applicable, with the
net proceeds of certain asset sales. These covenants
are subject to a number of significant exceptions and
qualifications. See "Description of Notes."
For additional information regarding the Notes, see "Description of Notes."
RISK FACTORS
For a discussion of certain factors that should be considered in connection
with participating in the Exchange Offer, see "Risk Factors."
12
<PAGE>
RISK FACTORS
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and 21E of the Exchange Act. Although the
Company believes that its plans, intentions and expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
plans, intentions or expectations will be achieved. Important factors that
could cause actual results to differ materially from the Company's forward-
looking statements are set forth below and elsewhere in this Prospectus. All
forward-looking statements attributable to the Company or persons acting on
its behalf are expressly qualified in their entirety by the cautionary
statements set forth below.
Investment in the Notes involves a high degree of risk. Prospective
purchasers of Notes should carefully consider the following factors in
addition to the other information contained herein in evaluating the Company
before purchasing any Notes.
FAILURE TO EXCHANGE PRIVATE NOTES
Exchange Notes will be issued in exchange for Private Notes only after
timely receipt by the Exchange Agent of such Private Notes, a properly
completed and duly executed Letter of Transmittal and all other required
documentation. Therefore, holders of Private Notes desiring to tender such
Private Notes in exchange for Exchange Notes should allow sufficient time to
ensure timely delivery. Neither the Exchange Agent nor the Company is under
any duty to give notification of defects or irregularities with respect to
tenders of Private Notes for exchange. Private Notes that are not tendered or
are tendered but not accepted will, following consummation of the Exchange
Offer, continue to be subject to the existing restriction upon transfer
thereof. In addition, any holder of Private Notes who tenders in the Exchange
Offer for the purpose of participating in a distribution of the Exchange Notes
will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Private Notes, where such Private Notes were acquired by such
broker-dealer as a result of market-making activities or any other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. To the extent that Private Notes are
tendered and accepted in the Exchange Offer, the trading market for untendered
and tendered but unaccepted Private Notes could be adversely affected due to
the limited amount, or "float," of the Private Notes that are expected to
remain outstanding following the Exchange Offer. Generally, a lower "float" of
a security could result in less demand to purchase such security and could,
therefore, result in lower prices for such security. For the same reason, to
the extent that a large amount of Private Notes are not tendered or are
tendered and not accepted in the Exchange Offer, the trading market for the
Exchange Notes could be adversely affected. See "Plan of Distribution" and
"The Exchange Offer."
ORIGINAL ISSUE DISCOUNT CONSEQUENCES OF EXCHANGE NOTES
The Exchange Notes will bear interest at the same rate and on the same terms
as the Private Notes. Therefore, the Private Notes have been issued at a
substantial discount from their principal amount at maturity. Although cash
interest will not accrue on the Exchange Notes prior to May 1, 2003 and there
will be no periodic payments of cash interest on the Exchange Notes prior to
November 1, 2003, original issue discount (the difference between the
aggregate principal amount at maturity and the issue price of the Exchange
Notes) will accrue from the issue date of the Exchange Notes. Consequently,
those who participate in the Exchange Offer generally will be required to
include amounts in gross income for United States federal income tax purposes
in advance of their receipt of the cash payments to which the income is
attributable. Such amounts in the aggregate will be equal to the difference
between the stated redemption price at maturity (inclusive of stated interest
on the Exchange Notes) and the issue price of the Exchange Notes. See "Certain
United States Federal Income Tax Consequences" for a more detailed discussion
of the federal income tax consequences of the purchase, ownership and
disposition of the Exchange Notes.
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In the event a bankruptcy case is commenced by or against the Company under
the United States Bankruptcy Code after the exchange of the Exchange Notes,
the claim of a holder of Exchange Notes may be limited to an amount equal to
the sum of (i) the initial offering price and (ii) that portion of the
original issue discount which is not deemed to constitute "unmatured interest"
for purposes of the Bankruptcy Code. Any original issue discount that was not
amortized as of the date of any such bankruptcy filing would constitute
"unmatured interest." To the extent that the Bankruptcy Code differs from the
Internal Revenue Code in determining the method of amortization of original
issue discount, a holder of Exchange Notes may realize taxable gain or loss on
payment of such holder's claim in bankruptcy.
ABSENCE OF PUBLIC MARKET FOR THE NOTES; RESTRICTIONS ON TRANSFER
As of the date hereof, the only registered holder of Private Notes is Cede &
Co., as its nominee. The Company believes that, as of the date hereof, such
holder is not an "affiliate" (as such term is defined in rule 405 under the
Securities Act) of the Company. Prior to the Private Offering, there had been
no market for the Notes and there can be no assurance that such a market will
develop or, if such a market develops, as to the liquidity of such market. The
Exchange Notes will not be listed on any securities exchange, but the Private
Notes are eligible for trading in the National Association of Securities
Dealers, Inc.'s Private Offering, Resales and Trading through Automatic
Linkages (PORTAL) market. The Exchange Notes are new securities for which
there is currently no market. The Exchange Notes may trade at a discount from
their initial offering price, depending upon prevailing interest rates, the
market for similar securities, the performance of the Company and other
factors. The Company has been advised by the Initial Purchasers that they
intend to make a market in the Exchange Notes, as well as the Private Notes,
as permitted by applicable laws and regulations; however, the Initial
Purchasers are not obligated to do so and any such market-making activities
may be discontinued at any time without notice. In addition, such market-
making activities may be limited during the Exchange Offer and the pendency of
the Shelf Registration Statement (as defined in the Registration Rights
Agreement). Therefore, there can be no assurance that an active market for the
Notes will develop. See "The Exchange Offer" and "Plan of Distribution."
DEVELOPMENT STAGE COMPANY; ABSENCE OF COMMERCIAL OPERATIONS
The Company is at an early stage of development. As of the date of this
Prospectus, the RF designs for the build-out of the Initial Configuration are
completed and the cell site acquisition process has been initiated; however,
the Company has only started building its PCS network and has not commenced
commercial PCS operations. The Company will require expenditures of
significant funds for development, construction, testing and deployment of its
PCS network before commencement of commercial operations. Such activities are
expected to place significant demands on the Company's managerial, operational
and financial resources. In addition, the Company's management has retained
direct control over its vendors and the system build-out process and will,
together with Entel Technologies, Inc. ("Entel") and Gearon & Co., Inc.
("Gearon"), oversee and implement the Company's build-out strategy. The
Company's future performance will depend, in part, on the Company's ability to
manage the build-out process successfully, to implement its operational and
administrative systems, to expand its employee base and to train and manage
its employees, including engineering, customer support, marketing and sales
personnel. There can be no assurance that the Company will be able to manage
operations successfully. Management's failure to guide and control growth
effectively (including implementing adequate systems, procedures and controls
in a timely manner) could have a material adverse effect on the Company. In
addition, there can be no assurance that the Company will be able to attract
or retain the highly qualified personnel required to operate its network
successfully. See "Business" and "Management."
NETWORK BUILD-OUT AND SYSTEM IMPLEMENTATION RISKS
In order for the Company to complete its PCS network and to provide its
wireless communications services to customers throughout the Licensed Area, it
must successfully (i) lease or otherwise obtain rights to a sufficient number
of cell and switch sites, (ii) develop and implement sophisticated information
systems, (iii) complete the
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purchase and installation of equipment, build-out the physical infrastructure
and test the network and (iv) relocate microwave paths of existing users that
may otherwise impair the Company's operations. There can be no assurance that
these events will occur on a timely basis or on the cost basis assumed by the
Company, or at all. Implementation of the network involves various risks and
contingencies, many of which are not within the control of the Company and all
of which could have a material adverse effect on the implementation of the
Company's system should there be delays or other problems.
Site Acquisition. The successful implementation of the Company's PCS system
will be dependent, to a significant degree, upon the Company's ability to
lease or otherwise obtain rights to cell sites for the location of its base
station equipment. The cell site selection process will require the lease or
acquisition of approximately 500 sites prior to commencement of commercial
operations of the Company's PCS network in the Initial Configuration and
approximately 1,200 sites prior to full operation in the Licensed Area, many
of which are likely to require the Company to obtain zoning variances or other
local governmental or third-party approvals or permits. As of March 31, 1998,
the Company had signed and/or fully negotiated leases or options for 88 sites,
87 of which were pending zoning. As of March 31, 1998, there were no sites
under construction. In addition, changes to the Company's RF design resulting
from difficulties in the site acquisition process could have a negative impact
on the ability of the Company to complete the build-out of its network in a
timely fashion, which could cause operations in the Initial Configuration to
be delayed or limited. The inability of the Company to lease or otherwise
obtain rights to the cell sites required under the Company's RF design or to
obtain the requisite zoning and other local approvals in a timely and cost
effective manner could have a material adverse effect on the Company. As the
Company expands the geographic coverage of its PCS system, it expects that the
site acquisition process will continue, subject to site availability and the
continued need to receive zoning and other local approvals.
Information Systems. The successful implementation and launch of the
Company's PCS system is dependent on the Company's ability to develop and
implement an integrated customer service, network management and billing
system. The majority of the systems work (including integration of hardware
and software) will be performed by the Company's vendors using their
respective platforms. Integration requires that numerous and diverse hardware
and software platforms work together through interfaces. The number of vendors
and the Company's tight implementation time frame will leave little time for
resolving problems discovered during testing. The Company expects to complete
an information system sufficient to enable it to launch commercial service by
the end of the first quarter of 1999. Any failure to develop an integrated
information systems solution on schedule will have an adverse effect on the
ability of the Company to commence PCS commercial operations in the Initial
Configuration and the rest of the Company's planned network.
Commencement of Operations. The Company's schedule for the commencement of
its operations in the Licensed Area is aggressive. Prior to commencing
operations, the Company will need to, among other things, purchase and install
network equipment, build out the physical infrastructure and test the network.
The Company intends to install a sophisticated, state-of-the-art network
requiring adherence to a strict build-out design; therefore, the Company may
experience system and construction delays prior to achieving full operation.
Any delay in full operation of the Company's system could have a material
adverse effect on the Company's financial condition and results of operations.
Relocation of Microwave Paths. For a period of up to five years after the
grant of a PCS license (subject to extension), a PCS licensee will be required
to share spectrum with existing microwave licensees that operate certain
microwave paths within its license area. PCS licensees are not permitted to
interfere with such existing licensees, so the Company may be required to
relocate those users to different frequency bands. See "Business--Network
Build-Out--Microwave Relocation." The Company estimates it must relocate a
total of 15 microwave paths in the Licensed Area, of which approximately four
need to be relocated to launch commercial service in the Initial
Configuration. As of March 31, 1998, two relocation agreements were under
negotiation. In places where relocation is necessary to permit operation of
the Company's PCS system, any delay in the relocation of such licensees may
adversely affect the Company's ability to commence commercial operations,
which could
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have a material adverse effect on the Company. The Company's estimated capital
requirements of $167 million for the Licensed Area through 1998, assuming
consummation of, but excluding the purchase price in connection with, the
Myrtle Beach Acquisition, include $7 million allocated to the cost of
relocating certain microwave paths. There can be no assurance that the
relocation of incumbent microwave operators can be achieved for the amounts
currently estimated or at all. The actual amounts of funds required may vary
materially from these estimates. See "--Government Regulation; Dependence on
FCC Licenses" and "Business--Regulation."
DEPENDENCE ON AT&T AFFILIATION
Pursuant to the AT&T Agreements, the Company is closely affiliated with
AT&T. Under the License Agreement (as defined herein), the Company has the
right to market its services under the AT&T brand name for a period of five
years (with an automatic five year renewal if neither party terminates such
agreement), and under the Stockholders' Agreement (as defined herein), the
Company is designated as AT&T's exclusive provider of mobile wireless services
within the Licensed Area for a period of 11 years. The Company and AT&T are
also parties to a reciprocal roaming agreement for a period of 20 years. Each
such agreement is subject to termination for breach of any material terms,
including, without limitation, certain minimum build-out and network quality
requirements and limitations on the use by the Company of the Licensed Marks
(as defined herein). See "Certain Relationships and Related Transactions--The
AT&T Agreements." In addition, in the event of a merger or other business
combination involving AT&T and another telecommunications company meeting
certain criteria set forth in the Stockholders' Agreement (a "Qualifying
Company"), AT&T has the right to terminate (i) its agreements not to compete
with the Company in the provision of mobile wireless services and (ii) its
obligations to use the Company as its exclusive provider of such mobile
wireless services in the Licensed Area. See "Certain Relationships and Related
Transactions--The AT&T Agreements--The Stockholders' Agreement." The Company
believes that as of the date of this Prospectus, only Sprint Corporation,
BellSouth Corporation and GTE Corporation qualify as Qualifying Companies. The
non-renewal or termination of any AT&T Agreement would have a material adverse
effect on the Company's operations.
AT&T has entered into, and anticipates entering into similar affiliation
agreements with other companies (the "Affiliates") in other MTAs pursuant to
its nationwide PCS build-out strategy. The Company plans to capitalize on its
affiliation with AT&T and, consequently, the Affiliates, through the marketing
advantages that will arise from the successful implementation of AT&T's
services within the AT&T BTAs. As a result, the results of operations of the
Company are highly dependent on the Company's relationship with AT&T and
AT&T's and the Affiliates' success as wireless services providers. AT&T and
the Affiliates are subject, to varying degrees, to the economic,
administrative, logistical and other risks set forth in this Prospectus. There
can be no assurance that AT&T's and the Affiliates' PCS operations will be
successful. See "Business--Competition."
RELATIONSHIP WITH AT&T; POSSIBLE CONFLICT OF INTEREST
The interests of AT&T and the Company may conflict and there can be no
assurance that any such conflict will be resolved in favor of the Company.
Pursuant to the Stockholders' Agreement, AT&T has the right to (i) select one
of the seven directors of the Company and (ii) approve, along with Michael
Kalogris and Steven Skinner, the selection of the two independent directors
nominated by the Cash Equity Investors. Pursuant to the Stock Purchase
Agreement, AT&T owes no duty to the Company except to the extent expressly set
forth in the Stock Purchase Agreement and the AT&T Agreements. Officers and
directors generally do not have fiduciary duties to holders of debt securities
such as the Notes. See "Management."
COMPETITION
The Company will initially compete directly in each of its markets within
the Licensed Area with two cellular providers. The existing cellular providers
in the Company's markets, most of which have an infrastructure in place and
have been operational for a number of years, and several of which have
significantly greater financial and technical resources than the Company, may
upgrade their networks to provide comparable
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services in competition with the Company. The Company may also compete with
several PCS license holders in each of its markets. The Company believes that
the ownership structure of PCS licenses in the Licensed Area is fragmented;
however, certain other PCS license holders do hold licenses that overlap large
portions of the Licensed Area. The Company believes most PCS license holders
have not commenced the roll-out of their networks in the Licensed Area.
However, the Company does expect to compete directly with one or more PCS
service providers in each of its markets in the future. See "Business--
Regulation."
The Company expects to also face competition from other existing
communications technologies such as SMR and ESMR. SMR and ESMR systems, which
can provide services that may be competitive with those offered by PCS, are
often significantly less expensive to build and operate than PCS systems. The
FCC now licenses SMR systems in the 800 and 900 MHz bands in contiguous blocks
in defined geographic areas. The first auction of such SMR spectrum occurred
in October 1997. The results of these auctions may lead to additional
competition for the Company.
The Company anticipates that market prices for two-way wireless services
generally will decline in the future based upon increased competition. The
Company's ability to compete successfully will depend, in part, on its ability
to anticipate and respond to various competitive factors affecting the
industry, including new services that may be introduced, changes in consumer
preferences, demographic trends, economic conditions and discount pricing
strategies by competitors, all of which could adversely affect the Company's
operating margins. See "Business--Competition."
LIMITED PCS OPERATING HISTORY IN THE UNITED STATES; SIGNIFICANT CHANGE IN
WIRELESS INDUSTRY
PCS systems have limited operating history in the United States and there
can be no assurance that the operation of these systems in the Company's
markets will become profitable. In addition, the extent of potential demand
for PCS in the Company's markets cannot be estimated with any degree of
certainty. The inability of the Company to establish and successfully market
PCS services could have a material adverse effect on the Company's financial
condition and results of operations.
The wireless telecommunications industry is experiencing significant
technological change, as evidenced by the increasing pace of digital upgrades
in existing analog wireless systems, ongoing improvements in the capacity and
quality of digital technology, shorter development cycles for new products and
enhancements and changes in end-user requirements and preferences. There is
also uncertainty as to the extent of customer demand as well as the extent to
which airtime and monthly access rates may continue to decline. As a result,
the future prospects of the industry and the Company, and the success of PCS
and other competitive services, remain uncertain.
GOVERNMENT REGULATION; DEPENDENCE ON FCC LICENSES
The licensing, construction, operation, sale and interconnection
arrangements of wireless telecommunications systems are regulated to varying
degrees by the FCC and, depending on the jurisdiction, state and local
regulatory agencies. In addition, the FCC, in conjunction with the Federal
Aviation Administration (the "FAA"), regulates tower marking and lighting.
There can be no assurance that either the FCC, the FAA or those state agencies
having jurisdiction over the Company's business will not adopt regulations or
take other actions that would adversely affect the business of the Company.
The Company's principal assets will be its licenses from the FCC to provide
PCS services. The loss of any such licenses would have a material adverse
effect on the Company. FCC licenses to provide PCS services are subject to
renewal and revocation. The FCC has adopted specific standards to apply to PCS
renewals, under which the FCC will award a renewal expectancy to a PCS
licensee that (i) has provided substantial service during its past license
term and (ii) has substantially complied with applicable FCC rules and
policies and the Communications Act of 1934 (the "Communications Act"). As a
licensee, the Company must construct facilities that offer coverage to one-
third of the population of its service areas within five years of the initial
license grants to AT&T and to two-thirds of the population within ten years.
Licensees that fail to meet the coverage requirements are subject to
forfeiture of the license. See "Business--Regulation."
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DEPENDENCE ON KEY PERSONNEL
The Company's business is managed by a small number of key executive
officers, the loss of certain of whom could have a material adverse effect on
the Company. The Company believes that its future success will also depend in
large part on its continued ability to attract and retain highly qualified
technical and management personnel. The Company believes that there is and
will continue to be intense competition for qualified personnel in the PCS
equipment and service industry as the emerging PCS market develops, and no
assurance can be given that the Company will be successful in retaining its
key personnel or in attracting and retaining other highly qualified technical
and management personnel. A number of the key officers (Messrs. Kalogris,
Skinner and Clark and Ms. Gallagher) are also officers of Triton Cellular
Partners, L.P. ("Triton Cellular"). Triton Cellular acquires, owns and
operates cellular RSAs. To date, a significant portion of the Company's
officers' time has been spent on this venture. The Company's management is
currently attempting to hire a management team for Triton Cellular which would
reduce or eliminate the loss or diversion of the Company's management's time
and attention to Triton Cellular. There can be no assurance that the Company
will be able to hire such a management team. The Company does not presently
maintain "key man" life insurance with respect to any of its executive
officers or other employees. See "Management."
RISKS RELATED TO THE MYRTLE BEACH ACQUISITION
Consummation of the Myrtle Beach Acquisition is subject to a number of
closing conditions, certain of which are beyond the Company's control.
Accordingly, there can be no assurance as to when the Myrtle Beach Acquisition
will be consummated or that it will be consummated on the terms described
herein or at all. See "Prospectus Summary--The Company." If the Myrtle Beach
Acquisition is not consummated, the Company expects that it will incur
additional capital expenditures of approximately $10 million to complete the
build-out of the Initial Configuration. There can be no assurance that, if the
Myrtle Beach Acquisition is consummated, the Company will be able to
successfully integrate the Myrtle Beach System with the Company's planned
network.
RISKS RELATED TO POTENTIAL ACQUISITIONS
The Company is currently a party to a non-binding letter of intent to
acquire the Norfolk Pops and the Georgia/North Carolina Pops. The acquisition
of the Norfolk Pops and the Georgia/North Carolina Pops is subject to the
negotiation of definitive agreements. In addition, the acquisition of the
Norfolk Pops and the Georgia/North Carolina Pops is expected to be subject to
other conditions typical in acquisitions of this nature, certain of which
conditions, such as FCC approval, may be beyond the Company's control. There
can be no assurance that definitive agreements will be entered into with
respect to the Norfolk Pops and the Georgia/North Carolina Pops or, if entered
into, that such acquisitions will be completed. See "Prospectus Summary--
Potential Acquisitions."
In addition, the Company may continue to pursue, on an opportunistic basis,
additional strategic acquisitions to enhance operational and financial
performance. Future acquisitions by the Company could result in the incurrence
of debt and/or contingent liabilities, which could materially adversely affect
the Company's business, financial condition and results of operations.
Acquisitions involve numerous risks, including difficulties in the
assimilation of the operations, technologies and services of the acquired
companies and the diversion of management's attention from other business
concerns. In the event that any such acquisitions were to occur, there can be
no assurance that the Company's business, financial condition and results of
operations would not be materially adversely affected.
OPERATING LOSSES AND NEGATIVE CASH FLOW FROM OPERATIONS
The Company expects to incur significant operating losses and to generate
significant negative cash flow from operating activities during the next
several years while it develops and constructs its PCS network and builds its
customer base. If and when the Company has successfully completed its network
build-out and started to provide services to customers, the Company's
operating profitability will depend upon many factors,
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including, among others, its ability to market its services successfully,
achieve its projected market penetration, manage customer turnover rates
effectively and price its services competitively. There can be no assurance
that the Company will achieve or sustain operating profitability or positive
cash flow from operating activities in the future. If the Company does not
achieve and maintain operating profitability and positive cash flow from
operating activities on a timely basis, it may not be able to meet its debt
service requirements, including its obligations with respect to the Notes.
SUBSTANTIAL CAPITAL REQUIREMENTS AND LIQUIDITY; HIGHLY LEVERAGED CAPITAL
STRUCTURE
The build-out of the Company's PCS network and the marketing of the
Company's PCS services will require substantial capital. As it completes its
build-out, the Company will be highly leveraged. The Company currently
estimates that its capital requirements (capital expenditures, working
capital, debt service requirements, anticipated operating losses and closing
costs) for the period from inception through year-end 2001 (assuming
substantial completion of the Company's network build-out to cover 85% of the
Pops in the Licensed Area by such time and the consummation of the Myrtle
Beach Acquisition) will total approximately $859 million. Actual amounts of
the funds required may vary materially from these estimates. Additional funds
would be required in the event of significant departures from the current
business plan, unforeseen delays, cost overruns, unanticipated expenses,
regulatory changes, engineering design changes and other technological risks
or if the Company acquires additional licenses. The Company engages, from time
to time, in discussions with AT&T regarding possible acquisitions of
additional PCS licenses from AT&T. See "Prospectus Summary--Potential
Acquisitions." Furthermore, the Company may engage in discussions regarding
future acquisitions of cellular licenses within the Licensed Area. Sources of
funding for the Company's further financing requirements may include any or
all of the following: vendor financing, public offerings or private placements
of equity and debt securities, commercial bank loans and additional capital
contributions from equity investors. Due to its highly leveraged capital
structure, there can be no assurance that any other additional financing will
be available to the Company or, if available, that such financing can be
obtained on a timely basis and on terms acceptable to the Company and within
limitations contained in the Indenture, the Credit Facility and any new
financing arrangements. Failure to obtain any such financing, should the need
for it develop, could result in the delay or abandonment of the Company's
development and expansion plans or the failure to meet regulatory
requirements. It also could impair the Company's ability to meet its debt
service requirements (including its obligations with respect to the Notes) and
could have a material adverse effect on its business. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."
The degree to which the Company is leveraged could have certain other
important consequences to the Company and to the holders of the Notes,
including increasing its vulnerability to changes in general economic
conditions, increases in prevailing interest rates or competitive pressures on
pricing. In addition, the fact that the Company may be more leveraged than
certain of its competitors may become a competitive disadvantage.
OPERATING COSTS DUE TO FRAUD
As do most companies in the wireless industry, the Company will likely incur
costs associated with the unauthorized use of its network, including
administrative and capital costs associated with detecting, monitoring and
reducing the incidence of fraud. Fraud impacts interconnection costs, capacity
costs, administrative costs, fraud prevention costs and payments to other
carriers for unbillable fraudulent roaming.
TECHNOLOGY RISKS
The Company intends to employ digital wireless communications technology,
utilizing the new TDMA/IS-136 standard. Other digital technologies, such as
CDMA and GSM, may ultimately prove to be more advantageous than TDMA. If
another technology becomes the preferred industry standard, the Company may be
at a competitive disadvantage and competitive pressures may require the
Company to change its digital technology at substantially increased costs.
There can be no assurance that the Company could respond to such
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pressures and implement new technology on a timely basis, or at an acceptable
cost. If TDMA technology becomes obsolete at some time in the future, and the
Company is unable to effect a cost-effective migration path, it could
materially and adversely effect the Company's financial condition, results of
operations and liquidity. There can be no assurance that TDMA/IS-136 will
always meet or exceed the capabilities and quality of other technologies.
RADIO FREQUENCY EMISSION CONCERNS; MEDICAL DEVICE INTERFERENCE
Media reports have suggested that certain RF emissions from wireless
handsets may be linked to various health concerns, including cancer, and may
interfere with various electronic medical devices, including hearing aids and
pacemakers. Concerns over RF emission may have the effect of discouraging the
use of wireless handsets, which could have an adverse effect upon the
Company's business. During the past two years, the FCC has updated the
guidelines and methods it uses for evaluating RF emissions from radio
equipment, including wireless handsets. While the updates impose more
restrictive standards on RF emissions from lower power devices such as
wireless handsets, all wireless handsets the Company proposes to offer its
customers will comply with the new proposed standards. In addition, certain
interest groups have requested that the FCC investigate claims that TDMA and
other digital technologies pose health concerns and cause interference with
hearing aids and other medical devices. The FCC recently initiated a
rulemaking proceeding to implement provisions of the Telecommunications Act of
1996 (the "Telecommunications Act") designed to ensure that PCS handsets and
other technological equipment are accessible to people with disabilities.
LIMITATIONS IMPOSED BY CERTAIN INDEBTEDNESS
The documents governing the indebtedness of the Company (including the
Credit Facility and the Indenture) contain significant covenants that limit
Triton's and its subsidiaries' ability to engage in various transactions and,
in the case of the Credit Facility, require satisfaction of specified
financial performance criteria. In addition, under each of the foregoing
documents, the occurrence of certain events (including, without limitation,
failure to comply with the foregoing covenants, material inaccuracies of
representations and warranties, certain defaults under or acceleration of
other indebtedness and events of bankruptcy or insolvency) would, in certain
cases after notice and grace periods, constitute an event of default
permitting acceleration of the indebtedness covered by such documents. The
limitations imposed by the documents governing the outstanding indebtedness of
Triton and its subsidiaries are substantial, and failure to comply with them
could have a material adverse effect on Triton and its subsidiaries. See
"Description of Notes" and "Description of Credit Facility."
SUBORDINATION
The Notes and the Guarantees will be unsecured obligations of Triton and its
subsidiaries and will be subordinated in right of payment to all current and
future Senior Debt, including indebtedness under the Credit Facility. As of
March 31, 1998, Triton and the Guarantors had $75 million of borrowings under
the Credit Facility. In the event of a liquidation, dissolution,
reorganization, bankruptcy or any similar proceeding of Triton and its
subsidiaries, the assets of Triton and its subsidiaries will be available to
pay obligations on the Notes and the Guarantees only after Senior Debt of
Triton has been paid in full. Accordingly, there may not be sufficient funds
remaining to pay amounts due on all or any of the Notes. See "Description of
Notes--Ranking."
The Company has granted to the lenders under the Credit Facility a security
interest in substantially all of the assets of Triton and each existing and
subsequently acquired or organized domestic subsidiary of Triton, including a
first priority pledge of all of the capital stock of all domestic subsidiaries
of Triton. In the event of a default on secured indebtedness, the parties
granted such security interests will have a prior secured claim on the capital
stock of Triton's subsidiaries and the assets of Triton and its subsidiaries.
If such parties should attempt to foreclose on their collateral, the Company's
financial condition and the value of the Notes would be materially adversely
affected. See "Description of Credit Facility."
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POSSIBLE INABILITY TO REPURCHASE NOTES UPON A CHANGE OF CONTROL
The Credit Facility prohibits the Company from purchasing any of the Notes
and also provides that certain change of control events with respect to the
Company constitute a default thereunder. Any future credit agreements or other
agreements relating to Senior Debt to which the Company becomes a party may
contain similar restrictions and provisions. In the event a Change of Control
occurs at a time when the Company is prohibited from purchasing the Notes, the
Company could seek the consent of its lenders to the purchase of the Notes or
could attempt to refinance the borrowings that contain such prohibition. If
the Company does not obtain such a consent or repay such borrowings, the
Company will remain prohibited from purchasing the Notes by the relevant
Senior Debt. In such case, the Company's failure to purchase the tendered
Notes would constitute an event of default under the Indenture which would, in
turn, constitute a default under the Credit Facility and/or other Senior Debt.
Furthermore, no assurance can be given that the Company will have sufficient
resources to satisfy its repurchase obligation with respect to the Notes
following a Change of Control. See "Description of Notes."
FRAUDULENT CONVEYANCE
Various fraudulent conveyance laws have been enacted for the protection of
creditors and may be utilized by a court to subordinate or avoid the Notes or
any of the Guarantees in favor of other existing or future creditors of Triton
or any of its subsidiaries. If a court in a lawsuit on behalf of any unpaid
creditor of Triton or its subsidiaries or a representative of Triton's or any
of its subsidiaries' creditors were to find that, at the time Triton and its
subsidiaries issued the Notes and the Guarantees, Triton or any of its
subsidiaries (x) intended to hinder, delay or defraud any existing or future
creditor or contemplated insolvency with a design to prefer one or more
creditors to the exclusion in whole or in part of others or (y) did not
receive fair consideration or reasonably equivalent value for issuing the
Notes or any of the Guarantees and Triton or any of its subsidiaries (i) were
insolvent, (ii) were rendered insolvent by reason of such issuance, (iii) were
engaged or about to engage in a business or transaction for which its
remaining assets constituted unreasonably small capital to carry on its
business or (iv) intended to incur, or believed that it would incur, debts
beyond its ability to pay such debts as they matured, such court could void
Triton's or such subsidiary's obligations under the Notes and/or the
Guarantees and void such transactions. Alternatively, in such event, claims of
the holders of the Notes could be subordinated to claims of the other
creditors of Triton or its subsidiaries. Based upon financial and other
information currently available to it, Triton believes that the Notes and the
Guarantees are being incurred for proper purposes and in good faith and Triton
and its subsidiaries are solvent and will continue to be solvent after issuing
the Notes, will have sufficient capital for carrying on its business after
such issuance and will be able to pay its debts as they mature.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Private Notes were sold by the Company on May 4, 1998 (the "Closing
Date") to the Initial Purchasers pursuant to the Purchase Agreement. The
Initial Purchasers subsequently sold the Private Notes (i) to "qualified
institutional buyers" ("QIBs"), as defined in Rule 144A under the Securities
Act ("Rule 144A"), in reliance on Rule 144A and (ii) pursuant to offers and
sales that occurred outside the United States within the meaning of Regulation
S under the Securities Act. As a condition to the sale of the Private Notes,
the Company and the Initial Purchasers entered into the Registration Rights
Agreement on May 4, 1998. Pursuant to the Registration Rights Agreement, the
Company agreed that, unless the Exchange Offer is not permitted by applicable
law or Commission policy, it would (i) file with the Commission a Registration
Statement under the Securities Act with respect to the Exchange Notes within
90 days after the Closing Date, (ii) use its best efforts to cause such
Registration Statement to become effective under the Securities Act within 150
days after the Closing Date and (iii) use its best efforts to consummate the
Exchange Offer within 180 days after the Closing Date. A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement. The Registration Statement is intended to satisfy certain of the
Company's obligations under the Registration Rights Agreement and the Purchase
Agreement.
RESALE OF THE EXCHANGE NOTES
With respect to the Exchange Notes, based upon an interpretation by the
staff of the Commission set forth in certain no-action letters issued to third
parties, the Company believes that a holder (other than (i) a broker-dealer
who purchases such Exchange Notes directly from the Company to resell pursuant
to Rule 144A or any other available exemption under the Securities Act or (ii)
any such holder that is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) who exchanges Private Notes for Exchange
Notes in the ordinary course of business and who is not participating, does
not intend to participate, and has no arrangement with any person to
participate, in a distribution of the Exchange Notes, will be allowed to
resell Exchange Notes to the public without further registration under the
Securities Act and without delivering to the purchasers of the Exchange Notes
a prospectus that satisfies the requirements of Section 10 of the Securities
Act. (See e.g., Exxon Capital Holdings Corp., SEC No-Action Letter (available
April 13, 1989) and Morgan Stanley & Co. Inc., SEC No-Action Letter (available
June 5, 1991)). However, if any holder acquires Exchange Notes in the Exchange
Offer for the purpose of distributing or participating in the distribution of
the Exchange Notes or is a broker-dealer, such holder cannot rely on the
position of the staff of the Commission enumerated in certain no-action
letters issued to third parties and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction, unless an exemption from registration is otherwise
available. Each broker-dealer that receives Exchange Notes for its own account
in exchange for Private Notes, where such Private Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. The Letter of Transmittal states that
by so acknowledging and by delivering a prospectus, a broker-dealer will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Private Notes where such Private Notes
were acquired by such broker-dealer as a result of market-making or other
trading activities. Pursuant to the Registration Rights Agreement, the Company
has agreed to make this Prospectus, as it may be amended or supplemented from
time to time, available to broker-dealers for use in connection with any
resale for a period of 180 days after the Expiration Date. See "Plan of
Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Private
Notes validly tendered and not withdrawn prior to the Expiration Date. The
Company will issue $1,000 principal amount at maturity of Exchange Notes in
exchange for each $1,000 principal amount at maturity of outstanding Private
Notes surrendered pursuant to the Exchange Offer. Private Notes may be
tendered only in integral multiples of $1,000.
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The form and terms of the Exchange Notes are the same as the form and terms
of the Private Notes except that (i) the exchange will be registered under the
Securities Act and, therefore, the Exchange Notes will not bear legends
restricting the transfer thereof and (ii) holders of the Exchange Notes will
not be entitled to any of the rights of holders of Private Notes under the
Registration Rights Agreement, which rights will terminate upon the
consummation of the Exchange Offer. The Exchange Notes will evidence the same
indebtedness as the Private Notes (which they replace) and will be issued
under, and be entitled to the benefits of, the Indenture, which also
authorized the issuance of the Private Notes, such that both series of Notes
will be treated as a single class of debt securities under the Indenture.
As of the date of this Prospectus, $511,989,000 in aggregate principal
amount at maturity of the Private Notes are outstanding and registered in the
name of Cede & Co., as nominee for the Depository. Only a registered holder of
the Private Notes (or such holder's legal representative or attorney-in-fact)
as reflected on the records of the Trustee under the Indenture may participate
in the Exchange Offer. There will be no fixed record date for determining
registered holders of the Private Notes entitled to participate in the
Exchange Offer.
Holders of the Private Notes do not have any appraisal or dissenters' rights
under the Indenture in connection with the Exchange Offer. The Company intends
to conduct the Exchange Offer in accordance with the provisions of the
Registration Rights Agreement and the applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations of the
Commission thereunder.
The Company shall be deemed to have accepted validly tendered Private Notes
when and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Private Notes for the purposes of receiving the Exchange Notes from the
Company.
Holders who tender Private Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Private
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time on
, 1998, unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will (i) notify the
Exchange Agent of any extension by oral or written notice, (ii) mail to the
registered holders an announcement thereof and (iii) issue a press release or
other public announcement which shall include disclosure of the approximate
number of Private Notes deposited to date, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. Without limiting the manner in which the Company may choose to make a
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, the Company shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Private Notes, (ii) to extend the Exchange Offer or (iii) if any
conditions set forth below under "--Conditions" shall not have been satisfied,
to terminate the Exchange Offer by giving oral or written notice of such
delay, extension or termination to the Exchange Agent. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly
as practicable by oral or written notice thereof to the registered holders. If
the Exchange Offer is amended in a manner determined by the Company to
constitute a material change, the Company will promptly disclose such
amendment by means of a prospectus supplement that will be distributed to the
registered holders, and the Company will extend the Exchange Offer for a
period of five to ten business days, depending upon the significance of the
amendment and the manner of disclosure to the registered holders, if the
Exchange Offer would otherwise expire during such five to ten business day
period.
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INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest at the same rate and on the same terms
as the Private Notes. Consequently, the Exchange Notes will be issued at a
substantial discount to their principal amount at maturity. The Exchange Notes
will accrete in value from and including the date of issuance of the Private
Notes (May 4, 1998) until May 1, 2003 at which time they will have an
aggregate principal amount at maturity of $511,989,000. Thereafter, cash
interest will accrue on the Exchange Notes and will be payable semi-annually
in arrears on May 1 and November 1, commencing November 1, 2003, at a rate of
11% per annum. Holders whose Private Notes are accepted for exchange will be
deemed to have waived the right to receive any interest accrued on the Private
Notes.
PROCEDURES FOR TENDERING
Only a registered holder of Private Notes may tender such Private Notes in
the Exchange Offer. To tender in the Exchange Offer, a holder of Private Notes
must complete, sign and date the Letter of Transmittal, or a facsimile
thereof, have the signatures thereon guaranteed if required by the Letter of
Transmittal, and mail or otherwise deliver such Letter of Transmittal or such
facsimile to the Exchange Agent at the address set forth below under "--
Exchange Agent" for receipt prior to the Expiration Date. In addition, either
(i) certificates for such Private 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 Private Notes, if such
procedure is available, into the Exchange Agent's account at the Depository
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.
The tender by a holder that is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the
Letter of Transmittal.
THE METHOD OF DELIVERY OF PRIVATE NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR PRIVATE NOTES SHOULD
BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
Any beneficial owner(s) of the Private Notes whose Private Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender should contact the registered holder
promptly and instruct such registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on such owner's own
behalf, such owner must, prior to completing and executing the Letter of
Transmittal and delivering such owner's Private Notes, either make appropriate
arrangements to register ownership of the Private Notes in such owner's name
or obtain a properly completed bond power from the registered holder. The
transfer of registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "--Withdrawal of Tenders"), as the case may be, must be guaranteed
by an Eligible Institution (as defined below) unless the Private Notes
tendered pursuant thereto are tendered (i) by a registered holder who has not
completed the box titled "Special Delivery Instructions" on the Letter of
Transmittal or (ii) for the account of an Eligible Institution. In the event
that signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, such guarantee must be made by a
member firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or an "eligible
guarantor institution" within the meaning of
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Rule 17Ad-15 under the Exchange Act which is a member of one of the recognized
signature guarantee programs identified in the Letter of Transmittal (an
"Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Private Notes listed therein, such Private Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Private
Notes.
If the Letter of Transmittal or any Private Notes or bond powers 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, evidence satisfactory to the Company of their authority to so act
must be submitted with the Letter of Transmittal.
The Exchange Agent and the Depository have confirmed that any financial
institution that is a participant in the Depository's system may utilize the
Depository's Automated Tender Offer Program to tender Private Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Private Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and
all Private Notes not properly tendered or any Private Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Private Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Private Notes must be cured within such time as the
Company shall determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Private Notes, neither
the Company, the Exchange Agent nor any other person shall incur any liability
for failure to give such notification. Tenders of Private Notes will not be
deemed to have been made until such defects or irregularities have been cured
or waived.
While the Company has no present plan to acquire any Private Notes that are
not tendered in the Exchange Offer or to file a registration statement to
permit resales of any Private Notes that are not tendered pursuant to the
Exchange Offer, the Company reserves the right in its sole discretion to
purchase or make offers for any Private Notes that remain outstanding
subsequent to the Expiration Date or, as set forth below under "--Conditions,"
to terminate the Exchange Offer and, to the extent permitted by applicable
law, purchase Private Notes in the open market, in privately negotiated
transactions or otherwise. The terms of any such purchases or offers could
differ from the terms of the Exchange Offer.
By tendering, each holder of Private Notes will represent to the Company
that, among other things, (i) Exchange Notes to be acquired by such holder of
Private Notes in connection with the Exchange Offer are being acquired by such
holder in the ordinary course of business of such holder, (ii) such holder has
no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, (iii) if such holder is a resident of the
State of California, it falls under the self-executing institutional investor
exemption set forth under Section 25102(i) of the Corporate Securities Law of
1968 and Rules 260.102.10 and 260.105.14 of the California Blue Sky
Regulations, (iv) if such holder is a resident of the Commonwealth of
Pennsylvania, it falls under the self-executing institutional investor
exemption set forth under Sections 203(c), 102(d) and (k) of the Pennsylvania
Securities Act of 1972, Section 102.111 of the Pennsylvania Blue Sky
Regulations and an interpretive opinion dated November 16, 1985, (v) such
holder acknowledges and agrees that any person who is a broker-dealer
registered under the Exchange Act or is participating in the Exchange Offer
for the purposes of distributing the Exchange Notes must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction of the Exchange Notes acquired
by such person and cannot rely on the position of the staff of the Commission
set forth in certain no-action letters, (vi) such holder understands that a
secondary resale transaction described in clause (v) above and any resales of
Exchange Notes obtained by such holder in exchange for Private Notes acquired
by such holder directly from the Company should be covered by an effective
registration statement containing the selling securityholder information
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required by Item 507 or Item 508, as applicable, of Regulation S-K of the
Commission and (vii) such holder is not an "affiliate," as defined in Rule 405
under the Securities Act, of the Company. If the holder is a broker-dealer
that will receive Exchange Notes for such holder's own account in exchange for
Private Notes that were acquired as a result of market-making activities or
other trading activities, such holder will be required to acknowledge in the
Letter of Transmittal that such holder will deliver a prospectus in connection
with any resale of such Exchange Notes; however, by so acknowledging and by
delivering a prospectus, such holder will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
RETURN OF PRIVATE NOTES
If any tendered Private Notes are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer or if Private Notes are
withdrawn or are submitted for a greater principal amount at maturity than the
holders desire to exchange, such unaccepted, withdrawn or non-exchanged
Private Notes will be returned without expense to the tendering holder thereof
(or, in the case of Private Notes tendered by book-entry transfer into the
Exchange Agent's account at the Depository pursuant to the book-entry transfer
procedures described below, such Private Notes will be credited to an account
maintained with the Depository) as promptly as practicable.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Private Notes at the Depository for purposes of the Exchange Offer
within two business days after the date of this Prospectus, and any financial
institution that is a participant in the Depository's systems may make book-
entry delivery of Private Notes by causing the Depository to transfer such
Private Notes into the Exchange Agent's account at the Depository in
accordance with the Depository's procedures for transfer. However, although
delivery of Private Notes may be effected through book-entry transfer at the
Depository, the Letter of Transmittal or facsimile thereof, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at the address set forth
below under "--Exchange Agent" on or prior to the Expiration Date or pursuant
to the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Private Notes and (i) whose Private Notes
are not immediately available or (ii) who cannot deliver their Private Notes,
the Letter of Transmittal or any other required documents to the Exchange
Agent prior to the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery) setting forth the name and
address of the holder, the certificate number(s) of such Private Notes and
the principal amount at maturity of Private Notes tendered, stating that
the tender is being made thereby and guaranteeing that, within five New
York Stock Exchange trading days after the Expiration Date, the Letter of
Transmittal (or a facsimile thereof), together with the certificate(s)
representing the Private 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
(c) Such properly executed Letter of Transmittal (or facsimile thereof),
as well as the certificate(s) representing all tendered Private Notes in
proper form for transfer and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within five New York Stock
Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Private Notes according to the
guaranteed delivery procedures set forth above.
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WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Private Notes may be
withdrawn at any time prior to the Expiration Date.
To withdraw a tender of Private Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. Any such
notice of withdrawal must (i) specify the name of the person having deposited
the Private Notes to be withdrawn (the "Depositor"), (ii) identify the Private
Notes to be withdrawn (including the certificate number or numbers and
principal amount at maturity of such Private Notes) and (iii) be signed by the
holder in the same manner as the original signature on the Letter of
Transmittal by which such Private Notes were tendered (including any required
signature guarantees). All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company
in its sole discretion, whose determination shall be final and binding on all
parties. Any Private Notes so withdrawn will be deemed not to have been
validly tendered for purposes of the Exchange Offer and no Exchange Notes will
be issued with respect thereto unless the Private Notes so withdrawn are
validly retendered. Properly withdrawn Private Notes may be retendered by
following one of the procedures described above under "The Exchange Offer--
Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange the Exchange Notes for, any
Private Notes, and may terminate the Exchange Offer as provided herein before
the acceptance of such Private Notes, if the Exchange Offer violates
applicable law, rules or regulations or an applicable interpretation of the
staff of the Commission.
If the Company determines in its sole discretion that any of these
conditions are not satisfied, the Company may (i) refuse to accept any Private
Notes and return all tendered Private Notes to the tendering holders, (ii)
extend the Exchange Offer and retain all Private Notes tendered prior to the
expiration of the Exchange Offer, subject, however, to the rights of holders
to withdraw such Private Notes (see "--Withdrawal of Tenders") or (iii) waive
such unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Private Notes that have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Company will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders of the Private Notes, and the Company
will extend the Exchange Offer for a period of five to ten business days,
depending upon the significance of the waiver and the manner of disclosure to
the registered holders, if the Exchange Offer would otherwise expire during
such five to ten business day period.
TERMINATION OF CERTAIN RIGHTS
All rights under the Registration Rights Agreement (including registration
rights) of holders of the Private Notes eligible to participate in the
Exchange Offer will terminate upon consummation of the Exchange Offer except
with respect to the Company's continuing obligations (i) to indemnify such
holders (including any broker-dealers) and certain parties related to such
holders against certain liabilities (including liabilities under the
Securities Act), (ii) to provide, upon the request of any holder of a
transfer-restricted Private Note, the information required by Rule 144A(d)(4)
under the Securities Act in order to permit resales of such Private Notes
pursuant to Rule 144A, (iii) to use its best efforts to keep the Registration
Statement effective to the extent necessary to ensure that it is available for
resales of transfer-restricted Private Notes by broker-dealers for a period of
up to 180 days from the Expiration Date and (iv) to provide copies of the
latest version of the Prospectus to broker-dealers upon their request for a
period of up to 180 days after the Expiration Date.
ADDITIONAL INTEREST
In the event of a registration default, the Company is required to pay, as
liquidated damages, Additional Interest (as defined in the Registration Rights
Agreement) to each holder of Registrable Securities (as defined
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below) during the first 90-day period immediately following the occurrence of
such registration default at a rate of .25% per annum on the Private Notes
constituting Registrable Securities held by such holder. Such Additional
Interest rate will increase by an additional .25% per annum at the beginning
of each subsequent 90-day period during which the registration default
continues. Registrable Securities shall mean each Private Note until (i) a
registration statement covering such Private Notes has been declared effective
by the Commission and such Private Notes have been disposed of in accordance
with such effective registration statement, (ii) such Private Notes are sold
in compliance with Rule 144 under the Securities Act or (iii) such Private
Notes cease to be outstanding. The amount of the Additional Interest will
increase at a rate of an additional .25% per annum on Private Notes
constituting Registrable Securities for each subsequent 90-day period until
all registration defaults have been cured, up to a maximum Additional Interest
of 1.0% per annum. Following the cure of all defaults relating to the filing
or effectiveness of registration statements under the Registration Rights
Agreement, the payment of Additional Interest will cease. The filing and
effectiveness of the Registration Statement of which this Prospectus is a part
and the consummation of the Exchange Offer will eliminate all rights of the
holders of Private Notes eligible to participate in the Exchange Offer to
receive damages that would have been payable if such actions had not occurred.
EXCHANGE AGENT
PNC Bank, National Association has been appointed as Exchange Agent of the
Exchange Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notice of Guaranteed Delivery should be directed to the Exchange Agent
addressed as follows:
By Registered or Certified Mail: By Hand Delivery:
PNC Bank, National Association PNC Bank, National Association
Corporate Trust Department Corporate Department
1600 Market Street, 30th Floor 1600 Market Street, 30th Floor
Philadelphia, PA 19103 Philadelphia, PA 19103
By Overnight Delivery: By Facsimile:
PNC Bank, National Association (215) 585-8872
Corporate Trust Department
1600 Market Street, 30th Floor Confirm by Telephone:
Philadelphia, PA 19103 (215) 585-3848
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. 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.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments 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 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 approximately
$270,000. Such expenses include registration fees, fees and expenses of the
Exchange Agent and the Trustee, accounting and legal fees and printing costs,
among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Private Notes pursuant to the Exchange Offer. If, however, a transfer tax
is imposed for any reason other than the exchange of the Private Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be
payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with the Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
holder.
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CONSEQUENCE OF FAILURES TO EXCHANGE
Participation in the Exchange Offer is voluntary. Holders of the Private
Notes are urged to consult their financial and tax advisors in making their
own decisions on what action to take.
The Private Notes that are not exchanged for the Exchange Notes pursuant to
the Exchange Offer will remain restricted securities. Accordingly, such
Private Notes may be offered, resold, pledged or otherwise transferred only
(1) to a person who the seller reasonably believes is a QIB in a transaction
meeting the requirements of Rule 144A, in a transaction meeting the
requirements of Rule 144 under the Securities Act, outside the United States
to a foreign person in a transaction meeting the requirements of Rule 904
under the Securities Act, or in accordance with another exemption from the
registration requirements of the Securities Act (and based upon an opinion of
counsel if the Company so requests), (2) to the Company or (3) pursuant to an
effective registration statement, and, in each case, in accordance with any
applicable securities laws of any State of the United States or any other
applicable jurisdiction.
ACCOUNTING TREATMENT
For accounting purposes, the Company will recognize no gain or loss as a
result of the Exchange Offer. The expenses of the Exchange Offer will be
amortized over the term of the Exchange Notes.
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USE OF PROCEEDS
The Company will not receive proceeds from the Exchange Offer. The net
proceeds to the Company from the Private Offering were approximately $290
million after deducting the Initial Purchasers' discounts and estimated
transaction fees and expenses payable by the Company. The remaining net
proceeds raised by the Company in the Private Offering will be used, together
with borrowings under the Credit Facility, for (i) capital expenditures,
including the build-out of the PCS Network, (ii) the Myrtle Beach Acquisition,
(iii) working capital, (iv) operating losses, (v) general corporate purposes
and (vi) potential acquisitions.
In the event (i) the Myrtle Beach Acquisition is not consummated by October
31, 1998, (ii) the acquisition of the Norfolk Pops is not consummated by
December 31, 1998 or (iii) the acquisition of the Georgia/North Carolina Pops
is not consummated by December 31, 1998, the Company must prepay its
obligations under the Credit Facility in an aggregate amount equal to $125
million, $75 million or $75 million, respectively. The Company's obligations
under the Credit Facility accrue interest, at the Company's option, at (i) an
adjusted LIBO rate plus the Applicable Margin (as defined herein) or (ii) the
higher of (a) the Administrative Agent's prime rate and (b) the Federal Funds
Effective Rate (as defined in the Credit Facility) plus 0.5%, plus the
Applicable Margin. See "Description of Credit Facility." Proceeds from the
Credit Facility may be used to fund capital expenditures related to the
construction of the Company's PCS network, the acquisition of related
businesses, working capital needs and subscriber acquisition costs.
30
<PAGE>
CAPITALIZATION
The following table sets forth the combined capitalization of Triton and its
subsidiaries as of March 31, 1998, as adjusted, to reflect (i) the Private
Offering, (ii) the Myrtle Equity Commitment and (iii) the Myrtle Beach
Acquisition, as if each of such transactions had been consummated as of March
31, 1997. The table should be read in conjunction with "Selected Historical
and Pro Forma Consolidated Financial Data" and "Description of Credit
Facility."
<TABLE>
<CAPTION>
AS OF
MARCH 31, 1998
AS ADJUSTED
--------------
<S> <C>
In thousands
Long-term debt:
Credit Facility(1).......................................... $ 75,000
Capital lease obligation.................................... 46
11% Senior Subordinated Discount Notes(2)................... 300,000
--------
Total long-term debt...................................... 375,046
--------
Shareholder's equity:
Common stock................................................ --
Additional paid-in-capital(3)............................... 181,731
Accumulated deficit(3)...................................... (4,103)
--------
Total shareholder's equity................................ 177,628
--------
Total capitalization...................................... $552,674
========
</TABLE>
- --------
(1) The Credit Facility provides for up to $425 million of term loan and
revolver financing. See "Description of Credit Facility."
(2) Represents gross proceeds from the Private Offering.
(3) Adjusted to give effect to the $35 million in equity commitments for the
Myrtle Beach Acquisition ($8 million of which was received upon signing of
the purchase agreement).
31
<PAGE>
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The following tables present selected financial data derived from the
combined financial statements of Triton and its predecessor company as of and
for the three month period ended March 31, 1998 and from the audited combined
financial statements for the period from inception on March 6, 1997 to
December 31, 1997. The table also presents selected financial data for
Vanguard as of and for the three months period ended March 31, 1998 and from
the audited financial statements for the year ended December 31, 1997. In
addition, the following table presents unaudited pro forma summary financial
data for Triton as of and for the three month period ended March 31, 1998. The
pro forma summary statements of operations data have been adjusted to give pro
forma effect to: (i) the initial borrowings under the Credit Facility, (ii)
the Private Offering and (iii) the Myrtle Beach Acquisition as if each of such
transactions had been consummated on January 1, 1998. The pro forma summary
balance sheet data have been adjusted to give effect to: (i) the Equity
Investments and the contribution of such Equity Investments from Holdings to
Triton, (ii) initial borrowings under the Credit Facility, (iii) the Myrtle
Beach Acquisition and (iv) the Private Offering, as if each of such
transactions had been consummated on December 31, 1997.
The unaudited pro forma financial data presented do not purport to represent
what the Triton's results of operations and financial condition would have
actually been or what operations of Triton in any future period would be if
the transactions described above had occurred on the dates assumed. The
following information is qualified by reference to and should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements and related notes
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31, 1998
----------------------------
ACTUAL ACTUAL PRO FORMA
TRITON VANGUARD COMBINED
------- -------- ---------
In thousands
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues........................................... $ -- $ 6,000 $ 6,000
Cost and Expenses
Costs of services................................ -- 1,385 1,385
Operations and development....................... 63 -- 63
Marketing and selling............................ -- 1,170 1,170
General and administrative....................... 2,063 2,047 4,110
Depreciation and amortization(1)................. 557 1,578 2,422
------- ------- --------
Total cost and expenses........................ 2,683 6,180 9,150
Income (loss) from operations...................... (2,683) (180) (3,150)
Interest expense net of interest income(2)......... 306 1,769 9,881
------- ------- --------
Loss before taxes.................................. (2,989) (1,949) (13,031)
Income tax benefit................................. 2,847 746 --
------- ------- --------
Net income (loss).................................. $ (142) ($1,203) $(13,031)
======= ======= ========
OTHER DATA:
Deficiency of earnings to fixed charges (3)....... $ 1,642
=======
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
MARCH 6, 1997 YEAR ENDED
TO DECEMBER 31, 1997 DECEMBER 31, 1997
-------------------- -------------------
ACTUAL ACTUAL PRO FORMA
TRITON VANGUARD COMBINED
-------------------- -------- ---------
<S> <C> <C> <C>
In thousands
STATEMENT OF OPERATIONS DATA:
Revenues............................. $ -- $23,608 $ 23,608
Cost and Expenses
Costs of services.................. -- 5,306 5,306
Operations and development......... 873 -- 873
Marketing and selling.............. -- 3,944 3,944
General and administrative......... 1,863 8,275 10,138
Depreciation and amortization(1)... 5 5,162 7,463
------- ------- --------
Total cost and expenses.......... 2,741 22,687 27,724
Income (loss) from operations........ (2,741) 921 (4,116)
Interest expense net of interest
income(2)........................... 1,220 6,451 39,525
------- ------- --------
Loss before taxes.................... (3,961) (5,530) (43,641)
Income tax benefit................... -- 6,892 --
------- ------- --------
Net income (loss).................... $(3,961) $ 1,362 $(43,641)
======= ======= ========
Other Data:
Deficiency of earnings to fixed
charges(3).......................... $ 3,961
=======
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
-----------------------------
TRITON VANGUARD PRO FORMA
-------- -------- ---------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................... $104,382 $ 227 $266,127
Working capital................................... 101,719 (52,008) 265,719
Total assets...................................... 245,716 53,820 574,448
Long-term debt.................................... 75,046 -- 375,046
Shareholder's equity (deficit).................... 150,628 (12,348) 177,628
======== ======= ========
<CAPTION>
AS OF DECEMBER 31, 1997
-----------------------------
TRITON VANGUARD PRO FORMA
-------- -------- ---------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................... $ 11,362 $ 121 $276,574
Working capital................................... (5,683) (51,709) 274,101
Total assets...................................... 13,253 53,931 575,082
Long-term debt.................................... -- -- 375,000
Shareholder's equity (deficit).................... (3,961) (11,145) 178,983
======== ======= ========
</TABLE>
- --------
(1) Pro forma depreciation and amortization expense has been adjusted to
reflect the recording of the purchased fixed assets and the resultant
depreciation and amortization expenses for the Myrtle Beach Acquisition.
(2) Pro forma interest expense includes (i) interest on the Notes in the
Private Offering at a rate of 11.00% per annum and (ii) interest on $75
million of initial borrowings under the Credit Agreement at a rate of
8.70%.
(3) For the period indicated, earnings were inadequate to cover fixed charges.
For purposes of determining the deficiency of earnings to fixed charges,
loss is defined as losses from continuing operations, plus capitalized
interest costs.
33
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion and analysis is based upon the combined financial
statements of the Company and its predecessor, Triton Communications L.L.C.
("Triton LLC"), for the quarterly period ended March 31, 1998 and for the
period from inception on March 6, 1997 to December 31, 1997, and should be
read in conjunction with the combined historical financial statements and the
notes thereto contained elsewhere in this Prospectus.
OVERVIEW
The Company intends to become a leading provider of wireless broadband PCS
in the southeastern United States. Triton was established by Michael Kalogris,
Steven Skinner and other former executives of Horizon Cellular Group, along
with various private equity investors, with the intent to develop and operate
a leading PCS network in the Southeast. In October 1997, the Company entered
into a joint venture agreement with AT&T PCS, a wholly-owned subsidiary of
AT&T Corp., whereby the Company will be the exclusive provider of wireless
mobility services under the AT&T consumer brand name in a contiguous area
covering approximately 11 million Pops in the southeastern United States. AT&T
PCS contributed the PCS Licenses to Triton covering the Licensed Area in
exchange for an equity interest in Holdings and subsequently, the Company.
Additionally, the Company is a party to agreements with AT&T that, among other
things, allow the Company to benefit from AT&T's nationwide wireless footprint
and promotional and marketing efforts and provide the Company with favorable
roaming and long distance rates for services on AT&T's wireless and long
distance networks. The PCS Licenses authorize the Company to provide PCS
services to such major population and business centers as Charleston, SC,
Columbia, SC, Greenville/Spartanburg, SC, Richmond, VA and Augusta, GA, as
well as major destination resorts such as Myrtle Beach, SC, Hilton Head, SC
and Kiawah Island, SC. The Company expects to commence commercial operations
by the end of the first quarter of 1999 in the Initial Configuration.
The Company has signed a purchase agreement to acquire an existing cellular
system (the "Myrtle Beach System"), which serves Myrtle Beach, SC and the
surrounding area (the "Myrtle Beach Acquisition"), from Vanguard for a
purchase price of approximately $160 million. The Company believes it will
seamlessly integrate the Myrtle Beach System, which uses digital TDMA/IS-136
cellular technology, into its planned PCS network as part of the Initial
Configuration. Since the Myrtle Beach System is within the Licensed Area, it
will operate under the AT&T Agreements. The Company expects that the Myrtle
Beach Acquisition will (i) provide the Company with a system that currently
generates positive cash flow, (ii) accelerate the ability of the Company to
capture roaming traffic generated by Myrtle Beach's highly transitory
population, (iii) accelerate the Company's time-to-market in South Carolina
and (iv) render a PCS build-out in the Myrtle Beach region unnecessary. The
Myrtle Beach Acquisition is subject to closing conditions typical in
acquisitions of this nature. There can be no assurance that the acquisition
will be consummated on the terms described herein or at all.
To date, the Company has incurred expenditures in connection with the
establishment of the joint venture, raising capital, the initial design and
construction of its PCS network, and engineering, marketing, administrative
and other start-up related expenses. The Company expects to launch commercial
operations in the initial configuration, covering approximately 40% of the
Pops and comprising 14 of the largest cities in the Licensed Area (based on
1997 Pops), by the end of the first quarter of 1999. Upon completion of the
initial configuration, the Company intends to target the remaining cities,
connecting highway corridors and counties along the interstates with
population densities of 50 or more per square mile. The Company expects to
extend its coverage to approximately 85% of the Pops in the Licensed Area by
the end of the fourth quarter of 2001, which the Company believes will
generally provide greater coverage than current cellular operators in such
markets. The extent to which the Company is able to generate operating
revenues and earnings is dependent on a number of business factors, including
construction of the network at or below its estimated costs, successfully
deploying the PCS network and attaining profitable levels of market demand for
the Company's products and services.
34
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THE PERIOD FROM MARCH 6, 1997
(INCEPTION) TO MARCH 31, 1997.
General and Administrative Expenses
General and administrative costs for the period increased $2.0 million to
$2.1 million in the three months ended March 31, 1998 as compared to the
period from March 6, 1997 to March 31, 1997, primarily due to the increase in
operations related to the establishment of the Company. During the three
months ended March 31, 1998, depreciation and amortization expenses were $0.6
million, primarily due to the amortization of intangible assets associated
with certain agreements contributed to the Company as part of the AT&T
transaction.
Interest Expense
For the three months ended March 31, 1998, interest expense, including
interest related to the preferred return on the convertible notes of $0.4
million, was $0.3 million, net of capitalized interest of $1.5 million. The
Company had borrowings of $75 million as of March 31, 1998, with a weighted
average interest rate of 10.25%.
Tax Benefit
For the three months ended March 31, 1998, the Company recorded a tax
benefit of $2.8 million, due to the realization of benefits from prior year
losses and the benefits related to temporary differences between the financial
reporting and tax reporting bases of its FCC Licenses.
FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1997
General and Administrative Expenses
General and administrative costs for the period were $1.9 million. This
includes costs associated with salary, benefits and expenses of administrative
personnel of $1.2 million and costs associated with professional and legal
fees associated with the market research and formation of the Company of $0.2
million. There was nominal depreciation expense during this period.
LIQUIDITY AND CAPITAL RESOURCES
Net Cash Used in Operating Activities
Net cash used in operating activities for the three months ended March 31,
1998 was $2.4 million, an increase of $2.3 million over the period from March
6, 1997 to March 31, 1997. The increase was primarily due to the increase in
the General and Administrative expenses.
Net Cash used in Investing Activities
Net cash used in investing activities for the three months ended March 31,
1998 was $11.9 million, an increase of $11.8 over the period from March 6,
1997 to March 31, 1997. This increase was primarily due to capital
expenditures related to the initial network build-out and the establishment of
administrative operations. This increase also includes a non-refundable escrow
payment of $8 million attributable to the proposed Myrtle Beach Acquisition.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the three months ended March
31, 1998 was $107.4 million, an increase of $107.0 million over the period
from March 6, 1997 to March 31, 1997. During the period, the Company had net
proceeds from borrowings under the Bank Credit Facility of $68 million, net of
deferred bank financing costs of $7.0 million. In addition, the Company
received capital contributions of $41.3 million from Holdings related to the
pending Myrtle Beach Acquisition.
35
<PAGE>
Liquidity
The build-out of the Company's PCS network and the marketing of the
Company's PCS services will require substantial capital. As it completes its
build-out, the Company will be highly leveraged. The Company currently
estimates that its capital requirements (including capital expenditures,
working capital, debt service requirements and anticipated operating losses)
for the period from inception through year-end 2001 (assuming substantial
completion of the Company's network build-out to cover 85% of the Pops in the
Licensed Areas by such time and consummation of the Myrtle Beach Acquisition)
will total approximately $859 million. Actual amounts of the funds required
may vary materially from these estimates.
The Company is engaged in a substantial construction project. The Company
expects to spend $167 million (assuming consummation of the Myrtle Beach
Acquisition) on the build-out of its initial coverage area by year-end 1998.
In the event that the Myrtle Beach Acquisition is not consummated, the Company
expects to spend an additional $10 million to fund its build-out. The build-
out will include the installation of two switches and the lease or acquisition
of approximately 500 cell sites, as well as spectrum clearing costs, retail
store fitout, developing a NOC and administrative systems. The Company
estimates that it will spend $128 million in 1999 for cell site acquisition
and construction costs as it continues to build-out to 85% coverage. Other
capital expenditures budgeted for 1999 include an aggregate of $19 million to
be spent on administrative systems, spectrum clearing and switch software. The
preceding capital forecasts exclude internal engineering and capitalized
interest costs.
Through December 31, 1997, the Company has primarily financed its operations
pursuant to Triton LLC's issuance of $1.6 million in aggregate principal
amount of promissory notes (the "Promissory Notes") to the Cash Equity
Investors. Upon closing of the Securities Purchase Agreement, the Cash Equity
Investors contributed the Promissory Notes to the Company in exchange for
Series C Preferred Stock valued at $3.2 million. The contribution of the
Promissory Notes resulted in a $1.2 million charge to the Company's statement
of operations in 1997 and will result in a $0.4 million charge in the first
quarter of 1998.
The Company currently has no sources of revenue to meet its capital
requirements and, assuming consummation of the Myrtle Beach Acquisition, the
Company's revenues will remain insufficient to meet its capital requirements.
The Cash Equity Investors and the Management Stockholders have severally made
irrevocable commitments to contribute $140 million in cash to the Company
through January 2001 in exchange for 1.4 million shares of Series C Preferred
Stock of Holdings. To date, the Cash Equity Investors, along with the
Management Stockholders, have contributed an aggregate of $45 million. The
Cash Equity Investors, along with Management Stockholders, will contribute an
additional $35 million on each of the first and second anniversaries of the
Securities Purchase Closing Date (as defined herein), and $25 million on the
third anniversary of the Securities Purchase Closing Date. In addition, the
Company has received an additional equity commitment of $40 million for the
Myrtle Beach Acquisition from CB Capital Investors, J.P. Morgan Investment
Corporation and First Union Capital Partners, Inc. on terms substantially
similar to those set forth in the Securities Purchase Agreement. To date,
Holdings has issued $8 million of Series C Preferred Stock to CB Capital
Investors under such equity commitment.
On February 3, 1998, the Credit Facility Effective Date, the Company entered
into the Credit Facility. The Credit Facility provides for (i) a $175 million,
eight and one-half year Tranche A Term Loan (as defined herein), (ii) a $150
million, nine and one-quarter year Tranche B Term Loan (as defined herein) and
(iii) a $100 million, eight and one-half year Revolving Credit Facility (as
defined herein). The commitment to make Revolving Credit Loans (as defined
herein) is reduced automatically beginning on the date that is six years and
six months after the Credit Facility Effective Date and the Term Loans (as
defined herein) must be repaid beginning on the date that is four years after
the Credit Facility Effective Date. The Credit Facility requires the Company
to make mandatory prepayments of outstanding borrowings under the Credit
Facility commencing with the fiscal year ending December 31, 2001 based on a
percentage of excess cash flow, and contains customary financial and other
covenants. In addition, in the event any of the Myrtle Beach Acquisition, the
acquisition of the Norfolk Pops or the acquisition of the Georgia/North
Carolina Pops is not consummated by certain dates, the Company
36
<PAGE>
must prepay certain of its obligations under the Credit Facility. The Tranche
A Term Loans and funds under the Revolving Credit Facility are not available
to Triton until the Tranche B Term Loans are fully drawn or become unavailable
pursuant to the terms of the Credit Facility. To date, $75 million of the
Tranche B Term Loans have been drawn by the Company which are expected to fund
the Company's future operations. Borrowing under the Facilities are secured by
a first priority pledge of all assets of the Company, including the capital
stock of Triton and Triton's subsidiaries that hold the PCS Licenses. See
"Description of Credit Facility."
On May 4, 1998 the Company issued $511,989,000 11% Senior Subordinated
Discount notes due 2008 (the "Notes"). The Private Offering provided
approximately $290 million of net proceeds to the Company. The remaining
proceeds will be used primarily for the acquisition and construction of
wireless communications towers, and for general corporate purposes including
working capital. Prior to May 1, 2003, interest expense on the Notes will
consist solely of non-cash accretion of original issue discount and the Notes
will not require cash interest payments. After such time, the Notes will have
accreted to $511,989,000 and will require annual cash interest payments of
approximately $56.3 million. In addition, the Notes mature on May 1, 2008.
YEAR 2000 DISCLOSURE
The Company is developing preliminary plans to address possible impact on
its computer systems of the year 2000. The Company is also in the process of
reviewing Year 2000 compliance of the third parties with which it deals
electronically. The Company is not in a position at this time to assess the
financial impacts or costs of such compliance on such third parties at this
time.
INFLATION
The impact of inflation on the Company's operations has not been significant
to date. However, there can be no assurance that a high rate of inflation in
the future will not have material adverse effect on the Company's operating
results.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued Statement No. 131, Disclosures About Segments
of an Enterprise and Related Information ("SFAS 131"). This statement
establishes additional standards for segment reporting in the financial
statements and is effective for fiscal years beginning after December 15,
1997. Management believes that SFAS 131 will not have a material effect on the
Company's financial statements.
37
<PAGE>
BUSINESS
THE COMPANY
The Company intends to become a leading provider of wireless broadband PCS
in the southeastern United States. Triton was established by Michael Kalogris,
Steven Skinner and other former executives of Horizon, along with various
equity investors, with the intent to develop and operate a leading PCS network
in the Southeast. In October 1997, the Company entered into a joint venture
agreement with AT&T PCS, a wholly-owned subsidiary of AT&T Corp., whereby the
Company will be the exclusive provider of wireless mobility services under the
AT&T consumer brand name in a contiguous area covering approximately 11
million Pops in the southeastern United States. AT&T PCS contributed the PCS
Licenses to Triton covering the Licensed Area in exchange for an equity
interest in the Company. Additionally, the Company is a party to agreements
with AT&T that, among other things, allow the Company to benefit from AT&T's
nationwide wireless footprint and promotional and marketing efforts and
provide the Company with favorable roaming and long distance rates for
services on AT&T's wireless and long distance networks. See "Certain
Relationships and Related Transactions--The AT&T Agreements." The PCS Licenses
authorize the Company to provide PCS services to such major population and
business centers as Charleston, SC, Columbia, SC, Greenville/Spartanburg, SC,
Richmond, VA and Augusta, GA, as well as major destination resorts such as
Myrtle Beach, SC, Hilton Head, SC and Kiawah Island, SC. The Company expects
to commence commercial operations by the end of the first quarter of 1999 in
the Initial Configuration.
The Company believes the Licensed Area has outstanding demographic
characteristics, including strong population growth and favorable population
density and traffic patterns. According to Kagan, from 1995 to 2000,
population growth in the Company's markets is expected to be nearly double the
national average. Additionally, the population density in the Company's
markets is 57% above the national average, and traffic density in the
Company's markets (measured by daily car miles per interstate highway miles)
is 7% above the national average. See "--Summary Market Data." The Company
believes that its Licensed Area, together with AT&T's recently launched
wireless systems located in the adjacent cities of Washington, D.C.,
Charlotte, NC and, Atlanta, GA, creates a large, contiguous area which
provides numerous cost and other synergistic benefits.
The Company intends to offer customers affordable, reliable, high-quality
mobile telecommunications services. Specific service offerings will include
single number service and advanced features such as call screening and caller
ID. As the market for wireless telecommunications services and the Company's
technological capabilities continue to develop, the Company expects to offer
additional wireless applications such as high-speed data transmission to and
from computers, "wireless office," advanced paging, facsimile and Internet
access services.
The Company has chosen to build its PCS network using TDMA/IS-136 which is
the technology utilized by AT&T's nationwide wireless network, thus allowing
the Company's network to be compatible with AT&T's and other TDMA/IS-136
networks immediately upon launch of operations. TDMA/IS-136, among other
things, allows service providers to offer enhanced integrated services not
currently offered by traditional analog cellular providers, including
integrated voicemail, custom-calling and short-messaging. Currently three of
the top four wireless telecommunications companies in the U.S., based on
current customers, utilize TDMA/IS-136 technology. See "--TDMA Digital
Technology."
The Company has signed a purchase agreement to acquire the Myrtle Beach
System, which serves Myrtle Beach, SC and the surrounding area, from Vanguard
for a purchase price of approximately $160 million. The Company believes it
will seamlessly integrate the Myrtle Beach System, which uses digital TDMA/IS-
136 cellular technology, into its planned PCS network as part of the Initial
Configuration. Since the Myrtle Beach System is within the Licensed Area, it
will operate under the AT&T Agreements. The Company expects that the Myrtle
Beach Acquisition will (i) provide the Company with a system that currently
generates positive cash flow, (ii) accelerate the ability of the Company to
capture roaming traffic generated by Myrtle Beach's highly transitory
population, (iii) accelerate the Company's time-to-market in South Carolina
and (iv) render a PCS build-out in
38
<PAGE>
the Myrtle Beach region unnecessary. The Myrtle Beach Acquisition is subject
to closing conditions typical in acquisitions of this nature. There can be no
assurance that the acquisition will be consummated on the terms described
herein or at all.
In addition to the contribution by AT&T PCS of the PCS Licenses, the Company
has raised $140 million of irrevocable equity commitments payable over a
three-year period, $45 million of which has been received by the Company to
date, from, or from entities managed by, Chase Capital Partners, J.P. Morgan
Investment Corporation, Desai Capital Management Incorporated, Toronto
Dominion Capital (USA), Inc., First Union Capital Partners, Inc. and Duff
Ackerman Goodrich & Assoc., L.P. and certain management stockholders, as well
as the Credit Facility. See "Certain Relationships and Related Transactions--
The Securities Purchase Agreement" and "Description of Credit Facility." The
Company has received additional equity commitments of $40 million from certain
of the Cash Equity Investors in connection with the Myrtle Beach Acquisition,
$8 million of which has been contributed to date. In addition, the Private
Offering, consummated on May 4, 1998, provided approximately $290 million of
net proceeds to the Company. The net proceeds from the Private Offering, in
conjunction with the Equity Investments and borrowings under the Credit
Facility, are expected to be sufficient to complete the planned build-out of
the Company's PCS network. See "Prospectus Summary--Network Build-Out and
Financing Plan."
STRATEGIC ALLIANCE WITH AT&T
AT&T holds FCC licenses to provide wireless telecommunications service in
areas covering more than 80% of the U.S. population. In order to effectively
and rapidly construct its PCS markets and commence offering wireless services,
AT&T has focused on building out selected cities within its coverage area,
while entering into agreements with certain independent wireless operators,
such as the Company, to build out and operate the remainder of its PCS
markets. AT&T contributed the PCS Licenses, covering 20 MHz of spectrum in the
Licensed Area, in exchange for an equity interest in the Company and certain
other rights including preemptive rights and the right to appoint one board
member. AT&T has retained 10 MHz of spectrum in the Licensed Area for use as a
non-mobile wireless provider. The terms of the joint venture between the
Company and AT&T are set forth in the AT&T Agreements described below. See
"Certain Relationships and Related Transactions--The AT&T Agreements."
The Company believes its alliance with AT&T will enable the Company to
benefit from AT&T's brand name recognition and marketing efforts and provides
numerous other strategic advantages, including the following:
LICENSE RIGHTS. The Company will market its PCS services as "Member, AT&T
Wireless Services Network" and will use the globally recognized AT&T logo.
COMPANY EXCLUSIVITY. The Company will be AT&T's exclusive provider of
wireless mobility services for people residing within the Licensed Area.
AT&T EXCLUSIVITY. The Company will use AT&T as its provider of
telecommunications services, other than wireless mobility, for its
ancillary or bundled services, including long distance and, where
applicable, local service to the Company.
ROAMING. AT&T's and the Company's customers who own dual-band/dual-mode
phones will roam on each other's mobile wireless systems. The Company will
be the preferred provider of mobile wireless telecommunications for AT&T's
wireless customers that roam in the Licensed Area.
PRODUCTS AND SERVICES. The Company has benefited and expects to continue
to benefit from AT&T related discounts on such products and services as
handsets, infrastructure equipment and billing services. For example, the
Company has entered into an agreement with Ericsson to supply mobile
telephone equipment, software and services at the discounted prices set for
AT&T affiliates.
RESALE BY AT&T. The Company's network will be utilized by AT&T to provide
service to accounts that reside in the Licensed Area.
39
<PAGE>
BUSINESS STRATEGY
The Company intends to become a leading provider of wireless broadband
communications services in its markets. To achieve its objective, the Company
will pursue the following business strategies:
LEVERAGE RELATIONSHIP WITH AT&T. The Company intends to capitalize on the
marketing opportunities derived from its relationship with AT&T, including
(i) co-branding with the AT&T logo, (ii) nationwide coverage, (iii) an
expansive home calling area and (iv) bundling of AT&T telecommunications
products and service offerings. The Company believes its affiliation with
AT&T will also yield the following benefits: (i) favorable vendor
contracts, (ii) long-term roaming arrangements with prescribed pricing,
including preferred carrier status for AT&T-affiliated roaming traffic, and
(iii) availability of AT&T's NOCs and customer service centers.
EXECUTE INTEGRATED MARKETING PLAN. The Company intends to adopt a
marketing approach that leverages AT&T's nationwide presence and brand
name. The Company expects to capitalize on its regional focus and its
ability, as a small, entrepreneurial company, to respond quickly and
creatively to changing customer needs. In all of its marketing efforts, the
Company intends to emphasize the improved quality, enhanced features and
favorable pricing of its PCS system. Its marketing strategy has been
designed to increase overall wireless communications penetration with an
emphasis on mass marketing concepts designed to appeal to a broad
demographic base.
CAPITALIZE ON EXTENSIVE TERRITORIAL REACH. The Licensed Area covers a
significant percentage of the population of Virginia, virtually all of
South Carolina, the Augusta region of northeast Georgia and large sections
of the eastern and western portions of North Carolina. The Company believes
that it will have an advantage over its competitors, which have less
extensive and/or non-contiguous coverage by offering regional and state-
wide PCS services using 100% of its own network facilities. Thus, the
Company will not need to use a third party long-distance carrier, and will
therefore be able to complete almost any call, within its region, without
incurring roaming charges. The Company believes it can optimally design its
network to minimize its interconnect expenses and reduce infrastructure
costs. In addition, the Company expects to operate its entire system
utilizing only two regional offices, thereby reducing its general and
administrative expenses.
PROVIDE SUPERIOR CUSTOMER SERVICE. The Company's strategy is predicated
on building strong, enduring relationships with customers. The Company is
developing an organization in which each employee views his or her function
in terms of their impact on the customer. In support of this strategy, the
Company is currently developing a compensation plan tied to the attainment
of customer quotas and customer retention rates. Furthermore, the Company
intends to effectively manage its customer relationships through the use of
sophisticated information systems that best meet the evolving needs of
individual customers.
DEPLOY STATE-OF-THE-ART TECHNOLOGY. The Company's choice of TDMA
technology utilizing the IS-136 platform provide the Company with the
opportunity to capitalize on certain advantages, such as higher voice
quality, greater security and enhance features, relative to analog cellular
service providers. This technology also provides for more powerful error
correction, less susceptibility to fading and reduced interference (which
results in fewer dropped calls) and increased customer capacity relative to
a typical analog system. In addition, the TDMA dual-band/dual-mode handsets
provide operating capability in both digital mode at 1900 MHz and 800 MHz
and analog mode at 800 MHz, thereby increasing the customer's roaming
capabilities. Furthermore, TDMA utilizes a hierarchical cell structure that
allows for cost-effective capacity enhancement and greater customization of
calling plans. See "--TDMA Digital Technology."
EXECUTE HIGH QUALITY BUILD-OUT PLAN. The Company plans to construct a
state-of-the-art, high quality network. The Company's RF design has a high
density of cell sites which, together with the use of digital technology,
will allow the Company's system to handle higher traffic demand than
cellular operators, thereby allowing the Company to offer lower per-minute
rates. The Company's network design will also allow extensive use of micro-
and mini-cell sites to service expensive, difficult to reach locations and
coverage gaps within the Company's wireless network. See "Prospectus
Summary--Network Build-Out and Financing Plan."
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<PAGE>
POTENTIAL ACQUISITIONS
The Company has entered into a non-binding letter of intent with AT&T, dated
as of March 24, 1998, to acquire an additional 1.8 million Pops, located in
the Norfolk/Virginia Beach, VA region, and 1.9 million net incremental Pops
(2.4 million additional Pops less 0.5 million Pops located in the Hagerstown,
MD and Cumberland, MD BTAs that Triton will return to AT&T), located primarily
in Georgia and North Carolina, all of which are contiguous to the Licensed
Area. The aggregate consideration for the additional 3.7 million Pops is
approximately $137 million, of which at least $32 million is expected to be
represented by additional non-cash equity interests in the Company issued to
AT&T. The build-out of the network for the Norfolk Pops, including the
installation of a switch, has been substantially completed. The Georgia/North
Carolina Pops have not yet been built, but the Company expects they will be
subject to a build-out plan similar to that developed for the Licensed Area.
These potential acquisitions are subject to conditions typical in acquisitions
of this nature, certain of which, including FCC consent, may be beyond the
Company's control. There can be no assurance, therefore, that these
acquisitions will be consummated on the terms described herein or at all. See
"Risk Factors--Risks Related to Potential Acquisitions."
41
<PAGE>
SUMMARY MARKET DATA
The Company believes the contiguous markets covered by the PCS Licenses are
in an area with attractive demographic characteristics, including strong
population growth, high population and local interstate traffic density.
<TABLE>
<CAPTION>
% GROWTH POPULATION LOCAL INTERSTATE
LICENSED AREAS(1) POPS(2) 1995-2000(3) DENSITY(4) TRAFFIC DENSITY(5)
- ----------------- -------- ------------ ---------- ------------------
<S> <C> <C> <C> <C>
CHARLOTTE MTA
Anderson, SC............. 329.4 0.97% 114 29,830
Asheville/Hendersonville,
NC...................... 568.2 1.41 93 28,806
Charleston, SC........... 638.0 (0.10) 118 36,887
Columbia, SC............. 627.9 1.18 158 31,678
Fayetteville/Lumberton,
NC...................... 642.0 1.51 133 27,781
Florence, SC............. 257.0 0.80 113 24,924
Goldsboro/Kinston, NC.... 233.0 0.98 114 9,068
Greenville/Washington,
NC...................... 241.3 1.31 60 n.a
Greenville/Spartanburg,
SC...................... 853.2 0.94 215 28,578
Greenwood, SC............ 72.8 0.58 91 n.a.
Hickory/Lenoir, NC....... 319.9 1.16 196 31,709
Jacksonville, NC......... 150.3 0.67 197 n.a.
Myrtle Beach, SC......... 156.6 0.83 137 n.a.
New Bern, NC............. 166.9 0.49 82 n.a.
Orangeburg, SC........... 118.8 0.25 63 27,530
Roanoke Rapids, NC....... 79.6 0.55 63 28,837
Rocky Mount/Wilson, NC... 212.7 0.82 150 26,101
Sumter, SC............... 154.1 0.87 92 19,303
Wilmington, NC........... 304.3 2.50 106 14,139
KNOXVILLE MTA
Kingsport, TN............ 682.2 0.38 116 23,560
Middlesboro/Harlan, KY... 123.3 0.23 77 n.a.
ATLANTA MTA
Augusta, GA.............. 567.8 0.51 88 24,425
Savannah, GA............. 128.9 1.38 78 24,362
WASHINGTON MTA
Charlottesville, VA...... 211.4 1.13 73 15,981
Cumberland, MD........... 159.9 (0.09) 63 15,239
Fredricksburg, VA........ 132.5 2.64 98 67,775
Hagerstown,
MD/Chambersburg, PA..... 353.8 0.64 160 25,319
Harrisonburg, VA......... 140.9 0.98 57 29,618
Winchester, VA........... 154.8 1.23 116 25,166
RICHMOND MTA
Danville, VA............. 177.6 0.32 79 n.a.
Lynchburg, VA............ 158.1 0.01 116 32,447
Martinsville, VA......... 89.3 (0.34) 102 n.a.
Richmond/Petersburg, VA.. 1,202.7 0.84 131 36,233
Roanoke, VA.............. 638.8 0.48 90 27,649
Staunton/Waynesboro, VA.. 106.9 0.62 75 27,180
TRITON TOTAL/AVERAGE..... 11,155.9(6) 1.57(7) 121(8) 33,570(9)
U.S. AVERAGE............. n.a. 0.83(10) 77(11) 31,521(12)
</TABLE>
- --------
All figures based on estimates for 1997 by Paul Kagan Associates, Inc., Carmel,
CA.
42
<PAGE>
(1) Licensed Areas are segmented into BTAs, except for Savannah, GA, which
includes only Beaufort, Hampton and Jasper counties from the Savannah, GA
BTA.
(2) Pops in thousands. Based on Kagan estimates, in which the estimated
average annual population growth rate for 1995-2000 was applied to
estimates of 1995 Pops to calculate the 1997 Pops in each market.
(3) Estimated average annual population growth based on 1995 population and
estimated 2000 population.
(4) Number of Pops per square mile.
(5) Daily vehicle miles traveled (interstate only) divided by interstate
highway miles in that market.
(6) Total Pops in the Licensed Area.
(7) See note 3. Weighted by Pops. Projected average annual population growth
in the Licensed Area.
(8) Weighted by Pops. Average number of Pops per square mile in the Licensed
Area.
(9) Weighted by interstate miles. Average daily vehicle miles traveled
(interstate only) divided by interstate highway miles in the Licensed
Area.
(10) See note 3. Projected average annual population growth for the U.S.
(11) Average number of Pops per square mile for the U.S.
(12) Average daily vehicle miles traveled (interstate only) divided by
interstate highway miles for the U.S.
SERVICES AND FEATURES
The Company intends to provide affordable, reliable, high-quality mobile
telecommunications service. Through its digital PCS network, the Company
plans, immediately upon commencement of commercial operations currently
scheduled for the end of the first quarter of 1999, to introduce a wide array
of services and features that are designed to provide customers with greater
capabilities in call management and increase usage for both outgoing and
incoming calls.
CONTIGUOUS FOOTPRINT. The Company believes that its large contiguous
footprint which is adjacent to AT&T's recently launched wireless network
markets of Washington, D.C., Charlotte, NC and Atlanta, GA, will be a
substantial competitive advantage. The Company's affiliation with the "AT&T
Wireless Services Network" will provide the Company with access to nationwide
coverage, while its sizable home area, which will include adjacent AT&T
wireless markets, will allow the Company to offer cost-effective, competitive
calling plans stretching down much of the Mid-Atlantic and Southeastern
coastal regions.
IMPROVED QUALITY AND TECHNOLOGY. As the quality of digital wireless
telephony networks continues to approach that of wireline systems, increased
customer usage is expected. The Company believes that PCS providers will in
general be the first to offer mass market all-digital mobile networks. In
addition, the Company believes PCS providers will be the first to be able to
offer mass market wireless applications in competition with switched and
direct access local telecommunications services.
SINGLE NUMBER SERVICE. This service will transfer all incoming calls between
primary landline and wireless locations automatically. When a customer's
handset is activated, the Company's network will route all incoming calls to
the customer's wireless number. When the handset is deactivated, all calls
will be directed to the customer's primary landline location. This advanced
intelligent network service application makes it possible for the customer to
receive all his or her calls and text messages through a single telephone
number, enhancing the "anytime, anywhere" functionality of the Company's
wireless telecommunications. This increased reachability will be managed
through a set of advanced features such as selective call screening,
rejection, routing and forwarding screening, caller ID, message waiting and
call hold.
CALLER ID, VOICEMAIL, MESSAGE WAITING INDICATOR, SHORT MESSAGING. Caller ID
enables users to choose which calls to accept and which to send to voicemail,
a feature that will boost customer willingness to leave the phone on for
incoming calls. Digital voicemail is available at a very cost effective rate
and allows for fewer missed calls. Digital handset displays with message
waiting indicators will eliminate the need to "dial-in" to check voicemail,
and will permit the delivery of short messages similar to E-mail or alpha-
numeric paging.
43
<PAGE>
DUAL-BAND/DUAL-MODE HANDSETS. Through dual-band/dual-mode PCS handsets, the
Company will offer customers the ability to make and receive calls on both PCS
and cellular frequency bands utilizing both digital and analog technology.
These advanced handsets allow seamless roaming on cellular networks where
compatible PCS service is not offered and can be equipped for a variety of
enhanced features and applications.
EXTENDED BATTERY LIFE. New digital handsets are capable of operating in
"sleep mode" while powered on but not in use, thus improving efficiency and
extending battery life. The estimated effect of this capability is to extend
battery life to five to six times that of analog handsets. The Company expects
that this feature will increase usage, especially for incoming calls, as the
phone can be left on for longer periods.
AUTHENTICATION, VOICE PRIVACY. Through the use of an authentication key,
the digital technology eliminates the need for "Personal Identification
Numbers or PINs." Digital technology also offers enhanced privacy of calls.
Each voice signal is converted into a stream of data bits, which is encoded
and then separated. Greater privacy results, as it is more difficult for a
call to be decoded.
WIRELESS DATA EXCHANGE. The Company believes that, as data transmission
technologies develop, a number of potential uses for such services will
emerge, including short message service, mobile office applications (e.g.,
facsimile, electronic mail and connecting notebook computers with the Internet
and other computer/data networks), access to stock quote services,
transmission of text such as maps and manuals, transmission of photographs,
connections of wireless point-of-sale terminals to host computers, monitoring
of alarm systems, automation of meter reading and monitoring of status and
inventory levels of vending machines.
MARKETING STRATEGY
The Company intends to adopt a marketing approach that leverages AT&T's
nationwide presence and brand name. The Company expects to capitalize on its
regional focus and its ability, as a small, entrepreneurial company, to
respond quickly and creatively to changing customer needs. In all of its
marketing efforts, the Company intends to emphasize the improved quality,
enhanced features and favorable pricing of its PCS system. Its marketing
strategy has been designed to increase overall wireless communications
penetration with an emphasis on mass marketing concepts designed to appeal to
a broad demographic base.
AFFILIATION WITH AT&T. The Company intends to capitalize on the marketing
opportunities derived from the AT&T relationship, including (i) co-branding
with the AT&T logo, (ii) nationwide coverage, (iii) an expansive home calling
area and (iv) bundling of AT&T telecommunications products and service
offerings. See "Business--Business Strategy" and "Certain Relationships and
Related Transactions--The AT&T Agreements."
LOCAL FOCUS/CUSTOMER SERVICE. The Company expects to benefit from its
intense focus on the Virginia, South Carolina, North Carolina and Georgia
markets. Operational executives will be close to the customer and better able
to build ties with the local community by emphasizing its regional
identification. The Company will employ full-time customer service
representatives that are extensively trained and authorized to solve
customer's concerns/questions about PCS services, activation, changing
personal options, and other service information. Customer service
representatives will be accessible from any of the Company's handsets at no
charge.
PRICING. The Company's pricing strategy will be based upon simplified,
customer-friendly service plans allowing for customer preferred options and
"usage friendly" features. "Usage friendly" features will include long
distance throughout the continental U.S., caller ID, free first incoming
minute and selective routing to voicemail. The Company's consumer pricing
strategy is expected to result in low monthly access charges, statewide local
calling, usage-enhancing features and low per-minute rates. Lower per-minute
rates relative to analog cellular providers are possible because digital cell
and switch sites have greater capacity, thereby enabling the Company to market
high use customer plans at significantly lower prices. Simultaneously, the
Company will be able to offer the business user substantial economic savings
on such features as: home regional roaming rates; free long distance
throughout the contiguous United States; messaging; and reduced rates for
incoming calls.
44
<PAGE>
ADVERTISING. The ability to benefit from the AT&T name and reputation will
allow the Company to achieve customer growth more efficiently than competitors
with low brand awareness. AT&T has spent billions of dollars nationally in
advertising to build its brand name. In addition to participating in
nationwide advertising campaigns promoting the AT&T brand name, the Company
intends, subject to the terms of the License Agreement, to advertise its
products and services using television, radio, print advertisements, outdoor
advertising and promotional displays in retail stores. The Company will market
its products and services under a local company name as "Member, AT&T Wireless
Services Network" with the AT&T logo. The focus of its advertising campaign
will be "local folks providing national wireless services."
BUNDLING OF SERVICES. In addition to its basic and enhanced wireless service
packages, the Company may bundle its wireless services with other
telecommunications services, including long distance services, through
strategic alliances and resale agreements. The Company may also seek to
provide bundled service options in partnership with local businesses and
affinity marketing groups. Examples include bundling wireless service with
local telephone or utility services, banking services, cable television,
Internet access or alarm monitoring services, or with local information
services (permitting the customer to access information such as account
status, weather and traffic reports, stock quotes and sports scores as text
messages from any location).
WIRELESS OFFICE. The Company expects that one of its future product
orientations will be the "wireless office" plan featuring (i) a wireless PBX
with one handset for both on-premises and mobile use and (ii) separate pricing
plans for calls within and outside such premises. The interconnection through
PBX equipment provides (i) security through voice privacy and authentication,
(ii) all connections through least-cost routing, (iii) private-four-digit
dialing that can reach regional or national end-users, (iv) concurrent ringing
of landline and mobile phone, and (v) caller control to select the routing if
no answer. The flexibility in available pricing plans offered by wireless
office is expected to give the Company the opportunity to attract high volume
end users to its services. See "--TDMA Digital Technology."
SALES AND DISTRIBUTION
The Company plans to target a broad range of consumer and business markets
utilizing a multi-channel sales plan. While the Company plans to have access
to AT&T's national sales channels, the Company also plans to offer its
services and products through traditional cellular channels, such as company
retail stores, mass merchandisers and retail outlets, a direct sales force and
a third party independent agent program, as well as through new, lower-cost
channels such as a corporate website and telemarketing. The Company is
planning 7 to 12 retail points of presence per 100,000 Pops. In total, the
Company estimates that approximately 60% to 70% of its gross additions will be
generated by retail distribution.
RETAIL STORES. The Company plans to open between 90 and 110 retail stores.
These stores are expected to provide the Company with the strong local
presence required to achieve high penetration in suburban and rural areas.
Sales representatives in corporate stores will receive in-depth training which
will allow them to explain PCS service in an informed and persuasive manner.
The Company believes that these representatives will foster effective and
enduring customer relationships.
MASS MERCHANDISERS AND OUTLETS. The Company's retail store strategy will be
complemented with mass market retail outlets in specifically identified areas
in which the Company believes that established retailers offer the highest
likelihood for success in reaching target customers. The Company also plans on
utilizing small in-line stores and kiosks in smaller areas of 8,000 Pops or
more.
THIRD PARTY INDEPENDENT AGENT PROGRAM. The Company's independent agent
strategy will create opportunities for distribution in areas that may not be
served by retail stores and mass merchandisers.
AT&T MAJOR ACCOUNT TEAMS. The Company plans on utilizing AT&T's Business
Marketing Division as a primary source of generating customers. Through
developing and implementing a cross sell services strategy,
45
<PAGE>
and creating an administrative tracking system for referrals, the Company
plans on providing compensatory incentives for the AT&T Major Account Teams to
promote and sell the Company's product.
DIRECT SALES FORCE. The Company plans on servicing major accounts through a
direct sales force. The focus will be on those business accounts not covered
by AT&T's Business Marketing Division.
WEBSITE AND TELEMARKETING. The Company plans on developing these less
expensive and more innovative sales channels to complement the retail presence
within the Licensed Area as the build-out of the Initial Configuration nears
completion. The primary concept of sales through the website is to communicate
with customers in the way most preferred by that category of customer.
Distribution of the Company's product can be divided into a two step
process-sale and activation. The Company's management intends to take
advantage of the technological features intrinsic to TDMA/IS-136 technology to
separate the activation of the phone from the sale of the phone. This
separation will provide several advantages to the Company, including: (i)
higher quality service activation than is normally the case through mass
merchandising retail channels; (ii) the opportunity for the Company to "up
sell" additional features, products or customized services at the time of
activation; and (iii) reduced churn because customer expectations are set
appropriately as basic training can be provided at the time of activation.
TDMA DIGITAL TECHNOLOGY
The Company has selected TDMA digital technology utilizing the state-of-the-
art IS-136 standard for its PCS network. The Company selected TDMA on the IS-
136 standard because it (i) offers quality digital service with enhanced
service capability, (ii) is compatible with AT&T's wireless network and (iii)
allows the Company to take advantage of hierarchical cell sites to enhance
coverage and create customized billing plans.
The Company believes that systems using TDMA digital technology on the IS-
136 standard offer three times the capacity of analog cellular systems and
offer enhanced transmission and routing capabilities, thus providing
significantly improved sound clarity relative to analog systems. TDMA digital
technology also allows the Company to offer an enhanced package of services to
its customers, including message waiting indicator, caller ID, sleep mode,
voice privacy, short message services, data communications, authentication and
others.
Since the Company has chosen the TDMA/IS-136 standard, its network will be
compatible with AT&T's nationwide network immediately upon launch of
operations. AT&T's network, together with that of the Company and other
affiliates of AT&T, is expected to span more than 80% of the United States.
Finally, the Company has also chosen TDMA/IS-136 because it is capable of
providing a hierarchical cell site structure which allows cost-effective
capacity enhancement and greater customization of calling plans. An area
covered by a macro-cell site can be overlapped with the addition of micro-
cells and pico-cells to provide enhanced coverage within the same area. In
addition, the technology allows for customized billing by cell site, if
necessary. This is especially important in offering wireless office services.
A pico-cell will provide coverage within an office building and can be billed
on a specialized rate plan. As a user leaves the building, a micro-cell will
provide localized coverage for a "campus-based" environment that will be
billed accordingly. When the user leaves the specialized coverage area and is
picked up by a macro-cell site, they will then be billed as a traditional
mobile customer.
NETWORK BUILD-OUT
The build-out of the Company's network involves systems design, acquisition
of cell sites, equipment procurement, relocation of existing microwave users,
interconnection with other communications providers, construction of cell
sites, installation of switches, and testing, optimization and implementation
of advanced management information and billing systems. A planning and
engineering team, composed of approximately 35 engineering employees,
independent contractors and consultants, is designing and constructing the
Company's
46
<PAGE>
digital PCS network based on the regional marketing and product requirements
to meet the Company's targets for consistency, uniformity and reliability.
The Company's principal objective is to maximize population coverage levels
within targeted demographic segments and geographic areas, rather than
building out wide-area cellular-like networks. The Company expects to cover
40% of the Pops in the Licensed Area and intends to commence commercial
service in the Initial Configuration by the end of the first quarter of 1999.
The Company expects to extend its coverage to approximately 85% of the Pops in
the Licensed Area by the end of the fourth quarter of 2001.
RF DESIGN. The Company, along with Wireless Facilities Inc., an RF
engineering firm, has developed the RF design for the initial build-out of its
digital PCS network in the Initial Configuration. This process includes cell
site design, frequency planning and network optimization for each such market.
RF engineering also allocates voice channels and assigns frequencies to cell
sites taking into consideration both PCS and microwave interference issues.
PROPERTY ACQUISITION. Two experienced vendors, Entel and Gearon, are
responsible for identifying and obtaining the required property for build-out
of the PCS network, including securing all zoning, permitting and surveying
approvals and licenses. The cell site selection process will require the lease
or acquisition of approximately 500 sites prior to commencement of commercial
operations of the Company's PCS network in the Initial Configuration and
approximately 1,200 sites prior to full operation in the Licensed Area, many
of which are likely to require the Company to obtain zoning variances or other
local governmental or third-party approvals or permits. As of March 31, 1998,
the Company had signed leases or options for 88 sites, 87 of which were
awaiting required zoning approvals.
CONSTRUCTION AND INSTALLATION. The Company, along with Entel and Gearon,
will oversee the deployment of its digital PCS network. Entel and Gearon will
act as general construction contractors and employ local construction firms to
build the cell sites.
MICROWAVE RELOCATION. The Company must clear its spectrum by relocating
certain commercial microwave service users within the Licensed Areas to become
operational. The Company has contracted with Entel to assist in the microwave
relocation process. Recently, the FCC adopted a microwave relocation cost-
sharing plan that limits permissible relocation costs and outlines new
procedures for the sharing of relocation costs where the relocation of private
microwave facilities benefits multiple broadband PCS licensees. See "--
Regulation."
The Company believes it must relocate a total of 15 microwave paths in the
Licensed Areas, of which approximately four need to be relocated to launch
commercial service in the Initial Configuration. As of March 31, 1998, two
relocation agreements were under negotiation. The Company expects to have the
four microwave paths required for launch in the Initial Configuration
relocated by the third quarter of 1998. The remaining 11 microwave paths will
be relocated as business requirements for service coverage expansion dictate
and as FCC negotiation periods expire. See "Risk Factors--Network Build-Out
and System Implementation Risks."
INTERCONNECTION. The Company's digital PCS network will connect to local
exchange carriers (LECs). The Company is negotiating, or intends to negotiate,
interconnection agreements with telephone companies operating or providing
service in the areas where the Company is deploying its digital PCS network.
The Company intends to use AT&T as its interexchange (long-distance) carrier
as provided in the Stockholders' Agreement.
ROAMING. Wireless service providers are able to offer service to customers
from other systems who are traveling in or through their service area.
Customers typically pay higher rates while "roaming" outside of their home
market. Roaming is made possible in today's analog and digital cellular
environment by virtue of common frequency and signaling technology. PCS and
analog cellular systems operate on different frequencies and with different
signaling technologies.
47
<PAGE>
In areas where TDMA-based PCS service is not available, the Company intends
to offer a roaming option on the traditional analog cellular and digital
cellular systems via dual-band/dual-mode handsets capable of transmitting over
either cellular or PCS frequencies. Access to cellular coverage will be
provided through the use of dual-band/dual-mode handsets which first became
commercially available in June of 1997. Pursuant to the AT&T Agreements, the
Company's customers who own dual-band/dual-mode handsets will be able to roam
on AT&T's wireless network. In addition, pursuant to the Stockholders'
Agreement, AT&T will use commercially reasonable efforts to enable the Company
to become a party to the roaming agreements between AT&T and other operators
of cellular or PCS systems.
INFORMATION TECHNOLOGY. The Company will require advanced and sophisticated
management information systems to handle customer care, billing, network
management and financial and administrative services. The systems are focused
on three primary areas: (i) customer care, including billing systems and
customer service and support systems, (ii) network management, including
service activation, traffic and usage monitoring, trouble management and
operational support systems and (iii) business systems, including financial,
purchasing, human resources and other administrative systems.
The Company, together with its equipment vendors, also plans to introduce
sophisticated network management and operations support systems which will
facilitate network fault detection, correction and management, performance and
usage monitoring and security. System capabilities are being developed which
will allow over-the-air activation of the handset and provision of services.
The Company is currently in discussions with several vendors, including
those currently providing services to AT&T, regarding information technology
services. See "Risk Factors--Network Build-Out and System Implementation
Risks."
48
<PAGE>
THE WIRELESS COMMUNICATIONS INDUSTRY
OVERVIEW
Wireless communications systems use a variety of radio frequencies to
transmit voice and data. Broadly defined, the wireless communications industry
includes one-way radio applications, such as paging or beeper services, and
two-way radio applications, such as PCS, cellular telephone and ESMR networks.
Historically, each application has been licensed by the FCC and operates in a
distinct radio frequency block.
Since its introduction in 1983, wireless service has grown dramatically. The
following chart illustrates the annual growth in United States wireless
customers through December 31, 1997:
[CHART TO APPEAR]
Source: Cellular Telecommunications Industry Association
The following table sets forth certain United States wireless industry
statistics:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
WIRELESS INDUSTRY
STATISTICS(1) 1992 1993 1994 1995 1996 1997
- ----------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Total service revenues (in
billions).................... $ 7.8 $ 10.9 $ 14.2 $ 19.1 $ 23.6 $ 27.5
Ending subscribers (in
millions).................... 11.0 16.0 24.1 33.8 44.0 55.3
Subscriber growth............. 46.0% 45.1% 50.8% 40.0% 30.4% 25.6%
Average monthly service
revenue per subscriber(2).... $70.13 $67.13 $59.08 $54.91 $50.61 $46.11
Average monthly subscriber
revenue per subscriber(3).... $61.40 $58.74 $51.48 $47.59 $44.66 $41.12
Ending penetration............ 4.4% 6.2% 9.4% 13.0% 16.3% 20.2%
</TABLE>
- --------
Source: Cellular Telecommunications Industry Association and Kagan.
(1) Reflects domestic U.S. commercially operational cellular, ESMR and PCS
providers.
(2) Per subscriber revenue including roaming revenue.
(3) Per subscriber revenue excluding roaming revenue.
49
<PAGE>
In the wireless communications industry, there are two principal services
licensed by the FCC for transmitting voice and data signals: "PCS" and
"cellular." PCS spectrum (1850-1990 MHz) was auctioned by the FCC beginning in
late 1994 and is to be used by PCS licensees to provide wireless
communications services. PCS will initially compete directly with existing
cellular telephone, paging and specialized mobile radio services. PCS will
also include features that are not generally offered by cellular providers,
such as data transmissions to and from portable computers, advanced paging
services and facsimile services. The Company believes that PCS providers will
be the first direct wireless competitors to cellular providers. In addition,
wireless providers may offer mass market wireless local loop applications in
competition with wired local communications services. See "Business--
Regulation" for a discussion of the FCC auction process and allocation of
wireless licenses.
Cellular service is currently the predominant form of wireless voice
communications service available. The FCC has made available for cellular
service a portion of the radio spectrum from 824-894 MHz. Cellular systems
were originally analog-based systems, although digital technology has been
introduced in several markets. Analog technology currently has several
limitations, including lack of privacy and limited capacity. Digital systems
convert voice or data signals into a stream of digits that is compressed
before transmission, enabling a single radio channel to carry multiple
simultaneous signal transmissions. This enhanced capacity, along with
improvements in digital signaling, allows digital-based wireless technologies
to offer new and enhanced services, such as greater call privacy, and robust
data transmission features, such as "mobile office" applications (including
facsimile, electronic mail and wireless connections to computer/data networks,
including the Internet). See "--Operation of Wireless Communications Systems."
OPERATION OF WIRELESS COMMUNICATIONS SYSTEMS
Wireless communications system service areas, whether PCS or cellular, are
divided into multiple cells. In both PCS and cellular systems, each cell
contains a transmitter, a receiver and signaling equipment (the "Cell Site").
The Cell Site is connected by microwave or landline telephone lines to a
switch that uses computers to control the operation of the cellular
communications system for the entire service area. The system controls the
transfer of calls from cell to cell as a subscriber's handset travels,
coordinates calls to and from handsets, allocates calls among the cells within
the system and connects calls to the local landline telephone system or to a
long distance telephone carrier. Wireless communications providers establish
interconnection agreements with local exchange carriers and interexchange
carriers, thereby integrating their system with the existing landline
communications system.
Because the signal strength of a transmission between a handset and a Cell
Site declines as the handset moves away from the Cell Site, the switching
office and the Cell Site monitor the signal strength of calls in progress.
When the signal strength of a call declines to a predetermined level, the
switching office may "hand off" the call to another Cell Site where the signal
strength is stronger. If a handset leaves the service area of a PCS or
cellular system, the call is disconnected unless there is a technical
connection with the adjacent system.
Analog cellular handsets are functionally compatible with cellular systems
in all markets within the United States. As a result, analog cellular handsets
may be used wherever a subscriber is located, as long as a cellular system is
operational in the area.
Although PCS and cellular systems utilize similar technologies and hardware,
they operate on different frequencies and may use different technical and
network standards. As a result, until the introduction of dual-band/dual-mode
handsets in June 1997, it was not possible for users of one type of system to
roam on a different type of system outside of their service area, or to hand
off calls from one type of system to another.
PCS systems operate under one of three principal digital signal transmission
technologies, or standards, that have been proposed by various operators and
vendors for use in PCS systems: TDMA, CDMA or GSM. TDMA and GSM are both "time
division-based" standards but are incompatible with each other and with CDMA.
Accordingly, a subscriber of a system that utilizes TDMA technology is
currently unable to use a TDMA handset when traveling in an area not served by
TDMA-based PCS operators, unless the subscriber carries a dual band/dual-mode
handset that permits the subscriber to use the analog cellular system in that
area.
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<PAGE>
COMPETITION
Competition for subscribers among wireless licensees is based principally
upon the services and features offered, the technical quality of the wireless
system, customer service, system coverage, capacity and price. Such
competition may increase to the extent that licenses are transferred from
smaller, stand-alone operators to larger, better capitalized and more
experienced wireless communications operators who may be able to offer
subscribers certain network advantages similar to those to be offered by the
Company.
The Company will initially compete directly with two cellular providers in
each of its Licensed Areas. The existing cellular providers in the Company's
markets, most of which have an infrastructure in place and have been
operational for a number of years, and several of which have significantly
greater financial and technical resources than the Company, may upgrade their
networks to provide comparable services in competition with the Company.
The Company will also compete with PCS license holders in each of its
markets. The Company believes that the ownership structure of PCS licenses in
the Licensed Area is fragmented. However, Sprint Corporation and BellSouth
Corporation, among others, hold licenses that overlap large portions of the
Licensed Area. The Company believes that most PCS license holders have not
commenced the roll-out of their networks in the Licensed Area. However, the
Company does expect to compete directly with one or more PCS service providers
in each of its markets in the future. See "Business--Regulation."
The Company expects to also face competition from other existing
communications technologies such as SMR and ESMR. Although SMR was originally
created by the FCC as a non-interconnected service principally for fleet
dispatch, in the last decade it has liberalized the rules to permit ESMR, to
offer services that are functionally equivalent to cellular and PCS, and may
be less expensive to build and operate than PCS systems.
The FCC requires all cellular and PCS 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. Thus, a reseller
is both a customer of a wireless licensee's services and also a competitor of
that licensee. Several small resellers currently operate in competition with
the Company. With respect to PCS licensees, the resale obligations terminate
five years after the last group of initial licenses of currently allotted PCS
spectrum is awarded.
The Company anticipates that market prices for two-way wireless services
generally will decline in the future based upon increased competition. The
Company's ability to compete successfully will depend, in part, on its ability
to anticipate and respond to various competitive factors affecting the
industry, including new services that may be introduced, changes in consumer
preferences, demographic trends, economic conditions and competitors' discount
pricing strategies, all of which could adversely affect the Company's
operating margins. The Company plans to use its digital feature offerings,
national network through its AT&T affiliations, contiguous footprint providing
an expanded home rate billing area, and local presence in secondary markets,
to combat potential competition. The Company expects that its extensive
digital network, once deployed, will provide the cost effective means to react
effectively to any price competition.
REGULATION
The FCC regulates the licensing, construction, operation, acquisition and
sale of PCS systems in the United States pursuant to the Communications Act,
as amended from time to time, and the rules, regulations and policies
promulgated by the FCC thereunder.
Licensing of PCS Systems
A broadband PCS system operates under a protected geographic service area
license granted by the FCC for a particular market on one of six frequency
blocks allocated for broadband PCS service. Narrowband PCS is
51
<PAGE>
for non-voice applications such as paging and data service and is separately
licensed. The FCC has segmented the United States into PCS markets as follows:
51 large regions called MTAs, which in turn are comprised of 493 smaller
regions called BTAs. Two licenses are awarded for each MTA and four for each
BTA, so that generally six licensees will be authorized to compete in each
area. The two MTA licenses authorize the use of 30 MHz of spectrum. One of the
BTA licenses is for 30 MHz of spectrum, and the other three are for 10 MHz
each. The FCC permits licensees to split their licenses and assign a portion,
on either a geographic or frequency basis or both, to a third party. It was in
this fashion that AT&T assigned to the Company 20 MHz of its 30 MHz licenses
covering the Licensed Area.
The FCC awards all PCS licenses by auction. Auctions began with the 30 MHz,
MTA-wide licenses, and concluded last year with the last of the BTA licenses.
Due to defaults in payment of the bid price, the FCC is considering a variety
of approaches for dealing with the defaulting bidders. Accordingly, certain
licenses may be re-auctioned in the future.
Under the FCC's current rules specifying spectrum aggregation limits
affecting broadband PCS licensees, no entity may hold "attributable" interests
(generally 20% or more of the equity, or an officer or director position) in
licenses for more than 45 MHz of PCS, cellular and certain SMR services where
there is significant overlap in any geographic area. Significant overlap will
occur when at least ten percent of the population of the PCS licensed service
area is within the cellular and/or SMR service area(s).
All PCS licenses have a 10-year term, at the end of which they must be
renewed. The FCC will award a "renewal expectancy" to a PCS licensee that (i)
has provided substantial service during its past license term and (ii) has
substantially complied with applicable FCC rules and policies and the
Communications Act. All PCS licensees must satisfy certain coverage
requirements. In the Company's case, it must construct facilities that offer
coverage to one-third of the population of its service area within five years
of the original license grants to AT&T and to two-thirds of the population
within ten years. Licensees that fail to meet the coverage requirements may be
subject to forfeiture of the license.
For a period of up to five years after the grant of a PCS license (subject
to extension), a PCS licensee will be required to share spectrum with existing
licensees that operate certain fixed microwave systems within its license
area. To secure a sufficient amount of unencumbered spectrum to operate its
PCS systems efficiently and with adequate population coverage, the Company
will need to relocate many of these incumbent licensees. In an effort to
balance the competing interests of existing microwave users and newly
authorized PCS licensees, the FCC has adopted (i) a transition plan to
relocate such microwave operators to other spectrum blocks and (ii) a cost
sharing plan so that if the relocation of an incumbent benefits more than one
PCS licensee, the benefiting PCS licensees will share the cost of the
relocation. Initially, this transition plan allowed most microwave users to
operate in the PCS spectrum for a two-year voluntary negotiation period and an
additional one-year mandatory negotiation period. For public safety entities
dedicating a majority of their system communications for police, fire or
emergency medical services operations, the voluntary negotiation period is
three years, with an additional two-year mandatory negotiation period. The FCC
has recently shortened the voluntary negotiation period by one year (without
lengthening the mandatory negotiation period) for non-public safety PCS
licensees in the C, D, E and F Blocks. Parties unable to reach agreement
within these time periods may refer the matter to the FCC for resolution, but
the incumbent microwave user is permitted to continue its operations until
final FCC resolution of the matter. The transition and cost sharing plans
expire on April 4, 2005, at which time remaining incumbents in the PCS
spectrum will be responsible for their costs to relocate to alternate spectrum
locations.
PCS systems are subject to certain FAA regulations governing the location,
lighting and construction of transmitter towers and antennas and may be
subject to regulation under the National Environmental Policy Act and the
environmental regulations of the FCC. State or local zoning and land use
regulations also apply to the Company's activities. The Company expects to use
common carrier point to point microwave facilities to connect Cell Sites and
to link them to the main switching office. These facilities are separately
licensed by the FCC and are subject to regulation as to technical parameters
and service.
52
<PAGE>
The Communications Act preempts state and local regulation of the entry of,
or the rates charged by, any provider of CMRS, which includes PCS and cellular
service, or any private mobile radio service ("PMRS"), and the FCC does not
regulate such rates.
Transfers and Assignments of PCS Licenses
The Communications Act and FCC rules require the FCC's prior approval of the
assignment or transfer of control of a license for a PCS or cellular system.
In addition, the FCC has established transfer disclosure requirements that
require licensees who transfer control of or assign a PCS license within the
first three years of their license term to file associated contracts for sale,
option agreements, management agreements or other documents disclosing the
total consideration that the licensee would receive in return for the transfer
or assignment of its license. Non-controlling interests in an entity that
holds a FCC license generally may be bought or sold without FCC approval. Any
acquisition or sale by the Company of PCS or cellular interests may also
require the prior approval of the Federal Trade Commission and the Department
of Justice, if over a certain size, as well as state or local regulatory
authorities having competent jurisdiction.
Foreign Ownership
Under existing law, no more than 20% of an FCC licensee's capital stock may
be owned, directly or indirectly, or voted by non-US citizens or their
representatives, by a foreign government or its representatives or by a
foreign corporation. If an FCC licensee is controlled by another entity, as is
the case with the Company's ownership structure, up to 25% of that entity's
capital stock may be owned or voted by non-US. citizens or their
representatives, by a foreign government or its representatives or by a
foreign corporation. Foreign ownership above the 25% level may be allowed
should the FCC find such higher levels not inconsistent with the public
interest. The FCC has recently issued an order in which it ruled that higher
levels of foreign ownership (even up to 100%) are presumptively consistent
with the public interest with respect to investors from most nations. If
foreign ownership of the Company were to exceed the permitted level, the FCC
could revoke the Company's FCC licenses, although the Company could seek a
declaratory ruling from the FCC allowing the foreign ownership or take other
actions to reduce the Company's foreign ownership percentage in order to avoid
the loss of its licenses. The Company has no knowledge of any present foreign
ownership in violation of these restrictions.
Recent Industry Developments
The FCC has announced rules for making emergency 911 services available by
cellular, PCS and other mobile service providers, including "enhanced 911"
services that provide the caller's telephone number, location and other useful
information. The original timetable required PCS providers to be able to
process and transmit 911 calls (without call validation), including those from
callers with speech or hearing disabilities, by late 1997, to take actions
enabling them to relay a caller's automatic number identification and cell
site by mid-1998, and by 2001 to be able to identify the location of a 911
caller within 125 meters in 67% of all cases. The FCC is currently considering
a revised implementation schedule for these requirements State actions
incompatible with the FCC rules are subject to preemption.
On August 1, 1996, the FCC released a Report and Order expanding the
flexibility of cellular, PCS and other CMRS providers to provide fixed as well
as mobile services. Such fixed services include, but need not be limited to,
"wireless local loop" services, e.g., to apartment and office buildings, and
wireless backup to PBXs and local area networks, to be used in the event of
interruptions due to weather or other emergencies. The FCC has not yet decided
whether such fixed services should be subjected to universal service
obligations, or how they should be regulated, but it has proposed a
presumption that they be regulated as CMRS services.
On August 8, 1996, the FCC released its order implementing the
interconnection provisions of the Telecommunications Act. The FCC's decision
is lengthy and complex and is still subject to further review, and its precise
impact is difficult to predict with certainty. Although many of the provisions
of this order were struck
53
<PAGE>
down by the United Stated Court of Appeals for the Eighth Circuit, the
rationale of the order has been adopted by many states' public utility
commissions, with the result that the charges that cellular and PCS operators
pay to interconnect their traffic to the public switched telephone network are
expected to decline significantly from pre-1996 levels.
The FCC recently adopted rules on telephone number portability which will
enable customers to migrate their landline and cellular telephone numbers to a
PCS or cellular carrier and from a PCS or cellular carrier to another service
provider. The FCC has also adopted rules requiring PCS and cellular operators
to provide functions to facilitate electronic surveillance by law enforcement
officials. Representatives of the cellular and PCS industry are challenging
both set of rules.
INTELLECTUAL PROPERTY
The AT&T globe design logo is a service mark registered with the United
States Patent and Trademark Office. The service mark is owned by AT&T. The
Company expects, pursuant to the License Agreement, to use, royalty-free, the
AT&T and globe design logo and certain other service marks of AT&T in
connection with marketing, offering and providing Licensed Services (as
defined herein) to end-users and resellers, solely within the Licensed Area.
The License Agreement also grants to the Company the right and license to use
the Licensed Marks on certain permitted mobile phones.
Except in certain instances, AT&T has agreed not to grant to any other
person a right or license to provide or resell, or act as agent for any person
offering, Licensed Services under the Licensed Marks. In all other instances,
AT&T reserves for itself and its affiliates the right to use the Licensed
Marks in providing its services (subject to its exclusivity obligations
described above), whether within or without the Licensed Area.
The License Agreement contains numerous restrictions with respect to the use
and modification of any of the Licensed Marks. See "Certain Relationships and
Related Transactions--The AT&T Agreements--License Agreement."
EMPLOYEES
As of June 27, 1998, the Company employed 48 persons, none of whom is
represented by a union. The Company believes its relations with its employees
are good.
PROPERTIES
The Company, through Management Co., maintains its executive offices in
Malvern, Pennsylvania. The Company also maintains two regional offices in
Richmond, VA and Charleston, SC.
LEGAL PROCEEDINGS
The Company is not a party to any lawsuit or proceeding which, in the
opinion of management, is likely to have a material adverse effect on the
Company.
54
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The table below sets forth certain information regarding the directors of
Holdings and the executive officers of Triton and certain executive officers
of Triton's subsidiaries. Triton is a wholly-owned subsidiary of Holdings and
Michael Kalogris is the sole director of Triton.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Michael Kalogris........ 48 Chairman of the Board of Directors and Chief Executive Officer
Steven Skinner.......... 55 President, Chief Operating Officer and Director
Clyde Smith............. 58 Executive Vice President and Chief Technical Officer
David Clark............. 34 Senior Vice President, Chief Financial Officer and Secretary
David Standig........... 42 Senior Vice President of Marketing
Patricia Gallagher...... 37 Vice President and Treasurer
Michael Mears........... 42 President and General Manager of the South Carolina Region
Scott Anderson.......... 38 Director
John Beletic............ 46 Director
Arnold Chavkin.......... 47 Director
William Hague........... 43 Director
John Watkins............ 36 Director
</TABLE>
MICHAEL KALOGRIS has been Chairman and Chief Executive Officer of the
Company since its inception. Mr. Kalogris was previously President and Chief
Executive Officer of Horizon which he joined October 1, 1991. Under Mr.
Kalogris' leadership, Horizon became the fifth largest independent non-
wireline company in the United States, specializing in suburban markets and
small cities encompassing approximately 3.2 million Pops, and was sold for
approximately $575.0 million. Prior to joining Horizon, Mr. Kalogris served as
President and Chief Executive Officer of Metrophone of Philadelphia
("Metrophone"), a non-wireline carrier in Philadelphia. Metrophone was
acquired by Comcast Corporation for over $1.1 billion. Prior to joining
Metrophone, Mr. Kalogris worked at IBM. Mr. Kalogris is a member of the Board
of Directors of General Magic, Inc.
STEVEN SKINNER has served as President, Chief Operating Officer and a
Director of the Company since its inception. Mr. Skinner previously served as
the Vice President of Operations and Chief Operating Officer of Horizon
beginning in May of 1993. From March 1992 to May 1993, Mr. Skinner served as
Vice President of Acquisitions for Horizon. From January 1991 to March 1992 he
served as a consultant in the area of cellular acquisitions to Norwest Venture
Capital Management, Inc. and others. From August 1987 to January 1991 he
served as President and General Manager of Houston Cellular Telephone Company.
Prior to 1987 he served as a General Manager of Cybertel, Inc., a non-wireline
carrier serving St. Louis. Mr. Skinner has also been active in the National
CellularOne Group, most recently acting as Chairman of the Advisory Committee.
CLYDE SMITH has served as the Executive Vice President and Chief Technical
Officer of the Company since January 1998. Mr. Smith previously served as Vice
President and Chief Technical officer of ALLTEL Communications Inc. ("ALLTEL")
from January 1993 to January 1998, where he oversaw the expansion and
migration of its wireless network to include digital and wireless data
technologies. Prior to joining ALLTEL, Mr. Smith served as Director of
Wireless Technologies for Bell Atlantic Mobile Systems, where he was
responsible for the evaluation of new technologies. Mr. Smith is active in
industry organizations, having served as the Chairman of the CTIA Chief
Technical Officers Forum. In addition, Mr. Smith served as Secretary/Treasurer
of the CDMA Development Group.
55
<PAGE>
DAVID CLARK has served as Senior Vice President, Chief Financial Officer and
Secretary of the Company since its inception. Prior to joining Triton, he was
a Managing Director at Furman Selz L.L.C. specializing in communications
finance, which he joined in March 1996. Prior thereto, Mr. Clark spent over
ten years at Citibank N.A. and Citicorp Securities Inc. as a lending officer
and a high yield finance specialist.
DAVID STANDIG has served as the Senior Vice President of Marketing of the
Company since January 1998. Mr. Standing served as Vice President of
Marketing, among other executive positions, at Metrophone, for the six years
prior thereto. In this capacity Mr. Standig managed all aspects of marketing
operations and strategy.
PATRICIA GALLAGHER has served as Vice President and Treasurer of the Company
since its inception. Ms. Gallagher was previously Director of Strategic
Planning for Horizon, which she joined in 1994. Prior to joining Horizon, Ms.
Gallagher spent eight years with the Prince Sports Group Inc. where she
managed both strategic planning and new product analysis.
MICHAEL MEARS has served as President and General Manager of the Company's
South Carolina region since its inception. Mr. Mears previously served as the
Vice President and General Manager of American Telecommunications Inc. from
June 1995 until April 1997. Prior to that Mr. Mears was the Regional and Area
General Manager of GTE Corp., serving in that capacity from 1992 October 1991
to June 1995. From 1986 to 1992 Mr. Mears served as Regional and Area General
Manager for Providence Journal Co.
SCOTT ANDERSON has served as a member of the Board of Directors of Holdings
since February 1998. He is currently a member of the Board of Directors of
PriCellular Corporation, Wireless Facilities, Inc., and Tegic Corp. and a
principal of Cedar Grove Partners, LLC. Mr. Anderson was previously Senior
Vice President for Acquisitions and Development at AT&T Wireless Services,
Inc. (formerly McCaw Cellular Communications, Inc.), which he joined in 1986,
and a director of Horizon.
JOHN BELETIC has served as a member of the Board of Directors of Holdings
since February 1998. Mr. Beletic currently serves as Chairman and Chief
Executive Officer of Pagemart Wireless Inc., which he joined in March 1992. He
currently also serves as a director of Pulsepoint Communications, Inc., PCIA
and President of the Paging Leadership Association.
ARNOLD CHAVKIN has served as a member of the Board of Directors of Holdings
since February 1998. Mr. Chavkin is also a member of the advisory board of
Triton Cellular and a director of American Radio Systems Corp., American Tower
Systems, Bell Sports Corporation, Patina Oil & Gas Corporation, R&B Falcon
Corporation, Wireless One, Inc. and U.S. Silica Company. He also serves on the
Advisory Investment Boards of Richina Group, the Indian Private Equity Fund
and the Southeast Asian Investment Fund. Mr. Chavkin is a General Partner of
Chase Capital Partners. Prior to joining Chase Capital Partners, he was a
member of Chemical Bank's merchant banking group and a generalist in its
corporate finance group specializing in mergers and acquisitions and private
placements for the energy industry.
WILLIAM HAGUE has served as member of the Board of Directors of Holdings
since February 1998. Mr. Hague serves as the Senior Vice President of
Acquisitions and Development at AT&T Wireless Services, Inc., which he joined
in 1995. Prior thereto and beginning in 1992, he acted as Director of Legal
Affairs and Human Resources at Pacific Northwest Cellular Western Wireless,
Inc. Mr. Hague also serves as a Director of Telecorp.
JOHN WATKINS has served as a member of the Board of Directors of Holdings
since February 1998. Mr. Watkins serves as a member of the advisory board of
FrontierVision Partners L.P. and Triton Cellular. Mr. Watkins is also a
Managing Director and an officer of J.P. Morgan Capital Corporation.
Previously, Mr. Watkins was a director of Horizon, Prism Radio Partners, L.P.
and Inference Corp.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company established a compensation committee in June of 1998. The
compensation committee currently consisits of Mr. Beletic, as chairman, Mr.
Chavkin and Mr. Watkins. Compensation for the Company's executive officers for
the year ended December 31, 1997 was determined by Mr. Kalogris and two
representatives from the Cash Equity Investors.
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<PAGE>
COMPENSATION OF DIRECTORS
It is not anticipated that the non-independent members of the Board of
Directors will receive cash compensation for service on the Board of
Directors, although such members will be reimbursed for certain out-of-pocket
expenses in connection with attendance at board meetings. The two independent
directors of the Company will receive compensation of $10,000 per annum, plus
$1,000 for each meeting attended in person and $500 for each meeting attended
via conference call, and shares of Common Stock.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation paid by Triton for the year ended December 31, 1997 to the Chief
Executive Officer of Triton and to each of Triton's other executive officers
(the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------- ---------------------------------------
RESTRICTED
OTHER ANNUAL STOCK ALL OTHER
NAME PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARD COMPENSATION
---- ------------------ ---- -------- -------- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael Kalogris........ Chairman of the 1997 $228,619 $350,000 $11,905 -- --
Board of
Directors and
Chief Executive
Officer
Steven Skinner.......... President and 1997 148,712 225,000 4,216 -- --
Chief Operating
Officer
David Clark............. Senior Vice 1997 122,243 165,000 -- -- $83,188
President, Chief
Financial
Officer and
Secretary
Patricia Gallagher...... Vice President 1997 50,758 90,000 -- -- --
and Treasurer
</TABLE>
- --------
(1) "Other Annual Compensation" includes annual compensation, other than
salary or bonus, including perquisites and other personal benefits, where
such exceed the lesser of $50,000 or 10% of the Named Executive Officer's
annual salary and bonus.
EMPLOYMENT AGREEMENTS
On February 4, 1998, Management Co. entered into an employment agreement
(the "Kalogris Employment Agreement") with Michael Kalogris, Chairman of the
Board of Directors and Chief Executive Officer of the Company. The Kalogris
Employment Agreement has a term of five years unless terminated earlier by
either Mr. Kalogris or Holdings. Mr. Kalogris may terminate the Kalogris
Employment Agreement (i) at any time at his sole discretion upon 30 days'
prior written notice and (ii) immediately, upon written notice, if (A) there
is a Change of Control (as defined in the Kalogris Employment Agreement) or
(B) Mr. Kalogris is demoted, removed or not re-elected as Chairman of the
Board of Directors of Holdings (as used in this paragraph, "Good Reason");
provided, that following the IPO Date (as defined herein), so long as Mr.
Kalogris remains a member of the Board of Directors and Chief Executive
Officer of Holdings, it is not considered "Good Reason" if Mr. Kalogris is no
longer Chairman of the Board of Directors. Holdings may terminate the Kalogris
Employment Agreement (i) at any time, upon written notice, at the sole
discretion of Holdings (as used in this paragraph, "Without Cause") and (ii)
for cause or the death or disability of Mr. Kalogris. Mr. Kalogris is entitled
to receive from Holdings upon termination of the Kalogris Employment Agreement
by Mr. Kalogris for Good Reason or by Holdings Without Cause the following
severance benefits: (A) $1.0 million, (B) up to an additional $500,000 if Mr.
Kalogris is unable to secure employment in a senior executive capacity by the
second anniversary date of the termination of the agreement, (C) all or a
portion of the Unvested Shares (as defined in the Kalogris Employment
Agreement) will vest in the manner set forth in the Kalogris Employment
Agreement and
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<PAGE>
(D) Holdings will allow Mr. Kalogris to participate in all health, dental,
disability and other benefit plans maintained by Holdings for a period of two
years following the date of termination of the agreement. In the event Mr.
Kalogris' employment is terminated on or after the initial five year term of
the Kalogris Employment Agreement, or due to Holdings' failure to renew the
Kalogris Employment Agreement, Holdings will pay Mr. Kalogris a severance
benefit in the amount of his base salary at such time. The Kalogris Employment
Agreement provides for an initial annual base salary of $350,000, subject to
annual increases at the discretion of the Compensation Committee of the Board
of Directors, and an annual bonus in an amount up to 100% of his base salary
based on the Company's performance. Mr. Kalogris is also entitled to acquire
shares of Holdings' Series C Preferred Stock pursuant to a stock purchase plan
to be created by Holdings as promptly as practicable pursuant to the terms of
the Kalogris Employment Agreement (the "Stock Purchase Plan") and is required
to invest toward the purchase of such shares 30% of any amounts he receives on
account of an annual bonus in excess of 50% of his base salary.
On February 4, 1998, Management Co. entered into an employment agreement
(the "Skinner Employment Agreement") with Steven Skinner, President and Chief
Operating Officer of the Company. The Skinner Employment Agreement has a term
of five years unless terminated earlier by either Mr. Skinner or Holdings. Mr.
Skinner may terminate the Skinner Employment Agreement (i) at any time at his
sole discretion upon 30 days' prior written notice and (ii) immediately, upon
written notice, if (A) there is a Change of Control (as defined in the Skinner
Employment Agreement) or (B) Mr. Skinner is demoted, removed or, prior to the
IPO Date, not re-elected to the Board of Directors of Holdings (as used in
this paragraph, "Good Reason"). Holdings may terminate the Skinner Employment
Agreement (i) at any time, upon written notice, at the sole discretion of
Holdings (as used in this paragraph, "Without Cause") and (ii) for cause or
the death or disability of Mr. Skinner. Mr. Skinner is entitled to certain
benefits from Holdings upon termination of the Skinner Employment Agreement by
Mr. Skinner for Good Reason or by Holdings Without Cause. Mr. Skinner is
entitled to receive from Holdings upon termination of the Skinner Employment
Agreement by Mr. Skinner for Good Reason or by Holdings Without Cause the
following severance benefits: (A) $675,000, (B) up to an additional $337,500
if Mr. Skinner is unable to secure employment in a senior executive capacity
by the second anniversary date of the termination of the agreement, (C) all or
a portion of the Unvested Shares (as defined in the Skinner Employment
Agreement) will vest in the manner set forth in the Skinner Employment
Agreement and (D) Holdings will allow Mr. Skinner to participate in all
health, dental, disability and other benefit plans maintained by Holdings for
a period of two years following the date of termination of the agreement. In
the event Mr. Skinner's employment is terminated on or after the initial five
year term of the Skinner Employment Agreement, or due to Holdings' failure to
renew the Skinner Employment Agreement, Holdings will pay Mr. Skinner a
severance benefit in the amount of his base salary at such time. The Skinner
Employment Agreement provides for an initial annual base salary of $225,000,
subject to annual increases at the discretion of the Compensation Committee of
the Board of Directors, and an annual bonus in an amount up to 100% of his
base salary based on the Company's performance. Mr. Skinner is also entitled
to acquire shares of Holdings' Series C Preferred Stock pursuant to the Stock
Purchase Plan and is required to invest toward the purchase of such shares 30%
of any amounts he receives on account of an annual bonus in excess of 50% of
his base salary.
On January 8, 1998, Management Co. entered into an employment agreement (the
"Smith Employment Agreement") with Clyde Smith, Executive Vice President and
Chief Technical Officer of the Company. The Smith Employment Agreement has a
term of five years unless terminated earlier by either Mr. Smith or Management
Co. Mr. Smith may terminate the Smith Employment Agreement (i) at any time at
his sole discretion upon 60 days' prior written notice and (ii) upon 60 days'
written notice, in the event that the employment by the Company of each of
Michael Kalogris and Steve Skinner has been terminated during the five year
period (as used in this paragraph, "Good Reason"). Management Co. may
terminate the Smith Employment Agreement (i) at any time, upon 60 days'
written notice, at the sole discretion of Management Co. (as used in this
paragraph, "Without Cause") and (ii) for cause (as defined in the Smith
Employment Agreement) or at the death, or due to a specified period of
disability, of Mr. Smith (as described in the Smith Employment Agreement). Mr.
Smith is entitled to certain benefits from Management Co. upon termination of
the Smith Employment Agreement prior to the termination of five years by Mr.
Smith for Good Reason or by
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Management Co. Without Cause. Mr. Smith is entitled to received from
Management Co. upon termination of the Smith Employment Agreement prior to the
termination of five years by Mr. Smith for Good Reason or by Management Co.
Without Cause the following severance benefits: (A) an amount equal to 150% of
Mr. Smith's then annual base salary and (B) a certain percentage of Unvested
Shares (as defined in the Smith Employment Agreement). The Smith Employment
Agreement provides for an initial annual base salary of $220,000, subject to
annual increases at the discretion of the Compensation Committee of the Board
of Directors, and an annual bonus in an amount up to 100% of his base salary
based on the Company's performance. After the first calendar year of the
Employment Period, the Company has agreed to pay Mr. Smith a guaranteed bonus
of 100% of his base salary. Mr. Smith has also received 3,139.79 shares of
Common Stock, such shares to vest according to the schedule set forth in the
Smith Employment Agreement.
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SECURITY OWNERSHIP
The following table sets forth, as of March 31, 1998, certain information
with respect to the beneficial holdings of each director, each of the
executive officers named in the Summary Compensation Table, and all executive
officers and directors as a group, of Holdings, as well as the holding of each
stockholder of Holdings who was known to the Company to be the beneficial
owner, as defined in Rule 13d-3 under the Exchange Act, of more than 5% of the
Common Stock (as defined herein) and the Series C Preferred Stock, based upon
Company records. Shares of Series C Preferred Stock are convertible
immediately into shares of Common Stock on a one-for-one basis, and
accordingly, holders of Series C Preferred Stock are deemed to own the same
number of shares of Common Stock. On all matters to be submitted to the
stockholders of Holdings, the holders of the Series C Preferred Stock have the
right to vote on an as-converted basis as a single class with the holders of
the Common Stock.
<TABLE>
<CAPTION>
SERIES C
COMMON STOCK PREFERRED STOCK TOTAL
---------------------- ---------------------- ----------------------
NAME(1) NUMBER PERCENTAGE NUMBER PERCENTAGE NUMBER PERCENTAGE
------- ------- ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael Kalogris........ 78,495(9) 40.0% 5,000 *% 83,495 4.0%
Steven Skinner.......... 58,871(10) 30.0 2,500 * 61,371 3.0
Clyde Smith............. 3,140(11) 1.6 -- -- 3,140 *
David Clark............. 5,887(12) 3.0 -- -- 5,887 *
Patricia Gallagher...... 2,944(13) 1.5 -- -- 2,944 *
Scott Anderson.......... -- -- -- -- -- --
John Beletic............ -- -- -- -- -- --
Arnold Chavkin(2)....... -- -- -- -- -- --
William Hague........... -- -- -- -- -- --
John Watkins(3)......... -- -- -- -- -- --
Michael Kalogris, as
Trustee(4)............. 41,995(14) 21.4 -- -- 41,995 2.1
CB Capital Investors,
L.P.(5)................ -- -- 484,714 26.3 484,714 23.7
J.P. Morgan Investment
Corporation(6)......... -- -- 404,715(16) 22.0 404,715(16) 19.8
Desai Capital Management
Incorporated(7)........ -- -- 388,714(17) 21.0 388,714(17) 19.0
AT&T Wireless PCS,
Inc.(8)................ -- -- 366,131(18) 19.8 366,131(18) 17.9
All directors and
executive officers as a
group.................. 196,237(15) 100.0 7,500 * 203,737 10.0
</TABLE>
- --------
* Represents less than 1%.
(1) Unless otherwise indicated, the address of each person listed in this
table is c/o Triton PCS, Inc., 101 Lindenwood Drive, Suite 125, Malvern,
PA 19355.
(2) CB Capital Investment Inc. is the sole general partner of CB Capital
Investors, L.P. Mr. Chavkin is a vice president of CB Capital Investments
Inc. Mr. Chavkin may be deemed to share beneficial ownership of any
shares of Series C Preferred Stock beneficially owned by CB Capital
Investments Inc. Mr. Chavkin disclaims beneficial ownership of any such
shares.
(3) Mr. Watkins is a managing director and an officer of J.P. Morgan
Investment Corporation. Mr. Watkins may be deemed to share beneficial
ownership of any shares of Series C Preferred Stock beneficially owned by
J.P. Morgan Investment Corporation. Mr. Watkins disclaims beneficial
ownership of any such shares.
(4) Mr. Kalogris serves as trustee under the Common Stock Trust Agreement for
Management Employees, dated February 4, 1998 (the "Common Stock Trust
Agreement"), pursuant to which the Company will distribute Common Stock
to management employees.
(5) The address of this person is 380 Madison Avenue, New York, NY 10017.
(6) The address of this person is 101 California Street, San Francisco, CA
94111.
(7) The address of this person is 540 Madison Avenue, New York, NY 10022.
(8) The address of this person is 5000 Carillon Point, Kirkland, WA 98033.
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(9) 70,645 of the 78,495 shares of Common Stock are subject to forfeiture in
accordance with the Kalogris Employment Agreement over a five year
period.
(10) 52,984 of the 58,871 shares of Common Stock are subject to forfeiture in
accordance with the Skinner Employment Agreement over a five year period.
(11) All 3,140 shares of Common Stock are subject to forfeiture in accordance
with the Smith Employment Agreement over a five year period.
(12) All 5,887 shares of Common Stock are subject to forfeiture in accordance
with the letter agreement, dated as of February 4, 1998, between the
Company and Mr. Clark.
(13) All 2,944 shares of Common Stock are subject to forfeiture in accordance
with the letter agreement, dated as of February 4, 1998, between the
Company and Ms. Gallagher.
(14) All 41,995 shares of Common Stock to be distributed under the Common
Stock Trust Agreement.
(15) See footnotes (7)-(12). Also includes 8,046 shares of Common Stock held
by certain management employees subject to forfeiture in accordance with
letter agreements, dated as of February 4, 1998, between the Company and
each such management employee.
(16) Includes 21,036 shares of Series C Preferred Stock held by Sixty Wall
Street SBIC Fund, L.P., an affiliate of J.P. Morgan Investment
Corporation.
(17) Consists of 194,357 shares of Series C Preferred Stock held by Private
Equity Investors III, L.P., and 194,357 shares of Series C Preferred
Stock held by Equity Linked Investors II, each an affiliate of Desai
Capital Management Incorporated.
(18) Consists of 366,131 shares of Series D Preferred Stock. Shares of Series
D Preferred Stock are convertible into an equivalent number of shares of
Series C Preferred Stock at any time. AT&T Wireless PCS, Inc. also owns
732,371 shares of Series A Preferred Stock.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The closing under the Securities Purchase Agreement occurred on February 4,
1998 (the "Securities Purchase Closing Date"). Certain terms under the
Securities Purchase Agreement and the AT&T Agreements were modified pursuant
to the Closing Agreement, dated as of February 4, 1998 (the "Closing
Agreement"), by and among the parties to the Securities Purchase Agreement.
The Securities Purchase Agreement and the AT&T Agreements are summarized below
as modified by the Closing Agreement. The following summary of the material
provisions of the Securities Purchase Agreement and the AT&T Agreements does
not purport to be complete and is qualified in its entirety by reference to
such agreements. Copies of the Securities Purchase Agreement and the AT&T
Agreements will be made available to prospective investors as set forth under
the caption "Available Information."
THE SECURITIES PURCHASE AGREEMENT
Pursuant to the Securities Purchase Agreement, dated as of October 8, 1997
(the "Securities Purchase Agreement"), by and among AT&T PCS, the Cash Equity
Investors, Michael Kalogris, Steven Skinner (Steven Skinner together with
Michael Kalogris, the "Management Stockholders") and Holdings, AT&T
transferred to Triton the PCS Licenses, which cover 20 MHz of authorized
frequencies and were initially valued at $110 million, in exchange for 732,371
shares of Series A Preferred Stock and 366,131 shares of Series D Preferred
Stock. AT&T has retained 10 MHz of spectrum within the Licensed Areas for use
as a non-mobility wireless provider.
The Cash Equity Investors have severally made irrevocable commitments to
contribute to Holdings $139.3 million in cash in exchange for 1,392,500 shares
of Series C Preferred Stock, and the Management Stockholders have severally
made irrevocable commitments to contribute to Holdings $750,000 in cash in
exchange for 7,500 shares of Series C Preferred Stock. The Cash Equity
Investors, together with the Management Stockholders, have contributed an
aggregate of $45 million of their $140 million commitment as of the date
hereof. The Cash Equity Investors and the Management Stockholders are required
to contribute the unfunded portion of their respective commitments under the
Securities Purchase Agreement (the "Unfunded Commitment Amount") to Holdings,
to the extent required, and at such times as determined, by the Board of
Directors of Holdings through the third anniversary of the Securities Purchase
Closing Date. Each Cash Equity Investor's obligation to make capital
contributions to Holdings after the Securities Purchase Closing Date in
respect of its Unfunded Commitment Amount is (i) an unconditional and
irrevocable obligation, and is not subject to counterclaim, set-off, deduction
or defense, or to abatement, suspension, deferment, diminution or reduction
for any reason whatsoever and (ii) secured by a pledge of all shares of Series
C Preferred Stock issued to such party under the Securities Purchase Agreement
pursuant to a pledge agreement between Holdings and such party.
THE MYRTLE EQUITY COMMITMENT
Pursuant to a letter agreement, dated as of March 10, 1998, the Company has
received an additional equity commitment of $40 million in the aggregate from
CB Capital Investors, L.P., J.P. Morgan Investment Corporation and First Union
Capital Partners, Inc. on terms substantially similar to those set forth in
the Securities Purchase Agreement. To date, the Company has received $8
million in exchange for Series C Preferred Stock issued to CB Capital
Investors under such equity commitment. In the event the Myrtle Equity
Commitment is not drawn upon by July 8, 1998, the remaining commitment will no
longer be available to the Company.
THE AT&T AGREEMENTS
The Stockholders' Agreement
General. Pursuant to the Stockholders' Agreement, dated as of February 4,
1998 (the "Stockholders' Agreement"), by and among AT&T PCS, the Cash Equity
Investors, the Management Stockholders, certain other executives of Holdings
(the "Other Management Stockholders" and, together with AT&T PCS, the Cash
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Equity Investors and the Management Stockholders, the "Stockholders") and
Holdings, the Stockholders and Holdings have agreed to certain matters in
connection with the management and operations of the Company and the sale,
transfer or other disposition of the capital stock of Holdings.
Board of Directors. Holdings is governed by a board of directors (the "Board
of Directors") consisting of seven persons, and, unless otherwise required,
actions of the Board of Directors require the affirmative vote of a majority
of the entire Board of Directors. The Stockholders have agreed to vote for the
seven persons as follows: (i) two directors selected by a majority in interest
of Common Stock and securities convertible into Common Stock held by the Cash
Equity Investors in their sole discretion, (ii) two directors selected by a
majority in interest of Common Stock and securities convertible into Common
Stock held by the Cash Equity Investors, which directors shall be acceptable
to Michael Kalogris and Steven Skinner, on the one hand, and AT&T PCS, on the
other hand, each in their sole discretion, (iii) Michael Kalogris so long as
he is an officer of Holdings, (iv) Steven Skinner so long as he is an officer
of Holdings, and (v) one director (the "Series A Director") selected by AT&T
PCS in its capacity as holder of the Series A Preferred Stock so long as it
has the right to elect one director in accordance with the Restated
Certificate of Incorporation (as defined herein). Representatives of AT&T PCS
and certain Cash Equity Investors also have the right to attend each meeting
of the Board of Directors as observers, provided that certain capital stock
ownership thresholds are met. Any transactions between the Company and the
Stockholders (other than the AT&T Agreements and other arms-length agreements
or transactions entered into from time to time between the Company and AT&T)
must be approved by a majority of disinterested directors. Under the
Stockholders' Agreement, the two directors selected pursuant to clause (ii)
above of this paragraph are deemed not to have been designated by any of the
Stockholders. If an executive committee of the Board of Directors is formed,
it must consist of at least the Series A Director, one of the directors
selected pursuant to clause (i) above of this paragraph and Michael Kalogris
(so long as he is an officer of Holdings). The Cash Equity Investors also have
agreed to contribute all or part of the Unfunded Commitment Amount at any time
to Holdings upon 20 business days' notice from the Board of Directors.
Restrictions on Transfer. The Stockholders' Agreement imposes numerous
restrictions with respect to the sale, transfer or other disposition
(collectively, "Transfer") of the capital stock of Holdings. Generally, prior
to the date on which Holdings receives in excess of $20 million in gross
proceeds from the sale of Common Stock pursuant to a registration statement
under the Securities Act (the "IPO Date"), no Transfers are permitted except:
(i) Series C Preferred Stock, Series D Preferred Stock and Common Stock may be
transferred (at any time) (A) to an affiliate of a person that is a transferee
or a successor in interest to any or all of such person's capital stock of
Holdings and that is required to become a party to the Stockholders' Agreement
in accordance with the terms thereof (an "Affiliated Successor") or (B) in the
case of a transfer by a Cash Equity Investor, to any partners, limited
partners or members of a Cash Equity Investor that are transferees of Series C
Preferred Stock or Common Stock pursuant to distributions in accordance with
the partnership agreement or operating agreement of such Cash Equity Investor
(an "Equity Investor Affiliate"), (ii) after the third anniversary of the
Securities Purchase Closing Date, the Cash Equity Investors may Transfer
Series C Preferred Stock or Common Stock to another Cash Equity Investor, and
(iii) after the third anniversary of the Securities Purchase Closing Date,
Series C Preferred Stock and Common Stock may be transferred to any person
(except a Prohibited Transferee (as defined herein)), subject to certain
rights of first refusal of the non-transferring Stockholders (the "Rights of
First Refusal"). Additionally, prior to the IPO Date, (x) no Cash Equity
Investor nor AT&T PCS may Transfer less than all of its Series C Preferred
Stock or Common Stock to any person except an Affiliated Successor or a Equity
Investor Affiliate unless after giving effect to such Transfer, the transferor
and the transferee will each own at least the lesser of (A) 5% of Common Stock
and (B) one-half of the Common Stock beneficially owned by such transferor on
the date of Transfer, and (y) no Management Stockholder or Other Management
Stockholder (together, the "Employee Stockholders") may effect more that one
Transfer of its Common Stock during any 12-month period to any person other
than an Affiliated Successor.
On and after the IPO Date, no Transfers of Series D Preferred Stock or
Common Stock are generally permitted except: (i) after the third anniversary
of the Securities Purchase Closing Date, the Cash Equity Investors may
Transfer Series C Preferred Stock or Common Stock to another Cash Equity
Investor, (ii) Series D
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Preferred Stock and Common Stock may be transferred (at any time) to an
Affiliated Successor or an Equity Investor Affiliate and (iii) Common Stock
may be transferred to any person, subject to the Rights of First Refusal.
AT&T PCS is subject to all of the foregoing restrictions with respect to its
Series C Preferred Stock and Common Stock. AT&T PCS may not Transfer any of
its Series D Preferred Stock at any time other than to an Affiliated
Successor. Finally, with respect to AT&T PCS' Series A Preferred Stock, (a)
prior to the IPO Date, no Transfers are permitted except (i) to an Affiliated
Successor or (ii) to any person after first complying with certain provisions
relating to the Rights of First Refusal, and (b) on or after IPO Date, no
Transfer restrictions exist.
In addition to the foregoing transfer restrictions, each Stockholder has
agreed, subject to certain exceptions, not to Transfer any Series A Preferred
Stock, Series B Preferred Stock (as defined herein), Series D Preferred Stock
or Common Stock to a Prohibited Transferee. A "Prohibited Transferee" is
defined generally as one of the three largest carriers (other than AT&T, or
any person that derives a material portion of its business from wireless
communications systems and utilizes TDMA technology in a substantial majority
of those systems) of telecommunications services that currently constitute
interexchange services.
Registration Rights. The Stockholders' Agreement grants certain demand and
piggyback registration rights to the Stockholders. On or after the 91st day
after the IPO Date, the following Stockholders may cause an underwritten
demand registration, subject to customary pro rata cutback and blackout
restrictions, so long as such registration is reasonably expected to result in
aggregate proceeds of at least $10 million: (a) AT&T PCS, (b) a holder of
shares of Series C Preferred Stock or Common Stock (if such registration is
reasonably expected to result in aggregate gross proceeds of at least $25
million) or (c) Employee Stockholders beneficially owning at least 50.1% of
the shares of Common Stock then beneficially owned by the Employee
Stockholders. In addition to such demand registration rights, any Stockholder
may piggyback on a registration by Holdings at any time (other than
registrations on Forms S-4 or S-8 of the Securities Act), subject to customary
pro rata cutback restrictions. The demand and piggyback registration rights
and obligations survive 20 years.
Furthermore, if the IPO Date has not occurred by the fifth anniversary of
the Securities Purchase Closing Date, Holdings, at the request of (i) any
holders beneficially owning in the aggregate greater than one-third of the
Series C Preferred Stock and Common Stock then outstanding or (ii) AT&T PCS
for so long as it beneficially owns greater than two-thirds of the initial
issuance to AT&T PCS of Series A Preferred Stock, shall undertake a
registration of Common Stock that results in the IPO Date.
Preemptive Rights. The Stockholders' Agreement grants preemptive rights in
certain circumstances to the Stockholders. If, on or prior to the IPO Date,
Holdings proposes to issue any equity security (including in an initial public
offering, but excluding pursuant to any stock option or stock appreciation
rights plan), for cash, each Stockholder shall have a preemptive right to
purchase its pro rata portion of such securities.
Exclusivity. Holdings and the Stockholders have also reached several
agreements regarding operational matters pertaining to the Company. The
Stockholders have agreed that during the term of the Stockholders' Agreement,
none of the Stockholders nor their respective affiliates will provide or
resell, or act as the agent for any person offering, within the Territory (as
defined in the Stockholders' Agreement) mobile wireless telecommunications
services initiated or terminated using TDMA and frequencies licensed by the
FCC ("Company Communications Services"), except AT&T PCS and its affiliates
may (i) resell or act as agent for the Company in connection with the
provision of Company Communications Services, (ii) provide or resell wireless
telecommunications services to or from certain specific locations, and (iii)
resell Company Communications Services for another person in any area where
the Company has not placed a system into commercial service on or prior to the
four and one-half year anniversary of the Securities Purchase Closing Date.
Additionally, with respect to the markets listed on the Roaming Agreement,
each of the Company and AT&T PCS agrees to cause their respective affiliates
in their home carrier capacities to (x) program and direct the programming of
customer equipment so that the other party in its capacity as the serving
carrier is the preferred provider in such markets, and (y) refrain from
inducing any of its customers to change such programming.
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Build-Out. The Company is bound to certain operational obligations,
including meeting the construction requirements set forth in an agreed-upon
minimum build-out plan, ensuring compatibility of the Company's PCS systems
with the majority of systems in the southeastern region of the United States,
satisfying the FCC construction requirements in the Territory, offering
certain core service features with respect to its systems, causing the
Company's systems to comply with AT&T PCS' TDMA quality standards, and
refraining from providing or reselling interexchange services other than
interexchange services that constitute Company Communications Services or that
are procured from AT&T. In the event that the Company materially breaches any
of the foregoing operational obligations or if, in the event AT&T PCS decides
to adopt in a majority of its markets a new technology standard and the
Company declines to adopt such new technology, AT&T PCS may terminate its
exclusivity obligations.
Certain Transactions. In the event a merger, consolidation, asset
acquisition or disposition or other business combination involving (i) AT&T
and (ii) a person that (a) derives from telecommunications businesses annual
revenues in excess of $5 billion, (b) derives less than one-third of its
aggregate revenues from the provision of wireless telecommunications and (c)
owns FCC Licenses to offer (and does offer) mobile wireless telecommunications
services serving more than 25% of the Pops within the Territory (such person,
the "Other Party"), the Company and AT&T have certain rights, including the
following: (i) AT&T may, upon written notice, terminate certain of its
obligations described above under the caption "--Exclusivity" in the portion
of the Territory in which the Other Party owns an FCC License to offer CMRS;
provided, that, upon such termination, the Company has the right to cause AT&T
PCS to exchange (A) certain shares of its Series A Preferred Stock into Series
B Preferred Stock and (B) certain shares of its Series D Preferred Stock (or
Series C Preferred Stock or Common Stock into which such Series D Preferred
Stock has been converted) into Series B Preferred Stock; (ii) if AT&T PCS
proposes to sell, transfer or assign to any non-affiliate any PCS system owned
and operated by AT&T PCS and its affiliates in any of the Charlotte, NC,
Atlanta, GA, Baltimore/Washington, D.C. or Richmond, VA BTAs (the "Subject
Markets"), then AT&T PCS will provide the Company with the opportunity for a
180-day period to have AT&T PCS joint market with the applicable Subject
Markets the portion of the Territory included in the MTA that includes such
Subject Markets.
Without the prior written consent of AT&T PCS, Holdings and its subsidiaries
may not effect any sale of substantially all of the assets of Holdings or any
of its subsidiaries or liquidation, merger or consolidation of Holdings or any
of its subsidiaries, with certain limited exceptions.
Acquisition of Licenses. The Company may acquire cellular licenses that the
Board of Directors has determined are demonstrably superior alternatives to
constructing a PCS system in the applicable area within the Territory,
provided that: (i) a majority of the cellular Pops are within the Territory,
(ii) AT&T PCS and its affiliates do not own CMRS licenses in such area, and
(iii) the Company's ownership of such cellular license will not cause AT&T PCS
or any affiliate to be in breach of any law or contract.
Equipment, Discounts and Roaming. If requested by the Company, AT&T PCS has
agreed to use all commercially reasonable efforts (i) to assist the Company in
obtaining discounts from any vendor with whom the Company is negotiating for
the purchase of any infrastructure equipment or billing services and (ii) to
enable the Company to become a party to the roaming agreements between AT&T
PCS and its affiliates and operators of other cellular and PCS systems.
Resale Agreements. The Company, upon the request of AT&T PCS, will enter
into resale agreements relating to the Territory. The rates, terms and
conditions of service provided by the Company shall be at least as favorable
to AT&T PCS, taken as a whole, as the rates, terms and conditions provided by
the Company to other customers.
Subsidiaries. All of Holdings' subsidiaries must be direct or indirect
wholly-owned subsidiaries of Holdings.
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Amendments. Amendments to the Stockholders' Agreement require the consent of
holders of (i) a majority of the shares of each class of capital stock,
including AT&T PCS, (ii) two-thirds of the Common Stock beneficially owned by
the Cash Equity Investors, and (iii) 60.1% of the Common Stock beneficially
owned by the Employee Stockholders; provided however, that in the event any
party thereto ceases to own any shares of Equity Securities, such party ceases
to be a party to the Stockholders' Agreement and the rights and obligations of
such party thereunder terminates.
Termination. The Stockholders' Agreement terminates upon the earliest to
occur of (i) the written consent of each party thereto, (ii) the eleventh
anniversary of the Securities Purchase Closing Date, and (iii) one Stockholder
owning all the Common Stock; provided, some provisions expire on the IPO Date
and certain consent rights of AT&T PCS expire when it fails to own the
requisite amount of capital stock of Holdings.
License Agreement
Pursuant to the Network Membership License Agreement, dated as of February
4, 1998 (the "License Agreement"), between AT&T Corp. and Operating LLC, AT&T
Corp. has granted to the Company a royalty-free, non-transferable, non-
sublicensable, non-exclusive, limited right and license to use the Licensed
Marks solely in connection with Licensed Activities. The Licensed Marks
include the logo containing the AT&T and globe design and the expression
"Member, AT&T Wireless Services Network." The "Licensed Activities" include
(i) the provision to end-users and resellers, solely within the Territory, of
Company Communications Services on frequencies licensed to the Company for
CMRS provided in accordance with the AT&T Agreements (collectively, the
"Licensed Services") and (ii) marketing and offering the Licensed Services
within the Territory. The License Agreement also grants to the Company the
right and license to use Licensed Marks on certain permitted mobile phones.
Except in certain instances, AT&T has agreed not to grant to any other
person a right or license to provide or resell, or act as agent for any person
offering, Company Communications Services within the Territory under the
Licensed Marks. In all other instances, AT&T reserves for itself the right to
use the Licensed Marks in the providing of its services (subject to its
exclusivity obligations described above), whether within or without the
Territory.
The License Agreement contains numerous restrictions with respect to the use
and modification of any of the Licensed Marks. Furthermore, the Company is
obligated to use commercially reasonable efforts to cause all Licensed
Services marketed and provided using the Licensed Marks to be of comparable
quality to the Licensed Services marketed and provided by AT&T in areas that
are comparable to the Territory taking into account, among other things, the
relative stage of development of the areas. The License Agreement also sets
forth specific testing procedures to determine compliance with these
standards, and affords the Company with a grace period to cure any instances
of alleged noncompliance therewith. Following the cure period, the Company
must cease using the Licensed Marks until the Company is back in compliance.
The Company may not assign or sublicense any of its rights under the License
Agreement; provided, however, that the License Agreement may be, and has been,
assigned to the Company's lenders under the Credit Facility and after the
expiration of any applicable grace and cure periods under the Credit Facility,
such lenders may enforce the Company's rights under the License Agreement and
assign the License Agreement to any person with AT&T's consent.
The term of the License Agreement is for five years (the "Initial Term") and
renews for an additional five-year period if neither party terminates the
Agreement. The License Agreement may be terminated by AT&T at any time in the
event of a significant breach by the Company, including the Company's misuse
of any Licensed Marks, the Company licensing or assigning any of the rights in
the License Agreement, the Company's failure to maintain AT&T's quality
standards or a change in control of the Company occurs. After the Initial
Term, in the event AT&T converts any shares of Series A Preferred Stock into
Common Stock in connection with a transaction described above under the
caption "--Stockholders' Agreement--Certain Transactions," the License
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Agreement terminates on the later of (i) two years from the date of such
conversion and (ii) the then existing expiration date of the License
Agreement. After the Initial Term, AT&T may also terminate the License
Agreement upon the occurrence of certain transactions described above under
the caption "--Stockholders' Agreement--Certain Transactions."
Roaming Agreement
Pursuant to the Intercarrier Roamer Service Agreement, dated as of February
4, 1998 (the "Roaming Agreement"), between AT&T Wireless Service, Inc. (on
behalf of its affiliates) and Operating LLC (on behalf of the Company), each
of AT&T and the Company agrees to provide (each in its capacity as serving
provider, the "Serving Provider") mobile wireless radiotelephone service for
registered customers of the other party's (the "Home Carrier") customers while
such customers are out of the Home Carrier's geographic area and in the
geographic area where the Serving Carrier (itself or through affiliates) holds
a license or permit to construct and operate a mobile wireless radiotelephone
system and station. Each Home Carrier whose customers receive service from a
Serving Carrier shall pay to such Serving Carrier 100% of the Serving
Carrier's charges for wireless service and 100% of pass-through charges (i.e.,
toll or other charges). Each Service Carrier's service charges per minute or
partial minute for the use for the first 3 years will be fixed at a declining
rate, and thereafter will be equal to an adjusted average home rate or such
lower rate as the parties negotiate from time to time. Each Serving Carrier's
toll charges per minute of use for the first 3 years will be fixed at a
declining rate, and thereafter such other rates as the parties negotiate from
time to time.
The Roaming Agreement has a term of 20 years, unless earlier terminated by a
party due to the other party's uncured breach of any term of the Roaming
Agreement, the other party's voluntary liquidation or dissolution or the FCC
revoking or denying renewal of the other party's license or permit to provide
CMRS.
Neither party may assign or transfer the Roaming Agreement or any of its
rights thereunder except to an assignee of all or part of its license or
permit to provide CMRS, provided that such assignee expressly assumes all or
the applicable part of the obligations of such party under the Roaming
Agreement.
Resale Agreement
Pursuant to the terms of the Stockholders' Agreement, the Company is
required to enter into a Resale Agreement, substantially in the form of
Exhibit C to the Securities Purchase Agreement (the "Resale Agreement" and,
together with the Stockholders' Agreement, the License Agreement and the
Roaming Agreement, the "AT&T Agreements"), at the request of AT&T. Pursuant to
the Resale Agreement, AT&T PCS will be granted the right to purchase and
resell on a nonexclusive basis access to and usage of the Company's services
in the Territory. AT&T PCS will pay to the Company the charges, including
usage and roaming charges, associated with services requested by AT&T PCS
under the Resale Agreement. The Company will retain the continuing right to
market and sell its services to customers and potential customers in
competition with AT&T PCS.
The Resale Agreement will have a term of ten years and will renew
automatically for successive one-year periods unless either party elects to
terminate the Resale Agreement. Following the eleventh anniversary of the
Resale Agreement, either party may terminate on 90 day prior written notice.
Furthermore, AT&T PCS may terminate the Resale Agreement at any time for any
reason on 180 days written notice.
Pursuant to the Stockholders' Agreement, Holdings has agreed that the rates,
terms and conditions of service, taken as a whole, provided by the Company to
AT&T PCS pursuant to the Resale Agreement shall be at least as favorable as
(or if permitted by applicable law, superior to) the rates, terms and
conditions of service, taken as a whole, provided by the Company to any other
customer. Without limiting the foregoing, the rate plans offered by the
Company pursuant to the Resale Agreement will be designed to result in a
discounted average actual rate per minute paid by AT&T PCS for service below
the weighted average actual rate per minute billed by the Company to its
customers generally for access and air time.
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Neither party may assign or transfer the Resale Agreement or any of its
rights thereunder without the other party's prior written consent, which will
not be unreasonably withheld, except (a) to an affiliate of that party at the
time of execution of the Resale Agreement, (b) by the Company to any of its
operating subsidiaries, and (c) to the transferee of a party's stock or
substantially all of its assets, provided that all FCC and other necessary
approvals have been received.
OTHER RELATED PARTY TRANSACTIONS
Over the course of fiscal year 1997, Triton Communications LLC, a
predecessor of Triton, incurred certain costs on behalf of Triton Cellular, an
entity affiliated with the Company by virtue of management overlap and sharing
of leased facilities. Such costs totaled $148,100 and will be reimbursed by
Triton Cellular in 1998. See "Risk Factors--Dependence on Key Personnel." In
addition, the Company purchased $22,800 of equipment from Horizon Cellular
Telephone Company, L.P. ("Horizon Cellular"), an entity affiliated with the
Company by virtue of management overlap and the sharing of leased facilities.
On February 3, 1998, the Company entered into the Credit Facility. Certain
affiliates of each of J.P. Morgan Investment Corporation, a holder of
approximately 20% of the issued and outstanding capital stock of the Company,
and CB Capital Investors, a holder of approximately 24% of the issued and
outstanding capital stock of the Company, serve as agent and lenders under the
Credit Facility. Each of the agent and lenders under the Credit Facility have
received customary fees and expenses in connection with the execution of the
Credit Facility.
On February 4, 1998, the Company entered into letter agreements with Messrs.
Clark, Standig and Mears, and Ms. Gallagher in connection with their
employment. Pursuant to such letter agreements they were issued shares of
Common Stock which vest at 20 percent per year over a five year period. See
"Security Ownership."
Through December 31, 1997, the Company had primarily financed its operations
pursuant to Triton LLC's issuance of $1.6 million in aggregate principal
amount of Promissory Notes to the Cash Equity Investors. Upon closing of the
Securities Purchase Agreement, the Cash Equity Investors contributed the
Promissory Notes to the Company in exchange for Series C Preferred Stock
valued at $3.2 million. The contribution of the Promissory Notes resulted in a
$1.2 million charge to the Company's statement of operations in 1997 and will
result in a $0.4 million charge in the first quarter of 1998.
On January 19, 1998, Operating LLC entered into the Master Services
Agreement with Wireless Facilities Inc. ("WFI") pursuant to which WFI will
provide RF design and system optimization support services to the Company. The
Master Services Agreement could result in payments by the Company to WFI of up
to$6.0 million. Mr. Scott Anderson, a director of Holdings, is also a director
of WFI.
On May 4, 1998, the Company consummated the Private Offering pursuant to
which the Company raised net proceeds of approximately $290 million. J.P.
Morgan Securities Inc. and Chase Securities Inc., each an affiliate of
entities that own in the aggregate approximately 48.3% of the outstanding
Series C Preferred Stock, acted as initial purchasers in connection with the
Private Offering and received a placement fee of $6.3 million in connection
therewith.
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DESCRIPTION OF CREDIT FACILITY
On February 3, 1998 (the "Credit Facility Effective Date"), Triton entered
into a $425 million Credit Facility (as amended, the "Credit Facility") with
Holdings, The Chase Manhattan Bank, as Administrative Agent, and certain banks
and other financial institutions party thereto. The Credit Facility provides
for (i) a $175 million senior secured term loan (the "Tranche A Term Loan")
which matures on the date that is eight and one-half years from the Credit
Facility Effective Date, (ii) a $150 million senior secured term loan (the
"Tranche B Term Loan" and, together with the Tranche A Term Loan, the "Term
Loans") which matures on the date that is nine and one-quarter years from the
Credit Facility Effective Date and (iii) a $100 million senior secured
revolving credit facility (the "Revolving Credit Facility" and, together with
the commitments to make the Term Loans, the "Facilities") which matures on the
date that is eight and one-half years from the Credit Facility Effective Date.
The Credit Facility also provides for letters of credit in an aggregate face
amount not to exceed $3 million outstanding at any one time. The commitment to
make loans under the Revolving Credit Facility ("Revolving Credit Loans" and,
together with the Term Loans, the "Loans") automatically and permanently
reduces, beginning on the date that is six years and six months after the
Credit Facility Effective Date, in eight quarterly reductions (the amount of
each of the first two reductions, $5 million, the next four reductions, $10
million, and the last two reductions, $25 million). The Tranche A Term Loans
are required to be repaid, beginning on the date that is four years after the
Credit Facility Effective Date, in eighteen consecutive quarterly installments
(the amount of each of the first four installments, $4,375,000, the next four
installments, $6,562,500, the next four installments, $8,750,000, the next
four installments, $10,937,500, and the last two installments, $26,250,000).
The Tranche B Term Loans are required to be repaid, beginning on the date that
is four years after the Credit Facility Effective Date, in twenty-one
consecutive quarterly installments (the amount of each of the first sixteen
installments, $375,000, the next four installments, $7,500,000, and the last
installment, $114 million). Interest on all Loans accrues, at Triton's option,
either at (i) (a) a LIBO rate multiplied by a fraction, the numerator of which
is the number one and the denominator of which is the number one minus the
aggregate of the maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by the
Board of Governors of the Federal Reserve System which the Administrative
Agent is subject for eurocurrency funding, plus (b) the Applicable Rate (as
defined below) (Loans bearing interest described in (i), "Eurodollar Loans")
or (ii) (a) the higher of (1) the Administrative Agent's prime rate and (2)
the Federal Funds Effective Rate (as defined in the Credit Facility) plus
0.5%, plus (b) the Applicable Rate (Loans bearing interest described in (ii),
"ABR Loans"). Interest on any overdue amounts will be at a rate per annum
equal to 2% plus the rate otherwise applicable to such amount. The Applicable
Rate means, with respect to Tranche B Term Loans, 1.75% per annum, in the case
of an ABR Loan, and 3.00% per annum, in the case of a Eurodollar Loan, and,
with respect to Tranche A Term Loans and Revolving Credit Loans, a rate
between 0.0% to 1.25% per annum (depending on the level of the Company's ratio
of debt to EBITDA), in the case of an ABR Loan, and a rate between 1.00% and
2.25% per annum (depending on the level of the Company's ratio of debt to
EBITDA), in the case of a Eurodollar Loan. The Credit Facility requires an
annual commitment fee of between 0.375% and 0.50% (depending on the level of
the Company's ratio of debt to EBITDA) of the unused portion of the Facilities
payable quarterly in arrears and a separate agent's fee payable to the
Administrative Agent. The Credit Facility also requires Triton to purchase an
interest rate hedging contract covering an amount equal to at least 50% of the
total amount of the outstanding indebtedness of Triton (other than
indebtedness which bears interest at a fixed rate). The Tranche A Term Loans
and funds under the Revolving Credit Facility are not available to Triton
until the Tranche B Term Loans are fully drawn or become unavailable pursuant
to the terms of the Credit Facility.
The Term Loans will be prepaid and commitments under the Revolving Credit
Facility reduced in an aggregate amount equal to (i) 50% of excess cash flow
of each fiscal year commencing the fiscal year ending December 31, 2001, (ii)
100% of the net proceeds of asset sales outside the ordinary course of
business, in excess of a $1 million yearly threshold, or unused insurance
proceeds, (iii) 100% of the net cash proceeds in excess of the initial $150
million of issuances of debt obligations (other than the issuance of the Notes
pursuant to the Private Offering) and (iv) 50% of the net cash proceeds of
issuances of equity securities (other than in connection with the Cash
Equity); provided, that the prepayments and reductions set forth under clauses
(iii) and (iv) will
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not be required if, after giving effect to such issuance, (a) Triton's ratio
of senior debt to EBITDA would be less than 5 to 1 and (b) Triton would be in
pro forma compliance with certain covenants in the Credit Facility. In
addition, in the event (i) the Myrtle Beach Acquisition is not consummated by
October 31, 1998, (ii) the acquisition of the Norfolk Pops is not consummated
by December 31, 1998 or (iii) the acquisition of the Georgia/North Carolina
Pops is not consummated by December 31, 1998, the Company must prepay
obligations under the Term Loans and reduce commitments under the Revolving
Credit Facility in an aggregate amount equal to $125 million, $75 million or
$75 million, respectively.
All obligations of Triton under the Credit Facility are unconditionally and
irrevocably guaranteed (the "Bank Facility Guarantees") by Holdings and each
existing and subsequently acquired or organized domestic subsidiary of Triton.
The Facilities and the Bank Facility Guarantees, and any related hedging
contracts provided by the lenders under the Credit Facility, are secured by
substantially all of the assets of Triton and each existing and subsequently
acquired or organized domestic subsidiary of Triton, including a first
priority pledge of all of the capital stock held by Holdings or Triton, or any
of its subsidiaries; provided that the pledge of shares of foreign
subsidiaries may be limited to 65% of the outstanding shares of such foreign
subsidiaries. The PCS Licenses are held by License LLC, a single purpose
subsidiary of Triton, and have not been pledged to secure the obligations of
Triton under the Credit Facility. Each single purpose subsidiary will not be
allowed by Triton to incur any liabilities or obligations other than the Bank
Facility Guarantee issued by it, the security agreement entered into by it in
connection with the Credit Facility, and, in the case of any single purpose
subsidiary established to hold real estate, liabilities incurred in the
ordinary course of business of such subsidiary which are incident to being the
lessee of real property or the purchaser, owner or lessee of equipment and
taxes and other liabilities incurred in the ordinary course in order to
maintain its existence.
The Credit Facility contains covenants customary for facilities and
transactions similar to the Credit Facility, including covenants relating to
the amounts of indebtedness that Triton may incur, limitations on dividends
and distributions on, and redemptions and repurchases of, capital stock and
other similar payments and various financial maintenance covenants. The Credit
Facility also contains covenants relating to the number of Pops covered by the
Company's network and number of customers and customary representations,
warranties, indemnities, conditions precedent to borrowing, and events of
default.
Loans under the Credit Facility are available to fund capital expenditures
related to the construction of the Company's PCS network, the acquisition of
related businesses, working capital needs of the Company and customer
acquisition costs.
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DESCRIPTION OF NOTES
As used below in this "Description of Notes" section, the "Company" means
Triton PCS, Inc. but not any of its subsidiaries. The Exchange Notes are to be
issued under an Indenture, dated as of May 4, 1998 (the "Indenture"), between
the Company, the Guarantors and PNC Bank, National Association, as Trustee
(the "Trustee"). The Exchange Notes (hereinafter referred to as "Exchange
Notes" or "Notes") will evidence the same indebtedness as the Private Notes
(which they replace) and will be entitled to the benefits of the Indenture.
The form and terms of the Exchange Notes are the same as the form and terms of
the Private Notes except that (i) the Exchange Notes will have been registered
under the Securities Act, and, therefore, the Exchange Notes will not bear
legends restricting the transfer thereof and (ii) Holders of the Exchange
Notes will not be entitled to certain rights of Holders of Private Notes under
the Registration Rights Agreement, which rights will terminate upon the
consummation of the Exchange Offer. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The
Exchange Notes are subject to all such terms, and Holders of the Exchange
Notes are referred to the Indenture and the Trust Indenture Act for a
statement thereof. A copy of the proposed form of the Indenture and the
Registration Rights Agreement described below will be made available to
prospective investors upon request. The statements under this caption relating
to the Exchange Notes, the Indenture and the Registration Rights Agreement are
summaries and do not purport to be complete, and where reference is made to
particular provisions of the Indenture or the Registration Rights Agreement,
such provisions, including the definitions of certain terms, are qualified in
their entirety by such reference.
The Notes will be general unsecured obligations of the Company, limited to
$450 million of gross proceeds, of which $300 million of gross proceeds were
offered in the Private Offering. Additional amounts of Notes may be issued in
one or more series from time to time subject to the limitations set forth
under "Covenants--Limitations on Incurrence of Indebtedness." All such
additional Notes shall be treated as a single series for all purposes under
the Indenture. The Notes will be senior subordinated obligations of the
Company, subordinated in right of payment to all Senior Debt of the Company.
The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple thereof. No service charge
will be made for the 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. Initially, the Trustee
will act as paying agent and registrar for the Notes.
PRINCIPAL, MATURITY AND INTEREST
The Notes will mature on May 1, 2008. Cash interest will not be required to
accrue or be payable on the Notes prior to May 1, 2003. Cash interest will
accrue at the rate per annum shown on the cover page hereof, except as noted
under "--Registration Rights," from May 1, 2003 and will be payable semi-
annually on May 1 and November 1 of each year, commencing November 1, 2003, to
the Person in whose name a Note is registered (a "Holder") at the close of
business on the preceding April 15 or October 15 (each, a "Record Date"), as
the case may be. Cash interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
May 1, 2003. Cash interest on the Notes will be computed on the basis of a
360-day year of twelve 30-day months. Holders must surrender the Notes to the
paying agent for the Notes to collect principal payments. At the Company's
option principal and interest may be paid at the Trustee's corporate trust
office or by check mailed to a holder's registered address.
OPTIONAL REDEMPTION
The Notes will be subject to redemption, at the option of the Company, in
whole or in part, at any time on or after May 1, 2003 and prior to maturity,
upon not less than 30 nor more than 60 days' notice mailed to each Holder of
Notes to be redeemed at its address appearing in the register for the Notes,
in amounts of $1,000 or an integral multiple of $1,000, at the following
redemption prices (expressed as percentages of principal amount), plus accrued
interest, if any, to but excluding the date fixed for redemption (subject to
the right of Holders on
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the relevant Record Date to receive interest, if any, due on an interest
payment date that is on or prior to the date fixed for redemption), if
redeemed during the 12-month period beginning on May 1 of the years indicated:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003........................................................... 105.50%
2004........................................................... 103.67%
2005........................................................... 101.84%
2006 and thereafter............................................ 100.00%
</TABLE>
In addition, on or prior to May 1, 2001, the Issuers may redeem up to 35% of
the principal amount at maturity of Notes issued under the Indenture at a
redemption price equal to 111% of the Accreted Value to the redemption date
with the net proceeds of one or more Equity Offerings of Qualified Stock of
(i) the Company, (ii) Triton PCS Holdings, Inc. or (iii) a special purpose
corporation (a "Special Purpose Corporation") formed to own Qualified Stock of
the Company or Triton PCS Holdings, Inc., in any such case; provided that at
least 65% of the aggregate principal amount at maturity of Notes issued under
the Indenture would remain outstanding immediately after giving effect to such
redemption. Notice of redemption pursuant to this paragraph must be mailed to
holders of Notes not later than 60 days following the consummation of the
relevant Equity Offering.
Selection of Notes for any partial redemption shall be made by the Trustee,
in accordance with the rules of any national securities exchange on which the
Notes may be listed or, if the Notes are not so listed, pro rata or by lot or
in such other manner as the Trustee shall deem appropriate and fair. Notes in
denominations larger than $1,000 may be redeemed in part but only in integral
multiples of $1,000. Notice of redemption will be mailed before the date fixed
for redemption to each holder of Notes to be redeemed at his or her registered
address. On and after the date fixed for redemption, interest will cease to
accrue on Notes or portions thereof called for redemption.
The Notes will not have the benefit of any sinking fund.
RANKING
The Company's obligations with respect to the payment of the principal of,
premium, if any, and interest (including Additional Interest) on, and all
other obligations in respect of each and all of the Notes shall be
subordinated in right of payment, to the extent and in the manner provided in
the Indenture, to the prior payment in full in cash of all existing and future
Senior Debt of the Company.
Upon any payment or distribution of assets or securities of the Company of
any kind or character (whether in cash, property or securities), upon any
total or partial dissolution or winding up or total or partial liquidation or
reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due or
to become due with respect to Senior Debt of the Company (including any
interest accruing subsequent to an event of bankruptcy regardless of whether
such interest is an allowed claim enforceable against the debtor under the
Bankruptcy Code) shall first be paid in full in cash, before the Holders or
the Trustee on their behalf shall be entitled to receive any Note Payment (as
defined below). Before any Note Payment may be made by, or on behalf of, the
Company of the principal of, premium, if any, or interest (including
Additional Interest) on, or any other obligation in respect of, the Notes upon
any such dissolution or winding up or liquidation or reorganization, any
payment or distribution of assets or securities of the Company of any kind or
character, whether in cash, property or securities, to which the Holders or
the Trustee on their behalf would be entitled, but for the subordination
provisions of the Indenture, shall be made by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, directly to the holders of Senior Debt of the Company
(pro rata to such holders on the basis of the respective amounts of Senior
Debt held by such holders) or their representatives or to the trustee or
trustees under any indenture pursuant to which any such Senior Debt may have
been issued as their respective interests may appear, to the extent necessary
to pay all such Senior Debt in full, in cash, after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders
of such Senior Debt.
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No direct or indirect payment, deposit or distribution of any kind or
character, whether in cash, property or securities (including any payment made
to Holders of the Notes under the terms of Indebtedness subordinated to the
Notes, but excluding any payment or distribution of Permitted Junior
Securities) by or on behalf of the Company of principal of, premium, if any,
or interest (including Additional Interest) on, or any other obligation in
respect of, the Notes (other than payments to Holders from funds held in trust
for the benefit of Holders), whether pursuant to the terms of the Notes or
upon acceleration, by way of repurchase, redemption, defeasance or otherwise
(all such payments, deposits or distributions being referred to herein,
individually and collectively, as a "Note Payment"), shall be made if, at the
time of such Note Payment, there exists a default in the payment when due of
all or any portion of the obligations under or in respect of any Designated
Senior Debt, whether at maturity, on account of mandatory redemption or
prepayment, acceleration or otherwise, and such default shall not have been
cured or waived or the benefits of this sentence waived by or on behalf of the
holders of such Designated Senior Debt. In addition, during the continuance of
any non-payment default or non-payment event of default with respect to any
Designated Senior Debt pursuant to which the maturity thereof may be
accelerated, and upon receipt by the Trustee of notice (a "Payment Blockage
Notice") from a holder or holders of such Designated Senior Debt or the
trustee or agent acting on behalf of such Designated Senior Debt, then, unless
and until such default or event of default has been cured or waived or has
ceased to exist or such Designated Senior Debt has been discharged or repaid
in full, in cash, no Note Payment may be made by or on behalf of the Company
on account of or with respect to the Notes, except payments to Holders from
funds held in trust for the benefit of Holders, during a period (a "Payment
Blockage Period") commencing on the date of receipt of such Payment Blockage
Notice by the Trustee and ending 179 days thereafter. Notwithstanding anything
herein to the contrary, (x) in no event will a Payment Blockage Period extend
beyond 179 days from the date of the Payment Blockage Notice in respect
thereof was given and (y) there must be 180 days in any 360 day period during
which no Payment Blockage Period is in effect. Not more than one Payment
Blockage Period may be commenced with respect to the Notes during any period
of 360 consecutive days. No default or event of default that existed or was
continuing on the date of commencement of any Payment Blockage Period with
respect to the Designated Senior Debt initiating such Payment Blockage Period
may be, or be made, the basis for the commencement of any other Payment
Blockage Period by the holder or holders of such Designated Senior Debt or the
trustee or agent acting on behalf of such Designated Senior Debt, whether or
not within a period of 360 consecutive days, unless such default or event of
default has been cured or waived for a period of not less than 90 consecutive
days.
The failure to make any payment or distribution for or on account of the
Notes by reason of the provisions of the Indenture described under this
section will not be construed as preventing the occurrence of an Event of
Default described in clause (a), (b) or (c) of the first paragraph under "--
Events of Default."
By reason of the subordination provisions described above, in the event of
insolvency of the Company, funds which would otherwise be payable to Holders
will be paid to holders of Senior Debt of the Company to the extent necessary
to repay such Senior Debt in full, and the Company may be unable to fully meet
its obligations with respect to the Notes. Subject to the restrictions set
forth in the Indenture, in the future the Company may incur additional Senior
Debt.
At March 31, 1998, on a pro forma basis, there would have been approximately
$75 million of Senior Debt of the Company outstanding.
THE GUARANTEES
The Indenture provides that the Guarantors will, jointly and severally,
unconditionally guarantee on a senior subordinated basis all of the
obligations of the Company under the Indenture, including its obligation to
pay principal, premium, if any, and interest (including Additional Interest)
with respect to the Notes. The obligation of each Guarantor is limited to the
maximum amount which, after giving effect to all other contingent and fixed
liabilities of such Guarantor, will result in the obligations of such
Guarantor under the Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law.
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The Company will not permit any Subsidiary to become a direct or indirect
obligor under, or in respect of, any Senior Credit Facilities without causing
such Subsidiary to become a Guarantor. Any such Subsidiary shall (a) execute
and deliver a supplemental indenture in form reasonably satisfactory to the
Trustee pursuant to which such Subsidiary shall unconditionally guarantee all
of the Company's obligations under the Notes and the Indenture on the terms
set forth in the Indenture and (b) deliver to the Trustee an opinion of
counsel that such supplemental indenture has been duly authorized, executed
and delivered by such Subsidiary and constitutes a valid and legally binding
and enforceable obligation of such Subsidiary.
Any Guarantor that is no longer a direct or indirect obligor (including as a
guarantor) under, or in respect of, all Senior Credit Facilities shall be
released from its Guarantee upon delivery of an Officers' Certificate to the
Trustee certifying to such effect.
In addition, the Indenture provides that if all of the Capital Stock of a
Guarantor is sold (including by issuance or otherwise) by the Company or any
Subsidiary in a transaction constituting an Asset Disposition (or which, but
for the provisions of clause (c) of such term, would constitute an Asset
Disposition), and (x) the Net Available Proceeds from such Asset Dispositions
are used in accordance with the covenant described under "--Covenants--
Limitation on Certain Asset Dispositions" or (y) the Company delivers to the
Trustee an Officers' Certificate to the effect that the Net Available Proceeds
from such Asset Disposition will be used in accordance with the covenant
described under "--Covenants--Limitation on Certain Asset Dispositions" within
the time limits specified by such covenant, then such Guarantor shall be
released and discharged from its Guarantee obligations upon such use in the
case of clause (x) or upon such delivery in the case of clause (y).
The Company may, at its option, cause any of its Subsidiaries to be a
Guarantor.
The obligations of each Guarantor under its Guarantee are subordinated in
right of payment to the prior payment in full of all Senior Debt of such
Guarantor on the same basis as the obligations of the Company on the Notes are
subordinated to Senior Debt of the Company. Each Guarantee will rank pari
passu in right of payment with any other senior subordinated indebtedness of
the Guarantor and senior in right of payment to any future Subordinated
Indebtedness of each Guarantor.
COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Incurrence of Indebtedness
The Indenture provides that the Company will not, and will not cause or
permit any Restricted Subsidiary to, directly or indirectly, Incur any
Indebtedness (including Acquired Indebtedness), except:
(i) Indebtedness of the Company, if immediately after giving effect to
the Incurrence of such Indebtedness and the receipt and application of the
net proceeds thereof (including, without limitation, the application or use
of the net proceeds therefrom to repay Indebtedness, consummate an Asset
Acquisition or make any Restricted Payment), (a) the ratio of (x) Total
Consolidated Indebtedness to (y) Annualized Pro Forma Consolidated
Operating Cash Flow would be less than (i) 7.0 to 1.0, if the Indebtedness
is to be incurred prior to July 1, 2004, or (ii) 6.0 to 1.0 if the
Indebtedness is to be incurred on or after July 1, 2004, or (b) in the case
of any incurrence of Indebtedness prior to July 1, 2004 only, Total
Consolidated Indebtedness would be equal to or less than 75% of Total
Invested Capital;
(ii) Indebtedness of the Company and the Restricted Subsidiaries Incurred
under one or more Senior Credit Facilities in an aggregate principal amount
at any one time outstanding not to exceed $425.0 million in the aggregate
for all such Senior Credit Facilities;
(iii) Indebtedness of the Company and its Restricted Subsidiaries
outstanding from time to time pursuant to any Vendor Credit Arrangement;
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(iv) Indebtedness owed by the Company to any Restricted Subsidiary or
Indebtedness owed by a Restricted Subsidiary to the Company or another
Restricted Subsidiary; provided, however, that upon either (x) the transfer
or other disposition by such Restricted Subsidiary or the Company of any
Indebtedness so permitted under this clause (iv) to a Person other than the
Company or another Restricted Subsidiary or (y) the issuance (other than
directors' qualifying shares), sale, transfer or other disposition of
shares of Capital Stock or other ownership interests (including by
consolidation or merger) of such Restricted Subsidiary to a Person other
than the Company or another such Restricted Subsidiary, the exception
provided by this clause (iv) shall no longer be applicable to such
Indebtedness and such Indebtedness shall be deemed to have been Incurred at
the time of any such issuance, sale, transfer or other disposition, as the
case may be;
(v) Indebtedness of the Company or any Restricted Subsidiary under any
interest rate agreement to the extent entered into to protect the Company
or such Restricted Subsidiary from fluctuations in interest rates on any
other Indebtedness permitted under the Indenture (including the Notes) and
not for speculative purposes;
(vi) Indebtedness Incurred to Refinance any Indebtedness Incurred under
the prior clause (i) or (iii) above, the Notes or the Guarantees; provided,
however, that (x) such Indebtedness does not exceed the principal amount
(or accreted value, if less) of the Indebtedness so Refinanced plus the
amount of any premium required to be paid in connection with such
Refinancing pursuant to the terms of the Indebtedness being Refinanced or
the amount of any premium reasonably determined by the issuer of such
Indebtedness as necessary to accomplish such Refinancing by means of a
tender offer, exchange offer, or privately negotiated repurchase, plus the
expenses of such issuer reasonably incurred in connection therewith and
(y)(1) in the case of any Refinancing of Indebtedness that is pari passu
with the Notes, such Refinancing Indebtedness is made pari passu with or
subordinate in right of payment to the Notes, and, in the case of any
Refinancing of Indebtedness that is subordinate in right of payment to the
Notes, such Refinancing Indebtedness is subordinate in right of payment to
the Notes on terms no less favorable to the Holders than those contained in
the Indebtedness being Refinanced, (2) in either case, the Refinancing
Indebtedness by its terms, or by the terms of any agreement or instrument
pursuant to which such Indebtedness is issued, does not have an Average
Life that is less than the remaining Average Life of the Indebtedness being
Refinanced and (3) any Indebtedness Incurred to Refinance any Indebtedness
is Incurred by the obligor on the Indebtedness being Refinanced or by the
Company;
(vii) Indebtedness of the Company under the Exchange Notes and
Indebtedness of the Guarantors under the Guarantee incurred in accordance
with the Indenture;
(viii) Capital Lease Obligations of the Company or any Restricted
Subsidiary with respect to the leasing by the Company or any Restricted
Subsidiary of tower sites and equipment that is a fixture thereto;
provided, that such Capital Lease Obligations shall not exceed $25 million
in aggregate principal amount at any time outstanding;
(ix) Indebtedness of the Company or any Restricted Subsidiary consisting
of a guarantee of Indebtedness of the Company or a Restricted Subsidiary of
the Company that was permitted to be incurred by another provision of this
covenant;
(x) Indebtedness of the Company or any Restricted Subsidiary in respect
of statutory obligations, performance, surety or appeal bonds or other
obligations of a like nature incurred in the ordinary course of business;
and
(xi) Indebtedness of the Company not otherwise permitted to be Incurred
pursuant to clauses (i) through (x) above which, together with any other
outstanding Indebtedness Incurred pursuant to this clause (xi), has an
aggregate principal amount not in excess of $75 million at any time
outstanding.
Indebtedness of a person existing at the time such person becomes a
Restricted Subsidiary or which is secured by a Lien on an asset acquired by
the Company or a Restricted Subsidiary (whether or not such Indebtedness is
assumed by the acquiring person) shall be deemed incurred at the time the
person becomes a Restricted Subsidiary or at the time of the asset
acquisition, as the case may be.
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For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories
of Indebtedness permitted pursuant to clauses (i) through (xi) above, the
Company is, in its sole discretion, permitted to classify such item of
Indebtedness in any manner that complies with this covenant and may from time
to time reclassify such item of Indebtedness in any manner that would comply
with this covenant at the time of such reclassification. Accrual of interest
and the accretion of accreted value will not be deemed to be an incurrence of
Indebtedness for purposes of this covenant.
LIMITATION ON LAYERED DEBT
The Indenture provides that the Company will not (i) directly or indirectly,
Incur any Indebtedness that by its terms would expressly rank senior in right
of payment to the Notes and rank subordinate in right of payment to any other
Indebtedness of the Company and (ii) cause or permit any Guarantor to, and no
Guarantor will, directly or indirectly, incur any Indebtedness that by its
terms would expressly rank senior in right of payment to the Guarantee of such
Guarantor and rank subordinate in right of payment to any other Indebtedness
of such Guarantor; provided, that no Indebtedness shall be deemed to be
subordinated solely by virtue of being unsecured.
LIMITATION ON RESTRICTED PAYMENTS
The Indenture provides that the Company will not, and will not cause or
permit any Restricted Subsidiary to, directly or indirectly, on or prior to
December 31, 2000:
(i) declare or pay any dividend, or make any distribution of any kind or
character (whether in cash, property or securities), in respect of any
class of Capital Stock of the Company, excluding any dividends or
distributions payable solely in shares of Qualified Stock of the Company or
in options, warrants or other rights to acquire Qualified Stock of the
Company,
(ii) purchase, redeem, or otherwise acquire or retire for value any
shares of Capital Stock of the Company, any options, warrants or rights to
purchase or acquire such shares or any securities convertible or
exchangeable into such shares (other than any such shares of Capital Stock,
options, warrants, rights or securities that are owned by the Company or a
Restricted Subsidiary),
(iii) make any Investment (other than a Permitted Investment) in, any
Person, other than the Company or a Restricted Subsidiary, or
(iv) redeem, defease, repurchase, retire or otherwise acquire or retire
for value, prior to its scheduled maturity, repayment or any sinking fund
payment, Subordinated Indebtedness (each of the transactions described in
clauses (i) through (iv) (other than any exception to any such clause)
being a "Restricted Payment");
and at any time after December 31, 2000, the Company will not, and will not
cause or permit any Restricted Subsidiary to, directly or indirectly, make a
Restricted Payment if, at the time thereof:
(1) a Default or an Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Restricted
Payment,
(2) immediately after giving effect to such Restricted Payment, the
Company could not Incur at least $1.00 of additional Indebtedness pursuant
to clause (i) of "--Limitation on Incurrence of Indebtedness" above, and
(3) immediately upon giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments declared or made on or after
the Issue Date (including any Designation Amount) exceeds the sum (without
duplication) of: (i) the amount of (x) the Consolidated Cash Flow of the
Company after December 31, 2000, through the end of the latest full fiscal
quarter for which consolidated financial statements of the Company are
available preceding the date of such Restricted Payment (treated as a
single accounting period) less (y) 150% of the cumulative Consolidated
Interest Expense of the Company after December 31, 2000, through the end of
the latest full fiscal quarter for which consolidated financial statements
of the Company
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are available preceding the date of such Restricted Payment (treated as a
single accounting period), plus (ii) the aggregate net cash proceeds (other
than Excluded Cash Proceeds) received by the Company as a capital
contribution in respect of Qualified Stock or from the proceeds of a sale
of Qualified Stock made after the Issue Date (excluding in each case (x)
the proceeds from a sale of Qualified Stock to a Restricted Subsidiary and
(y) the proceeds from a sale, other than from a Public Sale, of Qualified
Stock the proceeds of which are applied to optionally redeem Notes on or
prior to May 1, 2001), plus (iii) the aggregate net cash proceeds received
by the Company or any Restricted Subsidiary from the sale, disposition or
repayment (other than to the Company or a Restricted Subsidiary) of any
Investment made after the Issue Date and constituting a Restricted Payment
in an amount equal to the lesser of (x) the return of capital with respect
to such Investment and (y) the initial amount of such Investment, in either
case, less the cost of disposition of such Investment, plus (iv) an amount
equal to the consolidated net Investment on the date of Revocation made by
the Company and/or any of the Restricted Subsidiaries in any Subsidiary
that has been designated as an Unrestricted Subsidiary after the Issue Date
upon its redesignation as a Restricted Subsidiary in accordance with the
covenant described under "--Limitation on Designations of Unrestricted
Subsidiaries." For purposes of the preceding clause (ii), the value of the
aggregate net cash proceeds received by the Company from, or as a capital
contribution in connection with, the issuance of Qualified Stock either
upon the conversion of convertible Indebtedness of the Company or any of
its Restricted Subsidiaries or in exchange for outstanding Indebtedness of
the Company or any of its Restricted Subsidiaries or upon the exercise of
options, warrants or rights will be the net cash proceeds received by the
Company or any of its Restricted Subsidiaries upon the issuance of such
Indebtedness, options, warrants or rights plus the incremental amount
received by the Company or any of its Restricted Subsidiaries upon the
conversions, exchange or exercise thereof. For purposes of the preceding
clause (iv), the value of the consolidated net Investment on the date of
Revocation shall be equal to the Fair Market Value of the aggregate amount
of the Company's and/or any Restricted Subsidiary's Investments in such
Subsidiary on the applicable date of Designation.
For purposes of determining the amount expended for Restricted Payments,
cash distributed shall be valued at the face amount thereof and property other
than cash shall be valued at its Fair Market Value on the date such Restricted
Payment is made by the Company or a Restricted Subsidiary, as the case may be.
The provisions of this covenant do not prohibit (i) the payment of any
dividend or distribution within 60 days after the date of declaration thereof,
if at such date of declaration such payment would comply with the provisions
of the Indenture; (ii) so long as no Default or Event of Default shall have
occurred and be continuing, the purchase, redemption, retirement or other
acquisition of any Capital Stock of the Company out of the net cash proceeds
of the substantially concurrent capital contribution to the Company in
connection with Qualified Stock or out of the net cash proceeds received by
the Company from the substantially concurrent issue or sale (other than to a
Restricted Subsidiary) of Qualified Stock; provided that (x) any such net cash
proceeds shall be excluded from clause (3)(ii) of the second preceding
paragraph, (y) such proceeds do not constitute Excluded Cash Proceeds and (z)
such proceeds, if from a sale other than a Public Sale, are not applied to
optionally redeem Notes on or prior to May 1, 2001; (iii) so long as no
Default or Event of Default shall have occurred and be continuing, the
purchase, redemption, retirement, defeasance or other acquisition of
Subordinated Indebtedness of the Company made by exchange for or conversion
into, or out of the net cash proceeds received by the Company, or out of a
capital contribution to the Company in connection with a concurrent issue and
sale (other than to a Restricted Subsidiary) of (a) Qualified Stock (provided
that (x) any such net cash proceeds are excluded from clause (3)(ii) of the
second preceding paragraph, (y) such proceeds do not constitute Excluded Cash
Proceeds and (z) such proceeds, if from a sale other than a Public Sale, are
not applied to optionally redeem Notes on or prior to May 1, 2001) or (b)
other Subordinated Indebtedness of the Company that has an Average Life equal
to or greater than the Average Life of the Subordinated Indebtedness being
purchased, redeemed, retired, defeased or otherwise acquired; (iv) so long as
no Default or Event of Default shall have occurred and be continuing, the
making of a direct or indirect Investment constituting a Restricted Payment in
an amount not to exceed the amount of the proceeds of a concurrent capital
contribution in respect of Qualified Stock or from the issue or sale (other
than to a Restricted Subsidiary) of Qualified Stock of the Company; provided
that (x) any such net cash proceeds are excluded from clause (3)(ii) of the
second preceding paragraph, (y) such proceeds do
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not constitute Excluded Cash Proceeds and (z) such proceeds, if from a sale
other than a Public Sale, are not applied to optionally redeem Notes on or
prior to May 1, 2001; or (v) so long as no Default or Event of Default has
occurred and is continuing, dividends or distributions by the Company to
Triton PCS Holdings, Inc. to be used to repurchase, redeem, acquire or retire
for value any Capital Stock of Triton PCS Holdings, Inc. held by any member of
management of Triton PCS Holdings, Inc., the Company or any of its
Subsidiaries pursuant to any management equity subscription agreement, stock
option agreement or other similar agreement; provided that (x) the aggregate
amount of such dividends or distributions shall not exceed $2.0 million in any
twelve-month period and (y) any unused amount in any twelve-month period may
be carried forward to one or more future periods.
Restricted Payments made pursuant to clauses (i) and (v) of the immediately
preceding paragraph shall be included in making the determination of available
amounts under clause (3) of the third preceding paragraph and Restricted
Payments made pursuant to clauses (ii), (iii) and (iv) of the immediately
preceding paragraph shall not be included in making the determination of
available amounts under clause (3) of the third preceding paragraph.
LIMITATION ON RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
The Indenture provides that the Company will not, and will not cause or
permit any Restricted Subsidiary to, directly or indirectly, create or
otherwise cause or suffer to exist any consensual encumbrance or restriction
of any kind on the ability of any Restricted Subsidiary to (i) pay, directly
or indirectly, dividends, in cash or otherwise, or make any other
distributions in respect of its Capital Stock or pay any Indebtedness or other
obligation owed to the Company or any other Restricted Subsidiary, (ii) make
any Investment in the Company or any other Restricted Subsidiary or (iii)
transfer any of its property or assets to the Company or any other Restricted
Subsidiary, except for such encumbrances or restrictions existing under or by
reason of (a) any agreement in effect on the Issue Date as any such agreement
is in effect on such date, (b) any Senior Credit Facilities, (c) any agreement
relating to any Indebtedness Incurred by such Restricted Subsidiary prior to
the date on which such Restricted Subsidiary was acquired by the Company and
outstanding on such date and not Incurred in anticipation or contemplation of
becoming a Restricted Subsidiary; provided, however, that such encumbrance or
restriction shall not apply to any property or assets of the Company or any
Restricted Subsidiary other than such Restricted Subsidiary, (d) customary
provisions contained in an agreement which has been entered into for the sale
or disposition of all or substantially all of the Capital Stock or assets of a
Restricted Subsidiary; provided, however, that such encumbrance or restriction
is applicable only to such Restricted Subsidiary or its property and assets,
(e) any agreement effecting a Refinancing or amendment of Indebtedness
Incurred pursuant to any agreement referred to in clause (a) above; provided,
however, that the provisions contained in such Refinancing or amendment
agreement relating to such encumbrance or restriction are no more restrictive
in any material respect than the provisions contained in the agreement that is
the subject thereof in the reasonable judgment of (i) the Board of Triton PCS
Holdings, Inc. if, at the time of such Refinancing or amendment, the Company
is a Subsidiary of Triton PCS Holdings, Inc. or (ii) the Board of the Company
if, at the time of such Refinancing or amendment, the Company is not a
Subsidiary of Triton PCS Holdings, Inc., (f) the Indenture, (g) applicable law
or any applicable rule, regulation or order, (h) customary provisions
restricting subletting or assignment of any lease governing any leasehold
interest of any Restricted Subsidiary, (i) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions
of the type referred to in clause (iii) of this covenant; (j) restrictions of
the type referred to in clause (iii) of this covenant contained in security
agreements securing Indebtedness of a Restricted Subsidiary to the extent that
such Liens were otherwise incurred in accordance with "--Limitation on Liens"
below and restrict the transfer of property subject to such agreements; or (k)
customary provisions in joint venture agreements and other similar agreements
entered into in the ordinary course of business.
LIMITATION ON LIENS
The Indenture provides that the Company will not, and will not cause or
permit any Restricted Subsidiary to, directly or indirectly, create, cause,
incur or suffer to exist any Lien on or with respect to the Capital Stock or
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any property or assets of the Company or such Restricted Subsidiary owned on
the Issue Date or thereafter created or acquired to secure any Indebtedness,
without making, or causing such Restricted Subsidiary to make, effective
provision for securing the Notes and all other amounts due under the Indenture
equally and ratably with such Indebtedness or, in the event such Indebtedness
is Subordinated Indebtedness, prior to such Indebtedness, as to such property
or assets for so long as such Indebtedness shall be so secured.
The foregoing restrictions do not apply to (i) Liens existing on the Issue
Date securing Indebtedness existing on the Issue Date; (ii) Liens securing
Senior Debt (including Liens securing Indebtedness under any Senior Credit
Facilities) and any guarantees thereof to the extent that the Indebtedness
secured thereby is permitted to be incurred under the covenant described under
"--Limitation on Incurrence of Indebtedness" above; (iii) Liens securing only
the Notes and the Guarantees, if any; (iv) Liens in favor of the Company or
any Guarantor; (v) Liens to secure Indebtedness Incurred in connection with
Vendor Credit Arrangements; (vi) Liens on property existing immediately prior
to the time of acquisition thereof (and not created in connection with or in
anticipation or contemplation of the financing of such acquisition); (vii)
Liens on property of a Person existing at the time such Person is acquired or
merged with or into or consolidated with the Company or any such Restricted
Subsidiary (and not created in connection with or in anticipation or
contemplation thereof); (viii) Liens to secure the performance of statutory
obligations, surety or appeal bonds or bid or performance bonds, or
landlords', carriers', warehousemen's, mechanics', suppliers', materialmen's
or other similar Liens, in any case incurred in the ordinary course of
business and with respect to amounts not yet delinquent or being contested in
good faith by appropriate process of law, if a reserve or other appropriate
provision, if any, as is required by GAAP shall have been made therefor; (ix)
Liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision that shall be required in conformity
with GAAP shall have been made therefor; (x) Liens to secure Indebtedness
Incurred to Refinance, in whole or in part, any Indebtedness secured by Liens
referred to in the foregoing clauses (i)-(ix) so long as such Liens do not
extend to any additional category of property and the principal amount of
Indebtedness so secured is not increased except for the amount of any premium
required to be paid in connection with such Refinancing pursuant to the terms
of the Indebtedness Refinanced or the amount of any premium reasonably
determined by the Company as necessary to accomplish such Refinancing by means
of a tender offer, exchange offer or privately negotiated repurchase, plus the
expenses of the issuer of such Indebtedness reasonably incurred in connection
with such Refinancing; and (xi) Liens in favor of the Trustee as provided for
in the Indenture on money or property held or collected by the Trustee in its
capacity as Trustee.
LIMITATION ON CERTAIN ASSET DISPOSITIONS
The Indenture provides that the Company will not, and will not cause or
permit any Restricted Subsidiary to, directly or indirectly, make any Asset
Dispositions unless: (i) the Company or such Restricted Subsidiary, as the
case may be, receives consideration for such Asset Disposition at least equal
to the fair market value of the assets sold or disposed of as determined by
either (x) the Board of Triton PCS Holdings, Inc., if at the time of such
Asset Disposition, the Company is a Subsidiary of Triton PCS Holdings, Inc. or
(y) the Board of the Company if, at the time of such Asset Disposition, the
Company is not a Subsidiary of Triton PCS Holdings, Inc., in good faith and
evidenced by a resolution of such Board filed with the Trustee; (ii) other
than in the case of a Permitted Asset Swap, not less than 75% of the
consideration received by the Company or such Restricted Subsidiary from the
disposition consists of (x) cash or Cash Equivalents, (y) the assumption of
Indebtedness (other than non-recourse Indebtedness or any Subordinated
Indebtedness) of the Company or such Restricted Subsidiary or other
obligations relating to such assets (accompanied by the irrevocable
unconditional release of the Company or such Restricted Subsidiary from all
liability on the Indebtedness or other obligations assumed) or (z) notes or
other obligations received by the Company or such Restricted Subsidiary from
such transferee that are converted by the Company or such Restricted
Subsidiary into cash concurrently with the receipt of such notes or other
obligations (to the extent of the cash actually received by the Company); and
(iii) all Net Available Proceeds, less any amounts invested within 365 days of
such Asset Disposition to acquire all or substantially all of the assets of,
or a majority of the Voting Stock of, an entity primarily engaged in a
Permitted Business, to
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make a capital expenditure or to acquire other long-term assets that are used
or useful in a Permitted Business, are applied, on or prior to the 365th day
after such Asset Disposition, unless and to the extent that the Company shall
determine to make an Offer to Purchase, to the permanent reduction and
prepayment of any Senior Debt of the Company then outstanding (including a
permanent reduction of the commitments in respect thereof). Any Net Available
Proceeds from any Asset Disposition which is subject to the immediately
preceding sentence that are not applied as provided in the immediately
preceding sentence shall be used promptly after the expiration of the 365th
day after such Asset Disposition (or earlier if the Company so elects), to
make an Offer to Purchase outstanding Notes at a purchase price in cash equal
to (a) 100% of the Accreted Value on the Purchase Date, if such Purchase Date
is on or before May 1, 2003 and (b) 100% of the principal amount at maturity
plus accrued and unpaid interest to the Purchase Date, if such Purchase Date
is after May 1, 2003. Notwithstanding the foregoing, the Company may defer
making any Offer to Purchase outstanding Notes until there are aggregate
unutilized Net Available Proceeds from Asset Dispositions otherwise subject to
the two immediately preceding sentences equal to or in excess of $15.0 million
(at which time, the entire unutilized Net Available Proceeds from Asset
Dispositions otherwise subject to the two immediately preceding sentences, and
not just the amount in excess of $15.0 million, shall be applied as required
pursuant to this paragraph). Any remaining Net Available Proceeds following
the completion of the required Offer to Purchase may be used by the Company
for any other purpose (subject to the other provisions of the Indenture) and
the amount of Net Available Proceeds then required to be otherwise applied in
accordance with this covenant shall be reset to zero. These provisions will
not apply to a transaction consummated in compliance with the provisions of
the Indenture described under "--Mergers, Consolidations and Certain Sales of
Assets" below.
Pending application as set forth above, the Net Available Proceeds of any
Asset Disposition may be invested in Cash or Cash Equivalents or used to
reduce temporarily Indebtedness outstanding under any revolving credit
agreement to which the Company is a party and pursuant to which it has
incurred Indebtedness.
In the event that the Company makes an Offer to Purchase the Notes, the
Company shall comply with any applicable securities laws and regulations,
including any applicable requirements of Section 14(e) of, and Rule 14e-1
under, the Exchange Act.
LIMITATION ON TRANSACTIONS WITH AFFILIATES
The Indenture provides that the Company will not, and will not cause or
permit any Restricted Subsidiary to, directly or indirectly, conduct any
business or enter into, renew or extend any transaction with any of their
respective Affiliates or any beneficial holder of 10% or more of any class of
Capital Stock of the Company or Triton PCS Holdings, Inc., including, without
limitation, the purchase, sale, lease or exchange of property, the rendering
of any service, or the making of any guarantee, loan, advance or Investment,
either directly or indirectly, unless the terms of such transaction are at
least as favorable as the terms that could be obtained at such time by the
Company or such Restricted Subsidiary, as the case may be, in a comparable
transaction made on an arms'-length basis with a Person that is not such an
Affiliate; provided, however, that (x) in any transaction involving aggregate
consideration in excess of $10.0 million, the Company shall deliver an
officer's certificate to the Trustee stating that a majority of the
disinterested directors of either (i) the Board of Triton PCS Holdings, Inc.
if, at the time of such transaction, the Company is a Subsidiary of Triton PCS
Holdings, Inc. or (ii) the Board of the Company if, at the time of such
transaction, the Company is not a Subsidiary of Triton PCS Holdings, Inc.,
have determined, in their good faith judgment, that the terms of such
transaction are at least as favorable as the terms that could be obtained by
the Company or such Restricted Subsidiary, as the case may be, in a comparable
transaction made on an arm's-length basis between unaffiliated parties and
(y), if the aggregate consideration is in excess of $25.0 million, the Company
shall also deliver to the Trustee, prior to the consummation of the
transaction, the favorable written opinion of a nationally recognized
accounting, appraisal or investment banking firm as to the fairness of the
transaction to the Holders of the Notes, from a financial point of view.
Notwithstanding the foregoing, the restrictions set forth in this covenant
do not apply to (i) transactions between or among Company and/or any
Restricted Subsidiaries, (ii) any Restricted Payment or Permitted
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Investment permitted by the covenant described under "--Limitation on
Restricted Payments," (iii) directors' fees, indemnification and similar
arrangements, officers' indemnification, employee stock option or employee
benefit plans and employee salaries and bonuses paid or created in the
ordinary course of business, (iv) any other agreement in effect on the Issue
Date, as the same shall be amended from time to time; provided that any
material amendment shall be required to comply with the provisions of the
preceding paragraph of this covenant, (v) transactions with AT&T Corp.or any
of its Affiliates (collectively, "AT&T") relating to the marketing or
provision of telecommunication services or related hardware, software or
equipment on terms that are no less favorable (when taken as a whole) to the
Company or such Restricted Subsidiary, as applicable, than those available
from unaffiliated third parties, (vi) transactions involving the leasing or
sharing or other use by the Company or any Restricted Subsidiary of
communications network facilities (including, without limitation, cable or
fiber lines, equipment or transmission capacity) of any Affiliate of the
Company or any beneficial holder of 10% or more of any class of Capital Stock
of the Company or Triton PCS Holdings, Inc. (such Affiliate or holder being a
"Related Party") on terms that are no less favorable (when taken as a whole)
to the Company or such Restricted Subsidiary, as applicable, than those
available from such Related Party to unaffiliated third parties,
(vii) transactions involving the provision of telecommunication services by a
Related Party in the ordinary course of its business to the Company or any
Restricted Subsidiary, or by the Company or any Restricted Subsidiary to a
Related Party, on terms that are no less favorable (when taken as a whole) to
the Company or such Restricted Subsidiary, as applicable, than those available
from such Related Party to unaffiliated third parties, (viii) any sales agency
agreements pursuant to which an Affiliate has the right to market any or all
of the products or services of the Company or any of the Restricted
Subsidiaries, and (ix) customary commercial banking, investment banking,
underwriting, placement agent or financial advisory fees paid in connection
with services rendered to the Company and its subsidiaries in the ordinary
course.
LIMITATION ON ACTIVITIES OF THE COMPANY AND THE RESTRICTED SUBSIDIARIES
The Indentures provides that the Company will not, and will not permit any
Restricted Subsidiary to, engage in any business other than a Permitted
Business, except to such extent as is not material to the Company and its
Restricted Subsidiaries, taken as a whole.
CHANGE OF CONTROL
Within 30 days following the date of the consummation of a transaction
resulting in a Change of Control, the Company will commence an Offer to
Purchase all outstanding Notes at a purchase price in cash equal to (i) 101%
of the Accreted Value on the Purchase Date if such date is on or before May 1,
2003 and (ii) 101% of the principal amount at maturity, plus accrued and
unpaid interest, if any, to the Purchase Date, if such date is after May 1,
2003. Such Offer to Purchase will be consummated not earlier than 30 days and
not later than 60 days after the commencement thereof. Each holder shall be
entitled to tender all or any portion of the Notes owned by such holder
pursuant to the Offer to Purchase, subject to the requirement that any portion
of a Note tendered must be in an integral multiple of $1,000 principal amount.
In the event that the Company makes an Offer to Purchase the Notes, the
Company shall comply with any applicable securities laws and regulations,
including any applicable requirements of Section 14(e) of, and Rule 14e-1
under, the Exchange Act.
The Company will not be required to make an Offer to Purchase upon a Change
of Control if a third party makes the Offer to Purchase in the manner, at the
times and otherwise in compliance with the requirements set forth in the
Indenture applicable to an Offer to Purchase made by the Company and purchases
all Notes validly tendered and not withdrawn under such Offer to Purchase.
With respect to the sale of assets referred to in the definition of "Change
of Control," the phrase "all or substantially all" of the assets of the
Company will likely be interpreted under applicable law and will be dependent
upon particular facts and circumstances. As a result, there may be a degree of
uncertainty in ascertaining whether a sale or transfer of "all or
substantially all" of the assets of the Company has occurred. In
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addition, no assurances can be given that the Company will be able to acquire
Notes tendered upon the occurrence of a Change of Control. The ability of the
Company to pay cash to the holders of Notes upon a Change of Control may be
limited by its then existing financial resources. The Credit Agreement
contains certain covenants prohibiting, or requiring waiver or consent of the
lenders thereunder prior to, the repurchase of the Notes upon a Change of
Control and future debt agreements of the Company may provide the same. If the
Company does not obtain such waiver or consent or repay such Indebtedness, the
Company will remain prohibited from repurchasing the Notes. In such event, the
Company's failure to purchase tendered Notes would constitute an Event of
Default under the Indenture which would in turn constitute a default under the
Credit Agreement and possibly other Indebtedness. None of the provisions
relating to a repurchase upon a Change of Control are waivable by the Board of
the Company or the Trustee.
The foregoing provisions will not prevent the Company from entering into
transactions of the types described above with management or their affiliates.
In addition, such provisions may not necessarily afford the holders of the
Notes protection in the event of a highly leveraged transaction, including a
reorganization, restructuring, merger or similar transaction involving the
Company that may adversely affect the holders because such transactions may
not involve a shift in voting power or beneficial ownership, or even if they
do, may not involve a shift of the magnitude required under the definition of
Change of Control to trigger the provisions.
AMENDMENTS TO SECURITIES PURCHASE AGREEMENT
The Indenture provides that neither the Company nor Triton PCS Holdings,
Inc. will amend, modify or waive, or refrain from enforcing, any provision of
the Securities Purchase Agreement dated October 8, 1997, as amended as of the
date hereof, among AT&T Wireless PCS Inc., the Cash Equity Investors (named
therein), the Management Stockholders (named therein) and Triton PCS Holdings,
Inc., in any manner that would materially alter the obligations of the Cash
Equity Investors or the Management Stockholders thereunder to provide
additional equity capital to Triton PCS Holdings, Inc. (and to further
contribute such equity capital to the Company in the form of Qualified Stock
of the Company) until such time as the Company has received subsequent to the
Issue Date, net cash proceeds from capital contributions, or sales, in respect
of Qualified Stock of the Company equal to at least $122 million; provided,
however, such amount shall be reduced to $95 million in the event the Myrtle
Beach System is not acquired by the Company on or prior to March 31, 1999
pursuant to the Myrtle Beach Acquisition Agreement.
PROVISION OF FINANCIAL INFORMATION
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the
Company will furnish to the Holders of Notes (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if the Company were required to file
such Forms, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" that describes the financial condition
and results of operations of the Company and its consolidated Subsidiaries
and, with respect to the annual information only, a report thereon by the
Company's certified independent accountants, and (ii) all current reports that
would be required to be filed with the Commission on Form 8-K if the Company
were required to file such reports, in each case within the time period
specified in the Commission's rules and regulations; provided that no such
information or reports shall be required to be furnished prior to the date on
which the exchange offer registration statement is required by the terms of
the Registration Rights Agreement to be filed with the Commission. In
addition, following the consummation of the exchange offer contemplated by the
Registration Rights Agreement, whether or not required by the rules and
regulations of the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available
to securities analysts and prospective investors upon request. In addition,
the Company will, for so long as any Notes remain outstanding, furnish to the
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
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LIMITATION ON DESIGNATIONS OF UNRESTRICTED SUBSIDIARIES
The Indenture provides that the Company may designate any Subsidiary of the
Company (other than the License Subsidiary, the Real Property Subsidiary and
the Equipment Subsidiary) as an "Unrestricted Subsidiary" under the Indenture
(a "Designation") only if:
(i) no Default or Event of Default shall have occurred and be continuing
at the time of or after giving effect to such Designation; and
(ii) the Company would be permitted under the Indenture to make an
Investment at the time of Designation (assuming the effectiveness of such
Designation) in an amount (the "Designation Amount") equal to the Fair
Market Value of the aggregate amount of its Investments in such Subsidiary
on such date; and
(iii) except in the case of a Subsidiary in which an Investment is being
made pursuant to and as permitted by the third paragraph of the covenant
"Limitation on Restricted Payments," the Company would be permitted to
incur $1.00 of additional Indebtedness pursuant to clause (i) of the
covenant described under "--Limitation on Incurrence of Indebtedness" at
the time of Designation (assuming the effectiveness of such Designation).
In the event of any such Designation, the Company shall be deemed to have
made an Investment constituting a Restricted Payment pursuant to the covenant
described under "--Limitation on Restricted Payments" for all purposes of the
Indenture in the Designation Amount. The Indenture further provides that the
Company shall not, and shall not permit any Restricted Subsidiary to, at any
time (x) provide direct or indirect credit support for or a guarantee of any
Indebtedness of any Unrestricted Subsidiary (including of any undertaking,
agreement or instrument evidencing such Indebtedness), (y) be directly or
indirectly liable for any Indebtedness of any Unrestricted Subsidiary or (z)
be directly or indirectly liable for any Indebtedness which provides that the
holder thereof may (upon notice, lapse of time or both) declare a default
thereon or cause the payment thereof to be accelerated or payable prior to its
final scheduled maturity upon the occurrence of a default with respect to any
Indebtedness of any Unrestricted Subsidiary (including any right to take
enforcement action against such Unrestricted Subsidiary), except, in the case
of clause (x) or (y), to the extent permitted under the covenant described
under "--Limitation on Restricted Payments."
The Indenture further provides that the Company may revoke any Designation
of a Subsidiary as an Unrestricted Subsidiary (a "Revocation"), whereupon such
Subsidiary shall then constitute a Restricted Subsidiary, if:
(a) no Default shall have occurred and be continuing at the time of and
after giving effect to such Revocation; and
(b) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of the
Indenture.
All Designations and Revocations must be evidenced by Resolutions of the
Company delivered to the Trustee certifying compliance with the foregoing
provisions.
MERGERS, CONSOLIDATIONS AND CERTAIN SALES OF ASSETS
The Company will not consolidate or merge with or into any Person, or sell,
assign, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary to consolidate or merge with or into any Person or sell,
assign, lease, convey or otherwise dispose of) all or substantially all of the
Company's assets (determined on a consolidated basis for the Company and the
Restricted Subsidiaries), whether as an entirety or substantially an entirety
in one transaction or a series of related transactions, including by way of
liquidation or dissolution, to any Person unless, in each such case: (i) the
entity formed by or surviving any such consolidation or merger (if other than
the Company or such Restricted Subsidiary, as the case may be), or to which
such sale, assignment, lease, conveyance or other disposition shall have been
made (the "Surviving Entity"), is a
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corporation organized and existing under the laws of the United States, any
state thereof or the District of Columbia; (ii) the Surviving Entity assumes
by supplemental indenture all of the obligations of the Company on the Notes
and under the Indenture; (iii) immediately after giving effect to such
transaction and the use of any net proceeds therefrom on a pro forma basis,
the Company or the Surviving Entity, as the case may be, could Incur at least
$1.00 of Indebtedness pursuant to clause (i) of the provisions of the
Indenture described under "--Limitation on Incurrence of Indebtedness" above;
(iv) immediately after giving effect to such transaction and treating any
Indebtedness which becomes an obligation of the Company or any of its such
Restricted Subsidiaries as a result of such transaction as having been
Incurred by the Company or such Restricted Subsidiary, as the case may be, at
the time of the transaction, no Default or Event of Default shall have
occurred and be continuing; and (v) if, as a result of any such transaction,
property or assets of the Company or a Restricted Subsidiary would become
subject to a Lien not excepted from the provisions of the Indenture described
under "--Limitation on Liens" above, the Company, Restricted Subsidiary or the
Surviving Entity, as the case may be, shall have secured the Notes as required
by said covenant. The provisions of this paragraph shall not apply to any
merger of a Restricted Subsidiary with or into the Company or a Wholly Owned
Subsidiary or the release of any Guarantor in accordance with the terms of the
Guarantee and the Indenture in connection with any transaction complying with
the provisions of the Indenture described under "--Limitation on Certain Asset
Dispositions" above.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture: (a) failure to pay
the Accreted Value or principal of (or premium, if any, on) any Note when due
(whether or not prohibited by the provisions of the Indenture described under
"--Ranking" above); (b) failure to pay any interest on any Note when due,
continued for 30 days (whether or not prohibited by the provisions of the
Indenture described under "--Ranking" above); (c) default in the payment of
the Accreted Value or principal of and interest on Notes required to be
purchased pursuant to an Offer to Purchase as described under "--Covenants--
Change of Control" and "--Covenants--Limitation on Certain Asset Dispositions"
above when due and payable (whether or not prohibited by the provisions of the
Indenture described under "--Ranking" above); (d) failure to perform or comply
with any of the provisions described under "--Covenants--Mergers,
Consolidations and Certain Sales of Assets" above; (e) failure to perform any
other covenant or agreement of the Company under the Indenture or the Notes
continued for 60 days after written notice to the Company by the Trustee or
Holders of at least 25% in aggregate principal amount of outstanding Notes;
(f) default under the terms of one or more instruments evidencing or securing
Indebtedness of the Company or any of its Subsidiaries having an outstanding
principal amount of $15.0 million or more individually or in the aggregate
that has resulted in the acceleration of the payment of such Indebtedness or
failure to pay principal when due at the final stated maturity of any such
Indebtedness; (g) the rendering of a final judgment or judgments (not subject
to appeal) against the Company or any of its Subsidiaries in an amount of
$15.0 million or more which remains undischarged or unstayed for a period of
60 days after the date on which the right to appeal has expired; (h) certain
events of bankruptcy, insolvency or reorganization affecting the Company or
any Material Subsidiary; and (i) any Guarantee of a Material Subsidiary ceases
to be in full force and effect or is declared null and void and unenforceable
or is found to be invalid or any Guarantor denies its liability under the
Guarantee (other than by reason of a release of such Guarantor from the
Guarantee in accordance with the terms of the Indenture and the Guarantee).
If an Event of Default (other than an Event of Default with respect to the
Company described in clause (h) of the preceding paragraph) shall occur and be
continuing, either the Trustee or the Holders of at least 25% in aggregate
principal amount at maturity of the outstanding Notes may accelerate the
maturity of all Notes; provided, however, that after such acceleration, but
before a judgment or decree based on acceleration, the Holders of a majority
in aggregate principal amount at maturity of outstanding Notes may, under
certain circumstances, rescind and annul such acceleration if all Defaults,
other than the non-payment of accelerated principal, have been cured or waived
as provided in the Indenture. If an Event of Default specified in clause (h)
of the preceding paragraph with respect to the Company occurs, the outstanding
Notes will ipso facto become immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder. For
information as to waiver of defaults, see "--Modification and Waiver."
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The Indenture provides that the Trustee shall, within 30 days after the
occurrence of any Default or Event of Default with respect to the Notes, give
the holders thereof notice of all uncured Defaults or Events of Default known
to it; provided, however, that, except in the case of an Event of Default or a
Default in any payment with respect to the Notes or a Default or Event of
Default in complying with "--Covenants--Mergers, Consolidations and Certain
Sales of Assets," the Trustee shall be protected in withholding such notice if
and so long as the Board or responsible officers of the Trustee in good faith
determine that the withholding of such notice is in the interest of the
holders of the Notes.
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder
shall have previously given to the Trustee written notice of a continuing
Event of Default and unless the holders of at least 25% in aggregate principal
amount at maturity of the outstanding Notes shall have made written request,
and offered reasonable indemnity, to the Trustee to institute such proceeding
as Trustee, and the Trustee shall not have received from the holders of a
majority in aggregate principal amount at maturity of the outstanding Notes a
direction inconsistent with such request and shall have failed to institute
such proceeding within 60 days. However, such limitations do not apply to a
suit instituted by a holder of a Note for enforcement of payment of the
principal of and premium, if any, or interest on such Note on or after the
respective due dates expressed in such Note.
The Company will be required to furnish to the Trustee annually a statement
as to its performance of certain of its obligations under the Indenture and as
to any default in such performance.
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE
The Company may terminate its substantive obligations and the substantive
obligations of the Guarantors in respect of the Notes and the Guarantees by
delivering all outstanding Notes to the Trustee for cancellation and paying
all sums payable by the Company on account of principal of, premium, if any,
and interest on all Notes or otherwise. In addition to the foregoing, the
Company may, provided that no Default or Event of Default has occurred and is
continuing or would arise therefrom (or, with respect to a Default or Event of
Default specified in clause (h) of "--Events of Default" above, any time on or
prior to the 91st calendar day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until after such
91st day)) and provided that no default under any Senior Debt would result
therefrom, terminate its substantive obligations and the substantive
obligations of the Guarantors in respect of the Notes and the Guarantees
(except for the Company's obligation to pay the principal of (and premium, if
any, on) and the interest on the Notes and such Guarantors' guarantee thereof)
by (i) depositing with the Trustee, under the terms of an irrevocable trust
agreement, money or United States Government Obligations sufficient (without
reinvestment) to pay all remaining indebtedness on the Notes to maturity or to
redemption, (ii) delivering to the Trustee either an Opinion of Counsel or a
ruling directed to the Trustee from the Internal Revenue Service to the effect
that the holders of the Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and termination of
obligations, (iii) delivering to the Trustee an Opinion of Counsel to the
effect that the Company's exercise of its option under this paragraph will not
result in the Company, the Trustee or the trust created by the Company's
deposit of funds pursuant to this provision becoming or being deemed to be an
"investment company" under the Investment Company Act of 1940, as amended, and
(iv) complying with certain other requirements set forth in the Indenture. In
addition, the Company may, provided that no Default or Event of Default has
occurred, and is continuing or would arise therefrom (or, with respect to a
Default or Event of Default specified in clause (h) of "--Events of Default"
above, any time on or prior to the 91st calendar day after the date of such
deposit (it being understood that this condition shall not be deemed satisfied
until after such 91st day)) and provided that no default under any Senior Debt
would result therefrom, terminate all of its substantive obligations and all
of the substantive obligations of the Guarantors in respect of the Notes and
the Guarantees (including the Company's obligation to pay the principal of
(and premium, if any, on) and interest on the Notes and such Guarantors'
guarantee thereof by (i) depositing with the Trustee, under the terms of an
irrevocable trust agreement, money or United States Government Obligations
sufficient (without reinvestment) to pay all remaining indebtedness on the
Notes to maturity or to redemption, (ii) delivering to the Trustee either
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a ruling directed to the Trustee from the Internal Revenue Service to the
effect that the holders of the Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit and termination of
obligations or an Opinion of Counsel based upon such a ruling addressed to the
Trustee or a change in the applicable Federal tax law since the date of the
Indenture, to such effect, (iii) delivering to the Trustee an Opinion of
Counsel to the effect that the Company's exercise of its option under this
paragraph will not result in the Company, the Trustee or the trust created by
the Company's deposit of funds pursuant to this provision becoming or being
deemed to be an "investment company" under the Investment Company Act of 1940,
as amended, and (iv) complying with certain other requirements set forth in
the Indenture.
The Company may make an irrevocable deposit pursuant to this provision only
if at such time it is not prohibited from doing so under the subordination
provisions of the Indenture or certain covenants in the instruments governing
Senior Debt and the Company has delivered to the Trustee and any Paying Agent
an Officers' Certificate to that effect.
GOVERNING LAW
The Indenture, the Notes and the Guarantees are governed by the laws of the
State of New York without regard to principles of conflicts of laws.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the holders of a majority in aggregate
principal amount at maturity of the outstanding Notes; provided, however, that
no such modification or amendment may, without the consent of the holder of
each Note affected thereby, (a) change the stated maturity of the principal of
any Note, (b) alter the optional redemption or repurchase provisions of any
Note or the Indenture in a manner adverse to the holders of the Notes, (c)
reduce the principal amount of any Note, (d) reduce the rate of or change the
time for payment of interest on any Note, (e) change the place or currency of
payment of principal of or interest on any Note, (f) modify any provisions of
the Indenture relating to the waiver of past defaults (other than to add
sections of the Indenture subject thereto) or the right of the holders to
institute suit for the enforcement of any payment on or with respect to any
Note or the Guarantee, or the modification and amendment of the Indenture and
the Notes (other than to add sections of the Indenture or the Notes which may
not be amended, supplemented or waived without the consent of each holder
affected), (g) reduce the percentage of the principal amount of outstanding
Notes necessary for amendment to or waiver of compliance with any provision of
the Indenture or the Notes or for waiver of any Default, (h) waive a default
in the payment of principal of, interest on, or redemption payment with
respect to, any Note (except a rescission of acceleration of the Notes by the
holders as provided in the Indenture and a waiver of the payment default that
resulted from such acceleration), (i) modify the ranking or priority of the
Notes or the Guarantees, or modify the definition of Senior Debt or Designated
Senior Debt or amend or modify the subordination provisions of the Indenture
in any manner adverse to the Holders, (j) release any Guarantor from any of
its obligations under its Guarantee or the Indenture otherwise than in
accordance with the Indenture, or (k) modify any of the provisions (including
the definitions relating thereto) relating to any Offer to Purchase required
under the covenants described under "--Covenants--Limitation on Certain Asset
Dispositions" or "--Covenants--Change of Control" in a manner materially
adverse to the holders of Notes with respect to any Asset Disposition that has
been consummated or Change of Control that has occurred.
The holders of a majority in aggregate principal amount at maturity of the
outstanding Notes, on behalf of all Holders of Notes, may waive compliance by
the Company with certain restrictive provisions of the Indenture. Subject to
certain rights of the Trustee, as provided in the Indenture, the holders of a
majority in aggregate principal amount at maturity of the outstanding Notes,
on behalf of all holders of Notes, may waive any past default under the
Indenture, except a default in the payment of principal, premium or interest
or a default arising from failure to purchase any Note tendered pursuant to an
Offer to Purchase, or a default in respect of a provision that under the
Indenture cannot be modified or amended without the consent of the holder of
each outstanding Note affected.
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Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's obligations to Holders of Notes in the case of a
merger or consolidation or sale of all or substantially all of the Company's
assets, to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with requirements
of the Commission in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee or stockholder of the Company or any of its
Subsidiaries, as such, will have any liability for any obligations of the
Company or any Guarantor under the Notes, the Indenture, the Guarantees or any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance
of the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws, and it is the view of the Commission that such a
waiver is against public policy.
THE TRUSTEE
The Indenture provides that, except during the continuance of a Default, the
Trustee will perform only such duties as are specifically set forth in the
Indenture. During the existence of a Default, the Trustee will exercise such
rights and powers vested in it under the Indenture and use the same degree of
care and skill in their exercise as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs. The Indenture and
provisions of the Trust Indenture Act incorporated by reference therein
contain limitations on the rights of the Trustee, should it become a creditor
of the Company, the Guarantors, or any other obligor upon the Notes, to obtain
payment of claims in certain cases or to realize on certain property received
by it in respect of any such claim as security or otherwise. The Trustee is
permitted to engage in other transactions with the Company or an Affiliate of
the Company; provided, however, that if it acquires any conflicting interest
(as defined in the Indenture or in the Trust Indenture Act), it must eliminate
such conflict or resign.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture or the Registration Rights Agreement. Reference is made to the
Indenture or the Registration Rights Agreement for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Accreted Value" shall mean, as of any date of determination prior to May 1,
2003, the sum of (a) the initial offering price of each Note and (b) the
portion of the excess of the principal amount of each Note over such initial
offering price which shall have been amortized by the Company in accordance
with GAAP through such date, such amount to be so amortized on a daily basis
and compounded semi-annually on each interest payment date at a rate of 11%
per annum from the Issue Date through the date of determination computed on
the basis of a 360-day year of twelve 30-day months.
"Acquired Indebtedness" means, with respect to any Person, Indebtedness of
such Person (i) existing at the time such Person becomes a Restricted
Subsidiary or (ii) assumed in connection with the acquisition of assets from
another Person, including Indebtedness Incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary or such
acquisition, as the case may be.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with any specified Person. For 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
"controlling" and "controlled" have meanings correlative to the foregoing.
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"Annualized Pro Forma Consolidated Operating Cash Flow" means Consolidated
Cash Flow for the latest two full fiscal quarters for which consolidated
financial statements of the Company are available multiplied by two. For
purposes of calculating "Consolidated Cash Flow" for any period for purposes
of this definition only, (i) any Subsidiary of the Company that is a
Restricted subsidiary on the date of the transaction giving rise to the need
to calculate "Annualized Pro Forma Consolidated Operating Cash Flow" (the
"Transaction Date") shall be deemed to have been a Restricted Subsidiary at
all times during such period and (ii) any Subsidiary of the Company that is
not a Restricted Subsidiary on the Transaction Date shall be deemed not to
have been a Restricted subsidiary at any time during such period. In addition
to and without limitation of the foregoing, for purposes of this definition
only, "Consolidated Cash Flow" shall be calculated after giving effect on a
pro forma basis for the applicable period to, without duplication, any Asset
Dispositions or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of
the Company or one of the Restricted Subsidiaries (including any person who
becomes a Restricted Subsidiary as a result of the Asset Acquisition)
incurring, assuming or otherwise being liable for Acquired Indebtedness)
occurring during the period commencing on the first day of such two fiscal
quarter period to and including the Transaction Date (the "Reference Period"),
as if such Asset Sale or Asset Acquisition occurred on the first day of the
Reference Period.
"Asset Acquisition" means (i) any purchase or other acquisition (by means of
transfer of cash or other property to others or payment for property or
services for the account or use of others, or otherwise) of Equity Interests
of any person by the Company or any Restricted Subsidiary, in either case,
pursuant to which such person shall become a Restricted Subsidiary or shall be
merged with or into the Company or any Restricted Subsidiary or (ii) any
acquisition by the Company or any Restricted Subsidiary of the property or
assets of any person which constitute all or substantially all of an operating
unit or line of business of such person.
"Asset Disposition" means any sale, transfer or other disposition
(including, without limitation, by merger, consolidation or sale-and-leaseback
transaction) of (i) shares of Capital Stock of a Subsidiary of the Company
(other than directors' qualifying shares), (ii) any FCC license for the
provision of wireless telecommunications services held by the Company or any
Restricted Subsidiary (whether by sale of Capital Stock or otherwise) or (iii)
property or assets of the Company or any Subsidiary of the Company; provided,
however, that an Asset Disposition shall not include (a) any sale, transfer or
other disposition of shares of Capital Stock, property or assets by a
Restricted Subsidiary to the Company or to any other Restricted Subsidiary or
by the Company to any Restricted Subsidiary, (b) any sale, transfer or other
disposition of defaulted receivables for collection or any sale, transfer or
other disposition of property or assets in the ordinary course of business,
(c) any sale, transfer or other disposition that does not (together with all
related sales, transfers or dispositions) involve aggregate consideration in
excess of $5.0 million, (d) the sale, lease, conveyance or disposition or
other transfer of all or substantially all of the assets of the Company as
permitted under "--Covenants--Mergers, Consolidations and Certain Sales of
Assets" above or (e) any disposition that constitutes a Change of Control.
"Average Life" means, as of the date of determination, with respect to any
Indebtedness for borrowed money or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of the number of years from the date of
determination to the dates of each successive scheduled principal or
liquidation value payments of such Indebtedness or Preferred Stock,
respectively, and the amount of such principal or liquidation value payments,
by (ii) the sum of all such principal or liquidation value payments.
"Bankruptcy Code" means Title 11, United States Code.
"Board" of any person means the board of directors, management committee or
other governing body of such person.
"Capital Lease Obligations" of any Person means the obligations to pay rent
or other amounts under a lease of (or other Indebtedness arrangements
conveying the right to use) real or personal property of such Person which are
required to be classified and accounted for as a capital lease or liability on
the face of a balance sheet of such Person in accordance with GAAP. The amount
of such obligations shall be the capitalized amount thereof
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in accordance with GAAP and the stated maturity thereof shall be the date of
the last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without
payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants options, participations or other equivalents of or
interests in (however designated) of corporate stock or other equity
participations, including partnership interest, whether general or limited of
such Person.
"Cash Equivalents" means (i) direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the
United States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United States of
America), in each case maturing within one year from the date of acquisition
thereof; (ii) investments in commercial paper maturing within 365 days from
the date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from Standard & Poor's Corporation or from
Moody's Investors Service; (iii) investments in certificates of deposit,
banker's acceptance and time deposits maturing within 365 days from the date
of acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of any
commercial bank organized under the laws of the United States of America or
any State thereof which has a combined capital and surplus and undivided
profits of not less than $500,000,000; (iv) fully collateralized repurchase
agreements with a term of not more than 30 days for securities described in
clause (i) above and entered into with a financial institution satisfying the
criteria described in clause (iii) above; and (v) money market funds
substantially all of whose assets comprise securities of the type described in
clauses (i) through (iii).
"Change of Control" means the occurrence of one or more of the following
events: (i) any "person" or "group" (as such terms are used in Section 13(d)
and 14(d) of the Exchange Act) other than a Permitted Holder or Permitted
Holders or a person or group controlled by a Permitted Holder or Permitted
Holders becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all such securities that such person has the right
to acquire within one year, upon the happening of an event or otherwise), is
or becomes the "beneficial owner" (as defined in Rule 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly, of (A) securities of Triton PCS
Holdings, Inc. representing 50% or more of the combined voting power of Triton
PCS Holdings, Inc.'s then outstanding Voting Stock, or (B) securities of the
Company representing 50% or more of the combined voting power of the Company's
then outstanding Voting Stock; (ii) the following individuals cease for any
reason to constitute more than a majority of the number of directors then
serving on the Board of Triton PCS Holdings, Inc. or the Company: individuals
who, on the date hereof, constitute the Board and any new director (other than
a director whose initial assumption of the office is in connection with an
actual or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of Triton PCS Holdings,
Inc. or the Company) whose appointment or election by the Board or nomination
for election by the Company's stockholders was approved by the vote of at
least two-thirds ( 2/3) of the directors then still in office or whose
appointment, election or nomination was previously so approved or recommended;
or (iii) the shareholders of Triton PCS Holdings, Inc. or of the Company shall
approve any Plan of Liquidation (whether or not otherwise in compliance with
the provisions of the Indenture).
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Subsidiaries of
the Company, the Capital Stock of which constitutes all or substantially all
of the properties and assets of the Company, shall be deemed to be the
transfer of all or substantially all of the properties and assets of the
Company.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding
up of such Person, to shares of Capital Stock of any other class of such
Person.
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"Commission" means the Securities and Exchange Commission.
"Consolidated Cash Flow" of any Person means for any period the Consolidated
Net Income of such Person for such period (x) increased (to the extent
Consolidated Net Income for such period has been reduced thereby) by the sum
of (without duplication) (i) Consolidated Interest Expense of such Person for
such period, plus (ii) Consolidated Income Tax Expense of such Person for such
period, plus (iii) the consolidated depreciation and amortization expense of
such Person and its Restricted Subsidiaries for such period, plus (iv) any
other non-cash charges of such Person and its Restricted Subsidiaries for such
period except for any non-cash charges that represent accruals of, or reserves
for, cash disbursements to be made in any future accounting period and (y)
decreased (to the extent Consolidated Net Income for such period has been
increased thereby) by any non-cash gains from Asset Dispositions.
"Consolidated Income Tax Expense" of any Person means for any period the
consolidated provision for income taxes of such Person and its Restricted
Subsidiaries for such period calculated on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" for any Person means for any period, without
duplication, (a) the consolidated interest expense included in a consolidated
income statement (without deduction of interest or finance charge income) of
such Person and its Restricted Subsidiaries for such period calculated on a
consolidated basis in accordance with GAAP (including, without limitation, (i)
any amortization of debt discount, (ii) the net costs under interest rate
agreements, (iii) all capitalized interest, (iv) the interest portion of any
deferred payment obligation and (v) all amortization of any premiums, fees and
expenses payable in connection with the Incurrence of any Indebtedness, plus
(b) the interest component of Capital Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by such Person and its Restricted Subsidiaries
during such period as determined on a consolidated basis in accordance with
GAAP.
"Consolidated Net Income" of any Person means for any period the
consolidated net income (or loss) of such Person and its Restricted
Subsidiaries for such period determined on a consolidated basis in accordance
with GAAP; provided, however, that there shall be excluded therefrom (a) the
net income (or loss) of any Person acquired by such Person or a Restricted
Subsidiary of such Person in a pooling-of-interests transaction for any period
prior to the date of such transaction, (b) the net income (but not loss) of
any Restricted Subsidiary of such Person which is subject to restrictions
which prevent or limit the payment of dividends or the making of distributions
to such Person to the extent of such restrictions (regardless of any waiver
thereof), (c) the net income of any Person that is not a Restricted Subsidiary
of such Person, except to the extent of the amount of dividends or other
distributions representing such Person's proportionate share of such other
Person's net income for such period actually paid in cash to such Person by
such other Person during such period, (d) gains or losses (other than for
purposes of calculating Consolidated Net Income under clause (3) of the first
paragraph under "Limitation on Restricted Payments") on Asset Dispositions by
such Person or its Restricted Subsidiaries, (e) all extraordinary gains (but
not, other than for purposes of calculating Consolidated Net Income under
clause (3) under "Limitation on Restricted Payments," losses) determined in
accordance with GAAP and (f) in the case of a successor to the referent Person
by consolidation or merger or as a transferee of the referent Person's assets,
any earnings (or losses) of the successor corporation prior to such
consolidation, merger or transfer of assets.
"Credit Agreement" means the Credit Facility dated February 3, 1998, among
the Company, certain domestic subsidiaries of the Company, the agent and
certain banks referred to therein, as such agreement is amended through the
Issue Date and from time to time thereafter.
"Default" means any event that is, or after notice or lapse of time or both
would become, an Event of Default.
"Designated Senior Debt" means (i) so long as any Indebtedness under one or
more Senior Credit Facilities is outstanding or any lender has any commitment
to extend credit to the Company thereunder, the Senior Debt Incurred under any
such Senior Credit Facility and (ii) so long as outstanding, any other Senior
Debt which has
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at the time of initial issuance an aggregate outstanding principal amount in
excess of $25.0 million which has been so designated as Designated Senior Debt
by the Board of the Company at the time of initial issuance in a resolution
delivered to the Trustee.
"Designation" has the meaning set forth under "--Certain Covenants--
Limitation on Designations of Unrestricted Subsidiaries."
"Designation Amount" has the meaning set forth under "--Certain Covenants--
Limitation on Designations of Unrestricted Subsidiaries."
"Disqualified Stock" of any Person means any Capital Stock of such Person
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the final maturity of the Notes.
"Equipment Subsidiary" means Triton PCS Equipment Company, L.L.C., a
Delaware limited liability company.
"Equity Offering" means any public or private sale of Qualified Stock made
on a primary basis by the Company, Triton PCS Holdings, Inc. or a Special
Purpose Corporation, including through the issuance or sale of Qualified Stock
to one or more Strategic Equity Investors; provided that proceeds from such
issuance or sale of any Qualified Stock sold by Triton PCS Holdings, Inc. or
the Special Purpose Corporation, as the case may be, will be required, prior
to any redemption of Notes prior to May 1, 2001, to be contributed as equity
in exchange for Qualified Stock to, or be used to purchase Qualified Stock in,
the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Commission thereunder.
"Excluded Cash Proceeds" means the first $122 million of net cash proceeds
received by the Company subsequent to the Issue Date from capital
contributions in respect of Qualified Stock of the Company or from the issue
or sale (other than to a Restricted Subsidiary) of Qualified Stock of the
Company; provided, that if the Myrtle Beach System is not acquired on or prior
to March 31, 1999 pursuant to the Myrtle Beach Acquisition Agreement such
amount shall be reduced to the first $95 million received by the Company
subsequent to the Issue Date from capital contributions in respect of
Qualified Stock of the Company or from the issue or sale (other than to a
Restricted Subsidiary) of Qualified Stock of the Company.
"Fair Market Value" means, with respect to any asset or property, the price
that could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under
pressure or compulsion to complete the transaction. Unless otherwise specified
in the Indenture, Fair Market Value shall be determined by the Board of the
Company acting in good faith.
"GAAP" means generally accepted accounting principles, consistently applied,
as in effect from time to time in the United States of America, as set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as is approved by a significant segment of the
accounting profession in the United States.
"Guarantee" means the guarantee of both the Private Notes and the Exchange
Notes by each Guarantor under the Indenture.
"Guarantor" means (i) each Restricted Subsidiary that, on the Issue Date, is
a direct or indirect obligor under, or in respect of, one or more Senior
Credit Facilities and (ii) each Restricted Subsidiary that pursuant to the
terms of the Indenture executes a supplement to the Indenture as a Guarantor,
in each case, until such Restricted Subsidiary is released from its Guarantee.
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"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to
GAAP or otherwise, of any such Indebtedness or other obligation on the balance
sheet of such Person (and "Incurrence," "Incurred" and "Incurring" shall have
meanings correlative to the foregoing). Indebtedness of any Person or any of
its Restricted Subsidiaries existing at the time such Person becomes a
Restricted Subsidiary (or is merged into or consolidates with the Company or
any Restricted Subsidiary), whether or not such Indebtedness was incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary (or being merged into or consolidated with the Company or any
Restricted Subsidiary), shall be deemed Incurred at the time any such Person
becomes a Restricted Subsidiary or merges into or consolidates with the
Company or any Restricted Subsidiary.
"Indebtedness" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (i) every obligation of such Person for money
borrowed, (ii) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses, (iii) every
reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person, (iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable
or accrued liabilities arising in the ordinary course of business which are
not overdue or which are being contested in good faith), (v) every Capital
Lease Obligation of such Person, (vi) every net obligation under interest rate
swap or similar agreements of such Person and (vii) every obligation of the
type referred to in clauses (i) through (vi) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has guaranteed or is responsible or liable for, directly or indirectly, as
obligor, guarantor or otherwise. Indebtedness shall include the liquidation
preference and any mandatory redemption payment obligations in respect of any
Disqualified Stock of the Company and any Restricted Subsidiary, and any
Preferred Stock of a Subsidiary of the Company. Indebtedness shall never be
calculated taking into account any cash and cash equivalents held by such
Person. Indebtedness shall not include obligations arising from agreements of
the Company or a Restricted Subsidiary to provide for indemnification,
adjustment of purchase price, earn-out, or other similar obligations, in each
case, incurred or assumed in connection with the disposition of any business
or assets of a Restricted Subsidiary. The amount of any Indebtedness
outstanding as of any date shall be (i) the accreted value thereof, in the
case of any Indebtedness issued with original issue discount, (ii) the
principal amount thereof, in the case of any Indebtedness other than
Indebtedness issued with original issue discount, and (iii) the greater of the
maximum repurchase or redemption price or liquidation preference thereof, in
the case of any Disqualified Stock or Preferred Stock.
"Investment" by any Person means any direct or indirect loan, advance,
guarantee or other extension of credit or capital contribution to (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise), or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Indebtedness issued by any other Person.
"Issue Date" means May 4, 1998, the original issue date of the Notes.
"License Subsidiary" means Triton PCS License Company, L.L.C., a Delaware
limited liability company.
"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, hypothecation, assignment, security interest, lien, charge,
easement (other than any easement not materially impairing usefulness or
marketability), encumbrance, preference, priority or other security agreement
with respect to such property or assets (including, without limitation, any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"Material Subsidiary" means, at any date of determination, (a) any
Restricted Subsidiary that, together with its Subsidiaries that constitute
Restricted Subsidiaries (i) for the most recent fiscal year of the Company
accounted for more than 10.0% of the consolidated revenues of the Company and
the Restricted Subsidiaries or
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(ii) as of the end of such fiscal year, owned more than 10.0% of the
consolidated assets of the Company and the Restricted Subsidiaries, all as set
forth on the consolidated financial statements of the Company and the
Restricted Subsidiaries for such year prepared in conformity with GAAP, and
(b) any Restricted Subsidiary which, when aggregated with all other Restricted
Subsidiaries that are not otherwise Significant Restricted Subsidiaries and as
to which any event described in clause (h) of "Events of Default" above has
occurred, would constitute a Significant Restricted Subsidiary under clause
(a) of this definition.
"Myrtle Beach Acquisition Agreement" means the Asset Purchase Agreement
dated March 10, 1998 by and between the Company and Vanguard Cellular Systems
of South Carolina, Inc., including any amendments, modifications, supplements
or replacements thereof.
"Myrtle Beach System" means the existing cellular system currently owned and
operated by Vanguard Cellular Systems of South Carolina, Inc., serving the
South Carolina 5--Georgetown Rural Service Area.
"Net Available Proceeds" from any Asset Disposition by any Person means cash
or readily marketable cash equivalents received (including by way of sale or
discounting of a note, installment receivable or other receivable, but
excluding any other consideration received in the form of assumption by the
acquirer of Indebtedness or other obligations relating to such properties or
assets or received in any other non-cash form) therefrom by such Person,
including any cash received by way of deferred payment or upon the
monetization or other disposition of any non-cash consideration (including
notes or other securities) received in connection with such Asset Disposition,
net of (i) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred and all federal, state, foreign and local taxes
required to be accrued as a liability as a consequence of such Asset
Disposition, (ii) all payments made by such Person or any of its Restricted
Subsidiaries on any Indebtedness which is secured by such assets in accordance
with the terms of any Lien upon or with respect to such assets or which must
by the terms of such Lien, or in order to obtain a necessary consent to such
Asset Disposition or by applicable law, be repaid out of the proceeds from
such Asset Disposition, (iii) all payments made with respect to liabilities
associated with the assets which are the subject of the Asset Disposition,
including, without limitation, trade payables and other accrued liabilities,
(iv) appropriate amounts to be provided by such Person or any Restricted
Subsidiary thereof, as the case may be, as a reserve in accordance with GAAP
against any liabilities associated with such assets and retained by such
Person or any Restricted Subsidiary thereof, as the case may be, after such
Asset Disposition, including, without limitation, liabilities under any
indemnification obligations and severance and other employee termination costs
associated with such Asset Disposition, until such time as such amounts are no
longer reserved or such reserve is no longer necessary (at which time any
remaining amounts will become Net Available Proceeds to be allocated in
accordance with the provisions of clause (iii) of the covenant of the
Indenture described under "--Covenants--Limitation on Certain Asset
Dispositions") and (v) all distributions and other payments made to minority
interest holders in Restricted Subsidiaries of such Person or joint ventures
as a result of such Asset Disposition.
"Net Investment" means the excess of (i) the aggregate amount of all
Investments made in any Unrestricted Subsidiary or joint venture by the
Company or any Restricted Subsidiary on or after the Issue Date (in the case
of an Investment made other than in cash, the amount shall be the Fair Market
Value of such Investment as determined in good faith by the Board of the
Company or such Restricted Subsidiary) over (ii) the aggregate amount returned
in cash on or with respect to such Investments whether through interest
payments, principal payments, dividends or other distributions or payments;
provided, however, that such payments or distributions shall not be (and have
not been) included in subclause (iii) of clause (3) of the first paragraph
described under "--Covenants--Limitation on Restricted Payments"; provided,
further, that with respect to all Investments made in any Unrestricted
Subsidiary or joint venture the amounts referred to in clause (ii) above with
respect to such Investments shall not exceed the aggregate amount of all such
Investments made in such Unrestricted Subsidiary or joint venture.
"Note Payment" has the meaning set forth in "Ranking."
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"Offer to Purchase" means a written offer (the "Offer") sent by the Company
by first class mail, postage prepaid, to each holder at his address appearing
in the register for the Notes on the date of the Offer offering to purchase up
to (i) the Accreted Value of Notes if such Offer is on or prior to May 1, 2003
or (ii) the principal amount at maturity of the Notes if such Offer is after
May 1, 2003 specified in such Offer at the purchase price specified in such
Offer (as determined pursuant to the Indenture). Unless otherwise required by
applicable law, the Offer shall specify an expiration date (the "Expiration
Date") of the Offer to Purchase which shall be not less than 30 days nor more
than 60 days after the date of such Offer and a settlement date (the "Purchase
Date") for purchase of Notes within five Business Days after the Expiration
Date. The Company shall notify the Trustee at least 15 Business Days (or such
shorter period as is acceptable to the Trustee) prior to the mailing of the
Offer of the Company's obligation to make an Offer to Purchase, and the Offer
shall be mailed by the Company or, at the Company's request, by the Trustee in
the name and at the expense of the Company. The Offer shall contain all the
information required by applicable law to be included therein. The Offer shall
contain all instructions and materials necessary to enable such holders to
tender Notes pursuant to the Offer to Purchase. The Offer shall also state:
(1) the Section of the Indenture pursuant to which the Offer to Purchase
is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount at maturity of the outstanding Notes
offered to be purchased by the Company pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such amount has been
determined pursuant to the Section of the Indenture requiring the Offer to
Purchase) (the "Purchase Amount");
(4) the purchase price to be paid by the Company for each $1,000
aggregate principal amount at maturity of Notes accepted for payment (as
specified pursuant to the Indenture) (the "Purchase Price");
(5) that the holder may tender all or any portion of the Notes registered
in the name of such holder and that any portion of a Note tendered must be
tendered in an integral multiple of $1,000 principal amount at maturity;
(6) the place or places where Notes are to be surrendered for tender
pursuant to the Offer to Purchase;
(7) that interest on any Note not tendered or tendered but not purchased
by the Company pursuant to the Offer to Purchase will continue to accrue;
(8) that on the Purchase Date the Purchase Price will become due and
payable upon each Note being accepted for payment pursuant to the Offer to
Purchase and that interest thereon shall cease to accrue on and after the
Purchase Date;
(9) that each holder electing to tender all or any portion of a Note
pursuant to the Offer to Purchase will be required to surrender such Note
at the place or places specified in the Offer prior to the close of
business on the Expiration Date (such Note being, if the Company or the
Trustee so requires, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Trustee
duly executed by, the holder thereof or his attorney duly authorized in
writing);
(10) that holders will be entitled to withdraw all or any portion of
Notes tendered if the Company (or its Paying Agent) receives, not later
than the close of business on the fifth Business Day next preceding the
Expiration Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the holder, the principal amount of the Note the
holder tendered, the certificate number of the Note the holder tendered and
a statement that such holder is withdrawing all or a portion of his tender;
(11) that (a) if Notes in an aggregate principal amount at maturity less
than or equal to the Purchase Amount are duly tendered and not withdrawn
pursuant to the Offer to Purchase, the Company shall purchase all such
Notes and (b) if Notes in an aggregate principal amount at maturity in
excess of the Purchase Amount are tendered and not withdrawn pursuant to
the Offer to Purchase, the Company shall purchase Notes having an aggregate
principal amount at maturity equal to the Purchase Amount on a pro rata
basis (with such adjustments as may be deemed appropriate so that only
Notes in denominations of $1,000 or integral multiples thereof shall be
purchased); and
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(12) that in the case of any holder whose Note is purchased only in part,
the Company shall execute and the Trustee shall authenticate and deliver to
the holder of such Note without service charge, a new Note or Notes, of any
authorized denomination as requested by such holder, in an aggregate
principal amount at maturity equal to and in exchange for the unpurchased
portion of the Note so tendered.
An Offer to Purchase shall be governed by and effected in accordance with
the provisions above pertaining to any Offer.
"Permitted Asset Swap" means any exchange of assets by the Company or a
Restricted Subsidiary of the Company where the Company and/or its Restricted
Subsidiaries receive consideration at least 75% of which consists of (a) cash,
(b) assets that are used or useful in a Permitted Business or (c) any
combination thereof.
"Permitted Business" means (i) the delivery or distribution of
telecommunications, voice, data or video services, (ii) any business or
activity reasonably related or ancillary thereto, including, without
limitation, any business conducted by the Company or any Restricted Subsidiary
on the Issue Date and the acquisition, holding or exploitation of any license
relating to the delivery of the services described in clause (i) of this
definition or (iii) any other business or activity in which the Company and
the Restricted Subsidiaries are expressly contemplated to be engaged in
pursuant to the provisions of the certificate of incorporation and by-laws of
the Company as in effect on the Issue Date.
"Permitted Holder" means (i) each of AT&T Corporation, Chase Capital
Partners, J.P. Morgan Investment Corporation, Desai Capital Management
Incorporated, and any of their respective Affiliates and the respective
successors (by merger, consolidation, transfer or otherwise) to all or
substantially all of the respective businesses and assets of any of the
foregoing and (ii) any "person" or "group" (as such terms are used in Section
13(d) and 14(d) of the Exchange Act) controlled by one or more persons
identified in clause (i) of this definition.
"Permitted Investments" means (i) Investments in Cash Equivalents; (ii)
Investments representing Capital Stock or obligations issued to the Company or
any Restricted Subsidiary in the course of the good faith settlement of claims
against any other Person or by reason of a composition or readjustment of debt
or a reorganization of any debtor of the Company or any Restricted Subsidiary;
(iii) deposits, including interest-bearing deposits, maintained in the
ordinary course of business in banks; (iv) any Investment in any Person;
provided, however, that after giving effect to any such Investment such Person
is or becomes a Restricted Subsidiary or such Person is merged, consolidated
or amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of
the Company; (v) trade receivables and prepaid expenses, in each case arising
in the ordinary course of business; provided, however, that such receivables
and prepaid expenses would be recorded as assets of such Person in accordance
with GAAP; (vi) endorsements for collection or deposit in the ordinary course
of business by such Person of bank drafts and similar negotiable instruments
of such other Person received as payment for ordinary course of business trade
receivables; (vii) any interest rate agreements with an unaffiliated Person
otherwise permitted by clause (v) or (vi) under "--Covenants Limitation on
Incurrence of Indebtedness"; (viii) Investments received as consideration for
an Asset Disposition in compliance with the provisions of the Indenture
described under "--Covenants--Limitation on Certain Asset Dispositions" above;
(ix) loans or advances to employees of the Company or any Restricted
Subsidiary in the ordinary course of business in an aggregate amount not to
exceed $5.0 million in the aggregate at any one time outstanding; (xi) any
Investment acquired by the Company or any of its Restricted Subsidiaries as a
result of a foreclosure by the Company or any of its Restricted Subsidiaries
or in connection with the settlement of any outstanding Indebtedness or trade
payable; (xii) loans and advances to officers, directors and employees for
business-related travel expense, moving expenses and other similar expenses,
each incurred in the ordinary course of business; and (xiii) other Investments
(with each such Investment being valued as of the date made and without giving
effect to subsequent changes in value) in an aggregate amount not to exceed
$7.5 million at any one time outstanding.
"Permitted Junior Securities" means (i) Qualified Stock, (ii) securities of
the Company or any other corporation authorized by an order or decree giving
effect, and stating in such order or decree that effect is given,
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to the subordination of such securities to the Senior Debt, and made by a
court of competent jurisdiction in a reorganization proceeding under any
applicable bankruptcy, insolvency or other similar law, or (iii) any
securities of the Company provided for by a plan of reorganization or
readjustment that are subordinated in right of payment to all Senior Debt that
may at the time be outstanding to substantially the same extent as, or to a
greater extent than, the Notes are subordinated as provided in this Indenture.
"Person" means any individual, corporation, limited or general partnership,
joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Plan of Liquidation" means, with respect to any Person, a plan (including
by operation of law) that provides for, contemplates or the effectuation of
which is preceded or accompanied by (whether or not substantially
contemporaneously) (i) the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the referent Person and (ii) the
distribution of all or substantially all of the proceeds of such sale, lease,
conveyance or other disposition and all or substantially all of the remaining
assets of the referent Person to holders of Capital Stock of the referent
Person.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding
up of such Person, to shares of Capital Stock of any other class of such
Person.
"Public Sale" means any underwritten public offering, made on a primary
basis pursuant to a registration statement filed with, and declared effective
by, the Commission in accordance with the Securities Act.
"Purchase Date" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Qualified Stock" means any Capital Stock of the Company, Triton PCS
Holdings, Inc. or a Special Purpose Corporation other than Disqualified Stock.
"Real Property Subsidiary" means Triton PCS Property Company, L.L.C., a
Delaware limited liability company.
"Refinance" means refinance, renew, extend, replace or refund; and
"Refinancing" and "Refinanced" have correlative meanings.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Revocation" has the meaning set forth under "--Certain Covenants--
Limitation on Designations of Unrestricted Subsidiaries."
"Senior Credit Facilities" means upon the initial issuance of the Notes, the
Credit Agreement and at any time thereafter may include the Credit Agreement
and/or any other agreement providing for loans by banks, trust companies
and/or other institutions principally engaged in the business of lending money
to businesses under a credit facility, loan agreement or similar agreement.
"Senior Debt" means, with respect to any Person at any date, (i) in the case
of the Company or the Guarantors, all Indebtedness and other payment
obligations under one or more Senior Credit Facilities, including principal,
premium, if any, and interest on such Indebtedness and all other amounts due
on or in connection with such Indebtedness including all charges, fees,
expenses, reimbursement obligations, guarantees and indemnity payments, (ii)
all other Indebtedness of such Person for borrowed money or under Vendor
Credit Arrangements, including principal, premium, if any, and interest on
such Indebtedness, unless the instrument under which such Indebtedness for
money borrowed is created, incurred, assumed or guaranteed expressly provides
that such Indebtedness for money borrowed is not senior or superior in right
of payment to the Notes or the Guarantees, as the case may be, and all
Refinancings or modifications or amendments thereof and (iii) all interest on
any
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Indebtedness referred to in clauses (i) and (ii) accruing during the pendency
of any bankruptcy or insolvency proceeding, whether or not allowed thereunder.
Notwithstanding the foregoing, Senior Debt shall not include (a) Indebtedness
which is pursuant to its terms or any agreement relating thereto or by
operation of law subordinated or junior in right of payment or otherwise to
any other Indebtedness of such Person; provided, however, that no Indebtedness
shall be deemed to be subordinate or junior in right of payment or otherwise
to any other Indebtedness of a Person solely by reason of such other
Indebtedness being secured and such Indebtedness not being secured, (b) the
Notes, (c) any Indebtedness of such Person to any of its Subsidiaries, (d)
Indebtedness Incurred in violation of the provisions of the Indenture
described under "--Covenants--Limitation on Incurrence of Indebtedness" and
(e) any Indebtedness which, when incurred and without respect to any election
under Section 1111(b) of the Bankruptcy Code, is without recourse to the
Company.
"Strategic Equity Investor" means any of the Initial Cash Equity Investors
(as defined in the Securities Purchase Agreement), any Affiliate thereof or
any other Person engaged in a Permitted Business whose Total Equity Market
Capitalization exceeds $500 million.
"Subordinated Indebtedness" means any Indebtedness of the Company or any
Guarantor (whether outstanding on the date hereof or hereafter Incurred) which
is by its terms expressly subordinate or junior in right of payment to the
Notes or the Guarantee of such Guarantor, as the case may be.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person
and one or more other Subsidiaries thereof or (ii) any other Person (other
than a corporation) in which such Person, or one or more other Subsidiaries of
such Person or such Person and one or more other Subsidiaries thereof,
directly or indirectly, has at least a majority ownership and voting power
relating to the policies, management and affairs thereof.
"Total Consolidated Indebtedness" means at any date of determination, an
amount equal to (i) the accreted value of all Indebtedness, in the case of any
Indebtedness issued with original issue discount, plus (ii) the principal
amount of all Indebtedness, in the case of any other Indebtedness, of the
Company and the Restricted Subsidiaries outstanding as of the date of
determination.
"Total Equity Market Capitalization" of any Person means, as of any day of
determination, the sum of (i) the product of (A) the aggregate number of
outstanding primary shares of common stock of such Person on such day (which
shall not include any options or warrants on, or securities convertible or
exchangeable into, shares of common stock of such Person) multiplied by (B)
the average closing price of such common stock listed on a national securities
exchange or the Nasdaq National Market System over the 20 consecutive business
days immediately preceding such day, plus (ii) the liquidation value of any
outstanding shares of preferred stock of such Person on such day.
"Total Invested Capital" means, at any time of determination, the sum of,
without duplication, (i) the total amount of equity contributed to the Company
as of the Issue Date (as set forth on the March 31, 1998 combined balance
sheet of the Company), plus (ii) irrevocable binding commitments to purchase
Capital Stock (other than Disqualified Stock) existing as of the Issue Date,
plus (iii) the aggregate net cash proceeds received by the Company from
capital contributions or the issuance or sale of Capital Stock (other than
Disqualified Stock but including Capital Stock issued upon the conversion of
convertible Indebtedness or from the exercise of options, warrants or rights
to purchase Capital Stock (other than Disqualified Stock)) subsequent to the
Issue Date, other than to a Restricted Subsidiary; provided, however, such
aggregate net cash proceeds received pursuant to this clause (iii) shall
exclude any amounts included as commitments to purchase Capital Stock in the
preceding clause (ii), plus (iv) the aggregate net cash proceeds received by
the Company or any Restricted Subsidiary from the sale, disposition or
repayment of any Investment made after the Issue Date and constituting a
Restricted Payment in an amount equal to the lesser of (a) the return of
capital with respect to such Investment and (b) the initial amount of such
Investment, in either case, less the cost of the disposition of such
Investment, plus (v) an amount equal to the consolidated net Investment on the
date the Company and/or any of the Restricted Subsidiaries in
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any Subsidiary that has been designated as an Unrestricted Subsidiary after
the Issue Date upon its redesignation as a Restricted Subsidiary in accordance
with the covenant described under "--Certain Covenants--Limitation on
Designations of Unrestricted Subsidiaries," plus (vi) Total Consolidated
Indebtedness minus (vii) the aggregate amount of all Restricted Payments
(including any Designation Amount, but other than a Restricted Payment of the
type referred to in clause (iii)(b) of the third paragraph of the covenant
described under "--Certain Covenants--Limitation on Restricted Payments")
declared or made on or after the Issue Date.
"Unrestricted Subsidiary" means any Subsidiary of the Company (other than
the License Subsidiary, the Equipment Subsidiary or the Real Property
Subsidiary designated after the Issue Date as such pursuant to and in
compliance with the covenant described under "--Certain Covenants--Limitation
on Designations of Unrestricted Subsidiaries." Any such designation may be
revoked by a Resolution of the Company delivered to the applicable Trustee,
subject to the provisions of such covenant.
"Vendor Credit Arrangement" means any Indebtedness (including, without
limitation, Indebtedness under any credit facility entered into with any
vendor or supplier or any financial institution acting on behalf of such
vendor or supplier); provided that the net proceeds of such Indebtedness are
utilized solely for the purpose of financing the cost (including, without
limitation, the cost of design, development, site acquisition, construction,
integration, handset manufacture or acquisition or microwave relocation) of
assets used or usable in a Permitted Business (including, without limitation,
through the acquisition of Capital Stock of an entity engaged in a Permitted
Business).
"Voting Stock" of any Person means the Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
"Wholly Owned Subsidiary" means a Restricted Subsidiary, all of the
outstanding Capital Stock or other ownership interests of which (other than
directors' qualifying shares) shall at the time be owned by the Company and/or
by one or more Wholly Owned Subsidiaries.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of Holdings, as set forth in the Restated
Certificate of Incorporation of Triton PCS Holdings, Inc. (the "Restated
Certificate of Incorporation"), consists of (i) 5,500,000 shares of preferred
stock, par value $0.01 per share (the "Preferred Stock"), including 1,000,000
shares designated "Series A Convertible Preferred Stock" (the "Series A
Preferred Stock"), 2,000,000 shares designated "Series B Preferred Stock" (the
"Series B Preferred Stock"), 2,000,000 shares designated "Series C Convertible
Preferred Stock" (the "Series C Preferred Stock") and 500,000 shares
designated "Series D Convertible Preferred Stock" (the "Series D Preferred
Stock") and (ii) 10,000,000 shares of common stock, par value $0.01 per share
(the "Common Stock"). Upon consummation of the Cash Equity and drawings to
date under the Myrtle Beach Commitments, 732,371 shares of Series A Preferred
Stock, 1,480,000 shares of Series C Preferred Stock, 366,131 shares of Series
D Preferred Stock and 196,237 shares of Common Stock were outstanding. In
addition, no shares of Series A Preferred Stock, 1,098,502 shares of Series B
Preferred Stock, 366,131 shares of Series C Preferred Stock, no shares of
Series D Preferred Stock and 2,578,507 shares of Common Stock are reserved for
issuance in connection with transactions contemplated to occur after the
Securities Purchase Closing Date pursuant to the Stockholders' Agreement.
SERIES A PREFERRED STOCK
The Series A Preferred Stock, with respect to dividend rights and rights on
liquidation, dissolution or winding up, ranks on a parity basis with the
Series B Preferred Stock, and ranks senior to the Series C Preferred Stock,
the Series D Preferred Stock, the Common Stock and any other series or class
of Holdings' preferred or common stock, now or hereafter authorized. The
holders of Series A Preferred Stock are entitled to cumulative quarterly cash
dividends at the annual rate of 10% multiplied by the aggregate accreted value
thereof. Holdings may elect to defer payment of any such dividends until the
42nd quarterly payment is due, at which time (and not earlier) all deferred
payments must be made. Except as required by law or in certain specified
instances, the holders of the Series A Preferred Stock do not have any voting
rights. So long as AT&T PCS owns at least two-thirds of the number of shares
of Series A Preferred Stock owned by it on February 4, 1998, AT&T PCS has the
exclusive right, voting separately as a single class, to elect one director of
Holdings. The Series A Preferred Stock is redeemable at its accreted value at
the option of Holdings on or after February 4, 2008 and at the option of the
holders of the Series A Preferred Stock on or after February 4, 2018. Upon any
liquidation, dissolution or winding up of Holdings, the holders of the Series
A Preferred Stock are entitled to the accreted value thereof. Additionally, on
or after February 4, 2006, AT&T PCS (and certain of its affiliates) and
qualified transferees have the right to convert each share of Series A
Preferred Stock into Common Stock at its accreted value divided by the market
price of one share of Common Stock.
SERIES B PREFERRED STOCK
The Series B Preferred Stock ranks on a parity basis with the Series A
Preferred Stock and is identical in all respects to the Series A Preferred
Stock except (a) the Series B Preferred Stock is not convertible into the
Common Stock or any other security of Holdings at any time, (b) the Series B
Preferred Stock is redeemable at its accreted value at any time at the option
of Holdings and (c) holders of Series B Preferred Stock shall not have the
right to elect any directors of Holdings.
SERIES C PREFERRED STOCK
The Series C Preferred Stock ranks junior to the Series A Preferred Stock
and Series B Preferred Stock with respect to dividend rights and rights on
liquidation, dissolution or winding up, ranks junior to the Series D Preferred
Stock with respect to rights on a statutory liquidation, ranks on a parity
basis with the Series D Preferred Stock and Common Stock with respect to
dividend rights, and ranks senior to the Common Stock and any other series or
class of Holdings' preferred or common stock, now or hereafter authorized
(other than Series A Preferred Stock, Series B Preferred Stock or Series D
Preferred Stock), with respect to rights on liquidation, dissolution and
winding up. The holders of Series C Preferred Stock are entitled to dividends
when, as and if declared by the Board of Directors of Holdings. Upon any
liquidation, dissolution or winding up of Holdings,
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the holders of the Series C Preferred Stock are entitled to, after payment to
any stock ranking senior to the Series C Preferred Stock, a liquidation
preference of $100 per share, subject to adjustment. The holders of the Series
C Preferred Stock have the right at any time to convert each share of Series C
Preferred Stock (and upon the IPO Date each share of Series C Preferred Stock
automatically converts) into one share of Common Stock, subject to adjustment.
On all matters to be submitted to the stockholders of Holdings, the holders of
the Series C Preferred Stock shall have the right to vote on an as-converted
basis as a single class with the holders of the Common Stock. Additionally,
the vote of the holders of a majority of the Series C Preferred Stock is
required in certain instances. The Series C Preferred Stock is not redeemable.
SERIES D PREFERRED STOCK
The Series D Preferred Stock ranks junior to the Series A Preferred Stock
and the Series B Preferred Stock with respect to dividend rights and rights on
liquidation, dissolution or winding up, ranks senior to the Series C Preferred
Stock with respect to rights on a statutory liquidation, ranks on a parity
basis with the Series C Preferred Stock and Common Stock with respect to
dividend rights, and ranks senior to the Common Stock and any other series or
class of Holdings' common or preferred stock now or hereafter authorized
(other than Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock), with respect to rights on liquidation, dissolution and
winding up. Subject to the preceding sentence, the Series D Preferred Stock is
identical in all respects to the Series C Preferred Stock except (a) the
Series D Preferred Stock is convertible into an equivalent number of shares of
Series C Preferred Stock at any time, (b) except as required by law or in
certain specified instances, the holders of the Series D Preferred Stock do
not have any voting rights, and (c) shares of Series D Preferred Stock are not
subject to automatic conversion upon the IPO Date (provided that the
conversion rate will be set on the IPO Date, subject to adjustment).
COMMON STOCK
Each holder of Common Stock is entitled to one vote for each share of Common
Stock on all matters on which stockholders generally are entitled to vote and
to all other rights, powers and privileges of stockholders under Delaware law.
Upon the dissolution, liquidation or winding up of Holdings, after any
preferential amounts to be distributed to the holders of the preferred stock
of Holdings then outstanding have been paid or declared and funds sufficient
for payment thereof in full set apart for payment, the holders of the Common
Stock will be entitled to receive pro rata all the remaining assets of
Holdings available for distribution to its stockholders.
LIMITATION ON DIRECTORS' LIABILITIES
The Delaware General Corporation Law authorizes corporations to limit or
eliminate the personal liability of directors to corporations and their
stockholders for monetary damages for breach of directors' fiduciary duty of
care. The duty of care requires that, when acting on behalf of the
corporation, directors must exercise an informed business judgment based on
all material information reasonably available to them. In the absence of the
limitations authorized by the Delaware statute, directors could be accountable
to corporations and their stockholders for monetary damages for conduct that
does not satisfy their duty of care. Although the statute does not change
directors' duty of care, it enables corporations to limit available relief to
equitable remedies such as injunction or rescission. The Restated Certificate
of Incorporation limits the liability of Holdings' directors to Holdings or
its stockholders to the fullest extent permitted by the Delaware statute.
Specifically, the directors of Holdings will not be personably liable for
monetary damages for breach of a director's fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
Holdings or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which a director derived an improper personal benefit. The
inclusion of this provision in the Restated Certificate of Incorporation may
have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter stockholders or management from bringing
a lawsuit against directors for breach of their duty of care, even though such
an action, if successful, might otherwise have benefited Holdings and its
stockholders. In addition, pursuant to the terms of the Kalogris and the
Skinner Employment Agreements, the Company will purchase director's and
officer's liability insurance coverage for such executives in amounts
customary for similarly situated companies.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of certain material United States federal
income and estate tax consequences of the acquisition, ownership and
disposition of the Notes. Unless otherwise stated, this discussion is limited
to the tax consequences to those persons who hold such Notes as capital assets
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended (the "Code") (for purposes of this section, "Holders"). The discussion
does not purport to address specific tax consequences that may be relevant to
particular persons (including, for example, financial institutions, broker-
dealers, insurance companies, tax-exempt organizations, and persons in special
situations, such as those who hold Notes as part of a straddle, hedge,
conversion transaction, or other integrated investment). In addition, this
discussion does not address U.S. federal alternative minimum tax consequences
or any aspect of state, local or foreign taxation. This discussion is based
upon the Code, the Treasury regulations promulgated thereunder and
administrative and judicial interpretations thereof, all of which are subject
to change, possibly on a retroactive basis.
For purposes of this discussion, a "U.S. Holder" is any United States
citizen or resident, corporation or partnership or other entity created or
organized in or under the laws of the United States or any state thereof,
estate the income of which is subject to United State federal income taxation
regardless of its source, or trust if a United States court exercises primary
jurisdiction over its administration and one or more United States persons
have the authority to control all of its substantial decisions. A "Foreign
Holder" is any Holder other than a U.S. Holder.
PROSPECTIVE PURCHASERS OF THE NOTES ARE URGED TO CONSULT THEIR TAX ADVISORS
CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO THEM TO
ACQUIRING, OWNING AND DISPOSING OF THE NOTES, AS WELL AS THE APPLICATION OF
STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
EXCHANGE OF PRIVATE NOTES FOR EXCHANGE NOTES
There will be no federal income tax consequences to Holders exchanging
Private Notes for Exchange Notes pursuant to the Exchange Offer. For federal
income tax purposes, the Exchange Notes will be considered a continuation of
the Private Notes and the exchange of Private Notes for Exchange Notes
hereunder will not alter the federal income tax consequences, including the
accrual of original issue discount ("OID") on the Private Notes, as described
below, of owning the Private Notes to Holders. A Holder will have the same
adjusted basis and holding period in the Exchange Notes as it had in the
Private Notes immediately before the exchange.
CHARACTERIZATION OF THE NOTES
Triton will treat the Notes as indebtedness for federal income tax purposes,
and the following discussion assumes that such treatment will be respected.
TAX CONSEQUENCES TO U.S. HOLDERS
Taxation of Interest. The Notes will be treated as issued with OID. Thus,
all U.S. Holders, regardless of their method of accounting for tax purposes,
will be required to include OID in income as it accrues. OID will generally be
treated as interest income to the U.S. Holder and will accrue on a yield-to-
maturity basis over the life of the Notes, as discussed below.
The amount of OID with respect to a Note will be an amount equal to the
excess of the stated redemption price at maturity of such Note over the issue
price of such Note. The stated redemption price at maturity of each Note will
include all cash payments, including principal and interest, required to be
made under the Note through maturity. Stated interest on the Note will not
qualify as qualified stated interest and, thus, instead of being included in
income when accrued or paid, stated interest on the Notes will be taxed as a
part of OID on the Notes. The issue price of a Note will be the first price at
which a substantial portion of it is sold to the public (subject to certain
exceptions) for cash.
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The amount of OID accruing to a Holder with respect to any Note will be the
sum of the "daily portions" of OID with respect to such Note for each day
during the taxable year on which such Holder owns such Note ("accrued OID").
The daily portion is determined by allocating to each day in any "accrual
period" a pro rata portion of the OID allocable to that accrual period. An
accrual period may be of any length and may vary in length over the term of a
Note provided that each accrual period is no longer than one year and each
scheduled payment of principal or interest occurs either on the final day or
on the first day of an accrual period. The amount of OID accruing during any
full accrual period with respect to a Note will be equal to the following
amount: (i) the "adjusted issue price" of such Note at the beginning of that
accrual period, multiplied by (ii) the yield to maturity of such Note (taking
into account the length of the accrual period). OID allocable to a final
accrual period is the difference between the amount payable at maturity and
the adjusted issue price at the beginning of the final accrual period. If all
accrual periods are of equal length, except for an initial short accrual
period, the amount of OID allocable to the initial short accrual period may be
computed under any reasonable method. The adjusted issue price of a Note at
the beginning of its first accrual period will be equal to its issue price.
The adjusted issue price at the beginning of any subsequent accrual period
will be equal to (i) the adjusted issue price at the beginning of the
preceding accrual period, plus (ii) the amount of OID accrued during the
preceding accrual period, minus (iii) any payments made on the Note during the
preceding accrual period and on the first day of such subsequent accrual
period.
In the event of a Change of Control, the Holders of Notes will have the
right to require Triton to purchase their Notes. The Treasury regulations
provide that the right of Holders of the Notes to require redemption of the
Notes upon the occurrence of a Change of Control will not affect the yield or
maturity date of the Notes unless, based on all the facts and circumstances as
of the issue date, it is more likely than not that a Change of Control giving
rise to the redemption right will occur. Triton does not intend to treat this
redemption provision of the Notes as affecting the computation of the yield to
maturity of the Note.
Triton may redeem the Notes at any time on or after a certain date, and, in
certain circumstances, may redeem or repurchase all or a portion of the Notes
any time prior to the maturity date. Under the Treasury regulations, Triton is
deemed to exercise any option to redeem if the exercise of such option would
lower the yield of the debt instrument. Triton believes, and intends to take
the position, that it will not be treated as having exercised an option to
redeem under these rules.
Market Discount and Premium. If a U.S. Holder purchased a Note for an amount
that was less than its "adjusted issue price", the amount of the difference
would be treated as "market discount" for federal income tax purposes, unless
such difference was less than a specified de minimis amount. The adjusted
issue price of a Note is defined as the sum of the issue price of the Note and
the aggregate amount of previously accrued OID, less any prior principal and
interest payments on the Note.
Under the market discount rules, a U.S. Holder will be required to treat any
prior payment on, or any gain on the sale, exchange, retirement or other
disposition of, a Note as ordinary income to the extent of the market discount
which has not previously been included in income (pursuant to an election by
the U.S. Holder to include such market discount in income as it accrues) and
is treated as having accrued on such Note at the time of such payment or
disposition. If such Note is disposed of in a nontaxable transaction (other
than as provided in Code Sections 1276(c) and (d)), accrued market discount
will be includible as ordinary income to the U.S. Holder as if such Holder had
sold the Note at its then fair market value. In addition, the U.S. Holder may
be required to defer, until the maturity of the Note or its earlier
disposition (including a nontaxable transaction other than as provided in Code
Sections 1276(c) and (d)), the deduction of all or a portion or the interest
expense on any indebtedness incurred or maintained to purchase or carry such
Note.
A U.S. Holder who purchased a Note for an amount that was greater than its
adjusted issue price but less than its stated redemption price at maturity
would be considered to have purchased such Note at any "acquisition premium."
Under the acquisition premium rules of the Code and the regulations
thereunder, unless such Holder makes the election described under "Election to
Treat all Interest as Original Issue Discount" below, the amount
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of OID which such Holder must include in its gross income with respect to such
Note for any taxable year will be reduced by the portion of such acquisition
premium properly allocable to such year.
Election to Treat All Interest as Original Issue Discount. A U.S. Holder may
elect to include in gross income all interest that accrues on a Note using the
constant-yield method described above under "Taxation of Interest", with the
modifications described below. For purposes of this election, interest
includes stated interest, OID, de minimis OID, market discount, de minimis
market discount and unstated interest, as adjusted by any amortizable bond
premium or acquisition premium.
In applying the constant-yield method to a Note with respect to which this
election has been made, the issue price of the Note will equal the electing
U.S. Holder's adjusted basis in the Note immediately after its acquisition and
the issue date of the Note will be the date of its acquisition by the electing
U.S. Holder. This election will generally apply only to the Note with respect
to which it is made and may not be revoked without the consent of the Internal
Revenue Service.
If the election to apply the constant-yield method to all interest on a Note
is made with respect to a Note with market discount, the electing U.S. Holder
will be treated as having made the election discussed above under "Market
Discount" to include market discount in income currently over the life of all
debt instruments held or thereafter acquired by such U.S. Holder.
Sale, Exchange or Retirement of the Notes. Upon the sale, exchange or
retirement of Notes, a U.S. Holder will recognize gain or loss equal to the
difference between the amount realized upon the sale, exchange or retirement
and the U.S. Holder's adjusted tax basis in the Notes. A U.S. Holder's
adjusted tax basis in the Notes will generally be the U.S. Holder's cost
therefor, increased by the amount of OID previously accrued on the Notes
through the sale, exchange or retirement date and decreased by the amount of
all prior cash payments received with respect to the Notes.
Except as otherwise described under "Market Discount and Premium" above,
gain or loss recognized by a U.S. Holder on the sale, exchange, or retirement
of the Notes will be capital gain or loss. The gain or loss will be long-term
capital gain or loss if the Notes have been held by the U.S. Holder for more
than 12 months. A Holder of Notes who is an individual may qualify for a
reduced long-term capital gains tax rate that is lower than the tax rate
generally applicable to long-term capital gains if the Holder has held his or
her Notes for more than 18 months.
TAX CONSEQUENCES TO FOREIGN HOLDERS
Assuming that the interest income received by a Foreign Holder is not
effectively connected with the Foreign Holder's conduct of a trade or business
in the United States, a Foreign Holder generally will not be subject to United
States federal income or withholding tax on such interest so long as the
Foreign Holder (i) is not actually or constructively a "10 percent
shareholder" of Triton or a "controlled foreign corporation" with respect to
which Triton is a "related person" within the meaning of the Code, and (ii)
provides an appropriate statement, signed under penalties of perjury,
certifying that the beneficial owner of the Note is a foreign person and
providing that foreign person's name and address. If the foregoing conditions
are not satisfied, then interest paid on the Notes will be subject to United
States withholding tax at a rate of 30 percent, unless such rate is reduced or
eliminated pursuant to an applicable tax treaty.
Any capital gain a Foreign Holder realized on the sale, exchange, retirement
or other taxable disposition of a Note will be exempt from United States
federal income and withholding tax, provided that (a) the gain is not
effectively connected with the Foreign Holder's conduct of a trade or business
in the United States, (b) in the case of a Foreign Holder that is an
individual, the Foreign Holder is not present in the United States for 183
days or more in the taxable year and (c) the Foreign Holder is not subject to
tax pursuant to the provisions of U.S. tax law applicable to certain
expatriates.
103
<PAGE>
If the interest, gain or other income a Foreign Holder recognizes on a Note
is effectively connected with the Foreign Holder's conduct of a trade or
business in the United States, the Foreign Holder (although exempt from the
withholding tax previously discussed if an appropriate statement is furnished)
generally will be subject to United States federal income tax on the interest,
gain or other income at regular federal income tax rates. In addition, if the
Foreign Holder is a foreign corporation, it may be subject to a branch profits
tax equal to 30 percent of its "effectively connected earnings and profits,"
as adjusted for certain items, unless it qualifies for a lower rate under an
applicable tax treaty.
If interest on the Notes is exempt from withholding of United States federal
income tax under the rules described above, the Notes will not be included in
the estate of a deceased Foreign Holder for United States federal estate tax
purposes.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Triton will be required to report annually to the IRS, and to each Holder of
record, the amount of interest paid on the Notes (and the amount of interest
withheld for federal income taxes, if any) for each calendar year, except as
to exempt Holders (generally, corporations, tax-exempt organizations,
qualified pension and profit-sharing trusts, individual retirement accounts,
or nonresident aliens who provide certification as to their status). Each
Holder (other than Holders who are not subject to the reporting requirements)
will be required to provide to Triton, under penalties of perjury, a
certificate containing the Holder's name, address, correct federal taxpayer
identification number and a statement that the Holder is not subject to backup
withholding. Should a nonexempt Holder fail to provide the required
certificate, Triton will be required to withhold 31% of the interest otherwise
payable to the Holder and to remit the withheld amount to the IRS as a credit
against the Holder's federal income tax liability.
In the case of payments of interest to Foreign Holders, temporary Treasury
regulations provide that the 31% backup withholding tax and certain
information reporting will not apply to such payments with respect to which
the requisite certification, as described above (for the exemption from the
30% withholding tax), has been received or an exemption has otherwise been
established; provided that neither the Company nor its payment agent has
actual knowledge that the holder is a United States person or that the
conditions of any other exemption are not in fact satisfied. Under temporary
Treasury regulations, these information reporting and backup withholding
requirements will apply, however, to the gross proceeds paid to a Foreign
Holder on the disposition of the Notes by or through a United States office of
a United States or foreign broker, unless the holder certifies to the broker
under penalties of perjury as to its name, address and status as a foreign
person or the holder otherwise establishes an exemption. Information reporting
requirements will also apply to a payment of the proceeds of a disposition of
the Notes by or through a foreign office of a United States broker or foreign
brokers with certain types of relationships to the United States unless such
broker has documentary evidence in its file that the holder of the Notes is
not a United States person, and such broker has no actual knowledge to the
contrary, or the holder establishes an exception; backup witholding will not
apply to such payment, absent actual knowledge that the holder is a U.S.
Holder. Neither information reporting nor backup withholding generally will
apply to a payment of the proceeds of a disposition of the Notes by or through
a foreign office of a foreign broker not subject to the preceding sentence.
The Treasury Department recently promulgated final regulations regarding the
withholding and information reporting rules relating to Foreign Holders
discussed above. In general, the final regulations do not significantly alter
the substantive withholding and information reporting requirements but rather
unify current certification procedures and forms and clarify reliance
standards. The final regulations are generally effective for payments made
after December 31, 1999, subject to certain transition rules. FOREIGN HOLDERS
SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE IMPACT, IF ANY, OF
THE NEW FINAL REGULATIONS.
104
<PAGE>
APPLICABLE HIGH-YIELD DISCOUNT OBLIGATIONS
If the Notes are considered to have "significant OID" and if the yield of
the Notes is at least five percentage points above the applicable federal
rate, Triton would not be able to deduct for tax purposes any OID accruing
with respect thereto until such interest is actually paid. In addition, in
that event, if the yield of the Notes is more than six percentage points above
the applicable federal rate, then (i) a portion of such interest corresponding
to the yield in excess of six percentage points above the applicable federal
rate would not be deductible by Triton at any time, and (ii) a U.S. corporate
holder may be entitled to treat the interest that would not be not deductible
as a dividend to the extent of the earnings and profits of Triton, which may
then qualify for the dividends received deduction. In such event, U.S.
corporate holders should consult their tax advisors concerning the
availability of the dividends received deduction. Based on the applicable
federal rate for May of 1998, the Notes will be considered as applicable high-
yield discount obligations since the yield on the Notes exceeds such rate by
more than five percentage points, but the yield will not exceed such rate by
more than six percentage points.
105
<PAGE>
BOOK-ENTRY; DELIVERY AND FORM
Except as set forth below, the Notes will initially be issued in the form of
a global note (the "Global Note"). The Global Note will be deposited on the
Closing Date with, or on behalf of, the Depositary and registered in the name
of Cede & Co., as nominee of the Depositary.
Notwithstanding the foregoing, Notes (i) originally issued to or transferred
to institutional "accredited investors," as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act, who are not qualified institutional
buyers or to any other persons who are not qualified institutional buyers or
(ii) held by qualified institutional buyers who elect to take physical
delivery of their certificates instead of holding their interest through the
Global Note (and which are thus ineligible to trade through the Depositary)
(collectively referred to herein as "Non-Global Purchasers") will be issued,
in registered form, without interest coupons as "Certificated Notes." Upon the
transfer to a qualified institutional buyer of such Certificated Notes
initially issued to a Non-Global Purchaser, such Certificated Notes will,
unless the transferee requests otherwise or the Global Note has previously
been exchanged in whole for Certificated Securities, be exchanged for an
interest in the Global Note representing the principal amount of Notes being
transferred.
The Depositary has advised the Company that it is (i) a limited-purpose
trust company organized under the laws of the State of New York, (ii) is a
member of the Federal Reserve System, (iii) a "clearing operation" within the
meaning of the Uniform Commercial Code, as amended, and (iv) a "Clearing
Agency" registered pursuant to Section 17A of the Exchange Act. The Depositary
was created to hold securities for its participating organizations
(collectively, the "Participants" or the "Depositary's Participants") and to
facilitate the clearance and settlement of transactions in such securities
between Participants through electronic book-entry changes in accounts of its
Participants, thereby eliminating the need for physical movement of
certificates. The Depositary's Participants include securities brokers and
dealers (including the Initial Purchasers), banks and trust companies,
clearing corporations and certain other organizations. Access to the
Depositary's system is also available to other entities such as banks,
brokers, dealers and trust companies (collectively, the "Indirect
Participants" or the "Depositary's Indirect Participants") that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly. Qualified institutional buyers may elect to hold Notes purchased
by them through the Depositary. Qualified institutional buyers who are not
Participants may beneficially own securities held by or on behalf of the
Depositary only through Participants or Indirect Participants. Persons that
are not qualified institutional buyers may not hold Notes through the
Depositary.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Note, the Depositary will credit the
accounts of Participants designated by the Initial Purchasers with an interest
in the Global Note and (ii) ownership of the Notes will be shown on, and the
transfer of ownership thereof will be effected only through, records
maintained by the Depositary (with respect to the interests of the
Depositary's Participants), the Depositary's Participants and the Depositary's
Indirect Participants. The laws of some states require that certain persons
take physical delivery in definitive form of securities that they own and that
security interests in negotiable instruments can only be perfected by delivery
of certificates representing the instruments. Consequently, the ability to
transfer Notes or to pledge the Notes as collateral will be limited to such
extent.
So long as the Depositary or its nominee is the registered owner or holder
of the Global Note, the Depositary or such nominee will be considered the sole
owner or holder of the Notes represented by the Global Note for all purposes
under the Indenture. Except as provided below, owners of beneficial interests
in the Global Note will not be entitled to have Notes represented by such
Global Note registered in their names, will not receive or be entitled to
receive physical delivery of Certificated Notes, and will not be considered
the owners or holders thereof under the Indenture for any purpose, including
with respect to the giving of any directions, instructions or approvals to the
Trustee thereunder. As a result, the ability of a person having a beneficial
interest in Notes represented by the Global Note to pledge such interest to
persons or entities that do not participate in the Depositary's system, or to
otherwise take actions with respect to such interest, may be affected by the
lack of a physical certificate evidencing such interest.
106
<PAGE>
Accordingly, each qualified institutional buyer owing a beneficial interest
in the Global Note must rely on the procedures of the Depositary and, if such
qualified institutional buyer is not a Participant or an Indirect Participant,
on the procedures of the Participant through which such qualified
institutional buyer owns its interest, to exercise any rights of a holder
under the Indenture or the Global Note. The Company understands that under
existing industry practice, in the event the Company requests any action of
holders of Notes or a qualified institutional buyer that is an owner of a
beneficial interest in the Global Note desires to take any action that the
Depositary, as the holder of the Global Note, is entitled to take, the
Depositary would authorize the Participants to take such action and the
Participants would authorize the qualified institutional buyers owning through
such Participants to take such action or would otherwise act upon the
instructions of such qualified institutional buyers. Neither the Company nor
the Trustee will have any responsibility or liability for any aspect of the
records of the Depositary or for maintaining, supervising or reviewing any
records of the Depositary relating to the Notes.
Payments with respect to the principal of, premium, if any, interest and
Additional Interest, if any, on any Notes represented by the Global Note
registered in the name of the Depositary or its nominee on the applicable
record date will be payable by the Trustee to or at the direction of the
Depositary or its nominee in its capacity as the registered holder of the
Global Note representing such Notes under the Indenture. Under the terms of
the Indenture, the Company and the Trustee may treat the persons in whose
names the Notes, including the Global Note, are registered as the owners
thereof for the purpose of receiving such payments and for any and all
purposes whatsoever. Consequently, neither the Company nor the Trustee has or
will have any responsibility or liability for the payment of such amounts to
beneficial owners of Notes. The Company believes, however, that it is
currently the policy of the Depositary to immediately credit the accounts of
the relevant Participants with such payments, in amounts proportionate to
their respective holdings of beneficial interests in the Global Note as shown
on the records of the Depositary. Payments by the Depositary's Participants
and the Depositary's Indirect Participants to the beneficial owners of Notes
will be governed by standing instructions and customary practice and will be
the responsibility of the Depositary's Participants or the Depositary's
Indirect Participants.
Neither the Company nor the Trustee will be liable for any delay by the
Depositary or any Participant or Indirect Participant in identifying the
beneficial owners of the related Notes and the Company and the Trustee may
conclusively rely on, and will be protected in relying on, instructions from
the Depositary for all purposes (including with respect to the registration
and delivery, and the respective principal amounts of the Notes to be issued).
The Notes represented by the Global Note are expected to be eligible to
trade in the PORTAL market and to trade in the Depositary's Same-Day Funds
Settlement System, and any permitted secondary market trading activity in such
Notes will, therefore, be required by the Depositary to be settled in
immediately available funds.
CERTIFICATED NOTES
Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Certificated Notes. Upon any such issuance, the Trustee is
required to register such Certificated Notes in the name of, and cause the
same to be delivered to, such person or persons (or the nominee of any
thereof). All such Certificated Notes evidencing Private Notes will be subject
to the legend requirements applicable to the Private Notes. In addition, if
(i) the Company notifies the Trustee in writing that the Depositary is no
longer willing or able to act as a depository and the Company is unable to
locate a qualified successor within 90 days or (ii) the Company, at its
option, notifies the Trustee in writing that it elects to cause the issuance
of Notes in definitive form under the Indenture, then, upon surrender by the
Depositary of the Global Note, Certificated Notes will be issued to each
person that the Depositary identifies as being the beneficial owner of the
Notes represented by the Global Note.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources the Company
believes to be reliable. The Company will have no responsibility for the
performance by the Depositary or its Participants of their respective
obligations as described hereunder or under the rules and procedures governing
their respective operations.
107
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account in
connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange 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 Exchange Notes received
in exchange for Private Notes if such Private Notes were acquired as a result
of market-making activities or other trading activities. The Company has
agreed that for a period of 180 days after the Expiration Date, it will make
this Prospectus, as amended or supplemented, available to any broker-dealer
that requests such documents in the Letter of Transmittal, for use in
connection with any such resale. In addition, until (90 days after the
date of this Prospectus), all dealers effecting transactions in the Exchange
Notes may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. Exchange Notes received by broker-dealers for their own
account in connection with the Exchange Offer may be sold from time to time in
one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of 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 release may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions of
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Notes. Any broker-dealer that resells Exchange Notes that were
received by it for its own account in connection with the Exchange Offer and
any broker or dealer that participates in a distribution of such Exchange
Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of Exchange 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 delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
108
<PAGE>
LEGAL MATTERS
Certain legal matters with regard to the validity of the Exchange Notes will
be passed upon for the Company by Latham & Watkins, Washington, D.C.
EXPERTS
The combined financial statements of Triton PCS, Inc. as of December 31,
1997 and for the period from March 6, 1997 (inception) to December 31, 1997
have been included in the registration statement in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
The audited financial statements and schedule of Vanguard Cellular Systems
of South Carolina, Inc. as of December 31, 1997 and 1996 and for the three
years in the period ended December 31, 1997, included in this Registration
Statement, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
109
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act with respect to the Exchange Notes offered
hereby. As permitted by the rules and regulations of the Commission, this
Prospectus omits certain information, exhibits and undertakings contained in
the Registration Statement. For further information with respect to the
Company and the Exchange Notes offered hereby, reference is made to the
Registration Statement, including the exhibits thereto and the financial
statements, notes and schedules filed as a part thereof. As a result of the
Exchange Offer, the Company will become subject to the informational
requirements of the Exchange Act. The Registration Statement (and the exhibits
and schedules thereto), as well as the periodic reports and other information
filed by the Company with the Commission, may be inspected and copied at the
Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at Room 1400, 75 Park Place, New York, New York 10007 and
Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 6061-2511. Copies of such materials may be obtained from the Public
Reference Section of the Commission, Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and its public reference facilities in
New York, New York and Chicago, Illinois at the prescribed rates. The
Commission maintains a web site (http://www.sec.gov), that contains periodic
reports, proxy and information statements and other information regarding
registrants that file documents electronically with the Commission. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and in each instance reference is made
to the copy of such contract or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.
Pursuant to the Indenture, the Company has agreed to furnish to the Trustee
and to registered holders of the Exchange Notes, without cost to the Trustee
or such registered holders, copies of all reports and other information that
would be required to be filed by the Company with the Commission under the
Exchange Act, whether or not the Company is then required to file reports with
the Commission. As a result of this Exchange Offer, the Company will become
subject to the periodic reporting and other informational requirements of the
Exchange Act. In the event that the Company ceases to be subject to the
informational requirements of the Exchange Act, the Company has agreed that,
so long as any Notes remain outstanding, it will file with the Commission (but
only if the Commission at such time is accepting such voluntary filings) and
distribute to holders of the Private Notes or the Exchange Notes, as
applicable, copies of the financial information that would have been contained
in such annual reports and quarterly reports, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
that would have been required to be filed with the Commission pursuant to the
Exchange Act. The Company will also furnish such other reports as it may
determine or as may be required by law.
110
<PAGE>
TRITON PCS INC. AND PRECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
TRITON PCS INC. AND PRECESSOR COMPANY
Combined Financial Statements: F-2
Report of KPMG Peat Marwick LLP F-3
Combined Balance Sheet as of December 31, 1997 F-4
Combined Statements of Operations for the period March 6, 1997
(inception) to December 31, 1997 F-5
Combined Statements of Shareholder's Equity (Deficit) and Member's
Capital for the period March 6, 1997 (inception) to December 31, 1997 F-6
Combined Statement of Cash Flows for the period March 6, 1997
(inception) to December 31, 1997 F-7
Notes to Combined Financial Statements
Combined Balance Sheet as of March 31, 1997 F-16
Combined Statement of Operations for the three months ended March 31,
1998 F-17
Combined Statement of Shareholder's Equity (Deficit) and Member's
Capital for the three months ended March 31, 1998 F-18
Combined Statement of Cash Flows for the three months ended March 31,
1998 F-19
Notes to Combined Financial Statements F-20
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
Financial Statements:
Report of Arthur Andersen LLP F-29
Balance Sheets as of March 31, 1998, December 31, 1997 and 1996 F-30
Statements of Operations for the three months ended March 31, 1998 and
three years ended December 31, 1997 F-31
Statements of Cash Flows for the three months ended March 31, 1998 and
three years ended December 31, 1997 F-32
Statements of Changes in Shareholder's Deficit three months ended March
31, 1998 and three years ended December 31, 1997 F-33
Notes to Financial Statements F-34
Schedule II--Valuation and Qualifying Accounts F-39
TRITON PCS, INC. AND MYRTLE BEACH SYSTEMS
Pro forma Financial Statements:
Unaudited pro forma financial information F-40
Combined Balance Sheet as of March 31, 1998 F-41
Combined Statement of Operations for year ended December 31, 1997 F-42
Combined Statement of Operations for the quarter ended March 31, 1998 F-43
Notes to Combined Financial Statements F-44
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholder
Triton PCS, Inc.:
We have audited the accompanying combined balance sheet of Triton PCS, Inc. and
Predecessor Company, (a development stage enterprise) as defined in note 2, as
of December 31, 1997, and the related combined statements of operations, share-
holder's deficit and member's capital, and cash flows for the period from March
6, 1997 (inception) to December 31, 1997. These combined financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these combined financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of mate-
rial misstatement. An audit includes examining, on a test basis, evidence sup-
porting 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 pre-
sentation. We believe that our audit provides a reasonable basis for our opin-
ion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Triton PCS, Inc.
and Predecessor Company as of December 31, 1997, and the results of their
operations and their cash flows for the period March 6, 1997 (inception) to
December 31, 1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Philadelphia, Pennsylvania
March 27, 1998
F-2
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
COMBINED BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
------------------------- -------
PRO FORMA
(UNAUDITED--
NOTE 3)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $11,362,212 $120,574,106
Due from related party 148,100 148,100
Prepaid expenses 20,960 20,960
----------- ------------
Total current assets 11,531,272 120,743,166
----------- ------------
Property, plant and equipment:
Office furniture and equipment 121,398 121,398
Construction in progress 356,258 356,258
----------- ------------
477,656 477,656
Less: accumulated depreciation (4,762) (4,762)
----------- ------------
Net property and equipment 472,894 472,894
Intangible assets -- 119,700,000
Deferred transaction costs 1,248,855 7,165,461
----------- ------------
$13,253,021 $248,081,521
=========== ============
LIABILITIES AND SHAREHOLDER'S EQUITY
(DEFICIT) AND MEMBER'S CAPITAL
Current liabilities:
Accounts payable $ 1,580,880 $ 1,580,880
Accrued expenses 1,016,048 1,016,048
Accrued financing costs 1,228,029 --
Due to related party 45,402 45,402
Notes payable 13,343,500 --
----------- ------------
Total current liabilities 17,213,859 2,642,330
----------- ------------
Long-term debt -- 75,000,000
----------- ------------
Deferred Income Taxes -- 18,456,655
Commitments and contingencies (Note 7)
Shareholder's equity (deficit) and Mem-
ber's Capital:
Common stock, $.01 par value, 1,000
shares authorized, 100 shares
issued and outstanding 1 1
Additional paid-in capital -- 154,731,009
Deficit accumulated during the develop-
ment stage (3,960,839) (2,748,474)
----------- ------------
Total shareholder's equity (deficit) and
member's capital (3,960,838) 151,982,536
----------- ------------
$13,253,021 $248,081,521
=========== ============
</TABLE>
See accompanying notes to combined financial statements.
F-3
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
COMBINED STATEMENT OF OPERATIONS
For the period from March 6, 1997 (inception) to December 31, 1997
<TABLE>
<CAPTION>
----------
<S> <C>
Expenses:
Operations and development $ 873,477
General and administrative 1,867,328
----------
Loss from operations 2,740,805
----------
Financing costs 1,228,029
Interest income (7,995)
----------
Net loss $3,960,839
==========
</TABLE>
See accompanying notes to combined financial statements.
F-4
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
COMBINED STATEMENT OF SHAREHOLDER'S DEFICIT AND MEMBER'S CAPITAL
For the period from March 6, 1997 (inception) to December 31, 1997
<TABLE>
<CAPTION>
------------------------------------------------------
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON PAID-IN DEVELOPMENT
STOCK CAPITAL STAGE TOTAL
------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
Issuance of common stock $ 1 -- -- 1
Net loss -- -- (3,960,839) (3,960,839)
--- --- ---------- ----------
Balance, December 31,
1997 $ 1 -- (3,960,839) (3,960,838)
=== === ========== ==========
</TABLE>
See accompaning notes to combined financial statements.
F-5
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
COMBINED STATEMENT OF CASH FLOWS
For the period from March 6, 1997 (inception) to December 31, 1997
<TABLE>
<CAPTION>
-----------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,960,839)
-----------
Adjustments to reconcile net loss to cash used in operating
activities:
Depreciation 4,762
(Increase) in assets:
Prepaid expenses and other (20,960)
Increase in liabilities:
Accounts payable 656,441
Accrued expenses 1,016,048
Accrued financing costs 1,228,029
-----------
Net cash used in operating activities (1,076,519)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of office furniture and equipment (121,398)
Network construction (356,258)
Related-party advances, net (102,698)
-----------
Net cash used in investing activities (580,354)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on notes payable 13,343,500
Issuance of common stock 1
Deferred transaction costs (324,416)
-----------
Net cash provided by financing activities 13,019,085
-----------
NET INCREASE IN CASH 11,362,212
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD --
-----------
CASH AND CASH EQUIVALENTS END OF PERIOD $11,362,212
===========
SUPPLEMENTAL NONCASH INVESTING AND FINANCING TRANSACTIONS:
Deferred transaction costs financed via accounts payable $ 924,439
===========
</TABLE>
See accompanying notes to combined financial statements.
F-6
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(1) DESCRIPTION OF BUSINESS
Triton PCS, Inc (formerly Triton PCS Licence Company, Inc., with its subsid-
iaries referred to as the "Company") was formed on October 2, 1997 as a whol-
ly-owned subsidiary of Triton PCS Holdings, Inc. (formerly Triton PCS, Inc.
referred to as "Holdings"). The Company will be the exclusive provider of
wireless mobility services in the AT&T Corporation (together with affiliates
"AT&T") Mid-Atlantic and southeast regions. The Company intends to become a
leading provider of broadband PCS in Virginia, South Carolina, North Carolina,
northern Georgia, and surrounding areas. The Company is authorized to provide
PCS Service in major population and business centers such as Charleston, SC,
Columbia, SC, Greenville / Spartansburg, SC, Richmond, VA and Augusta GA, as
well as major destination resorts such as Myrtle Beach, SC, Hilton Head, SC,
and Kiawah Island, SC.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
On March 6, 1997, Triton Communications L.L.C. ("L.L.C.") was formed to ex-
plore various business opportunities in the wireless telecommunications indus-
try, principally related to personal communications services ("PCS") and cel-
lular activities. During the period March 6, 1997 through October 1, 1997,
L.L.C.'s activities consisted principally of hiring a management team, raising
capital, and negotiating strategic business relationships, primarily related
to PCS business opportunities. Subsequent to October 2, 1997, these activities
continued but were conducted primarily through the Company. Consequently, for
purposes of the accompanying financial statements, L.L.C. has been treated as
a "predecessor" entity. The chief executive officer and sole member of L.L.C.
is also the chief executive officer and principal shareholder of Holdings, and
consequently the Company. As a result of this relationship, certain financing
relationships and the similar nature of the business activities conducted by
each respective legal entity, L.L.C. and the Company are considered companies
under common control.
The combined financial statements incorporate the PCS-related business activi-
ties of L.L.C. and the Company. The consolidated accounts of the Company in-
clude Triton PCS Inc.; Triton PCS Holdings Company L.L.C.; Triton Management
Company, Inc.; Triton PCS Property Company L.L.C.; Triton PCS Equipment Com-
pany L.L.C.; Triton PCS Operating Company L.L.C.; and Triton PCS License Com-
pany L.L.C. All significant intercompany accounts or balances have been elimi-
nated in consolidation.
Development Stage Company
Since its inception, the Company's activities have been limited to developing
and executing a business plan, raising capital and negotiating the contribu-
tion of the PCS Licenses by AT&T. During the next several years, the Company
intends to devote its efforts to designing and constructing a PCS network in
each of its licensed areas. Accordingly, the Company is presently in the de-
velopment stage as defined by the Statement of Financial Accounting Standards
("SFAS") No. 7, Accounting and Reporting by Development Stage Enterprises.
Use of Estimates
The preparation of the financial statements in conformity with generally ac-
cepted accounting principles requires management to make estimates and assump-
tions that affect the reported amounts of assets and disclosure of contingent
assets and liabilities at the date of the financial statements and the re-
ported amount of expenses during the reporting period. Actual results could
differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents. At the balance sheet
date, cash equivalents were comprised primarily of investments in money market
accounts.
F-7
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DECEMBER 31, 1997)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
Property and equipment is stated at original cost and includes primarily
computer equipment and software and office equipment. Depreciation is provided
based on the straight-line method over the estimated useful lives of the
respective assets, generally three years for computer equipment and software.
In connection with the construction of the PCS network, the Company will
capitalize expenditures related to the design, construction, and microwave
relocation. In addition, the Company anticipates it will capitalize interest
on expenditures related to the buildout of the network. Expenditures for
repairs and maintenance are charged to expense as incurred.
Investment in PCS Licenses
The Company intends to amortize its licenses over 40 years. Investment in PCS
licenses will be recorded at the fair market value of the licenses upon the
closing of the AT&T transaction (see note 4). Amortization will begin with the
commencement of service to customers and will be computed using the straight-
line method.
Deferred Transaction Costs
At December 31, 1997, costs were incurred in the connection with the
negotiation and documentation of the AT&T transaction, bank financing, and the
Company's planned issuance of senior subordinated discount notes. The costs
related to the AT&T transaction will be amortized over the life of the various
intangibles acquired. The costs of the bank financing and planned issuance
will be amortized over the term of the respective agreements.
Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, which requires the use of the
liability method in accounting for deferred taxes.
New Accounting Pronouncements
In February 1997, the FASB issued Statement No. 129, Disclosure of Information
about Capital Structure. This statement establishes standards for disclosing
information about an entity's capital structure. Management intends to comply
with the disclosure requirements of this statement, which are effective for
periods beginning after December 15, 1997.
In June 1997, the FASB issued Statement No. 130, Reporting Comprehensive
Income ("SFAS 130"). This statement requires companies to classify items of
other comprehensive income by their nature in a financial statement and
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of a
statement of financial position. SFAS 130 is effective for financial
statements issued for fiscal years beginning after December 15, 1997.
Management believes that SFAS 130 will not have a material effect on the
Company's financial statements.
In June 1997, the FASB issued Statement No. 131, Disclosure About Segments of
an Enterprise and Related Information ("SFAS 131"). This statement establishes
additional standards for segment reporting in the financial statements and is
effective for fiscal years beginning after December 15, 1997. Management
believes that SFAS 131 will not have a material effect on the Company's
financial statements.
(3) UNAUDITED PRO FORMA BALANCE SHEET
Certain significant transactions occurred subsequent to December 31, 1997,
which will materially effect the Company's financial position, as follows:
. The AT&T transaction, as further described in note 4.
F-8
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DECEMBER 31, 1997)
(3) UNAUDITED PRO FORMA BALANCE SHEET (CONTINUED)
. The execution of the Bank Credit Facility, as further described in note 6.
. Capital contributions by Holdings, as further described in notes 5 and 9.
The unaudited pro forma balance sheet gives effect to these transactions as if
they had occurred on December 31, 1997. The values assigned to intangible
assets acquired in the AT&T transaction are based on an independent appraisal.
(4) AT&T TRANSACTION
On October 8, 1997, Holdings entered into a Securities Purchase Agreement with
AT&T Wireless PCS, Inc ("AT&T PCS"), a subsidiary of AT&T, and the other
stockholders of Holdings, whereby the Company will be the exclusive provider
of wireless mobility services in the AT&T mid-Atlantic and Southeast regions.
On February 4, 1998, Holdings executed the Closing Agreement with AT&T PCS and
the other stockholders of Holdings, finalizing the transactions contemplated
in the Securities Purchase Agreement. In accordance with the Closing
Agreement, Holdings and AT&T PCS and the other stockholders of Holdings
consented that one or more of Holding's subsidiaries shall enter into certain
agreements or conduct certain operations on the condition that such
subsidiaries shall at all times be direct or indirect wholly-owned
subsidiaries of Holdings and Holdings shall cause such subsidiaries to perform
the obligations and conduct such operations required to be performed or
conducted under those agreements.
Under the Closing Agreement, Holdings issued equity to AT&T PCS in exchange
for 20 MHz A and B block PCS licenses, which were contributed to the Company
and certain other agreements covering certain areas in the southeastern United
States. The fair value of the FCC licenses, as determined by an independent
appraisal, was $92.8 million with an estimated useful life of 40 years.
In connection with the closing of the AT&T transaction, the Company executed
or was a party to certain agreements, including the following:
STOCKHOLDERS' AGREEMENT
Resale Agreement
Pursuant to the Stockholders' Agreement, the Company is required to enter into
a Resale Agreement at the request of AT&T. Under this agreement, AT&T PCS will
be granted the right to purchase and resell on a nonexclusive basis access to
and usage of the Company's services in the Company's Licensed Area. The
Company will retain the continuing right to market and sell its services to
customers and potential customers in competition with AT&T PCS.
The Resale Agreement will have a term of ten years and will renew
automatically for successive one-year periods unless, after the eleventh
anniversary thereof, either party elects to terminate the Resale Agreement.
Furthermore, AT&T PCS may terminate the Resale Agreement at any time for any
reason on 180 days written notice.
The Company has agreed that the rates, terms, and conditions of service, taken
as a whole, provided by the Company to AT&T PCS pursuant to the Resale
Agreement, shall be at least as favorable as (or if permitted by applicable
law, superior to) the rates, terms, and conditions of service, taken as a
whole, provided by the Company to any other customer. Without limiting the
foregoing, the rate plans offered by the Company pursuant to the Resale
Agreement shall be designed to result in a discounted average actual rate per
minute paid by AT&T PCS for service below the weighted average actual rate per
minute billed by the Company to its subscribers generally for access and air
time.
Neither party may assign or transfer the Resale Agreement or any of its rights
thereunder without the other party's prior written consent, which will not be
unreasonably withheld, except (a) to an affiliate of that party at the time of
execution of the Resale Agreement, (b) by the Company to any of its operating
subsidiaries, and (c) to the transferee of a party's stock or substantially
all of its assets, provided that all FCC and other necessary approvals have
been received.
F-9
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DECEMBER 31, 1997)
(4) AT&T TRANSACTION (CONTINUED)
The Company expects to enter into the Resale Agreement upon commencement of its
operations in the initial configuration.
Exclusivity
Under the Stockholders' Agreement, none of the Stockholders will provide or re-
sell, or act as the agent for any person offering, within the Territory mobile
wireless telecommunications services initiated or terminated using Time Divi-
sion Multiple Access and frequencies licensed by the FCC ("Company Communica-
tions Services"), except AT&T PCS and its affiliates may (i) resell or act as
agent for the Company in connection with the provision of Company Communica-
tions Services, (ii) provide or resell wireless telecommunications services to
or from certain specific locations, and (iii) resell Company Communications
Services for another person in any area where the Company has not placed a sys-
tem into commercial service by August 2002. Additionally, with respect to the
markets listed on the Roaming Agreement, each of the Company and AT&T PCS
agrees to cause their respective affiliates in their home carrier capacities to
program and direct the programming of customer equipment so that the other
party in its capacity as the serving carrier is the preferred provider in such
markets, and refrain from inducing any of its customers to change such program-
ming.
Build-out
The Company is required to conform to certain requirements regarding the con-
struction of the Company's PCS system. In the event that the Company breaches
these requirements, AT&T PCS may terminate its exclusivity provisions.
Disqualifying Transactions
In the event of a merger, asset sale, or consolidation, as defined, involving
AT&T and another person that derives annual revenues in excess of $5.0 billion,
derives less than one third of its aggregate revenues from wireless telecommu-
nications, and owns FCC licenses to offer mobile wireless telecommunication
services to more than 25% of the population within the Company's territory,
AT&T and the Company have certain rights. AT&T may terminate its exclusivity in
the territory in which the other party overlaps that of the Company. In the
event that AT&T proposes to sell, transfer, or assign to a non-affiliate its
PCS system owned and operated in Charlotte, NC; Atlanta, GA; Baltimore, MD; and
Washington, DC, or Richmond, VA BTAs, then AT&T will provide the Company with
the opportunity for a 180 day period to have AT&T jointly market the Company's
licenses that are included in the MTA that AT&T is requesting to sell.
The Stockholders' Agreement expires on February 4, 2009. Certain provisions ex-
pire upon an initial public offering.
LICENSE AGREEMENT
Pursuant to a Network Membership License Agreement, dated February 4, 1998 (the
"License Agreement"), between AT&T and the Company, AT&T granted to the Company
a royalty-free, nontransferable, nonsublicensable, limited right, and license
to use certain Licensed Marks solely in connection with certain licensed activ-
ities. The Licensed Marks include the logo containing the AT&T and globe design
and the expression "Member, AT&T Wireless Services Network." The "Licensed Ac-
tivities" include (i) the provision to end-users and resellers, solely within
the Territory, of Company Communications Services on frequencies licensed to
the Company for Commercial Mobile Radio Services ("CMRS") provided in accor-
dance with the AT&T Agreement (collectively, the "Licensed Services") and (ii)
marketing and offering the Licensed Services within the Territory. The License
Agreement also grants to the Company the right and license to use Licensed
Marks on certain permitted mobile phones.
The License Agreement contains numerous restrictions with respect to the use
and modification of any of the Licensed Marks. Furthermore, the Company is ob-
ligated to use commercially reasonable efforts to cause all Licensed Services
marketed and provided using the Licensed Marks to be of comparable quality to
the Licensed Services marketed and provided by AT&T and its affiliates in areas
that are comparable to the Territory taking into account, among other things,
the relative stage of development of the areas. The License Agreement also sets
forth specific testing procedures to deter-
F-10
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DECEMBER 31, 1997)
(4) AT&T TRANSACTION (CONTINUED)
mine compliance with these standards, and affords the Company with a grace pe-
riod to cure any instances of alleged noncompliance therewith.
The Company may not assign or sublicense any of its rights under the License
Agreement; provided, however, that the License Agreement may be assigned to the
Company's lenders under the Credit Facility (see note 6) and after the expira-
tion of any applicable grace and cure periods under the Credit Facility, such
lenders may enforce the Company's rights under the License Agreement and assign
the License Agreement to any person with AT&T's consent.
The term of the License Agreement is for five years (the "Initial Term") and
renews for an additional five-year period if neither party terminates the
Agreement. The License Agreement may be terminated by AT&T at any time in the
event of a significant breach by the Company, including the Company's misuse of
any Licensed Marks, the Company licensing or assigning any of the rights in the
License Agreement, the Company's failure to maintain AT&T's quality standards,
or a change in control of the Company occurs. After the Initial Term, AT&T may
also terminate the License Agreement upon the occurrence of certain transac-
tions described in the Stockholders' Agreement.
The License Agreement, along with the Exclusivity and Resale Agreements, have a
fair value of $20.3 million, as determined by an independent appraisal, with an
estimated useful life of 10 years.
ROAMING AGREEMENT
Pursuant to the Intercarrier Roamer Service Agreement, dated as of February 4,
1998 (the "Roaming Agreement"), between AT&T Wireless Services, Inc. and the
Company, each of AT&T PCS and the Company agrees to provide (each in its capac-
ity as serving provider, the "Serving Provider") mobile wireless radiotelephone
service for registered customers of the other party's (the "Home Carrier") cus-
tomers while such customers are out of the Home Carrier's geographic area and
in the geographic area where the Serving Carrier (itself or through affiliates)
holds a license or permit to construct and operate a mobile wireless radio/tel-
ephone system and station. Each Home Carrier whose customers receive service
from a Serving Carrier shall pay to such Serving Carrier 100% of the Serving
Carrier's charges for wireless service and 100% of pass-through charges (i.e.,
toll or other charges). Each Service Carrier's service charges per minute or
partial minute for the use for the first 3 years will be fixed at a declining
rate, and thereafter will be equal to an adjusted average home rate or such
lower rate as the parties negotiate from time to time. Each service Carrier's
toll charges per minute of use for the first 3 years will be fixed at a declin-
ing rate, and thereafter such other rates as the parties negotiate from time to
time.
The Roaming Agreement has a term of 20 years, unless earlier terminated by a
party due to the other party's uncured breach of any term of the Roaming Agree-
ment, the other party's license or permit to provide CMRS.
Neither party may assign or transfer the Roaming Agreement or any of its rights
thereunder except to an assignee of all or part of its license or permit to
provide CMRS, provided that such assignee expressly assumes all or the applica-
ble part of the obligations of such party under the Roaming Agreement.
The fair value of the Roaming Agreement, as determined by an independent ap-
praisal, was $5.5 million, with an estimated useful life of 20 years.
F-11
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DECEMBER 31, 1997)
(5) SHORT-TERM DEBT
Convertible Notes
At various dates in 1997, certain private equity investors provided $1.6 mil-
lion in financing to L.L.C. in the form of convertible promissory notes. The
notes originally bore interest at 14% annually, payable at maturity. On Janu-
ary 15, 1998, L.L.C. assigned the notes to the Company. The Company, in con-
junction with Holdings and the noteholders, subsequently negotiated a revised
arrangement under which no interest would be paid on the notes, which became
convertible into approximately $3.2 million worth of Holdings' Series C pre-
ferred stock. The conversion of L.L.C. notes into Holdings equity occurred on
February 4, 1998. The $1.6 million preferred return to the investors has been
accounted for as a financing cost during the period the notes were outstand-
ing. Accordingly, the Company has accrued $1,228,029 in financing costs on the
notes as of December 31, 1997. The remaining $371,971 financing cost will be
recognized in the first quarter of calendar 1998.
Noninterest-bearing loans
During 1997, Holding's Cash Equity Investors provided short-term financing in
the form of $11.7 million in noninterest-bearing loans, which were advanced to
the Company. Pursuant to the Closing Agreement, such loans were converted to
equity of Holdings as a reduction of the requirements of the initial cash con-
tribution. Concurrently, Holdings contributed these funds to the Company,
which has recorded the transaction as additional paid in capital on the date
of the contribution.
(6) BANK CREDIT FACILITY
On February 3, 1998, (the "Credit Facility Effective Date"), the Company en-
tered into a Credit Agreement (the "Credit Facility"), a $425.0 million Credit
Facility with Holdings, The Chase Manhattan Bank, as Administrative Agent, and
certain banks and other financial institutions party thereto. The Credit Fa-
cility provides for (i) a $175.0 million senior secured term loan (the
"Tranche A Term Loan") which matures on the date that is eight and one-half
years from the credit Facility Effective Date, (ii) a $150.0 million senior
secured term loan (the "Tranche B Term Loan" and, together with the Tranche A
Term Loan, the "Term Loans") which matures on the date that is nine and one-
quarter years from the "Credit Facility Effective Date," and (iii) a $100.0
million senior secured revolving credit facility (the "Revolving Credit Facil-
ity" and, together with the commitments to make the Term Loans, the "Facili-
ties") which matures on the date that is eight and one-half years from the
Credit Facility Effective Date. The commitment to make loans under the Revolv-
ing Credit Facility ("Revolving Credit Loans" and, together with the Term
Loans, the "Loans") automatically and permanently reduces, beginning on the
date that is six years and six months after the Credit Facility Effective
Date, in eight quarterly reductions (the amount of each of the first two re-
ductions, $5.0 million, the next four reductions, $10.0 million, and the last
two reductions, $25.0 million). The Tranche A Term Loans are required to be
repaid, beginning on the date that is four years after the Credit Facility Ef-
fective Date, in eighteen consecutive quarterly installments (the amount of
each of the first four installments, $4,375,000, the next four installments,
$6,562,500, the next four installments $8,750,000, the next four installments,
$10,937,500, and the last two installments, $26,250,000). The Tranche B Term
Loans are required to be repaid beginning on the date that is four years after
the Credit Facility Effective Date, in twenty-one consecutive quarterly in-
stallments (the amount of the first sixteen installments, $375,000, the next
four installments $7,500,000, and the last installment, $114.0 million). In-
terest on all loans accrue, at the Company's option, either at (i) (a) a LIBOR
rate multiplied by a fraction, the numerator of which is the number one and
the denominator of which is the number one minus the aggregate of the maximum
reserve percentages (including any marginal, special, emergency, or supplemen-
tal reserves) expressed as a decimal established by the Board of Governors of
the Federal Reserve System which the Administrative Agent is subject for
eurocurrency funding, plus (b) the Applicable Rate (as defined below) (Loans
bearing interest described in (i), "Eurodollar Loans") or (ii) (a) the higher
of (1) the Administrative Agent's prime rate and (2) the Federal Funds Effec-
tive Rate (as defined in the Credit Facility) plus 0.5%, plus (b) the Applica-
ble Rate (Loans bearing interest described in (ii), "ABR Loans"). Interest on
any overdue amounts will be at a rate per annum equal to 2% plus the rate oth-
erwise applicable to such amounts. The Applicable Rate means, with respect to
Tranche B Term Loans, 1.75% per annum, in the case of an ABR Loan, and 3.00%
per annum, in the case of a Eurodollar Loan, and, with respect to Tranche A
Term Loans and Revolving Credit Loans, a rate between 0.0% to 1.25% per annum
(depending on the level of the Company's ratio of debt to earnings before in-
come taxes, depreciation, and amortization (EBITDA) in the case of an ABR
Loan, and a rate between 1.00% and 2.25% per annum (depending on the level of
the Company's ratio of debt to
F-12
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DECEMBER 31, 1997)
(6) BANK CREDIT FACILITY (CONTINUED)
EBITDA), in the case of a Eurodollar Loan. The Credit Facility requires an an-
nual commitment fee of between 0.375% and 0.50% (depending on the level of the
Company's ratio of debt to EBITDA) of the unused portion of the Facilities pay-
able quarterly in arrears and a separate agent's fee payable to the Administra-
tive Agent. The Credit Facility also requires the Company to purchase an inter-
est rate hedging contract covering an amount equal to at least 50% of the total
amount of the outstanding indebtedness of the Company (other than indebtedness
which bears interest at a fixed rate). The Tranche A Term Loans and funds under
the Revolving Credit Facility are not available to the Company until the
Tranche B Term Loans are fully drawn or become unavailable pursuant to the
terms of the Credit Facility.
The Term Loans are required to be prepaid and commitments under the Revolving
Credit Facility reduced in an aggregate amount equal to (i) 50% of excess cash
flow of each fiscal year commencing the fiscal year ending December 31, 2001,
(ii) 100% of the net proceeds of asset sales, in excess of a yearly threshold,
outside the ordinary course of business or unused insurance proceeds, (iii)
100% of the net cash proceeds in excess of the initial $150.0 million of issu-
ances of debt obligations and (iv) 50% of the net cash proceeds of issuances of
equity securities (other than in connection with the Equity Commitments); pro-
vided, that the prepayments and reductions set forth under clauses (iii) and
(iv) will not be required if, after giving effect to such issuance, (a) the
Company's ratio of senior debt to EBITDA would be less than 5 to 1 and (b) the
Company would be in pro forma compliance with certain covenants in the Credit
Facility.
All obligations of the Company under the Facilities are unconditionally and ir-
revocably guaranteed (the "Bank Facility Guarantees") by Holdings and each ex-
isting and subsequently acquired or organized domestic subsidiary of the Compa-
ny. The Facilities and the Bank Facility Guarantees, and any related hedging
contracts provided by the lenders under the Credit Facility, will be secured by
substantially all of the assets of the Company and each existing and subse-
quently acquired or organized domestic subsidiary of the Company, including a
first priority pledge of all of the capital stock held by the Company or any of
its subsidiaries; provided that the pledge of shares of foreign subsidiaries
may be limited to 65% of the outstanding shares of such foreign subsidiaries.
The PCS Licenses will be held by one or more single purpose subsidiaries of the
Company and will not be pledged to secure the obligations of the Company under
the Credit Facility. Each single purpose subsidiary will not be allowed by the
Company to incur any liabilities or obligations other than the Bank Facility
Guarantee issued by it, the security agreement entered into by it in connection
with the Credit Facility, and, in the case of any single purpose subsidiary es-
tablished to hold real estate, liabilities incurred in the ordinary course of
business of such subsidiary which are incident to being the lessee of real
property of the purchaser, owner of lessee of equipment and taxes and other li-
abilities incurred in the ordinary course in order to maintain its existence.
The Credit Facility contains covenants customary for facilities and transac-
tions similar to the Credit Facility, including covenants relating to the
amounts of indebtedness that the Company may incur, limitations on dividends
and distributions on, and redemptions and repurchases of, capital stock and
other similar payments and various financial maintenance covenants. The Credit
Facility also contains covenants relating to the population covered by the
Company's network and number of customers and customary representations, war-
ranties, indemnities, conditions precedent to borrowing, and events of default.
Loans under the Credit Facility are available to fund capital expenditures re-
lated to the construction of the Company's PCS network, the acquisition of re-
lated businesses, working capital needs of the Company, and customer acquisi-
tion costs. All indebtedness under the Credit Facility will constitute Senior
Debt.
The terms of the Credit Facility currently allow the Company to incur only $150
million of indebtedness pursuant to the issuance of Subordinated Debt (as de-
fined in the Credit Facility). The Company is currently negotiating with the
lenders under the Credit Facility to amend the terms of the Credit Facility
(the "Amendment to Credit Facility") to, among other things, allow for the con-
summation of this Offering. This Offering is conditioned upon the closing of
the Amendment to the Credit Facility.
As of March 27, 1998, the Company has drawn $75 million of Tranche B Term Loans
under the facility.
F-13
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DECEMBER 31, 1997)
(7) COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company has entered into various operating leases for its offices and
equipment. The Company incurred $13,070 of rent expense in the period from in-
ception to December 31, 1997. Future minimum lease payments as of March 27,
1998 are as follows:
<TABLE>
<CAPTION>
----------
<S> <C>
1998 $ 317,485
1999 484,090
2000 461,620
2001 457,672
2002 394,530
Thereafter $1,014,750
</TABLE>
Employment Agreements
In 1998, the Company entered into five-year employment agreements with three
of its officers. The employment agreements provide for minimum aggregate an-
nual compensation of $1,015,000 for 1998 and $795,000 for the years 1999
through 2001, as well as annual bonuses based upon performance. The employment
agreements also provide that in the event that the officers are terminated,
certain liabilities will be incurred by the Company. Also, upon the death or
disability of the officers, the Company will be required to make certain pay-
ments.
(8) RELATED-PARTY TRANSACTIONS
During the period covered by these financial statements, LLC incurred certain
costs on behalf of Triton Cellular Partners L.P. (Triton Cellular), an entity
affiliated with the Company by virtue of management overlap and the sharing of
leased facilities. Such costs totaled $148,100 and will be reimbursed by Tri-
ton Cellular in 1998. In addition, the Company purchased $22,800 of equipment
from Horizon Cellular Telephone Company, L.P. (Horizon Cellular), an entity
affiliated with the Company by virtue of management overlap and the sharing of
leased facilities. Horizon Cellular was in the process of concluding its busi-
ness activities as of December 31, 1997.
(9) CAPITAL CONTRIBUTIONS
On February 4, 1998, pursuant to the Securities Purchase Agreement, Holdings
issued $140,000,000 of equity to certain institutional investors. The Securi-
ties Purchase Agreement requires the institutional investors to fund their un-
conditional and irrevocable obligations in installments in accordance with the
following schedule:
<TABLE>
<CAPTION>
------------
DATE DUE AMOUNT
-------- ------------
<S> <C>
Initial closing (funded on February 4, 1998) $ 45,000,000
First anniversary of initial closing 35,000,000
Second anniversary of initial closing 35,000,000
Third anniversary of initial closing 25,000,000
$140,000,000
</TABLE>
Pursuant to the Securities Purchase Agreement, the initial cash contribution
and the unfunded commitments are required to be made to Holdings. Pursuant to
the Closing Agreement, Holdings has directed that all cash contributions sub-
sequent to the initial cash contribution be made directly to the Company.
During 1997, Holding's Cash Equity Investors provided short-term financing in
the form of $11.7 million in noninterest-bearing loans, which were advanced to
the Company. Pursuant to the Closing Agreement, such loans were converted to
equity of Holdings as a reduction of the requirements of the initial cash con-
tribution. Concurrently, Holdings contributed these funds to the Company,
which has recorded the transaction as additional paid in capital on the date
of contribution.
F-14
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DECEMBER 31, 1997)
(9) CAPITAL CONTRIBUTION (CONTINUED)
On March 10,1998, Holdings received commitments for an additional $40 million
in equity contributions, of which $8 million has been received to date. These
funds were concurrently contributed to the Company.
Common Stock
On October 2, 1997, the Company issued 100 shares of its common stock to Hold-
ings.
L.L.C. Members' Capital
Members' capital contributions are recorded when received. Total committed cap-
ital at October 31, 1997 was $1.00. Cash available for distribution will be
made in proportion as their then capital accounts. Allocation of income, gains,
losses, and deductions will be in proportion to their capital accounts
(10) INCOME TAXES
The Company accounts for income taxes in accordance with the principles of SFAS
109. There is no provision for income taxes for the period March 6, 1997 to De-
cember 31, 1997.
Total income tax expense differs from the amount computed at the U.S. federal
statutory rate, as follows:
<TABLE>
<CAPTION>
----------
<S> <C>
Income tax benefit at statutory rate of 35% $1,584,336
Valuation allowance (1,584,336)
----------
Total income tax provision $ --
</TABLE>
Deferred income tax assets reflect the net effects of temporary differences be-
tween the carrying value of assets and liabilities and their tax bases. The
components of the Company's deferred tax asset at December 31, 1997 are as fol-
lows:
<TABLE>
<CAPTION>
----------
<S> <C>
Start-up costs capitalized for tax purposes $1,093,123
Accrued financing costs 491,213
----------
1,584,336
Less: valuation allowance (1,584,336)
----------
Net deferred tax asset $ --
</TABLE>
Under SFAS 109, a valuation allowance is recognized if, based on the weight of
available evidence, it is more likely than not that some portion or all of the
deferred tax asset will not be realized. As the Company is a development stage
enterprise, management has concluded that a full valuation allowance for all of
the Company's deferred tax assets is appropriate.
(11) PENDING ACQUISITIONS
On March 10, 1998, the Company signed a purchase agreement to acquire an exist-
ing cellular system (the "Myrtle Beach System") which serves the South Carolina
5--Georgetown Rural Service Area (the "SC-5") for a purchase price of approxi-
mately $160 million from Vanguard Cellular Systems. The Company intends to in-
tegrate the Myrtle Beach System into its planned PCS Network. The acquisition
is subject to closing conditions typical in a transaction of this nature.
On March 24, 1998, Holdings entered into a non-binding letter of intent with
AT&T to acquire additional PCS licenses covering the Norfolk/Virginia Beach, VA
region and sections of Georgia and North Carolina, for an aggregate considera-
tion of approximately $137 million, of which at least $32 million is expected
to be represented by additional equity interests in Holdings. The planned ac-
quisition includes a PCS system covering the Norfolk/Virginia Beach, VA region
that is substantially completed. These potential acquisitions are subject to
conditions typical in acquisitions of this nature, certain of which, including
FCC consent, may be beyond the control of Holdings. If the transaction is con-
summated, Holdings intends to contribute the assets acquired to the Company.
F-15
<PAGE>
TRITON PCS INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
COMBINED BALANCE SHEET
MARCH 31, 1998
<TABLE>
<CAPTION>
---------------------
MARCH 31,
1998
------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $104,382,122
Due from related party 147,895
Prepaid expenses 38,273
------------
Total current assets 104,568,290
Property, plant, and equipment:
Office furniture and equipment 771,429
Construction in progress 3,594,508
------------
4,365,937
Less accumulated depreciation (32,875)
------------
Net property and equipment 4,333,062
Intangible assets 128,796,357
Deferred transaction costs 18,542
Escrow deposit 8,000,000
------------
Total assets $245,716,251
============
LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 2,014,755
Accrued expenses 834,555
Accrued financing costs --
Due to related party --
Notes payable --
------------
Total current liabilities 2,849,310
Long-term debt 75,046,109
Deferred income taxes 17,192,566
Commitments and contingencies --
Shareholder's Equity (Deficit):
Common stock, $.01 par value, 1,000 shares authorized,
100 shares issued and outstanding 1
Additional paid-in capital 154,731,009
Deficit accumulated during the development stage (4,102,744)
------------
Total shareholder's equity (deficit) 150,628,266
------------
$245,716,251
============
</TABLE>
See accompanying notes to combined financial statements.
F-16
<PAGE>
TRITON PCS INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
---------------------------------------------------
PERIOD FROM MARCH THREE MONTHS PERIOD FROM MARCH
6, 1997 ENDED 6, 1997
TO MARCH 31, 1997 MARCH 31, 1998 TO MARCH 31, 1998
----------------- -------------- -----------------
<S> <C> <C> <C>
Expenses:
Operations and
development $ -- $ 592,029 $ 1,465,506
General and
administrative 135,146 2,091,402 3,958,730
-------- ----------- -----------
Loss from operations 135,146 2,683,431 5,424,236
Interest expense -- 305,766 1,525,800
-------- ----------- -----------
Loss before taxes 135,146 2,989,197 6,950,036
Tax benefit -- (2,847,292) (2,847,292)
-------- ----------- -----------
Net loss $135,146 $ 141,905 $ 4,102,744
======== =========== ===========
</TABLE>
See accompanying notes to combined financial statements.
F-17
<PAGE>
TRITON PCS INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
COMBINED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY (DEFICIT)
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
----------------------------------------------------
ADDITIONAL
COMMON STOCK PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------ ------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance at March 6, 1997 -- $-- $ -- $ -- $ --
Issuance of common stock 100 1 -- -- 1
Net loss -- -- -- (3,960,839) (3,960,839)
--- ---- ------------ ----------- ------------
Balance at December 31,
1997 100 1 -- (3,960,839) (3,960,838)
Capital contribution
from Parent -- -- 154,731,009 154,731,009
Net loss -- -- (141,905) (141,905)
--- ---- ------------ ----------- ------------
Balance at March 31,
1998 100 $ 1 $154,731,009 $(4,102,744) $150,628,266
=== ==== ============ =========== ============
</TABLE>
See accompanying notes to combined financial statements.
F-18
<PAGE>
TRITON PCS INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
COMBINED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
----------------------------------------------------
PERIOD FROM MARCH THREE MONTHS PERIOD FROM MARCH
6, 1997 ENDED 6, 1997
TO MARCH 31, 1997 MARCH 31, 1998 TO MARCH 31, 1998
----------------- -------------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(135,146) $ (141,905) $ (4,102,744)
Adjustments to reconcile
net loss to cash used
in operating
activities:
Depreciation and
amortization -- 556,951 561,713
Deferred income taxes -- (2,847,292) (2,847,292)
Change in operating
assets and
liabilities:
Prepaid expenses and
other -- (17,313) (38,273)
Accounts payable 3,972 1,410,106 2,066,547
Accrued expenses -- (181,493) 834,555
Accrued interest -- (1,228,029) --
--------- ------------ ------------
Net cash used in
operating activities (131,174) (2,448,975) (3,525,494)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of office
furniture and equipment -- (650,031) (771,429)
Network construction -- (3,192,141) (3,548,399)
Related party advances -- (45,197) (147,895)
Licenses (10,567) -- --
Escrow deposit -- (8,000,000) (8,000,000)
--------- ------------ ------------
Net cash used in
investing activities (10,567) (11,887,369) (12,467,723)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings under Credit
Facility -- 67,955,394 67,955,394
Borrowings on notes
payable -- -- 13,343,500
Issuance of common stock -- -- 1
Capital contributions
from Parent -- 41,256,499 41,256,499
Payment of deferred
transaction costs -- (1,855,639) (2,180,055)
Advances from related
party advances, net 306,690 -- --
--------- ------------ ------------
Net cash provided by
financing activities 306,690 107,356,254 120,375,339
--------- ------------ ------------
NET INCREASE IN CASH 164,949 93,020,910 104,382,122
CASH AND CASH
EQUIVALENTS, BEGINNING
OF PERIOD -- 11,362,212 --
--------- ------------ ------------
CASH AND CASH EQUIVALENTS
END OF PERIOD $ 164,949 $104,382,122 $104,382,122
========= ============ ============
</TABLE>
See accompanying notes to combined financial statements.
F-19
<PAGE>
TRITON PCS INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED)
(1) DESCRIPTION OF BUSINESS
Triton PCS, Inc (formerly Triton PCS License Company, Inc. with its subsidiar-
ies referred to as the ("Company") was formed on October 2, 1997 as a wholly-
owned subsidiary of Triton PCS Holdings, Inc. (formerly Triton PCS, Inc. re-
ferred to as "Holdings"). The Company will be the exclusive provider of wire-
less mobility services in the AT&T Corporation (together with affiliates
"AT&T") mid-Atlantic and Southeast regions. The Company intends to become the
leading provider of broadband PCS in Virginia, South Carolina, North Carolina,
northern Georgia, and surrounding areas. The Company is authorized to provide
PCS Service in major population and business centers such as Charleston, SC,
Columbia, SC, Greenville / Spartansburg, SC, Richmond, VA and Augusta GA, as
well as major destination resorts such as Myrtle Beach, SC, Hilton Head, SC,
and Kiawah Island, SC.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
On March 6, 1997, Triton Communications L.L.C. ("L.L.C.") was formed to ex-
plore various business opportunities in the wireless telecommunications indus-
try, principally related to personal communications services ("PCS") and cel-
lular activities. During the period March 6, 1997 through October 1, 1997,
L.L.C.'s activities consisted principally of hiring a management team, raising
capital, and negotiating strategic business relationships, primarily related
to PCS business opportunities. Subsequent to October 2, 1997, these activities
continued but were conducted primarily through the Company. Consequently, for
purposes of the accompanying financial statements, L.L.C. has been treated as
a "predecessor" entity. The chief executive officer and sole member of L.L.C.
is also the chief executive officer and principal shareholder of Holdings, and
consequently the Company. As a result of this relationship, certain financing
relationships and the similar nature of the business activities conducted by
each respective legal entity, L.L.C. and the Company are considered companies
under common control.
The accompanying combined financial statements are unaudited and have been
prepared by management. In the opinion of management, these combined financial
statements contain all of the adjustments, consisting of normal recurring ad-
justments, necessary to present fairly, in summarized form, the financial po-
sition of the Company as of March 31, 1998; the results of operations for the
three months ended March 31, 1998, the period from March 6, 1997 to March 31,
1997 and the period from March 6, 1997 to March 31, 1998; and changes in cash
flows for the three months ended March 31, 1998, the period from March 6, 1997
to March 31, 1997 and the period from March 6, 1997 to March 31, 1998. The re-
sults of operations for the three months ended March 31, 1998 and the period
from March 6, 1997 to March 31, 1997 are not indicative of the results that
may be expected for the year ending December 31, 1998. The financial informa-
tion presented herein should be read in conjunction with the combined finan-
cial statements for the year ended December 31, 1997.
The combined financial statements incorporate the PCS-related business activi-
ties of L.L.C. and the Company. The consolidated accounts of the Company in-
clude Triton PCS Inc; Triton PCS Holdings Company L.L.C.; Triton Management
Company, Inc.; Triton PCS Property Company L.L.C.; Triton PCS Equipment Com-
pany L.L.C.; Triton PCS Operating Company L.L.C.; and Triton PCS License Com-
pany L.L.C. All significant intercompany accounts or balances have been elimi-
nated in consolidation.
Development Stage Company
Since its inception, the Company's activities have been limited to developing
and executing a business plan, raising capital and negotiating the contribu-
tion of the PCS Licenses by AT&T. During the next several years, the Company
intends to devote its efforts to designing and constructing a PCS network in
each of its licensed areas. Accordingly, the Company is presently in the de-
velopment stage as defined by the Statement of Financial Accounting Standards
("SFAS") No. 7, Accounting and Reporting by Development Stage Enterprises.
F-20
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
MARCH 31, 1998
(UNAUDITED)
Use of Estimates
The preparation of the financial statements in conformity with generally ac-
cepted accounting principles requires management to make estimates and assump-
tions that affect the reported amounts of assets and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of assets and disclosure of contingent assets and liabilities at the
date of the of the financial statements and the reported amount of expenses
during the reporting period. Actual results could differ from those estimates.
Comprehensive Income
The Company adopted Statement of Financial Accounting Standard No. 130, "Re-
porting Comprehensive Income" (SFAS 130), which was effective for fiscal years
beginning after December 15, 1997. SFAS 130 establishes standards for reporting
and display of comprehensive income and its components in a full set of gener-
al-purpose financial statements. Comprehensive income is the change in equity
of a business enterprise during a period from transactions and the events and
circumstances from non-owner sources. For the periods presented in the accompa-
nying statements of operations, comprehensive income equals the amounts re-
ported on the accompanying statement of operations.
Construction in Progress
Construction in progress includes expenditures for the design, construction and
testing of the Company's PCS network and also includes costs associated with
developing information systems. The Company capitalizes interest on certain of
its construction in progress activities. When the assets are placed in service,
the Company will transfer the assets to the appropriate property and equipment
category and depreciate these assets over their respective estimated useful
lives. The Company expects to commence PCS service in the first quarter 1999.
Investment in PCS Licenses
Investments in the PCS Licenses are recorded at their fair value as determined
by an independent appraisal. The Company records capitalized interest while
readying the licenses in the Company's region for use. The Company will begin
amortizing its licenses over 40 years upon commencement of service, which is
expected in its first market in the first quarter of 1999.
New Accounting Pronouncements
In April 1998, the Accounting Standards Executive Committee (AcSEC) of the
AICPA issued Statement of Position (SOP) 98-5, Reporting on the Costs of Start-
up Activities ("SOP 98-5"). This statement requires that the costs of start-up
activities, including organization costs, be expensed as incurred and is effec-
tive for fiscal years beginning after December 31, 1998. The Company has
elected early adoption of this statement beginning in fiscal year ending Decem-
ber 31, 1998. The effect of initial application of the statement did not have a
material effect on the Company's financial statements.
(3) AT&T TRANSACTION
On October 8, 1997, Holdings entered into a Securities Purchase Agreement with
AT&T Wireless PCS, Inc ("AT&T PCS"), a subsidiary of AT&T, and the other stock-
holders of Holdings, whereby the Company will be the exclusive provider of
wireless mobility services in the AT&T mid-Atlantic and Southeast regions.
On February 4, 1998, Holdings executed the Closing Agreement with AT&T PCS and
the other stockholders of Holdings, finalizing the transactions contemplated in
the Securities Purchase Agreement. In accordance with the Closing Agreement,
Holdings and AT&T PCS and the other stockholders of Holdings consented that one
or more of Holdings' subsidiaries shall
F-21
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
MARCH 31, 1998
(UNAUDITED)
enter into certain agreements or conduct certain operations on the condition
that such subsidiaries shall at all times be direct or indirect wholly-owned
subsidiaries of Holdings and Holdings shall cause such subsidiaries to perform
the obligations and conduct such operations required to be performed or con-
ducted under those agreements.
Under the Closing Agreement, Holdings issued equity to AT&T PCS in exchange for
20 MHz A and B block PCS licenses, which were contributed to the Company and
certain other agreements covering certain areas in the southeastern United
States. The fair value of the FCC licenses, as determined by an independent ap-
praisal, was $92.8 million with an estimated useful life of 40 years.
In connection with the closing of the AT&T transaction, the Company executed or
was a party to certain agreements, including the following:
STOCKHOLDERS' AGREEMENT
Resale Agreement
Pursuant to the Stockholders' Agreement, the Company is required to enter into
a Resale Agreement at the request of AT&T. Under this agreement, AT&T PCS will
be granted the right to purchase and resell on a nonexclusive basis access to
and usage of the Company's services in the Company's Licensed Area. The Company
will retain the continuing right to market and sell its services to customers
and potential customers in competition with AT&T PCS.
The Resale Agreement will have a term of ten years and will renew automatically
for successive one-year periods unless, after the eleventh anniversary thereof,
either party elects to terminate the Resale Agreement. Furthermore, AT&T PCS
may terminate the Resale Agreement at any time for any reason on 180 days writ-
ten notice.
The Company has agreed that the rates, terms, and conditions of service, taken
as a whole, provided by the Company to AT&T PCS pursuant to the Resale Agree-
ment, shall be at least as favorable as (or if permitted by applicable law, su-
perior to) the rates, terms, and conditions of service, taken as a whole, pro-
vided by the Company to any other customer. Without limiting the foregoing, the
rate plans offered by the Company pursuant to the Resale Agreement shall be de-
signed to result in a discounted average actual rate per minute paid by AT&T
PCS for service below the weighted average actual rate per minute billed by the
Company to its subscribers generally for access and air time.
Neither party may assign or transfer the Resale Agreement or any of its rights
thereunder without the other party's prior written consent, which will not be
unreasonably withheld, except (a) to an affiliate of that party at the time of
execution of the Resale Agreement, (b) by the Company to any of its operating
subsidiaries, and (c) to the transferee of a party's stock or substantially all
of its assets, provided that all FCC and other necessary approvals have been
received.
The Company expects to enter into the Resale Agreement upon commencement of its
operations in the initial configuration.
Exclusivity
Under the Stockholders' Agreement, none of the Stockholders will provide or re-
sell, or act as the agent for any person offering, within the Territory mobile
wireless telecommunications services initiated or terminated using Time Divi-
sion Multiple Access and frequencies licensed by the FCC ("Company Communica-
tions Services"), except AT&T PCS and its affiliates may (i) resell or act as
agent for the Company in connection with the provision of Company Communica-
tions Services, (ii) provide or resell wireless telecommunications services to
or from certain specific locations, and (iii) resell Company Communications
Services for another person in any area where the Company has not placed a sys-
tem into commercial service by August 2002. Additionally, with respect to the
markets listed on the Roaming Agreement, each of
F-22
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
MARCH 31, 1998
(UNAUDITED)
the Company and AT&T PCS agrees to cause their respective affiliates in their
home carrier capacities to program and direct the programming of customer
equipment so that the other party in its capacity as the serving carrier is the
preferred provider in such markets, and refrain from inducing any of its cus-
tomers to change such programming.
Build-out
The Company is required to conform to certain requirements regarding the con-
struction of the Company's PCS system. In the event that the Company breaches
these requirements, AT&T PCS may terminate its exclusivity provisions.
Disqualifying Transactions
In the event of a merger, asset sale, or consolidation, as defined, involving
AT&T and another person that derives annual revenues in excess of $5.0 billion,
derives less than one third of its aggregate revenues from wireless telecommu-
nications, and owns FCC licenses to offer mobile wireless telecommunication
services to more than 25% of the population within the Company's territory,
AT&T and the Company have certain rights. AT&T may terminate its exclusivity in
the territory in which the other party overlaps that of the Company. In the
event that AT&T proposes to sell, transfer, or assign to a non-affiliate its
PCS system owned and operated in Charlotte, NC; Atlanta, GA; Baltimore, MD; and
Washington, DC, or Richmond, VA BTAs, then AT&T will provide the Company with
the opportunity for a 180 day period to have AT&T jointly market the Company's
licenses that are included in the MTA that AT&T is requesting to sell.
The Stockholders' Agreement expires on February 4, 2009. Certain provisions ex-
pire upon an initial public offering.
LICENSE AGREEMENT
Pursuant to a Network Membership License Agreement, dated February 4, 1998 (the
"License Agreement"), between AT&T and the Company, AT&T granted to the Company
a royalty-free, nontransferable, nonsublicensable, limited right, and license
to use certain Licensed Marks solely in connection with certain licensed activ-
ities. The Licensed Marks include the logo containing the AT&T and globe design
and the expression "Member, AT&T Wireless Services Network." The "Licensed Ac-
tivities" include (i) the provision to end-users and resellers, solely within
the Territory, of Company Communications Services on frequencies licensed to
the Company for Commercial Mobile Radio Services ("CMRS") provided in accor-
dance with the AT&T Agreement (collectively, the "Licensed Services") and (ii)
marketing and offering the Licensed Services within the Territory. The License
Agreement also grants to the Company the right and license to use Licensed
Marks on certain permitted mobile phones.
The License Agreement contains numerous restrictions with respect to the use
and modification of any of the Licensed Marks. Furthermore, the Company is ob-
ligated to use commercially reasonable efforts to cause all Licensed Services
marketed and provided using the Licensed Marks to be of comparable quality to
the Licensed Services marketed and provided by AT&T and its affiliates in areas
that are comparable to the Territory taking into account, among other things,
the relative stage of development of the areas. The License Agreement also sets
forth specific testing procedures to determine compliance with these standards,
and affords the Company with a grace period to cure any instances of alleged
noncompliance therewith.
The Company may not assign or sublicense any of its rights under the License
Agreement; provided, however, that the License Agreement may be assigned to the
Company's lenders under the Credit Facility (see note 7) and after the expira-
tion of any applicable grace and cure periods under the Credit Facility, such
lenders may enforce the Company's rights under the License Agreement and assign
the License Agreement to any person with AT&T's consent.
The term of the License Agreement is for five years (the "Initial Term") and
renews for an additional five-year period if neither party terminates the
Agreement. The License Agreement may be terminated by AT&T at any time in the
event of a significant breach by the Company, including the Company's misuse of
any Licensed Marks, the Company licensing or
F-23
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
MARCH 31, 1998
(UNAUDITED)
assigning any of the rights in the License Agreement, the Company's failure to
maintain AT&T's quality standards, or a change in control of the Company oc-
curs. After the Initial Term, AT&T may also terminate the License Agreement
upon the occurrence of certain transactions described in the Stockholders'
Agreement.
The License Agreement, along with the Exclusivity and Resale Agreements, have a
fair value of $20.3 million, as determined by an independent appraisal, with an
estimated useful life of 10 years.
ROAMING AGREEMENT
Pursuant to the Intercarrier Roamer Service Agreement, dated as of February 4,
1998 (the "Roaming Agreement"), between AT&T Wireless Services, Inc. and the
Company, each of AT&T PCS and the Company agrees to provide (each in its capac-
ity as serving provider, the "Serving Provider") mobile wireless radiotelephone
service for registered customers of the other party's (the "Home Carrier") cus-
tomers while such customers are out of the Home Carrier's geographic area and
in the geographic area where the Serving Carrier (itself or through affiliates)
holds a license or permit to construct and operate a mobile wireless radio/tel-
ephone system and station. Each Home Carrier whose customers receive service
from a Serving Carrier shall pay to such Serving Carrier 100% of the Serving
Carrier's charges for wireless service and 100% of pass-through charges (i.e.,
toll or other charges). Each Service Carrier's service charges per minute or
partial minute for the use for the first 3 years will be fixed at a declining
rate, and thereafter will be equal to an adjusted average home rate or such
lower rate as the parties negotiate from time to time. Each service Carrier's
toll charges per minute of use for the first 3 years will be fixed at a declin-
ing rate, and thereafter such other rates as the parties negotiate from time to
time.
The Roaming Agreement has a term of 20 years, unless earlier terminated by a
party due to the other party's uncured breach of any term of the Roaming Agree-
ment, the other party's license or permit to provide CMRS.
Neither party may assign or transfer the Roaming Agreement or any of its rights
thereunder except to an assignee of all or part of its license or permit to
provide CMRS, provided that such assignee expressly assumes all or the applica-
ble part of the obligations of such party under the Roaming Agreement.
The fair value of the Roaming Agreement, as determined by an independent ap-
praisal, was $5.5 million, with an estimated useful life of 20 years.
(4) SHORT-TERM DEBT
Convertible Notes
At various dates in 1997, certain private equity investors provided $1.6 mil-
lion in financing to L.L.C. in the form of convertible promissory notes. The
notes originally bore interest at 14% annually, payable at maturity. On January
15, 1998, L.L.C. assigned the notes to the Company. The Company, in conjunction
with Holdings and the noteholders, subsequently negotiated a revised arrange-
ment under which no interest would be paid on the notes, which became convert-
ible into approximately $3.2 million worth of Holdings' Series C preferred
stock. The conversion of L.L.C. notes into Holdings equity occurred on February
4, 1998. The $1.6 million preferred return to the investors was accounted for
as a financing cost during the period the notes were outstanding.
Noninterest-bearing loans
During 1997, Holding's Cash Equity Investors provided short-term financing in
the form of $11.7 million noninterest-bearing loans, which were advanced to the
Company. Pursuant to the Closing Agreement, such loans were converted to equity
of Holdings as a reduction of the requirements of the initial cash contribu-
tion. Concurrently, Holdings contributed these funds to the Company, which has
recorded the transaction as additional paid in capital on the date of the con-
tribution.
F-24
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
MARCH 31, 1998
(UNAUDITED)
(5) BANK CREDIT FACILITY
On February 3, 1998, (the "Credit Facility Effective Date"), the Company en-
tered into a Credit Agreement (the "Credit Facility"), a $425.0 million Credit
Facility with Holdings, The Chase Manhattan Bank, as Administrative Agent, and
certain banks and other financial institutions party thereto. The Credit Facil-
ity provides for (i) a $175.0 million senior secured term loan (the "Tranche A
Term Loan") which matures on the date that is eight and one-half years from the
credit Facility Effective Date, (ii) a $150.0 million senior secured term loan
(the "Tranche B Term Loan" and, together with the Tranche A Term Loan, the
"Term Loans") which matures on the date that is nine and one-quarter years from
the "Credit Facility Effective Date," and (iii) a $100.0 million senior secured
revolving credit facility (the "Revolving Credit Facility" and, together with
the commitments to make the Term Loans, the "Facilities") which matures on the
date that is eight and one-half years from the Credit Facility Effective Date.
The commitment to make loans under the Revolving Credit Facility ("Revolving
Credit Loans" and, together with the Term Loans, the "Loans") automatically and
permanently reduces, beginning on the date that is six years and six months af-
ter the Credit Facility Effective Date, in eight quarterly reductions (the
amount of each of the first two reductions, $5.0 million, the next four reduc-
tions, $10.0 million, and the last two reductions, $25.0 million). The Tranche
A Term Loans are required to be repaid, beginning on the date that is four
years after the Credit Facility Effective Date, in eighteen consecutive quar-
terly installments (the amount of each of the first four installments,
$4,375,000, the next four installments, $6,562,500, the next four installments
$8,750,000, the next four installments, $10,937,500, and the last two install-
ments, $26,250,000). The Tranche B Term Loans are required to be repaid begin-
ning on the date that is four years after the Credit Facility Effective Date,
in twenty-one consecutive quarterly installments (the amount of the first six-
teen installments, $375,000, the next four installments $7,500,000, and the
last installment, $114.0 million). Interest on all loans accrue, at the
Company's option, either at (i) (a) a LIBOR rate multiplied by a fraction, the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any mar-
ginal, special, emergency, or supplemental reserves) expressed as a decimal es-
tablished by the Board of Governors of the Federal Reserve System which the Ad-
ministrative Agent is subject for eurocurrency funding, plus (b) the Applicable
Rate (as defined below) (Loans bearing interest described in (i), "Eurodollar
Loans") or (ii) (a) the higher of (1) the Administrative Agent's prime rate and
(2) the Federal Funds Effective Rate (as defined in the Credit Facility) plus
0.5%, plus (b) the Applicable Rate (Loans bearing interest described in (ii),
"ABR Loans"). Interest on any overdue amounts will be at a rate per annum equal
to 2% plus the rate otherwise applicable to such amounts. The Applicable Rate
means, with respect to Tranche B Term Loans, 1.75% per annum, in the case of an
ABR Loan, and 3.00% per annum, in the case of a Eurodollar Loan, and, with re-
spect to Tranche A Term Loans and Revolving Credit Loans, a rate between 0.0%
to 1.25% per annum (depending on the level of the Company's ratio of debt to
earnings before income taxes, depreciation, and amortization (EBITDA) in the
case of an ABR Loan, and a rate between 1.00% and 2.25% per annum (depending on
the level of the Company's ratio of debt to EBITDA), in the case of a Eurodol-
lar Loan. The Credit Facility requires an annual commitment fee of between
0.375% and 0.50% (depending on the level of the Company's ratio of debt to
EBITDA) of the unused portion of the Facilities payable quarterly in arrears
and a separate agent's fee payable to the Administrative Agent. The Credit Fa-
cility also requires the Company to purchase an interest rate hedging contract
covering an amount equal to at least 50% of the total amount of the outstanding
indebtedness of the Company (other than indebtedness which bears interest at a
fixed rate). The Tranche A Term Loans and funds under the Revolving Credit Fa-
cility are not available to the Company until the Tranche B Term Loans are
fully drawn or become unavailable pursuant to the terms of the Credit Facility.
The Term Loans are required to be prepaid and commitments under the Revolving
Credit Facility reduced in an aggregate amount equal to (i) 50% of excess cash
flow of each fiscal year commencing the fiscal year ending December 31, 2001,
(ii) 100% of the net proceeds of asset sales, in excess of a yearly threshold,
outside the ordinary course of business or unused insurance proceeds, (iii)
100% of the net cash proceeds in excess of the initial $150.0 million of issu-
ances of debt obligations and (iv) 50% of the net cash proceeds of issuances of
equity securities (other than in connection with the Equity Commitments); pro-
vided, that the prepayments and reductions set forth under clauses (iii) and
(iv) will not be
F-25
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
MARCH 31, 1998
(UNAUDITED)
required if, after giving effect to such issuance, (a) the Company's ratio of
senior debt to EBITDA would be less than 5 to 1 and (b) the Company would be in
pro forma compliance with certain covenants in the Credit Facility.
All obligations of the Company under the Facilities are unconditionally and ir-
revocably guaranteed (the "Bank Facility Guarantees") by Holdings and each ex-
isting and subsequently acquired or organized domestic subsidiary of the Compa-
ny. The Facilities and the Bank Facility Guarantees, and any related hedging
contracts provided by the lenders under the Credit Facility, will be secured by
substantially all of the assets of the Company and each existing and subse-
quently acquired or organized domestic subsidiary of the Company, including a
first priority pledge of all of the capital stock held by the Company or any of
its subsidiaries; provided that the pledge of shares of foreign subsidiaries
may be limited to 65% of the outstanding shares of such foreign subsidiaries.
The PCS Licenses will be held by one or more single purpose subsidiaries of the
Company and will not be pledged to secure the obligations of the Company under
the Credit Facility. Each single purpose subsidiary will not be allowed by the
Company to incur any liabilities or obligations other than the Bank Facility
Guarantee issued by it, the security agreement entered into by it in connection
with the Credit Facility, and, in the case of any single purpose subsidiary es-
tablished to hold real estate, liabilities incurred in the ordinary course of
business of such subsidiary which are incident to being the lessee of real
property of the purchaser, owner of lessee of equipment and taxes and other li-
abilities incurred in the ordinary course in order to maintain its existence.
The Credit Facility contains covenants customary for facilities and transac-
tions similar to the Credit Facility, including covenants relating to the
amounts of indebtedness that the Company may incur, limitations on dividends
and distributions on, and redemptions and repurchases of, capital stock and
other similar payments and various financial maintenance covenants. The Credit
Facility also contains covenants relating to the population covered by the
Company's network and number of customers and customary representations, war-
ranties, indemnities, conditions precedent to borrowing, and events of default.
Loans under the Credit Facility are available to fund capital expenditures re-
lated to the construction of the Company's PCS network, the acquisition of re-
lated businesses, working capital needs of the Company, and customer acquisi-
tion costs. All indebtedness under the Credit Facility will constitute Senior
Debt.
The terms of the Credit Facility originally allowed the Company to incur only
$150 million of indebtedness pursuant to the issuance of Subordinated Debt (as
defined in the Credit Facility). In May 1998, the Company received an amendment
to the Credit Facility, which included provisions that (I) permit the Pending
Acquisitions (see Note 8); (II) permit up to a total of $450 million in high
yield debt; and (III) exclude the equity issuances associated with the Pending
Acquisitions from the mandatory prepayment requirement.
As of March 31, 1998, the Company has drawn $75 million of Tranche B Term Loans
under the facility.
(6) CAPITAL CONTRIBUTIONS
On February 4, 1998, pursuant to the Securities Purchase Agreement, Holdings
issued $140,000,000 of equity to certain institutional investors. The Securi-
ties Purchase Agreement requires the institutional investors to fund their un-
conditional and irrevocable obligations in installments in accordance with the
following schedule:
<TABLE>
<CAPTION>
------------
DATE DUE AMOUNT
-------- ------------
<S> <C>
Initial closing (funded on February 4, 1998) $ 45,000,000
First anniversary of initial closing 35,000,000
Second anniversary of initial closing 35,000,000
Third anniversary of initial closing 25,000,000
$140,000,000
</TABLE>
F-26
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
MARCH 31, 1998
(UNAUDITED)
Pursuant to the Securities Purchase Agreement, the initial cash contribution
and the unfunded commitments are required to be made to Holdings. Pursuant to
the Closing Agreement, Holdings has directed that all cash contributions subse-
quent to the initial cash contribution be made directly to the Company.
On March 10, 1998, Holdings received commitments for an additional $40 million
in equity contributions related to the pending acquisition of the Myrtle Beach
System (see note 8). As of March 31, 1998, $8 million of these commitments has
been received and is non-refundable. These funds were concurrently contributed
to the Company.
Common Stock
On October 2, 1997, the Company issued 100 shares of its common stock to Hold-
ings.
L.L.C. Members' Capital
Members' capital contributions are recorded when received. Total committed cap-
ital at October 31, 1997 was $1.00. Cash available for distribution will be
made in proportion as their then capital accounts. Allocation of income, gains,
losses, and deductions will be in proportion to their capital accounts
(7) PENDING ACQUISITIONS
On March 10, 1998, the Company signed a purchase agreement to acquire an exist-
ing cellular system (the "Myrtle Beach System") which serves the South Carolina
5--Georgetown Rural Service Area (the "SC-5") for a purchase price of approxi-
mately $160 million from Vanguard Cellular Systems. The Company intends to in-
tegrate the Myrtle Beach System into its planned PCS Network. The acquisition
is subject to closing conditions typical in a transaction of this nature.
On March 24, 1998, Holdings entered into a non-binding letter of intent with
AT&T to acquire additional PCS licenses covering the Norfolk/Virginia Beach, VA
region and sections of Georgia and North Carolina, for an aggregate considera-
tion of approximately $137 million, of which at least $32 million is expected
to be represented by additional equity interests in Holdings. The planned ac-
quisition includes a PCS system covering the Norfolk/Virginia Beach, VA region
that is substantially completed and has not been placed in service. These po-
tential acquisitions are subject to conditions typical in acquisitions of this
nature, certain of which, including FCC consent, may be beyond the control of
Holdings. If the transaction is consummated, Holdings intends to contribute the
assets acquired to the Company.
(8) SUBSEQUENT EVENT
On May 7, 1998, the Company completed an offering (the "Offering") of
$511,989,000 of 11% Senior Subordinated Discount Notes ("Notes"), pursuant to
Rule 144A of the Securities Act of 1933, as amended. The net proceeds of the
Offering (after deducting an Initial Purchaser's Discount of $9 million and es-
timated fees and expenses of the offering of $1 million) are estimated to be
approximately $290 million. The Company intends to use the net proceeds from
the Offering, together with the Capital Contributions and borrowings under the
Credit Facility, to fund: (I) capital expenditures, including the build-out of
its PCS network; (II) the pending acquisition of the Myrtle Beach System (see
note 8); (III) working capital as required; (IV) operating losses; (V) general
corporate purposes, and (VI) potential acquisitions.
Cash interest will not accrue prior to May 1, 2003. Commencing on November 1,
2003, cash interest will be payable semiannually. Each Note was offered at an
original issue discount (Initial Purchaser's Discount). Although cash interest
will not be paid prior to May 1, 2003, the original issue discount will accrue
from the issue date to May 1, 2003.
The Notes are not redeemable prior to May 1, 2003, except as set forth below.
The Notes will be redeemable at the option of the Company, in whole or in part,
at any time on or after May 1, 2003 and prior to maturity at the following re-
demption
F-27
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
MARCH 31, 1998
(UNAUDITED)
prices (expressed as percentages of principal amount), plus accrued interest,
if any, to but excluding the redemption date, if redeemed during the 12-month
period beginning on May 1 of the years indicated:
<TABLE>
<CAPTION>
----------
YEAR PERCENTAGE
---- ----------
<S> <C>
2003 105.50%
2004 103.67
2005 101.84
2006 and thereafter 100.00
</TABLE>
In addition, on or prior to May 1, 2001, the Company may redeem up to 35% of
the principal amount at maturity of Notes issued under the Indenture at a re-
demption price equal to 111% of the accreted value at the redemption date with
the net proceeds of one or more equity offerings of qualified stock of (a) the
Company, (b) Holdings, or (c) a special purpose corporation formed to own qual-
ified stock of the Company or Holdings, provided that at least 65% of the ag-
gregate principal amount at maturity of Notes issued under the Indenture would
remain outstanding immediately after giving effect to such redemption.
Upon a change in control, each holder of the Notes may require the Company to
repurchase such Holder's Notes, in whole or in part, at a purchase price equal
to 101% of the accreted value thereof or the principal amount at maturity, as
applicable plus accrued and unpaid interest to the purchase date.
F-28
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Vanguard Cellular Systems of South Carolina, Inc.:
We have audited the accompanying balance sheets of Vanguard Cellular Systems of
South Carolina, Inc. (a South Carolina corporation and an indirect, wholly-
owned subsidiary of Vanguard Cellular Systems, Inc.) as of December 31, 1997
and 1996, and the related statements of operations, changes in shareholder's
deficit and cash flows for each of the three years in the period ended December
31, 1997. These financial statements and schedule referred to below are the re-
sponsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of mate-
rial misstatement. An audit includes examining, on a test basis, evidence sup-
porting 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 pre-
sentation. We believe that our audits provide a reasonable basis for our opin-
ion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Vanguard Cellular Systems of
South Carolina, Inc. as of December 31, 1997 and 1996 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic finan-
cial statements taken as a whole. The schedule listed in the index to financial
statements and schedules is presented for purposes of complying with the Secu-
rities and Exchange Commission's rules and is not part of the basic financial
statements. The schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Greensboro, North Carolina,
March 20, 1998.
F-29
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
BALANCE SHEETS
(Dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
-------------------------------
DECEMBER 31, MARCH 31,
1996 1997 1998
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash $ 199 $ 121 $ 227
Accounts receivable, net of allowances for
doubtful accounts of $200, $475 and $489 1,485 3,199 3,568
Cellular telephone inventories 511 526 310
Prepaid expenses 10 33 109
Deferred income tax asset -- 8,190 8,792
-------- -------- --------
Total current assets 2,205 12,069 13,006
-------- -------- --------
Deferred Cellular License Acquisition costs,
net of accumulated amortization of $2,860,
$3,343 and $3,465 16,247 15,764 15,642
Property and Equipment, at cost:
Land 306 313 313
Cellular telephones held for rental 1,653 1,859 1,604
Cellular telephone systems 24,068 29,453 29,743
Office furniture and equipment 2,323 3,139 3,223
-------- -------- --------
28,350 34,764 34,883
Less--Accumulated depreciation 5,864 9,252 10,427
-------- -------- --------
22,486 25,512 24,456
Construction in progress 198 565 560
-------- -------- --------
22,684 26,077 25,016
-------- -------- --------
Other Assets 22 21 156
-------- -------- --------
Total assets $ 41,158 $ 53,931 $ 53,820
======== ======== ========
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current Liabilities:
Accounts payable and accrued expenses $ 315 $ 686 $ 732
Advances from Vanguard 53,350 63,092 64,282
-------- -------- --------
Total current liabilities 53,665 63,778 65,014
-------- -------- --------
Deferred Income Tax Liability -- 1,298 1,154
-------- -------- --------
Commitments and Contingencies (Note 5)
Shareholder's Deficit:
Common stock--$1 par value, 1,000 shares
issued and outstanding 1 1 1
Accumulated deficit (12,508) (11,146) (12,349)
-------- -------- --------
Total shareholder's deficit (12,507) (11,145) (12,348)
-------- -------- --------
Total liabilities and shareholder's deficit $ 41,158 $ 53,931 $ 53,820
======== ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
F-30
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
STATEMENTS OF OPERATIONS
(Amounts in thousands)
<TABLE>
<CAPTION>
---------------------------------------------------
FOR THE YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------- ------------------------
1995 1996 1997 1997 1998
------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Service fees $16,428 $19,778 $22,508 $ 4,335 $ 5,446
Cellular telephone
equipment revenues 1,077 673 1,100 191 554
------- ------- ------- ------- -------
17,505 20,451 23,608 4,526 6,000
------- ------- ------- ------- -------
Costs and Expenses:
Cost of service 1,796 3,014 2,811 506 656
Cost of cellular
telephone equipment 1,853 1,478 2,495 364 729
General and
administrative 2,260 2,948 4,793 908 1,148
Marketing and selling 2,564 2,731 3,944 680 1,170
Depreciation and
amortization 1,765 2,907 5,162 1,083 1,578
Management fees 1,374 1,620 1,896 368 458
Corporate costs
allocated from Vanguard 989 1,195 1,586 316 441
------- ------- ------- ------- -------
12,601 15,893 22,687 4,225 6,180
------- ------- ------- ------- -------
Income (Loss) From
Operations 4,904 4,558 921 301 (180)
Interest Expense (4,414) (5,214) (6,451) (1,504) (1,769)
Other, net (326) (186) -- -- --
------- ------- ------- ------- -------
Income (Loss) Before
Income Taxes 164 (842) (5,530) (1,203) (1,949)
Income Tax Benefit -- -- 6,892 -- 746
------- ------- ------- ------- -------
Net Income (Loss) $ 164 $ (842) $ 1,362 $(1,203) $(1,203)
======= ======= ======= ======= =======
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-31
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
1995 1996 1997 1997 1998
---------- ----------- ---------- ----------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ 164 $ (842) $ 1,362 $ (1,203) $ (1,203)
Adjustments to reconcile
net income (loss) to net
cash provided by (used
in)operating activities:
Depreciation and
amortization 1,765 2,907 5,162 1,083 1,578
Net losses on
dispositions of property
and equipment 326 186 -- -- --
Deferred income tax
benefit -- -- (6,892) -- (746)
Changes in current items:
Accounts receivable, net (527) 404 (1,714) (210) (369)
Cellular telephone
inventories (162) (104) (15) (153) 216
Accounts payable and
accrued expenses (47) (97) 371 37 46
Other, net (20) 13 (23) (52) (76)
---------- ----------- ---------- ----------- -----------
Net cash provided by
(used in) operating
activities 1,499 2,467 (1,749) (498) (554)
---------- ----------- ---------- ----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES
- --Purchases of property and
equipment (8,948) (12,531) (8,072) (1,139) (395)
---------- ----------- ---------- ----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net increase in advances
from Vanguard 7,603 10,050 9,742 1,616 1,190
Other, net (12) -- 1 1 (135)
---------- ----------- ---------- ----------- -----------
Net cash provided by
financing activities 7,591 10,050 9,743 1,617 1,055
---------- ----------- ---------- ----------- -----------
NET INCREASE (DECREASE) IN
CASH 142 (14) (78) (20) 106
CASH, BEGINNING OF PERIOD 71 213 199 199 121
---------- ----------- ---------- ----------- -----------
CASH, END OF PERIOD $ 213 $ 199 $ 121 $ 179 $ 227
========== =========== ========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH PAID DURING THE
PERIOD FOR INTEREST, NET
OF AMOUNTS CAPITALIZED $ 4,414 $ 5,214 $ 6,451 $ 1,504 $ 1,769
========== =========== ========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-32
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
STATEMENTS OF CHANGES IN SHAREHOLDER'S DEFICIT
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
----------------------------------------
TOTAL
COMMON STOCK ACCUMULATED SHAREHOLDER'S
SHARES AMOUNT TOTAL DEFICIT
------ ------ ----------- -------------
<S> <C> <C> <C> <C>
Balance, January 1, 1995 1,000 $ 1 $(11,830) $(11,829)
Net income -- -- 164 164
----- --- -------- --------
Balance, December 31, 1995 1,000 1 (11,666) (11,665)
Net loss -- -- (842) (842)
----- --- -------- --------
Balance, December 31, 1996 1,000 1 (12,508) (12,507)
Net income -- -- 1,362 1,362
----- --- -------- --------
Balance, December 31, 1997 1,000 1 (11,146) (11,145)
Net loss (unaudited) -- -- (1,203) (1,203)
----- --- -------- --------
Balance, March 31, 1998 (unaudited) 1,000 $ 1 $(12,349) $(12,348)
===== === ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-33
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS
(Dollar amounts in thousands)
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION:
Vanguard Cellular Systems of South Carolina, Inc. (the Company), a South Caro-
lina corporation, is a provider of nonwireline cellular telephone service to
the SC-5 (Myrtle Beach) Rural Statistical Area (RSA). The Company acquired the
Myrtle Beach RSA license in January 1991 and the cellular system in this market
became operational in the second quarter of 1991. The Company is 100% con-
trolled by Vanguard Cellular Systems, Inc. (Vanguard) and operates under the
trade name of CellularOne(R), which is the trade name many nonwireline carriers
have adopted to provide conformity throughout the industry.
The accompanying financial statements present the financial position, results
of operations and cash flows of the Company as if it were a separate entity for
all periods presented. In accordance with Staff Accounting Bulletin No. 54 of
the Securities and Exchange Commission, Vanguard's investment in the Company is
reflected in the financial statements of the Company ("pushdown accounting").
The accompanying financial statements reflect the allocation of the purchase
price in excess of the net assets acquired on the same basis as in the consoli-
dation with Vanguard.
Substantially all of the Company's assets are pledged under Vanguard's long-
term credit facility. Operating and capital expansion funds have been advanced
between Vanguard and the Company on an interest bearing basis, with the net
amounts of these transfers reflected in advances from Vanguard in the accompa-
nying balance sheets. The debt of Vanguard has not been specifically allocated
to the Company; however, advances from Vanguard approximate the borrowings of
Vanguard that are attributable to the Company. Interest has been charged by
Vanguard to the Company on funds advanced to the Company as an approximation of
the Company's share of Vanguard's consolidated interest cost. Vanguard charges
interest to its subsidiaries based on its consolidated borrowing rates plus 200
basis points. For each of the three years in the period ended December 31, 1997
and the three-months ended March 31, 1997 and 1998, the average interest rate
charged to the Company by Vanguard was approximately 11%. Total interest
charged, net of amounts capitalized, from Vanguard to the Company was $4,414,
$5,214, $6,451, $1,504 (unaudited) and $1,769 (unaudited) for the years ended
December 31, 1995, 1996 and 1997, and the three months ended March 31, 1997 and
1998, respectively.
The net balance in Advances from Vanguard has been classified as a liability in
the accompanying balance sheets as the Company will repay these advances to
Vanguard upon receipt of the proceeds from the sale of the company's assets to
Triton PCS, Inc. (See Note 7) .
NOTE 2. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES:
Use of Estimates
The preparation of these financial statements and footnote disclosures in ac-
cordance with generally accepted accounting principles requires the use of cer-
tain estimates by management in determining the Company's financial position
and results of operations. Actual results could differ from those estimates.
Revenue Recognition
Service fees are recognized at the time cellular services are provided. Cellu-
lar telephone equipment revenues consist primarily of sales to subscribers,
which are recognized at the time equipment is delivered to the subscriber, and
equipment rentals, which are recognized monthly over the terms of the rental
agreement with the subscriber.
Cellular Telephone Inventories
Inventories, consisting primarily of cellular telephones held for resale, are
valued at the lower of first-in, first-out (FIFO) cost or market.
Deferred Cellular License Acquisition Costs
The Company's investment in deferred cellular license acquisition costs con-
sists of amounts paid for the acquisition of the Federal Communications Commis-
sion construction permit to build and subsequently provide cellular service in
the Myrtle
F-34
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(Dollar amounts in thousands)
Beach RSA. The Company amortizes its investment over 40 years. Amortization ex-
pense of $446, $483, $483, $121 (unaudited) and $122 (unaudited) was recorded
in 1995, 1996 and 1997, and three-months ended March 31, 1997 and 1998 respec-
tively.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is calculated on a
straight-line basis for financial reporting purposes over the following esti-
mated useful lives:
<TABLE>
<CAPTION>
----------
<S> <C>
Cellular telephones held for rental 3 years
Cellular telephone systems 7-20 years
Office furniture and equipment 3-10 years
</TABLE>
At December 31, 1996 and 1997, and at March 31, 1998, construction in progress
was composed primarily of the cost of uncompleted additions to the Company's
cellular telephone systems. The Company capitalized interest costs of $106,
$125, $43, $7 (unaudited) and $10 (unaudited) in 1995, 1996 and 1997 and the
three-months ended March 31, 1997 and 1998, respectively, as part of the cost
of cellular telephone systems.
During the first quarter of 1998, the Company revised its estimate of the use-
ful life of cellular telephones held for rental from 3 years to 18 months to
more closely approximate its historical experience. This change increased de-
preciation expense for the three-months ended March 31, 1998 by approximately
$400 (unaudited).
Maintenance, repairs and minor renewals are charged to operations as incurred.
Gains or losses at the time of disposition of property and equipment are re-
flected in the statements of operations currently.
Cellular telephones are rented to certain customers generally with a contract
for a minimum length of service. Such customers have the option to purchase the
cellular telephone at any time during the term of the agreement.
Long-Lived Assets
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
121. "Accounting for the Impairment of Long-Lived Assets and for Long-Lived As-
sets to be Disposed Of", the Company reviews for the impairment of long-lived
assets and certain identifiable intangibles, whenever events or changes in cir-
cumstances indicate that the carrying amount of an asset may not be recover-
able. Under SFAS No. 121 an impairment loss would be recognized when estimated
future cash flows expected to result from the use of the asset and its eventual
disposition are less than its carrying amount. No such impairment losses have
been identified by the Company.
Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109, "Ac-
counting for Income Taxes", which requires the use of the "asset and liability
method" of accounting for income taxes. Accordingly, deferred income tax lia-
bilities and assets are determined based on the differences between the finan-
cial statement and income tax bases of assets and liabilities, using enacted
tax rates in effect for the year in which the differences are expected to re-
verse. The Company is included in the consolidated Federal income tax return of
Vanguard and its subsidiaries. The Company records its share of consolidated
Federal income taxes as if the Company filed a separate return.
NOTE 3. FUTURE CASH FLOW REQUIREMENTS:
The Company's ability to sustain its current and planned operations, maintain
adequate working capital and make required or planned capital expenditures will
depend on its ability to generate sufficient cash flow from operations and ob-
tain additional financing from Vanguard in the form of interest bearing advanc-
es. During 1995, 1996 and 1997 and the three-months ended March 31, 1997 and
1998, the Company received $7,603, $10,050, $9,742, $1,616 (unaudited) and
$1,190 (unaudited), respectively, of these advances. Vanguard has committed to
fund the cash requirements of the Company at least through fiscal 1998 or
through the ultimate date of disposition (Note 7), whichever is earlier. Ac-
cordingly, the accompanying financial statements have been prepared assuming
the Company will continue as a going concern and, as such, adjustments, if any,
that may be required for presentation on another basis have not been consid-
ered.
F-35
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(Dollar amounts in thousands)
NOTE 4. INCOME TAXES:
For Federal income tax reporting purposes, the Company's identified portion of
Vanguard's consolidated net operating loss carryforward was approximately
$20,700 at December 31, 1997. These losses may be used to reduce future taxable
income, if any, and expire through 2012. The primary differences between the
accumulated deficit for financial reporting purposes and the income tax loss
carryforwards relate to differences in the treatment of deferred cellular li-
cense acquisition costs and differences in the depreciation methods and esti-
mated useful lives of property and equipment.
Deferred income taxes are provided for the temporary differences between the
financial reporting and income tax bases of the Company's assets and liabili-
ties. The components of net deferred taxes as of December 31, 1996, and 1997
and as of March 31, 1998 were as follows:
<TABLE>
<CAPTION>
------------------------------------
DECEMBER 31, DECEMBER 31, MARCH 31,
1996 1997 1998
------------ ------------ ---------
(UNAUDITED)
<S> <C> <C> <C>
Deferred income tax assets:
Net operating loss carryforward $ 5,802 $7,936 $8,533
Other liabilities and reserves 216 254 259
Valuation allowance (4,776) -- --
------- ------ ------
Total deferred income tax assets 1,242 8,190 8,792
Deferred income tax liabilities:
Unamortized deferred cellular license
acquisition costs 594 705 732
Property and equipment 648 593 422
------- ------ ------
Total deferred income tax liabilities 1,242 1,298 1,154
------- ------ ------
Net deferred income taxes $ -- $6,892 $7,638
======= ====== ======
</TABLE>
A valuation allowance of $4,454 as of December 31, 1995 was established because
in the Company's assessment, it was uncertain whether the net deferred income
tax assets would be realized. In addition, because of its continuing assessment
that it was uncertain whether the net deferred income tax assets would be real-
ized, the Company increased the valuation allowance by $322 to offset the 1996
net deferred income tax benefit.
In March 1998, Vanguard entered into an agreement to sell the operational as-
sets of the Company for a cash purchase price of $160,000, subject to adjust-
ment (Note 7). This transaction is expected to generate substantial capital
gains which will utilize an equivalent amount of Vanguard's accumulated net op-
erating loss carryforwards. Based on these anticipated gains, management has
assessed that it is more likely than not that the deferred income tax assets of
Vanguard and its subsidiaries, including the Company, are realizable. Accord-
ingly, for the year ended December 31, 1997, the Company recognized a net de-
ferred income tax benefit of $6,892 upon reversal of the valuation allowance on
its net deferred income tax assets. For the three months ended March 31, 1998,
the Company recognized a net deferred income tax benefit of $746 (unaudited)
related to operating losses generated during the period.
A reconciliation between income taxes computed at the statutory Federal rate of
35% and the reported income tax benefit is as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------
FOR THE THREE-
FOR THE YEARS ENDED MONTHS ENDED
---------------------------------------- -----------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31,
1995 1996 1997 1997 1998
------------ ------------ ------------ ----------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Amount at statutory
Federal rate $ 57 $(295) $(1,936) $(421) $(682)
Change in valuation
allowance (63) 322 (4,776) 460 --
Other 6 (27) (180) (39) (64)
---- ----- ------- ----- -----
Income tax benefit $-- $ -- $(6,892) $ -- $(746)
==== ===== ======= ===== =====
</TABLE>
F-36
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(Dollar amounts in thousands)
NOTE 5. OPERATING LEASES:
The Company leases office space and land under noncancelable operating leases
expiring through 2004. The future minimum rental payments required under these
lease agreements as of December 31, 1997, were as follows:
<TABLE>
<CAPTION>
------
<S> <C>
1998 $ 562
1999 508
2000 508
2001 485
2002 438
Thereafter 4,686
------
$7,187
======
</TABLE>
Rent expense under these leases was $349, $439, $573, $127 (unaudited) and
$170 (unaudited) for the years ended December 31, 1995, 1996 and 1997 and the
three-months ended March 31, 1997 and 1998, respectively.
NOTE 6. TRANSACTIONS WITH PARENT AND AFFILIATES:
At December 31, 1997, Vanguard has pledged its investment in the stock of the
Company as well as the assets of the Company as security for debt of Vanguard
totaling $569,000.
Operations Management Agreement
The Company is charged a management fee by Vanguard based upon a percentage of
service fees. The management fee expense under this agreement was $1,374,
$1,620, $1,896, $368 (unaudited) and $458 (unaudited) for the years ended
December 31, 1995, 1996 and 1997 and the three-months ended March 31, 1997 and
1998, respectively.
Services Provided by Vanguard
Vanguard performs certain services and incurs certain costs for the Company.
Services provided include treasury, human resources, legal, technical support,
data processing, financial accounting, marketing, and other general corporate
services. The costs of the services provided by Vanguard have been allocated
to the Company based upon the Company's annual subscriber activations and
subscriber base as a percentage of Vanguard's total annual subscriber
activations and total subscriber base. Corporate costs of Vanguard totaling
$989, $1,195, $1,586, $316 (unaudited) and $441 (unaudited) have been
allocated to the Company for the years ended December 31, 1995, 1996 and 1997
and the three-months ended March 31, 1997 and 1998, respectively. In the
opinion of management, the method of allocating these costs is believed to be
reasonable. However, the costs of these services charged to the Company are
not necessarily indicative of the costs that would have been incurred if the
Company had performed these functions.
Other Transactions
During 1997, the Company added certain engineering and managerial functions
and incurred costs for such functions totaling $700 and $96 (unaudited) for
the year ended December 31, 1997 and the three-months ended March 31, 1997,
respectively. These services benefited the Company and other Vanguard markets;
however, none of these costs has been allocated to other markets. For the
three-months ended March 31, 1998, such costs totaled approximately $55
(unaudited). These costs are included in general and administrative expenses
in the accompanying statement of operations.
Employee benefits costs are incurred by Vanguard and are allocated to the
Company based on an overall percentage of salaries expense. Such costs totaled
$267, $322, $557, $109 (unaudited) and $134 (unaudited) for the years ended
December 31, 1995, 1996 and 1997 and the three-months ended March 31, 1997 and
1998, respectively, and are included in general and administrative expenses in
the accompanying statements of operations. For purposes of these financial
statements, these costs are assumed to be fully funded by the Company and are
included in the Advances from Vanguard in the accompanying balance sheets.
F-37
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(Dollar amounts in thousands)
NOTE 7. SUBSEQUENT EVENT:
In March 1998, Vanguard reached an agreement with Triton PCS, Inc. to sell the
assets of the Company, including the cellular license for the Myrtle Beach RSA,
for a cash purchase price of approximately $160,000, subject to adjustment. The
consummation of this transaction is subject to receipt of customary regulatory
approvals.
F-38
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
PROVISION
BALANCE AT CHARGED
BEGINNING TO COSTS BALANCE AT
OF PERIOD AND EXPENSES DEDUCTIONS(1) END OF PERIOD
---------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Allowance for doubtful
accountants:
Year Ended December 31,
1995..................... $264 $712 ($706) $270
Year Ended December 31,
1996..................... $270 322 (392) 200
Year Ended December 31,
1997..................... $200 796 (521) 475
</TABLE>
- ---------------
(1) Accounts written off during the period, net of recoveries
F-39
<PAGE>
Unaudited pro forma financial statements
The following pro forma data is filed herewith: Unaudited condensed combined
pro forma balance sheet as of March 31, 1998 and unaudited condensed combined
pro forma statements of operations for the year ended December 31, 1996 and
three months ended March 31, 1998.
The unaudited condensed combined pro forma balance sheets reflect the
acquisition of the Myrtle Beach System from Vanguard Cellular Systems of South
Carolina, Inc. ("Myrtle Beach System") as of March 31, 1998. The unaudited
condensed combined pro forma statements of operations reflect the acquisition
of the Myrtle Beach System as if such acquisition occurred on January 1, 1997.
Since the pro forma financial statements which follow are based upon the
financial condition and operating results of the Myrtle Beach System during
periods when they were not under the control or management of Triton PCS, Inc.
the information presented may not be indicative of the results which would
have actually been obtained had the acquisition been completed as of January
1, 1997 nor are they indicative of future financial or operating results. The
unaudited pro forma financial information does not give effect to any
synergies that may occur due to the integration of Triton PCS, Inc. and the
Myrtle Beach System. The condensed combined pro forma financial statements
should be read in conjunction with the historical audited financial statements
of Triton PCS, Inc. and the notes thereto, as well as the audited historical
consolidated financial statements of Vanguard Cellular Systems of South
Carolina, Inc. and the notes thereto included elsewhere herein. The
acquisition has been accounted for by the purchase method.
The unaudited condensed combined balance sheet reflects the completion of
the Company's offering on May 4, 1998 of 11% Senior Subordinated Discount
Notes due 2008 which resulted in the Company receiving net proceeds of
approximately $290 million and also reflects $27 million of equity commitments
for the Myrtle Beach acquisition.
F-40
<PAGE>
TRITON PCS, INC. AND MYRTLE BEACH SYSTEM
(A DEVELOPMENT STAGE ENTERPRISE)
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
MYRTLE PRO FORMA PRO FORMA
TRITON PCS, INC. BEACH SYSTEMS ADJUSTMENTS COMBINED
---------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash
equivalents $104,382,122 $ 227,000 $161,518,000 (a)(b)(c) $266,127,122
Due from related party 147,895 -- 147,895
Accounts receivable,
net of allowances -- 3,568,000 3,568,000
Cellular telephone
inventories and
prepaids 38,273 419,000 457,273
Deferred income tax
asset -- 8,792,000 (8,792,000) --
------------ ----------- ------------ ------------
Total current assets 104,568,290 13,006,000 152,726,000 270,300,290
Property, plant, and
equipment:
Land -- 313,000 313,000
Cellular telephone
systems -- 31,347,000 (9,454,879)(b) 21,892,121
Office furniture and
equipment 771,429 3,223,000 (972,121)(b) 3,022,308
Construction in
progress 3,594,508 560,000 4,154,508
------------ ----------- ------------ ------------
4,365,937 35,443,000 (10,427,000) 29,381,937
Less accumulated
depreciation (32,875) (10,427,000) 10,427,000 (b) (32,875)
------------ ----------- ------------ ------------
Net property and
equipment 4,333,062 25,016,000 -- 29,349,062
Intangible assets and
deferred cellular
license acquisition
costs 128,796,357 15,642,000 120,342,000 (b) 264,780,357
Deferred transaction
costs and other assets 18,542 156,000 9,844,000 (a)(b) 10,018,542
Escrow deposit 8,000,000 -- (8,000,000)(b) --
------------ ----------- ------------ ------------
Total assets $245,716,251 $53,820,000 $274,912,000 $574,448,251
============ =========== ============ ============
LIABILITIES AND
SHAREHOLDER'S EQUITY
(DEFICIT)
Current Liabilities:
Accounts payable and
accrued expenses $ 2,849,310 $ 732,000 $ 1,000,000 (b) $ 4,581,310
Due to related party -- 64,282,000 (64,282,000)(b) --
------------ ----------- ------------ ------------
Total current
liabilities 2,849,310 65,014,000 (63,282,000) 4,581,310
Long-term debt 75,046,109 -- 300,000,000 (a) 375,046,109
Deferred income taxes 17,192,566 1,154,000 (1,154,000)(b) 17,192,566
Shareholder's Equity
(Deficit):
Common stock, $.01 par
value, 1,000 shares
authorized, 100
shares issued and
outstanding 1 1,000 (1,000)(b) 1
Additional paid-in
capital 154,731,009 -- 27,000,000 (c) 181,731,009
Accumulated deficit (4,102,744) (12,349,000) 12,349,000 (b) (4,102,744)
------------ ----------- ------------ ------------
Total shareholder's
equity (deficit) 150,628,266 (12,348,000) 39,348,000 177,628,266
------------ ----------- ------------ ------------
Total liabilities and
shareholder's equity
(deficit) $245,716,251 $53,820,000 $274,912,000 $574,448,251
============ =========== ============ ============
</TABLE>
F-41
<PAGE>
TRITON PCS, INC. AND MYRTLE BEACH SYSTEM
(A DEVELOPMENT STAGE ENTERPRISE)
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
-------------------------------------------------------
MYRTLE
TRITON BEACH PRO FORMA PRO FORMA
PCS, INC. SYSTEMS ADJUSTMENTS COMBINED
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues: $ -- $23,608,000 $ 23,608,000
Costs and Expenses:
Costs of services -- 5,306,000 5,306,000
Operations and
development 873,477 -- 873,477
Marketing and
selling -- 3,944,000 3,944,000
General and
administrative 1,862,566 8,275,000 10,137,566
Depreciation and
amortization 4,762 5,162,000 2,296,000 (d) 7,462,762
----------- ----------- ------------ ------------
Total Costs and
Expenses 2,740,805 22,687,000 2,296,000 27,723,805
----------- ----------- ------------ ------------
Income (loss) from
operations (2,740,805) 921,000 (2,296,000) (4,115,805)
Interest expense,
net 1,220,034 6,451,000 31,854,000 (e) 39,525,034
----------- ----------- ------------ ------------
Loss before taxes (3,960,839) (5,530,000) (34,150,000) (43,640,839)
Tax benefit -- 6,892,000 (6,892,000)(f) --
----------- ----------- ------------ ------------
Net income (loss) $(3,960,839) $ 1,362,000 $(41,042,000) $(43,640,839)
=========== =========== ============ ============
</TABLE>
F-42
<PAGE>
TRITON PCS, INC. AND MYRTLE BEACH SYSTEM
(A DEVELOPMENT STAGE ENTERPRISE)
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
--------------------------------------------------------------
MYRTLE PRO FORMA PRO FORMA
TRITON PCS, INC. BEACH SYSTEMS ADJUSTMENTS COMBINED
---------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues: $ -- $ 6,000,000 $ 6,000,000
Costs and Expenses:
Costs of services -- 1,385,000 1,385,000
Operations and
development 63,191 -- 63,191
Marketing and selling -- 1,170,000 1,170,000
General and
administrative 2,063,289 2,047,000 4,110,289
Depreciation and
amortization 556,951 1,578,000 287,000 (g) 2,421,951
----------- ----------- ------------ ------------
Total Costs and Expenses 2,683,431 6,180,000 287,000 9,150,431
----------- ----------- ------------ ------------
Income (loss) from
operations (2,683,431) (180,000) (287,000) (3,150,431)
Interest expense, net 305,766 1,769,000 7,806,484 (h) 9,881,250
----------- ----------- ------------ ------------
Loss before taxes (2,989,197) (1,949,000) (8,093,484) (13,031,681)
Tax benefit 2,847,292 746,000 (3,593,292)(i) --
----------- ----------- ------------ ------------
Net income (loss) $ (141,905) $(1,203,000) $(11,686,776) $(13,031,681)
=========== =========== ============ ============
</TABLE>
F-43
<PAGE>
TRITON PCS, INC. AND MYRTLE BEACH SYSTEM
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1.Basis of Presentation
The accompanying unaudited pro forma condensed combined balance sheet gives
effect to the acquisition as if it had occurred on March 31, 1998. The un-
audited pro forma condensed combined statement of operations for the three
months ended March 31, 1998 and the year ended December 31, 1997 give ef-
fect to the acquisition as if it had occurred on January 1, 1997.
The effects of the acquisition have been presented using the purchase
method and accordingly, the purchase price was allocated to the assets ac-
quired and liabilities assumed based upon management's best preliminary es-
timate of their fair value. The preliminary allocation of the purchase
price will be subject to further adjustments, which are not anticipated to
be material, as Triton PCS, Inc. ("Triton") finalizes its allocation of its
purchase price in accordance with generally accepted accounting principles.
The pro forma adjustments related to the purchase price allocation of the
acquisition represent management's best estimate of the effects of the ac-
quisition.
2. The pro forma balance sheet adjustments consist of:
(a) Record the proceeds from a debt offering completed by the Company on May 7,
1998 pursuant to Rule 144A of the Securities Act of 1933, as amended. The
net proceeds of the Offering (after deducting an Initial Purchaser's Dis-
count of $9 million and estimated fees and expenses of the offering of $1
million) were approximately $290 million.
(b) Record the purchase of the Myrtle Beach System for a purchase price of
approximately $163.5 million including $8 million that was paid on March
10, 1998.
(c) Record $27 million in equity commitments that will be received upon closing
of the Myrtle Beach System transaction.
The pro forma statement of operations adjustments for the year ended December
31, 1997 consist of:
(d) Pro forma depreciation expense and amortization expense includes an
adjustment to record the purchased fixed assets which have an average life
of 8 years, the subscriber list which has a life of 15 years, and the
licenses which have a life of 40 years.
(e) Pro forma interest expense includes (i) interest on the notes discussed in
(a) above at a rate of 11.0% per year and (ii) interest on $75 million of
initial borrowings under the Credit Agreement at a rate of 8.70% after giv-
ing effect to the elimination of Myrtle Beach System's historical interest
expense.
(f) Pro forma tax provision has been calculated as if the transaction had been
consummated on January 1, 1997 and does not reflect certain non-recurring
events reflected in the historical financial statements.
The pro forma statement of operations adjustments for the three months ended
March 31, 1998 consist of:
(g) Pro forma depreciation expense and amortization expense includes an adjust-
ment to record the purchased fixed assets which have an average life of 8
years, the subscriber list which has a life of 15 years, and the licenses
which have a life of 40 years.
(h) Pro forma interest expense includes (i) interest on the notes discussed in
(a) above at a rate of 11.0% per year and (ii) interest on $75 million of
initial borrowings under the Credit Agreement at a rate of 8.70% after giv-
ing effect to the elimination of Myrtle Beach System's historical interest
expense.
(i) Pro forma tax provision has been calculated as if the transaction had been
consummated on January 1, 1997 and does not reflect certain non-recurring
events reflected in the historical financial statements.
F-44
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO THE REGISTRATION STATEMENT OR QUALIFICATION UNDER THE +
+SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
[ALTERNATE COVER PAGE]
SUBJECT TO COMPLETION, DATED JUNE , 1998
PROSPECTUS
TRITON PCS, INC.
11% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2008
There will not be any payment of interest on the 11% Senior Subordinated
Notes due 2008 (the "Notes") of Triton PCS, Inc., a Delaware corporation
("Triton") prior to November 1, 2003. The Notes will accrete in value until May
1, 2003. Thereafter, cash interest will accrue on the Notes and will be payable
semiannually in arrears on May 1 and November 1 at a rate of 11% per annum. The
Notes will be redeemable at the option of Triton, in whole or in part, at any
time on or after May 1, 2003, at the redemption prices set forth herein, plus
accrued and unpaid interest, if any, thereon to the date of redemption. In
addition, prior to May 1, 2001, Triton may redeem up to 35% of the aggregate
principal amount at maturity of the Notes with the net cash proceeds received
from one or more Equity Offerings (as defined herein) of Triton, Triton PCS
Holdings, Inc., a Delaware corporation, or a Special Purpose Corporation (as
defined herein) at a redemption price of 111% of the Accreted Value (as defined
herein) thereof, plus accrued and unpaid interest, if any, to the redemption
date; provided, however, that at least 65% in aggregate principal amount at
maturity of the Notes remains outstanding immediately after any such
redemption.
The Notes are general unsecured obligations of Triton, are subordinated in
right of payment to all Senior Debt (as defined herein) of Triton, including
all obligations under the Credit Facility (as defined herein). The Notes are
guaranteed on a joint and several basis (the "Guarantees") by all of the
subsidiaries of Triton (the "Guarantors") that are direct or indirect obligors
under, or in respect of, any Senior Credit Facilities (as defined herein). The
Guarantees are unsecured obligations of the Guarantors, subordinated in right
of payment to all Senior Debt of the Guarantors, including all of the
Guarantors' obligations under the Credit Facility. As of March 31, 1998, after
giving pro forma effect to the Private Offering (as defined herein) and the
application of the net proceeds therefrom, Triton and the Guarantors would have
had $75 million of Senior Debt outstanding.
SEE "RISK FACTORS" BEGINNING ON PAGE FOR A DISCUSSION OF CERTAIN FACTORS
THAT INVESTORS SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER AND AN
INVESTMENT IN THE EXCHANGE NOTES.
-----------
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.
-----------
This Prospectus may be used by J.P. Morgan Securities Inc. and Chase
Securities Inc. (together, the "Market Makers") in connection with offers and
sales of the Notes in market-making transactions at negotiated prices related
to prevailing market prices at the time of sale. The Market Makers may act as
principals or as agents in such transactions. Triton will receive no portion of
the proceeds of the sale of such Notes and will bear the expenses incident to
the registration thereof. For as long as a market-making prospectus is required
to be delivered, the ability of the Market Makers to make a market in the Notes
may, in part, be dependent on the ability of Triton to maintain a current
market-making prospectus.
<PAGE>
[ALTERNATE PAGE]
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 13
Use of Proceeds.......................................................... 30
Capitalization........................................................... 31
Selected Historical and Pro Forma Consolidated Financial Data............ 32
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 34
Business................................................................. 38
Management............................................................... 55
Security Ownership....................................................... 60
Certain Relationships and Related Transactions........................... 62
Description of Credit Facility........................................... 69
Description of Notes..................................................... 71
Description of Capital Stock............................................. 99
Certain United States Federal Income Tax Consequences.................... 101
Book-Entry; Delivery and Form............................................ 106
Plan of Distribution..................................................... 108
Legal Matters............................................................ 109
Experts.................................................................. 109
Available Information.................................................... 110
</TABLE>
<PAGE>
[ALTERNATE PAGE]
SUMMARY DESCRIPTION OF NOTES
The Notes have been registered under the Securities Act and, therefore, the
Notes will not be subject to certain transfer restrictions or registration
rights and will not contain certain provisions providing for an increase in the
interest rate under certain circumstances relating to the Registration Rights
Agreement.
Notes................... Up to $511,989,000 aggregate principal amount at
maturity of 11% Senior Subordinated Discount Exchange
Notes due 2008.
Maturity................ May 1, 2008.
Yield and Interest...... 11% per annum (computed on a semiannual bond
equivalent basis) calculated from May 4, 1998. Cash
interest will not accrue prior to May 1, 2003.
Commencing on November 1, 2003, cash interest will be
payable semiannually on May 1 and November 1 (an
"Interest Payment Date").
Original Issue Each Note has been offered at an original issue
Discount............... discount for federal income tax purposes. Thus,
although cash interest will not accrue on the Notes
prior to May 1, 2003, original issue discount (i.e.,
the difference between the principal amount at
maturity and the issue price of such Notes) will
accrue from the issue date of such Notes up to May 1,
2003 and will be included as interest income
periodically in a holder's gross income for federal
income tax purposes in advance of receipt of the cash
payments to which the income is attributable.
Option Redemption....... The Notes will be redeemable at the option of Triton,
in whole or in part, at any time on or after May 1,
2003, at the redemption prices set forth herein,
together with accrued and unpaid interest to the
redemption date. In addition, prior to May 1, 2001,
Triton may redeem up to 35% of the aggregate
principal amount at maturity of the Notes with the
net cash proceeds received from one or more Equity
Offerings of Triton, Holdings or a Special Purpose
Corporation at a redemption price of 111% of the
Accreted Value thereof, plus accrued and unpaid
interest, if any, to the redemption date; provided,
however, that at least 65% in aggregate principal
amount at maturity of the Notes remains outstanding
immediately after any such redemption.
Guarantee............... The Notes will be guaranteed on a joint and several
basis by all of Triton's subsidiaries that are direct
or indirect obligors under, or in respect of, any
Senior Credit Facilities. The Guarantees will be
unsecured obligations of the Guarantors, subordinated
in right of payment to all Senior Debt of the
Guarantors, including all of the Guarantors'
obligations under their guarantees of the Credit
Facility.
Ranking................. The Notes are general unsecured obligations of
Triton, subordinated in right of payment to all
Senior Debt of Triton, including all obligations
under the Credit Facility. The Guarantees are
unsecured obligations of the Guarantors, subordinated
in right of payment to all Senior Debt of the
Guarantors, including all of the Guarantors'
obligations under their
11
<PAGE>
guarantees of the Credit Facility. As of March 31,
1998, after giving pro forma effect to the Private
Offering and the application of the net proceeds
therefrom, Triton and the Guarantors would have had
$75 million of Senior Debt outstanding.
Change of Control.......
Upon a Change of Control, each holder of the Notes
may require the Company to repurchase such holder's
Notes, in whole or in part, at a purchase price equal
to 101% of the Accreted Value thereof or the
principal amount at maturity, as applicable plus
accrued and unpaid interest to the purchase date. The
Credit Facility will prohibit the purchase of
outstanding Notes prior to repayment of the
borrowings under the Credit Facility. There can be no
assurance that upon a Change of Control the Company
will have sufficient funds to repurchase any of the
Notes.
Covenants............... The Indenture contains certain covenants that, among
other things, limit the ability of Triton or any of
its Restricted Subsidiaries to incur additional
Indebtedness, make certain Restricted Payments and
Investments, create Liens, permit dividend or other
payment restrictions to apply to Subsidiaries, enter
into certain transactions with Affiliates or
consummate certain merger, consolidation or similar
transactions. In addition, in certain circumstances,
the Company will be required to offer to purchase the
Notes at 100% of the Accreted Value or principal
amount at maturity thereof, as applicable, with the
net proceeds of certain asset sales. These covenants
are subject to a number of significant exceptions and
qualifications. See "Description of Notes."For
additional information regarding the Notes, see
"Description of Notes."
RISK FACTORS
See "Risk Factors" beginning after the Summary for a discussion of certain
factors relating to an investment in the Notes.
12
<PAGE>
[ALTERNATE PAGE]
RISK FACTORS
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and 21E of the Exchange Act. Although the
Company believes that its plans, intentions and expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
plans, intentions or expectations will be achieved. Important factors that
could cause actual results to differ materially from the Company's forward-
looking statements are set forth below and elsewhere in this Prospectus. All
forward-looking statements attributable to the Company or persons acting on
its behalf are expressly qualified in their entirety by the cautionary
statements set forth below.
Investment in the Notes involves a high degree of risk. Prospective
purchasers of Notes should carefully consider the following factors in
addition to the other information contained herein in evaluating the Company
before purchasing any Notes.
ORIGINAL ISSUE DISCOUNT CONSEQUENCES OF NOTES
The Notes have been issued at a substantial discount from their principal
amount at maturity. Although cash interest will not accrue on the Notes prior
to May 1, 2003 and there will be no periodic payments of cash interest on the
Notes prior to November 1, 2003, original issue discount (the difference
between the aggregate principal amount at maturity and the issue price of the
Notes) will accrue from the issue date of the Notes. Consequently, purchasers
of Notes generally will be required to include amounts in gross income for
United States federal income tax purposes in advance of their receipt of the
cash payments to which the income is attributable. Such amounts in the
aggregate will be equal to the difference between the stated redemption price
at maturity (inclusive of stated interest on the Notes) and the accreted value
of the Notes at the time of purchase. See "Certain United States Federal
Income Tax Consequences" for a more detailed discussion of the federal income
tax consequences of the purchase, ownership and disposition of the Notes.
In the event a bankruptcy case is commenced by or against the Company under
the United States Bankruptcy Code prior to May 1, 2003, the claim of a holder
of Notes may be limited to an amount equal to the sum of (i) the initial
offering price and (ii) that portion of the original issue discount which is
not deemed to constitute "unmatured interest" for purposes of the Bankruptcy
Code. Any original issue discount that was not amortized as of the date of any
such bankruptcy filing would constitute "unmatured interest." To the extent
that the Bankruptcy Code differs from the Internal Revenue Code in determining
the method of amortization of original issue discount, a holder of Notes may
realize taxable gain or loss on payment of such holder's claim in bankruptcy.
ABSENCE OF PUBLIC MARKET FOR THE NOTES
The Notes will not be listed on any securities exchange. The Notes are new
securities for which there is currently no established public market. The
Company has been advised by the Market Makers that they intend to make a
market in the Notes as permitted by applicable laws and regulations; however,
the Market Makers are not obligated to do so and any such market-making
activities may be discontinued at any time without notice. If either Market
Maker conducts any market-making activities, it may be required to deliver a
"market-making prospectus" when effecting offers and sales in the Notes
because of the beneficial ownership of the capital stock of the Company by
affiliates of each of the Market Makers. For so long as a market-making
prospectus is required to be delivered, the ability of the Market Makers to
make a market in the Notes may, in part, be dependent on the ability of the
Company to maintain a current market-making prospectus. Therefore, there can
be no assurance that an active market for the Notes will develop.
13
<PAGE>
[ALTERNATE PAGE]
DESCRIPTION OF NOTES
As used below in this "Description of Notes" section, the "Company" means
Triton PCS, Inc. but not any of its subsidiaries. The Notes have been issued
under an Indenture, dated as of May 4, 1998 (the "Indenture"), between the
Company, the Guarantors and PNC Bank, National Association, as Trustee (the
"Trustee"). The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Notes are subject to all
such terms, and holders of the Notes are referred to the Indenture and the
Trust Indenture Act for a statement thereof. A copy of the Indenture will be
made available to prospective investors upon request. The statements under
this caption relating to the Notes and the Indenture are summaries and do not
purport to be complete, and where reference is made to particular provisions
of the Indenture, such provisions, including the definitions of certain terms,
are qualified in their entirety by such reference.
The Notes are general unsecured obligations of the Company, limited to $450
million of gross proceeds, of which $300 million of gross proceeds were
offered in the Private Offering. Additional amounts of Notes may be issued in
one or more series from time to time subject to the limitations set forth
under "Covenants--Limitations on Incurrence of Indebtedness." All such
additional Notes shall be treated as a single series for all purposes under
the Indenture. The Notes are senior subordinated obligations of the Company,
subordinated in right of payment to all Senior Debt of the Company. The Notes
have been issued in fully registered form, without coupons, in denominations
of $1,000 and any integral multiple thereof. No service charge will be made
for the 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. Initially, the Trustee will act as
paying agent and registrar for the Notes.
PRINCIPAL, MATURITY AND INTEREST
The Notes will mature on May 1, 2008. Cash interest will not be required to
accrue or be payable on the Notes prior to May 1, 2003. Cash interest will
accrue at the rate of 11% per annum from May 1, 2003 and will be payable semi-
annually on May 1 and November 1 of each year, commencing November 1, 2003, to
the Person in whose name a Note is registered (a "Holder") at the close of
business on the preceding April 15 or October 15 (each, a "Record Date"), as
the case may be. Cash interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
May 1, 2003. Cash interest on the Notes will be computed on the basis of a
360-day year of twelve 30-day months. Holders must surrender the Notes to the
paying agent for the Notes to collect principal payments. At the Company's
option principal and interest may be paid at the Trustee's corporate trust
office or by check mailed to a holder's registered address.
71
<PAGE>
[ALTERNATE PAGE]
PLAN OF DISTRIBUTION
This Prospectus may be used by the Market Makers in connection with offers
and sales of the Notes in market-making transactions at negotiated prices
relating to prevailing market prices at the time of sale. The Market Makers
may act as principals or agents in such transactions.
There is currently no established public market for the Notes. The Company
does not currently intend to apply for listing of the Notes on any securities
exchange. Therefore, any trading that does develop will occur on the over-the-
counter market. The Company has been advised by the Market Makers that it
intends to make a market in the Notes but it has not obligation to do so and
any market-making may be discontinued at any time. No assurance can be given
that an active pubic market for the Notes will develop.
Each of the Market Makers acted as an initial purchaser in connection with
the Private Offering and received customary compensation in connection
therewith. J.P. Morgan Securities Inc., one of the Market Makers, is an
affiliate of J.P. Morgan Investment Corporation which as of March 31,1998
owned shares of Series C Preferred Stock of Holdings representing
approximately 19.8% of the outstanding voting stock of Holdings. In addition,
John Watkins, a director of Holdings, is a managing director and an officer of
J.P. Morgan Investment Corporation. An affiliate of J.P. Morgan Securities
Inc. is also a lender to Holdings under the Credit Facility.
Chase Securities Inc., the other Market Maker, is an affiliate of CB Capital
Investors, L.P., which as of March 31, 1998 owned shares of Series C Preferred
Stock of Holdings representing approximately 23.7% of the outstanding voting
stock of Holdings. In addition, Arnold Chavkin, a director of Holdings, is an
officer of the general partner of CB Capital Partners, L.P. and a partner of
Chase Capital Partners, an affiliate of Chase Securities Inc. Chase Securities
Inc. is also an affiliate of The Chase Manhattan Bank which is agent bank and
a lender to Holdings under the Credit Facility.
Although there are no agreements to do so, the Market Makers, as well as
others, may act as brokers or dealers in connection with the sale of Notes
contemplated by this Prospectus and may receive fees or commissions in
connection therewith.
The Company has agreed to indemnify the Market Makers against certain
liabilities under the Securities Act or to contribute to payments that the
Market Makers may be required to make in respect of such liabilities.
108
<PAGE>
[ALTERNATE PAGE]
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act with respect to the Notes offered hereby. As
permitted by the rules and regulations of the Commission, this Prospectus
omits certain information, exhibits and undertakings contained in the
Registration Statement. For further information with respect to the Company
and the Notes offered hereby, reference is made to the Registration Statement,
including the exhibits thereto and the financial statements, notes and
schedules filed as a part thereof. The Registration Statement (and the
exhibits and schedules thereto), as well as the periodic reports and other
information filed by the Company with the Commission, may be inspected and
copied at the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the Commission located at Room 1400, 75 Park Place, New
York, New York 10007 and Suite 1400, Northwestern Atrium Center, 500 West
Madison Street, Chicago, Illinois 6061-2511. Copies of such materials may be
obtained from the Public Reference Section of the Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and its
public reference facilities in New York, New York and Chicago, Illinois at the
prescribed rates. The Commission maintains a web site (http://www.sec.gov),
that contains periodic reports, proxy and information statements and other
information regarding registrants that file documents electronically with the
Commission. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or document filed as an exhibit
to the Registration Statement, each such statement being qualified in all
respects by such reference.
Pursuant to the Indenture, the Company has agreed to furnish to the Trustee
and to registered holders of the Notes, without cost to the Trustee or such
registered holders, copies of all reports and other information that would be
required to be filed by the Company with the Commission under the Exchange
Act, whether or not the Company is then required to file reports with the
Commission. In addition, the Company is currently subject to the periodic
reporting and other informational requirements of the Exchange Act. In the
event that the Company ceases to be subject to the informational requirements
of the Exchange Act, the Company has agreed that, so long as any Notes remain
outstanding, it will file with the Commission (but only if the Commission at
such time is accepting such voluntary filings) and distribute to holders of
the Notes copies of the financial information that would have been contained
in such annual reports and quarterly reports, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
that would have been required to be filed with the Commission pursuant to the
Exchange Act. The Company will also furnish such other reports as it may
determine or as may be required by law.
110
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13 (S-1). OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the Registration Statement are as
follows:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee................ $ 88,500
Printing and Engraving Expenses.................................... 65,000
Legal Fees and Expenses............................................ 70,000
Accounting fees and Expenses....................................... 25,000
Fees of Trustee (including counsel fees)........................... 10,000
Miscellaneous...................................................... 11,500
--------
$270,000
========
</TABLE>
ITEM 14 (S-1) AND ITEM 20 (S-4). INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law authorizes corporations to limit or
eliminate the personal liability of directors to corporations and their
stockholders for monetary damages for breach of directors' fiduciary duty of
care. The duty of care requires that, when acting on behalf of the
corporation, directors must exercise an informed business judgment based on
all material information reasonably available to them. In the absence of the
limitations authorized by the Delaware statute, directors could be accountable
to corporations and their stockholders for monetary damages for conduct that
does not satisfy their duty of care. Although the statute does not change
directors' duty of care, it enables corporations to limit available relief to
equitable remedies such as injunction or rescission. The Restated Certificate
of Incorporation limits the liability of Holdings' directors to Holdings or
its stockholders to the fullest extent permitted by the Delaware statute.
Specifically, the directors of Holdings will not be personably liable for
monetary damages for breach of a director's fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
Holdings or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which a director derived an improper personal benefit. The
inclusion of this provision in the Restated Certificate of Incorporation may
have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter stockholders or management from bringing
a lawsuit against directors for breach of their duty of care, even though such
an action, if successful, might otherwise have benefited Holdings and its
stockholders. In addition, pursuant to the terms of the Kalogris and the
Skinner Employment Agreements, the Company will purchase director's and
officer's liability insurance coverage for such executives in amounts
customary for similarly situated companies.
ITEM 16. (S-1) AND ITEM 21. (S-4). EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
-------
<C> <S>
3.1 Certificate of Incorporation of Triton PCS, Inc.*
3.2 By-laws of Triton PCS, Inc.*
4.1 Indenture, dated as of May 4, 1998, between Triton PCS, Inc., the
Guarantors party thereto and PNC Bank, National Association.
4.2 Form of 11% Senior Subordinated Discount Notes (the "Private Notes")
(included in Exhibit 4.1)
4.3 Form of 11% Senior Subordinated Discount Notes (the "Exchange Notes")
(included in Exhibit 4.1)
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
-------
<S> <C>
4.4 Registration Rights Agreement, dated as of May 4, 1998, by and among
Triton PCS, Inc., the subsidiaries of Triton PCS, Inc. listed on the
signature pages thereto, and J.P. Morgan Securities Inc., Chase
Securities Inc. and Lehman Brothers Inc.
5.1 Opinion of Latham & Watkins regarding the validity of the Exchange
Notes.*
10.1 Credit Agreement, dated as of February 3, 1998, among Triton PCS,
Inc., Triton PCS Holdings, Inc., the Lenders (as defined therein)
party thereto, and The Chase Manhattan Bank, as administrative agent.
10.2 First Amendment, Consent and Waiver, dated as of April 16, 1998, among
Triton PCS, Inc., Triton PCS Holdings, Inc., the several banks and
other financial institutions and entities from time to time parties
thereto, and The Chase Manhattan Bank, as administrative agent.
10.3 Securities Purchase Agreement, dated as of October 8, 1997, among AT&T
Wireless PCS, Inc., the cash equity investors listed on the signature
pages thereto, the management stockholders listed on the signature
pages thereto and Triton PCS, Inc.
10.4 Amendment No. 1 to Securities Purchase Agreement and Consent
Agreement, dated as of March 10, 1998, by and among AT&T Wireless PCS,
Inc., the cash equity investors listed on the signature pages thereto,
the management stockholders listed on the signature pages thereto, and
Triton PCS Holdings, Inc. (f\k\a Triton PCS, Inc.).
10.5 Closing Agreement, dated as of February 4, 1998, among AT&T Wireless
PCS, Inc., Triton PCS Holdings, Inc., CB Capital Investors, L.P., J.P.
Morgan Investment Corporation, Sixty Wall Street SBIC Fund, L.P.,
Private Equity Investors III, L.P., Equity-Linked Investors-II,
Toronto Dominion Capital (USA), Inc., First Union Capital Partners,
Inc., DAG-Triton PCS, Inc., Michael E. Kalogris and Steven R. Skinner.
10.6 Asset Purchase Agreement, dated as of March 10, 1998, between Triton
PCS, Inc. and Vanguard Cellular Systems of South Carolina, Inc.
10.7 Letter of Commitment, dated as of March 10, 1998, among CB Capital
Investors, L.P., J.P. Morgan Investment Corporation, and First Union
Capital Partners, Inc.
10.8 AT&T Wireless Services Network Membership License Agreement, dated as
of February 4, 1998, between AT&T Corp. and Triton PCS Operating
Company, L.L.C.
10.9 Stockholders Agreement, dated as of February 4, 1998, among AT&T
Wireless PCS, Inc., Triton PCS Holdings, Inc., CB Capital Investors,
L.P., J.P. Morgan Investment Corporation, Sixty Wall Street SBIC Fund,
L.P., Private Equity Investors III, L.P., Equity-linked Investors-II,
Toronto Dominion Capital (USA), Inc., First Union Capital Partners,
Inc., DAG-Triton PCS, L.P., Michael E. Kalogris, Steven R. Skinner,
David D. Clark, Clyde Smith, Patricia Gallagher and David Standig.
10.10 Investors Stockholders' Agreement, dated as of February 4, 1998, among
CB Capital Investors, L.P., J.P. Morgan Investment Corporation, Sixty
Wall Street SBIC Fund, L.P., Private Equity Investors III, L.P.,
Equity-Linked Investors-II, Toronto Dominion Capital (USA), Inc., Dag-
Triton PCS, L.P., First Union Capital Partners, Inc., and the
stockholders named therein.
10.11 Intercarrier Roamer Service Agreement, dated as of February 4, 1998,
between AT&T Wireless Services, Inc. and Triton PCS Operating Company
L.L.C.
10.12 Master Services Agreement, dated as of January 19, 1998, between
Triton PCS Operating Company, L.L.C., and Wireless Facilities Inc.*
10.13 Site Acquisition, Zoning and A & E Supervision Agreement, dated as of
December 15, 1997, between Triton PCS, Inc. and Gearon & Co., Inc.*
10.14 Site Development Services Agreement, dated as of December 10, 1997,
between Triton PCS, Inc. and Entel Technologies, Inc.*
10.15 Ericsson Acquisition Agreement, dated as of March 11, 1998, between
Triton Equipment Company L.L.C. and Ericsson, Inc.*
10.16 Employment Agreement, dated as of February 4, 1998, among Triton
Management Company, Inc., Triton PCS Holdings, Inc. and Michael E.
Kalogris.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
-------
<S> <C>
10.17 Employment Agreement, dated as of January 8, 1998, between Triton
Management Company and Clyde Smith.
10.18 Employment Agreement, dated as of February 4, 1998, between Triton
Management Company and Steven R. Skinner.
10.19 Common Stock Trust Agreement, dated as of February 4, 1998, between
Triton PCS Holdings, Inc. and Michael E. Kalogris.
10.20 Pledge Agreement, dated as of February 4, 1998, by Michael E. Kalogris
to Triton PCS, Inc.*
10.21 Pledge Agreement, dated as of February 4, 1998, by Steven R. Skinner
to Triton PCS, Inc.*
10.22 Pledge Agreement, dated as of February 4, 1998, by Sixty Wall Street
SBIC Fund, L.P. to Triton PCS, Inc.*
10.23 Pledge Agreement, dated as of February 4, 1998, by Michael E. Kalogris
to Triton PCS, Inc.*
10.24 Pledge Agreement, dated as of February 4, 1998, by CB Capital
Investors, L.P. to Triton PCS, Inc.*
10.25 Pledge Agreement, dated as of February 4, 1998, by J.P. Morgan
Investment Corporation to Triton PCS, Inc.*
10.26 Pledge Agreement, dated as of February 4, 1998, by DAG-Triton PCS,
L.P. to Triton PCS, Inc.*
10.27 Pledge Agreement, dated as of February 4, 1998, by First Union Capital
Partners, Inc. to Triton PCS, Inc.*
10.28 Pledge Agreement, dated as of February 4, 1998, by Equity-Linked
Investors II to Triton PCS, Inc.*
10.29 Pledge Agreement, dated as of February 4, 1998, by Toronto Dominion
Capital (USA), Inc. to Triton PCS, Inc.*
10.30 Pledge Agreement, dated as of February 4, 1998, by Private Equity
Investors III, L.P. to Triton PCS, Inc.*
10.31 Letter Agreement, dated as of February 1998, between Clyde Smith and
Triton Management Company, Inc.
10.32 Letter Agreement, dated as of February 1998, between David A. Clark
and Triton Management Company, Inc.
10.33 Letter Agreement, dated as of February 1998, between David Standig and
Triton Management Company, Inc.
10.34 Letter Agreement, dated as of February 1998, between Michael Mears and
Triton Management Company, Inc.
10.35 Letter Agreement, dated as of February 1998, between Patricia
Gallagher and Triton Management Company, Inc.
12.1 Statement of Computation of Deficiency of Earnings to Fixed Charges.*
21.1 Subsidiaries of Triton PCS, Inc.
23.1 Consent of Latham & Watkins (included in their opinion filed as
Exhibit 5.1).
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Arthur Andersen LLP.
25.1 Statement of Eligibility and Qualification (Form T-1) under the Trust
Indenture Act of 1939 of PNC Bank, National Association.*
27.1 Financial Data Schedule.*
99.1 Form of Letter of Transmittal and related documents to be used in
conjunction with the Exchange Offer.*
</TABLE>
- --------
* To be filed by amendment.
II-3
<PAGE>
SCHEDULES OMITTED
Schedules not listed above are omitted because of the absence of the
conditions under which they are required or because the information required
by such omitted schedules is set forth in the financial statements or the
notes thereto.
ITEM 17 (S-1) AND ITEM 22 (S-4). UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the 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 end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 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.
The undersigned Registrant hereby undertakes that 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 described under Item 20 above, 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 of 1933 and is, therefore, unenforceable. In the event that a
claim of 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 paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted against
the Registrant 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 of whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into this Prospectus pursuant to
Items 4, 10(b), 11, or 13 of Form S-4, 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 undertaking also includes documents filed
subsequent to the effective date of the Registration Statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes 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-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF MALVERN,
STATE OF PENNSYLVANIA ON JUNE 25, 1998.
Triton PCS, Inc.
/s/ Michael Kalogris
By: _________________________________
Sole Director and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND AS OF THE DATES INDICATED.
/s/ Michael Kalogris
SIGNATURE TITLE DATE
/s/ Michael Kalogris Sole Director and June 25, 1998
- ------------------------------------- Chief Executive
MICHAEL KALOGRIS Officer (Principal
Executive Officer)
/s/ David Clark Senior Vice June 25, 1998
- ------------------------------------- President, Chief
DAVID CLARK Financial Officer
and Secretary
(Principal
Financial and
Accounting Officer)
II-5
<PAGE>
EXHIBIT 4.1
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INDENTURE
Dated as of May 4, 1998
Between
TRITON PCS, INC.,
THE GUARANTORS PARTY HERETO,
and
PNC BANK, NATIONAL ASSOCIATION, Trustee
_____________
$450,000,000 Gross Proceeds
11% Senior Subordinated Discount Notes due 2008
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CROSS-REFERENCE TABLE
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Indenture
Trust Indenture Act Section Section
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(S) 310(a)(1)............................................ 7.10
(a)(2)............................................ 7.10
(a)(3)............................................ N.A.
(a)(4)............................................ N.A.
(a)(5)............................................ 7.10
(b)............................................... 7.08; 7.10; 13.02
(c)............................................... N.A.
(S) 311(a)............................................... 7.11
(b)............................................... 7.11
(c)............................................... N.A.
(S) 312(a)............................................... 2.05
(b)............................................... 13.03
(c)............................................... 13.03
(S) 313(a)............................................... 7.06
(b)(1)............................................ N.A.
(b)(2)............................................ 7.06
(c)............................................... 7.06; 13.02
(d)............................................... 7.06
(S) 314(a)............................................... 4.11; 4.12; 13.02
(b)............................................... N.A.
(c)(1)............................................ 13.04
(c)(2)............................................ 13.04
(c)(3)............................................ N.A.
(d)............................................... N.A.
(e)............................................... 13.05
(f)............................................... N.A.
(S) 315(a)............................................... 7.01
(b)............................................... 7.05; 13.02
(c)............................................... 7.01(a)
(d)............................................... 7.01(c)
(e)............................................... 6.11
(S) 316(a)(last sentence)................................ 2.09
(a)(1)(A)......................................... 6.05
(a)(1)(B)......................................... 6.04
(a)(2)............................................ N.A.
(b)............................................... 6.07
(c)............................................... 10.04
(S) 317(a)(1)............................................ 6.08
(a)(2)............................................ 6.09
(b)............................................... 2.04
(S) 318(a)............................................... 13.01
</TABLE>
__________________________
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
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TABLE OF CONTENTS
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ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions............................................ 1
SECTION 1.02. Other Definitions...................................... 24
SECTION 1.03. Incorporation by Reference of Trust Indenture Act...... 24
SECTION 1.04. Rules of Construction.................................. 25
ARTICLE TWO THE SECURITIES
SECTION 2.01. Form and Dating........................................ 26
SECTION 2.02. Execution and Authentication........................... 28
SECTION 2.03. Registrar and Paying Agent............................. 29
SECTION 2.04. Paying Agent To Hold Money in Trust.................... 29
SECTION 2.05. Securityholder Lists................................... 30
SECTION 2.06. Transfer and Exchange.................................. 30
SECTION 2.07. Replacement Securities................................. 40
SECTION 2.08. Outstanding Securities................................. 41
SECTION 2.09. Treasury Securities.................................... 41
SECTION 2.10. Temporary Securities................................... 41
SECTION 2.11. Cancellation........................................... 42
SECTION 2.12. Defaulted Interest..................................... 42
SECTION 2.13. CUSIP or CINS Number................................... 42
SECTION 2.14. Payments of Interest................................... 42
ARTICLE THREE REDEMPTION
SECTION 3.01. Notices to Trustee..................................... 43
SECTION 3.02. Selection of Securities To Be Redeemed................. 44
SECTION 3.03. Notice of Redemption................................... 44
SECTION 3.04. Effect of Notice of Redemption......................... 45
SECTION 3.05. Deposit of Redemption Price............................ 45
SECTION 3.06. Securities Redeemed in Part............................ 46
ARTICLE FOUR COVENANTS
SECTION 4.01. Payment of Securities.................................. 46
SECTION 4.02. Maintenance of Office or Agency........................ 46
SECTION 4.03. Limitation on Transactions with Affiliates............. 47
SECTION 4.04. Limitation on Incurrence of Indebtedness............... 49
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SECTION 4.05. Limitation on Certain Asset Dispositions............... 52
SECTION 4.06. Limitation on Restricted Payments...................... 53
SECTION 4.07. Corporate Existence.................................... 57
SECTION 4.08. Payment of Taxes and Other Claims...................... 58
SECTION 4.09. Notice of Defaults..................................... 58
SECTION 4.10. Maintenance of Properties.............................. 58
SECTION 4.11. Compliance Certificate................................. 59
SECTION 4.12. Provision of Financial Information..................... 59
SECTION 4.13. Waiver of Stay, Extension or Usury Laws................ 60
SECTION 4.14. Change of Control...................................... 60
SECTION 4.15. Limitation on Layered Debt............................. 61
SECTION 4.16. Limitation on Restrictions Affecting Restricted
Subsidiaries...................................... 61
SECTION 4.17. Limitation on Liens.................................... 62
SECTION 4.18. Subsidiary Guarantees.................................. 64
SECTION 4.19. Limitation on Activities of the Company and
Restricted Subsidiaries........................... 64
SECTION 4.20. Amendments to Securities Purchase Agreement............ 64
SECTION 4.21. Limitation on Designations of Unrestricted
Subsidiaries...................................... 65
ARTICLE FIVE MERGERS; SUCCESSOR CORPORATION
SECTION 5.01. Restriction on Mergers, Consolidations and Certain
Sales of Assets................................... 66
SECTION 5.02. Successor Corporation Substituted...................... 67
ARTICLE SIX DEFAULT AND REMEDIES
SECTION 6.01. Events of Default...................................... 68
SECTION 6.02. Acceleration........................................... 70
SECTION 6.03. Other Remedies......................................... 70
SECTION 6.04. Waiver of Past Default................................. 71
SECTION 6.05. Control by Majority.................................... 71
SECTION 6.06. Limitation on Suits.................................... 72
SECTION 6.07. Rights of Holders to Receive Payment................... 73
SECTION 6.08. Collection Suit by Trustee............................. 73
SECTION 6.09. Trustee May File Proofs of Claim....................... 73
SECTION 6.10. Priorities............................................. 74
SECTION 6.11. Undertaking for Costs.................................. 74
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ARTICLE SEVEN TRUSTEE
SECTION 7.01. Duties of Trustee...................................... 75
SECTION 7.02. Rights of Trustee...................................... 76
SECTION 7.03. Individual Rights of Trustee........................... 77
SECTION 7.04. Trustee's Disclaimer................................... 77
SECTION 7.05. Notice of Defaults..................................... 78
SECTION 7.06. Reports by Trustee to Holders.......................... 78
SECTION 7.07. Compensation and Indemnity............................. 78
SECTION 7.08. Replacement of Trustee................................. 80
SECTION 7.09. Successor Trustee by Merger, etc....................... 81
SECTION 7.10. Eligibility; Disqualification.......................... 81
SECTION 7.11. Preferential Collection of Claims Against Company...... 81
ARTICLE EIGHT SUBORDINATION OF SECURITIES
SECTION 8.01. Securities Subordinated to Senior Debt................. 82
SECTION 8.02. No Payment on Securities in Certain Circumstances...... 82
SECTION 8.03. Payment Over of Proceeds upon Dissolution, etc......... 84
SECTION 8.04. Subrogation............................................ 85
SECTION 8.05. Obligations of Company Unconditional................... 85
SECTION 8.06. Notice to Trustee...................................... 86
SECTION 8.07. Reliance on Judicial Order or Certificate of
Liquidating Agent................................. 87
SECTION 8.08. Trustee's Relation to Senior Debt...................... 87
SECTION 8.09. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Debt.......... 88
SECTION 8.10. Securityholders Authorize Trustee To Effectuate
Subordination of Securities....................... 88
SECTION 8.11. This Article Not to Prevent Events of Default.......... 89
SECTION 8.12. Trustee's Compensation Not Prejudiced.................. 89
SECTION 8.13. No Waiver of Subordination Provisions.................. 89
SECTION 8.14. Subordination Provisions Not Applicable to Money Held
in Trust for Securityholders; Payments May Be
Paid Prior to Dissolution......................... 89
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ARTICLE NINE DISCHARGE OF INDENTURE
SECTION 9.01. Termination of Company's Obligations................... 90
SECTION 9.02. Application of Trust Money............................. 92
SECTION 9.03. Repayment to Company................................... 92
SECTION 9.04. Reinstatement.......................................... 93
ARTICLE TEN AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01. Without Consent of Holders............................. 93
SECTION 10.02. With Consent of Holders................................ 94
SECTION 10.03. Compliance with Trust Indenture Act.................... 96
SECTION 10.04. Revocation and Effect of Consents...................... 96
SECTION 10.05. Notation on or Exchange of Securities.................. 97
SECTION 10.06. Trustee To Sign Amendments, etc........................ 97
ARTICLE ELEVEN GUARANTEE
SECTION 11.01. Unconditional Guarantee................................ 98
SECTION 11.02. Severability........................................... 99
SECTION 11.03. Release of a Guarantor................................. 99
SECTION 11.04. Limitation of Guarantor's Liability.................... 100
SECTION 11.05. Contribution........................................... 100
SECTION 11.06. Execution of Guarantee................................. 100
SECTION 11.07. Subordination of Subrogation and Other Rights.......... 101
ARTICLE TWELVE SUBORDINATION OF GUARANTEE
SECTION 12.01. Guarantee Obligations Subordinated to Senior Debt of
Guarantor......................................... 101
SECTION 12.02. No Payment on Guarantees in Certain Circumstances...... 102
SECTION 12.03. Payment Over of Proceeds upon Dissolution, etc......... 103
SECTION 12.04. Subrogation............................................ 104
SECTION 12.05. Obligations of Guarantors Unconditional................ 105
SECTION 12.06. Notice to Trustee...................................... 106
SECTION 12.07. Reliance on Judicial Order or Certificate of
Liquidating Agent................................. 107
SECTION 12.08. Trustee's Relation to Senior Debt of Guarantors........ 107
SECTION 12.09. Subordination Rights Not Impaired by Acts or Omissions
of the Guarantors or Holders of Senior Debt of
Guarantors........................................ 108
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SECTION 12.10. Securityholders Authorize Trustee to Effectuate
Subordination of Guarantee........................ 108
SECTION 12.11. This Article Not to Prevent Events of Default.......... 108
SECTION 12.12. Trustee's Compensation Not Prejudiced.................. 109
SECTION 12.13. No Waiver of Guarantee Subordination Provisions........ 109
SECTION 12.14. Payments May Be Paid Prior to Dissolution.............. 109
ARTICLE THIRTEEN MISCELLANEOUS
SECTION 13.01. Trust Indenture Act Controls........................... 110
SECTION 13.02. Notices................................................ 110
SECTION 13.03. Communications by Holders with Other Holders........... 112
SECTION 13.04. Certificate and Opinion as to Conditions Precedent..... 112
SECTION 13.05. Statements Required in Certificate or Opinion.......... 112
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.............. 113
SECTION 13.07. Governing Law.......................................... 113
SECTION 13.08. No Recourse Against Others............................. 113
SECTION 13.09. Successors............................................. 113
SECTION 13.10. Counterpart Originals.................................. 113
SECTION 13.11. Severability........................................... 114
SECTION 13.12. No Adverse Interpretation of Other Agreements.......... 114
SECTION 13.13. Legal Holidays......................................... 114
EXHIBIT A - Form of Security A-1
EXHIBIT B - Form of Certificate of Transfer B-1
EXHIBIT C - Form of Certificate of Exchange C-1
</TABLE>
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NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part
of this Indenture.
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<PAGE>
INDENTURE dated as of May 4, 1998, among TRITON PCS, INC., a Delaware
corporation (the "Company"), the Guarantors party hereto and PNC BANK, NATIONAL
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ASSOCIATION, a national banking association organized under laws of the United
States of America, as trustee (the "Trustee").
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Each party hereto agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's
11% Senior Subordinated Discount Notes due 2008:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
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"Accreted Value" means, as of any date of determination prior to May
--------------
1, 2003, the sum of (a) the initial offering price of each Note and (b) the
portion of the excess of the principal amount of each Note over such initial
offering price which shall have been amortized by the Company in accordance with
GAAP through such date, such amount to be so amortized on a daily basis and
compounded semiannually on each interest payment date at a rate of 11% per annum
from the Issue Date through the date of determination computed on the basis of a
360-day year of twelve 30-day months.
"Acquired Indebtedness" means, with respect to any Person,
---------------------
Indebtedness of such Person (i) existing at the time such Person becomes a
Restricted Subsidiary or (ii) assumed in connection with the acquisition of
assets from another Person, including Indebtedness Incurred in connection with,
or in contemplation of, such Person becoming a Restricted Subsidiary or such
acquisition, as the case may be.
"Additional Interest" shall have the meaning set forth in the
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Registration Rights Agreement.
"Affiliate" of any specified Person means any other Person directly or
---------
indirectly controlling or controlled by or under direct or indirect common
control with any specified Person. For purposes of this definition, "control"
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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 oth-
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erwise; and the terms "controlling" and "controlled" have meanings correlative
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to the foregoing.
"Agent" means any Registrar, Paying Agent or co-Registrar.
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"Annualized Pro Forma Consolidated Operating Cash Flow" means
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Consolidated Cash Flow for the latest two full fiscal quarters for which
consolidated financial statements of the Company are available multiplied by
two. For purposes of calculating "Consolidated Cash Flow" for any period for
purposes of this definition only, (i) any Subsidiary of the Company that is a
Restricted Subsidiary on the date of the transaction giving rise to the need to
calculate "Annualized Pro Forma Consolidated Operating Cash Flow" (the
"Transaction Date") shall be deemed to have been a Restricted Subsidiary at all
times during such period and (ii) any Subsidiary of the Company that is not a
Restricted Subsidiary on the Transaction Date shall be deemed not to have been a
Restricted Subsidiary at any time during such period. In addition to and without
limitation of the foregoing, for purposes of this definition only, "Consolidated
Cash Flow" shall be calculated after giving effect on a pro forma basis for the
applicable period to, without duplication, any Asset Dispositions or Asset
Acquisitions (including, without limitation, any Asset Acquisition giving rise
to the need to make such calculation as a result of the Company or one of the
Restricted Subsidiaries (including any person who becomes a Restricted
Subsidiary as a result of the Asset Acquisition) incurring, assuming or
otherwise being liable for Acquired Indebtedness) occurring during the period
commencing on the first day of such two fiscal quarter period to and including
the Transaction Date (the "Reference Period"), as if such Asset Sale or Asset
Acquisition occurred on the first day of the Reference Period.
"Applicable Procedures" means with respect to any transfer or exchange
---------------------
of interests in a Global Security, the rules and procedures of DTC, Euroclear
and Cedel that apply to such transfer or exchange.
"Asset Acquisition" means (i) any purchase or other acquisition (by
-----------------
means of transfer of cash or other property to others or payment for property or
services for the account or use of others, or otherwise) of Equity Interests of
any person by the Company or any Restricted Subsidiary, in either case, pursuant
to which such person shall become a Restricted Subsidiary or shall be merged
with or into the Company or any Restricted Subsidiary or (ii) any acquisition by
the Company or
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any Restricted Subsidiary of the property or assets of any person which
constitute all or substantially all of an operating unit or line of business of
such person.
"Asset Disposition" means any sale, transfer or other disposition
-----------------
(including, without limitation, by merger, consolidation or sale-and-leaseback
transaction) of (i) shares of Capital Stock of a Subsidiary of the Company
(other than directors' qualifying shares), (ii) any FCC license for the
provision of wireless telecommunications services held by the Company or any
Restricted Subsidiary (whether by sale of Capital Stock or otherwise) or (iii)
property or assets of the Company or any Subsidiary of the Company; provided,
--------
however, that an Asset Disposition shall not include (a) any sale, transfer or
- -------
other disposition of shares of Capital Stock, property or assets by a Restricted
Subsidiary to the Company or to any other Restricted Subsidiary or by the
Company to any Restricted Subsidiary, (b) any sale, transfer or other
disposition of defaulted receivables for collection or any sale, transfer or
other disposition of property or assets in the ordinary course of business, (c)
any sale, transfer or other disposition that does not (together with all related
sales, transfers or dispositions) involve aggregate consideration in excess of
$5.0 million, (d) the sale, lease, conveyance or disposition or other transfer
of all or substantially all of the assets of the Company as permitted under
Article Five or (e) any disposition that constitutes a Change of Control.
"Average Life" means, as of the date of determination, with respect to
------------
any Indebtedness for borrowed money or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of the number of years from the date of
determination to the dates of each successive scheduled principal or liquidation
value payments of such Indebtedness or Preferred Stock, respectively, and the
amount of such principal or liquidation value payments, by (ii) the sum of all
such principal or liquidation value payments.
"Bankruptcy Code" means Title 11, United States Code.
---------------
"Board" of any person means the board of directors, management
-----
committee or other governing body of such person.
"Board Resolution" means, with respect to any Person, a duly adopted
----------------
resolution of the Board of such Person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
------------
Friday which is not a day on which banking insti-
<PAGE>
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tutions in the City of New York, New York or Pittsburgh, Pennsylvania are
authorized or obligated by law or executive order to close.
"Capital Lease Obligations" of any Person means the obligations to pay
-------------------------
rent or other amounts under a lease of (or other Indebtedness arrangements
conveying the right to use) real or personal property of such Person which are
required to be classified and accounted for as a capital lease or liability on
the face of a balance sheet of such Person in accordance with GAAP. The amount
of such obligations shall be the capitalized amount thereof in accordance with
GAAP and the stated maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
-------------
rights to purchase, warrants, options participations or other equivalents of or
interests in (however designated) of corporate stock or other equity
participations, including partnership interests, whether general or limited of
such Person.
"Cash Equivalents" means (i) direct obligations of, or obligations the
----------------
principal of and interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in each
case maturing within one year from the date of acquisition thereof; (ii)
investments in commercial paper maturing within 365 days from the date of
acquisition thereof and having, at such date of acquisition, the highest credit
rating obtainable from Standard & Poor's or from Moody's Investors Service;
(iii) investments in certificates of deposit, banker's acceptance and time
deposits maturing within 365 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000; (iv)
fully collateralized repurchase agreements with a term of not more than 30 days
for securities described in clause (i) of this definition and entered into with
a financial institution satisfying the criteria described in clause (iii) of
this definition; and (v) money market funds substantially all of whose assets
comprise securities of the type described in clauses (i) through (iii) of this
definition.
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"Change of Control" means the occurrence of one or more of the
-----------------
following events: (i) any "person" or "group" (as such terms are used in Section
13(d) and 14(d) of the Exchange Act) other than a Permitted Holder or Permitted
Holders or a person or group controlled by a Permitted Holder or Permitted
Holders becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all such securities that such person has the right to acquire
within one year, upon the happening of an event or otherwise), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of (A) securities of Triton PCS Holdings, Inc.
representing 50% or more of the combined voting power of Triton PCS Holdings,
Inc.'s then outstanding Voting Stock, or (B) securities of the Company
representing 50% or more of the combined voting power of the Company's then
outstanding Voting Stock; (ii) the following individuals cease for any reason to
constitute more than a majority of the number of directors then serving on the
Board of Triton PCS Holdings, Inc. or the Company: individuals who, on the date
hereof, constitute the Board and any new director (other than a director whose
initial assumption of the office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of Triton PCS Holdings, Inc. or the Company) whose
appointment or election by the Board or nomination for election by the Company's
stockholders was approved by the vote of at least two-thirds (2/3) of the
directors then still in office or whose appointment, election or nomination was
previously so approved or recommended; or (iii) the shareholders of Triton PCS
Holdings, Inc. or of the Company shall approve any Plan of Liquidation (whether
or not otherwise in compliance with the provisions of this Indenture). For
purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Subsidiaries of the
Company, the Capital Stock of which constitutes all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.
"Common Stock" of any Person means Capital Stock of such Person that
------------
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
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"Commission" means the Securities and Exchange Commission.
----------
"Consolidated Cash Flow" of any Person means for any period the
----------------------
Consolidated Net Income of such Person for such period (x) increased (to the
extent Consolidated Net Income for such period has been reduced thereby) by the
sum of (without duplication) (i) Consolidated Interest Expense of such Person
for such period, plus (ii) Consolidated Income Tax Expense of such Person for
such period, plus (iii) the consolidated depreciation and amortization expense
of such Person and its Restricted Subsidiaries for such period, plus (iv) any
other non-cash charges of such Person and its Restricted Subsidiaries for such
period except for any non-cash charges that represent accruals of, or reserves
for, cash disbursements to be made in any future accounting period and (y)
decreased (to the extent Consolidated Net Income for such period has been
increased thereby) by any non-cash gains from Asset Dispositions.
"Consolidated Income Tax Expense" of any Person means for any period
-------------------------------
the consolidated provision for income taxes of such Person and its Restricted
Subsidiaries for such period calculated on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" for any Person means for any period,
-----------------------------
without duplication, (a) the consolidated interest expense included in a
consolidated income statement (without deduction of interest or finance charge
income) of such Person and its Restricted Subsidiaries for such period
calculated on a consolidated basis in accordance with GAAP (including, without
limitation, (i) any amortization of debt discount, (ii) the net costs under
interest rate agreements, (iii) all capitalized interest, (iv) the interest
portion of any deferred payment obligation and (v) all amortization of any
premiums, fees and expenses payable in connection with the Incurrence of any
Indebtedness, plus (b) the interest component of Capital Lease Obligations paid,
accrued and/or scheduled to be paid or accrued by such Person and its Restricted
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" of any Person means for any period the
-----------------------
consolidated net income (or loss) of such Person and its Restricted Subsidiaries
for such period determined on a consolidated basis in accordance with GAAP;
provided, however, that there shall be excluded therefrom (a) the net income (or
- -------- -------
loss) of any Person acquired by such Person or a Restricted Subsidiary of such
Person in a pooling-of-interests transaction
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for any period prior to the date of such transaction, (b) the net income (but
not loss) of any Restricted Subsidiary of such Person which is subject to
restrictions which prevent or limit the payment of dividends or the making of
distributions to such Person to the extent of such restrictions (regardless of
any waiver thereof), (c) the net income of any Person that is not a Restricted
Subsidiary of such Person, except to the extent of the amount of dividends or
other distributions representing such Person's proportionate share of such other
Person's net income for such period actually paid in cash to such Person by such
other Person during such period, (d) gains or losses (other than for purposes of
calculating Consolidated Net Income under Section 4.06(a)(3)) on Asset
Dispositions by such Person or its Restricted Subsidiaries, (e) all
extraordinary gains (but not, other than for purposes of calculating
Consolidated Net Income under Section 4.06(a)(3), losses) determined in
accordance with GAAP and (f) in the case of a successor to the referent Person
by consolidation or merger or as a transferee of the referent Person's assets,
any earnings (or losses) of the successor corporation prior to such
consolidation, merger or transfer of assets.
"Credit Agreement" means the Credit Facility dated February 3, 1998,
----------------
among the Company, certain domestic subsidiaries of the Company, the agent and
certain banks referred to therein, as such agreement is amended through the
Issue Date and from time to time thereafter.
"Default" means any event that is, or after notice or lapse of time or
-------
both would become, an Event of Default.
"Designated Senior Debt" means (i) so long as any Indebtedness under
----------------------
one or more Senior Credit Facilities is outstanding or any lender has any
commitment to extend credit to the Company thereunder, the Senior Debt incurred
under any such Credit Facility and (ii) so long as outstanding, any other Senior
Debt which has at the time of initial issuance an aggregate outstanding
principal amount in excess of $25.0 million which has been so designated as
Designated Senior Debt by the Board of the Company at the time of initial
issuance in a resolution delivered to the Trustee.
"Designation" has the meaning set forth in Section 4.21.
-----------
"Designation Amount" has the meaning set forth in Section 4.21.
------------------
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"Disinterested Director" means a member of the Board who does not have
----------------------
any material direct or indirect financial interest in or with respect to the
transaction being considered.
"Disqualified Stock" of any Person means any Capital Stock of such
------------------
Person which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the final maturity of the Notes.
"DTC" means The Depository Trust Company or its successors.
---
"Equipment Subsidiary" means Triton PCS Equipment Company, L.L.C., a
--------------------
Delaware limited liability company.
"Equity Offering" means any public or private sale of Qualified Stock
---------------
made on a primary basis by the Company, Triton PCS Holdings, Inc. or a Special
Purpose Corporation, including through the issuance or sale of Qualified Stock
to one or more Strategic Equity Investors; provided that the proceeds from such
--------
issuance or sale of any Qualified Stock sold by Triton PCS Holdings, Inc. or the
Special Purpose Corporation, as the case may be, will be required, prior to any
redemption of Notes prior to May 1, 2001, to be contributed as equity in
exchange for Qualified Stock to, or be used to purchase Qualified Stock in, the
Company.
"Euroclear" means Morgan Guaranty Trust Company of New York (Brussels
---------
Office) as operator of the Euroclear System.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations promulgated by the Commission thereunder.
"Exchange Registration Statement" has the meaning set forth in the
-------------------------------
Registration Rights Agreement.
"Excluded Cash Proceeds" means the first $122 million of net cash
----------------------
proceeds received by the Company subsequent to the Issue Date from capital
contributions in respect of Qualified Stock of the Company or from the issue or
sale (other than to a Restricted Subsidiary) of Qualified Stock of the Company;
provided, that if the Myrtle Beach System is not acquired on or prior to March
- --------
31, 1999 pursuant to the Myrtle Beach Acquisi-
<PAGE>
-9-
tion Agreement such amount shall be reduced to the first $95 million received by
the Company subsequent to the Issue Date from capital contributions in respect
of Qualified Stock of the Company or from the issue or sale (other than to a
Restricted Subsidiary) of Qualified Stock of the Company.
"Fair Market Value" means, with respect to any asset or property, the
-----------------
price that could be negotiated in an arm's-length transaction, for cash, between
a willing seller and a willing buyer, neither of whom is under pressure or
compulsion to complete the transaction. Unless otherwise specified in this
Indenture, Fair Market Value shall be determined by the Board acting in good
faith.
"GAAP" means generally accepted accounting principles, consistently
----
applied, as in effect from time to time in the United States of America, as set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as is approved by a significant segment of the
accounting profession in the United States.
"Guarantee" means the guarantee of the Notes by each Guarantor under
---------
this Indenture.
"Guarantor" means (i) each Restricted Subsidiary that, on the Issue
---------
Date, is a direct or indirect obligor under, or in respect, of one or more of
the Senior Credit Facilities and (ii) each Restricted Subsidiary that pursuant
to the terms of this Indenture executes a supplement to this Indenture as a
Guarantor, in each case, until such Restricted Subsidiary is released from its
Guarantee.
"Holder" or "Securityholder" means the Person in whose name a Security
------ --------------
is registered on the Registrar's books.
"Incur" means, with respect to any Indebtedness or other obligation of
-----
any Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred" and "Incurring" shall have meanings
---------- -------- ---------
correlative to the foregoing). Indebtedness of any Person or any of its
Restricted Subsidiaries existing at the time such Person becomes
<PAGE>
-10-
a Restricted Subsidiary (or is merged into or consolidates with the Company or
any Restricted Subsidiary), whether or not such Indebtedness was incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary (or being merged into or consolidated with the Company or any
Restricted Subsidiary), shall be deemed Incurred at the time any such Person
becomes a Restricted Subsidiary or merges into or consolidates with the Company
or any Restricted Subsidiary.
"Indebtedness" means (without duplication), with respect to any
------------
Person, whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (i) every obligation of such Person for money
borrowed, (ii) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses, (iii) every
reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person, (iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good faith), (v) every Capital Lease
Obligation of such Person, (vi) every net obligation under interest rate swap or
similar agreements of such Person and (vii) every obligation of the type
referred to in clauses (i) through (vi) of another Person and all dividends of
another Person the payment of which, in either case, such Person has guaranteed
or is responsible or liable for, directly or indirectly, as obligor, guarantor
or otherwise. Indebtedness shall include the liquidation preference and any
mandatory redemption payment obligations in respect of any Disqualified Stock of
the Company and any Restricted Subsidiary, and any Preferred Stock of a
Subsidiary of the Company. Indebtedness shall never be calculated taking into
account any cash and cash equivalents held by such Person. Indebtedness shall
not include obligations arising from agreements of the Company or a Restricted
Subsidiary to provide for indemnification, adjustment of purchase price, earn-
out, or other similar obligations, in each case, incurred or assumed in
connection with the disposition of any business or assets of a Restricted
Subsidiary. The amount of any Indebtedness outstanding as of any date shall be
(i) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount, (ii) the principal amount thereof, in the case of any
Indebtedness other than Indebtedness issued with original issue discount, and
(iii) the greater of the maximum repurchase or redemption price or liquidation
prefer-
<PAGE>
-11-
ence thereof, in the case of any Disqualified Stock or Preferred Stock.
"Indenture" means this Indenture as amended or supplemented from time
---------
to time in accordance with its terms.
"Initial Global Securities" means the Regulation S Global Security and
-------------------------
the 144A Global Security, each of which is issued on the Issue Date and contains
a Securities Act Legend.
"Institutional Accredited Investor" means an institution that is an
---------------------------------
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
of Regulation D promulgated under the Securities Act.
"interest" means, with respect to the Notes, the sum of any cash
--------
interest and any Additional Interest on the Notes.
"Interest Payment Date" has the meaning given to such term in the
---------------------
Securities.
"Interest Rate Obligations" means, with respect to any Person, the
-------------------------
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, and (ii) other
agreements or arrangements designed to protect such Person against, or to expose
such Person to, fluctuations in interest rates.
"Investment" by any Person means any direct or indirect loan, advance,
----------
guarantee or other extension of credit or capital contribution to (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise), or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Indebtedness issued by, any other Person.
"Issue Date" means May 4, 1998, the original issue date of the
----------
Securities initially issued hereunder.
"License Subsidiary" means Triton PCS License Company, L.L.C., a
------------------
Delaware limited liability company.
"Lien" means, with respect to any property or assets, any mortgage or
----
deed of trust, pledge, hypothecation, assignment, security interest, lien,
charge, easement (other than any easement not materially impairing usefulness or
marketability), encumbrance, preference, priority or other security agreement
<PAGE>
-12-
with respect to such property or assets (including, without limitation, any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"Material Subsidiary" means, at any date of determination, (a) any
-------------------
Restricted Subsidiary that, together with its Subsidiaries that constitute
Restricted Subsidiaries (i) for the most recent fiscal year of the Company
accounted for more than 10.0% of the consolidated revenues of the Company and
the Restricted Subsidiaries or (ii) as of the end of such fiscal year, owned
more than 10.0% of the consolidated assets of the Company and the Restricted
Subsidiaries, all as set forth on the consolidated financial statements of the
Company and the Restricted Subsidiaries for such year prepared in conformity
with GAAP, and (b) any Restricted Subsidiary which, when aggregated with all
other Restricted Subsidiaries that are not otherwise Significant Restricted
Subsidiaries and as to which any event described in clause (h) or (i) of Section
6.01 has occurred, would constitute a Significant Restricted Subsidiary under
clause (a) of this definition.
"Myrtle Beach Acquisition Agreement" means the Asset Purchase
----------------------------------
Agreement dated March 10, 1998 by and between the Company and Vanguard Cellular
Systems of South Carolina, Inc., including any amendments, modifications,
supplements or replacements thereof.
"Myrtle Beach System" means the existing cellular system currently
-------------------
owned and operated by Vanguard Cellular Systems of South Carolina, Inc., serving
the South Carolina 5- Georgetown Rural Service Area.
"Net Available Proceeds" from any Asset Disposition by any Person
----------------------
means cash or readily marketable cash equivalents received (including by way of
sale or discounting of a note, installment receivable or other receivable, but
excluding any other consideration received in the form of assumption by the
acquirer of Indebtedness or other obligations relating to such properties or
assets or received in any other non-cash form) therefrom by such Person,
including any cash received by way of deferred payment or upon the monetization
or other disposition of any non-cash consideration (including notes or other
securities) received in connection with such Asset Disposition, net of (i) all
legal, title and recording tax expenses, commissions and other fees and expenses
incurred and all federal, state, foreign and local taxes required to be accrued
as a liability as a consequence of such Asset Disposition, (ii) all payments
<PAGE>
-13-
made by such Person or any of its Restricted Subsidiaries on any Indebtedness
which is secured by such assets in accordance with the terms of any Lien upon or
with respect to such assets or which must by the terms of such Lien, or in order
to obtain a necessary consent to such Asset Disposition or by applicable law, be
repaid out of the proceeds from such Asset Disposition, (iii) all payments made
with respect to liabilities associated with the assets which are the subject of
the Asset Disposition, including, without limitation, trade payables and other
accrued liabilities, (iv) appropriate amounts to be provided by such Person or
any Restricted Subsidiary thereof, as the case may be, as a reserve in
accordance with GAAP against any liabilities associated with such assets and
retained by such Person or any Restricted Subsidiary thereof, as the case may
be, after such Asset Disposition, including, without limitation, liabilities
under any indemnification obligations and severance and other employee
termination costs associated with such Asset Disposition, until such time as
such amounts are no longer reserved or such reserve is no longer necessary (at
which time any remaining amounts will become Net Available Proceeds to be
allocated in accordance with the provisions of clause (iii) of Section 4.05) and
(v) all distributions and other payments made to minority interest holders in
Restricted Subsidiaries of such Person or joint ventures as a result of such
Asset Disposition.
"Net Investment" means the excess of (i) the aggregate amount of all
--------------
Investments made in any Unrestricted Subsidiary or joint venture by the Company
or any Restricted Subsidiary on or after the Issue Date (in the case of an
Investment made other than in cash, the amount shall be the Fair Market Value of
such Investment as determined in good faith by the Board of the Company or such
Restricted Subsidiary) over (ii) the aggregate amount returned in cash on or
with respect to such Investments whether through interest payments, principal
payments, dividends or other distributions or payments; provided, however, that
-------- -------
such payments or distributions shall not be (and have not been) included in
Section 4.06(a)(3)(iii); provided, further, that with respect to all Investments
-------- -------
made in any Unrestricted Subsidiary or joint venture the amounts referred to in
clause (ii) above with respect to such Investments shall not exceed the
aggregate amount of all such Investments made in such Unrestricted Subsidiary or
joint venture.
"Offer to Purchase" means a written offer (the "Offer") sent by the
----------------- -----
Company by first class mail, postage prepaid, to each Holder at his address
appearing in the register for the Securities on the date of the Offer offering
to purchase up to (i) the Accreted Value of Notes if such Offer is on
<PAGE>
-14-
or prior to May 1, 2003 or (ii) the principal amount at maturity of the Notes if
such Offer is after May 1, 2003 specified in such Offer at the purchase price
specified in such Offer (as determined pursuant to this Indenture). Unless
otherwise required by applicable law, the Offer shall specify an expiration date
(the "Expiration Date") of the Offer to Purchase which shall be not less than 30
days nor more than 60 days after the date of such Offer and a settlement date
(the "Purchase Date") for purchase of Notes within five Business Days after the
Expiration Date. The Company shall notify the Trustee at least 15 Business Days
(or such shorter period as is acceptable to the Trustee) prior to the mailing of
the Offer of the Company's obligation to make an Offer to Purchase, and the
Offer shall be mailed by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company. The Offer shall contain
all the information required by applicable law to be included therein. The Offer
shall contain all instructions and materials necessary to enable such holders to
tender Notes pursuant to the Offer to Purchase. The Offer shall also state:
(i) the Section of this Indenture pursuant to which the Offer to
Purchase is being made;
(ii) the Expiration Date and the Purchase Date;
(iii) the aggregate principal amount at maturity of the outstanding
Securities offered to be purchased by the Company pursuant to the Offer to
Purchase (including, if less than 100%, the manner by which such amount has
been determined pursuant to the Section of this Indenture requiring the
Offer to Purchase) (the "Purchase Amount");
---------------
(iv) the purchase price to be paid by the Company for each $1,000
aggregate principal amount at maturity of Securities accepted for payment
(as specified pursuant to this Indenture) (the "Purchase Price");
--------------
(v) that the Holder may tender all or any portion of the Securities
registered in the name of such Holder and that any portion of a Security
tendered must be tendered in an integral multiple of $1,000 principal
amount at maturity;
(vi) the place or places where Securities are to be surrendered for
tender pursuant to the Offer to Purchase;
<PAGE>
-15-
(vii) that interest on any Security not tendered or tendered but
not purchased by the Company pursuant to the Offer to Purchase will
continue to accrue;
(viii) that on the Purchase Date the Purchase Price will become due
and payable upon each Security being accepted for payment pursuant to the
Offer to Purchase and that interest thereon shall cease to accrue on and
after the Purchase Date;
(ix) that each Holder electing to tender all or any portion of a
Security pursuant to the Offer to Purchase will be required to surrender
such Security at the place or places specified in the Offer prior to the
close of business on the Expiration Date (such Security being, if the
Company or the Trustee so requires, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing);
(x) that Holders will be entitled to withdraw all or any portion of
Securities tendered if the Company (or its Paying Agent) receives, not
later than the close of business on the fifth Business Day next preceding
the Expiration Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount at maturity of
the Securities the Holder tendered, the certificate number of the
Securities the Holder tendered and a statement that such Holder is
withdrawing all or a portion of his tender;
(xi) that (a) if Securities in an aggregate principal amount at
maturity less than or equal to the Purchase Amount are duly tendered and
not withdrawn pursuant to the Offer to Purchase, the Company shall purchase
all such Securities and (b) if Securities in an aggregate principal amount
at maturity in excess of the Purchase Amount are tendered and not withdrawn
pursuant to the Offer to Purchase, the Company shall purchase Securities
having an aggregate principal amount at maturity equal to the Purchase
Amount on a pro rata basis (with such adjustments as may be deemed
appropriate so that only Securities in denominations of $1,000 or integral
multiples thereof shall be purchased); and
(xii) that in the case of any Holder whose Security is purchased
only in part, the Company shall execute and the
<PAGE>
-16-
Trustee shall authenticate and deliver to the Holder of such Security
without service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder in writing, in an aggregate
principal amount at maturity equal to and in exchange for the unpurchased
portion of the Security so tendered.
An Offer to Purchase shall be governed by and effected in accordance
with the provisions above pertaining to any Offer.
"Officer" means the Chairman of the Board, the Chief Executive
-------
Officer, any Executive Vice President, any Senior Vice President, the Chief
Financial Officer, the Treasurer, or the Secretary of the Company.
"Officers' Certificate" means a certificate, signed by two Officers
---------------------
(at least one of whom shall be the Chief Financial Officer of the Company) or by
an Officer and an Assistant Treasurer or Assistant Secretary of the Company,
complying with Sections 13.04 and 13.05.
"Opinion of Counsel" means a written opinion from legal counsel who is
------------------
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Participant" means any Person who has an account with DTC.
-----------
"Permitted Asset Swap" means any exchange of assets by the Company or
--------------------
a Restricted Subsidiary of the Company where the Company and/or its Restricted
Subsidiaries receive consideration at least 75% of which consists of (a) cash,
(b) assets that are used or useful in a Permitted Business or (c) any
combination thereof.
"Permitted Business" means (i) the delivery or distribution of
------------------
telecommunications, voice, data or video services, (ii) any business or activity
reasonably related or ancillary thereto, including, without limitation, any
business conducted by the Company or any Restricted Subsidiary on the Issue Date
and the acquisition, holding or exploitation of any license relating to the
delivery of the services described in clause (i) of this definition or (iii) any
other business or activity in which the Company and the Restricted Subsidiaries
are expressly contemplated to be engaged in pursuant to the provisions of the
<PAGE>
-17-
certificate of incorporation and by-laws of the Company as in effect on the
Issue Date.
"Permitted Holder" means (i) each of AT&T Corporation, Chase Capital
----------------
Partners, J.P. Morgan Investment Corporation, Desai Capital Management
Incorporated and any of their respective Affiliates and the respective
successors (by merger, consolidation, transfer or otherwise) to all or
substantially all of the respective businesses and assets of any of the
foregoing and (ii) any "person" or "group" (as such terms are used in Section
13(d) and 14(d) of the Exchange Act) controlled by one or more persons
identified in clause (i) of this definition.
"Permitted Investments" means (i) Investments in Cash Equivalents;
---------------------
(ii) Investments representing Capital Stock or obligations issued to the Company
or any Restricted Subsidiary in the course of the good faith settlement of
claims against any other Person or by reason of a composition or readjustment of
debt or a reorganization of any debtor of the Company or any Restricted
Subsidiary; (iii) deposits, including interest-bearing deposits, maintained in
the ordinary course of business in banks; (iv) any Investment in any Person;
provided, however, that after giving effect to any such Investment such Person
- -------- -------
is or becomes a Restricted Subsidiary or such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of the
Company; (v) trade receivables and prepaid expenses, in each case arising in the
ordinary course of business; provided, however, that such receivables and
-------- -------
prepaid expenses would be recorded as assets of such Person in accordance with
GAAP; (vi) endorsements for collection or deposit in the ordinary course of
business by such Person of bank drafts and similar negotiable instruments of
such other Person received as payment for ordinary course of business trade
receivables; (vii) any interest rate agreements with an unaffiliated Person
otherwise permitted by clause (v) or (vi) under Section 4.04; (viii) Investments
received as consideration for an Asset Disposition in compliance with Section
4.05; (ix) loans or advances to employees of the Company or any Restricted
Subsidiary in the ordinary course of business in an aggregate amount not to
exceed $5.0 million in the aggregate at any one time outstanding; (xi) any
Investment acquired by the Company or any of its Restricted Subsidiaries as a
result of a foreclosure by the Company or any of its Restricted Subsidiaries or
in connection with the settlement of any outstanding Indebtedness or trade
payable; (xii) loans and advances to officers, directors and employees for
business-related travel ex-
<PAGE>
-18-
pense, moving expenses and other similar expenses, each incurred in the ordinary
course of business; and (xiii) other Investments (with each such Investment
being valued as of the date made and without giving effect to subsequent changes
in value) in an aggregate amount not to exceed $7.5 million at any one time
outstanding.
"Permitted Junior Securities" means (i) Qualified Stock, (ii)
---------------------------
securities of the Company or any other corporation authorized by an order or
decree giving effect, and stating in such order or decree that effect is given,
to the subordination of such securities to the Senior Debt, and made by a court
of competent jurisdiction in a reorganization proceeding under any applicable
bankruptcy, insolvency or other similar law, or (iii) any securities of the
Company provided for by a plan of reorganization or readjustment that are
subordinated in right of payment to all Senior Debt that may at the time be
outstanding to substantially the same extent as, or to a greater extent than,
the Notes are subordinated as provided in this Indenture.
"Person" means any individual, corporation, limited or general
------
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan of Liquidation" means, with respect to any Person, a plan
-------------------
(including by operation of law) that provides for, contemplates or the
effectuation of which is preceded or accompanied by (whether or not
substantially contemporaneously) (i) the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the referent Person and
(ii) the distribution of all or substantially all of the proceeds of such sale,
lease, conveyance or other disposition and all or substantially all of the
remaining assets of the referent Person to holders of Capital Stock of the
referent Person.
"Preferred Stock" as applied to the Capital Stock of any Person, means
---------------
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"principal" of any Security means principal of, and premium, if any,
---------
with respect to, such Security.
<PAGE>
-19-
"Private Exchange Securities" has the meaning set forth in the
---------------------------
Registration Rights Agreement.
"Public Sale" means any underwritten public offering, made on a
-----------
primary basis pursuant to a registration statement filed with, and declared
effective by, the Commission in accordance with the Securities Act.
"Purchase Date" has the meaning set forth in the definition of "Offer
-------------
to Purchase."
"Qualified Institutional Buyer" or "QIB" shall have the meaning
----------------------------- ---
specified under Rule 144A under the Securities Act.
"Qualified Stock" means any Capital Stock of the Company, Triton PCS
---------------
Holdings, Inc. or a Special Purpose Corporation other than Disqualified Stock.
"Real Property Subsidiary" means Triton PCS Property Company, L.L.C.,
------------------------
a Delaware limited liability company.
"Refinance" means refinance, renew, extend, replace or refund; and
---------
"Refinancing" and "Refinanced" have correlative meanings.
----------- ----------
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated the date hereof among the Company, the Guarantors and J.P.
Morgan Securities Inc., Chase Securities Inc and Lehman Brothers Inc.
"Regulation S" means Regulation S under the Securities Act.
------------
"Restricted Physical Security" means a Physical Security containing,
----------------------------
or required to contain, a Securities Act Legend.
"Restricted Subsidiary" means any Subsidiary of the Company other than
---------------------
an Unrestricted Subsidiary.
"Revocation" has the meaning set forth in Section 4.21.
----------
"Rule 144" means Rule 144 under the Securities Act.
--------
"Rule 144A" means Rule 144A under the Securities Act.
---------
"SEC" means the Securities and Exchange Commission.
---
<PAGE>
-20-
"Securities" means the 11% Senior Subordinated Discount Notes due 2008
----------
issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated by the SEC thereunder.
"Senior Credit Facilities" means upon the initial issuance of the
------------------------
Notes, the Credit Agreement and at any time thereafter may include the Credit
Agreement and/or any other agreement providing for loans by banks, trust
companies and/or other institutions principally engaged in the business of
lending money to businesses under a credit facility, loan agreement or similar
agreement.
"Senior Debt" means, with respect to any Person at any date, (i) in
-----------
the case of the Company or the Guarantors, all Indebtedness and other payment
obligations under one or more Senior Credit Facilities, including principal,
premium, if any, and interest on such Indebtedness and all other amounts due on
or in connection with such Indebtedness, including all charges, fees, expenses,
reimbursement obligations, guarantees and indemnity payments, (ii) all other
Indebtedness of such Person for borrowed money or under Vendor Credit
Agreements, including principal, premium, if any, and interest on such
Indebtedness, unless the instrument under which such Indebtedness for borrowed
money is created, incurred, assumed or guaranteed expressly provides that such
Indebtedness for borrowed money is not senior or superior in right of payment to
the Securities or the Guarantees, as the case may be, and all Refinancings or
modifications or amendments thereof and (iii) all interest on any Indebtedness
referred to in clauses (i) and (ii) accruing during the pendency of any
bankruptcy or insolvency proceeding, whether or not allowed thereunder.
Notwithstanding the foregoing, Senior Debt shall not include (a) Indebtedness
which is pursuant to its terms or any agreement or instrument relating thereto
or by operation of law subordinated or junior in right of payment or otherwise
to any other Indebtedness of such Person; provided, however, that no
-------- -------
Indebtedness shall be deemed to be subordinate or junior in right of payment or
otherwise to any other Indebtedness of a Person solely by reason of such other
Indebtedness being secured and such Indebtedness not being secured, (b) the
Securities, (c) any Indebtedness of such Person to any of its Subsidiaries, (d)
Indebtedness Incurred in violation of Section 4.04 and (e) any Indebtedness
which, when incurred and without respect to any election under Section 1111(b)
of the Bankruptcy Code, is without recourse to the Company.
<PAGE>
-21-
"Shelf Registration Statement" has the meaning set forth in the
----------------------------
Registration Rights Agreement.
"Standard & Poor's" means Standard & Poor's Ratings Service, a
-----------------
division of the McGraw Hill Companies, Inc.
"Strategic Equity Investor" means any of the Initial Cash Equity
-------------------------
Investors (as defined in the Securities Purchase Agreement), any Affiliate
thereof or any other Person engaged in a Permitted Business whose Total Equity
Market Capitalization exceeds $500 million.
"Subordinated Indebtedness" means any Indebtedness of the Company or
-------------------------
any Guarantor (whether outstanding on the date hereof or hereafter Incurred)
which is by its terms expressly subordinate or junior in right of payment to the
Securities or the Guarantee of such Guarantor, as the case may be.
"Subsidiary" of any Person means (i) a corporation more than 50% of
----------
the outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person and
one or more other Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and voting power relating to the
policies, management and affairs thereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S) (S)
---
77aaa-77bbbb), as in effect on the date of this Indenture, except as provided in
Section 10.03.
"Total Consolidated Indebtedness" means at any date of determination,
-------------------------------
an amount equal to (i) the accreted value of all Indebtedness, in the case of
any Indebtedness issued with original issue discount, plus (ii) the principal
amount of all Indebtedness, in the case of any other Indebtedness, of the
Company and the Restricted Subsidiaries outstanding as of the date of
determination.
"Total Equity Market Capitalization" of any Person means, as of any
----------------------------------
day of determination, the sum of (i) the product of (A) the aggregate number of
outstanding primary shares of common stock of such Person on such day (which
shall not include any options or warrants on, or securities convertible or
exchangeable into, shares of common stock of such Person) multiplied by (B) the
average closing price of such common stock
<PAGE>
-22-
listed on a national securities exchange or the Nasdaq National Market System
over the 20 consecutive business days immediately preceding such day, plus (ii)
the liquidation value of any outstanding shares of preferred stock of such
Person on such day.
"Total Invested Capital" means, at any time of determination, the sum
----------------------
of, without duplication, (i) the total amount of equity contributed to the
Company as of the Issue Date (as set forth on the March 31, 1998 combined
balance sheet of the Company), plus (ii) irrevocable binding commitments to
purchase Capital Stock (other than Disqualified Stock) existing as of the Issue
Date, plus (iii) the aggregate net cash proceeds received by the Company from
capital contributions or the issuance or sale of Capital Stock (other than
Disqualified Stock but including Capital Stock issued upon the conversion of
convertible Indebtedness or from the exercise of options, warrants or rights to
purchase Capital Stock (other than Disqualified Stock)) subsequent to the Issue
Date, other than to a Restricted Subsidiary; provided, however, such aggregate
-------- -------
net cash proceeds received pursuant to this clause (iii) shall exclude any
amounts included as commitments to purchase Capital Stock in the preceding
clause (ii), plus (iv) the aggregate net cash proceeds received by the Company
or any Restricted Subsidiary from the sale, disposition or repayment of any
Investment made after the Issue Date and constituting a Restricted Payment in an
amount equal to the lesser of (a) the return of capital with respect to such
Investment and (b) the initial amount of such Investment, in either case, less
the cost of the disposition of such Investment, plus (v) an amount equal to the
consolidated net Investment on the date the Company and/or any of the Restricted
Subsidiaries in any Subsidiary that has been designated as an Unrestricted
Subsidiary after the Issue Date upon its redesignation as a Restricted
Subsidiary in accordance with Section 4.21, plus (vi) Total Consolidated
Indebtedness minus (vii) the aggregate amount of all Restricted Payments
(including any Designation Amount, but other than a Restricted Payment of the
type referred to in Section 4.06(b)(iii)(b) declared or made on or after the
Issue Date.
"Triton PCS Holdings, Inc." means, a Delaware corporation, that as of
------------------------
the Issue Date owns all of the issued and outstanding Capital Stock of the
Company.
"Trust Officer" means any officer within the corporate trust
-------------
department (or any successor group) of the Trustee including any vice president,
assistant vice president, assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to those per-
<PAGE>
-23-
formed 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 to whom
such trust matter is referred because of his knowledge of and familiarity with
the particular subject.
"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.
"Unrestricted Global Securities" means one or more Global Securities
------------------------------
that do not and are not required to bear the Securities Act Legend.
"Unrestricted Physical Securities" means one or more Physical
--------------------------------
Securities that do not and are not required to bear the Securities Act Legend.
"Unrestricted Securities" means the Securities that do not and are not
-----------------------
required to bear the Securities Act Legend.
"Unrestricted Subsidiary" means any Subsidiary of the Company (other
-----------------------
than the License Subsidiary, the Equipment Subsidiary or the Real Property
Subsidiary designated after the Issue Date as such pursuant to and in
compliance with Section 4.21. Any such designation may be revoked by a
Resolution of the Company delivered to the applicable Trustee, subject to the
provisions of Section 4.21.
"Vendor Credit Arrangement" means any Indebtedness (including, without
-------------------------
limitation, Indebtedness under any credit facility entered into with any vendor
or supplier or any financial institution acting on behalf of such vendor or
supplier); provided that the net proceeds of such Indebtedness are utilized
--------
solely for the purpose of financing the cost (including, without limitation, the
cost of design, development, site acquisition, construction, integration,
handset manufacture or acquisition or microwave relocation) of assets used or
usable in a Permitted Business (including, without limitation, through the
acquisition of Capital Stock of an entity engaged in a Permitted Business).
"Voting Stock" of any Person means the Capital Stock of such Person
------------
which ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only so
long as no senior
<PAGE>
-24-
class of securities has such voting power by reason of any contingency.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all of the
-----------------------
outstanding Capital Stock or other ownership interests of which (other than
directors' qualifying shares) shall at the time be owned by the Company and/or
by one or more Wholly Owned Subsidiaries.
SECTION 1.02. Other Definitions.
-----------------
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
" Bankruptcy Law" 6.01
" Change of Control" 4.14
" Corporate Trust Office" 2.02
" Custodian" 6.01
" Event of Default" 6.01
" Global Security" 2.01(a)
" Guarantor Blockage Period" 12.02(a)
" Guarantor Payment Blockage Notice" 12.02(a)
" 144A Global Security" 2.01(a)
" Paying Agent" 2.03
" Payment Blockage Notice" 8.02(a)
" Payment Blockage Period" 8.02(a)
" Physical Security" 2.01(b)
" Registrar" 2.03
" Regulation S Global Security" 2.01(a)
" Securities Act Legend" 2.06(f)
" Subsequent Securities" 2.02
" United States Government Obligation" 9.01
</TABLE>
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
-------------------------------------------------
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
----------
"indenture securities" means the Securities.
--------------------
"indenture security holder" means a Holder or Securityholder.
-------------------------
<PAGE>
-25-
"indenture to be qualified" means this Indenture.
-------------------------
"indenture trustee" or "institutional trustee" means the Trustee.
----------------- ---------------------
"obligor" on the indenture securities means the Company or 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 Commission rule
and not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.04. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
in effect from time to time, and any other reference in this Indenture to
"generally accepted accounting principles" refers to GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) Section and Article references are to sections and articles of
this Indenture;
(6) provisions apply to successive events and transactions; and
(7) "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.
<PAGE>
-26-
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
---------------
(a) Global Securities. Securities offered and sold to QIBs in
-----------------
reliance on Rule 144A shall be issued initially substantially in the form of
Exhibit A hereto in the name of Cede & Co. as nominee of DTC, duly executed by
- ---------
the Company and authenticated by the Trustee as hereinafter provided. Such
Security shall be referred to herein as the "144A Global Security." Securities
--------------------
offered and sold in reliance on Regulation S shall be issued initially
substantially in the form of Exhibit A hereto in the name of Cede & Co. as
nominee of DTC, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. Such Security shall be referred to herein as the
"Regulation S Global Security." Unrestricted Global Securities shall be issued
----------------------------
initially in accordance with Sections 2.06(b)(iv), 2.06(c)(ii) and 2.06(e) in
the name of Cede & Co. as nominee of DTC, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The 144A Global Security,
Regulation S Global Security and Unrestricted Global Security are collectively
referred to herein as the "Global Securities." The aggregate principal amount at
-----------------
maturity of each of the Global Securities may from time to time be increased or
decreased by adjustments made on the records of the Trustee as hereinafter
provided.
Each Global Security shall represent such of the outstanding
Securities as shall be specified therein and each shall provide that it shall
represent the aggregate principal amount at maturity of outstanding Securities
from time to time endorsed thereon and that the aggregate principal amount at
maturity of outstanding Securities represented thereby may from time to time be
reduced or increased, as appropriate, to reflect exchanges, redemptions and
transfers of interests therein in accordance with the terms of this Indenture.
Any endorsement of a Global Security to reflect the amount of any increase or
decrease in the principal amount at maturity of outstanding Securities
represented thereby shall be made by the Trustee or DTC, as applicable in
accordance with instructions given by the Holder thereof as required by Section
2.06.
Upon the issuance of the Global Security to DTC, DTC shall credit, on
its internal book-entry registration and transfer system, its Participants'
accounts with the respective interests owned by such Participants. Interests in
the Global
<PAGE>
-27-
Securities shall be limited to Participants, including Euroclear and
Cedel, and indirect Participants.
The Participants shall not have any rights either under this Indenture
or under any Global Security with respect to such Global Security held on their
behalf by DTC, and DTC may be treated by the Company, the Trustee and any agent
of the Company or the Trustee as the absolute owner of such Global Security for
the purpose of receiving payment of or on account of the principal of and,
subject to the provisions of this Indenture, interest on the Global Securities
and for all other purposes. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by DTC or impair, as between DTC and its Participants, the operation
of customary practices of DTC governing the exercise of the rights of an owner
of a beneficial interest in any Global Security.
The provisions of the "Operating Procedures of the Euroclear System,"
"Terms and Conditions Governing Use of Euroclear," the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel, and successors
provisions, shall be applicable to interests in the Regulation S Global Security
that are held by the Participants through Euroclear or Cedel.
(b) Physical Securities. Securities offered and sold to
-------------------
Institutional Accredited Investors who are not also QIBs shall be issued
substantially in the form of Exhibit A hereto, in certificated form and issued
---------
in the names of the purchasers thereof (or their nominees), duly executed by the
Company and authenticated by the Trustee as hereinafter provided. Securities in
certificated form shall be referred to herein as the "Physical Securities. "
-------------------
(c) Securities. The provisions of the form of Securities contained
----------
in Exhibit A hereto are incorporated herein by reference. The Securities and the
---------
Trustee's Certificates of Authentication shall be substantially in the form of
Exhibit A required by law, stock exchange rule or usage. The Company shall
- ---------
approve the form of the Securities and any notation, legend or endorsement
(including notations relating to the Guarantees) on them. If required, the
Securities shall bear the appropriate legend regarding original issue discount
for federal income tax purposes. Each Security shall be dated the date of its
authentication. The terms and provisions contained
<PAGE>
-28-
in the Securities shall constitute, and are hereby expressly made, a part of
this Indenture .
SECTION 2.02. Execution and Authentication.
----------------------------
Two Officers of the Company shall sign the Securities for the Company
by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized officer of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Initial Global Securities for gross
proceeds to the Company of up to $300,000,000, (ii) Subsequent Securities in
accordance with this paragraph, (iii) Private Exchange Securities from time to
time only in exchange for a like principal amount at maturity of Initial Global
Securities or Subsequent Securities and (iv) Unrestricted Securities from time
to time only in exchange for a like principal amount at maturity of Initial
Global Securities or Subsequent Securities, in each case upon a written order
signed by an Officer of the Company. The order shall specify the amount of
Securities to be authenticated and the date on which the original issue of
Securities is to be authenticated. The order shall also provide instructions
concerning registration, amounts for each Holder and delivery. The Securities
outstanding at any time may not exceed $450,000,000 of aggregate gross proceeds
to the Company (except as provided in Section 2.07) consisting of (i)
$300,000,000 aggregate gross proceeds to the Company for Securities being
offered on the Issue Date and (ii) one or more additional series of Securities
(the "Subsequent Securities") consisting of aggregate gross proceeds to the
Company not to exceed $150,000,000. The Subsequent Securities may be issued
from time to time to time only in compliance with the provisions of Section 4.04
and the other provisions of this Indenture. The Securities shall be issued only
in registered form, without coupons and only in denominations of $1,000 and any
integral multiple thereof.
<PAGE>
-29-
SECTION 2.03. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("Registrar") and an
---------
office or agency where Securities may be presented for payment ("Paying Agent").
------------
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 shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent and shall, if required,
incorporate the provisions of the TIA. The Company shall 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 and shall be
entitled to appropriate compensation in accordance with the provisions of
Section 7.07.
The Company initially appoints the Trustee as Registrar and Paying
Agent. The Company shall give written notice to the Trustee in the event that
the Company decides to act as Registrar. None of the Company, its Subsidiaries
or any of their Affiliates may act as Paying Agent.
SECTION 2.04. Paying Agent To Hold Money in Trust.
-----------------------------------
The Company shall require each Paying Agent to agree in writing to
hold in trust for the benefit of Securityholders or the Trustee all money held
by the Paying Agent for the payment of principal of or interest on the
Securities (whether such money has been paid to it by the Company or any other
obligor on the Securities), and the Company and the Paying Agent shall each
notify the Trustee in writing of any default by the Company (or any other
obligor on the Securities) in making any such payment. The Company at any time
may require a Paying Agent to pay all money held by it to the Trustee and
account for any funds 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 pay all money held by it to the Trustee and to
account for any funds disbursed. Upon making such payment the Paying Agent shall
have no further liability for the money delivered to the Trustee.
<PAGE>
-30-
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
Securityholders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee at least five Business Days before each Interest Payment Date and
at such other times as the Trustee may request in writing a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of Securityholders.
SECTION 2.06. Transfer and Exchange.
---------------------
(a) Transfer and Exchange of Global Securities. Transfer of the
------------------------------------------
Global Securities shall be by delivery. Global Securities will be exchanged by
the Company for Physical Securities only (i) if DTC notifies the Company that it
is unwilling or unable to continue to act as depositary with respect to the
Global Securities or ceases to be a clearing agency registered under the
Exchange Act and, in either case, a successor depositary registered as a
clearing agency under the Exchange Act is not appointed by the Company within
120 days, (ii) at any time if the Company in its sole discretion determines that
the Global Securities (in whole but not in part) should be exchanged for
Physical Securities or (iii) if the owner of an interest in the Global
Securities requests such Physical Securities, following an Event of Default
under the Indenture, in a writing delivered through DTC to the Trustee.
Upon the occurrence of any of the events specified in the previous
paragraph, Physical Securities shall be issued in such names as DTC shall
instruct the Trustee in writing and the Trustee shall cause the aggregate
principal amount at maturity of the applicable Global Security to be reduced
accordingly and direct DTC to make a corresponding reduction in its book-entry
system. The Company shall execute and the Trustee shall authenticate and make
available for delivery to the Person designated in the instructions a Physical
Security in the appropriate principal amount. The Trustee shall make available
for delivery such Physical Securities to the Persons in whose names such
Securities are so registered. Physical Securities issued in exchange for an
Initial Global Security pursuant to this Section 2.06(a) shall bear the
Securities Act Legend and shall be subject to all restrictions on transfer
contained therein. Global Securities may also be exchanged or replaced, in whole
or in part, as provided in Sections 2.07 and 2.10. Every Security authenticated
and made available for delivery in exchange for, or in lieu of, a Global
Security or any portion thereof,
<PAGE>
-31-
pursuant to Section 2.07 or 2.10, shall be authenticated and made available for
delivery in the form of, and shall be, a Global Security. A Global Security may
not be exchanged for another Security other than as provided in this Section
2.06(a).
(b) Transfer and Exchange of Interests in Global Securities. The
-------------------------------------------------------
transfer and exchange of interests in Global Securities shall be effected
through DTC, in accordance with this Indenture and the procedures of DTC
therefor. Interests in Initial Global Securities shall be subject to
restrictions on transfer comparable to those set forth herein to the extent
required by the Securities Act. The Trustee shall have no obligation to
ascertain DTC's compliance with any such restrictions on transfer. Transfers of
interests in Global Securities shall also require compliance with subparagraph
(i) below, as well as one or more of the other following subparagraphs as
applicable:
(i) All Transfers and Exchanges of Interests in Global Securities.
-------------------------------------------------------------
In connection with all transfers and exchanges of interests in Global
Securities (other than transfers of interests in a Global Security to
Persons who take delivery thereof in the form of an interest in the same
Global Security), the transferor of such interest must deliver to the
Registrar (1) instructions given in accordance with the Applicable
Procedures from a Participant or an indirect Participant directing DTC to
credit or cause to be credited an interest in the specified Global Security
in an amount equal to the interest to be transferred or exchanged, (2) a
written order given in accordance with the Applicable Procedures containing
information regarding the Participant account to be credited with such
increase and (3) instructions given by the Holder of the Global Security to
effect the transfer referred to in (1) and (2) above.
(ii) Transfer of Interests in the Same Initial Global Security.
---------------------------------------------------------
Interests in any Initial Global Security may be transferred to Persons who
take delivery thereof in the form of an interest in the same Initial Global
Security in accordance with the transfer restrictions set forth in Section
2.06(f) hereof.
(iii) Transfer of Interests to Another Initial Global Security.
--------------------------------------------------------
Interests in any Initial Global Security may be transferred to Persons who
take delivery thereof in the form of an interest in another Initial Global
Security if the Registrar receives the following:
<PAGE>
-32-
(A) if the transferee will take delivery in the form of an
interest in the 144A Global Security, then the transferor must deliver
a certificate in the form of Exhibit B hereto, including the
---------
certifications in item 1 thereof; or
(B) if the transferee will take delivery in the form of an
interest in the Regulation S Global Security, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
---------
certifications in item 2 thereof.
(iv) Transfer and Exchange of Interests in Initial Global Security
-------------------------------------------------------------
for Interests in an Unrestricted Global Security. Interests in any Initial
------------------------------------------------
Global Security may be exchanged by the holder thereof for an interest in
the Unrestricted Global Security or transferred to a Person who takes
delivery thereof in the form of an interest in the Unrestricted Global
Security if:
(A) such exchange or transfer is effected pursuant to the
Exchange Registration Statement in accordance with the Registration
Rights Agreement;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement; or
(C) the Registrar receives the following:
(1) if the holder of such an interest in an Initial
Global Security proposes to exchange it for an interest in the
Unrestricted Global Security, a certificate from such Holder in
the form of Exhibit C hereto, including the certifications in
---------
item 1(a) thereof;
(2) if the holder of such an interest in an Initial
Global Security proposes to transfer it to a Person who shall
take delivery thereof in the form of an interest in an
Unrestricted Global Security, a certificate in the form of
Exhibit B hereto, including the certification in item 4
thereof; and
(3) in each such case set forth in this paragraph (C), an
Opinion of Counsel in form reasonably acceptable to the Company,
to the ef-
<PAGE>
-33-
fect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained
herein and in Section 2.06(f) hereof are not required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to paragraph (B) above at a time
when an Unrestricted Global Security has not yet been issued, the Company
shall issue and, upon receipt of an authentication order in accordance with
Section 2.02, the Trustee shall authenticate one or more Unrestricted
Global Securities in an aggregate principal amount at maturity equal to the
principal amount at maturity of interests in the Initial Global Security
transferred pursuant to paragraph (B) above.
(v) Notation by the Trustee of Transfer of Interests Among Global
-------------------------------------------------------------
Securities. Upon satisfaction of the requirements for transfer of
----------
interests in Global Securities pursuant to clauses (iii) or (iv) above, the
Trustee, as Registrar, shall reduce or cause to be reduced the aggregate
principal amount at maturity of the relevant Global Security from which the
interests are being transferred, and increase or cause to be increased the
aggregate principal amount at maturity of the Global Security to which the
interests are being transferred, in each case, by the principal amount at
maturity so transferred and shall direct DTC to make corresponding
adjustments in its book-entry system. No transfer of interests of a Global
Security shall be effected until, and any transferee pursuant thereto shall
succeed to the rights of a holder of such interests only when, the
Registrar has made appropriate adjustments to the applicable Global
Security in accordance with this paragraph.
(c) Transfer or Exchange of Physical Securities for Interests in a
--------------------------------------------------------------
Global Security.
- ---------------
(i) If any Holder of Physical Securities required to contain the
Securities Act Legend proposes to exchange such Securities for an interest
in a Global Security or to transfer such Physical Securities to a Person
who takes delivery thereof in the form of an interest in a Global Security,
then, upon receipt by the Registrar of the following documentation (all of
which may be submitted by facsimile):
<PAGE>
-34-
(A) if the Holder of such Physical Registered Securities
proposes to exchange such Securities for an interest in an Initial
Global Security, a certificate from such Holder in the form of Exhibit
-------
C hereto, including the certifications in item 2 thereof;
-
(B) if such Physical Securities are being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
---------
certifications in item 1 thereof; or
(C) if such Physical Securities are being transferred to a Non-
U.S. Person (as defined in Regulation S) in an offshore transaction in
accordance with Rule 904 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
---------
in item 2 thereof,
the Trustee shall cancel the Physical Securities, increase or cause to be
increased the aggregate principal amount at maturity of, in the case of
clause (B) above, the 144A Global Security, in the case of clause (C)
above, the Regulation S Global Security, and direct DTC to make a
corresponding increase in its book-entry system.
(ii) A Holder of Physical Securities required to contain the
Securities Act Legend may exchange such Securities for an interest in the
Unrestricted Global Security or transfer such Restricted Physical
Securities to a Person who takes delivery thereof in the form of an
interest in the Unrestricted Global Security only:
(A) if such exchange or transfer is effected pursuant to the
Exchange Registration Statement in accordance with the Registration
Rights Agreement;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) upon receipt by the Registrar of the following documentation
(all of which may be submitted by facsimile):
(1) if the Holder of such Physical Securities proposes to
exchange such Securities for an
<PAGE>
-35-
interest in the Unrestricted Global Security, a certificate from
such Holder in the form of Exhibit C hereto, including the
---------
certifications in item 1(b) thereof;
(2) if the Holder of such Registered Securities proposes to
transfer such Securities to a Person who shall take delivery
thereof in the form of an interest in the Unrestricted Global
Security, a certificate in the form of Exhibit B hereto,
---------
including the certifications in item 4 thereof; and
(3) in each such case set forth in this paragraph (C), an
Opinion of Counsel in form reasonably acceptable to the Company,
to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer
contained herein and in Section 2.06(f) hereof are not required
in order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to paragraph (B) above
at a time when an Unrestricted Global Security has not yet been
issued, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02, the Trustee
shall authenticate one or more Unrestricted Global Securities in
an aggregate principal amount at maturity equal to the principal
amount at maturity of Physical Securities transferred pursuant to
paragraph (B) above.
(d) Transfer and Exchange of Physical Securities.
--------------------------------------------
(i) Transfer of a Physical Security to Another Physical Security.
------------------------------------------------------------
Following the occurrence of one or more of the events specified in Section
2.06(a), a Physical Security may be transferred to Persons who take
delivery thereof in the form of another Physical Security if the Registrar
receives the following:
(A) if the transfer is being effected pursuant to and in
accordance with Rule 144A, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
---------
certifications in item 3(a) thereof; or
<PAGE>
-36-
(B) if the transfer is being effected pursuant to and in
accordance with Regulation S, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
---------
certifications in item 3(b) thereof.
(ii) Transfer and Exchange of Restricted Physical Securities for
-----------------------------------------------------------
Unrestricted Physical Securities. Following the occurrence of one or more
--------------------------------
of the events specified in Section 2.06(a), a Restricted Physical Security
may be exchanged by the Holder thereof for an Unrestricted Physical
Security or transferred to a Person who takes delivery thereof in the form
of an Unrestricted Physical Security if:
(A) such exchange or transfer is effected pursuant to the
Exchange Registration Statement in accordance with the Registration
Rights Agreement;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement; or
(C) the Registrar receives a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item 1(c)
---------
thereof and an Opinion of Counsel in form reasonably acceptable to the
Company, to the effect that such exchange or transfer is in compliance
with the Securities Act and, that the restrictions on transfer
contained herein and in Section 2.06(f) hereof are not required in
order to maintain compliance with the Securities Act.
(iii) Exchange of Physical Securities. When Physical Securities
-------------------------------
are presented by a Holder to the Registrar with a request to register the
exchange of such Physical Securities for an equal principal amount at
maturity of Physical Securities of other authorized denominations, the
Registrar shall make the exchange as requested only if the Physical
Securities are endorsed or accompanied by a written instrument of transfer
in form satisfactory to the Registrar duly executed by such Holder or by
his attorney duly authorized in writing and shall be issued only in the
name of such Holder or its nominee. The Physical Securities issued in
exchange for Physical Securities shall bear the Securities Act Legend and
shall be subject to all re-
<PAGE>
-37-
strictions on transfer contained herein in each case to the same extent as
the Physical Securities so exchanged.
(iv) Return of Physical Securities. In the event of a transfer
-----------------------------
pursuant to clauses (i) or (ii) above and the Holder thereof has delivered
certificates representing an aggregate principal amount at maturity of
Securities in excess of that to be transferred, the Company shall execute
and the Trustee shall authenticate and make available for delivery to the
Holder of such Security, without service charge, a new Physical Security or
Securities of any authorized denomination requested by the Holder, in an
aggregate principal amount at maturity equal to the portion of the Security
not so transferred.
(e) Exchange Offer. Upon the occurrence of the Exchange Offer (as
--------------
defined in the Registration Rights Agreement) in accordance with the
Registration Rights Agreement, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02, the Trustee shall
authenticate one or more Unrestricted Global Securities in an aggregate
principal amount at maturity equal to the principal amount of the interests in
the Initial Global Securities tendered for acceptance (and not withdrawn) by
persons participating therein. Concurrently with the issuance of such
Securities, the Trustee shall cause the aggregate principal amount at maturity
of the applicable Initial Global Securities to be reduced accordingly and direct
DTC to make a corresponding reduction in its book-entry system. The Trustee
shall cancel any Restricted Physical Certificates in accordance with Section
2.11 hereof.
In the case that one or more of the events specified in Section
2.06(a) have occurred, upon the occurrence of such Exchange Offer, the Company
shall issue and, upon receipt of an authentication order in accordance with
Section 2.02, the Trustee shall authenticate Unrestricted Physical Securities in
an aggregate principal amount at maturity equal to the principal amount of the
Restricted Physical Securities tendered for acceptance by persons participating
therein .
(f) Legends. Each Initial Global Security and each Restricted
-------
Physical Security shall bear the legend (the "Securities Act Legend") in
---------------------
substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
<PAGE>
-38-
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a)
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT OR (c)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (2) TO THE COMPANY OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(g) Global Security Legend. Each Global Security shall bear a
----------------------
legend in substantially the following form:
"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 TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO A NOMINEE
OF DTC, OR BY ANY SUCH NOMINEE OF DTC, OR BY DTC TO A SUCCESSOR DEPOSITORY
OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON 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.
<PAGE>
-39-
"TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 2.06 OF THE INDENTURE."
(h) Cancellation and/or Adjustment of Global Securities. At such
---------------------------------------------------
time as all interests in the Global Securities have been exchanged for Physical
Securities, all Global Securities shall be returned to or retained and canceled
by the Trustee in accordance with Section 2.11 hereof. At any time prior to
such cancellation, if any interest in a Global Security is exchanged for an
interest in another Global Security or for Physical Securities, the principal
amount of Securities represented by such Global Security shall be reduced
accordingly and an endorsement shall be made on such Global Security, by the
Trustee to reflect such reduction.
(i) General Provisions Relating to All Transfers and Exchanges.
----------------------------------------------------------
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Securities
and Physical Securities upon a written order signed by an Officer of the
Company or at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any stamp or transfer tax or similar
governmental charge payable in connection therewith (other than any such
stamp or transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06, 4.05, 4.14 and 10.05
hereof).
(iii) All Global Securities and Physical Securities issued upon
any registration of transfer or exchange of Global Securities or Physical
Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Global Securities or Physical Securities surrendered upon such registration
of transfer or exchange.
(iv) The Company shall not be required (A) to issue, to register
the transfer of or to exchange Securities during a period beginning at the
opening of 15 Business Days
<PAGE>
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before the day of any mailing of notice of redemption of Securities under
Section 3.02 and ending at the close of business on the day of such
mailing, (B) to register the transfer of or to exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion
of any Security being redeemed in part or (C) to register the transfer of
or to exchange a Security between a record date and the next succeeding
Interest Payment Date.
(v) Prior to due presentment for the registration of a transfer of
any Security, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Security is registered as the absolute owner of
such Security for the purpose of receiving payment of principal of and
interest on such Securities and for all other purposes, and none of the
Trustee, any Agent or the Company shall be affected by notice to the
contrary.
(vi) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfers of any interest in any Security (including any transfers between
or among Participants or beneficial owners of interests in any Global
Security) or Physical Security other than to require delivery of such
certificates and other documentation or evidence as are expressly required
by, and to do so if and when expressly required by the terms of, this
Indenture, and to examine the same to determine substantial compliance as
to form with the express requirements hereof.
SECTION 2.07. Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims 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. The Holder shall
provide an indemnity bond in an amount sufficient in the judgment of 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 may be required by the
Trustee or the Company. The Company and the Trustee each may charge such Holder
for its expenses in replacing such Security.
Every replacement Security is an additional obligation of the
Company.
<PAGE>
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SECTION 2.08. Outstanding Securities.
----------------------
Securities outstanding at any time are all Securities that have been
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation and those described in this Section as not outstanding. A
Security does not cease to be outstanding because the Company or one of its
Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent holds on a redemption date or Maturity Date money
sufficient to pay the principal amount at maturity of or Accreted Value, on the
Securities, and interest on Securities payable on that date, 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 at
maturity of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company, any Subsidiary or any of their respective
Affiliates shall be disregarded, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities that the Trustee actually knows are so owned shall
be so disregarded.
The Trustee may require an Officers' Certificate listing securities
owned by the Company, any Subsidiary or any of their respective Affiliates.
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 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
such exchange, temporary Securities shall be entitled to the same rights,
benefits and privileges as definitive Securities.
<PAGE>
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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 and no one else shall cancel all Securities surrendered for transfer,
exchange, payment or cancellation. The Company may not issue new Securities to
replace, reissue or resell Securities which the Company has redeemed, paid,
purchased on the open market or otherwise, or otherwise acquired or have been
delivered to the Trustee for cancellation. The Trustee (subject to the record-
retention requirements of the Exchange Act) may, but shall not be required to,
destroy canceled Securities.
SECTION 2.12. Defaulted Interest.
------------------
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest, plus any interest payable on the defaulted
interest pursuant to Section 4.01 hereof, to the persons who are Securityholders
on a subsequent special record date, and such term, as used in this Section 2.12
with respect to the payment of any defaulted interest, shall mean the fifteenth
day next preceding the date fixed by the Company for the payment of defaulted
interest, whether or not such day is a Business Day. At least 15 days before
such special record date, the Company shall mail to each Securityholder and to
the Trustee a notice that states such special record date, the payment date and
the amount of defaulted interest to be paid.
SECTION 2.13. CUSIP or CINS Number.
--------------------
The Company in issuing the Securities may use a "CUSIP" or "CINS"
number, and if so, such CUSIP or CINS number shall be included in notices of
redemption or exchange as a convenience to Holders; provided, however, that any
such notice-------- -------may state that no representation is made as to the
correctness or accuracy of the CUSIP or CINS number printed in the notice or on
the Securities, and that reliance may be placed only on the other identification
numbers printed on the Securities. The Company will promptly notify the Trustee
of any change in the CUSIP or CINS number.
SECTION 2.14. Payments of Interest.
--------------------
(a) The Holder of a Physical Security at the close of business on the
regular record date with respect to any In-
<PAGE>
-43-
terest Payment Date shall be entitled to receive the interest payable on such
Interest Payment Date notwithstanding any transfer or exchange of such Physical
Security subsequent to the regular record date and prior to such Interest
Payment Date, except if and to the extent the Company shall default in the
payment of the interest due on such Interest Payment Date, in which case such
defaulted interest shall be paid in accordance with Section 2.12; and in the
event of an exchange of a Physical Security for a beneficial interest in any
Global Security subsequent to a regular record date or any special record date
and prior to or on the related Interest Payment Date or other payment date under
Section 2.12, any payment of the interest payable on such payment date with
respect to any such Physical Security shall be made to the Person in whose name
such Physical Security was registered on such record date. Payments of interest
on the Global Securities will be made on each Interest Payment Date to the
Holder of the Global Security on the record date with respect thereto; provided,
--------
however, that, in the event of an exchange of all or a portion of a Global
- -------
Security for a Physical Security subsequent to the regular record date or any
special record date and prior to or on the related Interest Payment Date or
other payment date under Section 2.12, any payment of interest payable on such
Interest Payment Date or other payment date with respect to the Physical
Security shall be made to the Holder of the Global Security as of the applicable
record date.
(b) Subject to Section 4.01, interest shall be paid to DTC, with
respect to any Global Security held by DTC, on the applicable Interest Payment
Date in accordance with instructions received from DTC at least five Business
Days before the applicable Interest Payment Date.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
------------------
If the Company elects to redeem Securities pursuant to paragraph 5 of
the Securities at the applicable redemption price set forth thereon, it shall
notify the Trustee in writing of the redemption date and the principal amount of
Securities to be redeemed.
The Company shall give the notice provided for in this Section 3.01 at
least 45 days before the redemption date
<PAGE>
-44-
(unless a shorter notice shall be agreed to by the Trustee in writing) but not
more than 60 days before the redemption date, together with an Officers'
Certificate stating that such redemption will comply with the conditions
contained herein.
SECTION 3.02. Selection of Securities To Be Redeemed.
--------------------------------------
If less than all of the Securities are to be redeemed pursuant to
paragraph 5 thereof, the Trustee shall select the Securities to be redeemed, in
accordance with the rules of any national securities exchange on which the
Securities may be listed or, if the Securities are not so listed, pro rata or by
--- ----
lot or in such other manner as the Trustee shall deem appropriate and fair. The
Trustee shall make the selection from the Securities then outstanding, subject
to redemption and not previously called for redemption. The Trustee may select
for redemption portions (equal to $1,000 or any integral multiple thereof) of
the principal amount at maturity 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 3.03. Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail a notice of redemption by first class mail to each Holder
whose Securities are to be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the CUSIP number (subject to Section 2.13);
(4) the name and address of the Paying Agent to which the Securities are
to be surrendered for redemption;
(5) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making the redemption payment,
interest on Securities called for redemption ceases to accrue on and after
the redemption date and the only remaining right of the Holders is to
receive
<PAGE>
-45-
payment of the redemption price upon surrender to the Paying Agent; and
(7) if any Security is being redeemed in part, the portion of the
principal amount at maturity of such Security to be redeemed and that,
after the redemption date, upon surrender of such Security, a new Security
or Securities in principal amount at maturity equal to the unredeemed
portion thereof will be issued.
At the Company's request, the Trustee shall give the notice of
redemption on behalf of the Company, in the Company's name and at the Company's
expense.
SECTION 3.04. Effect of Notice of Redemption.
------------------------------
Once a notice of redemption is mailed, Securities called for
redemption become due and payable on the redemption date and at the redemption
price. Upon surrender to the Paying Agent, such Securities shall be paid at the
redemption price, plus accrued interest thereon to the redemption date, but
interest installments whose maturity is on or prior to such redemption date
shall be payable to the Holders of record at the close of business on the
relevant record dates referred to in the Securities. The Trustee shall not be
required to (i) issue, authenticate, register the transfer of or exchange any
Security during a period beginning 15 days before the date a notice of
redemption is mailed and ending at the close of business on the date the
redemption notice is mailed, or (ii) register the transfer or exchange of any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
SECTION 3.05. Deposit of Redemption Price.
---------------------------
On or prior to the redemption date, the Company shall deposit with the
Paying Agent money sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date other than Securities or
portions thereof called for redemption on that date which have been delivered by
the Company to the Trustee for cancellation. If the Company complies with the
provisions of this paragraph, on and after the redemption date, interest shall
cease to accrue on the Securities or the portions of the Securities called for
redemption.
<PAGE>
-46-
SECTION 3.06. Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is redeemed in part, the Trustee
shall authenticate for the Holder a new Security equal in principal amount at
maturity to the unredeemed portion of the Security surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
---------------------
The Company shall pay the principal of and interest on the Securities
in the manner provided in the Securities. An installment of principal or
interest shall be considered paid on the date due if the Trustee or Paying Agent
holds on that date money designated for and sufficient to pay the installment in
full and is not prohibited from paying such money to the Holders of the
Securities pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the same rate
per annum borne by the Securities. The Company shall pay interest on
- --- -----
overdue installments of interest at the same rate per annum borne by the
--- -----
Securities, to the extent lawful.
SECTION 4.02. Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency where Securities may be surrendered for
registration of transfer or exchange or for presentation for payment 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
<PAGE>
-47-
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
-------- -------
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in the Borough of Manhattan, The City of New York, for such
purposes. The Company shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
The Company hereby designates the office of the Trustee set forth in
Section 13.02 (the "Corporate Trust Office") as one such office or agency of the
Company in accordance with Section 2.03.
SECTION 4.03. Limitation on Transactions with Affiliates.
------------------------------------------
The Company will not, and will not cause or permit any Restricted
Subsidiary to, directly or indirectly, conduct any business or enter into, renew
or extend any transaction with any of their respective Affiliates or any
beneficial holder of 10% or more of any class of Capital Stock of the Company or
Triton PCS Holdings, Inc., including, without limitation, the purchase, sale,
lease or exchange of property, the rendering of any service, or the making of
any guarantee, loan, advance or Investment, either directly or indirectly,
unless the terms of such transaction are at least as favorable as the terms that
could be obtained at such time by the Company or such Restricted Subsidiary, as
the case may be, in a comparable transaction made on an arms'-length basis with
a Person that is not such an Affiliate; provided, however, that (x) in any
-------- -------
transaction involving aggregate consideration in excess of $10.0 million, the
Company shall deliver an Officers' Certificate to the Trustee stating that a
majority of the Disinterested Directors of either (i) the Board of Triton PCS
Holdings, Inc., if at the time of such transaction, the Company is a Subsidiary
of Triton PCS Holdings, Inc. or (ii) the Board of the Company, if, at the time
of such transaction the Company is not a Subsidiary of Triton PCS Holdings,
Inc., have determined, in their good faith judgment, that the terms of such
transaction are at least as favorable as the terms that could be obtained by the
Company or such Restricted Subsidiary, as the case may be, in a comparable
transaction made on an arms'-length basis between unaffiliated parties and (y)
if the aggregate consideration is in excess of $25.0 million, the Company shall
also deliver to the Trustee, prior to the consummation of the transaction, the
favorable written opinion of a nationally recognized accounting, appraisal or
investment banking firm as to
<PAGE>
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the fairness of the transaction to Holders, from a financial point of view.
Notwithstanding the foregoing, the restrictions set forth in this
Section 4.03 shall not apply to (i) transactions between or among Company and/or
any Restricted Subsidiaries, (ii) any Restricted Payment or Permitted Investment
permitted by Section 4.06, (iii) directors' fees, indemnification and similar
arrangements, officers' indemnification, employee stock option or employee
benefit plans and employee salaries and bonuses paid or created in the ordinary
course of business, (iv) any other agreement in effect on the Issue Date, as the
same shall be amended from time to time; provided that any material amendment
--------
shall be required to comply with the provisions of the preceding paragraph of
this Section 4.03, (v) transactions with AT&T Corporation or any of its
Affiliates (collectively, "AT&T") relating to the marketing or provision of
telecommunication services or related hardware, software or equipment on terms
that are no less favorable (when taken as a whole) to the Company or such
Restricted Subsidiary, as applicable, than those available from unaffiliated
third parties, (vi) transactions involving the leasing or sharing or other use
by the Company or any Restricted Subsidiary of communications network facilities
(including, without limitation, cable or fiber lines, equipment or transmission
capacity) of any Affiliate of the Company or any beneficial holder of 10% or
more of any class of Capital Stock of the Company or Triton PCS Holdings, Inc.
(such Affiliate or holder being a "Related Party") on terms that are no less
favorable (when taken as a whole) to the Company or such Restricted Subsidiary,
as applicable, than those available from such Related Party to unaffiliated
third parties, (vii) transactions involving the provision of telecommunication
services by a Related Party in the ordinary course of its business to the
Company or any Restricted Subsidiary, or by the Company or any Restricted
Subsidiary to a Related Party, on terms that are no less favorable (when taken
as a whole) to the Company or such Restricted Subsidiary, as applicable, than
those available from such Related Party to unaffiliated third parties, (viii)
any sales agency agreements pursuant to which an Affiliate has the right to
market any or all of the products or services of the Company or any of the
Restricted Subsidiaries, and (ix) customary commercial banking, investment
banking, underwriting, placement agent or financial advisory fees paid in
connection with services rendered to the Company and its subsidiaries in the
ordinary course.
<PAGE>
-49-
SECTION 4.04. Limitation on Incurrence of Indebtedness.
----------------------------------------
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, Incur any Indebtedness (including
Acquired Indebtedness), except:
(i) Indebtedness of the Company, if immediately after giving effect
to the Incurrence of such Indebtedness and the receipt and application of
the net proceeds thereof (including, without limitation, the application or
use of the net proceeds therefrom to repay Indebtedness, consummate an
Asset Acquisition or make any Restricted Payment), (a) the ratio of (x)
Total Consolidated Indebtedness to (y) Annualized Pro Forma Consolidated
Operating Cash Flow would be less than (i) 7.0 to 1.0, if the Indebtedness
is to be incurred prior to July 1, 2004, or (ii) 6.0 to 1.0 if the
Indebtedness is to be incurred on or after July 1, 2004, or (b) in the case
of any incurrence of Indebtedness prior to July 1, 2004 only, Total
Consolidated Indebtedness would be equal to or less than 75% of Total
Invested Capital;
(ii) Indebtedness of the Company and the Restricted Subsidiaries
Incurred under one or more Senior Credit Facilities in an aggregate amount
at any one time outstanding not to exceed $425.0 million in the aggregate
for all such Senior Credit Facilities;
(iii) Indebtedness of the Company and its Restricted Subsidiaries
outstanding from time to time pursuant to any Vendor Credit Arrangement;
(iv) Indebtedness owed by the Company to any Restricted Subsidiary
or Indebtedness owed by a Restricted Subsidiary to the Company or another
Restricted Subsidiary; provided, however, that upon either (x) the transfer
-------- -------
or other disposition by such Restricted Subsidiary or the Company of any
Indebtedness so permitted under this clause (iv) to a Person other than the
Company or another Restricted Subsidiary or (y) the issuance (other than
directors' qualifying shares), sale, transfer or other disposition of
shares of Capital Stock or other ownership interests (including by
consolidation or merger) of such Restricted Subsidiary to a Person other
than the Company or another such Restricted Subsidiary, the exception
provided by this clause (iv) shall no longer be applicable to such
Indebtedness and such Indebtedness shall be deemed to have
<PAGE>
-50-
been Incurred at the time of any such issuance, sale, transfer or other
disposition, as the case may be;
(v) Indebtedness of the Company or any Restricted Subsidiary under
any interest rate agreement to the extent entered into to protect the
Company or such Restricted Subsidiary from fluctuations in interest rates
on any other Indebtedness permitted under the Indenture (including the
Notes) and not for speculative purposes;
(vi) Indebtedness Incurred to Refinance any Indebtedness Incurred
under the prior clause (i) or (iii) above, the Notes or the Guarantees;
provided, however, that (x) such Indebtedness does not exceed the principal
-------- -------
amount (or accreted value, if less) of the Indebtedness so Refinanced plus
the amount of any premium required to be paid in connection with such
Refinancing pursuant to the terms of the Indebtedness being Refinanced or
the amount of any premium reasonably determined by the issuer of such
Indebtedness as necessary to accomplish such Refinancing by means of a
tender offer, exchange offer, or privately negotiated repurchase, plus the
expenses of such issuer reasonably incurred in connection therewith and
(y)(1) in the case of any Refinancing of Indebtedness that is pari passu
---- -----
with the Notes, such Refinancing Indebtedness is made pari passu with or
---- -----
subordinate in right of payment to the Notes, and, in the case of any
Refinancing of Indebtedness that is subordinate in right of payment to the
Notes, such Refinancing Indebtedness is subordinate in right of payment to
the Notes on terms no less favorable to the Holders than those contained in
the Indebtedness being Refinanced, (2) in either case, the Refinancing
Indebtedness by its terms, or by the terms of any agreement or instrument
pursuant to which such Indebtedness is issued, does not have an Average
Life that is less than the remaining Average Life of the Indebtedness being
Refinanced and (3) any Indebtedness Incurred to Refinance any Indebtedness
is Incurred by the obligor on the Indebtedness being Refinanced or by the
Company;
(vii) Indebtedness of the Company under the Private Exchange
Securities and Unrestricted Securities, each of which have been issued only
in exchange for a like principal amount at maturity of the Initial Global
Securities and Indebtedness of the Guarantors under the Guarantee incurred
in accordance with this Indenture;
<PAGE>
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(viii) Capital Lease Obligations of the Company or any Restricted
Subsidiary with respect to the leasing by the Company or any Restricted
Subsidiary of tower sites and equipment that is a fixture thereto;
provided, that such Capital Lease Obligations shall not exceed $25 million
--------
in aggregate principal amount at any time outstanding;
(ix) Indebtedness of the Company or any Restricted Subsidiary
consisting of a guarantee of Indebtedness of the Company or a Restricted
Subsidiary of the Company that was permitted to be incurred by another
provision of this Section 4.04;
(x) Indebtedness of the Company or any Restricted Subsidiary in
respect of statutory obligations, performance, surety or appeal bonds or
other obligations of a like nature incurred in the ordinary course of
business; and
(xi) Indebtedness of the Company not otherwise permitted to be
Incurred pursuant to clauses (i) through (x) above which, together with any
other outstanding Indebtedness Incurred pursuant to this clause (xi), has
an aggregate principal amount not in excess of $75 million at any time
outstanding.
Indebtedness of a person existing at the time such person becomes a Restricted
Subsidiary or which is secured by a Lien on an asset acquired by the Company or
a Restricted Subsidiary (whether or not such Indebtedness is assumed by the
acquiring person) shall be deemed incurred at the time the person becomes a
Restricted Subsidiary or at the time of the asset acquisition, as the case may
be.
For purposes of determining compliance with this Section 4.04, in the event that
an item of Indebtedness meets the criteria of more than one of the categories of
Indebtedness permitted pursuant to clauses (i) through (xi) above, the Company
shall, in its sole discretion, be permitted to classify such item of
Indebtedness in any manner that complies with this Section 4.04 and may from
time to time reclassify such item of Indebtedness in any manner that would
comply with this Section 4.04 at the time of such reclassification. Accrual of
interest and the accretion of accreted value will not be deemed to be an
incurrence of Indebtedness for purposes of this Section 4.04.
<PAGE>
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SECTION 4.05. Limitation on Certain Asset Dispositions.
----------------------------------------
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, make any Asset Dispositions unless: (i)
the Company or such Restricted Subsidiary, as the case may be, receives
consideration for such Asset Disposition at least equal to the Fair Market Value
of the assets sold or disposed of as determined by either (x) the Board of
Triton PCS Holdings, Inc., if at the time of such Asset Disposition, the Company
is a Subsidiary of Triton PCS Holdings, Inc. or (y) the Board of the Company if,
at the time of such Asset Disposition, the Company is not a Subsidiary of Triton
PCS Holdings, Inc., in good faith and evidenced by a resolution of such Board
filed with the Trustee; (ii) other than in the case of a Permitted Asset Swap,
not less than 75% of the consideration received by the Company or such
Restricted Subsidiary from the disposition consists of (x) cash or Cash
Equivalents, (y) the assumption of Indebtedness (other than non-recourse
Indebtedness or any Subordinated Indebtedness) of the Company or such Restricted
Subsidiary or other obligations relating to such assets (accompanied by the
irrevocable unconditional release of the Company or such Restricted Subsidiary
from all liability on the Indebtedness or other obligations assumed) or (z)
notes or other obligations received by the Company or such Restricted Subsidiary
from such transferee that are converted by the Company or such Restricted
Subsidiary into cash concurrently with the receipt of such notes or other
obligations (to the extent of the cash actually received by the Company); and
(iii) all Net Available Proceeds, less any amounts invested within 365 days of
such Asset Disposition to acquire all or substantially all of the assets of, or
a majority of the Voting Stock of, an entity primarily engaged in a Permitted
Business, to make a capital expenditure or to acquire other long-term assets
that are used or useful in a Permitted Business, are applied, on or prior to the
365th day after such Asset Disposition, unless and to the extent that the
Company shall determine to make an Offer to Purchase, to the permanent reduction
and prepayment of any Senior Debt of the Company then outstanding (including a
permanent reduction of the commitments in respect thereof). Any Net Available
Proceeds from any Asset Disposition which is subject to the immediately
preceding sentence that are not applied as provided in the immediately preceding
sentence shall be used promptly after the expiration of the 365th day after such
Asset Disposition (or earlier if the Company so elects), to make an Offer to
Purchase outstanding Notes at a purchase price in cash equal to (a) 100% of the
Accreted Value on the Purchase Date, if such Purchase Date is on or before May
1, 2003 and (b) 100% of the principal amount at
<PAGE>
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maturity plus accrued and unpaid interest to the Purchase Date, if such Purchase
Date is after May 1, 2003. Notwithstanding the foregoing, the Company may defer
making any Offer to Purchase outstanding Notes until there are aggregate
unutilized Net Available Proceeds from Asset Dispositions otherwise subject to
the two immediately preceding sentences equal to or in excess of $15.0 million
(at which time, the entire unutilized Net Available Proceeds from Asset
Dispositions otherwise subject to the two immediately preceding sentences, and
not just the amount in excess of $15.0 million, shall be applied as required
pursuant to this paragraph). Any remaining Net Available Proceeds following the
completion of the required Offer to Purchase may be used by the Company for any
other purpose (subject to the other provisions of the Indenture) and the amount
of Net Available Proceeds then required to be otherwise applied in accordance
with this covenant shall be reset to zero. The provisions of this Section 4.05
will not apply to a transaction consummated in compliance with the provisions of
Article Five of this Indenture.
Pending application as set forth above, the Net Available Proceeds of
any Asset Disposition may be invested in Cash or Cash Equivalents or used to
reduce temporarily Indebtedness outstanding under any revolving credit agreement
to which the Company is a party and pursuant to which it has incurred
Indebtedness.
In the event that the Company makes an Offer to Purchase the
Securities, the Company shall comply with any applicable securities laws and
regulations, including any applicable requirements of Section 14(e) of, and Rule
14e-1 under, the Exchange Act.
SECTION 4.06. Limitation on Restricted Payments.
---------------------------------
(a) The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, on or prior to December 31,
2000,
(i) declare or pay any dividend, or make any distribution of any
kind or character (whether in cash, property or securities), in respect of
any class of Capital Stock of the Company excluding, any dividends or
distributions payable solely in shares of Qualified Stock of the Company or
in options, warrants or other rights to acquire Qualified Stock of the
Company,
<PAGE>
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(ii) purchase, redeem or otherwise acquire or retire for value any
shares of Capital Stock of the Company, any options, warrants or rights to
purchase or acquire such shares or any securities convertible or
exchangeable into such shares (other than any such shares of Capital Stock,
options, warrants, rights or securities that are owned by the Company or a
Restricted Subsidiary),
(iii) make any Investment (other than a Permitted Investment) in
any Person, other than the Company or a Restricted Subsidiary, or
(iv) redeem, defease, repurchase, retire or otherwise acquire or
retire for value, prior to its scheduled maturity, repayment or any sinking
fund payment, Subordinated Indebtedness (each of the transactions described
in clauses (i) through (iv) (other than any exception to any such clause)
being a "Restricted Payment");
------------------
and at any time after December 31, 2000, the Company will not, and will not
cause or permit any Restricted Subsidiary to, directly or indirectly, make a
Restricted Payment if, at the time thereof:
(1) a Default or an Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Restricted
Payment,
(2) immediately after giving effect to such Restricted Payment, the
Company could not Incur at least $1.00 of additional Indebtedness pursuant
to Section 4.04(i), and
(3) immediately after giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments declared or made on or after
the Issue Date (including any Designation Amount) exceeds the sum (without
duplication) of: (i) the amount of (x) the Consolidated Cash Flow of the
Company after December 31, 2000, through the end of the latest full fiscal
quarter for which consolidated financial statements of the Company are
available preceding the date of such Restricted Payment (treated as a
single accounting period) less (y) 150% of the cumulative Consolidated
Interest Expense of the Company after December 31, 2000, through the end of
the latest full fiscal quarter for which consolidated financial statements
of the Company are available preceding the date of such Restricted Payment
(treated as a single ac-
<PAGE>
-55-
counting period), plus (ii) the aggregate net cash proceeds (other than
Excluded Cash Proceeds) received by the Company as a capital contribution
in respect of Qualified Stock or from the proceeds of a sale of Qualified
Stock made after the Issue Date (excluding in each case (x) the proceeds
from a sale of Qualified Stock to a Restricted Subsidiary and (y) the
proceeds from a sale, other than from a Public Sale, of Qualified Stock the
proceeds of which are applied to optionally redeem Notes on or prior to May
1, 2001), plus (iii) the aggregate net cash proceeds received by the
Company or any Restricted Subsidiary from the sale, disposition or
repayment (other than to the Company or a Restricted Subsidiary) of any
Investment made after the Issue Date and constituting a Restricted Payment
in an amount equal to the lesser of (x) the return of capital with respect
to such Investment and (y) the initial amount of such Investment, in either
case, less the cost of disposition of such Investment, plus (iv) an amount
equal to the consolidated net Investment on the date of Revocation made by
the Company and/or any of the Restricted Subsidiaries in any Subsidiary
that has been designated as an Unrestricted Subsidiary after the Issue Date
upon its redesignation as a Restricted Subsidiary in accordance with
Section 4.21. For purposes of the preceding clause (ii), the value of the
aggregate net cash proceeds received by the Company from, or as a capital
contribution in connection with, the issuance of Qualified Stock either
upon the conversion of convertible Indebtedness of the Company or any of
its Restricted Subsidiaries or in exchange for outstanding Indebtedness of
the Company or any of its Restricted Subsidiaries or upon the exercise of
options, warrants or rights will be the net cash proceeds received by the
Company or any of its Restricted Subsidiaries upon the issuance of such
Indebtedness, options, warrants or rights plus the incremental amount
received by the Company or any of its Restricted Subsidiaries upon the
conversions, exchange or exercise thereof. For purposes of the preceding
clause (iv), the value of the consolidated net Investment on the date of
Revocation shall be equal to the Fair Market Value of the aggregate amount
of the Company's and/or any Restricted Subsidiary's Investments in such
Subsidiary on the applicable date of Designation.
For purposes of determining the amount expended for Restricted Payments, cash
distributed shall be valued at the face amount thereof and property other than
cash shall be valued at its
<PAGE>
-56-
Fair Market Value on the date such Restricted Payment is made by the Company or
a Restricted Subsidiary, as the case may be.
(b) The foregoing provisions will not prohibit any of the following:
(i) the payment of any dividend or distribution within 60 days
after the date of declaration thereof, if at such date of declaration such
payment would comply with the provisions of this Indenture;
(ii) so long as no Default or Event of Default shall have occurred
and be continuing, the purchase, redemption, retirement or other
acquisition of any Capital Stock of the Company out of the net cash
proceeds of the substantially concurrent capital contribution to the
Company in connection with Qualified Stock or out of the net cash proceeds
received by the Company from the substantially concurrent issue or sale
(other than to a Restricted Subsidiary) of Qualified Stock; provided that
--------
(x) any such net cash proceeds shall be excluded from Section
4.06(a)(3)(ii), (y) such proceeds do not constitute Excluded Cash Proceeds
and (z) such proceeds, if from a sale other than a Public Sale, are not
applied to optionally redeem Notes on or prior to May 1, 2001;
(iii) so long as no Default or Event of Default shall have
occurred and be continuing, the purchase, redemption, retirement,
defeasance or other acquisition of Subordinated Indebtedness of the Company
made by exchange for or conversion into, or out of the net cash proceeds
received by the Company, or out of a capital contribution to the Company in
connection with a concurrent issue and sale (other than to a Restricted
Subsidiary) of (a) Qualified Stock (provided that (x) any such net cash
--------
proceeds are excluded from Section 4.06(a)(3)(ii), (y) such proceeds do not
constitute Excluded Cash Proceeds and (z) such proceeds, if from a sale
other than a Public Sale, are not applied to optionally redeem Notes on or
prior to May 1, 2001) or (b) other Subordinated Indebtedness of the Company
that has an Average Life equal to or greater than the Average Life of the
Subordinated Indebtedness being purchased, redeemed, retired, defeased or
otherwise acquired;
(iv) so long as no Default or Event of Default shall have occurred
and be continuing, the making of a direct or indirect Investment
constituting a Restricted Payment in an amount not to exceed the amount of
the proceeds of a
<PAGE>
-57-
concurrent capital contribution in respect of Qualified Stock or from the
issue or sale (other than to a Restricted Subsidiary) of Qualified Stock of
the Company; provided that (x) any such net cash proceeds are excluded from
--------
Section 4.06(a)(3)(ii), (y) such proceeds do not constitute Excluded Cash
Proceeds and (z) such proceeds, if from a sale other than a Public Sale,
are not applied to optionally redeem Notes on or prior to May 1, 2001; or
(v) so long as no Default or Event of Default has occurred and is
continuing, dividends or distributions by the Company to Triton PCS
Holdings, Inc. to be used to repurchase, redeem, acquire or retire for
value any Capital Stock of Triton PCS Holdings, Inc. held by any member of
management of Triton PCS Holdings, Inc., the Company or any of its
Subsidiaries pursuant to any management equity subscription agreement,
stock option agreement or other similar agreement; provided that (x) the
--------
aggregate amount of such dividends or distributions shall not exceed $2.0
million in any twelve-month period and (y) any unused amount in any twelve-
month period may be carried forward to one or more future periods.
Restricted Payments made pursuant to clauses (i) and (v) of the immediately
preceding paragraph (b) shall be included in making the determination of
available amounts under Section 4.06(a)(3) and Restricted Payments made pursuant
to (ii), (iii) and (iv) of the immediately preceding paragraph (b) shall not be
included in making the determination of available amounts under Section
4.06(a)(3).
SECTION 4.07. Corporate Existence.
-------------------
Subject to Article Five, the Company shall do or shall cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each of its
Subsidiaries in accordance with the respective organizational documents of each
such Subsidiary and the rights (charter and statutory) and material franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
-------- -------
not be required to preserve any such right or franchise, or the corporate
existence of any Subsidiary, if the Board of either (x) Triton PCS Holdings,
Inc. if at the time, the Company is a Subsidiary of Triton PCS Holdings, Inc. or
(y) the Board of the Company if at the time the Company is not a subsidiary of
Triton PCS Holdings, Inc., shall determine that the preservation thereof is no
longer desirable in the conduct of the business
<PAGE>
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of the Company and its Subsidiaries, taken as a whole, and that the loss thereof
is not, and will not be, adverse in any material respect to the Holders;
provided, further, however, that a determination of either Board shall not be
- -------- ------- -------
required in the event of a merger of one or more Wholly Owned Subsidiaries with
or into another Wholly Owned Subsidiary or another Person, if the surviving
Person is a Wholly Owned Subsidiary organized under the laws of the United
States or a State thereof or of the District of Columbia.
SECTION 4.08. Payment of Taxes and Other Claims.
---------------------------------
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, all material taxes, assessments and
governmental charges levied or imposed upon the Company or any of its
Subsidiaries or upon the income, profits or property of the Company or any of
its Subsidiaries; provided, however, that the Company shall not be required to
-------- -------
pay or discharge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings or where the failure to
effect such payment is not adverse in any material respect to the Holders.
SECTION 4.09. Notice of Defaults.
------------------
Within five days after becoming aware of any Default, if such Default
is then continuing, the Company shall promptly deliver an Officers' Certificate
to the Trustee specifying the details of such Default and the action which the
Company proposes to take with respect thereto.
SECTION 4.10. Maintenance of Properties.
-------------------------
The Company shall cause all material properties owned by or leased to
it or any of its Subsidiaries and used or useful in the conduct of its business
or the business of any of its Subsidiaries to be maintained and kept in normal
condition, repair and working order and supplied with all necessary equipment
and shall cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
-------- -------
nothing in this Section 4.10 shall prevent the Company or any of its
Subsidiaries from discontinuing the use, operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance or disposal is,
in the judgment of
<PAGE>
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the Board or of the board of directors of the Subsidiary concerned, or of an
officer (or other agent employed by the Company or of any of its Subsidiaries)
of the Company or such Subsidiary having managerial responsibility for any such
property, desirable in the conduct of the business of the Company or any of its
Subsidiaries, and if such discontinuance or disposal is not adverse in any
material respect to the Holders.
SECTION 4.11. Compliance Certificate.
----------------------
The Company shall deliver to the Trustee within 45 days after the end
of each of the first three fiscal quarters of the Company and within 90 days
after the close of each fiscal year a certificate signed by the principal
executive officer, principal financial officer or principal accounting officer
stating that a review of the activities of the Company has been made under the
supervision of the signing officers with a view to determining whether a Default
or Event of Default has occurred and whether or not the signers know of any
Default by the Company that occurred during such fiscal quarter or fiscal year.
If they do know of such a Default, the certificate shall describe all such
Defaults, their status and the action the Company is taking or proposes to take
with respect thereto. The first certificate to be delivered by the Company
pursuant to this Section 4.11 shall be for the fiscal quarter ending June 30,
1998.
SECTION 4.12. Provision of Financial Information.
----------------------------------
Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company will furnish to
the Holders of Notes (i) all quarterly and annual financial information that
would be required to be contained in a filing with the Commission on Forms 10-Q
and 10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
the Company and its consolidated Subsidiaries and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants, and (ii) all current reports that would be required to be filed
with the Commission on Form 8-K if the Company were required to file such
reports, in each case within the time period specified in the Commission's rules
and regulations; provided that no such information or reports shall be required
--------
prior to the date on which the exchange offer registration statement is required
by the terms of the Registration Rights Agreement to be filed with the
Commission. In addition,
<PAGE>
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following the consummation of the exchange offer contemplated by the
Registration Rights Agreement, whether or not required by the rules and
regulations of the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. In addition, the
Company will, for so long as any Notes remain outstanding, furnish to the
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
SECTION 4.13. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay 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 and/or interest on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not hinder, delay or
impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law had
been enacted.
SECTION 4.14. Change of Control.
-----------------
Within 30 days following the date of the consummation of a transaction
resulting in a Change of Control, the Company will commence an Offer to Purchase
all outstanding Securities at a purchase price in cash equal to (i) 101% of the
Accreted Value on the Purchase Date if such date is on or before May 1, 2003 and
(ii) 101% of the principal amount at maturity, plus accrued and unpaid interest,
if any, to the Purchase Date, if such date is after May 1, 2003. Such Offer to
Purchase will be consummated not earlier than 30 days and not later than 60 days
after the commencement thereof. Each Holder shall be entitled to tender all or
any portion of the Securities owned by such Holder pursuant to the Offer to
Purchase, subject to the requirement that any portion of a Security tendered
must be in an
<PAGE>
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integral multiple of $1,000 aggregate principal amount at maturity.
In the event that the Company makes an Offer to Purchase the
Securities, the Company shall comply with any applicable securities laws and
regulations, including any applicable requirements of Section 14(e) of, and Rule
14e-1 under, the Exchange Act. The Company will not be required to make an Offer
to Purchase upon a Change of Control if a third party makes the Offer to
Purchase in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to an Offer to Purchase made
by the Company and purchases all Securities validly tendered and not withdrawn
under such Offer to Purchase.
SECTION 4.15. Limitation on Layered Debt.
--------------------------
The Company will not (i) directly or indirectly, Incur any
Indebtedness that by its terms would expressly rank senior in right of payment
to the Notes and rank subordinate in right of payment to any other Indebtedness
of the Company and (ii) cause or permit any Guarantor to, and no Guarantor will,
directly or indirectly, incur any Indebtedness that by its terms would expressly
rank senior in right of payment to the Guarantee of such Guarantor and rank
subordinate in right of payment to any other Indebtedness of such Guarantor;
provided, that no Indebtedness shall be deemed to be subordinated solely by
- --------
virtue of being unsecured.
SECTION 4.16. Limitation on Restrictions Affecting Restricted Subsidiaries.
------------------------
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist any consensual encumbrance or restriction of any kind on the ability of
any Restricted Subsidiary to (i) pay, directly or indirectly, dividends, in cash
or otherwise, or make any other distributions in respect of its Capital Stock or
pay any Indebtedness or other obligation owed to the Company or any other
Restricted Subsidiary, (ii) make any Investment in the Company or any other
Restricted Subsidiary or (iii) transfer any of its property or assets to the
Company or any other Restricted Subsidiary, except for such encumbrances or
restrictions existing under or by reason of (a) any agreement in effect on the
Issue Date as any such agreement is in effect on such date, (b) any Senior
Credit Facilities, (c) any agreement relating to any Indebtedness Incurred by
such Restricted Subsidiary prior to the date on which
<PAGE>
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such Restricted Subsidiary was acquired by the Company and outstanding on such
date and not Incurred in anticipation or contemplation of becoming a Restricted
Subsidiary; provided, however, that such encumbrance or restriction shall not
-------- -------
apply to any property or assets of the Company or any Restricted Subsidiary
other than such Restricted Subsidiary, (d) customary provisions contained in an
agreement which has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of a Restricted Subsidiary;
provided, however, that such encumbrance or restriction is applicable only to
- -------- -------
such Restricted Subsidiary or its property and assets, (e) any agreement
effecting a Refinancing or amendment of Indebtedness Incurred pursuant to any
agreement referred to in clause (a) above; provided, however, that the
-------- -------
provisions contained in such Refinancing or amendment agreement relating to such
encumbrance or restriction are no more restrictive in any material respect than
the provisions contained in the agreement that is the subject thereof in the
reasonable judgment of (i) the Board of Triton PCS Holdings, Inc. if, at the
time of such Refinancing or amendment, the Company is a Subsidiary of Triton PCS
Holdings, Inc. or (ii) the Board of the Company if, at the time of such
Refinancing or amendment, the Company is not a Subsidiary of Triton PCS
Holdings, Inc., (f) the Indenture, (g) applicable law or any applicable rule,
regulation or order, (h) customary provisions restricting subletting or
assignment of any lease governing any leasehold interest of any Restricted
Subsidiary, (i) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the type referred to in clause
(iii) of this Section 4.16; (j) restrictions of the type referred to in clause
(iii) of this Section 4.16 contained in security agreements securing
Indebtedness of a Restricted Subsidiary to the extent that such Liens were
otherwise incurred in accordance with Section 4.17 and restrict the transfer of
property subject to such agreements; or (k) customary provisions in joint
venture agreements and other similar agreements entered into in the ordinary
course of business.
SECTION 4.17. Limitation on Liens.
-------------------
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to directly or indirectly, create, cause, incur or suffer to exist
any Lien on or with respect to any Capital Stock or any property or assets of
the Company or such Restricted Subsidiary owned on the Issue Date or thereafter
created or acquired to secure any Indebtedness, without making, or causing such
Restricted Subsidiary to make, effective provision for securing the Securities
and all other
<PAGE>
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amounts due under this Indenture equally and ratably with such Indebtedness or,
in the event such Indebtedness is Subordinated Indebtedness, prior to such
Indebtedness, as to such property or assets for so long as such Indebtedness
shall be so secured.
The foregoing restrictions shall not apply to (i) Liens existing on
the Issue Date securing Indebtedness existing on the Issue Date; (ii) Liens
securing Senior Debt (including Liens securing Indebtedness under any Senior
Credit Facilities) and any guarantees thereof to the extent that the
Indebtedness secured thereby is permitted to be incurred under Section 4.04;
(iii) Liens securing only the Securities and the Guarantees, if any; (iv) Liens
in favor of the Company or any Guarantor; (v) Liens to secure Indebtedness
Incurred in connection with Vendor Credit Agreements; (vi) Liens on property
existing immediately prior to the time of acquisition thereof (and not created
in connection with or in anticipation or contemplation of the financing of such
acquisition); (vii) Liens on property of a Person existing at the time such
Person is acquired or merged with or into or consolidated with the Company or
any such Restricted Subsidiary (and not created in connection with or in
anticipation or contemplation thereof); (viii) Liens to secure the performance
of statutory obligations, surety or appeal bonds or bid or performance bonds, or
landlords', carriers', warehousemen's, mechanics', suppliers', materialmen's or
other similar Liens, in any case incurred in the ordinary course of business and
with respect to amounts not yet delinquent or being contested in good faith by
appropriate process of law, if a reserve or other appropriate provision, if any,
as is required by GAAP shall have been made therefor; (ix) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
--------
appropriate provision that shall be required in conformity with GAAP shall have
been made therefor; (x) Liens to secure Indebtedness Incurred to Refinance, in
whole or in part, any Indebtedness secured by Liens referred to in the foregoing
clauses (i)-(ix) so long as such Liens do not extend to any additional category
of property and the principal amount of Indebtedness so secured is not increased
except for the amount of any premium required to be paid in connection with such
Refinancing pursuant to the terms of the Indebtedness Refinanced or the amount
of any premium reasonably determined by the Company as necessary to accomplish
such Refinancing by means of a tender offer, exchange offer or privately
negotiated repurchase, plus the expenses of the issuer of such Indebtedness
reasonably incurred in connection with such Refinancing; and (xi) Liens in favor
of the Trustee
<PAGE>
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as provided for in this Indenture on money or property held or collected by the
Trustee in its capacity as Trustee.
SECTION 4.18. Subsidiary Guarantees.
---------------------
The Company shall not permit any Subsidiary to become a direct or
indirect obligor under, or in respect of, any Senior Credit Facilities without
causing such Subsidiary to become a Guarantor. Any such Subsidiary shall (a)
execute and deliver a supplemental indenture in form reasonably satisfactory to
the Trustee pursuant to which such Subsidiary shall unconditionally guarantee
all of the Company's obligations under the Securities and this Indenture on the
terms set forth in Articles Eleven and Twelve and (b) deliver to the Trustee an
Opinion of Counsel that such supplemental indenture has been duly authorized,
executed and delivered by such Subsidiary and constitutes a valid and legally
binding and enforceable obligation of such Subsidiary (subject, in the case of
enforceability, to customary bankruptcy, insolvency, fraudulent conveyance and
similar exceptions).
Any Subsidiary of the Company that ceases to be a direct or indirect
obligor (including as guarantor) under, or in respect of all Senior Credit
Facilities shall be released from its Guarantee upon delivery of an Officers'
Certificate to the Trustee certifying to such effect.
The Company may, at its option, cause any of its Subsidiaries to be a
Guarantor.
SECTION 4.19 Limitation on Activities of the Company and the Restricted
--------------
Subsidiaries.
-------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any business other than a Permitted Business, except to such
extent as is not material to the Company and its Restricted Subsidiaries, taken
as a whole.
SECTION 4.20 Amendments to Securities Purchase Agreement.
----------
Neither the Company nor Triton PCS Holdings, Inc. shall amend, modify
or waive, or refrain from enforcing, any provision of the Securities Purchase
Agreement dated October 8, 1997, as amended as of the date hereof, among AT&T
Wireless PCS Inc., the Cash Equity Investors (named therein), the Management
Stockholders (named therein) and Triton PCS Holdings, Inc., in any manner that
would materially alter the obligations of the
<PAGE>
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Cash Equity Investors or the Management Stockholders thereunder to provide
additional equity capital to Triton PCS Holdings, Inc. (and to further
contribute such equity capital to the Company in the form of Qualified Stock of
the Company) until such time as the Company has received subsequent to the Issue
Date, net cash proceeds from capital contributions, or sales, in respect of
Qualified Stock of the Company equal to at least $122 million; provided,
--------
however, such amount shall be reduced to $95 million in the event the Myrtle
- -------
Beach System is not acquired by the Company on or prior to March 31, 1999
pursuant to the Myrtle Beach Acquisition Agreement.
SECTION 4.21 Limitation on Designations of Unrestricted
Subsidiaries.
------------------------------------------
The Company may designate any Subsidiary of the Company (other than
the License Subsidiary, the Real Property Subsidiary and the Equipment
Subsidiary) as an "Unrestricted Subsidiary" under this Indenture (a
"Designation") only if:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Designation; and
(ii) the Company would be permitted under this Indenture to make an
Investment at the time of Designation (assuming the effectiveness of such
Designation) in an amount (the "Designation Amount") equal to the Fair
Market Value of the aggregate amount of its Investments in such Subsidiary
on such date; and
(iii) except in the case of a Subsidiary in which an Investment is
being made pursuant to and as permitted by Section 4.06(b), the Company
would be permitted to incur $1.00 of additional Indebtedness pursuant to
clause (i) of Section 4.04 at the time of Designation (assuming the
effectiveness of such Designation).
In the event of any such Designation, the Company shall be deemed
to have made an Investment constituting a Restricted Payment pursuant to Section
4.06 for all purposes of this Indenture in the Designation Amount.
The Company shall not, and shall not permit any Restricted
Subsidiary to, at any time (x) provide direct or indirect credit support for or
a guarantee of any Indebtedness of any Unrestricted Subsidiary (including of any
undertaking, agreement or instrument evidencing such Indebtedness), (y) be
<PAGE>
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directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary or (z) be directly or indirectly liable for any Indebtedness which
provides that the holder thereof may (upon notice, lapse of time or both)
declare a default thereon or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity upon the occurrence of a default
with respect to any Indebtedness of any Unrestricted Subsidiary (including any
right to take enforcement action against such Unrestricted Subsidiary), except,
in the case of clause (x) or (y), to the extent permitted under Section 4.06.
The Company may revoke any Designation of a Subsidiary as an Unrestricted
Subsidiary (a "Revocation"), whereupon such Subsidiary shall then constitute a
Restricted Subsidiary, if:
(a) no Default shall have occurred and be continuing at the time of
and after giving effect to such Revocation; and
(b) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of this
Indenture.
All Designations and Revocations must be evidenced by Resolutions of the Company
delivered to the Trustee certifying compliance with the foregoing provisions.
ARTICLE FIVE
MERGERS; SUCCESSOR CORPORATION
SECTION 5.01. Restriction on Mergers, Consolidations
and Certain Sales of Assets.
--------------------------------------
The Company will not consolidate or merge with or into any Person, or
sell, assign, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary to consolidate with or into any Person or sell, assign,
lease, convey or otherwise dispose of) all or substantially all of the Company's
assets (determined on a consolidated basis for the Company and the Restricted
Subsidiaries), whether as an entirety or substantially an entirety in one
transaction or a series of related transactions, including by way of liquidation
or dissolution, to any Person unless, in each such case: (i) the entity formed
by or surviving any such consolidation or
<PAGE>
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merger (if other than the Company or such Restricted Subsidiary, as the case may
be), or to which such sale, assignment, lease, conveyance or other disposition
shall have been made (the "Surviving Entity"), is a corporation organized and
----------------
existing under the laws of the United States, any state thereof or the District
of Columbia; (ii) the Surviving Entity assumes by supplemental indenture all of
the obligations of the Company on the Securities and under this Indenture; (iii)
immediately after giving effect to such transaction and the use of any net
proceeds therefrom on a pro forma basis, the Company or the Surviving Entity, as
the case may be, could Incur at least $1.00 of additional Indebtedness pursuant
to Section 4.04(i); (iv) immediately after giving effect to such transaction and
treating any Indebtedness that becomes an obligation of the Company or any
Restricted Subsidiary as a result of such transaction as having been Incurred by
the Company or such Restricted Subsidiary, as the case may be, at the time of
the transaction, no Default or Event of Default shall have occurred and be
continuing; and (v) if, as a result of any such transaction, property or assets
of the Company or a Restricted Subsidiary would become subject to a Lien not
excepted from restrictions on Liens set forth in Section 4.17, the Company, the
Restricted Subsidiary or the Surviving Entity, as the case may be, shall have
secured the Securities as required by Section 4.17. The provisions of this
Section 5.01 shall not apply to any merger of a Restricted Subsidiary with or
into the Company or a Wholly Owned Subsidiary or the release of any Guarantor in
accordance with the terms of its Guarantee and this Indenture in connection with
any transaction complying with Section 4.05.
SECTION 5.02. Successor Corporation Substituted.
---------------------------------
Upon the execution of a supplemental indenture by the Surviving Person
in form and substance satisfactory to the Trustee (as evidenced by the Trustee's
execution thereof) in accordance with Section 5.01, the Surviving Person shall
succeed to, and be substituted for, and may exercise every right and power of
and shall assume all obligations of, the Company or such Subsidiary, as the case
may be, under this Indenture, the Registration Rights Agreement and the
Securities or the Guarantees, as the case may be, with the same effect as if
such Surviving Person had been named as the Company or such Subsidiary, as the
case may be, herein and therein, and thereafter, except in the case of a lease,
the predecessor Person shall be relieved of all obligations and covenants under
this Indenture, the Registration Rights Agreement and the Securities or the
Guarantees, as the case may be.
<PAGE>
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ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
-----------------
An "Event of Default" occurs if:
(a) the Company fails to pay the Accreted Value or principal of (or
premium, if any, on) any Security when due (whether or not prohibited by
Article Eight or Twelve);
(b) the Company fails to pay any interest on any Security when due,
continued for 30 days (whether or not prohibited by Article Eight or
Twelve);
(c) the Company defaults in the payment of the Accreted Value or
principal of and interest on Securities required to be purchased pursuant
to an Offer to Purchase under Sections 4.05 or 4.14 hereof when due and
payable (whether or not prohibited by Article Eight or Twelve);
(d) the Company fails to perform or comply with any of the provisions
of Article Five;
(e) the Company fails to perform any other covenant or agreement of
the Company under this Indenture or the Securities continued for 60 days
after written notice to the Company by the Trustee or Holders of at least
25% in aggregate principal amount of outstanding Securities;
(f) the Company defaults under the terms of one or more instruments
evidencing or securing Indebtedness of the Company or any of its
Subsidiaries having an outstanding principal amount of $15.0 million or
more individually or in the aggregate that has resulted in the acceleration
of the payment of such Indebtedness or failure to pay principal when due at
the stated final maturity of any such Indebtedness;
(g) the rendering of a final judgment or judgments (not subject to
appeal) against the Company or any Restricted Subsidiary in an amount of
$15.0 million or more which remains undischarged or unstayed for a period
of 60 days after the date on which the right to appeal has expired;
<PAGE>
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(h) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(1) commences a voluntary case or proceeding,
(2) consents to the entry of an order for relief against it in an
involuntary case or proceeding,
(3) consents to the appointment of a Custodian of it or for all
or substantially all of its property, or
(4) makes a general assignment for the benefit of its creditors;
(i) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(1) is for relief against the Company or any Material Subsidiary
in an involuntary case or proceeding,
(2) appoints a Custodian of the Company or any Material
Subsidiary or for all or substantially all of its property, or
(3) orders the liquidation of the Company or any Material
Subsidiary,
and in each case the order or decree remains unstayed and in effect for 60 days;
provided, however, that if the entry of such order or decree is appealed
- -------- -------
and dismissed on appeal then the Event of Default hereunder by reason of
the entry of such order or decree shall be deemed to have been cured; or
(j) any Guarantee of a Material Subsidiary ceases to be in full force
and effect or is declared null and void and unenforceable or is found to be
invalid or any Guarantor denies its liability under its Guarantee (other than by
reason of a release of such Guarantor from its Guarantee in accordance with the
terms of this Indenture and such Guarantee).
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
--------------
Federal, state or foreign law for the relief of debtors. The term "Custodian"
---------
means any receiver, trustee, as-
<PAGE>
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signee, liquidator, sequestrator or similar official under any Bankruptcy Law.
SECTION 6.02. Acceleration.
------------
If an Event of Default (other than an Event of Default with respect to
the Company specified in Section 6.01(h) or (i)) shall occur and be continuing,
either the Trustee or the Holders of at least 25% in aggregate principal amount
at maturity of the outstanding Securities by notice in writing to the Company
(and to the Trustee if given by the Holders) may declare the Accreted Value of
all of the outstanding Securities, together with all accrued and unpaid
interest, if any, thereon, as of such date of declaration to be immediately due
and payable (provided that Securities whose Accreted Value remains unpaid after
such date of declaration shall continue to accrete pursuant to the definition of
"Accreted Value" and accrue interest as provided in the Securities); provided,
--------
however, that after such acceleration, but before a judgment or decree based on
- -------
acceleration, the Holders of a majority in aggregate principal amount at
maturity of outstanding Securities may rescind and annul such acceleration if
all Defaults, (other than the non-payment of Accreted Value or principal of and
interest on the Securities which has become due solely by virtue of such
acceleration), have been cured or waived as provided in this Indenture. Upon any
such declaration pursuant to the immediately preceding sentence, the Accreted
Value and accrued and unpaid interest, if any, shall become immediately due and
payable. If an Event of Default with respect to the Company specified in Section
6.01(h) or (i) occurs, the Accreted Value of all of the outstanding Securities,
together with all accrued and unpaid interest, if any, thereon, will ipso facto
become immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder (provided that Securities whose Accreted Value
remains unpaid after the date of such Event of Default shall continue to accrete
pursuant to the definition of "Accreted Value" and accrue interest as provided
in the Securities).
SECTION 6.03. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of Accreted Value or principal of, as applicable, or interest on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.
<PAGE>
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The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
maturing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.04. Waiver of Past Default.
----------------------
Subject to Sections 2.09, 6.07 and 10.02, prior to the declaration of
acceleration of the Securities, (i) the Holders of not less than a majority in
aggregate principal amount at maturity of the outstanding Securities by written
notice to the Trustee may waive an existing Default and its consequences, except
a Default in the payment of Accreted Value or principal of and interest on any
Security as specified in Section 6.01(a) or (b), (ii) a default arising from
failure to effect an Offer to Purchase required under Section 4.05 or 4.14 or
(iii) a Default in respect of any term or provision of this Indenture that may
not be amended or modified without the consent of each Holder affected as
provided in Section 10.02. The Company shall deliver to the Trustee an Officers'
Certificate stating that the requisite percentage of Holders have consented to
such waiver and attaching copies of such consents. In case of any such waiver,
the Company, the Trustee and the Holders shall be restored to their former
positions and rights hereunder and under the Securities, respectively. This
paragraph of this Section 6.04 shall be in lieu of (S) 316(a)(1)(B) of the TIA
and such (S) 316(a)(1)(B) of the TIA is hereby expressly excluded from this
Indenture and the Securities, as permitted by the TIA.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred for every
purpose of this Indenture and the Securities, but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereon.
SECTION 6.05. Control by Majority.
-------------------
Subject to Section 2.09, the Holders of a majority in principal amount
of the outstanding Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or
<PAGE>
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power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of another Securityholder, or that may involve
the Trustee in personal liability; provided, however, that the Trustee may take
-------- -------
any other action deemed proper by the Trustee which is not inconsistent with
such direction. In the event the Trustee takes any action or follows any
direction pursuant to this Indenture, the Trustee shall be entitled to
indemnification satisfactory to it in its sole discretion against any loss or
expense caused by taking such action or following such direction. This Section
6.05 shall be in lieu of (S) 316(a)(1)(A) of the TIA, and such (S) 316(a)(1)(A)
of the TIA is hereby expressly excluded from this Indenture and the Securities,
as permitted by the TIA.
SECTION 6.06. Limitation on Suits.
-------------------
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) the Holders of at least 25% in aggregate principal amount at
maturity of the outstanding Securities make a written request to the
Trustee to pursue a remedy;
(3) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(5) during such 60-day period the Holders of a majority in aggregate
principal amount at maturity of the outstanding Securities (excluding
Affiliates of the Company) do not give the Trustee a direction which, in
the opinion of the Trustee, is inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.
Section 6.06 limitations do not apply to a suit instituted by a Holder
of a Note for enforcement of payment of
<PAGE>
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the principal of and premium, if any, or of interest on such Security on or
after the respective due dates therefor.
SECTION 6.07. Rights of Holders to Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and premium, if any, and interest
on the Securities, on or after the respective due dates therefor, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of interest or principal specified
in Section 6.01(a) or (b) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or any other obligor on the Securities for the whole amount of principal of and
premium, if any, and accrued interest remaining unpaid, together with interest
overdue on principal and to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate per annum
---------
borne by the Securities and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Securityholders allowed in any judicial proceedings relative to the Company (or
any other obligor upon the Securities), its creditors or its property and shall
be entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same, and any
Custodian in any such judicial proceedings is hereby authorized by each
Securityholder 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
Securityholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel, and any other amounts due the Trustee under Section 7.07.
<PAGE>
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Nothing herein contained shall be deemed to authorize the Trustee 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 to vote in
respect of the claim of any Securityholder in any such proceeding.
SECTION 6.10. Priorities.
----------
If the Trustee collects any money or property pursuant to this Article
Six, it shall pay out the money or property in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: subject to Articles Eight and Twelve, to Holders for amounts
due and unpaid on the Securities for principal and interest, ratably,
without preference or priority of any kind, according to the amounts due
and payable on the Securities for principal, premium, if any, and interest,
respectively; and
Third: to the Company.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Securityholders pursuant to this
Section 6.10.
SECTION 6.11. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 shall not apply to a suit by the Trustee, a suit by
a Holder or group of Holders of more than 10% in aggregate principal amount at
maturity of the outstanding Securities, or to any suit instituted by any Holder
for the enforcement or the payment of the principal, premium, if any, or
interest on any Securities on or after the respective due dates therefor.
<PAGE>
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ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
-----------------
(a) If a 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 such person's own
affairs.
(b) Except during the continuance of a Default:
(1) The Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions conforming to
the requirements of this Indenture; provided, however, the Trustee shall
-------- -------
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated
therein).
(c) The Trustee shall 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; and
(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 6.05.
<PAGE>
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(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 take any action at the request or direction of Holders
if it shall have reasonable grounds for believing that repayment of such funds
is not assured to it or it does not receive an indemnity satisfactory to it in
its sole discretion against such risk, liability, loss, fee or expense which
might be incurred by it in compliance with such request or direction.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Money or assets held in trust by the Trustee need not be segregated
from other funds or assets except to the extent required by law.
SECTION 7.02. Rights of Trustee.
-----------------
Subject to Section 7.01:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting 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 of its selection and may require an Officers' Certificate and
an Opinion of Counsel, which shall conform to the provisions of Section
13.05. The Trustee shall not be liable for any action it takes, suffers or
omits to take in good faith in reliance on such certificate or opinion.
(c) The Trustee may act through attorneys and agents of its selection
and shall not be responsible for the misconduct or negligence of any agent
or attorney (other than an agent who is an employee of the Trustee)
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasona-
<PAGE>
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bly believes to be authorized or within its rights or powers conferred upon
it by this Indenture.
(e) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Securityholders pursuant to this Indenture, unless such
Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
(f) Provided the Trustee acts in good faith, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness 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, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney at the sole cost of the Company and shall incur no liability or
additional liability of any kind by reason of such inquiry or
investigation.
(g) The Trustee shall not be deemed to have notice of any Default
unless a Trust Officer of the Trustee has actual knowledge thereof or
unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office of the Trustee, and
such notice references the Securities and this Indenture.
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 its
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 is subject to Sections
7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
--------------------
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture
<PAGE>
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or the Securities, 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
of the Company in this Indenture or any document issued in connection with the
sale of Securities or any statement in the Securities other than the Trustee's
certificate of authentication.
SECTION 7.05. Notice of Defaults.
------------------
The Trustee shall, within 30 days after the occurrence of any Default
or Event of Default with respect to the Securities, give the Holders notice of
all uncured Defaults or Events of Default known to it; provided, however, that,
-------- -------
except in the case of an Event of Default or a Default in any payment with
respect to the Securities or a Default or Event of Default in complying with
Section 5.01, the Trustee shall be protected in withholding such notice if and
so long as the Board, the executive committee or a trust committee or
responsible officers of the Trustee in good faith determine that the withholding
of such notice is in the interest of the Holders.
SECTION 7.06. Reports by Trustee to Holders.
-----------------------------
If required by TIA (S) 313(a), within 60 days after each July 1
beginning with the July 1 following the date of this Indenture, the Trustee
shall mail to each Securityholder a report dated as of such July 1 that complies
with TIA (S) 313(a). The Trustee also shall comply with TIA (S) 313(b), (c) and
(d).
A copy of each such report at the time of its mailing to
Securityholders shall be filed with the Commission, the Company and each stock
exchange, if any, on which the Securities are listed in accordance with TIA (S)
313(d).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any securities exchange or of any delisting
therefrom.
SECTION 7.07. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time such
compensation as the Company and the Trustee shall from time to time agree in
writing for its services. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances (including reasonable fees, disbursements and expenses of its
agents and counsel) incurred or
<PAGE>
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made by it in addition to the compensation for its services except any such
disbursements, expenses and advances as may be attributable to the Trustee's
negligence or bad faith. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents, accountants,
experts and counsel and any taxes or other expenses incurred by a trust created
pursuant to Section 9.01 hereof.
The Company shall indemnify the Trustee or any predecessor Trustee and
their agents for, and hold them harmless against any and all loss, damage,
claims, liability or expense, including taxes (other than franchise taxes
imposed on the Trustee and taxes based upon, measured by or determined by the
income of the Trustee), arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of enforcing this Indenture against the Company (including Section
7.07) and of defending itself against any claim (whether asserted by any
Securityholder or the Company or any other person) or liability in connection
with the exercise or performance of any of their powers or duties hereunder,
except to the extent that such loss, damage, claim, liability or expense is due
to their own negligence or bad faith. The Trustee shall notify the Company
promptly of any claim asserted against the Trustee for which it may seek
indemnity. However, the failure by the Trustee to so notify the Company shall
not relieve the Company of its obligations hereunder (unless and only to the
extent that such failure results in the loss or compromise of any rights or
defenses). The Company shall defend the claim and the Trustee shall cooperate in
the defense (and may employ its own counsel) at the Company's expense; provided,
--------
however, that the Company's reimbursement obligation with respect to counsel
- --------
employed by the Trustee will be limited to the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
written consent, which consent shall not be unreasonably withheld. The Company
need not reimburse any expense or indemnify against any loss or liability
incurred by the Trustee as a result of the violation of this Indenture by the
Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) occurs, the expenses (including the
reasonable fees and expenses of its agents and counsel) and the compensation for
the services shall be preferred over the status of the Holders in a proceeding
under any Bankruptcy Law and are intended to constitute expenses of
administration under any Bankruptcy Law. The Company's obligations under this
Section 7.07 and any claim
<PAGE>
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arising hereunder shall survive the resignation or removal of any Trustee, the
discharge of the Company's obligations pursuant to Article Nine and any
rejection or termination under any Bankruptcy Law.
The provisions of this Section 7.07 shall survive the termination of
this Indenture.
SECTION 7.08. Replacement of Trustee.
----------------------
The Trustee may resign at any time by so notifying the Company in
writing. The Holders of a majority in aggregate principal amount at maturity of
the outstanding Securities may remove the Trustee by so notifying the Trustee
and the Company in writing and may appoint a successor Trustee with the
Company's consent. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent under any
Bankruptcy Law;
(3) a custodian or other public officer takes charge of the Trustee or
its property; or
(4) 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 Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. As promptly as
practicable after that, the retiring Trustee shall transfer, after payment of
all sums then owing to the Trustee pursuant to Section 7.07, all property held
by it as Trustee 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 the rights, powers and duties of
the Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Securityholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in aggregate principal amount at maturity of the
outstanding Secu-
<PAGE>
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rities 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.
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 or banking corporation, the resulting, surviving or transferee
corporation or banking corporation without any further act shall be the
successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee which shall be eligible to
act as Trustee under TIA (S) (S) 310(a)(1) and 310(a)(5). The Trustee (or in the
case of a corporation included in a bank holding company, the related bank
holding company) shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. If the Trustee has or shall acquire any "conflicting interest" within
the meaning of TIA (S) 310(b), the Trustee and the Company shall comply with the
provisions of TIA (S) 310(b); provided, however, that there shall be excluded
-------- -------
from the operation of TIA (S) 310(b)(1) any indenture or indentures under which
other securities, or certificates of interest or participation in other
securities, of the Company are outstanding, if the requirements for such
exclusion set forth in TIA (S) 310(b)(1) are met. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Trustee shall resign immediately in the manner and with the effect
hereinbefore specified in this Article Seven.
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
<PAGE>
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who has resigned or been removed shall be subject to TIA (S) 311(a) to the
extent indicated therein.
ARTICLE EIGHT
SUBORDINATION OF SECURITIES
SECTION 8.01. Securities Subordinated to Senior Debt.
--------------------------------------
The Company covenants and agrees, and the Trustee and each Holder by
acceptance of the Securities likewise covenant and agree, that all Securities
shall be issued subject to the provisions of this Article; and each person
holding any Security, whether upon original issue or upon transfer, assignment
or exchange thereof, accepts and agrees that all payments of the principal of,
premium, if any, and interest (including Additional Interest) on the Securities
by the Company shall, to the extent and in the manner set forth in this Article,
be subordinated and junior in right of payment to the prior payment in full in
cash of all existing and future Senior Debt of the Company.
SECTION 8.02. No Payment on Securities in
Certain Circumstances.
---------------------------
(a) No direct or indirect payment by or on behalf of the Company
of principal of, premium, if any, or interest (including Additional Interest) on
the Securities (other than payments to Holders from funds held in trust for the
benefit of Holders pursuant to Section 9.01), whether pursuant to the terms of
the Securities or upon acceleration, by way of repurchase, redemption,
defeasance or otherwise, will be made if, at the time of such payment, there
exists a default in the payment when due of all or any portion of the
obligations under or in respect of any Designated Senior Debt, whether at
maturity, on account of mandatory redemption or prepayment, acceleration or
otherwise, and such default shall not have been cured or waived or the benefits
of this sentence waived by or on behalf of the holders of Designated Senior
Debt. In addition, during the continuance of any non-payment default or non-
payment event of default with respect to any Designated Senior Debt pursuant to
which the maturity thereof may be accelerated, and upon receipt by the Trustee
of written notice (a "Payment Blockage Notice") from a holder or holders of such
-----------------------
Designated Senior Debt or the trustee or agent acting on behalf of such
Designated Senior Debt, then, unless and until such default or event of default
<PAGE>
-83-
has been cured or waived or has ceased to exist or such Designated Senior Debt
has been discharged or repaid in full in cash, or the requisite holders of such
Designated Senior Debt have otherwise agreed in writing, no payment or
distribution will be made by or on behalf of the Company on account of or with
respect to the Securities (except payments to Holders from funds held in trust
for the benefit of Holders pursuant to Section 9.01), during a period (a
"Payment Blockage Period") commencing on the date of receipt of such Payment
-----------------------
Blockage Notice by the Trustee and ending 179 days thereafter.
Notwithstanding anything herein to the contrary, (x) in no event will
a Payment Blockage Period extend beyond 179 days from the date the Payment
Blockage Notice in respect thereof was given and (y) there must be 180 days in
any 360-day period during which no Payment Blockage Period is in effect. Not
more than one Payment Blockage Period may be commenced with respect to the
Securities during any period of 360 consecutive days. No default or event of
default that existed or was continuing on the date of commencement of any
Payment Blockage Period with respect to the Designated Senior Debt initiating
such Payment Blockage Period may be, or be made, the basis for the commencement
of any other Payment Blockage Period by the holder or holders of such Designated
Senior Debt or the trustee or agent acting on behalf of such Designated Senior
Debt, whether or not within a period of 360 consecutive days, unless such
default or event of default has been cured or waived for a period of not less
than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Section 8.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Designated Senior Debt or
their respective representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Designated Senior Debt may have been
issued, as their respective interests may appear, but only to the extent that,
upon notice from the Trustee to the holders of Designated Senior Debt that such
prohibited payment has been made, the holders of the Designated Senior Debt (or
their representative or representatives or a trustee) notify the Trustee in
writing of the amounts then due and owing on the Designated Senior Debt, if any,
and only the amounts specified in such notice to the Trustee shall be paid to
the holders of Designated Senior Debt.
<PAGE>
-84-
SECTION 8.03. Payment Over of Proceeds upon Dissolution, etc.
----------------------------------------------
(a) Upon any payment or distribution of assets or securities of
the Company of any kind or character (whether in cash, property or securities)
upon any dissolution or winding up or total or partial liquidation or
reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due or to
become due with respect to Senior Debt of the Company (including any interest
accruing subsequent to an event of bankruptcy or insolvency, whether or not
allowed or allowable thereunder) shall first be paid in full in cash, before the
Holders or the Trustee on their behalf shall be entitled to receive any payment
by the Company of the principal of, premium, if any, or interest on the
Securities, or any payment to acquire any of the Securities for cash, property
or securities, or any distribution with respect to the Securities of any cash,
property or securities. Before any payment may be made by, or on behalf of, the
Company of the principal of, premium, if any, or interest on the Securities upon
any such dissolution or winding up or liquidation or reorganization, any payment
or distribution of assets or securities of the Company of any kind or character,
whether in cash, property or securities, to which the Holders of the Securities
or the Trustee on their behalf would be entitled, but for the subordination
provisions of this Indenture, shall be made by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, directly to the holders of Senior Debt of the Company
(pro rata to such holders on the basis of the respective amounts of Senior Debt
held by such holders) or their representative(s) or to the trustee(s) under any
indenture pursuant to which any such Senior Debt may have been issued as their
respective interests may appear, to the extent necessary to pay all such Senior
Debt in full after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Debt.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of the Company of any kind or character, whether in cash, property
or securities, shall be received by the Trustee or any Holder at a time when
such payment or distribution is prohibited by Section 8.03(a) and before all
obligations in respect of Senior Debt are paid in full, or payment provided for,
such payment or distribution shall be received and held in trust for the benefit
of, and shall be paid over or delivered to, the holders of Senior Debt or their
respective representative(s), or to the trustee(s) un-
<PAGE>
-85-
der any indenture pursuant to which any of such Senior Debt may have been
issued, as their respective interests may appear, for application to the payment
of Senior Debt remaining unpaid until all such Senior Debt has been paid in full
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Senior Debt.
SECTION 8.04. Subrogation.
-----------
Upon the payment in full of all Senior Debt, or provision for payment,
the Holders shall be subrogated (equally and ratably with all pari passu
---- -----
Indebtedness) to the rights of the holders of Senior Debt to receive payments or
distributions of cash, property or securities of the Company made on such Senior
Debt until the principal of, premium, if any, and interest on the Securities
shall be paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Debt of any cash, property or
securities to which the Holders or the Trustee on their behalf would be entitled
except for the provisions of this Article, and no payment over pursuant to the
provisions of this Article to the holders of Senior Debt by Holders or the
Trustee on their behalf shall, as between the Company, its creditors other than
holders of Senior Debt, and the Holders, be deemed to be a payment by the
Company to or on account of the Senior Debt. It is understood that the
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and the holders of
the Senior Debt, 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 shall have been
applied, pursuant to the provisions of this Article, to the payment of all
amounts payable under Senior Debt, then and in such case, the Holders shall be
entitled to receive from the holders of such Senior Debt any payments or
distributions received by such holders of Senior Debt in excess of the amount
required to make payment in full, or provision for payment, of such Senior Debt.
SECTION 8.05. Obligations of Company Unconditional.
------------------------------------
Nothing contained in this Article or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as among the Company and the
Holders, the obligation of the Company, 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
<PAGE>
-86-
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 Debt, nor shall anything herein or therein prevent any Holder or the
Trustee on their behalf from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article of the holders of the Senior Debt in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Without limiting the generality of the foregoing, nothing contained in
this Article shall restrict the right of the Trustee or the Holders to take any
action to declare the Securities to be due and payable prior to their stated
maturity pursuant to Section 6.01 or to pursue any rights or remedies hereunder;
provided, however, that all Senior Debt then due and payable shall first be paid
- -------- -------
in full before the Holders or the Trustee are entitled to receive any direct or
indirect payment from the Company of principal of or interest on the Securities.
SECTION 8.06. Notice to Trustee.
-----------------
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities pursuant to the provisions of this
Article. Failure to give such notice to the Trustee shall not affect the
subordination of the Securities to Senior Debt. The Trustee shall not be charged
with knowledge of the existence of any default or event of default with respect
to any Senior Debt or of any other facts which would prohibit the making of any
payment to or by the Trustee unless and until the Trustee shall have received
notice in writing to that effect signed by an Officer of the Company, or by a
holder of Senior Debt or trustee or agent therefor; and prior to the receipt of
any such written notice, the Trustee shall, subject to Article Seven, be
entitled to assume that no such facts exist; provided, however, that if the
-------- -------
Trustee shall not have received the notice provided for in this Section 8.06 at
least three Business Days prior to the date upon which by the terms of this
Indenture any moneys shall become payable for any purpose (including, without
limitation, the payment of the principal of, premium, if any, or interest on any
Security), then, regardless of anything herein to the contrary, the Trustee
shall have full power and authority to receive any moneys from the Company 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 prior date. Nothing contained in this
<PAGE>
-87-
Section 8.06 shall limit the right of the holders of Senior Debt to recover
payments as contemplated by Section 8.02 or 8.03. The Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself or itself to be a holder of any Senior Debt (or a trustee on behalf of,
or other representative of, such holder) to establish that such notice has been
given by a holder of such Senior Debt or a trustee or representative on behalf
of any such holder.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 8.07. Reliance on Judicial Order or
Certificate of Liquidating Agent.
--------------------------------
Upon any payment or distribution of assets or securities referred to
in this Article, the Trustee and the Holders of the Securities shall be entitled
to rely upon any order or decree made by any court of competent jurisdiction in
which bankruptcy, dissolution, winding-up, liquidation or reorganization
proceedings are pending, or upon a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, delivered 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 Debt and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amo unts paid or distributed thereon
and all other facts pertinent thereto or to this Article.
SECTION 8.08. Trustee's Relation to Senior Debt.
---------------------------------
The Trustee and any Paying Agent shall be entitled to all the rights
set forth in this Article with respect to any Senior Debt which may at any time
be held by it in its individual or any other capacity to the same extent as any
other holder of Senior Debt, and nothing in this Indenture shall de-
<PAGE>
-88-
prive the Trustee or any Paying Agent of any of its rights as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article, and no implied covenants or obligations
with respect to the holders of Senior Debt shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Debt (except as provided in Section 8.03(b)). The
Trustee shall not be charged with knowledge of the existence of Senior Debt or
of any facts that would prohibit any payment hereunder unless the Trustee shall
have received written notice to that effect at the address of the Trustee set
forth in Section 13.02.
SECTION 8.09. Subordination Rights Not Impaired
by Acts or Omissions of the Company
or Holders of Senior Debt.
-----------------------------------
No right of any present or future holders of any Senior Debt to
enforce subordination as provided herein 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 otherwise be charged with.
The provisions of this Article are intended to be for the benefit of, and shall
be enforceable directly by, the holders of Senior Debt.
SECTION 8.10. Securityholders Authorize Trustee To
Effectuate Subordination of Securities.
--------------------------------------
Each Holder of Securities by his acceptance of such Securities
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article, and appoints the Trustee his attorney-in-fact for such purposes,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the business and assets
of the Company, the filing of a claim for the unpaid balance of its or his
Securities in the form required in those proceedings.
<PAGE>
-89-
SECTION 8.11. This Article Not to Prevent Events of Default.
---------------------------------------------
The failure to make a payment on account of principal of or
interest on the Securities by reason of any provision of this Article shall not
be construed as preventing the occurrence of an Event of Default specified in
Section 6.01(a), (b) or (c).
SECTION 8.12. Trustee's Compensation Not Prejudiced.
-------------------------------------
Nothing in this Article shall apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
SECTION 8.13. No Waiver of Subordination Provisions.
-------------------------------------
Without in any way limiting the generality of Section 8.09, the
holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and without impairing
or releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Securities to the holders of Senior Debt, do any
one or more of the following: (a) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, Senior Debt or any
instrument evidencing the same or any agreement under which Senior Debt is
outstanding or secured; (b) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Debt; (c) release any
Person liable in any manner for the collection of Senior Debt; and (d) exercise
or refrain from exercising any rights against the Company and any other Person.
SECTION 8.14. Subordination Provisions Not Applicable to Money Held in Trust
for Securityholders; Payments May Be Paid Prior to Dissolution.
---------------------------------------------------------------
All money and United States Government Obligations deposited in
trust with the Trustee pursuant to and in accordance with Article Nine shall be
for the sole benefit of the Holders and shall not be subject to this Article
Eight.
Nothing contained in this Article or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in Section
8.02, from making payments of principal of and interest on the Securities, or
from depositing with the Trustee any moneys for such payments or from effecting
<PAGE>
-90-
a termination of the Company's and the Guarantors' obligations under the
Securities and this Indenture as provided in Article Nine, or (ii) the
application by the Trustee of any moneys deposited with it for the purpose of
making such payments of principal of, premium, if any, and interest on the
Securities, to the holders entitled thereto unless at least three Business Days
prior to the date upon which such payment becomes due and payable, the Trustee
shall have received the written notice provided for in Section 8.02(b) or in
Section 8.06.
ARTICLE NINE
DISCHARGE OF INDENTURE
SECTION 9.01. Termination of Company's Obligations.
------------------------------------
(a) Discharge. Subject to the provisions of Article Eight, the
---------
Company may terminate its substantive obligations and the substantive
obligations of the Guarantors, if any, in respect of the Securities and the
Guarantees by delivering all outstanding Securities to the Trustee for
cancellation and paying all sums payable by the Company on account of principal
of, premium, if any, and interest on all Securities or otherwise.
(b) Covenant Defeasance. In addition to the provisions of Section
-------------------
9.01(a), the Company may, provided that no Default or Event of Default has
occurred and is continuing or would arise therefrom (or, with respect to a
Default or Event of Default specified in Section 6.01(h) or (i), any time on or
prior to the 91st calendar day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until after such
91st day)) and provided that no default under any Senior Debt would result
therefrom, terminate its substantive obligations and the substantive obligations
of the Guarantors, if any, in respect of the Securities and the Guarantees
(except for the Company's obligation to pay the principal of (and premium, if
any, on) and the interest on the Securities and such Guarantors' guarantee
thereof) by (i) depositing with the Trustee, under the terms of an irrevocable
trust agreement, money or direct non-callable obligations of the United States
of America for the payment of which its full faith and credit is pledged
("United States Government Obligations") sufficient (without reinvestment) to
------------------------------------
pay all remaining indebtedness on the Securities to maturity or to redemption,
(ii) delivering to the Trustee either an Opinion of Counsel or a ruling directed
to the Trustee from the Internal Revenue
<PAGE>
-91-
Service to the effect that the Holders will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit and termination of
obligations, (iii) delivering to the Trustee an Opinion of Counsel to the effect
that the Company's exercise of its option under this paragraph will not result
in the Company, the Trustee or the trust created by the Company's deposit of
funds pursuant to this provision becoming or being deemed to be an "investment
company" under the Investment Company Act of 1940, as amended, and (iv)
delivering to the Trustee an Officers' Certificate and an Opinion of Counsel
each stating that there has been compliance with all conditions precedent
provided for herein.
(c) Legal Defeasance. In addition to the provisions of Section
----------------
9.01(a) and (b), the Company may, provided that no Default or Event of Default
has occurred and is continuing or would arise therefrom (or, with respect to a
Default specified in Section 6.01(h) or (i), any time on or prior to the 91st
calendar day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until after such 91st day)) and provided
that no default under any Senior Debt would result therefrom, terminate all of
its substantive obligations and all of the substantive obligations of the
Guarantors in respect of the Securities and the Guarantees (including the
Company's obligation to pay the principal of (and premium, if any, on) and
interest on the Securities and such Guarantors' guarantee thereof) by (i)
depositing with the Trustee, under the terms of an irrevocable trust agreement,
money or United States Government Obligations sufficient (without reinvestment)
to pay all remaining indebtedness on the Securities to maturity or to
redemption, (ii) delivering to the Trustee either a ruling directed to the
Trustee from the Internal Revenue Service to the effect that the Holders will
not recognize income, gain or loss for federal income tax purposes as a result
of such deposit and termination of obligations or an Opinion of Counsel based
upon such a ruling addressed to the Trustee or a change in the applicable
Federal tax law since the date of this Indenture, to such effect, (iii)
delivering to the Trustee an Opinion of Counsel to the effect that the Company's
exercise of its option under this paragraph will not result in the Company, the
Trustee or the trust created by the Company's deposit of funds pursuant to this
provision becoming or being deemed to be an "investment company" under the
Investment Company Act of 1940, as amended, and (iv) delivering to the Trustee
an Officers' Certificate and an Opinion of Counsel each stating that there has
been compliance with all conditions precedent provided for herein.
<PAGE>
-92-
(d) Notwithstanding the foregoing paragraphs 9.01(b) and (c) above,
the Company's obligations contained in Sections 2.03, 2.05, 2.06, 2.07, 4.02,
7.07, 7.08, 9.03 and 9.04 shall survive until the Securities are no longer
outstanding. In addition, notwithstanding the foregoing paragraph 9.01(b), in
that instance the Company's obligations contained in Section 4.01 shall also
survive until the Securities are no longer outstanding. Thereafter the Company's
obligations in Section 7.07, 9.03 and 9.04 shall survive. The Company may make
an irrevocable deposit pursuant to this Section 9.01 only if at such time it is
not prohibited from doing so under the subordination provisions of this
Indenture and the Company has delivered to the Trustee and any Paying Agent an
Officers' Certificate to that effect. After such delivery or irrevocable deposit
and delivery of an Officers' Certificate and Opinion of Counsel, the Trustee
upon request of the Company shall acknowledge in writing the discharge of the
Company's and the Guarantors' (if any) obligations under the Securities, the
Guarantees and this Indenture other than those surviving obligations specified
in this paragraph (d).
SECTION 9.02. Application of Trust Money.
--------------------------
The Trustee shall hold in trust money or United States Government
Obligations deposited with it pursuant to Section 9.01, and shall apply the
deposited money and the money from United States Government Obligations in
accordance with this Indenture solely to the payment of principal of and
interest on the Securities. The Company shall indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the United States
Government Obligations deposited pursuant to Section 9.01 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding Securities.
SECTION 9.03. Repayment to Company.
--------------------
Subject to Sections 7.07 and 9.01, the Trustee shall promptly pay to
the Company upon receipt by the Trustee of the Company's written request
accompanied by an Officers' Certificate any excess money held by it at any time.
The Trustee shall pay to the Company upon such request any money held by it for
the payment of principal (premium, if any) or interest that remains unclaimed
for two years; provided, however, that the Trustee before being required to make
-------- -------
any payment may at the expense of the Company cause to be published once in a
newspaper of general circulation in The City of New York or mail to
<PAGE>
-93-
each Holder entitled to such money notice that such money remains unclaimed and
that, after a date specified therein which shall be at least 30 days from the
date of such publication or mailing, any unclaimed balance of such money then
remaining shall be repaid to the Company. After payment to the Company,
Securityholders entitled to money must look to the Company for payment as
general creditors unless an applicable abandoned property law designates another
person, and all liability of the Trustee or Paying Agent with respect to such
money shall thereupon cease.
SECTION 9.04. Reinstatement.
-------------
If the Trustee is unable to apply any money or United States
Government Obligations in accordance with Section 9.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's and the Guarantors'(if any) obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 9.01 until such time as the Trustee is permitted to apply
all such money or United States Government Obligations in accordance with
Section 9.01; provided, however, that if the Company has made any payment of
-------- -------
interest on or principal of any Securities because of 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 money or United States
Government Obligations held by the Trustee.
ARTICLE TEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01. Without Consent of Holders.
--------------------------
The Company and the Guarantors, if any, when authorized by a
resolution of their respective Boards, and the Trustee may amend or supplement
this Indenture or the Securities without notice to or consent of any
Securityholder:
(i) to cure any ambiguity, defect or inconsistency; provided,
--------
however, that such amendment or supplement does not adversely affect the
-------
rights of any Holder;
<PAGE>
-94-
(ii) to effect the assumption by a successor Person of all
obligations of the Company under the Securities and this Indenture in
connection with any transaction complying with Article Five of this
Indenture;
(iii) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(iv) to comply with any requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the TIA;
(v) to make any change that would provide any additional benefit
or rights to the Holders;
(vi) to make any other change that does not adversely affect the
rights of any Holder under this Indenture;
(vii) to evidence the succession of another Person to any
Guarantor and the assumption by any such successor of the covenants of
such Guarantor herein and in the Guarantee;
(viii) to add to the covenants of the Company or the Guarantors for
the benefit of the Holders, or to surrender any right or power herein
conferred upon the Company or any Guarantor;
(ix) to secure the Securities pursuant to the requirements of
Section 4.17 or otherwise; or
(x) to reflect the release of a Guarantor from its obligations
with respect to its Guarantee in accordance with the provisions of Section
11.03 and to add a Guarantor pursuant to the requirements of Section 4.18;
provided, however, that the Company has delivered to the Trustee an Opinion of
- -------- -------
Counsel and an Officers' Certificate each stating that such amendment or
supplement complies with the provisions of this Section 10.01.
SECTION 10.02. With Consent of Holders.
-----------------------
The Company, the Guarantors, if any, and the Trustee may amend or
supplement this Indenture or the Securities with the written consent of the
Holders of at least a majority in principal amount at maturity of the
outstanding Securities.
<PAGE>
-95-
However, without the consent of each Holder affected, an amendment, supplement
or waiver may not:
(1) change the Stated Maturity of the principal of any Security;
(2) alter the optional redemption or repurchase provisions of any
Security or this Indenture in a manner adverse to the holders of the
Securities (other than the provisions of this Indenture relating to any Offer
to Purchase required under Section 4.05 or 4.14);
(3) reduce the principal amount of any Security;
(4) reduce the rate of or change the time for payment of interest on any
Security;
(5) change the place or currency of payment of the principal of or
interest on any Security;
(6) modify any provisions of this Indenture relating to the waiver of
past defaults (other than to add sections of this Indenture subject thereto)
or the right of the Holders to institute suit for the enforcement of any
payment on or with respect to any Security or the Guarantees, or the
modification and amendment of this Indenture and the Securities (other than
to add sections of this Indenture or the Securities which may not be amended,
supplemented or waived without the consent of each Holder affected);
(7) reduce the percentage of the principal amount of outstanding
Securities necessary for amendment to or waiver of compliance with any
provision of this Indenture or the Securities or for waiver of any Default;
(8) waive a default in the payment of principal of, interest on, or
redemption payment with respect to, any Security (except a rescission of
acceleration of the Securities by the Holders as provided in this Indenture
and a waiver of the payment default that resulted from such acceleration);
(9) modify the ranking or priority of the Securities or the Guarantee, or
modify the definition of Senior Debt or Designated Senior Debt or amend or
modify the subordination provisions of this Indenture in any manner adverse
to the Holders;
<PAGE>
-96-
(10) release any Guarantor from any of its obligations under its Guarantee
or this Indenture otherwise than in accordance with this Indenture; or
(11) modify any of the provisions (including the definitions relating
thereto) relating to an Offer to Purchase required under Section 4.05 or 4.14
in a manner materially adverse to the Holders of Securities with respect to
Change of Control that has occurred or any Asset Disposition that has been
consummated.
The Holders of a majority in aggregate principal amount at maturity of the
outstanding Securities, on behalf of all Holders of Securities, may waive
compliance by the Company with certain restrictive provisions of this Indenture.
Subject to certain rights of the Trustee, as provided in this Indenture, (i) the
Holders of a majority in aggregate principal amount at maturity of the
outstanding Securities, on behalf of all Holders of Securities, may waive any
past default under this Indenture, except a default in the payment of principal,
premium or interest or a default arising from failure to purchase any Security
tendered pursuant to an Offer to Purchase required pursuant to Section 4.14, or
a default in respect of a provision that under this Indenture cannot be modified
or amended without the consent of the Holder of each outstanding Security
affected.
It shall not be necessary for the consent of the Holders under this
Section 10.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
SECTION 10.03. Compliance with Trust Indenture Act.
-----------------------------------
Every amendment to or supplement of this Indenture or the Securities shall
comply with the TIA as then in effect.
SECTION 10.04. Revocation and Effect of Consents.
---------------------------------
Until an amendment or waiver becomes effective, a consent to it by a
Holder is a continuing consent by the Holder and every subsequent Holder of that
Security or portion of that Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. Subject to the following paragraph, any such Holder or subsequent
Holder may revoke the consent as to such Holder's Security or portion of such
Security by written notice to the Trustee or the Company received before the
date on which
<PAGE>
-97-
the Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount at maturity 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. 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 (or their duly designated proxies), and only those Persons,
shall be entitled to consent to such amendment, supplement or waiver or 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 the second sentence
of Section 10.02. In that case the amendment, supplement or waiver shall bind
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 same debt as the
consenting Holder's Security.
SECTION 10.05. 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.
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.
Failure to make the appropriate notation or issue a new Security shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 10.06. Trustee To Sign Amendments, etc.
-------------------------------
The Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel and an Officers' Certificate each stating
that the execution of any amendment, supplement or waiver authorized pursuant to
this Article Ten is authorized or permitted by this Indenture and that such
amendment, supplement or waiver constitutes the legal, valid and binding
obligation of the Company and the Guarantors,
<PAGE>
-98-
enforceable in accordance with its terms (subject to customary exceptions). The
Trustee shall execute any amendment, supplement or waiver authorized pursuant to
this Article Ten, provided, however, 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 or otherwise. In
signing any amendment, supplement or waiver, the Trustee shall be entitled to
receive an indemnity reasonably satisfactory to it.
ARTICLE ELEVEN
GUARANTEE
SECTION 11.01. Unconditional Guarantee.
-----------------------
Each Guarantor who becomes a party to this Indenture hereby
unconditionally, jointly and severally, guarantees to each Holder of a Security
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns that: the principal of, premium, if any, and interest (including
Additional Interest) on the Securities will be promptly paid in full when due,
subject to any applicable grace period, whether at maturity, by acceleration or
otherwise, and interest on the overdue principal and interest on any overdue
interest (including Additional Interest) on the Securities and all other
obligations of the Company to the Holders or the Trustee hereunder or under the
Securities will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; subject, however, to the limitations set forth in
Section 11.04. Each such Guarantor hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Securities with
respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each such Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that the Guarantee will
not be discharged except by complete performance of the obligations contained in
the Securities, this Indenture, and such Guarantee.
<PAGE>
-99-
If any Holder or the Trustee is required by any court or otherwise to return to
the Company, any Guarantor, or any custodian, trustee, liquidator or other
similar official acting in relation to the Company or any Guarantor, any amount
paid by the Company or any Guarantor to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Guarantor further agrees that, as between each Guarantor,
on the one hand, and the Holders and the Trustee, on the other hand, (x) the
maturity of the obligations guaranteed hereby may be accelerated as provided in
Article Six for the purpose of this Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any acceleration of such
obligations as provided in Article Six, such obligations (whether or not due and
payable) shall forthwith become due and payable by each Guarantor for the
purpose of this Guarantee.
SECTION 11.02. Severability.
------------
In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 11.03. Release of a Guarantor.
----------------------
If the Securities are defeased in accordance with Section 9.01(c), or if
all of the Capital Stock of any Guarantor is sold (including by issuance or
otherwise) by the Company or any of its Subsidiaries in a transaction
constituting an Asset Disposition (or which, but for the provisions of clause
(c) of the definition of such term, would constitute an Asset Disposition), and,
if required by this Indenture, (x) the Net Available Proceeds from such Asset
Disposition are used in accordance with Section 4.05 or (y) the Company delivers
to the Trustee an Officers' Certificate covenanting that the Net Available
Proceeds from such Asset Disposition will be used in accordance with Section
4.05 and within the time limits specified by such Section 4.05, then such
Guarantor shall be released and discharged from all obligations under this
Article Eleven upon such use in the case of clause (x) or upon such delivery in
the case of clause (y). The Trustee shall, at the sole cost and expense of the
Company and upon receipt at the reasonable request of the Trustee of an Opinion
of Counsel that the provisions of this Section 11.03 have been complied with,
deliver an appropriate instrument evidencing such release upon receipt of a
request by the Company accompanied by an Officers'
<PAGE>
-100-
Certificate certifying as to the compliance with this Section. Any Guarantor not
so released remains liable for the full amount of principal of (premium, if any)
and interest on the Securities and the other obligations of the Company
hereunder as provided in this Article Eleven.
SECTION 11.04. Limitation of Guarantor's Liability.
-----------------------------------
Each Guarantor, and by its acceptance hereof each Holder and the Trustee,
hereby confirms that it is the intention of all such parties that the guarantee
by such Guarantor pursuant to its Guarantee not constitute a fraudulent transfer
or conveyance for purposes of title 11 of the United States Code, as amended,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar U.S. Federal or state or other applicable law. To effectuate the
foregoing intention, the Holders and such Guarantor hereby irrevocably agree
that the obligations of such Guarantor under the Guarantee shall be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Guarantor and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to Section
11.05, result in the obligations of such Guarantor under the Guarantee not
constituting such fraudulent transfer or conveyance.
SECTION 11.05. Contribution.
------------
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
----- --
distribution is made by any Guarantor (a "Funding Guarantor") under the
-----------------
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount, based on the net assets of each Guarantor
--- ----
(including the Funding Guarantor), determined in accordance with GAAP, subject
to Section 11.04, for all payments, damages and expenses incurred by that
Funding Guarantor in discharging the Company's obligations with respect to the
Securities or any other Guarantor's obligations with respect to the Guarantee.
SECTION 11.06. Execution of Guarantee.
----------------------
To further evidence their Guarantee to the Holders, any Guarantor
required to Guarantee the Securities pursuant to Section 4.18 shall execute the
endorsement of Guarantee in substantially the form set forth in Exhibit A
---------
hereto, which en-
<PAGE>
-101-
dorsement shall be delivered to each Holder to be attached to each Security.
Each such Guarantor hereby agrees that its Guarantee set forth in Section 11.01
shall remain in full force and effect notwithstanding any failure to endorse on
each Security a notation of such Guarantee. Each such Guarantee shall be signed
on behalf of each Guarantor by its Chairman of the Board, its President or one
of its Vice Presidents prior to the authentication of the Security on which it
is endorsed, and the delivery of such Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of such
Guarantee on behalf of such Guarantor. Such signature upon the Guarantee may be
manual or facsimile signature of such officer and may be imprinted or otherwise
reproduced on the Guarantee, and in case such officer who shall have signed the
Guarantee shall cease to be such officer before the Security on which such
Guarantee is endorsed shall have been authenticated and delivered by the Trustee
or disposed of by the Company, such Security nevertheless may be authenticated
and delivered or disposed of as though the Person who signed the Guarantee had
not ceased to be such officer of the Guarantor.
SECTION 11.07. Subordination of Subrogation and Other Rights.
---------------------------------------------
Each Guarantor hereby agrees that any claim against the Company that
arises from the payment, performance or enforcement of such Guarantor's
obligations under its Guarantee or this Indenture, including, without
limitation, any right of subrogation, shall be subject and subordinate to, and
no payment with respect to any such claim of such Guarantor shall be made
before, the payment in full in cash of all outstanding Securities in accordance
with the provisions provided therefor in this Indenture.
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE
SECTION 12.01. Guarantee Obligations Subordinated
to Senior Debt of Guarantor.
----------------------------------
Each Guarantor covenants and agrees, and the Trustee and each Holder of
the Securities by his acceptance thereof likewise covenant and agree, that the
Guarantees shall be issued subject to the provisions of this Article; and each
person holding any Security, whether upon original issue or upon
<PAGE>
-102-
transfer, assignment or exchange thereof, accepts and agrees that all payments
of the principal of, premium, if any, and interest (including Additional
Interest) on the Securities pursuant to the Guarantee made by or on behalf of
any Guarantor shall, to the extent and in the manner set forth in this Article,
be subordinated and junior in right of payment to the prior payment in full in
cash of all existing and future Senior Debt of such Guarantor.
SECTION 12.02. No Payment on Guarantees in Certain Circumstances.
-------------------------------------------------
(a) No direct or indirect payment by or on behalf of any Guarantor of
principal of, premium, if any, or interest (including Additional Interest) on
the Securities (other than payments to Holders from funds held in trust for the
benefit of Holders pursuant to Section 9.01) pursuant to such Guarantor's
Guarantee, whether pursuant to the terms of the Securities, upon acceleration or
otherwise, will be made if, at the time of such payment, there exists a default
in the payment of all or any portion of the obligations under or in respect of
any Designated Senior Debt of such Guarantor whether at maturity, on account of
mandatory redemption or prepayment, acceleration or otherwise, and such default
shall not have been cured or waived or the benefits of this sentence waived by
or on behalf of Holders of Designated Senior Debt. In addition, during the
continuance of any non-payment default or non-payment event of default with
respect to any Designated Senior Debt pursuant to which the maturity thereof may
be accelerated, and upon receipt by the Trustee of written notice (the
"Guarantor Payment Blockage Notice") from a holder or holders of such Designated
---------------------------------
Senior Debt or the trustee or agent acting on behalf of such Designated Senior
Debt, then, unless and until such default or event of default has been cured or
waived or has ceased to exist or such Designated Senior Debt has been discharged
or repaid in full in cash, or the requisite holders of such Designated Senior
Debt have otherwise agreed in writing, no payment or distribution will be made
by or on behalf of such Guarantor on account of or with respect to the
Securities (other than payments to Holders from funds held in trust for the
benefit of Holders pursuant to Section 9.01), during a period (a "Guarantor
---------
Blockage Period") commencing on the date of receipt of such Guarantor Payment
- ---------------
Blockage Notice by the Trustee and ending 179 days thereafter.
Notwithstanding anything herein or in the Securities to the contrary,
(x) in no event shall a Guarantor Blockage Period extend beyond 179 days from
the date the Guarantor Payment
<PAGE>
-103-
Blockage Notice was given and (y) there must be 180 days in any 365 day period
during which no Guarantor Payment Blockage Period is in effect with respect to
such Guarantor. Not more than one Guarantor Blockage Period may be commenced
with respect to each Guarantor during any period of 360 consecutive days. No
default or event of default that existed or was continuing on the date of
commencement of any Guarantor Blockage Period with respect to the Designated
Senior Debt initiating such Guarantor Payment Blockage Period may be, or be
made, the basis for the commencement of any Guarantor Blockage Period by the
holder or holders of such Designated Senior Debt or the trustee or agent acting
on behalf of such Designated Senior Debt, whether or not within a period of 360
consecutive days, unless such default or event of default has been cured or
waived for a period of not less than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Section 12.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of such Designated Senior Debt
or their respective representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Designated Senior Debt may have been
issued, as their respective interests may appear, but only to the extent that,
upon notice from the Trustee to the holders of such Designated Senior Debt that
such prohibited payment has been made, the holders of such Designated Senior
Debt (or their representative or representatives or a trustee) notify the
Trustee in writing of the amounts then due and owing on such Designated Senior
Debt, if any, and only the amounts specified in such notice to the Trustee shall
be paid to the holders of such Designated Senior Debt.
SECTION 12.03. Payment Over of Proceeds upon Dissolution, etc.
----------------------------------------------
(a) Upon any payment or distribution of assets or securities of any
Guarantor of any kind or character (whether in cash, property or securities)
upon any dissolution or winding-up or total or partial liquidation or
reorganization of such Guarantor, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due or to
become due with respect to all Senior Debt of such Guarantor shall first be paid
in full in cash before the Holders or the Trustee on their behalf shall be
entitled to receive any payment by such Guarantor of the principal of, premium,
if any, or interest on the Securities pursuant to such Guarantor's Guarantee, or
any payment to acquire any of the Se-
<PAGE>
-104-
curities for cash, property or securities, or any distribution with respect to
the Securities of any cash, property or securities. Before any payment may be
made by, or on behalf of, any Guarantor of the principal of, premium, if any, or
interest on the Securities upon any such dissolution or winding-up or
liquidation or reorganization, any payment or distribution of assets or
securities of such Guarantor of any kind or character, whether in cash, property
or securities, to which the Holders of the Securities or the Trustee on their
behalf would be entitled, but for the subordination provisions of this
Indenture, shall be made by such Guarantor or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, directly to the holders of the Senior Debt of such Guarantor or
their representative(s) or to the trustee(s) under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, to the extent necessary to pay all such Senior Debt in
full after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Senior Debt.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of any kind or character, whether in cash, property or securities,
shall be received by the Trustee or any Holder at a time when such payment or
distribution is prohibited by Section 12.03(a) and before all obligations in
respect of the Senior Debt of such Guarantor are paid in full, or payment
provided for, such payment or distribution shall be received and held in trust
for the benefit of, and shall be paid over or delivered to, the holders of such
Senior Debt or their respective representative(s), or to the trustee(s) under
any indenture pursuant to which any of such Senior Debt may have been issued, as
their respective interests may appear, for application to the payment of such
Senior Debt remaining unpaid until all such Senior Debt has been paid in full
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Senior Debt.
SECTION 12.04. Subrogation.
-----------
Upon the payment in full of all Senior Debt of a Guarantor, or
provision for payment, the Holders shall be subrogated (equally and ratably with
all pari passu Indebtedness) to the rights of the holders of such Senior Debt to
---- -----
receive payments or distributions of cash, property or securities of, premium,
if any, such Guarantor made on such Senior Debt until
<PAGE>
-105-
the principal of and interest on the Securities shall be paid in full; and, for
the purposes of such subrogation, no payments or distributions to the holders of
such Senior Debt of any cash, property or securities to which the Holders or the
Trustee on their behalf would be entitled except for the provisions of this
Article, and no payment over pursuant to the provisions of this Article to the
holders of such Senior Debt by Holders or the Trustee on their behalf shall, as
between such Guarantor, its creditors other than holders of such Senior Debt,
and the Holders, be deemed to be a payment by such Guarantor to or on account of
such Senior Debt. It is understood that the provisions of this Article are and
are intended solely for the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of Senior Debt of the Guarantors, 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 shall have been
applied, pursuant to the provisions of this Article, to the payment of all
amounts payable under Senior Debt, then and in such case, the Holders shall be
entitled to receive from the holders of such Senior Debt any payments or
distributions received by such holders of Senior Debt in excess of the amount
required to make payment in full, or provision for payment, of such Senior Debt.
SECTION 12.05. Obligations of Guarantors Unconditional.
---------------------------------------
Nothing contained in this Article or elsewhere in this Indenture or
in the Securities or the Guarantee is intended to or shall impair, as among the
Guarantors and the Holders, the obligation of each Guarantor, 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 the terms of the Guarantee, or is intended to or shall affect
the relative rights of the Holders and creditors of any Guarantor other than the
holders of Senior Debt, nor shall anything herein or therein prevent any Holder
or the Trustee on their behalf from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture, subject to the rights, if
any, under this Article of the holders of Senior Debt in respect of cash,
property or securities of any Guarantor received upon the exercise of any such
remedy.
Without limiting the generality of the foregoing, nothing contained
in this Article shall restrict the right of the Trustee or the Holders to take
any action to declare the
<PAGE>
-106-
Securities to be due and payable prior to their stated maturity pursuant to
Section 6.01 or to pursue any rights or remedies hereunder; provided, however,
-------- -------
that all Senior Debt of any Guarantor then due and payable shall first be paid
in full before the Holders or the Trustee are entitled to receive any direct or
indirect payment from such Guarantor of principal of or interest on the
Securities pursuant to such Guarantor's Guarantee.
SECTION 12.06. Notice to Trustee.
-----------------
The Company shall give prompt written notice to the Trustee of any
fact known to the Company or such Guarantor which would prohibit the making of
any payment to or by the Trustee in respect of the Securities pursuant to the
provisions of this Article. Failure to give such notice to the Trustee shall not
affect the subordination of the Securities to Senior Debt of Guarantors. The
Trustee shall not be charged with knowledge of the existence of any default or
event of default with respect to any Senior Debt or of any other facts which
would prohibit the making of any payment to or by the Trustee unless and until
the Trustee shall have received notice in writing to that effect signed by an
Officer of the Company, or by a holder of Senior Debt or trustee or agent
therefor; and prior to the receipt of any such written notice, the Trustee
shall, subject to Article Seven, be entitled to assume that no such facts exist;
provided, however, that if the Trustee shall not have received the notice
- -------- -------
provided for in this Section 12.06 at least three Business Days prior to the
date upon which by the terms of this Indenture any moneys shall become payable
for any purpose (including, without limitation, the payment of the principal of,
premium, if any, or interest on any Security), then, regardless of anything
herein to the contrary, the Trustee shall have full power and authority to
receive any moneys from any Guarantor 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 prior date. Nothing
contained in this Section 12.06 shall limit the right of the holders of Senior
Debt of a Guarantor to recover payments as contemplated by Section 12.02 or
12.03. The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself or itself to be a holder of any Senior
Debt of a Guarantor (or a trustee on behalf of, or other representative of, such
holder) to establish that such notice has been given by a holder of such Senior
Debt of a Guarantor or a trustee or representative on behalf of any such holder.
<PAGE>
-107-
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Debt of a Guarantor to participate in any payment or distribution
pursuant to this Article, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of such
Senior Debt held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article, and if such evidence is not furnished,
the Trustee may defer any payment to such Person pending judicial determination
as to the right of such Person to receive such payment.
SECTION 12.07. Reliance on Judicial Order or Certificate of Liquidating Agent.
--------------------------------------------------------------
Upon any payment or distribution of assets or securities of a
Guarantor referred to in this Article, the Trustee and the Holders of the
Securities shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings are pending, or upon a certificate of
the receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Trustee or to the Holders
for the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of Senior Debt of such Guarantor and other
indebtedness of such Guarantor, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.
SECTION 12.08. Trustee's Relation to Senior Debt of Guarantors.
-----------------------------------------------
The Trustee and any Paying Agent shall be entitled to all the rights
set forth in this Article with respect to any Senior Debt of Guarantors which
may at any time be held by it in its individual or any other capacity to the
same extent as any other holder of such Senior Debt, and nothing in this
Indenture shall deprive the Trustee or any Paying Agent of any of its rights as
such holder.
With respect to the holders of a Guarantor's Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with
<PAGE>
-108-
respect to the holders of such Senior Debt shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Debt of Guarantors (except as provided in Section
12.03(b)). The Trustee shall not be charged with knowledge of the existence of
Senior Debt or of any facts that would prohibit any payment hereunder unless the
Trustee shall have received written notice to that effect at the address of the
Trustee set forth in Section 13.02.
SECTION 12.09. Subordination Rights Not Impaired by Acts or Omissions of the
Guarantors or Holders of Senior Debt of Guarantors.
-------------------------------------------------------------
No right of any present or future holders of any Senior Debt of
Guarantors to enforce subordination as provided herein shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of any
Guarantor or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by any Guarantor with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with. The provisions of this Article are intended to be for the
benefit of, and shall be enforceable directly by, the holders of Senior Debt of
Guarantors.
SECTION 12.10. Securityholders Authorize Trustee to Effectuate Subordination of
Guarantee.
----------------------------------------------------------------
Each Holder of Securities by his acceptance of such Securities
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article, and appoints the Trustee his attorney-in-fact for such purposes,
including, in the event of any dissolution, winding up, liquidation or
reorganization of any Guarantor (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards liquidation of the
business and assets of such Guarantor, the filing of a claim for the unpaid
balance of its or his Securities in the form required in those proceedings.
SECTION 12.11. This Article Not to Prevent Events of Default.
---------------------------------------------
The failure to make a payment on account of principal of or interest
on the Securities by reason of any provision of
<PAGE>
-109-
this Article shall not be construed as preventing the occurrence of an Event of
Default specified in Section 6.01(a), (b) or (c).
SECTION 12.12. Trustee's Compensation Not Prejudiced.
-------------------------------------
Nothing in this Article shall apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
SECTION 12.13. No Waiver of Guarantee Subordination Provisions.
-----------------------------------------------
Without in any way limiting the generality of Section 12.09, the
holders of Senior Debt of Guarantors may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Debt of Guarantors, do any one or more of the following: (a) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Debt of Guarantors or any instrument evidencing the same or any
agreement under which such Senior Debt is outstanding or secured; (b) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing such Senior Debt; (c) release any Person liable in any manner
for the collection of such Senior Debt; and (d) exercise or refrain from
exercising any rights against any Guarantor and any other Person.
SECTION 12.14. Payments May Be Paid Prior to Dissolution.
-----------------------------------------
Nothing contained in this Article or elsewhere in this Indenture shall
prevent (i) a Guarantor, except under the conditions described in Section 12.02,
from making payments of principal of and interest on the Securities, or from
depositing with the Trustee any moneys for such payments, or (ii) the
application by the Trustee of any moneys deposited with it for the purpose of
making such payments of principal of, premium, if any, and interest on the
Securities, to the holders entitled thereto unless at least three Business Days
prior to the date upon which such payment becomes due and payable, the Trustee
shall have received the written notice provided for in Section 12.02(b) or in
Section 12.06.
<PAGE>
-110-
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. Trust Indenture Act Controls.
----------------------------
This Indenture is subject to the provisions of the TIA that are
required to be a part of this Indenture, and shall, to the extent applicable, be
governed by such provisions. If any provision of this Indenture modifies any TIA
provision that may be so modified, such TIA provision shall be deemed to apply
to this Indenture as so modified. If any provision of this Indenture excludes
any TIA provision that may be so excluded, such TIA provision shall be excluded
from this Indenture.
The provisions of TIA (S)(S) 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included unless expressly
excluded by this Indenture) are a part of and govern this Indenture, whether or
not physically contained herein.
SECTION 13.02. Notices.
-------
Any notice or communication shall be sufficiently given if in writing
and delivered in person, by facsimile, by overnight courier, or mailed by first-
class mail addressed as follows:
if to the Company:
Triton PCS, Inc.
101 Lindenwood Drive, Suite 125
Malvern, Pennsylvania 19355
Attention: Chief Executive Officer
Facsimile: (610) 651-5900
Telephone: (610) 651-5906
with a copy to:
James F. Rogers, Esq.
Latham & Watkins
1001 Penn Avenue, N.W.
Washington, D.C. 20004-2505
<PAGE>
-111-
Facsimile: (202) 637-2201
Telephone: (202) 637-2200
if to the Trustee:
PNC Bank, National Association
1600 Market Street, 30th Floor
Philadelphia, Pennsylvania 19103
Attention: Corporate Trust
Administration
Facsimile: (215) 585-8872
Telephone: (215) 585-8739
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when telephonic acknowledgment of receipt is
obtained, if telecopied; and the next Business Day after timely delivery to the
courier, if sent by overnight courier promising next Business Day delivery.
Any notice or communication to a Holder shall be mailed, by first
class mail, postage prepaid, or by overnight air courier promising next Business
Day delivery, including any notice delivered in connection with TIA (S)(S)
310(b), 313(c), 314(a) and 315(b), to him at his address as set forth on the
registration books of the Registrar and shall be sufficiently given to him if so
mailed within the time prescribed. To the extent required by the TIA, any notice
or communication shall also be mailed to any Person described in TIA (S) 313(c).
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 given in the manner provided
above, it is duly given, whether or not the addressee receives it.
<PAGE>
-112-
SECTION 13.03. Communications by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA (S) 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
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee at the request of the Trustee:
(1) an Officers' Certificate in form and substance 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;
(2) an Opinion of Counsel in form and substance satisfactory to the
Trustee stating that, in the opinion of such counsel, all such conditions
precedent have been complied with; and
(3) where applicable, a certificate or opinion by an independent
certified public accountant satisfactory to the Trustee that complies with
TIA (S) 314(c).
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;
(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 neces-
<PAGE>
-113-
sary 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 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. Governing Law.
-------------
The laws of the State of New York shall govern this Indenture, the
Securities and the Guarantee without regard to principles of conflicts of law.
SECTION 13.08. No Recourse Against Others.
--------------------------
No director, officer, employee or stockholder, as such, of the Company
or any of its Subsidiaries shall have any liability for any obligations of the
Company or any Guarantor under the Securities, the Guarantees or this Indenture
or for any claim based on, in respect of or by reason of such obligations or
their creation. Each Securityholder by accepting a Security waives and releases
all such liability. The waiver and release are part of the consideration for
issuance of the Securities.
SECTION 13.09. Successors.
----------
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of each Guarantor in this Indenture and
the Guarantee of such Guarantor shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 13.10. Counterpart Originals.
---------------------
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
<PAGE>
-114-
SECTION 13.11. Severability.
------------
In case any provision in this Indenture, in the Securities or in the
Guarantees shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby, and a Holder shall have no claim therefor against any party
hereto.
SECTION 13.12. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 13.13. Legal Holidays.
--------------
If a payment date is not a Business Day at a place of payment, payment
may be made at that place on the next succeeding Business Day, and no interest
shall accrue for the intervening period.
[Signature Page Follows]
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
TRITON PCS, INC.
By: __________________________________
Name:
Title:
GUARANTORS:
TRITON MANAGEMENT COMPANY, INC.
By: __________________________________
Name:
Title:
TRITON PCS HOLDINGS COMPANY L.L.C.
TRITON PCS PROPERTY COMPANY L.L.C.
TRITON PCS EQUIPMENT COMPANY L.L.C.
TRITON PCS OPERATING COMPANY L.L.C.
TRITON PCS LICENSE COMPANY L.L.C.
By: TRITON MANAGEMENT COMPANY,
INC., as Manager of each of the
foregoing
By: __________________________________
Name:
Title:
<PAGE>
-2-
PNC BANK, NATIONAL ASSOCIATION
as Trustee
By: __________________________________
Name:
Title:
<PAGE>
EXHIBIT A
TRITON PCS, INC.
CUSIP No.
No. 1 $
11% SENIOR SUBORDINATED DISCOUNT NOTE DUE 2008
This security is issued with original issue discount for purposes of
Section 1271 et seq. of the Internal Revenue Code. For each $1,000 of aggregate
------
principal amount at maturity of this Security, the issue price is $585.95 and
the amount of original issue discount is $964.05. The issue date of this
Security is May 4, 1998 and the yield to maturity is 11%.
TRITON PCS, INC. promises to pay to [ ] or registered
assigns the principal sum at maturity of [ ] Dollars on May 1,
2008.
Interest Payment Dates: May 1 and November 1, beginning
November 1, 2003.
Record Dates: April 15 and October 15.
IN WITNESS WHEREOF, TRITON PCS, INC. has caused this instrument to be
executed by duly authorized officers.
TRITON PCS, INC.
By: __________________________________
Name:
Title:
Dated: May 4, 1998 By: __________________________________
Name:
Title:
<PAGE>
-2-
Certificate of Authentication:
This is one of the 11% Senior Subordinated Discount Notes due 2008
referred to in the within-mentioned Indenture.
PNC BANK, NATIONAL ASSOCIATION,
as Trustee
By_______________________ Date: May 4, 1998
Authorized Signatory
<PAGE>
(REVERSE OF SECURITY)
TRITON PCS, INC.
11% Senior Subordinated Discount Note due 2008
1. Interest.
--------
Triton PCS, Inc., a Delaware corporation (the "Company"),
promises to pay interest at the rate of 11% per annum on the principal amount of
this Security, until the principal hereof is paid or made available for payment.
Interest on the Securities will accrue from and including the most recent date
to which interest has been paid or, if no interest has been paid, from and
including May 1, 2003, through but excluding the date on which interest is paid.
If an Interest Payment Date falls on a day that is not a Business Day, the
interest payment to be made on such Interest Payment Date will be made on the
next succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, and no additional interest will accrue as a result of
such delayed payment. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.
The principal of this Security shall not bear or accrue
interest until May 1, 2003, except in the case of a default in payment of
principal and/or premium, if any, upon acceleration, redemption or purchase and,
in such case, the overdue principal and any overdue premium shall bear interest
at the rate of 11% per annum (compounded semiannually on each May 1 and November
--- -----
1 (to the extent that the payment of such interest shall be legally
enforceable), from the dates such amounts are due until they are paid or duly
provided for. To the extent, but only to the extent, interest on amounts in
default constituting original issue discount prior to May 1, 2003 is not
permitted by law, original issue discount shall continue to accrete until paid
or duly provided for. On or after May 1, 2003, interest on overdue principal and
premium, if, any, and, to the extent permitted by law, on overdue installments
of interest will accrue, until the principal and premium, if any, is paid or
duly provided for, at the rate of 11% per annum. Interest on any overdue
--- -----
principal or premium shall be payable on demand.
<PAGE>
-2-
2. Method of Payment.
-----------------
The interest payable on the Securities, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Indenture (as defined below), be paid to the Person in whose name this Security
is registered at the close of business on the regular record date, which shall
be the April 15 or October 15 (whether or not a Business Day) next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for, and any interest payable on such defaulted interest (to the extent
lawful), will forthwith cease to be payable to the Holder on such regular record
date and shall be paid to the person in whose name this Security is registered
at the close of business on a special record date for the payment of such
defaulted interest to be fixed by the Company, notice of which shall be given to
Holders not less than 15 days prior to such special record date. Payment of the
principal of and interest on this Security will be made at the corporate trust
office of the Trustee in Pittsburgh, Pennsylvania and at any other office or
agency maintained by the Company for such purpose, in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
-------- -------
the Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
register.
3. Paying Agent and Registrar.
--------------------------
Initially, PNC Bank, National Association (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 of Securities. The
Company or any of its Subsidiaries may act as Registrar or co-Registrar but may
not act as Paying Agent.
4. Indenture.
---------
This Security is one of a duly authorized issue of Securities
of the Company, designated as its 11% Senior Subordinated Discount Notes due
2008 (the "Securities"), limited to $450,000,000 in gross proceeds to the
Company (except for Securities issued in substitution for destroyed, lost or
stolen Securities) issuable under an indenture dated as of May 4, 1998 (the
"Indenture"), among the Company, the guarantors party thereto (the "Guarantors")
and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by the Trust Indenture Act of
1939 (the
<PAGE>
-3-
"Act") (15 U.S. Code (S)(S) 77aaa-77bbbb) 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 the Act for a statement of them.
Each Securityholder, by accepting a Security, agrees to be bound to all of the
terms and provisions of the Indenture, as the same may be amended from time to
time. Payment on each Security is guaranteed on a senior subordinated basis,
jointly and severally, by the Guarantors pursuant to Article Eleven of the
Indenture.
The Securities are subordinated in right of payment to all
Senior Debt of the Company to the extent and in the manner provided in the
Indenture. Each Holder of a Security, by accepting a Security, agrees to such
subordination, authorizes the Trustee to give effect to such subordination and
appoints the Trustee as attorney-in-fact for such purpose.
Capitalized terms contained in this Security to the extent not
defined herein shall have the meanings assigned to them in the Indenture.
5. Optional Redemption.
-------------------
These Securities will be subject to redemption, at the option
of the Company, in whole or in part, at any time on or after May 1, 2003 and
prior to maturity, upon not less than 30 nor more than 60 days' notice mailed to
each Holder of Securities to be redeemed at its address appearing in the
register for the Securities, in amounts of $1,000 or an integral multiple of
$1,000, at the following redemption prices (expressed as percentages of
principal amount), plus accrued interest, if any, to but excluding the date
fixed for redemption (subject to the right of Holders on the relevant Record
Date to receive interest, if any, due on an interest payment date that is on or
prior to the date fixed for redemption), if redeemed during the 12-month period
beginning on May 1 of the years indicated:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2003................................... 105.50%
2004................................... 103.67
2005................................... 101.84
2006 and thereafter.................... 100.00
</TABLE>
In addition, on or prior to May 1, 2001, the Issuers may redeem up to 35% of the
principal amount at maturity of Securities issued under the Indenture at a
redemption price equal to 111% of the Accreted Value to the redemption date with
the net proceeds
<PAGE>
-4-
of one or more Equity Offerings of Qualified Stock of (i) the Company, (ii)
Triton PCS Holdings, Inc. or (iii) a special purpose corporation (a "Special
Purpose Corporation") formed to own Qualified Stock of the Company or Triton PCS
Holdings, Inc., in any such case; provided that at least 65% of the aggregate
--------
principal amount at maturity of Securities issued under the Indenture would
remain outstanding immediately after giving effect to such redemption. Notice of
redemption pursuant to this paragraph must be mailed to holders of Securities
not later than 60 days following the consummation of the relevant Equity
Offering.
Selection of Securities for any partial redemption shall be
made by the Trustee, in accordance with the rules of any national securities
exchange on which the Securities may be listed or, if the Securities are not so
listed, pro rata or by lot or in such other manner as the Trustee shall deem
appropriate and fair. Securities in denominations larger than $1,000 may be
redeemed in part but only in integral multiples of $1,000. Notice of redemption
will be mailed before the date fixed for redemption to each holder of Securities
to be redeemed at his or her registered address. On and after the date fixed for
redemption, interest will cease to accrue on Securities or portions thereof
called for redemption.
The Securities will not have the benefit of any sinking fund.
6. Offer to Purchase upon Occurrence
of a Change of Control.
----------------------------------
Within 30 days following a Change of Control, the Company will
offer to purchase all outstanding Securities at a purchase price in cash equal
to (i) 101% of the Accreted Value on the Purchase Date if such date is on or
before May 1, 2003 and (ii) 101% of the principal amount at maturity thereof
plus any accrued and unpaid interest thereon, if any, to the Purchase Date if
such date is after May 1, 2003.
7. Notice of Redemption.
--------------------
Notice of redemption will be mailed by first class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 may be redeemed in part. On and after the
redemption date, interest ceases to accrue on those Securities or portion of
them called for redemption.
<PAGE>
-5-
8. 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 transfer
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 transfer or exchange any Securities
selected for redemption.
9. Persons Deemed Owners.
---------------------
The registered Holder of a Security may be treated as the
owner of it for all purposes.
10. Unclaimed Funds.
---------------
If funds for the payment of principal or interest remain
unclaimed for two years, the Trustee or Paying Agent will repay the funds to the
Company at its request. After such repayment Holders of Securities entitled to
such funds must look to the Company for payment unless an abandoned property law
designates another person.
11. Discharge Prior to Redemption or Maturity.
-----------------------------------------
The Indenture will be discharged and canceled except for
certain Sections thereof, subject to the terms of the Indenture, upon the
payment of all the Securities or upon the irrevocable deposit with the Trustee
of funds or United States Government Obligations sufficient for such payment or
redemption.
12. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount at maturity of the outstanding Securities, and any
past default or compliance with any provision may be waived with the consent of
the Holders of a majority in aggregate principal amount at maturity of the
outstanding Securities. Without notice to or the consent of any Holder, the
Company, the Guarantors and the Trustee may amend or supplement the Indenture or
the Securities to cure any ambiguity, defect or inconsistency, or to make any
change that does not adversely affect the rights of any Holder of Securities.
<PAGE>
-6-
13. Restrictive Covenants.
---------------------
The Indenture restricts, among other things, the ability of
the Company or any Restricted Subsidiary to permit any Liens to be imposed on
their assets, to make certain Restricted Payments and Investments, limits the
Indebtedness which the Company or any Restricted Subsidiary may incur and limits
the terms on which the Company may engage in certain Asset Dispositions. The
Company is also obligated under certain circumstances to make an offer to
purchase Securities with the net cash proceeds of certain Asset Dispositions.
The Company must report quarterly to the Trustee on compliance with the
covenants in the Indenture.
14. Successor Corporation.
---------------------
Pursuant to the Indenture, the ability of the Company to
consolidate with, merge with or into or transfer its assets to another person is
conditioned upon certain requirements, including certain financial requirements
applicable to the surviving Person.
15. Defaults and Remedies.
---------------------
If an Event of Default shall occur and be continuing, the
Accreted Value of or principal of all of the outstanding Securities, plus all
accrued and unpaid interest, if any, to the date the Securities become due and
payable, may be declared due and payable in the manner and with the effect
provided in the Indenture.
16. Trustee Dealings with Company.
-----------------------------
The Trustee in its individual or any other capacity, may
become the owner or pledgee of Securities and 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 Trustee.
17. No Recourse Against Others.
--------------------------
No director, officer, employee or stockholder, as such, of the
Company or any of its Subsidiaries shall have any liability for any obligations
of the Company or any Guarantor under the Securities, the Guarantee or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder of a Security by accepting a Security
waives and releases all such liability. The waiver
<PAGE>
-7-
and release are part of the consideration for the issue of the Securities.
18. Authentication.
--------------
This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
19. Abbreviations.
-------------
Customary abbreviations may be used in the name of
Securityholder 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).
20. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
21. Governing Law.
-------------
The laws of the State of New York shall govern the Indenture,
this Security and the Guarantee without regard to principles of conflicts of
law.
The Company will furnish to any Holder of record of Securities
upon written request and without charge a copy of the Indenture.
<PAGE>
[FORM OF NOTATION ON SECURITY RELATING TO GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
The Guarantor(s) (as defined in the Indenture referred to in the
Security upon which this notation is endorsed) hereby, jointly and severally,
unconditionally guarantee on a senior subordinated basis (such guarantee by each
Guarantor being referred to herein as the "Guarantee") the due and punctual
payment of the Accreted Value or the principal of, premium, if any, and interest
on the Securities, whether at maturity, by acceleration or otherwise, the due
and punctual payment of interest on the overdue Accreted Value or the principal,
premium and interest, if any, on the Securities, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee, all in accordance with the terms set forth in Article Eleven of the
Indenture.
The obligations of each Guarantor to the Holders of Securities and to
the Trustee pursuant to the Guarantee and the Indenture are expressly set forth,
and are expressly subordinated and subject in right of payment to the prior
payment in full of all Senior Debt of such Guarantor, to the extent and in the
manner provided, in Article Twelve of the Indenture, and reference is hereby
made to such Indenture for the precise terms of the Guarantee therein made.
The Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Securities upon which the Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflicts of
law.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
[GUARANTORS]
By: _________________________________
Name:
Title:
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Security to:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID 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.
Dated: ________________ Signed: _________________________________________
(Sign exactly as
name appears on the
other side of this
Security)
Signature Guarantee: __________________________________________________________
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you the Holder want to elect to have this Security purchased by the Company,
check the box: [_]
If you want to elect to have only part of this Security purchased by the
Company, state the aggregate principal amount at maturity: $
Dated: ___________ Your signature: ____________________________________
(Sign exactly as
name appears on the
other side of this
Security)
Signature Guarantee: _________________________________________________________
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
TRITON PCS, INC.
101 Lindenwood Drive, Suite 125
Malvern, Pennsylvania 19355
Attention: Chief Executive Officer
[Name and Address of Registrar]
Re: 11% Senior Subordinated Discount Notes due 2008
Reference is hereby made to the Indenture, dated as of May 4, 1998
the "Indenture"), between Triton PCS, Inc. (the "Company") and PNC Bank,
---------
National Association, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
________________, (the "Transferor") owns and proposes to transfer the
----------
Security[s] specified in Annex A hereto in the principal amount at maturity of
$___ in such Security[s] (the "Transfer"), to ________ (the "Transferee"), as
-------- ----------
further specified in Annex A hereto. In the event that Transferor holds
Physical Securities, this Certificate is accompanied by one or more certificates
aggregating at least the principal amount at maturity of Securities proposed to
be Transferred. In connection with the Transfer, the Transferor hereby
certifies that:
1. [_] Check if Transferee will take an Interest in the 144A Global Security.
--------------------------------------------------------------------
The Transfer is being effected pursuant to and in accordance with Rule 144A
under the United States Securities Act of 1933, as amended (the "Securities
----------
Act"), and, accordingly, the Transferor hereby further certifies that the
- ---
Securities are being transferred to a Person that the Transferor reasonably
believes is purchasing the Securities for its own account, or for one or more
accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A in a transaction meeting the requirements of
Rule 144A and such Transfer is in compliance with any applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the transferred
Security will be subject to the restrictions on transfer enumerated in the
Securities Act Legend and in the Indenture and the Securities Act.
<PAGE>
-2-
2. [_] Check if Transferee will take an Interest in the Regulation S Global
--------------------------------------------------------------------
Security pursuant to Regulation S. The Transfer is being effected pursuant to
- ---------------------------------
and in accordance with Rule 904 under the Securities Act and, accordingly, the
Transferor hereby further certifies that (i) the Transfer is not being made to a
person in the United States and (x) at the time the buy order was originated,
the Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 904(b) of Regulation
S under the Securities Act and (iii) the transaction is not part of a plan or
scheme to evade the registration requirements of the Securities Act. Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the Security will be subject to the restrictions on Transfer
enumerated in the Securities Act Legend printed on the Regulation S Global
Security and in the Indenture and the Securities Act.
3. [_] Check and complete if Transferee will take delivery of a Restricted
-------------------------------------------------------------------
Physical Security pursuant to Rule 144A or Regulation S. One or more of the
- -------------------------------------------------------
events specified in Section 2.06(a) of the Indenture have occurred and the
Transfer is being effected in compliance with the transfer restrictions
applicable to Securities bearing the Securities Act Legend and pursuant to and
in accordance with the Securities Act, and accordingly the Transferor hereby
further certifies that (check one):
(a) [_] such Transfer is being effected pursuant to and in
accordance with Rule 144A under the Securities Act and the Transferor certifies
to the effect set forth in paragraph 1 above; or
(b) [_] such Transfer is being effected pursuant to and in
accordance with Rule 904 under the Securities Act and the Transferor certifies
to the effect set forth in paragraph 2 above.
4. [_] Check if Transferee will take an Interest in the Unrestricted Global
--------------------------------------------------------------------
Security. The Transfer is being effected pursuant to and in accordance with Rule
- --------
144 under the Securities Act and in compliance with the transfer restrictions
con-
<PAGE>
-3-
tained in the Indenture, and the restrictions on transfer contained in the
Indenture and the Securities Act Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred Securities will
no longer be subject to the restrictions on transfer enumerated in the
Securities Act Legend and in the Indenture and the Securities Act.
5. [_] Check if Transferee will take an Interest in the Physical Global
----------------------------------------------------------------
Security that does not bear the Securities Act Legend One or more of the events
- -----------------------------------------------------
specified in Section 2.06(a) of the Indenture have occurred and the Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture,
and the restrictions on transfer contained in the Indenture and the Securities
Act Legend are not required in order to maintain compliance with the Securities
Act. Upon consummation of the proposed Transfer in accordance with the terms of
the Indenture, the transferred Securities will no longer be subject to the
restrictions on transfer enumerated in the Securities Act Legend and in the
Indenture and the Securities Act.
<PAGE>
-4-
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuers.
___________________________
[Insert Name of Transferor]
By: ___________________________
Name:
Title:
Dated: _________________
<PAGE>
FORM OF ANNEX A TO CERTIFICATE
OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [_] Interests in the
(i) [_] 144A Global Security (CUSIP _____), or
(ii) [_] Regulation S Global Security (CINS _____).
(b) [_] Physical Security.
2. That the Transferee will hold:
[CHECK ONE]
(a) [_] Interests in the:
(i) [_] 144A Global Security (CUSIP _____), or
(ii) [_] Regulation S Global Security (CINS _____), or
(iii) [_] Unrestricted Global Security (CUSIP _____); or
(b) [_] Physical Securities that bear the Securities Act Legend;
(c) [_] Physical Securities that do not bear the Securities Act
Legend;
in accordance with the terms of the Indenture.
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
TRITON PCS, INC.
101 Lindenwood Drive, Suite 125
Malvern, Pennsylvania 19355
Attention:
[Name and Address of Registrar]
Re: 11% Senior Subordinated Discount Notes due 2008
(CUSIP _______________)
Reference is hereby made to the Indenture, dated as of May 4, 1998
(the "Indenture"), between Triton PCS, Inc. (the "Company") and PNC Bank,
---------
National Association, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
__________, (the "Holder") owns and proposes to exchange the
------
Security[s] specified herein, in the principal amount at maturity of $___ in
such Security[s] (the "Exchange"). In the event Holder holds Physical
--------
Securities, this Certificate is accompanied by one or more certificates
aggregating at least the principal amount at maturity of Securities proposed to
be Exchanged. In connection with the Exchange, the Holder hereby certifies that:
1. Exchange of Restricted Physical Securities or Interests in the Initial
Global Security for Physical Securities that do not bear the Securities Act
Legend or Unrestricted Global Securities
(a) [_] Check if Exchange is from Initial Global Securities to the
----------------------------------------------------------
Unrestricted Global Security. In connection with the Exchange of the Holder's
- ----------------------------
Initial Global Security to the Unrestricted Global Security in an equal
principal amount at maturity, the Holder hereby certifies (i) the Unrestricted
Global Securities are being acquired for the Holder's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Initial Global Securities and pursuant to and in
accordance with the Securities Act of 1933, as amended (the "Securities Act")
and (iii) the restrictions on transfer contained in the
<PAGE>
-2-
Indenture and the Securities Act Legend are not required in order to maintain
compliance with the Securities Act.
(b) [_] Check if Exchange is from Restricted Physical Securities to an
--------------------------------------------------------------
Interest in the Unrestricted Global Security. In connection with the Holder's
- --------------------------------------------
Exchange of Restricted Physical Securities for Interest in the Unrestricted
Global Security, (i) the Interest in the Unrestricted Global Security are being
acquired for the Holder's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Physical Securities and pursuant to and in accordance with the
Securities Act and (iii) the restrictions on transfer contained in the Indenture
and the Securities Act Legend are not required in order to maintain compliance
with the Securities Act.
(c) [_] Check if Exchange is from Restricted Physical Securities to
-----------------------------------------------------------
Physical Securities that do not bear the Securities Act Legend. In connection
- --------------------------------------------------------------
with the Holder's Exchange of a Restricted Physical Security for Physical
Securities that do not bear the Securities Act Legend, the Holder hereby
certifies (i) the Physical Securities that do not bear the Securities Act Legend
are being acquired for the Holder's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Physical Securities and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Securities Act Legend are not required in order to maintain
compliance with the Securities Act and (iv) one or more of the events specified
in Section 2.06(a) of the Indenture have occurred.
2. [_] Check if Exchange is from Restricted Physical Securities to Interests
---------------------------------------------------------------------
in an Initial Global Security. In connection with the Exchange of the Holder's
- -----------------------------
Restricted Physical Security for interests in an Initial Global Security [[CHECK
ONE] 144A Global Security, Regulation S Global Security], with an equal
principal amount, (i) the interests in the Initial Global Security are being
acquired for the Holder's own account without transfer and (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Restricted Physical Security and pursuant to and in accordance with the
Securities Act. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Initial Global Security issued will be subject
to the restrictions on transfer enumerated in the Securities Act Legend printed
on the Initial Global Securities and in the Indenture and the Securities Act.
<PAGE>
-3-
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuers.
________________________________________
[Insert Name of Holder]
By: ____________________________________
Name:
Title:
Dated: __________________
<PAGE>
EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
Dated as of May 4, 1998
among
TRITON PCS, INC.,
THE GUARANTORS NAMED HEREIN
and
J.P. MORGAN SECURITIES INC.,
CHASE SECURITIES INC.
and
LEHMAN BROTHERS INC.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated as of
May 4, 1998, by and among TRITON PCS, INC., a corporation formed under the laws
of the State of Delaware (the "Company"), the subsidiaries of the Company listed
on the signature pages hereof (the "Guarantors" and, together with the Company,
the "Issuers"), and J.P. MORGAN SECURITIES INC., CHASE SECURITIES INC. and
LEHMAN BROTHERS INC. (collectively, the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of April 29, 1998, among the Company, the Guarantors and the
Initial Purchasers (the "Purchase Agreement") relating to the sale by the
Company to the Initial Purchasers of $511,989,000 aggregate principal amount at
maturity of its 11% Senior Subordinated Discount Notes due 2008 (the "Notes")
and the issuance by the Guarantors to the Initial Purchasers of guarantees (the
"Guarantees" and together with the Notes, the "Securities"). In order to induce
the Initial Purchasers to enter into the Purchase Agreement, the Issuers have
agreed to provide the registration rights set forth in this Agreement for the
benefit of the Initial Purchasers (including any Initial Purchaser in its
capacity as a Market Maker) and their direct and indirect transferees. The
execution and delivery of this Agreement is a condition to the Initial
Purchasers' obligation to purchase the Securities under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4.
-------------------
Advice: See Section 5.
------
Applicable Period: See Section 2(b).
-----------------
Blocking Notice: Written notice from the Company that (i) an
---------------
amendment or supplement to any Registration Statement (including an amendment or
supplement required by Section 11 hereof), or a distribution of Registrable
Securities under a Shelf Registration Statement, as applicable, would require
<PAGE>
-2-
the public disclosure of material non-public information concerning any
transaction or negotiation involving the Company or any of its affiliates that,
in the Company's judgment, exercised reasonably and in good faith, would
materially interfere with such transaction or negotiations, or (ii) such
amendment or supplement would otherwise require premature disclosure of non-
public information that, in the Company's judgment, exercised reasonably and in
good faith, would adversely affect or otherwise be detrimental to the Company.
Blocking Period: The period of time beginning with the date of
---------------
receipt by the Holders of a Blocking Notice and ending on the earliest to occur
of (x) 30 days from the date of receipt by the Holders of a Blocking Notice, (y)
the date upon which the transactions or negotiations that are the subject of the
Blocking Notice have been publicly disclosed or terminated and (z) the receipt
by the Holders of a Blocking Termination Notice.
Blocking Termination Notice: See the last paragraph of Section 5
---------------------------
hereof.
Chase: Chase Securities Inc.
-----
Closing Date: The Closing Date as defined in the Purchase Agreement.
------------
Company: See the introductory paragraph to this Agreement.
-------
Consummation Date: The 180th day after the Closing Date.
-----------------
Effectiveness Date: The 150th day after the Closing Date.
------------------
Effectiveness Period: See Section 3(a).
--------------------
Event Date: See Section 4(b).
----------
Exchange Act: The Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2(a).
--------------
Exchange Registration Statement: See Section 2(a).
-------------------------------
<PAGE>
-3-
Exchange Securities: See Section 2(a).
-------------------
Filing Date: The 90th day after the Closing Date.
-----------
Guarantors: See the introductory paragraph to this Agreement.
----------
Holder: Any record holder of Registrable Securities and each Market
------
Maker holding Securities, Exchange Securities or Private Exchange Securities
from time to time.
Indemnified Person: See Section 7.
------------------
Indemnifying Person: See Section 7.
-------------------
Indenture: The Indenture, dated as of May 4, 1998, among the Company,
---------
the Guarantors and PNC Bank, National Association, as trustee, pursuant to which
the Securities are being issued, as amended or supplemented from time to time in
accordance with the terms thereof.
Initial Purchasers: See the introductory paragraph to this Agreement.
------------------
Initial Shelf Registration: See Section 3(a).
--------------------------
Inspectors: See Section 5(p).
----------
Issue Date: The original issue date of the Securities.
----------
Issuers: See the introductory paragraph to this Agreement.
-------
JPMS: J.P. Morgan Securities Inc.
----
Market Makers: See Section 11(a).
-------------
Market Making: See Section 11(j).
-------------
Market Maker Termination Notice: See Section 11(j).
-------------------------------
NASD: See Section 5(t).
----
Notes: See the preamble to this Agreement.
-----
Participant: See Section 7.
-----------
<PAGE>
-4-
Participating Broker-Dealer: See Section 2(b).
---------------------------
Person: An individual, corporation, limited or general partnership,
------
joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
Private Exchange: See Section 2(b).
----------------
Private Exchange Securities: See Section 2(b).
---------------------------
Prospectus: The prospectus included in any Registration Statement
----------
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Securities, Exchange Securities or Private
Exchange Securities covered by such Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Records: See Section 5(p).
-------
Registrable Securities: The Securities, upon original issuance
----------------------
thereof and at all times subsequent thereto, each Exchange Security as to which
Section 2(c)(1)(i) hereof is applicable upon original issuance and at all times
subsequent thereto and, if issued, the Private Exchange Securities, until, in
the case of any such Securities, Exchange Securities or Private Exchange
Securities, as the case may be, (i) a Registration Statement (other than, with
respect to any Exchange Security as to which Section 2(c)(1)(i) hereof is
applicable, the Exchange Registration Statement) covering such Securities,
Exchange Securities or Private Exchange Securities has been declared effective
by the SEC and such Securities, Exchange Securities or Private Exchange
Securities, as the case may be, have been disposed of in accordance with such
effective Registration Statement, (ii) such Securities, Exchange Securities or
Private Exchange Securities, as the case may be, are sold in compliance with
Rule 144, or (iii) such Securities, Exchange Securities or Private Exchange
Securities, as the case may be, cease to be outstanding.
<PAGE>
-5-
Registration Statement: Any registration statement of the Issuers,
----------------------
and the Guarantors, including, but not limited to, the Exchange Registration
Statement and any registration statement required pursuant to Article 11 hereof,
that covers any of the Securities, Exchange Securities or Private Exchange
Securities pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such registration statement, including
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such
---------
Rule may be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
---
Securities: See the preamble to this Agreement.
----------
Securities Act: The Securities Act of 1933, as amended, and the
--------------
rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
------------
Shelf Registration: See Section 3(b).
------------------
Subsequent Shelf Registration: See Section 3(b).
-----------------------------
TIA: The Trust Indenture Act of 1939, as amended.
---
Trustee: The trustee as defined in the Indenture and, if existent,
-------
the trustee under any indenture governing the Exchange Securities and Private
Exchange Securities (if any).
<PAGE>
-6-
Underwritten registration or underwritten offering: A registration in
--------------------------------------------------
connection with which securities are sold to an underwriter for reoffering to
the public pursuant to an effective Registration Statement.
2. Exchange Offer
--------------
(a) Unless in the opinion of counsel for the Initial Purchasers, the
Exchange Offer shall not be permitted by applicable federal laws, the
Issuers agree to file with the SEC as soon as practicable after the Closing
Date, but in no event later than the Filing Date, an offer to exchange (the
"Exchange Offer") any and all of the Registrable Securities for a like
aggregate principal amount at maturity of debt securities of the Company
which are identical in all material respects to the Notes and guaranteed by
the Guarantors with terms identical in all material respects to the
Guarantees (the "Exchange Securities") (and which are entitled to the
benefits of a trust indenture which is identical in all material respects
to the Indenture (other than such changes as are necessary to comply with
any requirements of the SEC to effect or maintain the qualification of such
trust indenture under the TIA) and which has been qualified under the TIA),
except that the Exchange Securities shall have been registered pursuant to
an effective Registration Statement under the Securities Act and shall
contain no restrictive legend thereon. The Issuers agree to use their
commercially reasonable efforts to keep the Exchange Offer open for at
least 20 business days (or longer if required by applicable law) after the
date notice of the Exchange Offer is mailed to Holders and to consummate
the Exchange Offer on or prior to the Consummation Date. The Exchange Offer
will be registered under the Securities Act on the appropriate form (the
"Exchange Registration Statement") and will comply with all applicable
tender offer rules and regulations under the Exchange Act. If after such
Exchange Registration Statement is initially declared effective by the SEC,
the Exchange Offer or the issuance of the Exchange Securities thereunder is
interfered with by any stop order, injunction or other order or requirement
of the SEC or any other governmental agency or court such Exchange
Registration Statement shall be deemed not to have become effective for
purposes of this Agreement. Each Holder who participates in the Exchange
Offer will be deemed to represent that any Exchange Securities received by
it will be acquired in the ordinary course of its business, that at the
time of the consummation of the Exchange Offer such Holder will have
<PAGE>
-7-
no arrangement or understanding with any person to participate in the
distribution of the Exchange Securities in violation of the provisions of
the Securities Act, and that such Holder is not an affiliate of the Company
within the meaning of Rule 501(b) of Regulation D under the Securities Act
and such Holder has full power and authority to exchange the Registrable
Securities in exchange for the Exchange Securities. Upon consummation of
the Exchange Offer in accordance with this Section 2, the provisions of
this Agreement shall continue to apply, mutatis, mutandis, solely with
------- --------
respect to Registrable Securities that are Private Exchange Securities and
Exchange Securities held by Participating Broker-Dealers and any Securities
held by a Market Maker, and the Issuers shall have no further obligation to
register Registrable Securities (other than Private Exchange Securities,
Securities held by a Market Maker in accordance with Section 11 hereof, and
Exchange Securities as to which clause (c)(1)(i) hereof applies) pursuant
to Section 3 of this Agreement. No securities other than the Exchange
Securities shall be included in the Exchange Registration Statement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Registration Statement one or more section(s) reasonably
acceptable to the Initial Purchaser, which shall contain a summary
statement of the positions taken or policies made by the Staff of the SEC
(which are available to the Issuers) with respect to the potential
"underwriter" status of any broker-dealer that is the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of Exchange Securities
received by such broker-dealer in the Exchange Offer (a "Participating
Broker-Dealer"), whether such positions or policies have been publicly
disseminated by the Staff of the SEC or such positions or policies, in the
reasonable judgment of the Initial Purchaser, represent the prevailing
views of the Staff of the SEC. Such section(s) shall also allow the use of
the prospectus by all persons subject to the prospectus delivery
requirements of the Securities Act, including all Participating Broker-
Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Securities.
The Issuers shall use their commercially reasonable efforts to keep
the Exchange Registration Statement effective and to amend and supplement the
Prospectus contained therein in order to permit such Prospectus to be lawfully
delivered by all persons subject to the prospectus delivery requirements of the
<PAGE>
-8-
Securities Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Securities, provided that such
--------
period shall not exceed 180 days (or such longer period if extended pursuant to
the last paragraph of Section 5) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, an Initial Purchaser
holds any Securities acquired by them and having the status of an unsold
allotment in the initial distribution or if either of the Market Makers holds
any Securities (whether acquired in market making activities or having the
status of an unsold allotment), the Issuers shall upon the request of such
Initial Purchaser, simultaneously with the delivery of the applicable Exchange
Securities in the Exchange Offer, issue and deliver to the Initial Purchaser, in
exchange (the "Private Exchange") for the Securities held by the Initial
Purchaser, a like principal amount at maturity of debt securities of the Company
that are identical in all material respects to the Exchange Securities (the
"Private Exchange Securities") (and which are issued pursuant to the same
indenture as the Exchange Securities) except for the placement of a restrictive
legend on such Private Exchange Securities. If possible, the Private Exchange
Securities shall bear the same CUSIP number as the Exchange Securities. Interest
on the Exchange Securities and Private Exchange Securities will accrue from the
last interest payment date on which interest was paid on the Notes surrendered
in exchange therefor or, if no interest has been paid on the Notes, from the
Issue Date. Accreted Value (as defined in the Indenture) will accrue on the
Exchange Securities and the Private Exchange Securities in the same manner as
the Securities.
Any indenture under which the Exchange Securities or the Private
Exchange Securities will be issued shall provide that the holders of any of the
Exchange Securities and the Private Exchange Securities will vote and consent
together on all matters (to which such holders are entitled to vote or consent)
as one class and that none of the holders of the Exchange Securities and the
Private Exchange Securities will have the right to vote or consent as a separate
class on any matter (to which such holders are entitled to vote or consent).
(c) If (1) prior to the consummation of the Exchange Offer, the
Company reasonably determines in good faith or Holders of at least a
majority in aggregate principal amount at maturity of the Registrable
Securities notify the Company that they have reasonably determined in good
faith that (i) in the opinion of counsel, the Exchange Se-
<PAGE>
-9-
curities would not, upon receipt, be tradable by such Holders who are not
affiliates of the Company without restriction under the Securities Act and
without restrictions under applicable blue sky or state securities laws or
(ii) in the opinion of counsel, the SEC is unlikely to permit the
consummation of the Exchange Offer and/or (2) subsequent to the
consummation of the Private Exchange, holders of at least a majority in
aggregate principal amount at maturity of the Private Exchange Securities
so request with respect to the Private Exchange Securities and/or (3) the
Exchange Offer is commenced and not consummated prior to the 45th day
following the Consummation Date for any reason, then the Company shall
promptly deliver to the Holders and the Trustee notice thereof (the "Shelf
Notice") and shall thereafter file an Initial Shelf Registration as set
forth in Section 3 (which only in the circumstances contemplated by clause
(2) of this sentence will relate solely to the Private Exchange Securities)
pursuant to Section 3. The parties hereto agree that, following the
delivery of a Shelf Notice to the Holders of Registrable Securities (only
in the circumstances contemplated by clauses (1) and/or (3) of the
preceding sentence), the Issuers shall not have any further obligation to
conduct the Exchange Offer or the Private Exchange under this Section 2.
3. Shelf Registration
------------------
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) Initial Shelf Registration. The Issuers shall as promptly as
--------------------------
reasonably practicable prepare and file with the SEC a Registration
Statement for an offering to be made on a continuous basis pursuant to Rule
415 covering all of the Registrable Securities (the "Initial Shelf
Registration"). If the Issuers shall have not yet filed an Exchange Offer,
the Issuers shall use their commercially reasonable efforts to file with
the SEC the Initial Shelf Registration on or prior to the Filing Date.
Otherwise, the Issuers shall use their commercially reasonable efforts to
file with the SEC the Initial Shelf Registration within 45 days of the
delivery of the Shelf Notice. The Initial Shelf Registration shall be on
Form S-1 or another appropriate form permitting registration of such
Registrable Securities for resale by such holders in the manner or manners
designated by them (including, without limitation, one or more underwritten
offerings). The Is-
<PAGE>
-10-
suers shall not permit any securities other than the Registrable Securities
to be included in the Initial Shelf Registration or any Subsequent Shelf
Registration. The Issuers shall use their commercially reasonable efforts
to cause the Initial Shelf Registration to be declared effective under the
Securities Act on or prior to the 60th day after the filing thereof with
the Commission and to keep the Initial Shelf Registration continuously
effective under the Securities Act until the date on which the Securities
are no longer "restricted securities" (within the meaning of Rule 144 under
the Act) (subject to extension pursuant to the last paragraph of Section 5
hereof) (the "Effectiveness Period"), or such shorter period ending when
(i) all Registrable Securities covered by the Initial Shelf Registration
have been sold in the manner set forth and as contemplated in the Initial
Shelf Registration or (ii) a Subsequent Shelf Registration covering all of
the Registrable Securities has been declared effective under the Securities
Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf
------------------------------
Registration or any Subsequent Shelf Registration ceases to be effective
for any reason at any time during the Effectiveness Period (other than
because of the sale of all of the securities registered thereunder), the
Issuers shall use their commercially reasonable efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof, and in
any event shall within 45 days of such cessation of effectiveness amend the
Shelf Registration in a manner reasonably expected to obtain the withdrawal
of the order suspending the effectiveness thereof, or file an additional
"shelf" Registration Statement pursuant to Rule 415 covering all of the
Registrable Securities (a "Subsequent Shelf Registration"). If a Subsequent
Shelf Registration is filed, the Issuers shall use their commercially
reasonable efforts to cause the Subsequent Shelf Registration to be
declared effective as soon as practicable after such filing and to keep
such Registration Statement continuously effective for a period equal to
the number of days in the Effectiveness Period less the aggregate number of
days during which the Initial Shelf Registration or any Subsequent Shelf
Registration was previously continuously effective. As used herein the term
"Shelf Registration" means the Initial Shelf Registration and any
Subsequent Shelf Registration.
(c) Supplements and Amendments. The Issuers shall promptly
--------------------------
supplement and amend the Shelf Registration if
<PAGE>
-11-
required by the rules, regulations or instructions applicable to the
registration form used for such Shelf Registration, if required by the
Securities Act, or if reasonably requested by the Holders of a majority in
aggregate principal amount at maturity of the Registrable Securities
covered by such Registration Statement or by any underwriter of such
Registrable Securities.
(d) Provision by Holders of Certain Information in Connection with
--------------------------------------------------------------
the Self Registration Statement. No Holder of Registrable Securities may
-------------------------------
include any of its Registrable Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes
to the Company in writing, within 10 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 Registrable
Securities shall be entitled to Additional Interest 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 and not to omit any material fact.
4. Additional Interest
-------------------
(a) The Issuers and the Initial Purchasers agree that the Holders of
Registrable Securities will suffer damages if the Issuers fail to fulfill
their obligations under Section 2 or Section 3 hereof and that it would not
be feasible to ascertain the extent of such damages with precision.
Accordingly, the Issuers, jointly and severally, agree to pay, as
liquidated damages, additional interest on the Registrable Securities
("Additional Interest") under the circumstances and to the extent set forth
below (each of which shall be given independent effect and shall not be
duplicative except as otherwise provided below):
(i) if neither the Exchange Registration Statement nor the
Initial Shelf Registration has been filed on or prior to the Filing
Date, Additional Interest shall accrue on the Registrable Securities
over and above the stated interest at a rate of .25%
<PAGE>
-12-
per annum for the first 90 days immediately following the Filing Date,
such Additional Interest rate increasing by an additional .25% per
annum at the beginning of each subsequent 90-day period;
(ii) if neither the Exchange Registration Statement nor the
Initial Shelf Registration is declared effective by the SEC on or
prior to the Effectiveness Date, Additional Interest shall accrue on
the Registrable Securities included or which should have been included
in such Registration Statement over and above the stated interest at a
rate of .25% per annum for the first 90 days immediately following the
day after the Effectiveness Date, such Additional Interest rate
increasing by an additional .25% per annum at the beginning of each
subsequent 90-day period; and
(iii) if (A) the Company has not exchanged Exchange Securities
for all Securities validly tendered in accordance with the terms of
the Exchange Offer on or prior to the Consummation Date or (B) the
Exchange Registration Statement ceases to be effective at any time
prior to the time that the Exchange Offer is consummated or (C) if
applicable, the Shelf Registration has been declared effective and
such Shelf Registration ceases to be effective at any time during the
Effectiveness Period, then Additional Interest shall accrue on the
Registrable Securities (over and above the stated interest rate
otherwise payable on the Registrable Securities) at a rate of .25% per
annum for the first 90 days commencing on the (x) 151st day after the
Issue Date, in the case of (A) above, or (y) the day the Exchange
Registration Statement ceases to be effective in the case of (B)
above, or (z) the day such Shelf Registration ceases to be effective
in the case of (C) above, such Additional Interest rate increasing by
an additional .25% per annum at the beginning of each such subsequent
90-day period;
provided, however, that the Additional Interest rate on the Registrable
- -------- -------
Securities may not exceed at any one time in the aggregate 1.0% per annum; and
provided, further, that (1) upon the filing of the Exchange Registration
- -------- -------
Statement or a Shelf Registration as required hereunder (in the case of clause
(i) of this Section 4), (2) upon the effectiveness of the Exchange Registration
Statement or the Shelf Registration as required
<PAGE>
-13-
hereunder (in the case of clause (ii) of this Section 4), or (3) upon the
exchange of Exchange Securities for all Notes tendered (in the case of clause
(iii)(A) of this Section 4), or upon the effectiveness of the Exchange
Registration Statement which had ceased to remain effective (in the case of
(iii)(B) of this Section 4), or upon the effectiveness of the Shelf Registration
which had ceased to remain effective (in the case of (iii)(C) of this Section
4), Additional Interest on the Registrable Securities as a result of such clause
(or the relevant subclause thereof), as the case may be, shall cease to accrue.
It is understood and agreed that, notwithstanding any provision to the contrary,
so long as any Registrable Security is then covered by an effective Shelf
Registration Statement (regardless of whether a Blocking Period is in effect),
no Additional Interest shall accrue on such Registrable Security.
(b) The Company shall notify the Trustee within one business day
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). The Issuers
shall pay the Additional Interest due on the Registrable Securities by
depositing with the Trustee, in trust, for the benefit of the Holders
thereof, on or before the applicable semi-annual interest payment date,
immediately available funds in sums sufficient to pay the Additional
Interest then due to Holders of Registrable Securities. The Additional
Interest amount due shall be payable on each such date to the record Holder
of Registrable Securities on the April 15 or October 15, as the case may
be, immediately preceding such semi-annual interest payment date (or the
calendar date which would be a semi-annual interest payment date if cash
interest were then payable on the Registrable Securities). The amount of
Additional Interest will be determined by multiplying the applicable
Additional Interest rate by the principal amount at maturity of the
affected Registrable Securities of such Holders, multiplied by a fraction,
the numerator of which is the number of days such Additional Interest rate
was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months and, in the case of a partial month,
the actual number of days elapsed including the first day but excluding the
last day of such period), and, the denominator of which is 360. Each
obligation to pay Additional Interest shall be deemed to accrue immediately
following the occurrence of the applicable Event Date. The parties hereto
agree that the Additional Interest provided for in this Section 4
constitutes a reasonable estimate of the damages that may be incurred
<PAGE>
-14-
by Holders of Registrable Securities by reason of the failure of a Shelf
Registration or Exchange Offer to be filed or declared effective, an
Exchange Offer to be consummated or a Shelf Registration to remain
effective, as the case may be, in accordance with this Section 4.
5. Registration Procedures
-----------------------
In connection with the registration of any Registrable Securities
pursuant to Sections 2 or 3 hereof and the sale of Exchange Securities from time
to time by the Market Makers, the Issuers shall effect such registrations to
permit the sale of Registrable Securities, and in accordance with Section 11 the
sale by the Market Makers of Exchange Securities in accordance with the intended
method or methods of disposition thereof, and pursuant thereto the Issuers
shall:
(a) Use their commercially reasonable efforts to prepare and file
with the SEC, as soon as practicable after the date hereof but in any event
prior to the Filing Date in the case of the Exchange Registration Statement
and the 45th day following the Consummation Date in the case of the Shelf
Registration Statement, a Registration Statement or Registration Statements
as prescribed by Section 2 or 3, and to use their commercially reasonable
efforts to cause each such Registration Statement to become effective and
remain effective as provided herein, provided that, if (1) such filing is
--------
pursuant to Section 3, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is required to be
delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Securities during the Applicable Period, before
filing any Registration Statement or Prospectus or any amendments or
supplements thereto, the Issuers shall upon written request furnish to and
afford the Holders of the Registrable Securities (which in the case of
Registrable Securities in the form of global certificates shall be The
Depository Trust Company ("DTC")) and each such Participating Broker-
Dealer, as the case may be, covered by such Registration Statement, their
counsel and the managing underwriters, if any, a reasonable opportunity to
review copies of all such documents (including copies of any documents to
be incorporated by reference therein and all exhibits thereto) proposed to
be filed.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration
<PAGE>
-15-
or Exchange Registration Statement, as the case may be, as may be necessary
to keep such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period, as the case may be; 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, the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to it with respect
to the disposition of all securities covered by such Registration Statement
as so amended or in such Prospectus as so supplemented and with respect to
the subsequent resale of any securities being sold by a Participating
Broker-Dealer covered by any such Prospectus; the Issuers shall not be
deemed to have used their commercially reasonable efforts to keep a
Registration Statement effective during the Applicable Period if either of
them voluntarily takes any action that would result in selling Holders of
the Registrable Securities covered thereby or Participating Broker-Dealers
seeking to sell Exchange Securities not being able to sell such Registrable
Securities or such Exchange Securities during that period unless such
action is required by applicable law or unless the Issuers comply with this
Agreement, including without limitation, the provisions of paragraph 5(k)
hereof and the last paragraph of this Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Securities
during the Applicable Period, notify the selling Holders of Registrable
Securities, or each such Participating Broker-Dealer, as the case may be,
their counsel and the managing underwriters, if any, who have provided the
Issuers with their names and addresses promptly (but in any event within
two business days), and confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or any post-
effective amendment, when the same has become effective under the
Securities Act (including in such notice a written statement that any
Holder may, upon request, obtain, without charge, one conformed copy of
such Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated
<PAGE>
-16-
or deemed to be incorporated by reference and exhibits), (ii) of the
issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus or the initiation of any proceedings for that
purpose, (iii) of the receipt by the Issuers of any notification with
respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable
Securities or the Exchange Securities to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, (iv) of the happening of
any event or any information becoming known 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 necessary 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 any material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and (v) of
the Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Securities
during the Applicable Period, use their commercially reasonable efforts to
prevent the issuance of any order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of
a Prospectus or suspending the qualification (or exemption from
qualification) of any of the Registrable Securities or the Exchange
Securities to be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use their commercially
reasonable efforts to obtain the withdrawal of any such order at the
earliest possible moment.
<PAGE>
-17-
(e) If a Shelf Registration is filed pursuant to Section 3 and if
reasonably requested by the managing underwriters, if any, or the Holders
of a majority in aggregate principal amount at maturity of the Registrable
Securities being sold in connection with an underwritten offering, (i)
promptly incorporate in a prospectus supplement or post-effective amendment
such information as the managing underwriters, if any, or such Holders or
counsel reasonably request to be included therein, or (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(c) that
would, in the reasonable opinion of counsel for the Company, violate
applicable law.
(f) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Securities
during the Applicable Period, furnish to each selling Holder of Registrable
Securities and to each such Participating Broker-Dealer who so requests and
to counsel and each managing underwriter, if any, without charge, one
conformed copy of the Registration Statement or Statements and each post-
effective amendment thereto, including financial statements and schedules,
and if requested, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Securities
during the Applicable Period, deliver to each selling Holder of Registrable
Securities, or each such Participating Broker-Dealer, as the case may be,
their counsel, and the underwriters, if any, without charge, as many copies
of the Prospectus or Prospectuses (including each form of preliminary
prospectus, if requested) and each amendment or supplement thereto
(provided the manner of such use complies with all applicable federal
securities laws, the rules and regulations of the SEC and applicable state
securities "Blue Sky" laws and subject to the
<PAGE>
-18-
provisions of this Agreement) and any documents incorporated by reference
therein as such Persons may reasonably request; and, subject to the last
paragraph of this Section 5, the Issuers hereby consent to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
holders of Registrable Securities or each such Participating Broker-Dealer,
as the case may be, and the underwriters or agents, if any, and dealers (if
any), in connection with the offering and sale of the Registrable
Securities covered by or the sale by Participating Broker-Dealers of the
Exchange Securities pursuant to such Prospectus and any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable Securities or any
delivery of a Prospectus contained in the Exchange Registration Statement
by any Participating Broker-Dealer who seeks to sell Exchange Securities
during the Applicable Period, to use their commercially reasonable efforts
to register or qualify, and to cooperate with the selling Holders of
Registrable Securities or each such Participating Broker-Dealer, as the
case may be, the underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any selling Holder, Participating Broker-Dealer, or the
managing underwriters reasonably request in writing, provided that where
--------
Exchange Securities held by Participating Broker-Dealers or Registrable
Securities are offered other than through an underwritten offering, the
Issuers agree to cause their counsel to perform Blue Sky investigations and
file registrations and qualifications required to be filed pursuant to this
Section 5(h); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is
required to be kept effective and do any and all other reasonable acts or
things necessary or advisable to enable the disposition in such
jurisdictions of the Exchange Securities held by Participating Broker-
Dealers or the Registrable Securities covered by the applicable
Registration Statement, provided that neither of the Issuers shall be
--------
required to (A) qualify generally to do business in any jurisdiction where
it is not then so qualified, (B) take any action that would subject it to
general service of process in any such jurisdiction where it is not then so
subject or (C) subject itself to
<PAGE>
-19-
taxation in excess of a nominal dollar amount in any such jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section 3,
reasonably cooperate with the selling Holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold,
which certificates shall not bear any restrictive legends and shall be in a
form eligible for deposit with DTC; and enable such Registrable Securities
to be registered in such names as the managing underwriter or underwriters,
if any, or Holders may request at least two business days prior to any sale
of Registrable Securities.
(j) Use their commercially reasonable efforts to cause the
Registrable Securities covered by the Registration Statement to be
registered with or approved by such other United States governmental
agencies or authorities of the United States as may be necessary to enable
the seller or sellers thereof or the underwriters, if any, to consummate
the disposition of such Registrable Securities, except as may be required
solely as a consequence of the nature of such selling Holder's business, in
which case the Issuers will cooperate in all reasonable respects with the
filing of such Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Securities
during the Applicable Period, upon the occurrence of any event contemplated
by paragraph 5(c)(iv) or 5(c)(v) above, as promptly as practicable prepare
and (subject to Section 5(a) above) file with the SEC, solely at the
expense of the Issuers, a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities being sold thereunder or to the
purchasers of the Exchange Securities to whom such Prospectus will be
delivered by a Participating Broker-Dealer, any such Prospectus will not
contain an untrue statement of a material fact or omit to state a material
fact required to be
<PAGE>
-20-
stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(l) Use their commercially reasonable efforts to cause the
Registrable Securities covered by a Registration Statement or the Exchange
Securities, as the case may be, to be rated, or, if previously rated,
updated, with the appropriate rating agencies, if so requested by the
Holders of a majority in aggregate principal amount at maturity of
Registrable Securities covered by such Registration Statement or the
Exchange Securities, as the case may be, or the managing underwriters, if
any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Securities, (i) provide the Trustee with
printed certificates for the Registrable Securities in a form eligible for
deposit with DTC and (ii) provide a CUSIP number for the Registrable
Securities.
(n) Use their best efforts to cause all Registrable Securities
covered by such Registration Statement or the Exchange Securities, as the
case may be, to be (i) listed on each securities exchange, if any, on which
similar securities issued by either of the Issuers are then listed, or (ii)
authorized to be quoted on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or the National Market System of
NASDAQ if similar securities of the Issuers are so authorized.
(o) In connection with an underwritten offering of Registrable
Securities pursuant to a Shelf Registration, enter into an underwriting
agreement as is customary in underwritten offerings and take all such other
actions as are reasonably requested by the managing underwriters in order
to expedite or facilitate the registration or the disposition of such
Registrable Securities, and in such connection, (i) make such
representations and warranties to the underwriters, with respect to the
business of the Company and its subsidiaries, if any, and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made by
issuers to underwriters in underwritten offerings, and confirm the same if
and when reasonably requested; (ii) obtain an opinion of counsel to the
Issuers and updates thereof in form and substance reasonably satisfactory
to the manag-
<PAGE>
-21-
ing underwriters (if any), addressed to the underwriters covering the
matters customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by underwriters;
(iii) obtain "cold comfort" letters and updates thereof in form and
substance reasonably satisfactory to the managing underwriters from the
independent certified public accountants of the Company (and, if necessary,
any other independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as may be reasonably
requested by underwriters; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures no
less favorable than those set forth in Section 7 hereof (or such other
provisions and procedures acceptable to Holders of a majority in aggregate
principal amount at maturity of Registrable Securities covered by such
Registration Statement and the managing underwriters or agents) with
respect to all parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting agreement, or
as and to the extent required thereunder.
(p) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Securities
during the Applicable Period, make available for inspection by any selling
Holder of such Registrable Securities being sold, or each such
Participating Broker-Dealer, as the case may be, any underwriter
participating in any such disposition of Registrable Securities, if any,
and any attorney, accountant or other agent retained by any such selling
holder or each such Participating Broker-Dealer, as the case may be, or
underwriter (collectively, the "Inspectors"), 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, if any (collectively, the "Records"), as shall be reasonably
necessary to enable them to exercise any applicable due dili-
<PAGE>
-22-
gence responsibilities, and cause the officers, directors and employees of
the Company and its subsidiaries, if any to supply all information in each
case reasonably requested by any such Inspector in connection with such
Registration Statement, as shall be reasonably necessary to enable the
Inspectors to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; provided, however, that the foregoing
inspection and information gathering shall be coordinated on behalf of the
Initial Purchasers and such selling Holders by you and on behalf of the
other parties, by one counsel designated by and on behalf of such other
parties as described in Section 6 hereof; provided, further, that Records
designated, in good faith, by the Company as confidential at the time of
delivery shall be kept confidential by the Inspectors, unless (i) the
disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such Registration Statement, (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or (iii) the information in such Records has been
made generally available to the public. Each selling Holder of such
Registrable Securities and each such Participating Broker-Dealer will be
required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Issuers unless
and until such is made generally available to the public. Each selling
Holder of such Registrable Securities and each such Participating Broker-
Dealer will be required to further agree that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction,
give notice to the Company and allow the Company at its expense to
undertake appropriate action to prevent disclosure of the Records deemed
confidential.
(q) Provide an indenture trustee for the Registrable Securities or
the Exchange Securities, as the case may be, and cause the Indenture or the
trust indenture provided for in Section 2(a), as the case may be, to be
qualified under the TIA not later than the effective date of the Exchange
Offer or the first Registration Statement relating to the Registrable
Securities; and in connection therewith, cooperate with the trustee under
any such indenture and the holders of the Registrable Securities, to effect
such changes to such indenture as may be required for such indenture to be
so qualified in accordance with the terms of the TIA; and execute, and use
their commercially rea-
<PAGE>
-23-
sonable efforts to cause such trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents required
to be filed with the SEC to enable such indenture to be so qualified in a
timely manner.
(r) Comply in all material respects 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 90 days after the end
of any 12-month period (i) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a firm commitment
or best efforts underwritten offering and (ii) if not sold to underwriters
in such an offering, commencing on the first day of the first fiscal
quarter of the Company after the effective date of a Shelf Registration
Statement, which statements shall cover said 12-month periods.
(s) If an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Securities by Holders to the Company (or
to such other Person as directed by the Company) in exchange for the
Exchange Securities or the Private Exchange Securities, as the case may be,
the Company shall mark, or caused to be marked, on such Registrable
Securities that such Registrable Securities are being cancelled in exchange
for the Exchange Securities or the Private Exchange Securities, as the case
may be; in no event shall such Registrable Securities be marked as paid or
otherwise satisfied.
(t) Reasonably cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD").
(u) Use their commercially reasonable efforts to take all other steps
necessary to effect the registration of the Registrable Securities covered
by a Registration Statement contemplated hereby.
(v) Upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Company
<PAGE>
-24-
and the Guarantor, in a form customary for underwritten offerings of debt
securities similar to the Securities, addressed to the Trustee solely for
the benefit of the Trustee, and not for the benefit of Holders of
Registrable Securities participating in the Exchange Offer or the Private
Exchange, as the case may be, and which includes an opinion that (i) each
of the Company and the Guarantors has duly authorized, executed and
delivered the Exchange Securities and Private Exchange Securities and the
related indenture and (ii) each of the Exchange Securities or the Private
Exchange Securities, as the case may be, and related indenture constitute a
legal, valid and binding obligation of each of the Company and the
Guarantors, enforceable against each of the Company and the Guarantors in
accordance with its respective terms (with customary exceptions).
The Issuers may require each seller of Registrable Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuers such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Securities or Exchange
Securities to be sold by such Participating Broker-Dealer, as the case may be,
as the Issuers may, from time to time, reasonably request. The Issuers may
exclude from such registration the Registrable Securities of any seller or
Participating Broker-Dealer who unreasonably fails to furnish such information
within a reasonable time after receiving such request. Each seller as to which
any Shelf Registration is being effected is deemed to agree to furnish promptly
to the Issuers all information required to be disclosed in order to make the
information previously furnished to the Issuers by such seller not materially
misleading.
Each Holder of Registrable Securities, each Market Maker holding
Exchange Securities, and each Participating Broker-Dealer agrees by acquisition
of such Securities to be sold by such Holder, Participating Broker-Dealer or
Market Maker, as the case may be, 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)(iv), or 5(c)(v), such Holder will forthwith discontinue
disposition of Securities or Exchange Securities covered by any such
Registration Statement or Prospectus or Exchange Securities to be sold by such
Participating Broker-Dealer, as the case may be, until such Holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
5(k), or until it is advised in writing (the "Advice") by the Company that the
use of the applicable
<PAGE>
-25-
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto. In the event the Company shall give any such notice, each
of the Effectiveness Period and the Applicable Period shall be extended by the
number of days during such periods from and including the date of the giving of
such notice to and including the date when each seller of Registrable Securities
covered by such Registration Statement or Exchange Securities to be sold by such
Participating Broker-Dealer, as the case may be, shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 5(k) or
(y) the Advice. Each Holder of Registrable Securities, each Participating
Broker-Dealer and each Market Maker, further agrees, by acquisition of such
Securities, Registrable Securities or Exchange Securities to be sold by such
Holder, Participating Broker-Dealer or Market-Maker, as the case may be, that
upon receipt of a Blocking Notice from the Company, such Holder, Participating
Broker-Dealer or Market Maker will forthwith discontinue disposition of such
Securities, Registrable Securities, or Exchange Securities, as the case may be,
during the Blocking Period. In no event may a Blocking Notice be delivered prior
to the consummation of the Exchange Offer and, thereafter, only one Blocking
Notice may be delivered pursuant to this Agreement during any period of 180
consecutive days. The Company shall promptly send each Holder, Participating
Broker-Dealer or Market Maker, as applicable, written notice (a "Blocking
Termination Notice"), at the earliest possible time that they determine, in good
faith that, (x) the transaction or negotiations that are subject to such
Blocking Notice have been publicly disclosed, (y) such non-public information
has been publicly disclosed, or (z) counsel to the Company has determined that
such disclosure is not required due to subsequent events.
6. Registration Expenses
---------------------
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Issuers shall be borne by the
Issuers, jointly and severally, whether or not the Exchange Offer or a
Shelf Registration is filed or becomes effective, including, without
limitation, (i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the
NASD in connection with an underwritten offering and (B) fees and expenses
of compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with
Blue Sky qualifications of the Registrable Securities or Exchange
Securities and determi-
<PAGE>
-26-
nation of the eligibility of the Registrable Securities or Exchange
Securities for investment under the laws of such jurisdictions in the
United States (x) where the holders of Registrable Securities are located,
in the case of the Exchange Securities, or (y) as provided in Section 5(h),
in the case of Registrable Securities or Exchange Securities to be sold by
a Participating Broker-Dealer during the Applicable Period)), (ii)
reasonable printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities or Exchange Securities in
a form eligible for deposit with DTC and of printing prospectuses if the
printing of prospectuses is requested by the managing underwriters, if any,
or, in respect of Registrable Securities or Exchange Securities to be sold
by any Participating Broker-Dealer during the Applicable Period, by the
Holders of a majority in aggregate principal amount at maturity of the
Registrable Securities included in any Registration Statement or of such
Exchange Securities, as the case may be), (iii) messenger, telephone and
delivery expenses, (iv) reasonable fees and disbursements of counsel for
the Issuers and fees and disbursements of special counsel for the sellers
of Registrable Securities (subject to the provisions of Section 6(b)), (v)
reasonable fees and disbursements of all independent certified public
accountants referred to in Section 5(o)(iii) (including, without
limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) rating agency fees,
(vii) Securities Act liability insurance, if the Issuers desire such
insurance, (viii) reasonable fees and expenses of all other Persons
retained by either of the Issuers, (ix) internal expenses of the Issuers
(including, without limitation, all salaries and expenses of officers and
employees of the Issuers performing legal or accounting duties), (x) the
expense of any annual audit, (xi) the fees and expenses incurred in
connection with the listing of the securities to be registered on any
securities exchange, if applicable, (xii) the reasonable expenses relating
to printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any
other documents necessary in order to comply with this Agreement, (xiii)
reasonable fees and expenses of the Trustee (including reasonable fees and
expenses of counsel to the Trustee) and (ix) as provided in Section 11.
(b) In connection with any Shelf Registration hereunder, the Issuers
shall reimburse the Holders of the Reg-
<PAGE>
-27-
istrable Securities being registered in such registration for the
reasonable fees and disbursements of not more than one counsel (in addition
to appropriate local counsel) chosen by the Holders of a majority in
aggregate principal amount at maturity of the Registrable Securities to be
included in such Registration Statement. Such Holders shall be responsible
for all reasonable out-of-pocket expenses of the Holders of Registrable
Securities incurred in connection with the registration of the Registrable
Securities.
7. Indemnification
---------------
The Issuers, jointly and severally, agree to indemnify and hold
harmless (i) each Holder of Registrable Securities, (ii) each Participating
Broker-Dealer selling Exchange Securities during the Applicable Period, (iii)
each Market Maker, and the officers and directors of each such person included
in the immediately preceding clauses (i), (ii), and (iii), and each person, if
any, who controls any such person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the legal fees and other expenses incurred in connection
with any suit, action or proceeding or any claim asserted) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) or Prospectus (as amended or
supplemented if the Issuers shall have furnished any amendments or supplements
thereto) or 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 not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Participant furnished to the Company
in writing by such Participant expressly for use therein; provided that the
--------
foregoing indemnity with respect to any preliminary prospectus shall not inure
to the benefit of any Participant (or to the benefit of any person controlling
such Participant) from whom the person asserting any such losses, claims,
damages or liabilities purchased Registrable Securities or Exchange Securities
if such untrue statement or omission or alleged untrue statement or omission
made in such preliminary prospectus is completely remedied in the related
Prospectus (as amended or supplemented if the Issuers shall have furnished any
amendments or supplements thereto) and a copy of the related Prospectus
<PAGE>
-28-
(as so amended or supplemented) shall not have been furnished to such person at
or prior to the sale of such Registrable Securities or Exchange Securities, as
the case may be, to such person.
Each Participant will be required to agree, severally and not jointly,
to indemnify and hold harmless the Issuers, their directors, their officers and
each person who controls the Issuers within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuers to each Participant, but only with
reference to information relating to such Participant furnished to the Company
in writing by such Participant expressly for use in any Registration Statement
or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Registrable
Securities giving rise to such obligations.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel satisfactory to the Indemnified Person
to represent the Indemnified Person and any others the Indemnifying Person may
designate in such proceeding and shall pay the fees and expenses actually
incurred by such counsel related to such proceeding, provided that the failure
--------
to so notify the Indemnifying Person shall not relieve it of any obligation or
liability which it may have hereunder or otherwise (unless and only to the
extent that such failure directly results in the loss or compromise of any
material rights or defenses). In any such proceeding, any Indemnified Person
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary, (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel satisfactory to the Indemnified Person or (iii) the named parties
in any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests
<PAGE>
-29-
between them. It is understood that the Indemnifying Person shall not, in
connection with any proceeding or related proceeding in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any appropriate local counsel) for all Indemnified Persons, and that all such
fees and expenses shall be reimbursed as they are incurred. Any such separate
firm for the Participants and such control persons of Participants shall be
designated in writing by Participants who sold a majority in interest of
Registrable Securities sold by all such Participants and any such separate firm
for the Issuers, their directors, their officers and such control persons of the
Issuers shall be designated in writing by the Company. The Indemnifying Person
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final non-
appealable judgment for the plaintiff, the Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested in writing an
Indemnifying Person to reimburse the Indemnified Person for fees and expenses
actually incurred by counsel as contemplated by the third sentence of this
paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such Indemnifying
Person of the aforesaid written request and (ii) such Indemnifying Person shall
not have reimbursed the Indemnified Person for all reasonable fees and expenses
of such counsel in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the prior written consent of
the Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such
proceeding.
If the Indemnification provided for in the first and second paragraphs of
this Section 7 is unavailable to an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraph, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the Issuers on the
one
<PAGE>
-30-
hand and the Participants on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Issuers on the one hand and the Participants on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuers or by the Participants and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The parties shall agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
--- ----
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses incurred by such Indemnified Person in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, in no event shall a Participant be required to
contribute any amount in excess of the amount by which proceeds received by such
Participant from sales of Registrable Securities exceeds the amount of any
damages that such Participant 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 Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 7
will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
8. Rule 144 and Rule 144A
----------------------
Each of the Issuers shall use their commercially reasonable efforts to
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder in a
timely manner and, if at any time the Issuers are not required to file such
<PAGE>
-31-
reports, they shall, upon the request of any Holder of Registrable Securities,
make publicly available other information so long as necessary to permit sales
pursuant to Rule 144 and Rule 144A under the Securities Act. The Issuers further
covenant to take such further action as any Holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 and Rule
144A under the Securities Act, as such Rules may be amended from time to time,
or (b) any similar rule or regulation hereafter adopted by the SEC.
9. Underwritten Registrations
--------------------------
If any of the Registrable 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 manage the offering will be selected
by the Holders of a majority in aggregate principal amount at maturity of such
Registrable Securities included in such offering and reasonably acceptable to
the Company.
No Holder of Registrable Securities may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) 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 Issuers of any of their
--------
obligations under this Agreement, each Holder of Registrable Securities and
each Market Maker, in addition to being entitled to exercise all rights
provided herein, in the Indenture or, in the case of the Initial
Purchasers, in the Purchase Agreement or granted by law, including recovery
of damages, will be entitled to specific performance of its rights under
this Agreement. The Issuers agree that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by them
of any of the provisions of this Agreement and hereby further agree that,
in the event of any action for specific performance in respect of such
breach, they shall waive the defense that a remedy at law would be
adequate.
<PAGE>
-32-
(b) No Inconsistent Agreements. The Issuers have not, as of the date
--------------------------
hereof, entered and shall not, after the date of this Agreement, enter into
any agreement with respect to any of their securities that is inconsistent
with the rights granted to the Holders of Registrable Securities or the
Market Makers in this Agreement or otherwise conflicts with the provisions
hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the
holders of the Company's securities under any agreement in effect on the
date hereof.
(c) Adjustments Affecting Registrable Securities. The Issuers shall
--------------------------------------------
not, directly or indirectly, take any action with respect to the
Registrable Securities as a class that would adversely affect the ability
of the Holders of Registrable Securities or the Market Makers to include
Registrable Securities or Exchange Securities in a registration undertaken
pursuant to this Agreement.
(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 the Company has obtained the written
consent of Holders of at least a majority of the then outstanding aggregate
principal amount of Registrable Securities (and, in the case of Section 11,
each Market Maker). 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 Registrable Securities or of the
Market Makers whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders may be given by Holders of at least
a majority in aggregate principal amount of the Registrable Securities
being sold by such Holders pursuant to such Registration Statement, (and,
in the case of Section 11, each Market Maker), provided that the provisions
--------
of this sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding sentence.
(e) Notices. All notices and other communications (including without
-------
limitation any notices or other communications to the Trustee) provided for
or permitted hereunder shall be made in writing by hand-delivery,
regis-
<PAGE>
-33-
tered first-class mail, next-day air courier or telecopier:
(i) if to a Holder, at the most current address given by the
Trustee to the Company;
(ii) if to the Market Makers, (A) to JPMS at 60 Wall Street,
New York, New York 10260 (telecopy: (212) 648-3501); Attention: Leslie
Gardner and (B) to Chase at 270 Park Avenue, 4th floor, New York, New
York 10017, Attention: Stephanie Cuskley (fax: (212) 270-0994), with a
copy to The Chase Manhattan Bank, Legal Department, 270 Park Avenue,
40th floor, New York, New York 10017, Attention: Stephen B. Grant
(fax: (212) 270-7487); and
(iii) if to the Issuers, at Triton PCS, Inc., 101 Lindenwood
Drive, Suite 125, Malvern, Pennsylvania 19355, Attention: Chief
Executive Officer; with a copy to Latham & Watkins, 1001 Pennsylvania
Avenue, N.W., Suite 1300, Washington, D.C. 20004-2505, Attention:
James F. Rogers.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business
day after being timely delivered to a next-day air courier; and when
receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the trustee under
the Indenture at the address specified in such Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express
assignment, subsequent Holders of Registrable Securities; provided, that,
with respect to the indemnity and contribution agreements in Section 7,
each Holder of Registrable Securities subsequent to the Initial Purchasers
shall be bound by the terms thereof if such Holder elects to include
Registrable Securities in a Shelf Registration; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a
successor or assign of a
<PAGE>
-34-
Holder unless and to the extent such successor or assignee holds
Registrable Securities or is a successor or assignee of a Market Maker.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Severability. 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 best 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.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement, and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein.
(l) Securities Held by the Company or Its Affiliates. Whenever the
------------------------------------------------
consent or approval of holders of a specified percentage of Registrable
Securities is required
<PAGE>
-35-
hereunder, Registrable Securities held by the Company or its affiliates (as
such term is defined in Rule 405 under the Securities Act) other than the
Market Makers shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
(m) Subsidiary Guarantor a Party. Immediately upon the designation of
----------------------------
any subsidiary of the Company as a Guarantor (as defined in the Indenture),
the Company shall cause such Guarantor to guarantee the obligations of the
Company hereunder (including, without limitation, the obligation to pay
Additional Interest, if any, pursuant to the terms of Section 4 hereof), by
executing and delivering to the Initial Purchaser an appropriate amendment
to this Agreement.
11. Additional Agreements
---------------------
(a) Except during a Blocking Period, the Company will, for the sole
benefit of JPMS and Chase (each a "Market Maker" and together the "Market
------
Makers"), for so long as (i) any of the Securities are outstanding and (ii)
------
the Market Makers or any of their Affiliates (as defined in the rules and
regulations of the SEC under the Securities Act) would be, in the opinion
of counsel for either of the Market Makers, required to deliver a
Prospectus in connection with their market making activities as they relate
to the Securities, the Exchange Securities or the Private Exchange
Securities:
(i) (A) On the date that the Exchange Offer Registration
Statement is filed with the Commission, file a Registration Statement
(which may be the Exchange Offer Registration Statement or the Shelf
Registration Statement if permitted by the rules and regulations of
the Commission) covering sales of the Securities, Exchange Securities
or Private Exchange Securities by the Market Makers, use its best
efforts to cause such Registration Statement to be declared effective
by the Commission on or prior to the consummation of the Exchange
Offer and periodically amend such Registration Statement so that the
information contained in the Registration Statement complies with the
requirements of Section 10(a) under the Securities Act; (B) if
requested by either Market Maker, within 45 days following the end of
the Company's most recent fiscal quarter, file a supplement to the
Prospectus which sets forth the financial re-
<PAGE>
-36-
sults of the Company for the previous quarter; (C) amend the
Registration Statement or supplement the Prospectus when necessary to
reflect any material changes in the information provided therein; and
(D) amend the Registration Statement when required to do so in order
to comply with Section 10(a)(3) of the Securities Act; provided,
--------
however, that (1) prior to filing any post-effective amendment to the
-------
Registration Statement or any supplement to the Prospectus, the
Company will furnish to each Market Maker copies of all such documents
proposed to be filed, which documents will be subject to the
reasonable review of each Market Maker and its counsel, (2) the
Company will not file any post-effective amendment to the Registration
Statement or any supplement to the Prospectus to which each Market
Maker and its counsel shall reasonably object and (3) the Company will
provide each Market Maker and its counsel with the number of copies of
each amendment or supplement filed as the Market Makers shall
reasonably request.
(ii) Promptly upon the Company satisfying the eligibility
criteria for use of Form S-3 under the Securities Act, file a post-
effective amendment to the Registration Statement to convert it from a
Form S-1 to a Form S-3 registration statement.
(iii) Notify each Market Maker, and (if requested by any such
Market Maker) confirm such advice in writing, (A) when any Prospectus
supplement or amendment or post-effective amendment to the
Registration Statement has been filed, and, with respect to any post-
effective amendment, when the same has become effective; (B) of any
request by the SEC for any post-effective amendment to the
Registration Statement, any supplement or amendment to the Prospectus
or for additional information; (C) the issuance by the SEC of any stop
order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose; (D) of the receipt
by the Company of any notification with respect to the suspension of
the qualification of the Securities for sale in any jurisdiction or
the initiation or threatening of any proceedings for such purpose; (E)
of the happening of any event which makes any statement made in the
Registration Statement, the Prospectus or any amendment or supplement
thereto untrue or which requires the making of any changes in
<PAGE>
-37-
the Registration Statement, the Prospectus or any amendment or
supplement thereto, in order to make the statements therein not
misleading; and (F) of any advice from a nationally recognized
statistical rating organization that such organization has placed the
Company under surveillance or review with negative implications or has
determined to downgrade the rating of the Securities or the Exchange
Securities or any other debt obligation of the Company whether or not
such downgrade shall have been publicly announced.
(iv) Furnish to each Market Maker, without charge, (i) at least
one conformed copy of any post-effective amendment to the Registration
Statement; and (ii) as many copies of any amendment or supplement to
the Prospectus as the Market Makers may request.
(v) Consent to the use of the Prospectus or any amendment or
supplement thereto by the Market Makers in connection with the
offering and sale of the Securities.
(vi) For so long as the Securities shall be outstanding,
furnish to the Market Makers (A) as soon as practicable after the end
of each fiscal year, the number of copies reasonably requested by the
Market Makers of the Company's annual report to stockholders for such
year, (B) as soon as available, the number of copies reasonably
requested by the Market Makers of each report (including, without
limitation, Reports on Forms 10-K, 10-Q and 8-K) or definitive proxy
statements of the Company filed under the Exchange Act or mailed to
stockholders and (C) all public reports and all reports and financial
statements furnished by the Company to the Nasdaq National Market
System or any U.S. national securities exchange or quotation service
upon which the Notes may be listed pursuant to requirements of or
agreements with such exchange or quotation service or to the SEC
pursuant to the Exchange Act or any rule or regulation of the SEC
thereunder.
(vii) In the event of the issuance of any stop order suspending
the effectiveness of the Registration Statement or of any order
suspending the qualification of the Securities or the Exchange
Securities
<PAGE>
-38-
for sale in any jurisdiction, to use promptly its best efforts to
obtain its withdrawal.
(b) The Company represents that any post-effective amendments to the
Registration Statement, any amendments or supplements to the Prospectus and
any documents filed under the Exchange Act will, when they become effective
or are filed with the SEC, as the case may be, conform in all respects to
the requirements of the Securities Act and the rules and regulations of the
SEC thereunder and will not, as of the effective date of such post-
effective amendments and as of the filing date of amendments or supplements
to the Prospectus or filings under the Exchange Act 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 not
misleading; provided that no representation or warranty is made as to
--------
information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with written information
furnished to the Company by the Market Makers specifically for inclusion
therein, which information the parties hereto agree will be limited to the
statements concerning the market-making activities of the Market Makers to
be set forth on the cover page and in the "Plan of Distribution" section of
the Prospectus.
(c) Each time that the Registration Statement or Prospectus shall be
amended or the Prospectus shall be supplemented, the Company shall,
concurrently with such amendment or supplement, if reasonably requested by
either of the Market Makers, furnish the Market Makers and their counsel
with a certificate of its Chairman of the Board or its President and its
chief financial officer to the effect that:
(i) The Registration Statement has been declared effective and
such amendment has become effective under the Securities Act as of the
date and time specified in such certificate; such amendment to the
Prospectus (or such supplement to the Prospectus, as the case may be)
was filed with the SEC pursuant to the subparagraph of Rule 424(b)
under the Securities Act specified in such certificate on the date
specified therein; and, to the knowledge of such officers, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose is pending or
threatened by the SEC; and
<PAGE>
-39-
(ii) Such officers have carefully examined the Registration
Statement and the Prospectus and such amendment or supplement thereto
and, in their opinion, as of the date of such amendment or supplement,
the Registration Statement and the Prospectus, as amended or
supplemented, as the case may be, did not include any untrue statement
of a material fact and did not omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
(d) Each time that the Registration Statement or Prospectus shall be
amended or the Prospectus shall be supplemented, the Company shall,
concurrently with such amendment or supplement, if reasonably requested by
either of the Market Makers, furnish the Market Makers and their counsel
with the written opinion of counsel for the Company satisfactory to the
Market Maker to the effect that:
(i) The Registration Statement has been declared effective and
such amendment has become effective under the Securities Act as of the
date and time specified in such certificate, such amendment to the
Prospectus (or such supplement to the Prospectus, as the case may be)
was filed with the SEC pursuant to the subparagraph Rule 424(b) under
the Securities Act specified in such opinion on the date specified
therein; and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose is pending or threatened by
the SEC; and
(ii) Counsel for the Company has reviewed such amendment or
supplement and participated with officers of the Company and
independent public accountants for the Company in the preparation of
such amendment or supplement and has no reason to believe that the
Registration Statement (or any post-effective amendment thereto), at
the time of its effective date, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or that the Prospectus contains any untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements
<PAGE>
-40-
therein, in the light of the circumstances under which they were made,
not misleading.
(e) Each time that the Registration Statement or Prospectus shall be
amended or the Prospectus shall be supplemented to include audited annual
financial information, the Company shall, concurrently with such amendment
or supplement, if reasonably requested by either of the Market Makers,
furnish the Market Makers and their counsel with a letter of KPMG Peat
Marwick LLP (or other independent public accountants for the Company of
nationally recognized standing), in form satisfactory to the Market Makers,
addressed to the Market Makers and dated the date of delivery of such
letter, (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01
of Regulation S-X of the SEC and (ii) a letter substantially in the form of
the letter delivered to the Initial Purchasers pursuant to Section 6(g) of
the Purchase Agreement with such changes as may be necessary to reflect the
amended or supplemental financial information.
(f) The Company hereby agrees to indemnify each Market Maker, and if
applicable, contribute to each such Market Maker, in accordance with the
terms of Section 7 hereof.
(g) The Company will comply with the provisions of this Section 11 at
its own expense and will reimburse the Market Makers for their expenses
associated with this Section 11 (including fees of counsel); provided that
--------
the Company shall not be obligated to reimburse the Market Makers for their
expenses associated with this Section 11 (excluding, for these purposes,
any reimbursement obligation pursuant to Section 7 hereof), to the extent
such expenses exceed $10,000 per annum.
(h) The agreements contained in this Section 11 and the
representations, warranties and agreements contained in this Agreement
shall survive all offers and sales of the Securities and the Exchange
Securities and shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement or any investigation made by
or on behalf of any indemnified party.
<PAGE>
-41-
(i) For purposes of this Section 11, any reference to the terms
"amend", "amendment" or "supplement" with respect to the Registration
Statement or the Prospectus shall be deemed to refer to and include the
filing under the Exchange Act on or after the date the Registration
Statement is converted to Form S-3 of any document deemed to be
incorporated therein by reference.
(j) The Company shall have no further obligations under this Section
11 to a Market Maker upon receipt of written notice (a "Market Maker
Termination Notice") from such Market Makers indicating that such Market
Maker has ceased to engage in the business of making a market in securities
of the type issued by the Company under the Indenture ("Market Making") and
each of the Market Makers shall be obligated to provide the Company with a
Market Maker Termination Notice as soon as reasonably practicable following
the date such Market Maker ceases Market Making.
<PAGE>
-42-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
TRITON PCS, INC.
By:_____________________________________
Name:
Title:
TRITON MANAGEMENT COMPANY, INC.
By:_____________________________________
Name:
Title:
TRITON PCS HOLDINGS COMPANY L.L.C.
TRITON PCS PROPERTY COMPANY L.L.C.
TRITON PCS EQUIPMENT COMPANY L.L.C.
TRITON PCS OPERATING COMPANY L.L.C.
TRITON PCS LICENSE COMPANY L.L.C.
By: TRITON MANAGEMENT COMPANY, INC.,
as Manager of each of the foregoing
By:_____________________________________
Name:
Title:
<PAGE>
-43-
J.P. MORGAN SECURITIES INC.
LEHMAN BROTHERS INC.
By: J.P. MORGAN SECURITIES INC.
By:_____________________________________
Name:
Title:
CHASE SECURITIES INC.
By:_____________________________________
Name:
Title:
<PAGE>
EXHIBIT 10.1
================================================================================
CREDIT AGREEMENT
dated as of
February 3, 1998
among
TRITON PCS, INC.
TRITON PCS HOLDINGS, INC.
The Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
---------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Definitions
-----------
SECTION 1.01. Defined Terms......................................................... 1
SECTION 1.02. Classification of Loans and Borrowings................................ 31
SECTION 1.03. Terms Generally ...................................................... 31
SECTION 1.04. Accounting Terms; GAAP................................................ 31
ARTICLE II
The Credits
-----------
SECTION 2.01. Commitments........................................................... 32
SECTION 2.02. Loans and Borrowings.................................................. 32
SECTION 2.03. Requests for Borrowings............................................... 33
SECTION 2.04. Funding of Borrowings................................................. 34
SECTION 2.05. Interest Elections.................................................... 35
SECTION 2.06. Termination and Optional Reduction of Commitments..................... 37
SECTION 2.07. Repayment of Loans; Evidence of Debt.................................. 37
SECTION 2.08. Automatic Revolving Commitment Reductions; Amortization
of Term Loans....................................................... 38
SECTION 2.09. Prepayment of Loans................................................... 40
SECTION 2.10. Fees.................................................................. 42
SECTION 2.11. Interest.............................................................. 43
SECTION 2.12. Alternate Rate of Interest............................................ 44
SECTION 2.13. Increased Costs....................................................... 45
SECTION 2.14. Break Funding Payments................................................ 46
SECTION 2.15. Taxes................................................................. 47
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Setoffs............ 48
SECTION 2.17. Mitigation Obligations; Replacement of Lenders........................ 51
</TABLE>
<PAGE>
2
ARTICLE III
Representations and Warranties
------------------------------
<TABLE>
<S> <C>
SECTION 3.01. Organization; Powers.................................................. 52
SECTION 3.02. Authorization; Enforceability......................................... 52
SECTION 3.03. Governmental Approvals; No Conflicts.................................. 52
SECTION 3.04. Financial Condition; No Material Adverse Change....................... 53
SECTION 3.05. Properties............................................................ 53
SECTION 3.06. Litigation and Environmental Matters.................................. 54
SECTION 3.07. Compliance with Laws and Agreements................................... 55
SECTION 3.08. Investment and Holding Company Status................................. 55
SECTION 3.09. Taxes................................................................. 55
SECTION 3.10. ERISA................................................................. 55
SECTION 3.11. Disclosure............................................................ 56
SECTION 3.12. Subsidiaries; Parents................................................. 56
SECTION 3.13. Absence of Non-Permitted Obligations.................................. 57
SECTION 3.14. Licenses.............................................................. 57
SECTION 3.15. No Burdensome Restrictions............................................ 57
SECTION 3.16. Use of Proceeds....................................................... 58
SECTION 3.17. Flood Insurance....................................................... 58
SECTION 3.18. Insurance............................................................. 58
SECTION 3.19. Labor Matters......................................................... 58
SECTION 3.20. Solvency.............................................................. 58
SECTION 3.21. FCC Compliance........................................................ 59
SECTION 3.22. Security Documents.................................................... 59
SECTION 3.23. Copyrights, Trademarks, etc........................................... 61
SECTION 3.24. Federal Regulations................................................... 61
SECTION 3.25. Assets and Business of Holdings....................................... 61
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date........................................................ 61
SECTION 4.02. Each Credit Event..................................................... 68
ARTICLE V
Affirmative Covenants
---------------------
SECTION 5.01. Financial Statements and Other Information........................... 69
SECTION 5.02. Notices of Material Events........................................... 72
</TABLE>
<PAGE>
3
<TABLE>
<S> <C>
SECTION 5.03. Information Regarding Collateral...................................... 72
SECTION 5.04. Existence; Conduct of Business........................................ 73
SECTION 5.05. Payment of Obligations................................................ 73
SECTION 5.06. Maintenance of Properties............................................. 74
SECTION 5.07. Insurance............................................................. 74
SECTION 5.08. Casualty and Condemnation............................................. 73
SECTION 5.09. Books and Records; Inspection and Audit Rights........................ 75
SECTION 5.10. Compliance with Laws.................................................. 75
SECTION 5.11. Use of Proceeds....................................................... 75
SECTION 5.12. Additional Subsidiaries............................................... 75
SECTION 5.13 Further Assurances.................................................... 76
SECTION 5.14. Interest Rate Protection.............................................. 77
SECTION 5.15. License Drop Down..................................................... 77
SECTION 5.16. Business of Holdings; Immediate Contributions to the Borrower......... 78
SECTION 5.17. Execution of Agreement................................................ 78
ARTICLE VI
Negative Covenants
------------------
SECTION 6.01. Indebtedness; Certain Equity Securities............................... 78
SECTION 6.02. Liens................................................................. 80
SECTION 6.03. Sale and Lease-Back Transactions...................................... 82
SECTION 6.04. Fundamental Changes................................................... 82
SECTION 6.05. Investments, Loans, Advances, Guarantees and Acquisitions............. 83
SECTION 6.06 Asset Sales........................................................... 84
SECTION 6.07. Hedging Agreements.................................................... 84
SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness................. 84
SECTION 6.09. Transactions with Affiliates.......................................... 85
SECTION 6.10. Restrictive Agreements................................................ 86
SECTION 6.11. Amendment of Material Documents....................................... 86
SECTION 6.12. Financial Covenants................................................... 87
SECTION 6.13. Liabilities of Special Purpose Subsidiaries........................... 91
ARTICLE VII
Events of Default...................................... 92
-----------------
ARTICLE VIII
The Administrative Agent................................... 96
------------------------
</TABLE>
<PAGE>
4
ARTICLE IX
Miscellaneous
-------------
<TABLE>
<S> <C>
SECTION 9.01. Notices............................................................... 99
SECTION 9.02. Waivers; Amendments................................................... 100
SECTION 9.03. Expenses; Indemnity; Damage Waiver.................................... 101
SECTION 9.04. Successors and Assigns................................................ 103
SECTION 9.05. Survival.............................................................. 106
SECTION 9.06. Counterparts; Integration; Effectiveness.............................. 106
SECTION 9.07. Severability.......................................................... 107
SECTION 9.08. Right of Setoff....................................................... 107
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process............ 107
SECTION 9.10. WAIVER OF JURY TRIAL.................................................. 108
SECTION 9.11. Headings.............................................................. 109
SECTION 9.12. Confidentiality....................................................... 110
</TABLE>
SCHEDULES:
- ---------
Schedule 2.01 -- Commitments
Schedule 3.05 -- Real Property
Schedule 3.06 -- Litigation and Environmental Matters
Schedule 3.14 -- Network Area
Schedule 3.22 -- Mortgaged Property
Schedule 6.02 -- Existing Liens
Schedule 6.10 -- Existing Restrictions
EXHIBITS:
- --------
Exhibit A -- Form of Assignment and Acceptance
Exhibit B-1 -- Form of Opinion of Borrower's Counsel
Exhibit B-2 -- Form of Opinion of Local Counsel
Exhibit B-3 -- Form of Opinion of FCC Counsel
Exhibit C -- Form of Guarantee Agreement
Exhibit D -- Form of Pledge Agreement
Exhibit E -- Form of Security Agreement
Exhibit F -- Form of Indemnity, Subrogation and
Contribution Agreement
<PAGE>
CREDIT AGREEMENT dated as of February 3, 1998 among
TRITON PCS, INC., a Delaware corporation (the "Borrower"),
TRITON PCS HOLDINGS, INC. ("Holdings"), the LENDERS (as
defined in Article I) party hereto, and THE CHASE MANHATTAN
BANK, as Administrative Agent.
WHEREAS the Borrower intends to construct and operate a mobile
wireless telecommunications network utilizing TDMA IS-136 technology or its
successor serving the MTA's and BTA's listed on Schedule 3.14 (the
"Network");
WHEREAS the Borrower has requested the Lenders to make available
credit facilities to finance capital expenditures related to the
construction of the Network, the acquisition of Related Businesses, working
capital needs of the Borrower and subscriber acquisition costs; and
WHEREAS the Lenders are willing to make the requested credit
facilities available on the terms and subject to the conditions set forth
in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth below, the parties hereto agree as follows:
ARTICLE I
Definitions
-----------
SECTION 1.01. Defined Terms. As used in this Agreement, the
--------------
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
---
whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.
"Adjusted EBITDA" means for any fiscal period, the sum of (a)
---------------
Consolidated EBITDA for such period plus (b) the aggregate amount deducted
----
in determining Consolidated Net Income for such period in respect of sales,
marketing and advertising expenses and consumer-related equipment subsidy
expenses.
<PAGE>
2
"Adjusted LIBO Rate" means, with respect to any Eurodollar
------------------
Borrowing for any Interest Period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate
for such Interest Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its
--------------------
capacity as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative
----------------------------
Questionnaire in the form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
---------
Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified and with respect to any Lender that is a fund that invests in
commercial loans, any other fund that invests in commercial loans and is
managed by the same investment advisor as such Lender or by an Affiliate of
such investment advisor.
"Aggregate Service Revenue" means for any period, the sum of
-------------------------
subscriber revenues, toll revenues and roaming revenues for such period.
"Alternate Base Rate" means, for any day, a rate per annum equal
-------------------
to the greater of (a) the Prime Rate in effect on such day and (b) the
Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any
change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective from and including the
effective date of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.
"Annualized Adjusted EBITDA" means for the period ending on the
--------------------------
last day of any fiscal quarter, the product of (a) Adjusted EBITDA for the
two consecutive fiscal quarters ending on such last day, multiplied by (b)
two.
"Annualized EBITDA" means for the period ending on the last day
-----------------
of any fiscal quarter, the product of (a) Consolidated EBITDA for the two
consecutive fiscal quarters ending on such last day, multiplied by (b) two.
"Applicable Rate" means, for any day (a) with respect to any
---------------
Tranche B Term Loan, the applicable Tranche B Rate, and (b) with respect to
any ABR Loan or Eurodollar Loan that is a Revolving Loan or a Tranche A
Term Loan, or with respect to the commitment fees payable hereunder, as
<PAGE>
3
the case may be, the applicable rate per annum set forth below under the
caption "ABR Spread", "Eurodollar Spread" or "Commitment Fee Rate", as the
case may be, based upon the Leverage Ratio as of the most recent
determination date; provided that, unless Consolidated EBITDA for the most
--------
recent fiscal quarter for which financial statements have been delivered
pursuant to Section 5.01 is positive, the "Applicable Rate" for purposes of
clause (b) shall be the applicable rate per annum set forth below in
Category 1:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
ABR EURODOLLAR COMMITMENT FEE
--- ---------- --------------
Leverage Ratio: SPREAD SPREAD RATE
--------------- ------ ------ ----
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Category 1
----------
Not Applicable 1.25% 2.25% 0.50%
- ----------------------------------------------------------------------------------------------------------
Category 2
----------
Greater than or equal to 10.0 to 1 1.00% 2.00% 0.50%
- ----------------------------------------------------------------------------------------------------------
Category 3
----------
Greater than or equal to 9.0 to 1 but less than 10.0 to 1 0.875% 1.875% 0.375%
- ----------------------------------------------------------------------------------------------------------
Category 4
----------
Greater than or equal to 8.0 to 1 but less than 9.0 to 1 0.75% 1.75% 0.375%
- ----------------------------------------------------------------------------------------------------------
Category 5
----------
Greater than or equal to 6.0 to 1 but less than 8.0 to 1 0.50% 1.50% 0.375%
- ----------------------------------------------------------------------------------------------------------
Category 6
----------
Greater than or equal to 5.0 to 1 but less than 6.0 to 1 0.25% 1.25% 0.375%
- ----------------------------------------------------------------------------------------------------------
Category 7
----------
Less than 5.0 TO 1 -- 1.00% 0.375%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
For purposes of the foregoing, (i) the Leverage Ratio shall be
determined as of the end of each fiscal quarter of the Borrower's fiscal
year based upon the Borrower's consolidated financial statements delivered
pursuant to Section 5.01(a) or (b) and (ii) each change in the Applicable
Rate resulting from a change in the Leverage Ratio shall be effective
during the period commencing on and including the date of delivery to the
Administrative Agent of such consolidated financial statements indicating
such change and ending on the date immediately preceding the effective date
of the next such change; provided that the Leverage Ratio shall be deemed
--------
to be in Category 1 (A) at any time that an Event of Default has occurred
and is continuing or (B) if the Borrower fails to deliver the consolidated
financial statements required to be delivered by it pursuant to Section
5.01(a) or (b), during the period from the expiration of the time for
delivery thereof until such consolidated financial statements are
delivered.
Notwithstanding the foregoing if, prior to the Effective Date,
the Indebtedness to be created under the Loan Documents receives a rating
from Moody's of less than
<PAGE>
4
"B", the Applicable Rate will be increased by 25 basis points.
"Assignment and Acceptance" means an assignment and acceptance
-------------------------
entered into by a Lender and an assignee (with the consent of any party
whose consent is required by Section 9.04), and accepted by the
Administrative Agent, in the form of Exhibit A or any other form approved
by the Administrative Agent.
"AW" means AT&T Wireless PCS, Inc.
--
"AW Licenses" has the meaning set forth in the definition of
-----------
Initial Equity Contributions.
"Board" means the Board of Governors of the Federal Reserve
-----
System of the United States of America.
"Borrower" means Triton PCS, Inc., a Delaware corporation.
--------
"Borrowing" means Loans of the same Class and Type, made,
---------
converted or continued on the same date and, in the case of Eurodollar
Loans, as to which a single Interest Period is in effect.
"Borrowing Request" means a request by the Borrower for a
-----------------
Borrowing in accordance with Section 2.03.
"BTA" means a Basic Trading Area, as defined in 47
---
C.F.R.(S)24.202.
"Business Day" means any day that is not a Saturday, Sunday or
------------
other day on which commercial banks in New York City are authorized or
required by law to remain closed; provided that, when used in connection
--------
with a Eurodollar Loan, the term "Business Day" shall also exclude any day
------------
on which banks are not open for dealings in dollar deposits in the London
interbank market.
"Capital Expenditures" means, for any period, (a) the additions
--------------------
to property, plant and equipment and other capital expenditures of the
Borrower and its consolidated Subsidiaries that are (or would be) set forth
in a consolidated statement of cash flows of the Borrower for such period
prepared in accordance with GAAP and (b) Capital Lease Obligations incurred
by the Borrower and its consolidated Subsidiaries during such period (other
than Capital Lease Obligations permitted by Section 6.01(a)(vi)).
<PAGE>
5
"Capital Lease Obligations" of any Person means the obligations
-------------------------
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
GAAP, and the amount of such obligations shall be the capitalized amount
thereof determined in accordance with GAAP.
"Capital Stock" means any and all shares, interests,
-------------
participations or other equivalents (however designated) of capital stock
of a corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants, rights or options to
purchase or subscribe for any of the foregoing, or any warrants, rights or
options to purchase or subscribe for any such warrants, rights or options.
"Cash Interest Expense" means, for any period, (a) Consolidated
---------------------
Interest Expense for such period, minus (b) the aggregate amount of pay-in-
kind or accreted Consolidated Interest Expense for such period not
involving any payment in cash.
"Change in Control" means (a) the sale or other disposition by AW
-----------------
of any shares of the Series C Preferred Stock, Series D Preferred Stock or
Common Stock of Holdings or of any Common Stock of the Borrower prior to
the date which is three years from the Effective Date, (b) the acquisition
of ownership, directly or indirectly, beneficially or of record, by any
Person or group (within the meaning of the Securities Exchange Act of 1934
and the rules of the Securities and Exchange Commission thereunder as in
effect on the date hereof) other than Holdings or persons owning capital
stock of Holdings on the Closing Date, of shares representing more than 20%
of the aggregate ordinary voting power represented by the issued and
outstanding capital stock of either the Borrower or Holdings; (c)
occupation of a majority of the seats (other than vacant seats) on the
board of directors of Holdings or the Borrower by Persons who were not (i)
nominated by the board of directors of Holdings (in the case of Holdings'
board) or the Borrower (in the case of the Borrowers' board) (ii) appointed
by directors so nominated or (iii) in the case of Holdings, appointed by
shareholders of Holdings who are shareholders of Holdings on the Effective
Date; or (d) the acquisition of direct or indirect Control of the Borrower
or Holdings by any Person or group other than Holdings or persons owning
capital stock of Holdings on the date hereof; provided, however, that
-------- -------
neither (A) the sale by
<PAGE>
6
AW of all or any of its equity interest in Holdings subsequent to the date
which is three years from the Effective Date nor (B) the public sale by
Holdings or the Borrower of newly issued Common Stock in an initial public
offering, shall constitute a Change of Control.
"Change in Law" means (a) the adoption of any law, rule or
-------------
regulation after the date of this Agreement, (b) any change in any law,
rule or regulation or in the interpretation or application thereof by any
Governmental Authority after the date of this Agreement or (c) compliance
by any Lender (or, for purposes of Section 2.15(b), by any lending office
of such Lender or by such Lender's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of
any Governmental Authority made or issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers
-----
to whether such Loan, or the Loans comprising such Borrowing, are Revolving
Loans, Tranche A Term Loans or Tranche B Term Loans and, when used in
reference to any Commitment, refers to whether such Commitment is a
Revolving Commitment, Tranche A Commitment or Tranche B Commitment.
"Code" means the Internal Revenue Code of 1986, as amended from
----
time to time.
"Collateral" means any and all "Collateral", as defined in any
----------
applicable Security Document and shall also include the Mortgaged
Properties.
"Committed Equity" means irrevocable binding commitments to
----------------
purchase stock of the Borrower pursuant to the Securities Purchase
Agreement.
"Commitment" means a Revolving Commitment, Tranche A Commitment
----------
or Tranche B Commitment, or any combination thereof (as the context
requires).
"Common Stock" means the Common Stock, par value $.01 per share,
------------
of the Borrower.
"Communications Act" means the Communications Act of 1934, and
------------------
any similar or successor federal statute, and the rules and regulations and
published policies of the FCC thereunder, all as amended and as the same
may be in effect from time to time.
"Consents to Assignment" has the meaning set forth in subsection
----------------------
4.01(r).
<PAGE>
7
"Consolidated EBITDA" means, for any period, Consolidated Net
-------------------
Income plus, to the extent deducted in computing such Consolidated Net
Income, the sum of (a) income or franchise tax expense for such period, (b)
Consolidated Interest Expense, (c) depreciation and amortization expense
and (d) any non-cash charges or non-cash losses, minus, to the extent added
in computing such Consolidated Net Income, (i) any non-cash gains or other
non-cash items and (ii) any income tax credits, all as determined on a
consolidated basis with respect to the Borrower and the Subsidiaries in
accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the
-----------------------------
interest expense of Holdings, the Borrower and the Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP,
including but not limited to the portion of any payments or accruals with
respect to Capital Lease Obligations that are allocable to interest
expense.
"Consolidated Net Income" means, for any period, net income or
-----------------------
loss of the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; provided that there shall be
--------
excluded (a) the income of any person in which any other person (other than
the Borrower or any of the Subsidiaries or any director holding qualifying
shares in compliance with applicable law) has a joint interest, except to
the extent of the amount of dividends or other distributions (i) that the
Borrower or any of the Subsidiaries has the power to cause such person to
make to the Borrower or any Subsidiary during such period and such dividend
or other distribution is not prohibited by the terms of any agreement
binding upon such person or otherwise or (ii) that, to the extent not
already included in Consolidated Net Income for any period pursuant to
clause (i) above, were actually paid to the Borrower or any of the
Subsidiaries by such person during such period, (b) any after tax gains or
losses attributable to sales of assets out of the ordinary course of
business and (c) (to the extent not included in clauses (a) or (b) above)
any extraordinary gains or extraordinary losses.
"Contractual Obligations" means as to any Person, any provision
-----------------------
of any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any of
its property is bound.
"Contributed Equity" means at any time or for any period, the
------------------
aggregate amount which shall have been received by the Borrower prior to
such time or during such period as
<PAGE>
8
consideration for the issuance of stock of the Borrower (valued, in the
case of the AW Licenses, at $109,850,200, the agreed value of the AW
Licenses in the Securities Purchase Agreement).
"Control" means the possession, directly or indirectly, of the
-------
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract
or otherwise. "Controlling" and "Controlled" have meanings correlative
----------- ----------
thereto.
"Covered Pops" means the aggregate number of Pops within each
------------
geographic area for which facilities owned by the Borrower or its
Subsidiaries that provide service to such geographic area have achieved
substantial completion.
"Debt Service" means for any period, the sum of (a) Cash Interest
------------
Expense for such period plus (b) scheduled principal amortization of Total
----
Debt for such period.
"Default" means any event or condition which constitutes an Event
-------
of Default or which upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and
-----------------
the environmental matters disclosed in Schedule 3.06.
"Disqualifying Transaction" has the meaning set forth in the
-------------------------
Stockholders Agreement.
"dollars" or "$" refers to lawful money of the United States of
------- -
America.
"Effective Date" means the date on which the conditions specified
--------------
in Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
------------------
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental
Authority, relating in any way to the environment, preservation or
reclamation of natural resources, the management, release or threatened
release of any Hazardous Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
-----------------------
otherwise (including any liability for
<PAGE>
9
damages, costs of environmental remediation, fines, penalties or
indemnities), of the Borrower or any Subsidiary directly or indirectly
resulting from or based upon (a) violation of any Environmental Law, (b)
the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials
into the environment or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect
to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
-----
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) that, together with the Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
-----------
Section 4043 of ERISA or the regulations issued thereunder with respect to
a Plan (other than an event for which the 30-day notice period is waived);
(b) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of
the Code or Section 303(d) of ERISA of an application for a waiver of the
minimum funding standard with respect to any Plan; (d) the incurrence by
the Borrower or any of its ERISA Affiliates of any liability under Title IV
of ERISA with respect to the termination of any Plan; (e) the receipt by
the Borrower or any ERISA Affiliate from the PBGC or a plan administrator
of any notice relating to an intention to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to
the withdrawal or partial withdrawal from any Plan or Multiemployer Plan;
or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or
the receipt by any Multiemployer Plan from the Borrower or any ERISA
Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
----------
refers to whether such Loan, or the Loans
<PAGE>
10
comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in
----------------
Article VII.
"Excess Cash Flow" means, for any period, the sum of (without
----------------
duplication):
(a) Consolidated Net Income for such period, adjusted to exclude
any gains or losses attributable to Prepayment Events; plus
----
(b) depreciation, amortization and other non-cash charges or
losses deducted in determining such consolidated net income (or loss) for
such period; plus
----
(c) the sum of (i) the amount, if any, by which Net Working
Capital decreased during such period plus (ii) the amount, if any, by which
the consolidated deferred revenues of the Borrower and its consolidated
Subsidiaries increased during such period plus (iii) the aggregate
principal amount of Capital Lease Obligations and other Indebtedness
incurred during such period to finance Capital Expenditures, to the extent
that mandatory principal payments in respect of such Indebtedness would not
be excluded from clause (f) below when made; minus
-----
(d) the sum of (i) any non-cash gains included in determining
such Consolidated Net Income (or loss) for such period plus (ii) the
amount, if any, by which Net Working Capital increased during such period
plus (iii) the amount, if any, by which the consolidated deferred revenues
of the Borrower and its consolidated Subsidiaries decreased during such
period; minus
-----
(e) cash Capital Expenditures for such period; minus
-----
(f) the aggregate principal amount of Indebtedness repaid or
prepaid by the Borrower and its consolidated Subsidiaries during such
period, excluding (i) Indebtedness in respect of Revolving Loans, (ii) Term
Loans prepaid pursuant to Section 2.09(b) or (c), (iii) repayments or
prepayments of Indebtedness financed by incurring other Indebtedness, to
the extent that mandatory principal payments in respect of such other
Indebtedness would not be excluded from this clause (f) when made and (iv)
Indebtedness referred to
<PAGE>
11
in clauses (ii), (vii), (viii), (ix) and (x) of Section 6.01(a).
"Excluded Assets" means at any time, the collective reference to
---------------
all assets of the Borrower or any Subsidiary then subject to a Lien
permitted by sub-Section 6.02(iii)-(vi).
"Excluded Real Property Assets" means Real Property Assets which
-----------------------------
constitute Excluded Assets.
"Excluded Real Property-Related Equipment" means Real Property-
----------------------------------------
Related Equipment which constitutes Excluded Assets.
"Excluded Taxes" means, with respect to the Issuing Bank, the
--------------
Administrative Agent, or any Lender (a) income or franchise Taxes imposed
on (or measured by) its net income by the United States of America, or by
the jurisdiction under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in
which its applicable lending office is located or any Governmental
Authority of or in any of the foregoing (including, without limitation,
minimum Taxes and Taxes computed under alternative methods, the principal
one of which is based on or measured by net income), (b) any branch profits
Taxes imposed by the United States of America or any similar Tax imposed by
any other jurisdiction in which the Borrower is located or the Issuing
Bank, the Administrative Agent or Lender as applicable, or organized or any
Governmental Authority of or in any of the foregoing, (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.17(b)), any withholding Tax that is in effect and
would apply to a payment to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending
office), except to the extent that such Foreign Lender (or its assignor, if
any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect
to such withholding Tax pursuant to Section 2.15(a), (d) any Taxes to the
extent imposed by reason of the Issuing Bank, Lender or Administrative
Agent, as applicable, engaging in activities in the jurisdiction imposing
the Tax that are unrelated to the transactions contemplated hereby, and (e)
any Tax that would not have been imposed but for the failure of a Lender or
the Administrative Agent, as applicable, to comply with the certification
requirements described in Section 2.15(e).
<PAGE>
12
"FCC" means the Federal Communications Commission, or any other
---
similar or successor agency of the Federal government administering the
Communications Act.
"Federal Funds Effective Rate" means, for any day, the weighted
----------------------------
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
quotations for such day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
"Financial Officer" means the chief financial officer, principal
-----------------
accounting officer, treasurer or controller of the Borrower.
"Fixed Charges" means (a) Debt Service, (b) Capital Expenditures,
-------------
(c) Taxes and (d) dividends and distributions paid pursuant to Section
6.08(a)(iii).
"Foreign Lender" means any Lender that is organized under the
--------------
laws of a jurisdiction other than that in which the Borrower is located.
For purposes of this definition, the United States of America, each State
thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is organized
------------------
under the laws of a jurisdiction other than the United States of America or
any State thereof or the District of Columbia.
"Funded Debt" means, as of the date of determination, all
-----------
Indebtedness for borrowed money of Holdings, the Borrower and its
Subsidiaries which by its terms matures more than one year after the date
of calculation, and any such Indebtedness maturing within one year from
such date which is renewable or extendable at the option of the obligor to
a date more than one year from such date including, in any event, the
Revolving Loans.
"GAAP" means generally accepted accounting principles in the
----
United States of America.
"Governmental Authority" means the government of the United
----------------------
States of America, any other nation or any
<PAGE>
13
political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any
--------- ---------
obligation, contingent or otherwise, of the guarantor guaranteeing or
having the economic effect of guaranteeing any Indebtedness or other
obligation of any other Person (the "primary obligor") in any manner,
---------------
whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation
or to purchase (or to advance or supply funds for the purchase of) any
security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such
Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition
or liquidity of the primary obligor so as to enable the primary obligor to
pay such Indebtedness or other obligation or (d) as an account party in
respect of any letter of credit or letter of guaranty issued to support
such Indebtedness or obligation; provided, that the term Guarantee shall
--------
not include endorsements for collection or deposit in the ordinary course
of business.
"Guarantee Agreement" means the Guarantee Agreement with respect
-------------------
to the Obligations substantially in the form of Exhibit C, made by the
Subsidiary Loan Parties in favor of the Administrative Agent for the
benefit of the Secured Parties.
"Hazardous Materials" means all explosive or radioactive
-------------------
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or
asbestos containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any
nature regulated pursuant to any Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
-----------------
foreign currency exchange agreement, commodity price protection agreement
or other interest or currency exchange rate or commodity price hedging
arrangement.
"Holdings" means Triton PCS Holdings, Inc., a Delaware
--------
corporation.
<PAGE>
14
"Indebtedness" of any Person means, without duplication, (a) all
------------
obligations of such Person for borrowed money or with respect to deposits
or advances of any kind, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (c) all obligations of
such Person upon which interest charges are customarily paid, (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Indebtedness of others secured by (or
for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property owned or acquired by
such Person, whether or not the Indebtedness secured thereby has been
assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances.
The Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.
"Indemnity, Subrogation and Contribution Agreement" means the
-------------------------------------------------
Indemnity, Subrogation and Contribution Agreement, substantially in the
form of Exhibit F, among the Borrower and the Subsidiaries.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
-----------------
"Information Memorandum" means the Confidential Information
----------------------
Memorandum dated November 1997 relating to the Borrower and the
Transactions.
"Initial Equity Contributions" means (i) AW's contribution to the
----------------------------
Borrower of 20 MHz of A or B Block PCS licenses covering the markets and
Pops set forth in Schedule 3.14 hereto (the "AW Licenses") in exchange for
732,371 shares of Series A Preferred Stock and 366,131 shares of Series D
Preferred Stock and (ii) purchases of 1,400,000 shares of Series C
Preferred Stock of Holdings by other investors for cash consideration and
irrevocable
<PAGE>
15
commitments of not less than $140,000,000, the purchase price for which
will be paid directly to the Borrower.
"Interest Election Request" means a request by the Borrower to
-------------------------
convert or continue a Revolving Borrowing or Term Borrowing in accordance
with Section 2.05.
"Interest Payment Date" means (a) with respect to any ABR Loan,
---------------------
the last day of each March, June, September and December and (b) with
respect to any Eurodollar Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case
of a Eurodollar Borrowing with an Interest Period of more than three
months' duration, each day prior to the last day of such Interest Period
that occurs at intervals of three months' duration.
"Interest Period" means with respect to any Eurodollar Borrowing,
---------------
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three
or six months (or, with the consent of each Lender, nine or twelve months)
thereafter, as the Borrower may elect; provided, that (i) if any Interest
--------
Period would end on a day other than a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which
case such Interest Period shall end on the next preceding Business Day and
(ii) any Interest Period that commences on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the
last Business Day of the last calendar month of such Interest Period. For
purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective date of
the most recent conversion or continuation of such Borrowing.
"Lenders" means the Persons listed on Schedule 2.01 and any other
-------
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto
pursuant to an Assignment and Acceptance.
"Leverage Ratio" means for any fiscal period, the ratio of (a)
--------------
Total Debt on the last day of such fiscal period to (b) Annualized EBITDA
for the period ending on the last day of such fiscal period.
<PAGE>
16
"LIBO Rate" means, with respect to any Eurodollar Borrowing for
---------
any Interest Period, the rate appearing on Page 3750 of Dow Jones Market
(or on any successor or substitute page of such service, or any successor
to or substitute for such service, providing rate quotations comparable to
those currently provided on such page of such service, as determined by the
Administrative Agent from time to time for purposes of providing quotations
of interest rates applicable to dollar deposits in the London interbank
market) at approximately 11:00 a.m., London time, two Business Days prior
to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event
that such rate is not available at such time for any reason, then the "LIBO
----
Rate" with respect to such Eurodollar Borrowing for such Interest Period
----
shall be the rate at which dollar deposits of $5,000,000 and for a maturity
comparable to such Interest Period are offered by the principal London
office of the Administrative Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period.
"License" means any broadband Personal Communications Services
-------
license issued by the FCC in connection with the operation of a System.
"License Subsidiary" means Triton PCS License Company, L.L.C.
------------------
and/or any other Wholly Owned Subsidiary of the Borrower designated as a
License Subsidiary by notice to the Administrative Agent; provided,
--------
however, that (i) such Subsidiary has no obligations or liabilities other
-------
than as permitted by Section 3.13, (ii) the stock of such Subsidiary is
pledged to the Collateral Agent for the benefit of the Lenders in
accordance with the terms of the Pledge Agreement and (iii) the Borrower
and such Subsidiary have entered into a Special Purpose Subsidiary Funding
Agreement.
"Lien" means, with respect to any asset, (a) any mortgage, deed
----
of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor
under any conditional sale agreement, capital lease or title retention
agreement (or any financing lease having substantially the same economic
effect as any of the foregoing) relating to such asset and (c) in the case
of securities, any purchase option, call or similar right of a third party
with respect to such securities.
"Loan Documents" means this Agreement, the Guarantee Agreement,
--------------
the Pledge Agreement, the Security
<PAGE>
17
Agreement, the Indemnity, Subrogation and Contribution Agreement, the
Special Purpose Subsidiary Funding Agreements, the Consents to Assignment
and the other Security Documents.
"Loan Parties" means Holdings, the Borrower and the Subsidiary
------------
Loan Parties.
"Loans" means the loans made by the Lenders to the Borrower
-----
pursuant to this Agreement.
"Material Adverse Effect" means a material adverse effect on (a)
-----------------------
the business, assets, results of operations, prospects or financial
condition of the Borrower and the Subsidiaries taken as a whole or of
Holdings, (b) the ability of any Loan Party to perform any of its
obligations under any Loan Document or (c) the validity or enforceability
of any Loan Document or the rights of or remedies available to the
Administrative Agent or the Lenders under any Loan Document; provided that,
--------
on or after the date which is five years from the Effective Date, neither
(x) the nonrenewal of the Network License Agreement by AW nor (y) the
termination of the Network License Agreement by AW in accordance with its
terms as a result of a Disqualifying Transaction shall be a Material
Adverse Effect.
"Material Indebtedness" means Indebtedness (other than the
---------------------
Loans), or obligations in respect of one or more Hedging Agreements, of any
one or more of Holdings, the Borrower and the Subsidiaries in an aggregate
principal amount exceeding $5,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of
Holdings, the Borrower or any Subsidiary in respect of any Hedging
Agreement at any time shall be the maximum aggregate amount (giving effect
to any netting agreements) that the Borrower or such Subsidiary would be
required to pay if such Hedging Agreement were terminated at such time.
"Moody's" means Moody's Investors Service, Inc.
-------
"Mortgage" means a mortgage, deed of trust, assignment of leases
--------
and rents, leasehold mortgage or other security document granting a Lien on
any Mortgaged Property to secure the Obligations. Each Mortgage shall be
satisfactory in form and substance to the Administrative Agent.
"Mortgaged Property" means, initially, each interest in real
------------------
property and any improvements thereto owned
<PAGE>
18
by a Loan Party and identified on Schedule 3.22, and includes each interest
in real property and any improvements thereto with respect to which a
Mortgage is granted pursuant to Section 5.12 or 5.13.
"MTA" means a Major Trading Area as defined in 47 C.F.R. (S)
---
24.202.
"Multiemployer Plan" means a multiemployer plan as defined in
------------------
Section 4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any event (a) the cash
------------
proceeds received in respect of such event including (i) any cash received
in respect of any non-cash proceeds, but only as and when received, (ii) in
the case of a casualty, insurance proceeds, and (iii) in the case of a
condemnation or similar event, condemnation awards and similar payments,
net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses
paid by the Borrower and the Subsidiaries to third parties (other than
Affiliates) in connection with such event, (ii) in the case of a sale or
other disposition of an asset (including pursuant to a casualty or
condemnation), the amount of all payments required to be made by the
Borrower and the Subsidiaries as a result of such event to repay
Indebtedness (other than Loans) secured by such asset or otherwise subject
to mandatory prepayment as a result of such event, and (iii) the amount of
all taxes paid (or reasonably estimated to be payable) by the Borrower and
the Subsidiaries, and the amount of any reserves established by the
Borrower and the Subsidiaries to fund contingent liabilities reasonably
estimated to be payable, in each case during the year that such event
occurred or the next succeeding year and that are directly attributable to
such event (as determined reasonably and in good faith by the chief
financial officer of the Borrower).
"Network" has the meaning set forth in the first recital.
-------
"Network License Agreement" means the Network Membership License
-------------------------
Agreement, dated the date hereof, between AT&T Corp. and the Borrower, as
the same may be amended, supplemented or otherwise modified from time to
time in accordance with Section 6.11 hereof.
"Net Working Capital" means, at any date, (a) the consolidated
-------------------
current assets of the Borrower and its consolidated Subsidiaries as of such
date (excluding cash and Permitted Investments) minus (b) the consolidated
current liabilities of the Borrower and its consolidated
<PAGE>
19
Subsidiaries as of such date (excluding current liabilities in respect of
Indebtedness). Net Working Capital at any date may be a positive or
negative number. Net Working Capital increases when it becomes more
positive or less negative and decreases when it becomes less positive or
more negative.
"Obligations" has the meaning assigned to such term in the
-----------
Guarantee Agreement and the Security Documents.
"Other Taxes" means any and all present or future stamp or
-----------
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any
Loan Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
----
and defined in ERISA and any successor entity performing similar functions.
"PCS Documents" means the Securities Purchase Agreement and each
-------------
of the documents that is an exhibit thereto (including the Network License
Agreement).
"Perfection Certificate" means a certificate in the form of Annex
----------------------
2 to the Security Agreement or any other form approved by the
Administrative Agent.
"Permitted Encumbrances" means:
----------------------
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by more
than 60 days or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business
in compliance with workers' compensation, unemployment insurance and other
social security laws or regulations and deposits securing liability to
insurance carriers under insurance or self-insurance arrangements;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety
<PAGE>
20
and appeal bonds, performance bonds and other obligations of a like nature,
in each case in the ordinary course of business;
(e) liens of attachments, judgments or awards in respect of
judgments that do not constitute an Event of Default under clause (k) of
Article VII and in respect of which adequate reserves have been established
in accordance with GAAP;
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrower or any Subsidiary;
(g) restrictions on the transfer of assets contained in any
License or imposed by the Communications Act or comparable state
legislation enacted after the date hereof;
(h) leases or subleases granted to others not interfering in any
material respect with the business of the Borrower and its Subsidiaries
taken as a whole and any interest or title of a lessor under any lease not
prohibited by this Agreement;
(i) ground leases in respect of real property on which facilities
owned or leased by the Borrower or its Subsidiaries are located; and
(j) the filing of financing statements regarding leases not
prohibited by this Agreement.
provided that the term "Permitted Encumbrances" shall not include any Lien
--------
securing Indebtedness.
"Permitted Investments" means:
---------------------
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from
the date of acquisition thereof
<PAGE>
21
and having, at such date of acquisition, the highest credit rating
obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances
and time deposits maturing within 180 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any State
thereof which has a combined capital and surplus and undivided profits of
not less than $500,000,000; and
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and entered
into with a financial institution satisfying the criteria described in
clause (c) above.
"Person" means any natural person, corporation, limited liability
------
company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
----
Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 302 of ERISA, and in respect of which
the Borrower or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined
in Section 3(5) of ERISA.
"Pledge Agreement" shall mean the Pledge Agreement, substantially
----------------
in the form of Exhibit D, between the Borrower, the Subsidiary Loan Parties
and the Administrative Agent for the benefit of the Secured Parties.
"Pops" means, as of any date, with respect to any BTA or MTA, the
----
population of such BTA or MTA as such number is published in the then most
recently issued Donnelly Marketing Service Population Guide.
"Prepayment Event" means:
----------------
(a) any sale, transfer or other disposition (including pursuant
to a sale and leaseback transaction) of any property or asset of the
Borrower or any Subsidiary, other than (i) dispositions described in
clauses (a) and (b) of Section 6.06 and (ii) other dispositions resulting
in aggregate Net
<PAGE>
22
Proceeds not exceeding $1,000,000 during any fiscal year of the
Borrower; or
(b) any casualty or other insured damage to, or any taking under
power of eminent domain or by condemnation or similar proceeding of,
any property or asset of the Borrower or any Subsidiary, provided
that, if no Default exists or would result therefrom, such event shall
constitute a Prepayment Event only to the extent that the Net Proceeds
therefrom have not been applied to repair, restore or replace such
property or asset within 270 days after such event; or
(c) the issuance by Holdings, the Borrower or any Subsidiary of
any equity securities, or the receipt by Holdings, the Borrower or any
Subsidiary of any capital contribution, other than, in the case of
Borrower or any Subsidiary, any such issuance of equity securities to,
or receipt of any such capital contribution from the Borrower or a
Subsidiary; provided that no such issuance or receipt shall constitute
--------
a Prepayment Event if (i) such equity is part of the initial
$140,000,000 contribution and commitment of capital to Holdings
pursuant to the Securities Purchase Agreement or the immediate
contribution by Holdings of such capital to the Borrower or (ii),
after giving effect to such issuance or receipt (x) Senior Leverage
would be less than 5:1 and (y) the Borrower would be in Pro Forma
Compliance; or
(d) the incurrence by Holdings, the Borrower or any Subsidiary of
any Indebtedness, other than Indebtedness permitted by Section 6.01;
provided that (i) no such issuance or receipt shall constitute a
--------
Prepayment Event if, after giving effect to such issuance or receipt
(x) (I) Senior Leverage would be less than 5:1 and (II) the Borrower
would be in Pro Forma Compliance or (y) the Borrower shall have
incurred in the aggregate less than $150,000,000 of Indebtedness and
(ii) the foregoing shall not relieve the Borrower from any requirement
hereunder to obtain the consent of the Lenders for the incurrence of
any Indebtedness.
"Prime Rate" means the rate of interest per annum publicly
----------
announced from time to time by The Chase Manhattan Bank as its prime rate
in effect at its principal office in New York City; each change in the
Prime Rate shall be effective from and including the date such change is
publicly announced as being effective.
<PAGE>
23
"Pro Forma Compliance" shall exist if (a) Holdings and the
--------------------
Borrower shall be in pro forma compliance with the covenants set forth in
--- -----
Section 6.12 recomputed, with respect to income statement items, as of the
last day of the most recently ended fiscal quarter for which financial
statements have been delivered in accordance with subsection 5.01 as if the
events with respect to which Pro Forma Compliance is being measured had
occurred on the first day of each relevant period with respect to which Pro
Forma Compliance is being measured and as if Restricted Payments under
Section 6.08(a)(iii) were deductions to EBITDA and (b) no Default or Event
of Default shall exist either immediately prior to the events with respect
to which Pro Forma Compliance is being determined or after giving effect to
such events.
"Qualified Vendor" means Ericsson Inc. or an affiliate thereof or
----------------
Lucent Technologies Inc. or an affiliate thereof.
"Qualified Vendor Agreement" shall have the meaning assigned
--------------------------
thereto in Section 6.01(a)(v).
"Real Property Assets" means all interests (including leasehold
--------------------
interests) of the Borrower and its Subsidiaries in real property.
"Real Property-Related Equipment" means all equipment (as defined
-------------------------------
in the UCC) of the Borrower or any Subsidiary that constitutes a fixture
(as defined in the UCC) on Real Property Assets.
"Real Property Subsidiary" means Triton PCS Property Company,
------------------------
L.L.C. and/or any Wholly Owned Subsidiary of the Borrower designated by the
Borrower as the Real Property Subsidiary by notice to the Administrative
Agent; provided, however, that (i) such Subsidiary has no obligations or
-------- -------
liabilities other than as permitted by Section 3.13, (ii) the stock of such
Subsidiary is pledged to the Collateral Agent for the benefit of the
Lenders in accordance with the terms of the Pledge Agreement and (iii) the
Borrower and such Subsidiary have entered into a Special Purpose Subsidiary
Funding Agreement.
"Register" has the meaning set forth in Section 9.04.
--------
"Related Business" means any business of the type conducted by
----------------
the Borrower and its Subsidiaries on the Effective Date or any business
contemplated to be conducted by the Borrower and its Subsidiaries in the
business plan
<PAGE>
24
delivered to the Lenders prior to the date hereof and any business directly
related thereto (including the business contemplated to be conducted by the
Borrower by (S) 7.11(b) of the Stockholders Agreement, subject to the
conditions therein).
"Related Parties" means, with respect to any specified Person,
---------------
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Revolving
----------------
Exposures, Term Loans and unused Commitments representing more than 50% of
the sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at such time.
"Requirement of Law" means, as to any Person, the certificate of
------------------
incorporation and by-laws, the partnership agreement or other
organizational or governing documents of such Person, and any law, treaty,
rule or regulation, or determination, judgment, writ, injunction, decree or
order of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer" means any of the president, chief executive
-------------------
officer or chief financial officer of the Borrower.
"Restricted Payment" means any dividend or other distribution
------------------
(whether in cash, securities or other property) with respect to any shares
of any class of capital stock of the Borrower or any Subsidiary, or any
payment (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancelation or termination of any such shares of
capital stock of the Borrower or any Subsidiary or any option, warrant or
other right to acquire any such shares of capital stock of the Borrower or
any Subsidiary.
"Revolving Availability Period" means the period from and
-----------------------------
including the Effective Date to but excluding the earlier of the Revolving
Maturity Date and the date of termination of the Revolving Commitments.
"Revolving Commitment" means, with respect to each Lender, the
--------------------
commitment, if any, of such Lender to make Revolving Loans hereunder, as
such commitment may be
<PAGE>
25
(a) reduced from time to time pursuant to Section 2.06 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The initial amount of each Lender's Revolving
Commitment is set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Revolving
Commitment, as applicable. The initial aggregate amount of the Lenders'
Revolving Commitments is $100,000,000.
"Revolving Exposure" means, with respect to any Lender at any
------------------
time, the sum of the outstanding principal amount of such Lender's
Revolving Loans.
"Revolving Lender" means a Lender with a Revolving Commitment or,
----------------
if the Revolving Commitments have terminated or expired, a Lender with
Revolving Exposure.
"Revolving Loan" means a Loan made pursuant to clause (c) of
--------------
Section 2.01.
"Revolving Maturity Date" means the date which is eight and one-
-----------------------
half years from the Effective Date.
"S&P" means Standard & Poor's.
---
"Secured Parties" has the meaning assigned to such term in the
---------------
Security Agreement.
"Secured Real Property Assets" means all Real Property Assets
----------------------------
(including Mortgaged Properties) in which the Administrative Agent, for the
benefit of the Secured Parties, has a first priority perfected Mortgage or
other first priority perfected security interest pursuant to the Security
Documents.
"Secured Real Property-Related Equipment" means Real Property
---------------------------------------
Related Equipment in which the Administrative Agent, for the benefit of
the Secured Parties, has a first priority perfected security interest
pursuant to the Security Documents.
"Securities Purchase Agreement" means the Securities Purchase
-----------------------------
Agreement by and among AW, Holdings, and the other parties thereto dated as
of October 8, 1997, including the schedules thereto.
"Security Agreement" means the Security Agreement among the
------------------
Borrower, the Subsidiary Loan Parties and the Administrative Agent,
substantially in the form of Exhibit E.
<PAGE>
26
"Security Documents" means the Security Agreement, the Pledge
------------------
Agreement, the Mortgages and the Consents to Assignment and each other
security agreement or other instrument or document executed and delivered
pursuant to any of the foregoing or Section 5.12 or 5.13 to secure any of
the Obligations.
"Senior Debt" shall mean all Indebtedness of Holdings, the
-----------
Borrower and the Subsidiaries on a consolidated basis other than the
Subordinated Debt.
"Senior Leverage" means, on any date, the ratio of (a) Senior
---------------
Debt on such date to (b) Annualized EBITDA for the most recently ended
fiscal quarter for which financial statements have been delivered in
accordance with Section 5.01.
"Series A Preferred Stock" means the Series A Preferred Stock,
------------------------
par value $.01 per share, of Holdings.
"Series C Preferred Stock" means the Series C Preferred Stock,
------------------------
par value $.01 per share, of Holdings.
"Series D Preferred Stock" means the Series D Preferred Stock,
------------------------
par value $.01 per share, of Holdings.
"Special Purpose Subsidiary" means the License Subsidiary and the
--------------------------
Real Property Subsidiary.
"Special Purpose Subsidiary Funding Agreement" means an agreement
--------------------------------------------
between the Borrower and/or Triton PCS Operating Company, L.L.C. and each
Special Purpose Subsidiary whereby (a) such Special Purpose Subsidiary
agrees to provide to the Borrower the benefit of the use of such Special
Purpose Subsidiary's assets, (b) the Borrower agrees to pay to such Special
Purpose Subsidiary an amount equal to all liabilities of such Special
Purpose Subsidiary less any amounts contributed by the Borrower to the
equity of such Special Purpose Subsidiary to fund such liabilities, (c) the
Borrower agrees to cause all Contractual Obligations of such Special
Purpose Subsidiary to be performed and all Requirements of Law of such
Special Purpose Subsidiary to be complied with and (d) the Borrower and
such Special Purpose Subsidiary agree, for the benefit of the
Administrative Agent and the Secured Parties, to the assignment by each of
its rights thereunder to the Administrative Agent for the benefit of the
Secured Parties.
"Statutory Reserve Rate" means a fraction (expressed as a
----------------------
decimal), the numerator of which is the number one and the denominator of
which is the number one minus the aggregate of the maximum reserve
percentages
<PAGE>
27
(including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board to which the Administrative
Agent is subject for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to
be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to
any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"Stockholders Agreement" means the Stockholders' Agreement among
----------------------
AW, the Borrower and the other parties thereto dated the date hereof.
"Subordinated Debt" means high yield subordinated debt issued by
-----------------
the Borrower or Holdings on terms reasonably acceptable to the Lenders
maturing on a date that is not earlier than the date which is six months
subsequent to the Tranche B Maturity Date in a minimum aggregate principal
amount of $125,000,000 and the Indebtedness represented thereby and
refinancings of such Indebtedness; provided that (i) any such refinancing
Indebtedness (a) shall not have a greater outstanding principal amount, an
earlier maturity date, or a decreased weighted average life than the
Subordinated Debt refinanced and (b) shall be subordinated to the
Indebtedness created under the Loan Documents to at least the extent of,
and shall otherwise be issued on terms no less favorable to the Lenders
than, the Subordinated Debt refinanced and (ii) the proceeds of such
refinancing Indebtedness shall be used solely to repay the Subordinated
Debt refinanced thereby and fees and expenses in connection therewith.
"Subordinated Debt Documents" means the indenture under which the
---------------------------
Subordinated Debt, if any, is issued and all other instruments, agreements
and other documents evidencing or governing the Subordinated Debt, if any,
or providing for any Guarantee or other right in respect thereof.
"Subscribers" means as of any date, all customers then receiving
-----------
Wireless Services from the Borrower or any of its Subsidiaries none of the
subscriber payments (other than those disputed in good faith by such
customer) of which are, as of such date, past due more than 60 days (or
past due for more than such shorter period of time as the Borrower may
<PAGE>
28
have established for accounting or credit policy purposes for treating a
customer as not being in good standing).
"subsidiary" means, with respect to any Person (the "parent") at
---------- ------
any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated
with those of the parent in the parent's consolidated financial statements
if such financial statements were prepared in accordance with GAAP as of
such date, as well as any other corporation, limited liability company,
partnership, association or other entity (a) of which securities or other
ownership interests representing more than 50% of the equity or more than
50% of the ordinary voting power or, in the case of a partnership, more
than 50% of the general partnership interests are, as of such date, owned,
controlled or held, or (b) that is, as of such date, otherwise Controlled,
by the parent or one or more subsidiaries of the parent or by the parent
and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
----------
"Subsidiary Loan Party" means any Subsidiary that is not a
---------------------
Foreign Subsidiary.
"System" means, as to any Person, assets constituting a radio
------
communications system authorized under the rules for wireless
communications services (including any license and the network, marketing,
distribution, sales, customer interface and operations functions relating
thereto) owned and operated by such Person.
"Taxes" means any and all present or future taxes, levies,
-----
imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.
"Term Loans" means Tranche A Term Loans and Tranche B Term Loans.
----------
"Total Capital" means, at any date, the sum of (a) Funded Debt
-------------
outstanding on such date plus (b) Contributed Equity on such date plus (c)
----
Committed Equity on such date.
"Total Debt" shall mean, at any time, all Indebtedness of
----------
Holdings, the Borrower and the Subsidiaries as determined on a consolidated
basis in accordance with GAAP.
"Tranche A Availability Period" means the period from and
-----------------------------
including the Effective Date to but excluding the
<PAGE>
29
earlier of the third anniversary of the Effective Date and the date of
termination of the Tranche A Commitments.
"Tranche A Commitment" means, with respect to each Lender, the
--------------------
commitment, if any, of such Lender to make Tranche A Term Loans hereunder,
expressed as an amount representing the maximum principal amount of the
Tranche A Term Loans to be made by such Lender hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.06
and (b) reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 9.04. The initial amount of each
Lender's Tranche A Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed
its Tranche A Commitment, as applicable. The initial aggregate amount of
the Lenders' Tranche A Commitments is $175,000,000.
"Tranche A Lender" means a Lender with a Tranche A Commitment or
----------------
an outstanding Tranche A Term Loan.
"Tranche A Maturity Date" means the date that is eight and one-
-----------------------
half years from the Effective Date.
"Tranche A Term Loan" means a Loan made pursuant to clause (a) of
-------------------
Section 2.01.
"Tranche B Availability Period" means the period from and
-----------------------------
including the Effective Date to but excluding the earlier of the date that
is six months from the Effective Date and the date of termination of the
Tranche B Commitments.
"Tranche B Commitment" means, with respect to each Lender, the
--------------------
commitment, if any, of such Lender to make Tranche B Term Loans hereunder,
expressed as an amount representing the maximum principal amount of the
Tranche B Term Loans to be made by such Lender hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.06
and (b) reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 9.04. The initial amount of each
Lender's Tranche B Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed
its Tranche B Commitment, as applicable. The initial aggregate amount of
the Lenders' Tranche B Commitments is $150,000,000.
"Tranche B Lender" means a Lender with a Tranche B Commitment or
----------------
an outstanding Tranche B Term Loan.
<PAGE>
30
"Tranche B Maturity Date" means the date that is nine and one
-----------------------
quarter years from the Effective Date.
"Tranche B Rate" means, with respect to any Tranche B Term Loan
--------------
(a) 1.75% per annum, in the case of an ABR Loan, and (b) 3.00% per annum,
in the case of a Eurodollar Loan.
"Tranche B Term Loan" means a Loan made pursuant to clause (b) of
-------------------
Section 2.01.
"Transactions" means (a) the execution, delivery and performance
------------
by each Loan Party of the Loan Documents to which it is to be a party, the
borrowing of Loans, the use of the proceeds thereof, (b) the execution,
delivery and performance by each Loan Party of the Subordinated Debt
Documents, if any, to which it is to be a party, the issuance of the
Subordinated Debt, if any, and the use of the proceeds thereof and (c) the
Initial Equity Contributions.
"Type", when used in reference to any Loan or Borrowing, refers
----
to whether the rate of interest on such Loan, or on the Loans comprising
such Borrowing, is determined by reference to the Adjusted LIBO Rate or the
Alternate Base Rate.
"UCC" mean the Uniform Commercial Code of the State of New York.
---
"Wholly Owned Subsidiary" of any person shall mean a subsidiary
-----------------------
of such person of which securities (except for directors' qualifying
shares) or other ownership interests representing 100% of the equity or
100% of the ordinary voting power or 100% of the general partnership
interests are, at the time any determination is being made, owned,
controlled or held by such person or one or more wholly owned subsidiaries
of such person or by such person and one or more wholly owned subsidiaries
of such person.
"Withdrawal Liability" means liability to a Multiemployer Plan as
--------------------
a result of a complete or partial withdrawal from such Multiemployer Plan,
as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Wireless Services" means broadband personal communications
-----------------
services provided in one or more Systems (including cellular services
provided on the 850 MHZ band to the extent such services constitute a
Related Business).
<PAGE>
31
SECTION 1.02. Classification of Loans and Borrowings. For
---------------------------------------
purposes of this Agreement, Loans may be classified and referred to by
Class (e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or
---- ----
by Class and Type (e.g., a "Eurodollar Revolving Loan"). Borrowings also
----
may be classified and referred to by Class (e.g., a "Revolving Borrowing")
----
or by Type (e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a
---- ----
"Eurodollar Revolving Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein
----------------
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires
otherwise (a) any definition of or reference to any agreement, instrument
or other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein), (b) any reference herein to
any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of
similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (d) all references
herein to Articles, Sections, Exhibits and Schedules shall be construed to
refer to Articles and Sections of, and Exhibits and Schedules to, this
Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise
-----------------------
expressly provided herein, all terms of an accounting or financial nature
shall be construed in accordance with GAAP, as in effect from time to time;
provided that, if the Borrower notifies the Administrative Agent that the
--------
Borrower requests an amendment to any provision hereof to eliminate the
effect of any change occurring after the date hereof in GAAP or in the
application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless
of whether any such notice is given before or after such change in GAAP or
in
<PAGE>
32
the application thereof, then such provision shall be interpreted on the
basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith.
ARTICLE II
The Credits
-----------
SECTION 2.01. Commitments. Subject to the terms and conditions
------------
set forth herein, each Lender agrees (a) to make Tranche A Term Loans to
the Borrower during the Tranche A Availability Period in an aggregate
principal amount not exceeding its Tranche A Commitment, (b) to make
Tranche B Term Loans to the Borrower during the Tranche B Availability
Period in a principal amount not exceeding its Tranche B Commitment and (c)
to make Revolving Loans to the Borrower from time to time during the
Revolving Availability Period in an aggregate principal amount that will
not result in such Lender's Revolving Exposure exceeding such Lender's
Revolving Commitment; provided, however, that (i) on the Effective Date,
-------- -------
the Lenders will make Tranche B Term Loans to the Borrower in an aggregate
principal amount of not less than 50% of the initial aggregate amount of
the Lenders' Tranche B Commitments, and (ii) no Tranche A Term Loans or
Revolving Loans will be made during the Tranche B Availability Period
unless the Lenders have made Tranche B Term Loans to the Borrower in an
aggregate principal amount equal to the aggregate amount of the Lenders'
Tranche B Commitments. Within the foregoing limits and subject to the terms
and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Revolving Loans. Amounts repaid or prepaid in respect of Term
Loans may not be reborrowed.
SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be
---------------------
made as part of a Borrowing consisting of Loans of the same Class and Type
made by the Lenders ratably in accordance with their respective Commitments
of the applicable Class. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments of the Lenders are
--------
several and no Lender shall be responsible for any other Lender's failure
to make Loans as required.
(b) Subject to Section 2.12, each Revolving Borrowing and Term
Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as
the Borrower may request in accordance herewith. Each Lender at its option
may make any
<PAGE>
33
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of
such Lender to make such Loan; provided that any exercise of such option
--------
shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any
Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that
is an integral multiple of $1,000,000 and not less than $5,000,000. At the
time that each ABR Revolving Borrowing is made, such Borrowing shall be in
an aggregate amount that is an integral multiple of $1,000,000 and not less
than $2,000,000; provided that an ABR Revolving Borrowing may be in an
--------
aggregate amount that is equal to the entire unused balance of the total
Revolving Commitments. Borrowings of more than one Type and Class may be
outstanding at the same time; provided that there shall not at any time be
--------
more than a total of 10 Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or
continue, any Borrowing if the Interest Period requested with respect
thereto would end after the Revolving Maturity Date, Tranche A Maturity
Date or Tranche B Maturity Date, as applicable.
SECTION 2.03. Requests for Borrowings. To request a Revolving
------------------------
Borrowing or Term Borrowing, the Borrower shall notify the Administrative
Agent of such request by telephone (a) in the case of a Eurodollar
Borrowing, not later than 11:00 a.m., New York City time, three Business
Days before the date of the proposed Borrowing or (b) in the case of an ABR
Borrowing, not later than 11:00 a.m., New York City time, one Business Day
before the date of the proposed Borrowing. Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing
Request in a form approved by the Administrative Agent and signed by the
Borrower. Each such telephonic and written Borrowing Request shall specify
the following information in compliance with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving
Borrowing, Tranche A Term Borrowing or Tranche B Term Borrowing;
(ii) the aggregate amount of such Borrowing;
<PAGE>
34
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated
by the definition of the term "Interest Period"; and
(vi) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.06.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified
with respect to any requested Eurodollar Revolving Borrowing, then the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. Promptly following receipt of a Borrowing Request in accordance
with this Section, the Administrative Agent shall advise each Lender of the
details thereof and of the amount of such Lender's Loan to be made as part
of the requested Borrowing.
SECTION 2.04. Funding of Borrowings. (a) Each Lender shall
----------------------
make each Loan to be made by it hereunder on the proposed date thereof by
wire transfer of immediately available funds by 12:00 noon, New York City
time, to the account of the Administrative Agent most recently designated
by it for such purpose by notice to the Lenders. The Administrative Agent
will make such Loans available to the Borrower by promptly crediting the
amounts so received, in like funds, to an account of the Borrower
maintained with the Administrative Agent in New York City and designated by
the Borrower in the applicable Borrowing Request.
(b) Unless the Administrative Agent shall have received notice
from a Lender prior to the proposed date of any Borrowing that such Lender
will not make available to the Administrative Agent such Lender's share of
such Borrowing, the Administrative Agent may assume that such Lender has
made such share available on such date in accordance with paragraph (a) of
this Section and may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. In such event, if a Lender has not in
fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such
corresponding
<PAGE>
35
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of
payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Loans. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.
SECTION 2.05. Interest Elections. (a) Each Revolving Borrowing
-------------------
and Term Borrowing initially shall be of the Type specified in the
applicable Borrowing Request and, in the case of a Eurodollar Borrowing,
shall have an initial Interest Period as specified in such Borrowing
Request. Thereafter, the Borrower may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided
in this Section. The Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such
portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall
be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower
shall notify the Administrative Agent of such election by telephone by the
time that a Borrowing Request would be required under Section 2.03 if the
Borrower were requesting a Revolving Borrowing of the Type resulting from
such election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent
of a written Interest Election Request in a form approved by the
Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02 and
paragraph (f) of this Section:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be
<PAGE>
36
specified pursuant to clauses (iii) and (iv) below shall be specified
for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of
the term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but
does not specify an Interest Period, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request,
the Administrative Agent shall advise each Lender of the details thereof
and of such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid
as provided herein, at the end of such Interest Period such Borrowing shall
be converted to an ABR Borrowing. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies
the Borrower, then, so long as an Event of Default is continuing (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar
Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.
(f) A Borrowing of any Class may not be converted to or
continued as a Eurodollar Borrowing if after giving effect thereto (i) the
Interest Period therefor would commence before and end after a date on
which any principal of the Loans of such Class is scheduled to be repaid
and (ii) the sum of the aggregate principal amount of outstanding
Eurodollar Borrowings of such Class with Interest Periods ending on or
prior to such scheduled repayment date plus the aggregate principal amount
of
<PAGE>
37
outstanding ABR Borrowings of such Class would be less than the aggregate
principal amount of Loans of such Class required to be repaid on such
scheduled repayment date.
SECTION 2.06. Termination and Optional Reduction of Commitments.
-------------------------------------------------
(a) Unless previously terminated, (i) the Tranche A Commitments shall
terminate at 5:00 p.m., New York City time, on the last day of the Tranche
A Availability Period, (ii) the Tranche B Commitments shall terminate at
5:00 p.m., New York City time, on the last day of the Tranche B
Availability Period and (iii) the Revolving Commitments shall terminate on
the Revolving Maturity Date.
(b) The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class; provided that (i) each reduction of
--------
the Commitments of any Class shall be in an amount that is an integral
multiple of $1,000,000 and not less than $2,000,000, (ii) the Borrower
shall not terminate or reduce the Revolving Commitments if, after giving
effect to any concurrent prepayment of the Revolving Loans in accordance
with Section 2.09, the sum of the Revolving Exposures would exceed the
total Revolving Commitments and (iii) the Borrower may not reduce or
terminate the Tranche B Commitments if any portion of the Revolving
Commitments or Tranche A Commitments is outstanding.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by
the Borrower pursuant to this Section shall be irrevocable; provided that a
--------
notice of termination of the Revolving Commitments delivered by the
Borrower may state that such notice is conditioned upon the effectiveness
of other credit facilities, in which case such notice may be revoked by the
Borrower (by notice to the Administrative Agent on or prior to the
specified effective date) if such condition is not satisfied. Any
termination or reduction of the Commitments of any Class shall be
permanent. Each reduction of the Commitments of any Class shall be made
ratably among the Lenders in accordance with their respective Commitments
of such Class.
SECTION 2.07. Repayment of Loans; Evidence of Debt. (a) The
-------------------------------------
Borrower hereby unconditionally promises to pay (i) to the Administrative
Agent for the account of each
<PAGE>
38
Lender the then unpaid principal amount of each Revolving Loan of such
Lender on the Revolving Maturity Date and (ii) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each
Term Loan of such Lender as provided in Section 2.08.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower
to such Lender resulting from each Loan made by such Lender, including the
amounts of principal and interest payable and paid to such Lender from time
to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received
by the Administrative Agent hereunder for the account of the Lenders and
each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall, to the extent permitted by law,
be prima facie evidence of the existence and amounts of the obligations
----- -----
recorded therein; provided that the failure of any Lender or the
--------
Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Loans
in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by it be
evidenced by a promissory note. In such event, the Borrower shall execute
and deliver to such Lender a promissory note payable to the order of such
Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent. Thereafter,
the Loans evidenced by such promissory note and interest thereon shall at
all times (including after assignment pursuant to Section 9.04) be
represented by one or more promissory notes in such form payable to the
order of the payee named therein (or, if such promissory note is a
registered note, to such payee and its registered assigns).
SECTION 2.08. Automatic Revolving Commitment Reductions;
------------------------------------------
Amortization of Term Loans. (a) The aggregate amount of the Lenders'
---------------------------
Revolving Commitments shall automatically and permanently reduce in eight
consecutive
<PAGE>
39
quarterly reductions occurring on the date that is six years and six months
after the Effective Date and on each successive date thereafter which is
three months after the preceding reduction date, in the aggregate amount
set forth below for each reduction:
<TABLE>
<CAPTION>
Reduction Amount
--------- ------
<S> <C>
1-2 $ 5,000,000
--- -----------
3-6 $10,000,000
--- -----------
7-8 $25,000,000
--- -----------
</TABLE>
(b) Subject to adjustment pursuant to paragraph (e) of this
Section, the Borrower shall repay Tranche A Term Loans in 18 consecutive
quarterly installments, payable on the date that is four years after the
Effective Date and on each successive date thereafter which is three months
after the preceding installment date, in the aggregate amount set forth
below for each installment:
<TABLE>
<CAPTION>
Installment Amount
----------- ------
<S> <C>
1-4 $ 4,375,000
--- -----------
5-8 $ 6,562,500
--- -----------
9-12 $ 8,750,000
---- -----------
13-16 $10,937,500
----- -----------
17-18 $26,250,000
----- -----------
</TABLE>
(c) Subject to adjustment pursuant to paragraph (e) of this
Section, the Borrower shall repay Tranche B Term Loans in 21 consecutive
quarterly installments, payable on the date that is four years from the
Effective Date and on each successive date thereafter which is three months
after the preceding installment date, in the aggregate amount set forth
below for each installment:
<TABLE>
<CAPTION>
Installment Amount
------------ ------
<S> <C>
1-4 $ 375,000
--- ------------
5-8 $ 375,000
--- ------------
9-12 $ 375,000
---- ------------
13-16 $ 375,000
----- ------------
17-20 $ 7,500,000
----- ------------
21 $114,000,000
-- ------------
</TABLE>
(d) To the extent not previously paid, (i) all Tranche A Term
Loans shall be due and payable on the Tranche A Maturity Date and (ii) all
Tranche B Term Loans shall be due and payable on the Tranche B Maturity
Date.
<PAGE>
40
(e) If the initial aggregate amount of the Lenders' Term
Commitments of either Class exceeds the aggregate principal amount of Term
Loans of such Class that are made during the Tranche A Availability Period
or the Tranche B Availability Period, as the case may be, then the
scheduled repayments of Term Borrowings of such Class to be made pursuant
to this Section shall be reduced ratably by an aggregate amount equal to
such excess. Any prepayment of a Term Borrowing of either Class shall be
applied to reduce the subsequent scheduled repayments of the Term
Borrowings of such Class to be made pursuant to this Section ratably.
(f) Prior to any repayment of any Term Borrowings of either
Class hereunder, the Borrower shall select the Borrowing or Borrowings of
the applicable Class to be repaid and shall notify the Administrative Agent
by telephone (confirmed by telecopy) of such selection not later than 11:00
a.m., New York City time, three Business Days before the scheduled date of
such repayment; provided that each repayment of Term Borrowings of either
--------
Class shall be applied to repay any outstanding ABR Term Borrowings of such
Class before any other Borrowings of such Class. Each repayment of a
Borrowing shall be applied ratably to the Loans included in the repaid
Borrowing. Repayments of Term Borrowings shall be accompanied by accrued
interest on the amount repaid.
SECTION 2.09. Prepayment of Loans. (a) The Borrower shall have
--------------------
the right at any time and from time to time to prepay any Borrowing in
whole or in part, subject to the requirements of this Section.
(b) In the event and on each occasion that any Net Proceeds are
received by or on behalf of the Borrower or any Subsidiary in respect of
any Prepayment Event, immediately after such Net Proceeds are received, the
Borrower shall prepay Term Borrowings and the Revolving Commitments shall
be automatically and permanently reduced in an aggregate amount (to be
applied ratably among the Tranche A Term Loans, the Tranche B Term Loans
and the Revolving Commitments based on their then respective amounts) equal
to (i) in the case of an event described in clause (c) of the definition of
"Prepayment Event", 50% of such Net Proceeds and (ii) in the case of an
event described in any other clause of the definition of "Prepayment
Event", 100% of such Net Proceeds.
(c) Following the end of the fiscal year of the Borrower ending
December 31, 2001 and following the end of each subsequent fiscal year, the
Borrower shall prepay Term Borrowings and the Revolving Commitments shall
be
<PAGE>
41
automatically and permanently reduced in an aggregate amount (to be applied
ratably among the Tranche A Term Loans, the Tranche B Term Loans and the
Revolving Commitments based on their then respective amounts) equal to 50%
of Excess Cash Flow for such fiscal year. Each prepayment pursuant to this
paragraph shall be made on or before the date on which financial statements
are delivered pursuant to Section 5.01 with respect to the fiscal year for
which Excess Cash Flow is being calculated (and in any event within 105
days after the end of such fiscal year).
(d) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be
prepaid and shall specify such selection in the notice of such prepayment
pursuant to paragraph (e) of this Section; provided that each prepayment of
--------
Borrowings of any Class shall be applied to prepay ABR Borrowings of such
Class before any other Borrowings of such Class. In the event of any
optional or mandatory prepayment of Term Borrowings made at a time when
Term Borrowings of both Classes remain outstanding, the Borrower shall
select Term Borrowings to be prepaid so that the aggregate amount of such
prepayment is allocated between the Tranche A Term Borrowings and Tranche B
Term Borrowings pro rata based on the aggregate principal amount of
outstanding Borrowings of each such Class; provided that any Tranche B
--------
Lender may elect, by notice to the Administrative Agent by telephone
(confirmed by telecopy) at least one Business Day prior to the prepayment
date, to decline all or any portion of any prepayment of its Tranche B Term
Loans pursuant to this Section (other than an optional prepayment pursuant
to paragraph (a) of this Section, which may not be declined), in which case
the Net Proceeds or Excess Cash Flow that would have been applied to prepay
Tranche B Term Loans but were so declined shall be applied to prepay
Tranche A Term Loans and to reduce the Revolving Commitments on a pro rata
basis based on their then respective amounts.
(e) The amount of any optional or mandatory prepayments
allocated to Tranche A Term Loans or Tranche B Term Loans shall be applied
pro rata to reduce the principal amount of the then remaining amortization
installments applicable to such Loans set forth in Section 2.08. The
amount of any optional or mandatory commitment reductions allocated to the
Revolving Loans shall be applied pro rata to reduce the principal amount of
the then remaining reductions applicable to such Commitments set forth in
Section 2.08. Any reduction of the Revolving Commitments shall be
accompanied by prepayment of Revolving Loans to the extent the aggregate
amount of such loans outstanding
<PAGE>
42
exceeds the total amount of the Revolving Commitments as so reduced.
(f) The Borrower shall notify the Administrative Agent by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the
case of prepayment of a Eurodollar Revolving Borrowing, not later than
11:00 a.m., New York City time, three Business Days before the date of
prepayment, (ii) in the case of prepayment of an ABR Revolving Borrowing,
not later than 11:00 a.m., New York City time, one Business Day before the
date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date, the principal amount of each Borrowing or
portion thereof to be prepaid and, in the case of a mandatory prepayment, a
reasonably detailed calculation of the amount of such prepayment; provided
--------
that, if a notice of optional prepayment is given in connection with a
conditional notice of termination of the Revolving Commitments as
contemplated by Section 2.08, then such notice of prepayment may be revoked
if such notice of termination is revoked in accordance with Section 2.08.
Promptly following receipt of any such notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each partial prepayment
of any Borrowing shall be in an amount that would be permitted in the case
of an advance of a Borrowing of the same Type as provided in Section 2.02,
except as necessary to apply fully the required amount of a mandatory
prepayment. Each prepayment of a Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing. Prepayments shall be accompanied
by accrued interest to the extent required by Section 2.13.
SECTION 2.10. Fees. (a) The Borrower agrees to pay to the
-----
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the Applicable Rate on the daily unused amount of each
Commitment of such Lender for each day during the period from and including
the date hereof to but excluding the date on which such Commitment
terminates. Accrued commitment fees shall be payable in arrears on the
last day of March, June, September and December of each year and on the
date on which any Commitments of such Lender shall expire or terminate,
commencing on the first such date to occur after the date hereof. All
commitment fees shall be computed on the basis of a year of 360 days and
shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). For purposes of computing commitment fees
with respect to Revolving Commitments, a Revolving Commitment of a Lender
shall be deemed to be used
<PAGE>
43
to the extent of the outstanding Revolving Loans of such Lender.
(b) The Borrower agrees to pay to the Administrative Agent, for
its own account, fees payable in the amounts and at the times separately
agreed upon between the Borrower and the Administrative Agent.
(c) All fees payable hereunder shall be paid on the dates due,
in immediately available funds, to the Administrative Agent for
distribution, in the case of commitment fees and participation fees, to the
Lenders entitled thereto. Fees paid shall not be refundable under any
circumstances.
SECTION 2.11. Interest. (a) The Loans comprising each ABR
---------
Borrowing shall bear interest at the Alternate Base Rate plus the
Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for
such Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon
acceleration or otherwise, such overdue amount shall bear interest, after
as well as before judgment, at a rate per annum equal to (i) in the case of
overdue principal of any Loan, 2% plus the rate otherwise applicable to
such Loan as provided in the preceding paragraphs of this Section or (ii)
in the case of any other amount, 2% plus the rate applicable to ABR
Revolving Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan and, in the case of Revolving
Loans, upon termination of the Revolving Commitments; provided that (i)
--------
interest accrued pursuant to paragraph (c) of this Section shall be payable
on demand, (ii) in the event of any repayment or prepayment of any Loan
(other than a prepayment of an ABR Revolving Loan prior to the end of the
Revolving Availability Period), accrued interest on the principal amount
repaid or prepaid shall be payable on the date of such repayment or
prepayment and (iii) in the event of any conversion of any Eurodollar Loan
prior to the end of the current Interest Period therefor, accrued interest
on such
<PAGE>
44
Loan shall be payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest computed by reference to the
Alternate Base Rate at times when the Alternate Base Rate is based on the
Prime Rate shall be computed on the basis of a year of 365 days (or 366
days in a leap year), and in each case shall be payable for the actual
number of days elapsed (including the first day but excluding the last
day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.
SECTION 2.12. Alternate Rate of Interest. If prior to the
---------------------------
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that, by reason of
circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Adjusted LIBO Rate for such
Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders
that the Adjusted LIBO Rate for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and
the Lenders by telephone or telecopy as promptly as practicable thereafter
and, until the Administrative Agent notifies the Borrower and the Lenders
that the circumstances giving rise to such notice no longer exist (provided
that the Administrative Agent shall use commercially reasonable efforts to
determine whether or not the circumstances which have caused the notice,
continue to exist), (i) any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a
Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request
requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.
<PAGE>
45
SECTION 2.13. Increased Costs. (a) If any Change in Law shall:
----------------
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate) or the
Issuing Bank; or
(ii) impose on any Lender or the London interbank market any
other condition (other than a condition relating to a Tax) affecting
this Agreement or Eurodollar Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any Eurodollar Loan (or of maintaining
its obligation to make any such Loan) or to reduce the amount of any sum
received or receivable by such Lender hereunder (whether of principal,
interest or otherwise), then the Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.
(b) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of
return on such Lender's capital or on the capital of such Lender's holding
company, if any, as a consequence of this Agreement or the Loans made by
such Lender, to a level below that which such Lender or such Lender's
holding company could have achieved but for such Change in Law (taking into
consideration such Lender's policies and the policies of such Lender's
holding company with respect to capital adequacy), then from time to time
the Borrower will pay to such Lender, as the case may be, such additional
amount or amounts as will compensate such Lender or such Lender's holding
company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or
amounts necessary to compensate such Lender or its holding company, as the
case may be, as specified in paragraph (a) or (b) of this Section shall be
delivered to the Borrower and shall be conclusive absent manifest error.
The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not
<PAGE>
46
constitute a waiver of such Lender's right to demand such compensation;
provided that the Borrower shall not be required to compensate a Lender
--------
pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender, notifies the
Borrower of the Change in Law giving rise to such increased costs or
reductions and of such Lender's intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased
-------- -------
costs or reductions is retroactive, then the 270-day period referred to
above shall be extended to include the period of retroactive effect
thereof.
SECTION 2.14. Break Funding Payments. In the event of (a) the
-----------------------
payment of any principal of any Eurodollar Loan other than on the last day
of an Interest Period applicable thereto (including as a result of an Event
of Default), (b) the conversion of any Eurodollar Loan other than on the
last day of the Interest Period applicable thereto, (c) the failure to
borrow, convert, continue or prepay any Revolving Loan or Term Loan on the
date specified in any notice delivered pursuant hereto (regardless of
whether such notice may be revoked under Section 2.11(g) and is revoked in
accordance therewith), or (d) the assignment of any Eurodollar Loan other
than on the last day of the Interest Period applicable thereto as a result
of a request by the Borrower pursuant to Section 2.17, then, in any such
event, the Borrower shall compensate each Lender for the loss, cost and
expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had
such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been
the Interest Period for such Loan), over (ii) the amount of interest which
would accrue on such principal amount for such period at the interest rate
which such Lender would bid were it to bid, at the commencement of such
period, for dollar deposits of a comparable amount and period from other
banks in the eurodollar market. A certificate of any Lender setting forth
any amount or amounts that such Lender is entitled to receive pursuant to
this Section shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay such Lender the amount shown
as due on any such certificate within 10 days after receipt thereof.
<PAGE>
47
SECTION 2.15. Taxes. (a) Any and all payments by or on account
------
of any obligation of the Borrower hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
--------
required to deduct any Indemnified Taxes or Other Taxes from such payments,
then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent,
Lender or Issuing Bank (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance
with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each
Lender, and the Issuing Bank within 30 days after written demand therefor,
for the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender, or the Issuing Bank, on or with respect
to any payment by or on account of any obligation of the Borrower hereunder
or under any other Loan Document (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender, the Issuing Bank or by the
Administrative Agent on its own behalf or on behalf of a Lender, or the
Issuing Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the
Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or
other evidence of such payment reasonably satisfactory to the
Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law
<PAGE>
48
of the jurisdiction in which the Borrower is located, or any treaty to
which such jurisdiction is a party, with respect to payments under this
Agreement shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate, including, without
limitation, if such Lender is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and intends to claim exemption from the U.S.
Federal withholding tax under Section 871(h) or 881(c) of the Code with
respect to payments of "portfolio interest", a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Foreign Lender
delivers a Form W-8, a certificate representing that such Foreign Lender is
not a bank for purposes of Section 881(c) of the code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code of the
Borrower and is not a controlled foreign corporation related to the
Borrower (within the meaning of Section 864(d)(4) of the Code)), properly
completed and duly executed by such Foreign Lender claiming complete
exemption from, or a reduced rate of, U.S. Federal withholding tax on
payments of interest by the Borrower under this Agreement and the other
Loan Documents.
(f) If the Administrative Agent or a Lender receives a refund in
respect of any Indemnified Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.15, it shall within 30 days
from the date of such receipt pay over to the Borrower (a) such refund (but
only to the extent of indemnity payments made, or additional amounts paid,
by the Borrower under this Section 2.15 with respect to the Indemnified
Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative agent or such Lender and (b) interest paid
by the relevant Governmental Authority with respect to such refund);
provided, however, that the Borrower, upon the request of the
-------- -------
Administrative Agent or such Lender shall repay the amount paid over to the
Borrower (plus penalties, interest or other charges) to the Administrative
Agent or such Lender in the event the Administrative Agent or such Lender
is required to repay such refund to such Governmental Authority.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of
--------------------------------------------------
Setoffs. (a) The Borrower shall make each payment required to be made by
--------
it hereunder or under
<PAGE>
49
any other Loan Document (whether of principal, interest, fees, or of
amounts payable under Section 2.13, 2.14 or 2.15, or otherwise) prior to
12:00 noon, New York City time, on the date when due, in immediately
available funds, without setoff or counterclaim. Any amounts received after
such time on any date may, in the discretion of the Administrative Agent,
be deemed to have been received on the next succeeding Business Day for
purposes of calculating interest thereon. All such payments shall be made
to the Administrative Agent at its offices at 270 Park Avenue, New York,
New York, except that payments pursuant to Sections 2.13, 2.14, 2.15 and
9.03 shall be made directly to the Persons entitled thereto and payments
pursuant to other Loan Documents shall be made to the Persons specified
therein. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate
recipient promptly following receipt thereof. If any payment under any Loan
Document shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable
for the period of such extension. All payments under each Loan Document
shall be made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of
principal, interest and fees then due hereunder, such funds shall be
applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts
of interest and fees then due to such parties, and (ii) second, towards
payment of principal then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of principal then due to such
parties.
(c) If any Lender shall, by exercising any right of set off or
counterclaim or otherwise, obtain payment in respect of any Loan or Loans
as a result of which the unpaid principal portion of its Tranche A Term
Loans, Tranche B Term Loans or Revolving Loans shall be proportionately
less than the unpaid principal portion of the Tranche A Term Loans, Tranche
B Term Loans or Revolving Loans of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and
shall promptly pay to such other Lender the purchase price for, a
participation in the Tranche A Term Loans, Tranche B Term Loans or
Revolving Loans, as the case may be, of such other Lender, so that the
aggregate unpaid principal amount of the Tranche A Term Loans, Tranche B
Term Loans and Revolving Loans and
<PAGE>
50
participations in Tranche A Term Loans, Tranche B Term Loans and Revolving
Loans held by each Lender shall be in the same proportion to the aggregate
unpaid principal amount of all Tranche A Term Loans, Tranche B Term Loans
and Revolving Loans then outstanding as the principal amount of its Tranche
A Term Loans, Tranche B Term Loans and Revolving Loans prior to such
exercise of any right of setoff or counterclaim or other event was to the
principal amount of all Tranche A Term Loans, Tranche B Term Loans and
Revolving Loans outstanding prior to such exercise of any right of setoff
or counterclaim or other event; provided that (i) if any such
--------
participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest,
and (ii) the provisions of this paragraph shall not be construed to apply
to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of
its Loans to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrower consents to the foregoing and agrees,
to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of setoff and counterclaim with
respect to such participation as fully as if such Lender were a direct
creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders hereunder that the
Borrower will not make such payment, the Administrative Agent may assume
that the Borrower has made such payment on such date in accordance herewith
and may, in reliance upon such assumption, distribute to the Lenders, the
amount due. In such event, if the Borrower has not in fact made such
payment, then each of the Lenders severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation.
<PAGE>
51
(e) If any Lender shall fail to make any payment required to be
made by it pursuant to Section 2.04(b), 2.04(c), 2.06(d) or 9.03(c), then
the Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such
Lender's obligations under such Sections until all such unsatisfied
obligations are fully paid.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders.
-----------------------------------------------
(a) If any Lender requests compensation under Section 2.13, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section
2.15, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to
assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable
pursuant to Section 2.13 or 2.15, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13, or
if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to
Section 2.15, or if any Lender defaults in its obligation to fund Loans
hereunder, then the Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to
the restrictions contained in Section 9.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
--------
written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of
an amount equal to the outstanding principal of its Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from
the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and
(iii) in the case of any such assignment resulting from a claim for
compensation under
<PAGE>
52
Section 2.13 or payments required to be made pursuant to Section 2.15, such
assignment will result in a reduction in such compensation or payments. A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and
delegation cease to apply.
ARTICLE III
Representations and Warranties
------------------------------
Holdings and the Borrower represent and warrant to the Lenders
that:
SECTION 3.01. Organization; Powers. Each of Holdings, the
---------------------
Borrower and its Subsidiaries is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, has
all requisite power and authority to carry on its business as now conducted
and to own and operate Systems in the areas set forth on Schedule 3.14 and,
except where the failure to do so, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect, is
qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required.
SECTION 3.02. Authorization; Enforceability. The Transactions
------------------------------
to be entered into by each Loan Party are within such Loan Party's
corporate or other organizational powers and have been duly authorized by
all necessary action. This Agreement has been duly executed and delivered
by the Borrower and constitutes, and each other Loan Document to which any
Loan Party is to be a party, when executed and delivered by such Loan
Party, will constitute, a legal, valid and binding obligation of the
Borrower or such Loan Party (as the case may be), enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The
-------------------------------------
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except
such as have been obtained or made and are in full force and effect and
except filings necessary to perfect Liens created under the
<PAGE>
53
Loan Documents, (b) will not violate any applicable law or regulation or
the charter, by-laws or other organizational documents of any Loan Party or
any order of any Governmental Authority, (c) will not violate or result in
a default under any indenture, agreement or other instrument binding upon
any Loan Party or any of their assets, or give rise to a right thereunder
to require any payment to be made by any Loan Party and (d) will not result
in the creation or imposition of any Lien on any asset of any Loan Party,
except Liens created under the Loan Documents.
SECTION 3.04. Financial Condition; No Material Adverse Change.
------------------------------------------------
(a) Holdings and the Borrower have heretofore furnished to the
Lenders pro forma consolidated balance sheets as of October 31, 1997,
prepared giving effect to the Transactions as if the Transactions had
occurred on such date. Such pro forma consolidated balance sheets (i) have
been prepared in good faith based on the same assumptions used to prepare
the pro forma financial statements included in the Information Memorandum
(which assumptions are believed by the Borrower to be reasonable), (ii) are
based on the best information available to the Borrower after due inquiry,
(iii) accurately reflect all adjustments necessary to give effect to the
Transactions and (iv) present fairly, in all material respects, the pro
forma financial position of the Borrower and its consolidated Subsidiaries
as of such date as if the Transactions had occurred on such date.
(b) Except as disclosed in the financial statements referred to
above or the notes thereto or in the Information Memorandum and except for
the Disclosed Matters, after giving effect to the Transactions, none of
Holdings, the Borrower or its Subsidiaries has, as of the Effective Date,
any material contingent liabilities, unusual long-term commitments or
unrealized losses.
(c) Since October 31, 1997, there has been no material adverse
change in the business, assets, operations, prospects or condition,
financial or otherwise, of the Borrower and its Subsidiaries, taken as a
whole.
SECTION 3.05. Properties. (a) Each of the Borrower and its
-----------
Subsidiaries has, or with respect to assets to be purchased from a
Qualified Vendor will have upon execution of the Qualified Vendor Agreement
and delivery of the assets contemplated thereby, good title to, or valid
leasehold interests in, all real and personal property material to its
business (including its Mortgaged Properties), except for minor defects in
title that do not
<PAGE>
54
interfere with its ability to conduct its business as currently conducted
or to utilize such properties for their intended purposes.
(b) Each of the Borrower and its Subsidiaries owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to its business, and the use thereof by the
Borrower and its Subsidiaries does not infringe upon the rights of any
other Person, except for any such infringements that, individually or in
the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
(c) Schedule 3.05 sets forth the address of each real property
that is owned or leased by the Borrower or any of its Subsidiaries as of
the Effective Date after giving effect to the Transactions.
(d) As of the Effective Date, neither the Borrower nor any of
its Subsidiaries has received notice of, or has knowledge of, any pending
or contemplated condemnation proceeding affecting any Mortgaged Property or
any sale or disposition thereof in lieu of condemnation. Neither any
Mortgaged Property nor any interest therein is subject to any right of
first refusal, option or other contractual right to purchase such Mortgaged
Property or interest therein.
SECTION 3.06. Litigation and Environmental Matters. (a) There
-------------------------------------
are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the
Borrower, threatened against or affecting Holdings, the Borrower or any of
its Subsidiaries (i) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably
be expected, individually or in the aggregate, to result in a Material
Adverse Effect (other than the Disclosed Matters) or (ii) that involve any
of the Loan Documents or the Transactions.
(b) Except for the Disclosed Matters and except with respect to
any other matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, neither none
of Holdings, the Borrower or any Subsidiary (i) has failed to comply with
any Environmental Law or to obtain, maintain or comply with any permit,
license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice of
any claim with respect to any Environmental Liability or (iv) knows of any
basis for any Environmental Liability.
<PAGE>
55
(c) Since the date of this Agreement, there has been no change
in the status of the Disclosed Matters that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each Loan
------------------------------------
Party is in compliance with (a) all laws, regulations and orders of any
Governmental Authority applicable to it or its property and (b) the terms
of the PCS Documents and all other indentures, agreements and instruments
binding upon it or its property, except, in the case of agreements,
indentures and instruments other than the PCS Documents, where the failure
to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred
and is continuing.
SECTION 3.08. Investment and Holding Company Status. No Loan
--------------------------------------
Party is (a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a "holding
company" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935.
SECTION 3.09. Taxes. Each Loan Party has filed or caused to be
------
filed all Tax returns which, to the knowledge of the Borrower are required
to have been filed and has paid or caused to be paid all Taxes required to
have been paid by it, except (a) Taxes that are being contested in good
faith by appropriate proceedings and for which the Borrower or such
Subsidiary, as applicable, has set aside on its books reserves in
accordance with GAAP or (b) to the extent that the failure to do so could
not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is
------
reasonably expected to occur that, when taken together with all other such
ERISA Events for which liability is reasonably expected to occur, could
reasonably be expected to result in a Material Adverse Effect. The present
value of all accumulated benefit obligations under each Plan (based on the
assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $1,000,000 the fair
market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such
<PAGE>
56
amounts, exceed by more than $1,000,000 the fair market value of the assets
of all such underfunded Plans.
SECTION 3.11. Disclosure. The Borrower has disclosed to the
-----------
Lenders all agreements, instruments and corporate or other restrictions to
which any Loan Party is subject, and all other matters known to any of
them, that, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect. Neither the Information Memorandum
nor any of the other reports, financial statements, certificates or other
information furnished by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the negotiation of
this Agreement or any other Loan Document or delivered hereunder or
thereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that,
--------
with respect to projected financial information, the Borrower represents
only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time.
SECTION 3.12. Subsidiaries; Parents. (a) Schedule 3.12 sets
----------------------
forth the name of, and the ownership interest of the Borrower in, each
Subsidiary of the Borrower and identifies each Subsidiary that is a
Subsidiary Loan Party, in each case as of the Effective Date. Each of the
License Subsidiary and the Real Property Subsidiary is a Wholly Owned
Subsidiary, and all the Capital Stock of each such Person is directly owned
by the Borrower free and clear of any Lien (other than Liens created by the
Security Documents).
(b) As of the Effective Date, the Capital Stock of Holdings will
be owned as set forth on Schedule 3.12. As of the date hereof, to the best
of the Borrower's knowledge, AW is a Wholly Owned Subsidiary of AT&T Corp.
(c) As of the date hereof, there is not, and as of the Effective
Date, there will not be, any issued or outstanding Capital Stock or other
interest of or in Holdings, the Borrower or any of its Subsidiaries other
than as described in subsections 3.12(a) and (b). All outstanding Capital
Stock of each Subsidiary of the Borrower is owned, directly or indirectly,
by the Borrower or another Subsidiary, and all outstanding Capital Stock of
the Borrower, is owned by Holdings, in each case free and clear of all
Liens whatsoever (other than Liens created by the Security Documents).
<PAGE>
57
(d) All Licenses which are directly or indirectly held by the
Borrower or any of its Subsidiaries are owned, beneficially and of record
by the License Subsidiary, free and clear of all Liens (other than Liens
under the Security Documents or imposed by the Communications Act).
(e) All Real Property Assets and Real Property-Related Equipment
(other than Excluded Real Property Assets, Excluded Real Property-Related
Equipment, Secured Real Property Assets and Secured Real Property-Related
Equipment) which are directly or indirectly owned by the Borrower or any
other Loan Party are owned, beneficially and of record by the Real Property
Subsidiary, free and clear of all Liens (other than Liens under the
Security Documents or Permitted Encumbrances). At least 90% of the value
of (A) the Real Property Assets and (B) the Real Property-Related Equipment
of the Borrower and its Subsidiaries (excluding Secured Real Property
Assets and Secured Real Property-Related Equipment) are owned, beneficially
and of record, free and clear of all Liens (other than the Liens under the
Security Documents) by the Real Property Subsidiary.
SECTION 3.13. Absence of Non-Permitted Obligations. None of the
-------------------------------------
Special Purpose Subsidiaries has any obligations or liabilities other than
(a) under the Guarantee Agreement and the Security Agreement, (b) in the
case of the Real Property Subsidiary, under any lease of real property or
equipment which it has entered into in the ordinary course of business and
for taxes incurred in the ordinary course of business which are incident to
being the owner or lessee of real property and equipment, (c) under the
Special Purpose Subsidiary Funding Agreements and (d) franchise and
corporate taxes incurred in the ordinary course in order for it to continue
to maintain its existence.
SECTION 3.14. Licenses. (i) The Borrower and its Subsidiaries
---------
have the full use and benefit of all Licenses necessary to operate a System
in the BTAs listed on Schedule 3.14 and each other area in which the
Borrower or any Subsidiary conducts a broadband personal communications
services business, (ii) such Licenses have been duly issued by the FCC, are
held by the License Subsidiary and are in full force and effect and (iii)
the Borrower and its Subsidiaries are in compliance in all material
respects with all of the provisions of each such License.
SECTION 3.15. No Burdensome Restrictions. No Requirement of Law
---------------------------
or Contractual Obligation (other than, in the case of clause (b) below, any
restriction under subsection 6.08(a)) applicable to Holdings, the Borrower
or
<PAGE>
58
any Subsidiary could reasonably be expected to (a) have a Material Adverse
Effect or (b) limit the ability of any Subsidiary to pay dividends or to
make distributions or advances to the Borrower or any other Subsidiary.
SECTION 3.16. Use of Proceeds. The Borrower will use the
----------------
proceeds of the Loans to fund capital expenditures related to the
construction of the Network, the acquisition of Related Businesses, working
capital needs of the Borrower and subscriber acquisition costs.
SECTION 3.17. Flood Insurance. To the extent reasonably
----------------
available, the Borrower has obtained for all Mortgaged Properties which are
located in a "flood hazard area", as designated in any Flood Insurance Rate
Map published by the Federal Emergency Management Agency, such flood
insurance in such total amount as the Administrative Agent has from time to
time reasonably required.
SECTION 3.18. Insurance. Schedule 3.18 sets forth a description
----------
of all insurance maintained by or on behalf of the Borrower and its
Subsidiaries as of the Effective Date. As of the Effective Date, all
premiums in respect of such insurance have been paid.
SECTION 3.19. Labor Matters. As of the Effective Date, there
--------------
are no strikes, lockouts or slowdowns against the Borrower or any
Subsidiary pending or, to the knowledge of the Borrower, threatened. With
such exceptions as could not reasonably be expected to result in a Material
Adverse Effect, (i) the hours worked by and payments made to employees of
the Borrower and the Subsidiaries have not been in violation of the Fair
Labor Standards Act or any other applicable Federal, state, local or
foreign law dealing with such matters and (ii) all payments due from the
Borrower or any Subsidiary, or for which any claim may be made against the
Borrower or any Subsidiary, on account of wages and employee health and
welfare insurance and other benefits, have been paid or accrued as a
liability on the books of the Borrower or such Subsidiary.
SECTION 3.20. Solvency. Immediately after the consummation of
---------
the Transactions to occur on the Effective Date and immediately following
the making of each Loan made on the Effective Date and after giving effect
to the application of the proceeds of such Loans, (a) the fair value of the
assets of each Loan Party, at a fair valuation, will exceed its debts and
liabilities, subordinated, contingent or otherwise; (b) the present fair
saleable value of the property of each Loan Party will be greater than the
amount that will be required to pay the probable liability
<PAGE>
59
of its debts and other liabilities, subordinated, contingent or otherwise,
as such debts and other liabilities become absolute and matured; (c) each
Loan Party will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) each Loan Party will not have unreasonably small capital
with which to conduct the business in which it is engaged as such business
is now conducted and is proposed to be conducted following the Effective
Date.
SECTION 3.21. FCC Compliance. (a) The Borrower and each
---------------
Subsidiary are in compliance in all material respects with the
Communications Act.
(b) The Borrower has no knowledge of any investigation, notice
of apparent liability, violation, forfeiture or other order or complaint
issued by or before the FCC, or of any other proceedings (other than
proceedings relating to the wireless communications industries generally)
of or before the FCC, which could reasonably be expected to have a Material
Adverse Effect.
(c) No event has occurred which (i) results in, or after notice
or lapse of time or both would result in, revocation, suspension, adverse
modifications, non-renewal, impairment, restriction or termination of, or
order of forfeiture with respect to, any License in any respect which could
reasonably be expected to have a Material Adverse Effect or (ii) affects or
could reasonably be expected in the future to affect any of the rights of
the Borrower or the License Subsidiary under any License held by the
Borrower or the License Subsidiary in any respect which could reasonably be
expected to have a Material Adverse Effect.
(d) The Borrower and the License Subsidiary have duly filed in a
timely manner all material filings, reports, applications, documents,
instruments and information required to be filed by it under the
Communications Act, and all such filings were when made true, correct and
complete in all material respects.
(e) The Borrower has no reason to believe that each License of
the Borrower or any Subsidiary will not be renewed in the ordinary course.
SECTION 3.22. Security Documents. (a) The Pledge Agreement is
-------------------
effective to create in favor of the Administrative Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable security
interest in the Collateral (as defined in the Pledge Agreement) and,
<PAGE>
60
when the Collateral is delivered to the Administrative Agent, the Pledge
Agreement shall create a fully perfected first priority Lien on, and
security interest in, all right, title and interest of the pledgors
thereunder in such Collateral, in each case prior and superior in right to
any other person.
(b) The Security Agreement is effective to create in favor of
the Administrative Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable security interest in the Collateral (as
defined in the Security Agreement) and, when financing statements in
appropriate form are filed in the offices specified on Schedule 6 to the
Perfection Certificate, the Security Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest
of the grantors thereunder in such Collateral (other than the Intellectual
Property, as defined in the Security Agreement), in each case prior and
superior in right to any other person, other than with respect to Liens
expressly permitted by Section 6.02. Following an Event of Default, the
Borrowers rights under the PCS Documents (other than the Stockholders
Agreement) will be enforceable by the Lenders; provided, however, that the
-------- -------
Administrative Agent shall not assign the Network Licensing Agreement to a
third party without first obtaining AW's consent.
(c) When the Security Agreement is filed in the United States
Patent and Trademark Office and the United States Copyright Office, and,
with respect to Collateral in which a security interest cannot be perfected
by such filings, upon the filing of the financing statements referred to in
paragraph (b) above, the Security Agreement and such financing statements
shall constitute a fully perfected Lien on, and security interest in, all
right, title and interest of the grantors thereunder in the Intellectual
Property (as defined in the Security Agreement), in each case prior and
superior in right to any other person (it being understood that subsequent
recordings in the United States Patent and Trademark Office and the United
States Copyright Office may be necessary to perfect a lien on registered
trademarks, trademark applications and copyrights acquired by the grantors
after the date hereof).
(d) The Mortgages are effective to create in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable Lien on all of the Borrower's right, title and
interest in and to the Mortgaged Property thereunder and the proceeds
thereof, and when the Mortgages are filed in the offices specified on
Schedule 3.22, the Mortgages shall constitute a fully
<PAGE>
61
perfected Lien on, and security interest in, all right, title and interest
of the Borrower in such Mortgaged Property and the proceeds thereof, in
each case prior and superior in right to any other person, other than with
respect to the rights of persons pursuant to Liens expressly permitted by
Section 6.02.
SECTION 3.23. Copyrights, Trademarks, etc. The Borrower and the
----------------------------
Subsidiaries own, or are licensed to use, all copyrights, trademarks, trade
names, patents, technology, know-how and processes, service marks and
rights with respect to the foregoing that are (a) used in or necessary for
the conduct of their respective businesses as currently conducted and (b)
material to the business, assets, operations, properties, prospects or
condition (financial or otherwise) of the Borrower and the Subsidiaries
taken as a whole. The use of such copyrights, trademarks, trade names,
patents, technology, know-how and processes, service marks and rights with
respect to the foregoing by the Borrower and the Subsidiaries does not
infringe on the rights of any Person.
SECTION 3.24. Federal Regulations. No part of the proceeds of
--------------------
any Loans will be used in any manner which would result in a violation of
Regulation G, U or X of the Board as now and from time to time hereafter in
effect or to buy or carry "margin stock" (as defined thereunder) or to
refinance any Indebtedness incurred for such purpose.
SECTION 3.25. Assets and Business of Holdings.
--------------------------------
(a) As of the date hereof Holdings has, and as of the Effective
Date Holdings will have, no assets other than (i) the Capital Stock of
the Borrower, (ii) contract rights under the Securities Purchase
Agreement and (iii) (on the Effective Date) rights under the
Stockholders Agreement.
(b) Holdings is engaged in no business other than the holding of
such assets and the incurrence of debt permitted under Section
6.01(a).
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date. The obligations of the Lenders to
---------------
make Loans hereunder shall not become
<PAGE>
62
effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this
Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of this Agreement) that such
party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable
written opinion or opinions (addressed to the Administrative Agent and
the Lenders and dated the Effective Date) of (i) Latham & Watkins and
Kleinbard, Bell & Brecker LLP, counsel for the Borrower, which when
taken together will be substantially in the form of Exhibit B-1 and
(ii) Latham & Watkins, special counsel to the Borrower with respect to
FCC matters, substantially in the form of Exhibit B-2 and, in the case
of each such opinion required by this paragraph, covering such other
matters relating to the Loan Parties, the Loan Documents or the
Transactions as the Required Lenders shall reasonably request. The
Borrower hereby requests such counsel to deliver such opinions.
(c) The Administrative Agent shall have received (i) a
certificate of the Secretary or Assistant Secretary of the Borrower
and each Subsidiary Loan Party dated the Effective Date and certifying
(A) that attached thereto is a true and complete copy of the by-laws,
operating agreement or partnership agreement of such Loan Party as in
effect on the Effective Date and at all times since a date prior to
the date of the resolutions described in clause (B) below, (B) that
attached thereto is a true and complete copy of resolutions duly
adopted by the board of directors (or equivalent governing body),
members or partners of the Borrower and each Subsidiary Loan Party
authorizing the execution, delivery and performance of the Loan
Documents to which such person is a party and, in the case of the
Borrower, the borrowings hereunder, and that such resolutions have not
been modified, rescinded or amended and are in full force and effect,
and (C) as to the incumbency and specimen signature of each officer or
partner of the Borrower (or its general partner) and any Subsidiary
Loan Party executing any Loan Document on behalf of such Loan Party;
(ii) a
<PAGE>
63
certificate of another officer as to the incumbency and specimen
signature of the Secretary or Assistant Secretary executing the
certificate pursuant to (i) above; and (iii) such other documents as
the Lenders or Cravath, Swaine & Moore, counsel for the Administrative
Agent, may reasonably request.
(d) The Administrative Agent shall have received a certificate,
dated the Effective Date and signed by the President, a Vice President
or a Financial Officer of the Borrower, confirming compliance with the
conditions set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received all fees and
other amounts due and payable on or prior to the Effective Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by any Loan
Party hereunder or under any other Loan Document.
(f) Special Purpose Subsidiaries. The Borrower shall have
-----------------------------
transferred to a Real Property Subsidiary all Real Property Assets and
Real Property-Related Equipment other than (A) Real Property Assets
constituting rights under leases that as of the date hereof prohibit
such transfer (without regard to any such prohibition which contains
exceptions if the obligations under the applicable lease were to be
assumed by the Borrower or its Subsidiaries or if the Borrower or its
Subsidiaries were to take other actions which are reasonably within
their power to take ("Restricted Real Property Assets")) and (B)
equipment which constitutes a fixture to any Restricted Real Property
Asset ("Restricted Real Property-Related Equipment") but in any event
the Borrower shall have so transferred assets constituting at least
90% of the value of all Real Property Assets and Real Property-Related
Equipment of the Borrower and its Subsidiaries (excluding Secured Real
Property Assets and Secured Real Property-Related Equipment) as of the
date hereof and provided evidence reasonably satisfactory to the
Administrative Agent of the transfers described above and each of the
Real Property Subsidiary and the License Subsidiary shall have entered
into Special Purpose Subsidiary Funding Agreements with the Borrower.
(g) The Pledge Agreement shall have been duly executed by the
parties thereto, shall have been delivered to the Administrative Agent
and shall be in
<PAGE>
64
full force and effect, and all the outstanding (i) intercompany
Indebtedness owed to any Loan Party by the Borrower or any Subsidiary
and (ii) equity interests that are owned by the Borrower or any
Subsidiary Loan Party (in each case as of the Effective Date after
giving effect to the Transactions) (A) shall have been duly and
validly pledged thereunder to the Administrative Agent for the ratable
benefit of the Secured Parties, and (B) certificates representing such
equity interests (except that such certificates representing equity
interests in a Foreign Subsidiary may be limited to 65% of the
outstanding shares of such partnership interests or equity interests
in such Foreign Subsidiary) and promissory notes evidencing such
intercompany Indebtedness shall be in the actual possession of the
Administrative Agent, accompanied by stock powers or other instruments
of transfer, endorsed in blank, with respect to such certificates and
such promissory notes.
(h) The Security Agreement shall have been duly executed by the
parties thereto, shall have been delivered to the Administrative Agent
and shall be in full force and effect, and all documents and
instruments, including Uniform Commercial Code financing statements,
required by law or reasonably requested by the Administrative Agent to
be filed, registered or recorded to create or perfect the Liens
intended to be created under the Security Agreement shall have been
delivered to the Administrative Agent.
(i) The Administrative Agent shall have received a completed
Perfection Certificate (giving effect to the Transactions) dated the
Effective Date and signed by an executive officer or Financial Officer
of the Borrower, together with all attachments contemplated thereby,
including the results of a search of the Uniform Commercial Code (or
equivalent) filings made with respect to the Borrower and the
Subsidiary Loan Parties in the jurisdictions contemplated by the
Perfection Certificate and copies of the financing statements (or
similar documents) disclosed by such search and evidence reasonably
satisfactory to the Administrative Agent that the Liens indicated by
such financing statements (or similar documents) are permitted by
Section 6.02 or have been released.
(j) The Guarantee Agreement shall have been duly executed by the
Subsidiary Loan Parties and the Administrative Agent, shall have been
delivered to the
<PAGE>
65
Administrative Agent and shall be in full force and effect.
(k) The Indemnity, Subrogation and Contribution Agreement shall
have been duly executed by the parties thereto, shall have been
delivered to the Administrative Agent and shall be in full force and
effect.
(l) The Administrative Agent shall have received evidence
satisfactory to it that the insurance required by Section 5.07 is in
effect.
(m) The Administrative Agent shall have received from the
Borrower a photocopy, certified to be true and complete, of its
Licenses for the BTAs listed in Schedule 3.14 and such Licenses shall
be owned by the Borrower free and clear of all Liens other than liens
imposed by the Communications Act.
(n) The Administrative Agent shall have received from the
Borrower conformed copies, certified and true and complete, of (i) the
Securities Purchase Agreement, (ii) the Network License Agreement,
(iii) the Stockholders Agreement, (iv) the Roaming Agreement, (v) the
Resale Agreement (unexecuted) and (vi) the Special Purpose Subsidiary
Funding Agreements. Each of the agreements referred to in the previous
sentence (other than the Resale Agreement) shall have been duly
executed and delivered on behalf of each party thereto, shall have
been duly authorized thereby, and shall constitute a legal, valid and
binding obligation of such party, enforceable against such party in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law);
and the Borrower shall have delivered to the Lenders a certificate of
a Responsible Officer as to the accuracy of the foregoing.
(o) To the extent not expressly contemplated in the final form
of Securities Purchase Agreement or the final form of Restated
Certificate of Incorporation delivered to the Administrative Agent
prior to October 8, 1997, the Administrative Agent shall be satisfied
with (i) the corporate and capital structure of the Borrower and its
subsidiaries, (ii) the contributions to the Borrower's equity and
(iii) all legal, tax and accounting matters related to the
<PAGE>
66
formation, capitalization and operations of the Borrower.
(p) The Borrower shall have entered into or, with respect to the
Qualified Vendor Agreement, will enter into within 30 days of the
Effective Date, (i) supply contracts with vendors for the build out of
the Network and the acquisition of related equipment, and, to the
extent material, such contracts shall be reasonably satisfactory to
the Lenders and (ii) such other agreements with third parties as may
be reasonably necessary to the conduct of its proposed operations in
accordance with its business plan.
(q) The Borrower shall have received all scheduled cash capital
contributions set forth on Schedule I to the Securities Purchase
Agreement, including contributions of $45,000,000 in cash on or prior
to the Effective Date as set forth therein.
(r) Each of Holdings, the Borrower, AW and the other parties
thereto shall have executed and delivered to the Administrative Agent
consents to assignment ("Consents to Assignment") to the
Administrative Agent for the benefit of the Secured Parties, in form
and substance satisfactory to the Administrative Agent, with respect
to the Securities Purchase Agreement, the Network License Agreement
and such of the other PCS Documents as are requested by the
Administrative Agent; provided, however, that, with respect to the
-------- -------
Network License Agreement, such Consent to Assignment will not permit
the Administrative Agent to assign the Network License Agreement to
any person other than the Lenders without first obtaining AW's
consent.
(s) The terms and conditions of any Subordinated Debt, if any,
and the provisions of the Subordinated Debt Documents, if any, shall
be satisfactory to the Lenders and the Administrative Agent shall have
received copies of any Subordinated Debt Documents, if any, certified
by a Responsible Officer as complete and correct.
(t) All consents and approvals required to be obtained from any
Governmental Authority or other Person in connection with the
Transactions shall have been obtained, and all applicable waiting
periods and appeal periods shall have expired or, with respect to the
consent of the FCC to the License Transfer (as defined in the
Securities Purchase Agreement) a Final Order (as defined in the
Securities Purchase Agreement)
<PAGE>
67
shall have been obtained, in each case without the imposition of any
burdensome conditions and there shall be no governmental or judicial
action, actual or threatened, that could reasonably be expected to
restrain, prevent or impose burdensome conditions on the Transactions.
To the extent contemplated by the terms of this Agreement and the
Securities Purchase Agreement, the Transactions shall have been, or
substantially simultaneously with the initial funding of Loans on the
Effective Date shall be, consummated in accordance with the PCS
Documents and applicable law, without any amendment to or waiver of
any material terms or conditions of the PCS Documents not approved by
the Required Lenders. The Administrative Agent shall have received
copies of the PCS Documents and all certificates, opinions and other
documents delivered thereunder, certified by a Responsible Officer as
complete and correct and the PCS Documents shall contain no material
changes adverse to the interests of the Lenders compared to the final
form of such documents delivered to the Administrative Agent prior to
October 8, 1997.
(u) The Lenders shall have received pro forma consolidated
balance sheets of the Borrower and Holdings as of October 31, 1997,
reflecting all pro forma adjustments as if the Transactions had been
consummated on such date, and such pro forma consolidated balance
sheets shall be consistent in all material respects with the
projections and other information previously provided to the Lenders.
After giving effect to the Transactions, neither Holdings, the
Borrower nor any of their Subsidiaries shall have outstanding any
shares of preferred stock or any Indebtedness, other than (i)
Indebtedness incurred under the Loan Documents, (ii) the Subordinated
Debt and (iii) preferred stock issued to AW and the other equity
investors listed on Schedules I and II to the Securities Purchase
Agreement pursuant to the terms of the Securities Purchase Agreement.
(v) The Administrative Agent shall have received from the
Borrower (i) the financial statements referred to in Section 3.04 and
(ii) a certificate dated the Effective Date and duly executed by a
Responsible Officer of the Borrower certifying that attached thereto
is the annual budget of the Borrower for the fiscal year ending
December 31, 1998 as well as a 10-year business plan of the Borrower
satisfactory to the Administrative Agent with quarterly projections
for
<PAGE>
68
at least the two-year period following the Effective Date.
(w) There shall have been no material adverse change in the
business, assets, results of operations, properties, prospects or
financial condition of the Borrower and the Subsidiaries, taken as a
whole, or of Holdings since October 31, 1997.
(x) Holdings and the Borrower shall be in Pro Forma Compliance.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans
shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m.,
New York City time, on the date hereof (and, in the event such conditions
are not so satisfied or waived, the Commitments shall terminate at such
time).
SECTION 4.02. Each Credit Event. The obligation of each Lender
------------------
to make a Loan on the occasion of any Borrowing, is subject to the
satisfaction of the following conditions:
(a) The representations and warranties of each Loan Party set
forth in the Loan Documents shall be true and correct in all material
respects on and as of the date of such Borrowing except with respect
to representations and warranties expressly made only as of the date
hereof or the Effective Date which shall be true in all material
respects as of such date.
(b) At the time of and immediately after giving effect to such
Borrowing no Default shall have occurred and be continuing and the
Borrower shall be in Pro Forma Compliance.
(c) At the time of and immediately after giving effect to such
Borrowing, the Borrower shall be in Pro Forma Compliance with (i) if
the Subordinated Debt has not been issued, the covenant set forth in
subsection 6.12(a) and (ii) if the Subordinated Debt has been issued,
the covenant set forth in subsection 6.12(b); provided, however, that,
-------- -------
after Holdings and the Borrower deliver the financial statements
required for the fiscal quarter ended September 30, 2000 pursuant to
Section 5.01, this clause (c) shall be deemed to have been satisfied
if at
<PAGE>
69
the time of and immediately after giving effect to such Borrowing, the
Bororwer is in pro forma compliance with the covenants set forth in
Section 6.12(g) and (i).
Each Borrowing shall be deemed to constitute a representation and warranty
by the Borrower on the date thereof as to the matters specified in
paragraphs (a) and (b) of this Section.
ARTICLE V
Affirmative Covenants
---------------------
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall
have been paid in full each of Holdings and the Borrower covenants and
agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. Each
-------------------------------------------
of Holdings and the Borrower will furnish to the Administrative Agent and
each Lender:
(a) within 90 days after the end of each fiscal year its audited
consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for
the previous fiscal year, all reported on by KPMG Peat Marwick, LLP,
or other independent public accountants of recognized national
standing (without a "going concern" or like qualification or exception
and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, its consolidated balance sheet
and related statements of operations, stockholders' equity and cash
flows as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods
of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by one of its Financial
<PAGE>
70
Officers as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with
Sections 6.08 and 6.12 and (iii) stating whether any change in GAAP or
in the application thereof has occurred since the date of the
Borrower's audited financial statements referred to in Section 3.04
and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported
on such financial statements stating whether they obtained knowledge
during the course of their examination of such financial statements of
any Default (which certificate may be limited to the extent required
by accounting rules or guidelines);
(e) no more than 45 days after the commencement of each fiscal
year, a detailed consolidated budget for such fiscal year, broken down
by fiscal quarters (including a projected consolidated balance sheet
and related statements of projected operations and cash flow as of the
end of and for each such fiscal quarter) and, promptly when available,
any significant revisions of such budget;
(f) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials
filed by Holdings, the Borrower or any Subsidiary with the Securities
and Exchange Commission, or any Governmental Authority succeeding to
any or all of the functions of said Commission, or with any national
securities exchange, as the case may be;
<PAGE>
71
(g) on an annual basis, a copy of the projections as to the
performance of Holdings and the Borrower, presented in a manner
consistent with the projections in the Information Memorandum for the
period from the date of the most recent balance sheet included in the
financial statements delivered pursuant to (a) above through the last
day of the fiscal year in which the Tranche B Maturity Date occurs,
such projections to be accompanied by a certificate of a Responsible
Officer of the Borrower to the effect that such projections have been
prepared using assumptions believed in good faith by the management of
the Borrower to be reasonable as of the date of such certificate
(which shall be subsequent to the date of the most recent balance
sheet included in such financial statements).
(h) within 30 days after the end of each calendar month, a
certificate of a Responsible Officer setting forth (A) the aggregate
number of Subscribers at the end of the calendar month preceding such
calendar month and (B) the aggregate number of Subscribers at the end
of such calendar month;
(i) within 30 days after the end of each fiscal quarter, a
certificate of a Responsible Officer setting forth (A) the aggregate
number of Subscribers whose service terminated during such fiscal
quarter, (B) the aggregate number of Subscribers added during such
fiscal quarter and (C) certain revenue and system build information.
(j) within five Business Days after the same are sent, a copy of
any financial statement, report or notice which Holdings, the Borrower
or any Subsidiary sends to any Person under or pursuant to or in
connection with the Securities Purchase Agreement, the Network License
Agreement, the Stockholders Agreement, the Roaming Agreement, the
Resale Agreement, or any other PCS Document, in each case if such
statement, report or notice relates to an event that has resulted or
could reasonably be expected to result in an Event of Default or a
Material Adverse Effect; and, within five Business Days after the same
are received by Holdings, the Borrower or any Subsidiary, copies of
all notices sent to any such Person under or pursuant to or in
connection with any such agreement or instrument which notice relates
to an event that has resulted or could reasonably be expected to
result in an Event of Default or a Material Adverse Effect; and
<PAGE>
72
(k) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of Holdings, the Borrower or any Subsidiary, or compliance
with the terms of any Loan Document, as the Administrative Agent or
any Lender may reasonably request.
SECTION 5.02. Notices of Material Events. Upon a Responsible
---------------------------
Officer having knowledge of the following, the Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or
affecting Holdings, the Borrower or any Affiliate thereof that, if
adversely determined, could reasonably be expected to result in a
Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in a Material Adverse Effect; and
(d) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice
and any action taken or proposed to be taken with respect thereto.
SECTION 5.03. Information Regarding Collateral. (a) The
---------------------------------
Borrower will furnish to the Administrative Agent prompt written notice of
any change (i) in any Loan Party's corporate name or in any trade name used
to identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of any Loan Party's chief executive
office, its principal place of business, any office in which it maintains
books or records relating to Collateral owned by it or any office or
facility at which Collateral owned by it is located (including the
establishment of any such new office or facility), (iii) in any Loan
Party's identity or corporate structure or (iv) in any Loan Party's Federal
Taxpayer Identification Number. The Borrower agrees not to effect or
permit any change referred to in the preceding sentence unless all filings
<PAGE>
73
have been made under the Uniform Commercial Code or otherwise that are
required in order for the Administrative Agent to continue at all times
following such change to have a valid, legal and perfected security
interest in all the Collateral. The Borrower also agrees promptly to
notify the Administrative Agent if any material portion of the Collateral
is damaged or destroyed.
(b) Each year, at the time of delivery of annual financial
statements with respect to the preceding fiscal year pursuant to clause (a)
of Section 5.01, the Borrower shall deliver to the Administrative Agent a
certificate of a Financial Officer of the Borrower (i) setting forth the
information required pursuant to Section 2 of the Perfection Certificate or
confirming that there has been no change in such information since the date
of the Perfection Certificate delivered on the Effective Date or the date
of the most recent certificate delivered pursuant to this Section and (ii)
certifying that all Uniform Commercial Code financing statements (including
fixture filings, as applicable) or other appropriate filings, recordings or
registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral have been filed of record in
each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (i) above to the extent
necessary to protect and perfect the security interests under the
Collateral Agreement for a period of not less than 18 months after the date
of such certificate (except as noted therein with respect to any
continuation statements to be filed within such period).
SECTION 5.04. Existence; Conduct of Business. Holdings and the
-------------------------------
Borrower will, and will cause each of its Subsidiaries to, do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence and the rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its business; provided that the foregoing shall not prohibit any
--------
merger, consolidation, liquidation or dissolution permitted under Section
6.04.
SECTION 5.05. Payment of Obligations. Holdings and the Borrower
-----------------------
will, and will cause each of its Subsidiaries to, pay its Indebtedness and
other obligations, including Tax liabilities, before the same shall become
delinquent or in default, except where (a) the validity or amount thereof
is being contested in good faith by appropriate proceedings, (b) the
Borrower or such Subsidiary has set aside on its books reserves with
respect thereto in
<PAGE>
74
accordance with GAAP, (c) such contest effectively suspends collection of
the contested obligation and the enforcement of any Lien securing such
obligation and (d) the failure to make payment pending such contest could
not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.06. Maintenance of Properties. Holdings and the
--------------------------
Borrower will, and will cause each of its Subsidiaries to, maintain (i) all
property necessary to the conduct of its business in good working order and
condition with such exceptions as would not have a Material Adverse Effect
and (ii) its accounting, software and billing systems and controls at a
level consistent with the standards of other reputable wireless services
providers and reasonably required in connection with the Borrower's
business.
SECTION 5.07. Insurance. Holdings and the Borrower will, and
----------
will cause each of its Subsidiaries to, maintain, with financially sound
and reputable insurance companies insurance on all its property in at least
such amounts and against at least such risks as are usually insured against
by companies engaged in the same or a similar business in the same or
similar locations, and furnish to the Administrative Agent, upon written
request, full information as to the insurance carried.
SECTION 5.08. Casualty and Condemnation. (a) Holdings and the
--------------------------
Borrower will furnish to the Administrative Agent and the Lenders prompt
written notice of any casualty or other insured damage to any portion of
any Collateral or the commencement of any action or proceeding for the
taking of any Collateral or any part thereof or interest therein under
power of eminent domain or by condemnation or similar proceeding.
(b) If any event described in paragraph (a) of this Section
results in Net Proceeds (whether in the form of insurance proceeds,
condemnation award or otherwise), the Administrative Agent is authorized to
collect such Net Proceeds and, if received by Holdings, the Borrower or any
Subsidiary, such Net Proceeds shall be paid over to the Administrative
Agent; provided that (i) if the aggregate Net Proceeds in respect of such
--------
event (other than proceeds of business income insurance) are less than
$3,000,000, such Net Proceeds shall be paid over to the Borrower unless a
Default has occurred and is continuing, and (ii) all proceeds of business
income insurance shall be paid over to the Borrower unless a Default has
occurred and is continuing. All such Net Proceeds retained by or paid over
to the Administrative Agent shall be held by the Administrative Agent and
released from time to time to pay
<PAGE>
75
the costs of repairing, restoring or replacing the affected property in
accordance with the terms of the applicable Security Document, subject to
the provisions of the applicable Security Document regarding application of
such Net Proceeds during a Default.
(c) If any Net Proceeds retained by or paid over to the
Administrative Agent as provided above continue to be held by the
Administrative Agent on the date that is 270 days after the occurrence of
the event resulting in such Net Proceeds, then such Net Proceeds shall be
applied to prepay Term Borrowings as provided in Section 2.09(b).
SECTION 5.09. Books and Records; Inspection and Audit Rights.
-----------------------------------------------
Holdings and the Borrower will, and will cause each of its Subsidiaries to,
keep proper books of record and account in which entries which are accurate
and complete in all material respects are made of all dealings and
transactions in relation to its business and activities. The Borrower
will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants, all
at such reasonable times and as often as reasonably requested.
SECTION 5.10. Compliance with Laws. Holdings and the Borrower
---------------------
will, and will cause each of its Subsidiaries to, comply with all laws,
rules, regulations and orders of any Governmental Authority applicable to
it or its property, except where the failure to do so, individually or in
the aggregate, could not reasonably be expected to result in a Material
Adverse Effect and to comply in all material respects with all of its
material Contractual Obligations (including obligations under any License).
SECTION 5.11. Use of Proceeds. The proceeds of the Loans,
----------------
together with the proceeds of the Initial Equity Contributions and the
Subordinated Debt, if any, will be used only to fund capital expenditures
related to the construction of the Network, the acquisition of Related
Businesses, working capital needs of the Borrower and subscriber
acquisition costs. No part of the proceeds of any Loan will be used,
whether directly or indirectly, for any purpose that entails a violation of
any of the Regulations of the Board, including Regulations G, U and X.
SECTION 5.12. Additional Subsidiaries. If any additional
------------------------
Subsidiary is formed or acquired after the
<PAGE>
76
Effective Date, the Borrower will notify the Administrative Agent and the
Lenders thereof and (a) if such Subsidiary is a Subsidiary Loan Party, the
Borrower will cause such Subsidiary to become a party to the Pledge
Agreement (if such Subsidiary owns capital stock or intercompany
Indebtedness), the Security Agreement, the Guarantee Agreement and the
Indemnity, Subrogation and Contribution Agreement as contemplated under
each agreement, within three Business Days after such Subsidiary is formed
or acquired and promptly take such actions to create and perfect Liens on
such Subsidiary's assets to secure the Obligations as the Administrative
Agent or the Required Lenders shall reasonably request and (b) if any
shares of capital stock or Indebtedness of such Subsidiary are owned by or
on behalf of any Loan Party, the Borrower will cause such shares and
promissory notes evidencing such Indebtedness to be pledged pursuant to the
Pledge Agreement within three Business Days after such Subsidiary is formed
or acquired (except that, if such Subsidiary is a Foreign Subsidiary,
shares of common stock of such Subsidiary to be pledged pursuant to the
Pledge Agreement may be limited to 65% of the outstanding shares of common
stock of such Subsidiary).
SECTION 5.13. Further Assurances. (a) Holdings and the Borrower
-------------------
will, and will cause each Loan Party to, execute any and all further
documents, financing statements, agreements and instruments, and take all
such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other
documents), which may be required under any applicable law, or which the
Administrative Agent or the Required Lenders may reasonably request, to
effectuate the transactions contemplated by the Loan Documents or to grant,
preserve, protect or perfect the Liens created or intended to be created by
the Security Documents or the validity or priority of any such Lien, all at
the expense of the Loan Parties. The Borrower also agrees to provide to the
Administrative Agent, from time to time upon request, evidence reasonably
satisfactory to the Administrative Agent as to the perfection and priority
of the Liens created or intended to be created by the Security Documents
(including opinions of local counsel in the jurisdictions in which assets
of any Loan Party are located).
(b) If any material assets (including any real property or
improvements thereto or any interest therein) are acquired by the Borrower
or any Loan Party after the Effective Date (other than assets constituting
Collateral under the Security Documents that become subject to the Lien of
the Security Documents upon acquisition thereof), the Borrower will notify
the Administrative Agent and the
<PAGE>
77
Lenders thereof, and, if requested by the Administrative Agent or the
Required Lenders, the Borrower will cause such assets to be subjected to a
Lien securing the Obligations and will take, and cause the Loan Parties to
take, such actions as shall be necessary or reasonably requested by the
Administrative Agent to grant and perfect such Liens, including actions
described in paragraph (a) of this Section, all at the expense of the
Borrower. In addition, if (i) any License is acquired by the Borrower or
any Subsidiary (other than the License Subsidiary) the Borrower will
promptly transfer or cause the transfer to the License Subsidiary of such
License, (ii) any Real Property Assets (other than Restricted Real Property
Assets, Secured Real Property Assets and Excluded Real Property Assets) or
any Real Property-Related Equipment (other than Restricted Real Property-
Related Equipment, Secured Real Property-Related Equipment and Excluded
Real Property Equipment) is acquired by the Borrower or any Subsidiary
(other than the Real Property Subsidiary) the Borrower will promptly
transfer or cause the transfer of such assets to the Real Property
Subsidiary and (iii) any fee interests in real property having at the time
of acquisition thereof a purchase price or fair market value greater than
$1,000,000 (a "Mortgaged Property") are acquired by the Borrower or any
Subsidiary after the date hereof (including Mortgaged Properties of any
Person that becomes a Subsidiary or is merged with or into or consolidated
with the Borrower or any Subsidiary) the Borrower will promptly create or
cause to be created a first priority perfected Mortgage in favor of the
Administrative Agent for the benefit of the Secured Parties on, and pay all
recording taxes, title insurance costs, survey costs and other costs in
connection with such Mortgage.
SECTION 5.14. Interest Rate Protection. As promptly as
-------------------------
practicable, and in any event within 90 days after the Effective Date, the
Borrower will enter into, and thereafter until the final maturity of all
the Loans, will maintain in effect, one or more interest rate protection
agreements with one or more Lenders on such terms as shall be reasonably
satisfactory to the Administrative Agent, the effect of which shall be to
fix or limit the interest cost to the Borrower with respect to at least 50%
of the outstanding Indebtedness of the Borrower (other than indebtedness
which bears interest at a fixed rate) at a maximum rate reasonably
acceptable to the Administrative Agent.
SECTION 5.15. License Drop Down. As promptly as practicable,
------------------
and in any event with 90 days after the Effective Date, the Borrower shall
contribute to the License Subsidiary all Licenses owned by the Borrower
(including the
<PAGE>
78
Licenses for the MTAs and BTAs listed in Schedule 3.14) and the License
Subsidiary shall own such Licenses free and clear of all Liens (other than
Liens imposed by the Communications Act).
SECTION 5.16. Business of Holdings; Immediate Contributions to
------------------------------------------------
the Borrower. (a) Holdings shall not engage in any business other than
-------------
holding the Capital Stock of the Borrower and issuing Indebtedness
permitted by Section 6.01.
(b) Holdings shall immediately contribute to the Borrower upon
receipt (i) any capital contributions and (ii) proceeds from the issuance
of any Indebtedness.
SECTION 5.17. Execution of Other Agreements. Within 30 days of
------------------------------
the Effective Date, the Borrower (or a wholly owned Subsidiary) and the
other parties thereto will enter into the Qualified Vendor Agreement and
deliver copies thereof to the Administrative Agent.
ARTICLE VI
Negative Covenants
------------------
Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have
been paid in full. Each of Holdings and the Borrower covenants and agrees
with the Lenders that:
SECTION 6.01. Indebtedness; Certain Equity Securities. (a)
----------------------------------------
Holdings and the Borrower will not, and will not permit any Subsidiary to,
create, incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) the Subordinated Debt issued on terms reasonably satisfactory to
the Lenders in an aggregate principal amount not to exceed $150,000,000;
provided that the proceeds of the Subordinated Debt shall be used by the
--------
Borrower solely to fund the build-out of the Network;
(iii) Indebtedness of the Borrower to any Subsidiary (other than any
Special Purpose Subsidiary) and of any Subsidiary (other than any Special
Purpose Subsidiary) to the Borrower or any other Subsidiary (other than any
Special Purpose Subsidiary); provided that Indebtedness of any Subsidiary
--------
that is not a Loan Party to the
<PAGE>
79
Borrower or any Subsidiary Loan Party shall be subject to Section 6.05;
(iv) Guarantees by the Borrower of Indebtedness of any Subsidiary
(other than any License Subsidiary) and by any Subsidiary (other than any
Special Purpose Subsidiary) of Indebtedness of the Borrower or any other
Subsidiary (other than any Special Purpose Subsidiary); provided that
--------
Guarantees by the Borrower or any Subsidiary Loan Party of Indebtedness of
any Subsidiary that is not a Loan Party shall be subject to Section 6.05;
(v) Indebtedness of the Borrower or any Subsidiary (other than a
Special Purpose Subsidiary) incurred to finance the acquisition from a
Qualified Vendor of cellular equipment and ancillary services required for
the initial buildout of the Network pursuant to a purchase agreement
between Triton PCS Equipment Company, L.L.C. and such Qualified Vendor to
be entered into within 30 days of the Closing Date (the "Qualified Vendor
Agreement"); provided that the aggregate principal amount of such
--------
Indebtedness shall not exceed $65 million at any time outstanding;
(vi) Capital Lease Obligations of the Borrower or any Subsidiary
(other than any Special Purpose Subsidiary) with respect to the leasing by
the Borrower of tower sites and equipment that is a fixture thereto;
provided that such Capital Lease Obligations shall not exceed $25,000,000
--------
in aggregate principal amount at any time outstanding;
(vii) Indebtedness (other than Indebtedness described in (v) or (vi)
above) of the Borrower or any Subsidiary (other than any Special Purpose
Subsidiary) incurred to finance the acquisition, construction or
improvement of any fixed or capital assets, including Capital Lease
Obligations and any Indebtedness assumed in connection with the acquisition
of any such assets or secured by a Lien on any such assets prior to the
acquisition thereof, and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof
or result in an earlier maturity date or decreased weighted average life
thereof; provided that such Indebtedness is incurred prior to or within 90
--------
days after such acquisition or the completion of such construction or
improvement and shall not exceed $10,000,000 in aggregate principal amount
at any time outstanding;
<PAGE>
80
(viii) Indebtedness incurred to refinance any senior secured
Indebtedness; provided that (x) such refinancing Indebtedness (a) shall
--------
not have a greater outstanding principal amount, an earlier maturity date
or a decreased weighted average life than the Indebtedness refinanced (b)
shall be subordinated to the Indebtedness created under the Loan Documents
to at least the extent of, and shall otherwise be issued on terms no less
favorable to the Lenders than, the Subordinated Debt and (y) the proceeds
of such Indebtedness shall be used solely to repay the senior secured
Indebtedness refinanced thereby and fees and expenses in connection
therewith;
(ix) to the extent that the accrual of dividends with respect to the
Series A Preferred Stock would be considered Indebtedness, the accrual of
dividends with respect to such Series A Preferred Stock; provided that no
--------
dividends may be paid in respect thereof under any circumstances prior to
the date that is six months after the Tranche B Maturity Date; and
(x) other unsecured Indebtedness of the Borrower and the
Subsidiaries (other than any Special Purpose Subsidiary); provided that the
--------
aggregate principal amount of such Indebtedness shall not exceed $3,000,000
at any time outstanding.
(b) Holdings and the Borrower will not, and will not permit any
Subsidiary to, issue any preferred stock (other than preferred stock of
Holdings issued pursuant to the terms of the Securities Purchase Agreement)
or be or become liable in respect of any obligation (contingent or
otherwise) to purchase, redeem, retire, acquire or make any other payment
in respect of any shares of capital stock of Holdings, the Borrower or any
Subsidiary or any option, warrant or other right to acquire any such shares
of capital stock, except for the obligation of Holdings to repurchase
unvested rights to Common Stock of Holdings in an amount not to exceed
$2,000 in the aggregate. No preferred stock issued by Holdings, the
Borrower or any Subsidiary shall be mandatorily redeemable or subject to
mandatory purchase by the Borrower or any Subsidiary, and no dividends may
be paid (it being understood that dividends may accrue) in respect thereof
under any circumstances prior to the date that is six months after the
Tranche B Maturity Date.
SECTION 6.02. Liens. Holdings and the Borrower will not, and
------
will not permit any Subsidiary to, create, incur, assume or permit to exist
any Lien on any property or asset now owned or hereafter acquired by it, or
assign or
<PAGE>
81
sell any income or revenues (including accounts receivable) or rights in
respect of any thereof, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) any Lien on any property or asset of the Borrower or any
Subsidiary (other than the License Subsidiary or the Property Subsidiary)
existing on the date hereof and set forth in Schedule 6.02; provided that
--------
(A) such Lien shall not apply to any other property or asset of the
Borrower or any Subsidiary and (B) such Lien shall secure only those
obligations which it secures on the date hereof;
(iv) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date
hereof prior to the time such Person becomes a Subsidiary; provided that
--------
(A) such Lien is not created in contemplation of or in connection with
such acquisition or such Person becoming a Subsidiary, as the case may
be, (B) such Lien shall not apply to any other property or assets of the
Borrower or any Subsidiary and (C) such Lien shall secure only those
obligations which it secures on the date of such acquisition or the date
such Person becomes a Subsidiary, as the case may be;
(v) Liens on fixed or capital assets acquired, constructed or improved
by the Borrower or any Subsidiary; provided that (A) such security
interests secure Indebtedness permitted by clause (vii) of Section
6.01(a), (B) such security interests and the Indebtedness secured thereby
are incurred prior to or within 180 days after such acquisition or the
completion of such construction or improvement, (C) the Indebtedness
secured thereby does not exceed 100% of the cost of acquiring,
constructing or improving such fixed or capital assets and (D) such
security interests shall not apply to any other property or assets of the
Borrower or any Subsidiary;
(vi) Liens (not to exceed $3,000,000 in aggregate at any time
outstanding) on goods (and the documents of title related thereto) the
purchase price of which is financed by a documentary letter of credit
issued for the account of the Borrower or its Subsidiaries (other than
the Special Purpose Subsidiaries), provided that such Lien secures only
the obligations of the Borrower
<PAGE>
82
or such Subsidiaries in respect of such letter of credit; and
(vii) Liens on assets acquired from a Qualified Vendor securing
Indebtedness permitted by clause (v) of Section 6.01(a) incurred to
finance the acquisition of such assets; provided, however, that (i) such
-------- -------
Qualified Vendor and the Collateral Agent, on behalf of the Secured
Parties, enter into an intercreditor agreement or joint security
agreement providing for the sharing of the security interest in such
assets on terms satisfactory to the Administrative Agent and (ii) the
Borrower or a wholly owned Subsidiary has title to such assets.
SECTION 6.03. Sale and Lease-Back Transactions. The Borrower
---------------------------------
will not, nor will it permit any Subsidiary to, enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer
any property, real or personal, used or useful in its business, whether now
owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose
as the property being sold or transferred.
SECTION 6.04. Fundamental Changes. (a) Holdings and the
--------------------
Borrower will not, and will not permit any Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into
or consolidate with it, or liquidate or dissolve, except that, if at the
time thereof and immediately after giving effect thereto no Default shall
have occurred and be continuing (i) any Subsidiary (other than the License
Subsidiary or the Property Subsidiary) may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (ii) any
Subsidiary (other than the License Subsidiary or the Property Subsidiary)
may merge into any Subsidiary (other than the License Subsidiary or the
Property Subsidiary) in a transaction in which the surviving entity is a
Wholly Owned Subsidiary and (iii) any Subsidiary (other than the License
Subsidiary on the Property Subsidiary) may liquidate or dissolve if the
Borrower determines in good faith that such liquidation or dissolution is
in the best interests of the Borrower and is not materially disadvantageous
to the Lenders.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage in any business other than businesses of the type
conducted or contemplated to be conducted by the Borrower and its
Subsidiaries on the date of execution of this Agreement and Related
Businesses.
<PAGE>
83
SECTION 6.05. Investments, Loans, Advances, Guarantees and
--------------------------------------------
Acquisitions. The Borrower will not, and will not permit any of its
-------------
Subsidiaries to, purchase, hold or acquire (including pursuant to any
merger with any Person that was not a Wholly Owned Subsidiary prior to such
merger) any capital stock, evidences of indebtedness or other securities
(including any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist any loans or advances to, Guarantee
any obligations of, or make or permit to exist any investment or
any other interest in, any other Person, or purchase or otherwise acquire
(in one transaction or a series of transactions) any assets of any other
Person constituting a business unit, except:
(a) Permitted Investments;
(b) investments existing on the date hereof, to the extent such
investments would not be permitted under any other clause of this
Section;
(c) investments by the Borrower and its Subsidiaries (other than the
License Subsidiary or the Property Subsidiary) in the capital stock of
their Subsidiaries; provided that any such shares of capital stock held
--------
by a Loan Party shall be pledged pursuant to the Pledge Agreement
(subject to the limitations applicable to common stock of a Foreign
Subsidiary referred to in Section 5.12) and no investments may be made
in Subsidiaries that are not Loan Parties;
(d) loans or advances made by the Borrower to any Subsidiary and made
by any Subsidiary to the Borrower or any other Subsidiary; provided that
--------
any such loans and advances made by a Loan Party shall be evidenced by a
promissory note pledged pursuant to the Pledge Agreement and no loans or
advances may be made to Subsidiaries that are not Loan Parties;
(e) Guarantees constituting Indebtedness permitted by Section 6.01;
provided that a Subsidiary shall not Guarantee the Subordinated Debt
unless (A) such Subsidiary also has Guaranteed the Obligations pursuant
to the Guarantee Agreement, (B) such Guarantee of the Subordinated Debt
is subordinated to such Guarantee of the Obligations on terms no less
favorable to the Lenders than the subordination provisions of the
Subordinated Debt and (C) such Guarantee of the Subordinated Debt
provides for the release and termination thereof, without action by any
party, upon any release and termination of such Guarantee of the
Obligations; and
<PAGE>
84
(f) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes
with, customers and suppliers, in each case in the ordinary course of
business.
SECTION 6.06. Asset Sales. Holdings and the Borrower
------------
will not, and will not permit any Subsidiary to, sell, transfer, lease or
otherwise dispose of any asset, including any capital stock, nor will the
Borrower permit any of it Subsidiaries to issue any additional shares of
its capital stock or other ownership interest in such Subsidiary, except in
the case of the Borrower and its Subsidiaries:
(a) sales of inventory, used or surplus equipment and Permitted
Investments in the ordinary course of business;
(b) sales, transfers and dispositions to the Borrower or a Subsidiary;
provided that any such sales, transfers or dispositions involving a
--------
Subsidiary that is not a Loan Party shall be made in compliance with
Section 6.09; and
(c) sales, transfers and dispositions of assets (other than capital
stock of a Subsidiary) that are not permitted by any other clause of
this Section; provided that the aggregate fair market value of all
assets sold, transferred or otherwise disposed of in reliance upon this
clause (c) shall not exceed $1,000,000 during any fiscal year of the
Borrower;
provided that all sales, transfers, leases and other dispositions permitted
--------
hereby shall be made for fair value and solely for cash consideration.
SECTION 6.07. Hedging Agreements. Holdings and the Borrower
-------------------
will not, and will not permit any Subsidiary to, enter into any Hedging
Agreement, other than (a) Hedging Agreements required by Section 5.14 and
(b) Hedging Agreements entered into in the ordinary course of business to
hedge or mitigate risks to which the Borrower or any Subsidiary is exposed
in the conduct of its business or the management of its liabilities.
SECTION 6.08. Restricted Payments; Certain Payments of
----------------------------------------
Indebtedness. (a) The Borrower will not, nor will it permit any
-------------
Subsidiary to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, except (i) the Borrower may declare and
pay
<PAGE>
85
dividends with respect to its capital stock payable solely in additional
shares of its common stock, (ii) Subsidiaries may declare and pay dividends
ratably with respect to their capital stock, provided that no distribution
--------
referred to in this clause (ii) shall be permitted to be made by any
Special Purpose Subsidiary if any Default or Event of Default shall have
occurred and be continuing or would result therefrom, (iii) the Borrower
may make Restricted Payments, not exceeding $1,000,000 during any fiscal
year, pursuant to and in accordance with stock option plans or other
benefit plans for management or employees of the Borrower and its
Subsidiaries and (iv) if no Default has occurred and is continuing, the
Borrower may make Restricted Payments to Holdings to fund, as and when due,
payments of regularly scheduled interest and principal in respect of any
Indebtedness incurred by Holdings that is permitted by Section 6.01(a),
other than payments in respect of the Subordinated Debt prohibited by the
subordination provisions thereof.
(b) Holdings and the Borrower will not, and will not permit any
Subsidiary to, make or agree to pay or make, directly or indirectly, any
payment or other distribution (whether in cash securities or other
property) of or in respect of principal of or interest on any Indebtedness,
or any payment or other distribution (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancelation or termination
of any Indebtedness, except:
(i) payment of Indebtedness created under the Loan Documents;
(ii) payment of regularly scheduled interest and principal
payments as and when due in respect of any Indebtedness permitted by
Section 6.01 (a), other than payments in respect of the Subordinated
Debt prohibited by the subordination provisions thereof;
(iii) refinancings of Indebtedness to the extent permitted by
Section 6.01; and
(iv) payment of secured Indebtedness permitted by Section 6.01(a)
that becomes due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness.
SECTION 6.09. Transactions with Affiliates. Holdings and the
-----------------------------
Borrower will not, and will not permit any Subsidiary to, sell, lease or
otherwise transfer any
<PAGE>
86
property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of
its Affiliates, except (a) transactions in the ordinary course of business
that are at prices and on terms and conditions not less favorable to the
Borrower or such Subsidiary than could be obtained on an arm's-length basis
from unrelated third parties, (b) transactions between or among the
Borrower and the Subsidiary Loan Parties not involving any other Affiliate
and (c) any Restricted Payment permitted by Section 6.08.
SECTION 6.10. Restrictive Agreements. The Borrower will not,
-----------------------
nor will it permit any Subsidiary to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of the Borrower or
any Subsidiary to create, incur or permit to exist any Lien upon any of its
property or assets, or (b) the ability of any Subsidiary to pay dividends
or other distributions with respect to any shares of its capital stock or
to make or repay loans or advances to the Borrower or any other Subsidiary
or to Guarantee Indebtedness of the Borrower or any other Subsidiary;
provided that (i) the foregoing shall not apply to restrictions and
--------
conditions imposed by law or by any Loan Document or Subordinated Debt
Document, (ii) the foregoing shall not apply to restrictions and conditions
existing on the date hereof identified on Schedule 6.10 (but shall apply to
any extension or renewal of, or any amendment or modification expanding the
scope of, any such restriction or condition), (iii) the foregoing shall not
apply to customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary pending such sale, provided such
restrictions and conditions apply only to the Subsidiary that is to be sold
and such sale is permitted hereunder, (iv) clause (a) of the foregoing
shall not apply to restrictions or conditions imposed by any agreement
relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing
such Indebtedness and (v) clause (a) of the foregoing shall not apply to
customary provisions in leases restricting the assignment thereof.
SECTION 6.11. Amendment of Material Documents. Holdings and the
--------------------------------
Borrower will not, and will not permit any Subsidiary to, amend, modify or
waive any of its rights under (a) any agreement relating to material
Indebtedness, (b) its certificate of incorporation, by-laws or other
organizational documents, (c) the Special Purpose Subsidiary Funding
Agreements or (d) the PCS Documents, in the case of clauses (a), (b) and
(c) above, in a manner adverse to the
<PAGE>
87
interests of the Lender and, in the case of clause (d) above, in a manner
that could be adverse in a material respect to the interests of the Lenders
provided that, if requested by the Borrower, the Administrative Agent will
--------
review any contemplated amendment or waiver of such debt or other
agreements and promptly advise the Borrower if such amendment or waiver
could be adverse to the interests of the Lenders.
SECTION 6.12. Financial Covenants. (a) Senior Debt to Total
-------------------- --------------------
Capital. Holdings and the Borrower will not permit the ratio of Senior
--------
Debt to Total Capital in each case on any day on which a Borrowing occurs
and the last day of each fiscal quarter to exceed .50 to 1; provided,
--------
however, that if (i) all Unfunded Commitments (as defined in the Securities
-------
Purchase Agreement) have been contributed in full in cash to the Borrower
and (ii) Covered Pops meet or exceed 60% of the aggregate number of Pops
within the Licensed Territory (as defined in the Network License Agreement)
then the ratio of Senior Debt to Total Capital may exceed .5 to 1 but shall
not exceed .55 to 1.
(b) Total Debt to Total Capital. Holdings and the Borrower will
----------------------------
not permit the ratio of Total Debt to Total Capital in each case on any day
on which a Borrowing occurs and the last day of each fiscal quarter to
exceed .7 to 1.
(c) Covered Pops. The Borrower will not permit Covered Pops as
-------------
a percentage of the total number of Pops in the BTAs and MTAs listed on
Schedule 3.14 on or after any date set forth below to be less than the
percentage set forth opposite such date.
<TABLE>
<CAPTION>
Minimum Covered
---------------
Date Pops
---- ----
<S> <C>
June 30, 1999 40%
June 30, 2000 60%
June 30, 2001 75%
June 30, 2002 and thereafter 80%
</TABLE>
(d) Subscribers. The Borrower will not permit the number of
------------
Subscribers on or after any date set forth below to be less than the number
of Subscribers set forth opposite such date:
<PAGE>
88
<TABLE>
<CAPTION>
Minimum
-------
Date Subscribers
---- -----------
<S> <C>
December 31, 1999 90,000
June 30, 2000 140,000
December 31, 2000 215,000
June 30, 2001 255,000
December 31, 2001 and
thereafter 320,000
</TABLE>
(e) Aggregate Service Revenue. The Borrower will not permit
-------------------------
Aggregate Service Revenue for any period of four consecutive fiscal
quarters ending on or after any date set forth below to be less than
Aggregate Service Revenue set forth opposite such date.
<TABLE>
<CAPTION>
Minimum Aggregate
-----------------
Date Service Revenue
---- ---------------
<S> <C>
December 31, 1999 $ 15,000,000
June 30, 2000 $ 35,000,000
December 31, 2000 $ 72,000,000
June 30, 2001 $ 95,000,000
December 31, 2001 $120,000,000
June 30, 2002 $140,000,000
December 31, 2002 and
thereafter $165,000,000
</TABLE>
(f) Total Debt to Annualized EBITDA. Holdings and the Borrower
-------------------------------
will not permit the ratio of (i) Total Debt outstanding on any day from and
including (A) the last day of any fiscal quarter set forth below through
(B) the day immediately preceding the last day of the immediately following
fiscal quarter to (ii) Annualized EBITDA for the period ending on the date
referred to in clause (i)(A) above to exceed the ratio set forth opposite
such date:
<TABLE>
<CAPTION>
Fiscal Quarter
Ending On Ratio
--------- -----
<S> <C>
December 31, 2001 19.0 to 1
March 31, 2002 17.0 to 1
June 30, 2002 14.0 to 1
September 30, 2002 11.0 to 1
December 31, 2002 8.0 to 1
June 30, 2003 6.0 to 1
December 31, 2003 and
thereafter 4.5 to 1
</TABLE>
(g) Total Debt to Annualized Adjusted EBITDA. Holdings and the
-----------------------------------------
Borrower will not permit the ratio of (i) Total Debt outstanding on any day
from and including (A) the last day of any fiscal quarter set forth below
<PAGE>
89
through (B) the day immediately preceding the last day of the immediately
following fiscal quarter to (ii) Annualized Adjusted EBITDA for the period
ending on the date referred to in clause (i)(A) above to exceed the ratio
set forth opposite such date:
<TABLE>
<CAPTION>
Fiscal Quarter
Ending On Ratio
--------- -----
<S> <C>
September 30, 2000 23.0 to 1
December 31, 2000 17.0 to 1
March 31, 2001 14.0 to 1
June 30, 2001 12.0 to 1
September 30, 2001 10.0 to 1
December 31, 2001 8.0 to 1
March 31, 2002 and thereafter 6.0 to 1
</TABLE>
(h) Senior Debt to Annualized EBITDA. Holdings and the
--------------------------------
Borrower will not permit the ratio of (i) Senior Debt outstanding on any
day from and including (A) the last day of any fiscal quarter set forth
below through (B) the day immediately preceding the last day of the
immediately following fiscal quarter to (ii) Annualized EBITDA for the
period ending on the date referred to in clause (i)(A) above to exceed the
ratio set forth opposite such date:
<TABLE>
<CAPTION>
Fiscal Quarter
Ending On Ratio
-------------- -----
<S> <C>
December 31, 2001 15.0 to 1
March 31, 2002 13.0 to 1
June 30, 2002 11.0 to 1
September 30, 2002 9.0 to 1
December 31, 2002 6.0 to 1
June 30, 2003 4.5 to 1
December 31, 2003 and
thereafter 3.0 to 1
</TABLE>
(i) Senior Debt to Annualized Adjusted EBITDA. Holdings and the
------------------------------------------
Borrower will not permit the ratio of (i) Senior Debt outstanding on any
day from and including (A) the last day of any fiscal quarter set forth
below through (B) the day immediately preceding the last day of the
immediately following fiscal quarter to (ii) Annualized
<PAGE>
90
Adjusted EBITDA for the period ending on the date referred to in clause
(i)(A) above to exceed the ratio set forth opposite such date:
<TABLE>
<CAPTION>
Fiscal Quarter
Ending On Ratio
-------------- -----------
<S> <C>
September 30, 2000 20.0 to 1
December 31, 2000 14.0 to 1
March 31, 2001 12.0 to 1
June 30, 2001 10.0 to 1
September 30, 2001 8.0 to 1
December 31, 2001 6.0 to 1
March 31, 2002 and
thereafter 4.0 to 1
</TABLE>
(j) Interest Coverage Ratio. Holdings and the Borrower will not
------------------------
permit the ratio of (i) Consolidated EBITDA for any period of four
consecutive fiscal quarters ending on any date or during any "Test Period"
set forth below to (ii) Cash Interest Expense for such period to be less
than the ratio set forth opposite such date or Test Period:
<TABLE>
<CAPTION>
Date or Test Period Ratio
------------------- -----------
<S> <C>
September 30, 2002 1.25 to 1
December 31, 2002 -
March 31, 2004 1.50 to 1
June 30, 2004 and
thereafter 2.25 to 1
</TABLE>
(k) Fixed Charges Ratio. Holdings and the Borrower will not
-------------------
permit the ratio of (i) Consolidated EBITDA for any period of four
consecutive fiscal quarters ending during any "Test Period" set forth below
to Fixed Charges for such period to be less than the ratio set forth
opposite such Test Period.
<TABLE>
<CAPTION>
Test Period Ratio
----------- ----------
<S> <C>
September 30, 2002 -
June 30, 2003 1.05 to 1
September 30, 2003 and
thereafter 1.10 to 1
</TABLE>
<PAGE>
91
(l) Capital Expenditures. The Borrower will not permit Capital
--------------------
Expenditures of the Borrower and its Subsidiaries for any period set forth
below to exceed the sum set forth opposite such period:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
Date of formation through
December 31, 1998 $275,000,000
January 1, 1999 - December 31, 1999 $200,000,000
January 1, 2000 - December 31, 2000 $ 75,000,000
January 1, 2001 - December 31, 2001 $ 15,000,000
January 1, 2002 - December 31, 2002 $ 15,000,000
</TABLE>
; provided that any permitted amount which is not expended in any of the
--------
periods specified above may be carried over for expenditure in the
immediately subsequent period.
SECTION 6.13. Liabilities of Special Purpose Subsidiaries. The
--------------------------------------------
Borrower will not:
(a) permit the License Subsidiary to incur, assume or permit to exist
any liabilities (other than under the Guarantee Agreement and the Security
Agreement and the Communications Act and taxes and other liabilities
incurred in the ordinary course in order to maintain its existence) or to
engage in any business or activities other than the holding of Licenses; or
(b) permit the Real Property Subsidiary to incur, assume or permit to
exist any liabilities (other than under the Guarantee Agreement and the
Security Agreement and other liabilities incurred in the ordinary course of
business which are incident to being the lessee of real property or the
purchaser, owner or lessee of equipment and taxes and other liabilities in
the ordinary course in order to maintain its existence) or to engage in any
business or activities other than the owning or leasing, as lessee, of Real
Property Assets and the leasing, as lessor, or, as the case may be,
subleasing, as sublessor, thereof to the Borrower, and the owning of Real
Property-Related Equipment constituting fixtures thereto and the leasing
thereof to the Borrower.
<PAGE>
92
ARTICLE VII
Events of Default
-----------------
If any of the following events ("Events of Default") shall occur:
-----------------
(a) the Borrower shall fail to pay any principal of any Loan when and
as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement or any other Loan Document,
when and as the same shall become due and payable, and such failure
shall continue unremedied for a period of five days;
(c) any representation or warranty made or deemed made by or on behalf
of any Loan Party in or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, or in any
report, certificate, financial statement or other document furnished
pursuant to or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been
incorrect in any material respect when made or deemed made;
(d) Holdings or the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.04 (with
respect to the existence of the Borrower and Holdings), 5.11 or 5.16(b)
or in Article VI;
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after notice thereof
from the Administrative Agent to the Borrower (which notice will be
given at the request of any Lender);
(f) any Loan Party shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and
payable;
<PAGE>
93
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of
time or both) the holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any Material
Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to secured Indebtedness
--------
that becomes due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of any Loan Party or its debts, or of a substantial
part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or
(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or
for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be
entered;
(i) any Loan Party shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief
under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Article,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the
Borrower or any Subsidiary or for a substantial part of its assets, (iv)
file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;
(j) any Loan Party shall become unable, admit in writing its inability
or fail generally to pay its debts as they become due;
<PAGE>
94
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $5,000,000 shall be rendered against the Borrower,
any Loan Party or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by
a judgment creditor to attach or levy upon any assets of the Borrower or
any Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that
have occurred, could reasonably be expected to result in a Material
Adverse Effect;
(m) any Lien purported to be created under any Security Document shall
cease to be, or shall be asserted by any Loan Party not to be, a valid
and perfected Lien on any Collateral, with the priority required by the
applicable Security Document, except (i) as a result of the sale or
other disposition of the applicable Collateral in a transaction
permitted under the Loan Documents or (ii) as a result of the
Administrative Agent's failure to maintain possession of any stock
certificates, promissory notes or other instruments delivered to it
under the Pledge Agreement or the Administrative Agent's failure to file
necessary continuation financing statements or make required filings
with the Patent and Trademark Office of the United States after delivery
to the Administrative Agent by the Borrower of executed copies of such
financing statements and filings.
(n) any of the Security Documents shall cease to be or shall be
asserted by any Loan Party not to be in full force and effect;
(o) the Guarantee Agreement shall cease to be or shall be asserted by
any Loan Party not to be in full force and effect or the Borrower;
(p) a Change in Control shall occur;
(q) the failure of the Borrower to make any payments required to be
made to the FCC or any other Governmental Authority with respect to any
License held by the Borrower or any Subsidiary or any Indebtedness or
other payment obligations relating thereto as and when due which failure
could reasonably
<PAGE>
95
be expected to lead to the loss, termination, revocation, non-renewal or
material impairment of any License or otherwise result in a Material
Adverse Effect;
(r) any termination (prior to the expiration of its term), revocation
or non-renewal by the FCC of one or more Licenses of the Borrower or its
Subsidiaries;
(s) the Borrower's right to use any "AT&T" trademark pursuant to the
Network License Agreement shall terminate (it being understood that, on
or after the date which is five years from the Effective Date, neither
the non-renewal of the Network License Agreement by AW nor the
termination of the Network License Agreement by AW as a result of a
Disqualifying Transaction (as defined in the Stockholders Agreement)
shall constitute an Event of Default hereunder);
(t) the loss by any Loan Party of any rights to the benefit of, or the
occurrence of any default or the termination of any rights under, any
application, marketing or other material agreements, which loss,
occurrence or termination could reasonably be expected to affect in a
material and adverse respect the Borrower's ability to satisfy its
obligations to the Lenders hereunder or to result in a Material Adverse
Effect (it being understood that, on or after the date which is five
years from the Effective Date, neither the non-renewal of the Network
License Agreement by AW nor the termination of the Network License
Agreement by AW as a result of a Disqualifying Transaction (as defined
in the Stockholders Agreement) shall constitute an Event of Default
hereunder); or
(u) the failure of any party to the Securities Purchase Agreement or
the Stockholders Agreement to comply with any funding or contribution
obligation under such Agreement and such failure shall continue
unremedied for a period of 30 days;
then, and in every such event (other than an event with respect to the
Borrower described in clause (h) or (i) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent
may, and at the request of the Required Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or
different times: (i) terminate the Commitments, and thereupon the
Commitments shall terminate immediately, and (ii) declare the Loans then
outstanding to be due and payable in whole (or in part, in which case any
<PAGE>
96
principal not so declared to be due and payable may thereafter be declared
to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and
all fees and other obligations of the Borrower accrued hereunder, shall
become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the
Borrower; and in case of any event with respect to the Borrower described
in clause (h) or (i) of this Article, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with
accrued interest thereon and all fees and other obligations of the Borrower
accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
ARTICLE VIII
The Administrative Agent
------------------------
Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Administrative Agent as its agent and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms of the Loan Documents,
together with such actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Administrative Agent, and
such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any
Subsidiary or other Affiliate thereof as if it were not the Administrative
Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth in the Loan Documents. Without limiting
the generality of the foregoing, (a) the Administrative Agent shall not be
subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing, (b) the Administrative Agent shall
not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated by the Loan Documents that the Administrative Agent is
required to exercise in writing
<PAGE>
97
by the Required Lenders (or such other number or percentage of the Lenders
as shall be necessary under the circumstances as provided in Section 9.02),
and (c) except as expressly set forth in the Loan Documents, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the
Borrower or any of its Subsidiaries that is communicated to or obtained by
the bank serving as Administrative Agent or any of its Affiliates in any
capacity. The Administrative Agent shall not be liable for any action taken
or not taken by it with the consent or at the request of the Required
Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02) or in the
absence of its own gross negligence or wilful misconduct. The
Administrative Agent shall be deemed not to have knowledge of any Default
unless and until written notice thereof is given to the Administrative
Agent by the Borrower or a Lender, and the Administrative Agent shall not
be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with any
Loan Document, (ii) the contents of any certificate, report or other
document delivered thereunder or in connection therewith, (iii) the
performance or observance of any of the covenants, agreements or other
terms or conditions set forth in any Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of any Loan Document or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere in any Loan Document, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to
be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or
by telephone and believed by it to be made by the proper Person, and shall
not incur any liability for relying thereon. The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through
<PAGE>
98
any one or more sub-agents appointed by the Administrative Agent. The
Administrative Agent and any such sub-agent may perform any and all its
duties and exercise its rights and powers through their respective Related
Parties. The exculpatory provisions of the preceding paragraphs shall apply
to any such sub-agent and to the Related Parties of each Administrative
Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities
provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor the
Administrative Agent as provided in this paragraph, the Administrative
Agent may resign at any time by notifying the Lenders, the Issuing Bank and
the Borrower. Upon any such resignation, the Required Lenders shall have
the right, in consultation with the Borrower, to appoint a successor. If no
successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders and the Issuing Bank,
appoint a successor Administrative Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent,
and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this
Article and Section 9.03 shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of
them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to
<PAGE>
99
make its own decisions in taking or not taking action under or based upon
this Agreement, any other Loan Document or related agreement or any
document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
-------------
SECTION 9.01. Notices. Except in the case of notices and other
--------
communications expressly permitted to be given by telephone, all notices
and other communications provided for herein shall be in writing and shall
be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower or Holdings, to it c/o Triton Communications
L.L.C., 101 Lindenwood Drive, Suite 125, Malvern, Pennsylvania 19355,
Attention of David Clark and Patricia Gallagher (Telecopy No. 610-933-
2683);
with copies to
Klienbard, Bell & Brecker LLP
1900 Market Street, Suite 700
Philadelphia, PA 19103
Attn: Howard Davis and Ralph Mauro
Telecopy: 215-568-0140
and
Latham & Watkins
885 Third Avenue
New York, NY 10022
Attn: Roger Zaitzeff and Carlos Alvarez
Telecopy: 212-751-4864
(b) if to the Administrative Agent, to The Chase Manhattan Bank, Loan
and Agency Services Group, One Chase Manhattan, 8th Floor, New York, New
York 10081, Attention of Rana Khan (Telecopy No. (212) 552-5700), with a
copy to The Chase Manhattan Bank, 270 Park Avenue, New York 10017,
Attention of Ann Kerns (Telecopy No. (212) 270-4584); and
(c) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
<PAGE>
100
Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on
the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
--------------------
Administrative Agent or any Lender in exercising any right or power
hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a
right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b)
of this Section, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. Without limiting
the generality of the foregoing, the making of a Loan shall not be
construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in
the case of this Agreement, pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Lenders or, in the
case of any other Loan Document, pursuant to an agreement or agreements in
writing entered into by the Administrative Agent and the Loan Party or Loan
Parties that are parties thereto, in each case with the consent of the
Required Lenders; provided that no such agreement shall (i) increase the
--------
Commitment of any Lender without the written consent of such Lender, (ii)
reduce the principal amount of any Loan or reduce the rate of interest
thereon, or reduce any fees payable hereunder, without the written consent
of each Lender affected thereby, (iii) postpone the scheduled date of
payment of the principal amount of any Loan, or any interest thereon, or
any fees payable hereunder, or reduce the amount of, waive or excuse any
such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby,
(iv) change Section 2.16(b) or (c) in a
<PAGE>
101
manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (v) change any of the
provisions of this Section or the definition of "Required Lenders" or any
other provision of any Loan Document specifying the number or percentage of
Lenders (or Lenders of any Class) required to waive, amend or modify any
rights thereunder or make any determination or grant any consent
thereunder, without the written consent of each Lender (or each Lender of
such Class, as the case may be), (vi) release any Subsidiary Loan Party
from its Guarantee under the Collateral Agreement (except as expressly
provided in the Collateral Agreement), or limit its liability in respect of
such Guarantee, without the written consent of each Lender, (vii) release
all or a substantial part of the Collateral from the Liens of the Security
Documents, without the written consent of each Lender, (viii) change any
provisions of any Loan Document in a manner that by its terms adversely
affects the rights in respect of payments due to Lenders holding Loans of
any Class differently than those holding Loans of any other Class, without
the written consent of Lenders holding a majority in interest of the
outstanding Loans and unused Commitments of each affected Class or (ix)
change the rights of the Tranche B Lenders to decline mandatory prepayments
as provided in Section 2.09, without the written consent of Tranche B
Lenders holding a majority of the outstanding Tranche B Loans; provided
--------
further that (A) no such agreement shall amend, modify or otherwise affect
-------
the rights or duties of the Administrative Agent without the prior written
consent of the Administrative Agent and (B) any waiver, amendment or
modification of this Agreement that by its terms affects the rights or
duties under this Agreement of the Revolving Lenders (but not the Tranche A
Lenders and Tranche B Lenders), the Tranche A Lenders (but not the
Revolving Lenders and Tranche B Lenders) or the Tranche B Lenders (but not
the Revolving Lenders and Tranche A Lenders) may be effected by an
agreement or agreements in writing entered into by the Borrower and
requisite percentage in interest of the affected Class of Lenders.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
-----------------------------------
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including due diligence expenses
and the reasonable fees, charges and disbursements of counsel for the
Administrative Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of the
Loan Documents or any amendments, modifications or waivers of the
provisions thereof (whether or not the transactions contemplated
<PAGE>
102
hereby or thereby shall be consummated), (ii) all out-of-pocket expenses
incurred by the Administrative Agent or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent any
Lender, in connection with the enforcement or protection of its rights in
connection with the Loan Documents, including its rights under this
Section, or in connection with the Loans made hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans.
(b) The Borrower shall indemnify the Administrative Agent and each
Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an "Indemnitee") against, and hold each Indemnitee
----------
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for
any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of
any Loan Document or any other agreement or instrument contemplated hereby,
the performance by the parties to the Loan Documents of their respective
obligations thereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or the use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any Mortgaged Property or any other property owned or
operated by the Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of its Subsidiaries, or
(iv) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract,
tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any
--------
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent under paragraph (a) or (b) of
this Section, each Lender severally agrees to pay to the Administrative
Agent, such Lender's pro rata share (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss,
--------
claim, damage, liability or related expense, as the case may be, was
<PAGE>
103
incurred by or asserted against the Administrative Agent in its capacity as
such. For purposes hereof, a Lender's "pro rata share" shall be determined
based upon its share of the sum of the total Revolving Exposures,
outstanding Term Loans and unused Commitments at the time.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly
after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
-----------------------
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except
that the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and
any attempted assignment or transfer by the Borrower without such consent
shall be null and void). Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to
the extent expressly contemplated hereby, the Related Parties of each of
the Administrative Agent, the Issuing Bank and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided
--------
that (i) except in the case of an assignment to a Lender or an Affiliate of
a Lender, each of the Borrower and the Administrative Agent must give their
prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) except in the case of an assignment to a
Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender's Commitment or Loans, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to
such assignment is delivered to the Administrative Agent) shall not be less
than $5,000,000
<PAGE>
104
unless each of the Borrower and the Administrative Agent otherwise consent,
(iii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations
under this Agreement, except that this clause (iii) shall not be construed
to prohibit the assignment of a proportionate part of all the assigning
Lender's rights and obligations in respect of one Class of Commitments or
Loans, (iv) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500, and (v) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire; and provided further that any consent of the
----------------
Borrower otherwise required under this paragraph shall not be required if
an Event of Default under clause (h) or (i) of Article VII has occurred and
is continuing. Subject to acceptance and recording thereof pursuant to
paragraph (d) of this Section, from and after the effective date specified
in each Assignment and Acceptance the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto but
shall continue to be entitled to the benefits of Sections 2.13, 2.14, 2.15
and 9.03). Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this paragraph shall be
treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph
(e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York
a copy of each Assignment and Acceptance delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The
--------
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder
for all purposes of this Agreement, notwithstanding notice to the contrary.
The
<PAGE>
105
Register shall be available for inspection by the Borrower and any Lender,
at any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b)
of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in
the Register. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph.
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, sell participations to one or more banks or other
entities (a "Participant") in all or a portion of such Lender's rights and
-----------
obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (i) such Lender's
--------
obligations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative
Agent, the Issuing Bank and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to
which a Lender sells such a participation shall provide that such Lender
shall retain the sole right to enforce the Loan Documents and to approve
any amendment, modification or waiver of any provision of the Loan
Documents; provided that such agreement or instrument may provide that such
--------
Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
9.02(b) that affects such Participant. Subject to paragraph (f) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph
(b) of this Section. To the extent permitted by law, each Participant also
shall be entitled to the benefits of Section 9.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.16(c)
as though it were a Lender.
<PAGE>
106
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.15 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is
made with the Borrower's prior written consent. A Participant that would
be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.15 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.15(e) as though it were a
Lender.
(g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to
any such pledge or assignment of a security interest; provided that no such
--------
pledge or assignment of a security interest shall release a Lender from any
of its obligations hereunder or substitute any such pledgee or assignee for
such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations
---------
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant
to this Agreement or any other Loan Document shall be considered to have
been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents and the making of any Loans,
regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent or any Lender may
have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue
in full force and effect as long as the principal of or any accrued
interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid and so long as the Commitments have not
expired or terminated. The provisions of Sections 2.13, 2.14, 2.15 and
9.03 and Article VIII shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Commitments or
the termination of this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
-----------------------------------------
Agreement may be executed in counterparts (and by different parties hereto
on different
<PAGE>
107
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract. This Agreement, the
other Loan Document and any separate letter agreements with respect to fees
payable to the Administrative Agent constitute the entire contract among
the parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the
subject matter hereof. Except as provided in Section 4.01, this Agreement
shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each
of the other parties hereto, and thereafter shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to
-------------
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof; and the invalidity of a
particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
----------------
occurred and be continuing, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement
held by such Lender, irrespective of whether or not such Lender shall have
made any demand under this Agreement and although such obligations may be
unmatured. The rights of each Lender under this Section are in addition to
other rights and remedies (including other rights of setoff) which such
Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
--------------------------------------------------
Process. (a) This Agreement shall be construed in accordance with and
--------
governed by the law of the State of New York.
<PAGE>
108
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out
of or relating to any Loan Document, or for recognition or enforcement of
any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the
extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement
or any other Loan Document shall affect any right that the Administrative
Agent, the Issuing Bank or any Lender may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan Document
against the Borrower or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection
which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any
other Loan Document in any court referred to in paragraph (b) of this
Section. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in
this Agreement or any other Loan Document will affect the right of any
party to this Agreement to serve process in any other manner permitted by
law.
Section 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
---------------------
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF
<PAGE>
109
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS Section.
SECTION 9.11. Headings. Article and Section headings and the Table
---------
of Contents used herein are for convenience of reference only, are not part
of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent and
----------------
the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (d) to any other party to this
Agreement, (e) in connection with the exercise of any remedies hereunder or
any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement containing provisions substantially the same as those of
this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) becomes available to the Administrative
Agent or any Lender on a nonconfidential basis from a source other than the
Borrower. For the purposes of this Section, "Information" means all
-----------
information received from or the Borrower relating to or the Borrower or
its business, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower; provided that, in the case of information
--------
received from the Borrower after the date hereof, such information is
clearly identified at the time of delivery as confidential. Any Person
required to maintain the confidentiality of Information as provided in this
Section shall be considered
<PAGE>
110
to have complied with its obligation to do so if such Person has exercised
the same degree of care to maintain the confidentiality of such Information
as such Person would accord to its own confidential information.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
TRITON PCS, INC.,
by /s/ David D. Clark
-------------------------
Name: David D. Clark
Title: Senior Vice President
TRITON PCS HOLDINGS, INC.,
by /s/ David D. Clark
-------------------------
Name: David D. Clark
Title: Senior Vice President
THE CHASE MANHATTAN BANK, individually and
as Administrative Agent,
by /s/ Ann B. Kerns
-----------------------
Name: Ann B. Kerns
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
by /s/ R. Blake Herrington
------------------------
Name: R. Blake Herrington
Title: Vice President
<PAGE>
111
TORONTO DOMINION BANK (TEXAS),
by /s/ Debbie A. Greene
-----------------------
Name: Debbie A. Greene
Title: Vice President
BANKBOSTON, N.A.,
by /s/ Cindy Chen
-----------------------
Name: Cindy Chen
Title: Director
BANK OF HAWAII,
by /s/ Elizabeth O. Maclean
------------------------
Name: Elizabeth O. Maclean
Title: Vice President
BANK OF TOKYO - MITSUBISHI, NEW YORK BRANCH,
by /s/ Glenn B. Eckert
-----------------------
Name: Glenn B. Eckert
Title: Vice President
BARCLAYS BANK PLC,
by /s/ Andrew Wynn
-----------------------
Name: Andrew Wynn
Title: Managing Director
<PAGE>
112
BHF BANK AKTIENGESELLSCHAFT
by /s/ Heidimarie Skor
-----------------------
Name: Heidimarie Skor
Title: Vice President
FIRST UNION NATIONAL BANK,
by /s/ Jim Redman
-----------------------
Name: Jim Redman
Title: Senior Vice President
THE FUJI BANK, LIMITED
New York Branch
by /s/ Teiji Teramoto
-----------------------
Name: Teiji Teramoto
Title: Vice President &
Manager
GENERAL ELECTRIC CAPITAL CORPORATION,
by /s/ Molly S. Fergusson
-----------------------
Name: Molly S. Fergusson
Title: Manager, Operations
ING HIGH INCOME PRINCIPAL PRESERVATION FUND
HOLDINGS, LDC
by ING CAPITAL ADVISORS,INC., as
Investment Advisor
by /s/ Kathleen A. Lenarcic
-------------------------
Name: Kathleen A. Lenarcic
Title: Vice President &
Portfolio Manager
<PAGE>
113
LEHMAN COMMERCIAL PAPER, INC.,
by /s/ Dennis J. Dee
-----------------------
Name: Dennis J. Dee
Title: Authorized Signatory
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
by /s/ Lynn Callicott Baranski
---------------------------
Name: Lynn Callicott
Baranski
Title: Authorized Signatory
VAN CAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST,
by /s/ Jeffrey W. Maillet
-----------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President
and Director
<PAGE>
LIST OF EXHIBITS
EXHIBIT A Form of Assignment and Acceptance
EXHIBIT B-1 Form of Opinion of Borrower's Counsel
EXHIBIT B-2 Form of Opinion of FCC Counsel
EXHIBIT B-3 Form of Opinion of Local Counsel
EXHIBIT C Form of Guarantee Agreement
EXHIBIT D Form of Pledge Agreement
EXHIBIT E Form of Security Agreement
EXHIBIT F Form of Indemnity Subrogation and Contribution Agreement
<PAGE>
EXHIBIT A
[Form of]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of February , 1998 (the
"Credit Agreement"), among Triton PCS, Inc., a Delaware corporation (the
"Borrower"), Triton PCS Holdings, Inc., a Delaware corporation ("Holdings"), the
lenders listed on Schedule 2.01 thereto (the "Lenders") and The Chase Manhattan
Bank, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent") and collateral agent. Terms defined in the Credit
Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below (but not prior
to the registration of the information contained herein in the Register pursuant
to Section 9.04(d) of the Credit Agreement), the interests set forth below (the
"Assigned Interest") in the Assignor's rights and obligations under the Credit
Agreement and the other Loan Documents, including, without limitation, the
amounts and percentages set forth below of (i) the Commitments of the Assignor
on the Assignment Date and (ii) the Loans owing to the Assignor which are
outstanding on the Assignment Date. From and after the Assignment Date (i) the
Assignee shall be a party to and be bound by the provisions of the Credit
Agreement and, to the extent of the interests assigned by this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and under the
Loan Documents and (ii) the Assignor shall, to the extent of the interests
assigned by this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is a Foreign Lender, the
forms specified in Section 2.15(e) of the Credit Agreement, duly completed and
executed by such Assignee, (ii) if the Assignee is not already a Lender under
the Credit Agreement, an Administrative Questionnaire duly completed by the
Assignee and (iii) a processing and recordation fee of $3,500.
3. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment ("Assignment Date")
(may not be fewer than 5 Business
Days after the Date of Assignment):
<PAGE>
2
<TABLE>
<CAPTION>
Percentage Assigned of
Applicable Facility/Commitment
(set forth, to at least 8 decimals,
as a percentage of the Facility and
the aggregate Commitments
Facility/Commitment Principal Amount Assigned of all Lenders thereunder)
- ------------------- ------------------------- --------------------------
<S> <C> <C>
Revolving Credit $ %
Tranche A $ %
Tranche B $ %
</TABLE>
The terms set forth above are hereby agreed to:
_____________________________, as Assignor,
By_______________________________________
Name:
Title:
_____________________________, as Assignee,
By_______________________________________
Name:
Title:
The undersigned hereby consent
to the above assignment /*/
TRITON PCS, INC., THE CHASE MANHATTAN BANK, as Administrative
Agent,
By________________________________
Name:
Title: By_______________________________________
Name:
Title:
_____________________
/*/ To be completed to the extent consents are required under Section
9.04(b) of the Credit Agreement.
<PAGE>
EXHIBIT B-1
[Letterhead of]
Latham & Watkins and/or
Kleinbard Bell & Brecker
February , 1998
The Chase Manhattan Bank,
as Administrative Agent and Collateral Agent
270 Park Avenue
New York, NY 10017
Chase Securities Inc.,
J.P. Morgan Securities Inc.
Toronto Dominion Securities USA
as Arrangers
c/o Chase Securities Inc.
270 Park Avenue
New York, NY 10017
The Lenders party to the Credit
Agreement referred to below (all of
the Addressees, collectively, the
"Creditors")
Ladies and Gentlemen:
We have acted as counsel to Triton PCS, Inc., a Delaware corporation
(the "Borrower"), Triton PCS Holdings, Inc., a Delaware corporation ("Holdings")
and each of the subsidiaries of the Borrower listed on the attached Schedule A
(the "Subsidiaries"), in connection with the execution and delivery today of,
and the consummation of the transactions contemplated by, the Credit Agreement
dated as of February , 1998 (the "Credit Agreement"), among the Borrower, the
financial institutions party thereto as lenders (the "Lenders") and The Chase
Manhattan Bank, as administrative agent (in such capacity, the "Administrative
Agent") and as collateral agent (in such capacity, the "Collateral Agent"). This
opinion is delivered pursuant to Section 4.02(b) of the Credit Agreement.
Capitalized terms used but not defined herein shall have the meanings assigned
to such terms in the Credit Agreement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the following
documents (collectively, the "Documents"):
(a) the Credit Agreement;
(b) the Guarantee Agreement;
(c) the Security Agreement;
(d) the Pledge Agreement;
(e) the Indemnity, Subrogation and Contribution Agreement;
(f) the Mortgages;
(g) UCC-1 financing statements, copies of which are attached
hereto as Exhibit A (the "Financing Statements"); and
(h) the Assignment of Rights.
<PAGE>
2
In addition, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such records, agreements,
instruments and other documents, and have made such other investigations, as we
have deemed necessary for the purpose of this opinion.
References in this opinion to the "[ ] UCC" shall mean the
Uniform Commercial Code as in effect on the date hereof in the State of [ ].
[References in this opinion to the "[ ] UCC", the "[ ] UCC", the
"[ ] UCC", the "[ ] UCC" and the "[ ] UCC", shall mean the
Uniform Commercial Code as in effect on the date hereof in the States of
[ ], [ ], [ ], [ ] and [ ], respectively, and solely as
set forth in the CCH Secured Transactions Guide and without regard to the case
law decided thereunder.
Based upon the foregoing, it is our opinion that:
1. The Borrower and each Loan Party (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite corporate power and
authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted, (c) is qualified to do business and
is in good standing in each jurisdiction where such qualification is required,
except where the failure so to qualify could not reasonably be expected to
result in a Material Adverse Effect, and (d) has the corporate power and
authority to execute, deliver and perform its obligations under each of the Loan
Documents to which it is a party and, in the case of the Borrower, to borrow
under the Credit Agreement.
2. The execution, delivery and performance of each of the Loan
Documents by the Borrower and each Loan Party thereto, the borrowings thereunder
and the creation of the security interests contemplated thereby (a) have been
duly authorized by all requisite corporate and, if necessary, stockholder action
of the Borrower and each Loan Party and (b) will not (i) violate (A) any
provision of the certificate of incorporation or by-laws of the Borrower or any
Loan Party, (B) any law, statute, rule or regulation or any order of any
Governmental Authority applicable to the Borrower or any Loan Party or their
properties or (C) any provision of any indenture or other material agreement or
other material instrument to which the Borrower or any Subsidiary is a party or
by which any of them or any of their property is or may be bound, (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under, or give rise to any right to accelerate
or to require the prepayment, repurchase or redemption of any obligation under
any such indenture, agreement or other instrument or (iii) result in the
creation or imposition of any Lien upon or with respect to any property or
assets now owned or hereafter acquired by the Borrower or any Loan Party (other
than any Lien created under the Loan Documents).
3. Each Loan Document has been duly executed and delivered by the
Borrower and each Loan Party thereto and constitutes the legal, valid and
binding obligation of the Borrower and each such Loan Party, in each case
enforceable against the Borrower and each such Subsidiary in accordance with its
terms.
4. No action, consent or approval of, registration or filing with or
any other action by any Governmental Authority is or will be required in
connection with the execution, delivery and performance of the Loan Documents by
the Loan Parties party thereto or the consummation of the transactions
contemplated thereby, other than (i) the filing of any UCC-1 financing
statements and filings with the United States Patent and Trademark Office and
the United States Copyright Office, (ii) the recordation of the Mortgages and
(iii) such authorizations and approvals as have already been obtained and are in
full force and effect.
5. There are not any actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to our
knowledge, threatened against or affecting the Borrower or any Loan Party or any
business, property or rights of any such person (i) that involve any Loan
Documents or the transactions contemplated thereby or (ii) as to which there is
a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.
6. All shares of capital stock of each Loan Party have been duly and
validly authorized and issued, are fully paid and non-assessable and are owned
by the Borrower, directly or indirectly, free and clear of all Liens (other than
Liens created under the Loan Documents). No authorized but unissued or treasury
shares of capital stock of any Loan Party are subject to any option, warrant,
right to call or commitment of any kind.
<PAGE>
3
Neither the Borrower nor any Loan Party is subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock or any securities convertible into or for shares of its capital
stock. Neither the Borrower nor any Loan Party is a party to any agreement
restricting the transfer or voting of any shares of any capital stock of any
Subsidiary.
7. Neither the Borrower nor any Loan Party is an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940.
8. Neither the Borrower nor any Loan Party is a "holding company" or
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935.
9. The making of the Loans to the Borrower and the application of
the proceeds thereof by the Borrower pursuant to the terms of the Credit
Agreement will not violate Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System.
10. The Pledge Agreement, together with possession by the Collateral
Agent of the stock certificates or notes evidencing the Pledged Securities (as
defined in the Pledge Agreement), creates in favor of the Collateral Agent for
the benefit of the Secured Parties a valid and perfected security interest in,
lien on or pledge of the Collateral (as defined in the Pledge Agreement),
subject to no equal or prior security interest of any creditor.
11. The Security Agreement creates in favor of the Collateral Agent
for the benefit of the Secured Parties a valid and perfected security interest
in, lien on or pledge of those items and types of Collateral (as defined in the
Security Agreement).
12. Upon the filing of the Security Agreement in the United States
Patent and Trademark Office and the United States Copyright Office, the
Collateral Agent for the benefit of the Secured Parties will have a valid and
duly perfected security interest in the Intellectual Property (as defined in the
Security Agreement).
13. The Financing Statements (a) are in proper form for filing under
the applicable laws of the State of [ ], (b) adequately identify the
Collateral described therein to provide sufficient notice to third parties of
the security interest referenced therein and (c) are required to be filed with
the Office of the Secretary of State of the State of [ ] and with the
Recorder of [and ] County [Counties]. Upon the filing
of the [ ] Financing Statements, the Collateral Agent for the benefit of the
Secured Parties will have a valid and duly perfected security interest in those
items and types of Collateral (as defined in the Security Agreement) in which a
security interest may be perfected under the [ ] UCC (the "Filing
Collateral"). The filing of the Financing Statements [with the recorders and]
in the offices described above are the only actions, recordings or filings
necessary to publish notice and protect the validity of and to establish of
record the rights of the parties under the Security Agreement with respect to
the Collateral, except (i) that continuation statements under the [ ] UCC are
are required to be filed within six months prior to the expiration of five years
from the date of filing of the Financing Statements, and (ii) that a security
interest in or pledge of money or instruments, other than money or instruments
constituting chattel paper, cannot be perfected by filing financing statements,
but must be perfected by taking physical possession thereof.
14. Subject to appropriate continuation or perfection under the [
] UCC as set forth in the preceding paragraph, the priority of the security
interest in, lien on or pledge of the Collateral created by the Pledge Agreement
and the Security Agreement with respect to any extension of credit (each, a
"Further Advance") made or deemed to have been made by the Creditors after the
date (the "Perfection Date") on which the security interest in, lien on or
pledge of the Collateral shall have been perfected will be the same as the
priority of the security interest, lien on or pledge of the Collateral with
respect to all extensions of credit made or deemed to have been made by the
Creditors on or before the Perfection Date, and such priority will not be
affected by the rights in and to the Collateral of any third party whose
interest in the Collateral attached thereto after the Perfection Date but prior
to the date of such Further Advance.
15. [The [ ] Financing Statements (a) are in proper form for
filing under the [ ] UCC, (b) adequately identify the Collateral described
therein to provide sufficient notice to third parties of the security interest
referenced therein and (c) are required to be filed with the Office of the
Secretary of State of
<PAGE>
4
the State of [ ] and with the Recorder of [and ] County
[Counties]. Upon the filing of the [ ] Financing Statements, the
Collateral Agent for the benefit of the Secured Parties will have a valid and
duly perfected security interest in those items and types of Collateral (as
defined in the Security Agreement) in which a security interest may be perfected
under the [ ] UCC./**/]
16. None of the Collateral Agent or the other Creditors is required
(a) to be qualified to do business, file any designation for service of process
or file any reports or pay any taxes in the Commonwealth of Pennsylvania, or (b)
to comply with any statutory or regulatory requirement applicable only to
financial institutions chartered or qualified or required to be chartered or
qualified to do business in the Commonwealth of Pennsylvania, in each case by
reason of the execution and delivery or filing or recording, as applicable, of
any of the Documents, or by reason of the participation in any of the
transactions under or contemplated by the Documents, including, without
limitation, the extension of any credit contemplated thereby, the making and
receipt of payments pursuant thereto and the exercise of any remedy thereunder.
If it were determined that such qualification and filing were required, the
validity of the Documents would not be affected thereby, but (a) if the
Collateral Agent were not qualified it would be precluded from enforcing its
rights as collateral agent on behalf of the Creditors in the courts of the
Commonwealth of Pennsylvania until such time as it is admitted to transact
business in the Commonwealth of Pennsylvania or (b) assuming the Creditors would
institute remedies without the Collateral Agent, they would be precluded from
enforcing their rights in the courts of the Commonwealth of Pennsylvania until
such time as they were admitted to transact business in the Commonwealth of
Pennsylvania. However, the lack of qualification would not result in any waiver
of rights or remedies pending such qualification.
We are admitted to practice in the State of New York and the
Commonwealth of Pennsylvania. We express no opinion as to matters under or
involving the laws of any jurisdiction other than the laws of the State of New
York and the Commonwealth of Pennsylvania, the General Corporation Law of the
State of Delaware, the Federal Laws of the United States and [, to the extent
specifically referred to herein, the [ ] UCC].
This opinion may be relied upon by each of you, by any successors and
assigns of the Administrative Agent or the Collateral Agent, and any
participant, assignee or successor to the interests of the Lenders under the
Loan Documents.
Very truly yours,
______________________
/**/ Repeat for each state, if any, as to which counsel opines on the basis
of a review of the CCH Secured Transactions Guide.
<PAGE>
Schedule A
SUBSIDIARIES
[List all subsidiaries of the Borrower]
<PAGE>
EXHIBIT B-2
[Letterhead of]
FCC Counsel
February , 1998
The Chase Manhattan Bank,
as Administrative Agent and Collateral Agent
270 Park Avenue
New York, NY 10017
Chase Securities Inc.,
J.P. Morgan Securities Inc
Toronto Dominion Securities USA
as Arrangers
c/p Chase Securities Inc.
270 Park Avenue
New York, NY 10017
The Lenders party to the Credit
Agreement referred to below (all of
the Addressees, collectively, the
"Creditors")
Ladies and Gentlemen:
We have acted as special FCC counsel to Triton PCS, Inc., a Delaware
corporation (the "Borrower"), Triton PCS Holdings, Inc., a Delaware corporation
("Holdings"), and each of the subsidiaries of the Borrower listed on the
attached Schedule A (the "Subsidiaries"), in connection with the execution and
delivery today of, and the consummation of the transactions contemplated by, the
Credit Agreement dated as of February , 1998 (the "Credit Agreement"), among the
Borrower, the financial institutions party thereto as lenders (the "Lenders")
and The Chase Manhattan Bank, as administrative agent (in such capacity, the
"Administrative Agent") and as collateral agent (in such capacity, the
"Collateral Agent"). This opinion is delivered pursuant to Section 4.02(b) of
the Credit Agreement. Capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Credit Agreement.
In connection with this opinion, we have examined, and relied upon,
the FCC licensing records and copies of documents filed by the Borrower and the
License Subsidiary with the FCC and have compared these records to the licenses
listed in Schedule I (the "Licenses"). We also have obtained, and relied upon as
to matters of fact, without independent investigation, such certifications from
officers of the Borrower (the "Officers' Certificates") as we have deemed
necessary for purposes of this opinion. We have also examined FCC orders and
other records of the FCC's Wireless Telecommunications Bureau (the "FCC Files")
and have made telephone inquiries to FCC staff in the FCC's Wireless
Telecommunications Bureau with respect to the opinions stated in paragraphs
(iii), (iv), and (vi) herein. We have also examined the Credit Agreement and the
form of Notes which may be delivered pursuant to the Credit Agreement after the
date hereof, the Guarantee Agreement, the Pledge Agreement, the Securities
Agreement and such other documents and records and made such other
investigations as we have deemed relevant and necessary in connection with this
opinion.
As to matters of fact, we have relied upon and assumed the accuracy
and completeness of the FCC files, the documents filed by the Borrower and the
License Subsidiary with the FCC, and the Officers' Certificate(s). In rendering
this opinion, we have not independently investigated, established or verified
the factual basis of any opinion set forth herein, and, unless otherwise
indicated herein, have relied for such matters solely upon the FCC Files, the
documents filed by the Borrower and the License Subsidiary with the FCC and the
Officers' Certificate(s).
We have assumed: (i) the authenticity of all documents submitted to
us as originals and the conformity with the original documents of any copies
thereof submitted to us as certified, conformed or
<PAGE>
2
photostatic copies for our examination; (ii) that the signatures on all
documents examined by us are genuine; (iii) that where any such signature
purports to have been made in a corporate, governmental, fiduciary or other
capacity, the person who affixed such signature to such documents had authority
to do so; and (iv) that all public files, records and certificates of, or
furnished by, governmental or regulatory agencies or authorities are true,
correct and complete.
As to all matters covered by the opinion letter delivered to you on
the date hereof by Latham & Watkins, counsel to the Borrower, we have relied
upon such opinion letter and assumed the accuracy of the legal opinions
expressed therein.
Based upon our examination of the foregoing documents, records and
disclosures and subject to the qualifications, assumptions and limitations set
forth herein, we are of the opinion that:
(i) The execution, delivery and performance of the Credit
Agreement, the Guarantee Agreement, the Indemnity, Subrogation and
Contribution Agreement, the Pledge Agreement, the Security Agreement
or any other Loan Document and any Notes, the borrowings under the
Credit Agreement and the use of the proceeds thereof, the granting of
security interests under the Security Documents and the guaranteeing
of the Obligations under the Guarantee Agreement will not result in a
violation of the Communications Act or any order, rule or regulation
of the FCC.
(ii) No consent, approval, authorization, order, registration,
filing or qualification of or with, or any other act by, any court or
governmental agency or body is required under the Communications Act
or the rules, regulations and published policies of the FCC for the
valid execution, delivery and consummation of and performance under
the Loan Documents or the consummation by the Loan Parties of the
transactions contemplated thereby.
(iii) The License Subsidiary holds and has the full use and
benefit of and the right to use all of the Licenses held by it. Such
Licenses are in full force and effect and we are not aware of any
other licenses or other approvals or authorizations required by the
Borrower or any Restricted Subsidiary to conduct its business as now
operated or as contemplated to be operated by it.
(iv) To the best of our knowledge, there is no material respect
in which the operation of the Borrower and the Subsidiaries'
businesses is not in accordance with the Licenses, the Communications
Act and all orders, rules, regulations and published policies of the
FCC.
(v) To the best of our knowledge, there are no material
proceedings threatened, pending or contemplated before the FCC against
or involving the properties, businesses or Licenses of the Borrower or
any Subsidiary.
(vi) To the best of our knowledge, no event has occurred as of
the date hereof that permits, or with notice or lapse of time or both
would permit, the suspension, revocation or termination of such
License or that might result in any other material impairment of the
rights of the Borrower or the Subsidiaries therein.
This opinion letter is rendered to you in connection with the above-
described transactions. It may not be relied upon by you for any other purpose,
or relied upon by any other Person without our prior written consent.
Very truly yours,
<PAGE>
Schedule I
PCS Licenses Held by the License Subsidiary
Location Call Sign Market No.
-------- --------- ----------
<PAGE>
EXHIBIT B-3
[Letterhead of]
Local Counsel
February , 1998
The Chase Manhattan Bank,
as Administrative Agent and Collateral Agent
270 Park Avenue
New York, NY 10017
Chase Securities Inc.,
J.P. Morgan Securities Inc
Toronto Dominion Securities USA
as Arrangers
c/o Chase Securities Inc.
270 Park Avenue
New York, NY 10017
The Lenders party to the Credit
Agreement referred to below (all of
the Addressees, collectively, the
"Creditors")
Ladies and Gentlemen:
We have acted as special counsel in the State of [ ] (the
"State") to Triton PCS, Inc., a Delaware corporation (the "Borrower"), Triton
PCS Holdings, Inc., a Delaware corporation ("Holdings"), and each of the
subsidiaries of the Borrower listed on the attached Schedule A (the
"Subsidiaries"), in connection with the execution and delivery today of, and the
consummation of the transactions contemplated by, the Credit Agreement dated as
of February , 1998 (the "Credit Agreement"), among the Borrower, the financial
institutions party thereto as lenders (the "Lenders") and The Chase Manhattan
Bank, as administrative agent (in such capacity, the "Administrative Agent") and
as collateral agent (in such capacity, the "Collateral Agent"). This opinion is
delivered pursuant to Section 4.02(b) of the Credit Agreement. Capitalized terms
used but not defined herein shall have the meanings assigned to such terms in
the Credit Agreement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the following
documents (collectively, the "Documents"):
(a) the Credit Agreement;
(b) the Guarantee Agreement;
(c) the Security Agreement;
(d) the Pledge Agreement;
(e) the Indemnity, Subrogation and Contribution Agreement;
(f) the Mortgages;
(g) UCC-1 financing statements, copies of which are attached
hereto as Exhibit A (the "Financing Statements"); and
(h) the Assignment of Rights.
<PAGE>
2
In addition, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such records, agreements,
instruments and other documents, and have made such other investigations, as we
have deemed necessary for the purpose of this opinion.
References in this opinion to the "UCC" shall mean the Uniform
Commercial Code as in effect on the date hereof in the State.
In rendering this opinion to you, we have assumed that:
(a) there has occurred due execution and delivery of the
Documents; and
(b) except as otherwise set forth in the applicable Security
Documents, the Borrower and each Guarantor, as applicable, owns the
Mortgaged Property (as defined in [the] [each] Mortgage) and the
Collateral (as defined in the Security Agreement and the Pledge
Agreement).
Subject to the foregoing assumptions, we are of the opinion that:
1. None of the Collateral Agent or the other Creditors is required
(a) to be qualified to do business, file any designation for service of process
or file any reports or pay any taxes in the State, or (b) to comply with any
statutory or regulatory requirement applicable only to financial institutions
chartered or qualified or required to be chartered or qualified to do business
in the State, in each case by reason of the execution and delivery or filing or
recording, as applicable, of any of the Documents, or by reason of the
participation in any of the transactions under or contemplated by the Documents,
including, without limitation, the extension of any credit contemplated thereby,
the making and receipt of payments pursuant thereto and the exercise of any
remedy thereunder. If it were determined that such qualification and filing were
required, the validity of the Documents would not be affected thereby, but (a)
if the Collateral Agent were not qualified it would be precluded from enforcing
its rights as collateral agent on behalf of the Creditors in the courts of the
State until such time as it is admitted to transact business in the State or (b)
assuming the Creditors would institute remedies without the Collateral Agent,
they would be precluded from enforcing their rights in the courts of the State
until such time as they were admitted to transact business in the State.
However, the lack of qualification would not result in any waiver of rights or
remedies pending such qualification.
2. The execution, delivery, filing or recording, as applicable, and
performance by the Borrower and each Guarantor of each of the Documents to which
each of them is a party (i) will not violate any existing law, governmental rule
or regulation of the State and (ii) do not require any license, permit,
authorization, consent or other approval of, any exemption by, or any
registration, recording or filing with any court, administrative agency or other
Governmental Authority of the State.
3. Assuming that the Security Agreement and the Pledge Agreement
were governed by the law of the State for the purpose of rendering the opinion
set forth in this paragraph, each of the Security Agreement and the Pledge
Agreement is in proper form under the applicable laws of the State to (i) be
enforceable against the grantors or pledgors named therein in accordance with
its terms and (ii) create and constitute a valid security interest in, lien on
or pledge of the Collateral.
4. The Mortgage[s] [is] [are] in proper form under applicable laws
of the State (a)(i) to be accepted for recording by the Recorder of [and ]
County [Counties] and (ii) to be enforceable against the Borrower and each
Guarantor, as applicable, in accordance with [its] [their] terms, and (b)(i) to
create and constitute valid, legal, binding and enforceable mortgage lien[s] on
the real property described therein (the "Real Property"), (ii) to create and
constitute valid, legal, binding and enforceable perfected security interests in
such of the Mortgaged Property (the "UCC Property") as is subject to the
provisions of Article 9 of the UCC, and (iii) to create and constitute valid,
legal, binding and enforceable perfected common law liens on or pledges of such
of the Mortgaged Property as is not UCC Property or Real Property (such
property, together with the UCC Property, the "Personal Property").
5. The Financing Statements relating to the Mortgage[s] (a) are in
proper form under the applicable laws of the State for filing, (b) adequately
identify the collateral described therein to provide sufficient notice to third
parties of the security interest referenced therein and (c) are required to be
filed with the Office of the
<PAGE>
3
Secretary of State of the State and with the Recorder of [and ]
County [Counties]. The Financing Statements relating to the Security Agreement
(a) are in proper form under the applicable laws of the State for filing, (b)
adequately identify the collateral described therein to provide sufficient
notice to third parties of the security interest referenced therein and (c) are
required to be filed with the Office of the Secretary of State of the State and
with the Recorder of [and ] County [Counties]. Upon the filing
of the Financing Statements, the Collateral Agent for the benefit of the
Creditors will have a valid and duly perfected security interest in and lien on
the Personal Property and Collateral (including after-acquired property)
described in the Mortgage[s] and the Security Agreement, respectively.
6. The recording of the Mortgage[s] and the filing of the Financing
Statements with the recorders and in the offices described above are the only
actions, recordings or filings necessary to publish notice and protect the
validity of and to establish of record the rights of the parties under the
Mortgage[s] and Security Agreement, except (i) that continuation statements
under the UCC are required to be filed within six months prior to the expiration
of five years from the date of filing of the Financing Statements, and (ii) that
a security interest in or pledge of money or instruments, other than money or
instruments constituting chattel paper, cannot be perfected by filing Financing
Statements or recording a Mortgage, but must be perfected by taking physical
possession thereof.
7. Subject to appropriate continuation or perfection under the UCC
as set forth the preceding paragraph, the priority of the security interest in,
lien on or pledge of the Collateral created by the Security Agreement and the
Pledge Agreement with respect to any extension of credit (each, a "Further
Advance") made or deemed to have been made by the Creditors after the date (the
"Perfection Date") on which the security interest in, lien on or pledge of the
Collateral shall have been perfected will be the same as the priority of the
security interest, lien on or pledge of the Collateral with respect to all
extensions of credit made or deemed to have been made by the Creditors on or
before the Perfection Date, and such priority will not be affected by the rights
in and to the Collateral of any third party whose interest in the Collateral
attached thereto after the Perfection Date but prior to the date of such Further
Advance.
8. The Collateral Agent has the power without naming all the
Creditors in any applicable legal proceeding to exercise remedies under the
Security Documents for the realization of any of the Mortgaged Property or the
Collateral in its own name, as collateral agent.
9. No taxes or other charges, including, without limitation,
intangible or documentary stamp taxes, mortgage or recording taxes, transfer
taxes or similar charges, are payable to the State or to any jurisdiction
therein on account of the execution or delivery or recording or filing of the
Mortgage[s] or any of the other Documents or the creation of the indebtedness
evidenced or secured by any of the Documents, as applicable, except for nominal
filing or recording fees.
[In the event that an intangible tax would be required to be paid in
connection with any of the transactions described in the preceding paragraph,
please describe with specificity in the context of this transaction, and the
collateral to be secured in your State, (a) the nature of the tax, (b) how and
when it is paid, (c) how it is calculated, (d) what forms or other documentation
would be required, and (e) any other information that would be necessary or
useful in order for the Borrower or any Guarantor to comply with the payment of
such tax. In the event that an intangible tax would not be required to be paid,
please specify that the intangible tax is inapplicable and the basis for such
conclusion.]
10. The transfer of all or any portion of the Mortgaged Property in
connection with the exercise of any remedy under the Mortgage[s], including,
without limitation, by way of judicial foreclosure, will not restrict, affect or
impair the liability of the Borrower and the other Loan Parties with respect to
the indebtedness secured thereby or the mortgagee's rights or remedies relating
thereto, including the foreclosure or enforcement of any other security interest
or liens securing such indebtedness, and the laws of the State do not require a
lienholder to elect to pursue its remedies either against mortgaged real
property or personal property where such lienholder holds security interests and
liens on both real and personal property of a debtor.
11. A State court or a federal court applying the choice of laws
principles prevailing under the laws of the State to which the question is
presented will give effect to the provisions in the Documents selecting
<PAGE>
4
the laws of the State of New York as the governing law thereof (except as
therein provided) and will apply such laws, rather than the laws of the State,
to the construction and application thereof.
12. Assuming that the Documents were governed by the law of the State
for the purpose of rendering the opinion set forth in this paragraph, (a) none
of the provisions of the Documents will violate any law, statute or regulation
of the State relating to usury and (b) the use of counterpart copies of any of
the Documents does not affect the enforceability of any of the Documents.
We are admitted to practice in the State. We express no opinion as to
matters under or involving the laws of any jurisdiction other than laws of the
United States and the State and its political subdivisions.
This opinion may be relied upon by each of you, by any successors and
assigns of the Administrative Agent or the Collateral Agent, and any
participant, assignee or successor to the interests of the Lenders under the
Loan Documents.
Very truly yours,
<PAGE>
SCHEDULE A
SUBSIDIARIES
[List all subsidiaries of the Borrower]
<PAGE>
GUARANTEE AGREEMENT dated as of February 4, 1998, among
TRITON PCS HOLDINGS, INC., a Delaware corporation ("Holdings"),
each of the subsidiaries listed on Schedule I hereto (each such
subsidiary individually, a "Subsidiary" and, together with
Holdings, the "Guarantors") of TRITON PCS, INC., a Delaware
corporation (the "Borrower"), and THE CHASE MANHATTAN BANK, a
Delaware corporation, as collateral agent (the "Collateral
Agent") for the Secured Parties (as defined in the Credit
Agreement referred to below).
Reference is made to the Credit Agreement dated as of February 3, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Holdings, the Borrower, the lenders from time to time party
thereto (the "Lenders") and The Chase Manhattan Bank, as Administrative Agent
and Collateral Agent. Capitalized terms used herein and not defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower pursuant to, and upon
the terms and subject to the conditions specified in, the Credit Agreement. Each
of the Subsidiaries is a direct or indirect wholly owned Subsidiary of the
Borrower and acknowledges that it will derive substantial benefit from the
making of the Loans by the Lenders. Holdings owns all the capital stock of the
Borrower and acknowledges that it will derive substantial benefit from the
making of the Loans by the Lenders. The obligations of the Lenders to make Loans
are conditioned on, among other things, the execution and delivery by the
Guarantors of a Guarantee Agreement in the form hereof. As consideration
therefor and in order to induce the Lenders to make Loans, the Guarantors are
willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor unconditionally guarantees, jointly
with the other Guarantors and severally, as a primary obligor and not merely as
a surety, (a) the due and punctual payment of (i) the principal of and premium,
if any, and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, and (ii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the Loan Parities to the
Secured Parties under the Credit Agreement and the other Loan Documents, (b) the
due and punctual performance of all covenants, agreements, obligations and
liabilities of the Loan Parties under or pursuant to the Credit Agreement and
the other Loan Documents and (c) unless otherwise agreed upon in writing by the
applicable Lender party thereto, all obligations of the Borrower, monetary or
otherwise, under each Interest Rate Protection Agreement entered into with a
counterparty that was a Lender at the time such Interest Rate Protection
Agreement was entered into (all the monetary and other obligations referred to
in the preceding clauses (a) through (c) being collectively called the
"Obligations"). Each Guarantor further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice to or further assent
from it, and that it will remain bound upon its guarantee notwithstanding any
extension or renewal of any Obligation.
Anything contained in this Agreement to the contrary notwithstanding, the
obligations of each Guarantor hereunder shall be limited to a maximum aggregate
amount equal to the greatest amount that would not render such Guarantor's
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
provisions of applicable state law (collectively, the "Fraudulent Transfer
Laws"), in each case after giving effect to all other liabilities of such
Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (a) in respect of intercompany indebtedness to the Borrower or
Affiliates of the Borrower to the extent that such indebtedness would be
discharged in an amount equal to the amount paid by such Guarantor hereunder and
(b) under any Guarantee of senior unsecured indebtedness or Indebtedness
subordinated in right of payment to the Obligations which Guarantee contains a
limitation as to maximum amount similar to that set forth in this paragraph,
pursuant to which the liability of such Guarantor hereunder is included in the
liabilities taken into account in determining such maximum amount)
<PAGE>
2
and after giving effect as assets to the value (as determined under the
applicable provisions of the Fraudulent Transfer Laws) of any rights to
subrogation, contribution, reimbursement, indemnity or similar rights of such
Guarantor pursuant to (i) applicable law or (ii) any agreement providing for an
equitable allocation among such Guarantor and other Affiliates of the Borrower
of obligations arising under Guarantees by such parties (including the
Indemnity, Subrogation and Contribution Agreement).
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Guarantor waives presentment to, demand of payment from and
protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment.
SECTION 3. Security. Each of the Guarantors authorizes the Collateral
Agent and each of the other Secured Parties, to (a) take and hold security for
the payment of this Guarantee and the Obligations and exchange, enforce, waive
and release any such security, (b) apply such security and direct the order or
manner of sale thereof as they in their sole discretion may determine and (c)
release or substitute any one or more endorsees, other guarantors of other
obligors.
SECTION 4. Guarantee of Payment. Each Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Collateral Agent or
any other Secured Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
the Collateral Agent or any other Secured Party in favor of the Borrower or any
other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations of
each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment in
full in cash of the Obligations), including any claim of waiver, release,
surrender, alteration or compromise of any of the Obligations, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Collateral Agent or any other Secured
Party to assert any claim or demand or to enforce any remedy under the Credit
Agreement, any other Loan Document or any other agreement, by any waiver or
modification of any provision of any thereof, by any default, failure or delay,
wilful or otherwise, in the performance of the Obligations, or the failure to
perfect any security interest in, or the release of, any of the security held by
or on behalf of the Collateral Agent or any other Secured Party, or by any other
act or omission that may or might in any manner or to any extent vary the risk
of any Guarantor or that would otherwise operate as a discharge of each
Guarantor as a matter of law or equity (other than the indefeasible payment in
full in cash of all the Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted
by applicable law, each of the Guarantors waives any defense based on or arising
out of any defense of the Borrower or the unenforceability of the Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrower, other than the final and indefeasible payment in full
in cash of the Obligations. The Collateral Agent and the other Secured Parties
may, at their election, foreclose on any security held by one or more of them by
one or more judicial or nonjudicial sales, accept an assignment of any such
security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Borrower or any other
guarantor or exercise any other right or remedy available to them against the
Borrower or any other guarantor, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Obligations have
been fully, finally and indefeasibly paid in cash.
SECTION 7. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against any Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
or such other Secured Party as designated thereby in cash the amount of such
unpaid Obligations. Upon payment by any Guarantor of any sums to the Collateral
Agent or any Secured Party as provided above, all rights of such Guarantor
against the Borrower arising as a result thereof by way of right of subrogation,
<PAGE>
3
contribution, reimbursement, indemnity or otherwise shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in
full in cash of all the Obligations. In addition, any indebtedness of the
Borrower now or hereafter held by any Guarantor is hereby subordinated in right
of payment to the prior payment in full of the Obligations during the existence
of an Event of Default. If any amount shall erroneously be paid to any Guarantor
on account of (i) such subrogation, contribution, reimbursement, indemnity or
similar right or (ii) any such indebtedness of the Borrower, such amount shall
be held in trust for the benefit of the Secured Parties and shall forthwith be
paid to the Collateral Agent to be credited against the payment of the
Obligations, whether matured or unmatured, in accordance with the terms of the
Loan Documents.
SECTION 8. Information. Each of the Guarantors assumes all responsibility
for being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Obligations and the nature, scope and extent of the risks that such
Guarantor assumes and incurs hereunder, and agrees that none of the Collateral
Agent or the other Secured Parties will have any duty to advise any of the
Guarantors of information known to it or any of them regarding such
circumstances or risks.
SECTION 9. Representations and Warranties. Each of the Guarantors
represents and warrants as to itself that all representations and warranties
relating to it contained in the Credit Agreement are true and correct.
SECTION 10. Termination. The Guarantees made hereunder (a) shall
terminate when all the Obligations have been indefeasibly paid in full and the
Lenders have no further commitment to lend under the Credit Agreement and (b)
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any Obligation is rescinded or must
otherwise be restored by any Secured Party or any Guarantor upon the bankruptcy
or reorganization of the Borrower, any Guarantor or otherwise.
SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Guarantors that are contained in
this Agreement shall bind and inure to the benefit of each party hereto and
their respective successors and assigns. This Agreement shall become effective
as to any Guarantor when a counterpart hereof executed on behalf of such
Guarantor shall have been delivered to the Collateral Agent, and a counterpart
hereof shall have been executed on behalf of the Collateral Agent, and
thereafter shall be binding upon such Guarantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Guarantor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Guarantor shall have the right
to assign its rights or obligations hereunder or any interest herein (and any
such attempted assignment shall be void). If all of the capital stock of a
Guarantor is sold, transferred or otherwise disposed of to a person that is not
an Affiliate of the Borrower pursuant to a transaction permitted by Section 6.06
of the Credit Agreement, such Guarantor shall be released from its obligations
under this Agreement without further action. This Agreement shall be construed
as a separate agreement with respect to each Guarantor and may be amended,
modified, supplemented, waived or released with respect to any Guarantor without
the approval of any other Guarantor and without affecting the obligations of any
other Guarantor hereunder.
SECTION 12. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by any
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Guarantor in any case shall entitle such Guarantor to
any other or further notice or demand in similar or other circumstances.
<PAGE>
4
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Guarantors with respect to which such waiver, amendment or modification relates
and the Collateral Agent, with the prior written consent of the Required Lenders
(except as otherwise provided in the Credit Agreement).
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 14. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to each Guarantor shall be given to it in
care of the Borrower at the address set forth in the Credit Agreement.
SECTION 15. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by the Guarantors herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or any other fee or amount payable under this Agreement or any other
Loan Document is outstanding and unpaid and as long as the Commitments have not
been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 16. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 11. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 17. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 18. Jurisdiction; Consent to Service of Process. (a) Each
Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against any Guarantor or its properties in the courts of any jurisdiction.
(b) Each Guarantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
<PAGE>
5
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 14. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 19. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
SECTION 20. Additional Guarantors. Pursuant to Section 5.12 of the Credit
Agreement, each Subsidiary Loan Party of the Borrower that was not in existence
or not a Subsidiary Loan Party on the date of the Credit Agreement is required
to enter into this Agreement as a Guarantor upon becoming a Subsidiary Loan
Party. Upon execution and delivery after the date hereof by the Collateral Agent
and such a Subsidiary of an instrument in the form of Annex 1, such Subsidiary
Loan Party shall become a Guarantor hereunder with the same force and effect as
if originally named as a Guarantor herein. The execution and delivery of any
instrument adding an additional Guarantor as a party to this Agreement shall not
require the consent of any other Guarantor hereunder. The rights and obligations
of each Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Guarantor as a party to this Agreement.
SECTION 21. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Secured Party is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other Indebtedness at any time owing by such Secured Party to
or for the credit or the account of any Guarantor against any or all the
obligations of such Guarantor now or hereafter existing under this Agreement and
the other Loan Documents held by such Secured Party, irrespective of whether or
not such Secured Party shall have made any demand under this Agreement or any
other Loan Document and although such obligations
<PAGE>
6
may be unmatured. The rights of each Secured Party under this Section 21 are in
addition to other rights and remedies (including other rights of setoff) which
such Secured Party may have.
SECTION 22. FCC Consent. Notwithstanding anything herein which may be
construed to the contrary, no action shall be taken by any of the Collateral
Agent and the Secured Parties with respect to the Licenses or any license of the
Federal Communications Commission ("FCC") unless and until any required approval
under the Federal Communications Act of 1934, and any applicable rules and
regulations thereunder, requiring the consent to or approval of such action by
the FCC or any governmental or other authority, have been satisfied.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
TRITON PCS HOLDINGS, INC.,
By_______________________________________
Name:
Title:
TRITON MANAGEMENT COMPANY, INC.,
By_______________________________________
Name:
Title:
EACH OF THE OTHER SUBSIDIARIES LISTED ON
SCHEDULE I HERETO,
By: TRITON MANAGEMENT COMPANY, INC.,
its manager,
___________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral
Agent,
By_______________________________________
Name:
Title:
<PAGE>
Schedule I to the
Guarantee Agreement
<TABLE>
<CAPTION>
Subsidiary Guarantor Address
-------------------- -------
<S> <C>
1. Triton Management Company, Inc. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
2. Triton PCS Holdings Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
3. Triton PCS Operating Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
4. Triton PCS License Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
5. Triton PCS Property Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
6. Triton PCS Equipment Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
</TABLE>
<PAGE>
Annex 1 to the
Guarantee Agreement
SUPPLEMENT NO. [ ] dated as of , to the Guarantee
Agreement dated as of February , 1998, among TRITON PCS
HOLDINGS, INC., a Delaware corporation ("Holdings"), each of the
subsidiaries listed on Schedule I thereto (each such subsidiary
individually, a "Subsidiary" and, together with Holdings, the
"Guarantors") of TRITON PCS, INC., a Delaware corporation (the
"Borrower"), and THE CHASE MANHATTAN BANK, a Delaware
corporation, as collateral agent (the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement referred to
below).
A. Reference is made to the Credit Agreement dated as of February ,
1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the lenders from time to time party
thereto (the "Lenders") and The Chase Manhattan Bank, as Administrative Agent
and Collateral Agent. Capitalized terms used herein and not defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Guarantee Agreement and the
Credit Agreement.
C. The Guarantors have entered into the Guarantee Agreement in order to
induce the Lenders to make Loans. Pursuant to Section 5.12 of the Credit
Agreement, each Subsidiary Loan Party of the Borrower that was not in existence
or not a Subsidiary Loan Party on the date of the Credit Agreement is required
to enter into the Guarantee Agreement as a Guarantor upon becoming a Subsidiary
Loan Party. Section 20 of the Guarantee Agreement provides that additional
Subsidiaries of the Borrower may become Guarantors under the Guarantee Agreement
by execution and delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary of the Borrower (the "New Guarantor") is executing this
Supplement in accordance with the requirements of the Credit Agreement to become
a Guarantor under the Guarantee Agreement in order to induce the Lenders to make
additional Loans and as consideration for Loans previously made.
Accordingly, the Collateral Agent and the New Guarantor agree as follows:
SECTION 1. In accordance with Section 20 of the Guarantee Agreement, the
New Guarantor by its signature below becomes a Guarantor under the Guarantee
Agreement with the same force and effect as if originally named therein as a
Guarantor and the New Guarantor hereby (a) agrees to all the terms and
provisions of the Guarantee Agreement applicable to it as a Guarantor thereunder
and (b) represents and warrants that the representations and warranties made by
it as a Guarantor thereunder are true and correct on and as of the date hereof
except for representations and warranties which by their terms refer to a
specific date. Each reference to a "Guarantor" in the Guarantee Agreement shall
be deemed to include the New Guarantor. The Guarantee Agreement is hereby
incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity
regardless of whether considered in a proceeding in equity or at law.
SECTION 3. This Supplement may be executed in counterparts, each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Guarantor and the Collateral
Agent. Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Guarantee
Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
<PAGE>
2
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Guarantee Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision hereof in a particular jurisdiction shall not in and of itself affect
the validity of such provision in any other jurisdiction). The parties hereto
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 14 of the Guarantee Agreement. All
communications and notices hereunder to the New Guarantor shall be given to it
at the address set forth under its signature below, with a copy to the Borrower.
SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent for
its out-of-pocket expenses in connection with this Supplement, including the
fees, disbursements and other charges of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have duly
executed this Supplement to the Guarantee Agreement as of the day and year first
above written.
[NAME OF NEW GUARANTOR],
By_______________________________________
Name:
Title:
Address:
THE CHASE MANHATTAN BANK, as Collateral Agent,
By_______________________________________
Name:
Title:
<PAGE>
PLEDGE AGREEMENT dated as of February 4, 1998, among TRITON
PCS, INC., a Delaware corporation (the "Borrower"), each Subsidiary of
the Borrower listed on Schedule I hereto (each such Subsidiary
individually a "Subsidiary Pledgor" and collectively, the "Subsidiary
Pledgors") TRITON PCS HOLDINGS, INC., a Delaware corporation
("Holdings"); the Borrower, the Subsidiary Pledgors and Holdings are
referred to collectively herein as the "Pledgors") and THE CHASE
MANHATTAN BANK, a Delaware corporation ("Chase"), as collateral agent
(in such capacity, the "Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of February 3, 1998
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Holdings, the Borrower, the lenders from time to time party
thereto (the "Lenders") and Chase, as administrative agent for the Lenders and
Collateral Agent, and (b) the Guarantee Agreement dated as of February 4, 1998
(as amended, supplemented or otherwise modified from time to time, the
"Guarantee Agreement") among the Pledgors and the Collateral Agent.
The Lenders have agreed to make Loans to the Borrower, pursuant to, and
upon the terms and subject to the conditions specified in, the Credit Agreement.
The Guarantors have agreed to guarantee, among other things, all the obligations
of the Borrower under the Credit Agreement. The obligations of the Lenders to
make Loans are conditioned upon, among other things, the execution and delivery
by the Pledgors of a Pledge Agreement in the form hereof to secure (a) the due
and punctual payment by the Borrower of (i) the principal of and premium, if
any, and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise and (ii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the Borrower to the Secured
Parties under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrower under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of each Subsidiary Pledgor
and of Holdings under or pursuant to the Guarantee Agreement or the other Loan
Documents and (d) the due and punctual payment and performance of all
obligations of the Borrower or any other Loan Party under each Hedging Agreement
entered into with any counterparty that was a Lender at the time such Hedging
Agreement was entered into (all the monetary and other obligations referred to
in the preceding clauses (a) through (d) being referred to collectively as the
"Obligations"). Capitalized terms used herein and not defined herein shall have
meanings assigned to such terms in the Credit Agreement.
Accordingly, the Pledgors and the Collateral Agent, on behalf of itself and
each Secured Party (and each of their respective successors or assigns), hereby
agree as follows:
SECTION 1. Pledge. As security for the payment and performance, as the
case may be, in full of the Obligations, each Pledgor hereby transfers, grants,
bargains, sells, conveys, hypothecates, pledges, sets over and delivers unto the
Collateral Agent, its successors and assigns, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest in all of the Pledgor's right, title and
interest in, to and under (a) the shares of capital stock, membership interests
or other equity interests owned by it all of which are listed on Schedule II
hereto and any shares of capital stock, membership interests or other equity
interests obtained in the future by the Pledgor and the certificates
representing all such shares, membership interests or other equity interests
(the "Pledged Interests"); provided that the Pledged Interests shall not include
(i) more than 65% of the issued and outstanding shares of stock of any Foreign
Subsidiary or (ii) to the extent that applicable law requires that a Subsidiary
of the Pledgor issue directors' qualifying shares, such qualifying shares;
(b)(i) the debt securities owned by it all of which are listed opposite the name
of the Pledgor on Schedule II hereto, (ii) any debt securities in the future
issued to the Pledgor and (iii) the promissory notes and any other instruments
evidencing such debt securities (the "Pledged Debt Securities"); (c) all other
property that may be delivered to and held by the Collateral Agent pursuant to
the terms hereof; (d) subject to Section 5, all payments of principal or
interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed, in respect of,
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2
in exchange for or upon the conversion of the securities referred to in clauses
(a) and (b) above; (e) subject to Section 5, all rights and privileges of the
Pledgor with respect to the securities and other property referred to in clauses
(a), (b), (c) and (d) above; and (f) all proceeds of any of the foregoing (the
items referred to in clauses (a) through (f) above being collectively referred
to as the "Collateral"). Upon delivery to the Collateral Agent, (a) any stock
certificates, notes or other securities now or hereafter included in the
Collateral (the "Pledged Securities") shall be accompanied by stock powers duly
executed in blank or other instruments of transfer satisfactory to the
Collateral Agent and by such other instruments and documents as the Collateral
Agent may reasonably request and (b) all other property comprising part of the
Collateral shall be accompanied by proper instruments of assignment duly
executed by the applicable Pledgor and such other instruments or documents as
the Collateral Agent may reasonably request. Each delivery of Pledged Securities
shall be accompanied by a schedule describing the securities theretofore and
then being pledged hereunder, which schedule shall be attached hereto as
Schedule II and made a part hereof. Each schedule so delivered shall supersede
any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the ratable benefit
of the Secured Parties, forever; subject, however, to the terms, covenants and
conditions hereinafter set forth.
SECTION 2. Delivery of the Collateral. (a) Each Pledgor agrees promptly
to deliver or cause to be delivered to the Collateral Agent any and all Pledged
Securities, and any and all certificates or other instruments or documents
representing the Collateral.
(b) Each Pledgor will cause any Indebtedness for borrowed money owed to
the Pledgor by any person to be evidenced by a duly executed promissory note
that is pledged and delivered to the Collateral Agent pursuant to the terms
thereof.
SECTION 3. Representations, Warranties and Covenants. Each Pledgor hereby
represents, warrants and covenants, as to itself and the Collateral pledged by
it hereunder, to and with the Collateral Agent that:
(a) the Pledged Stock represents that percentage as set forth on
Schedule II of the issued and outstanding shares of each class of the
capital stock of the issuer with respect thereto;
(b) except for the security interest granted hereunder, the Pledgor
(i) is and will at all times continue to be the direct owner, beneficially
and of record, of the Pledged Securities indicated on Schedule II, (ii)
holds the same free and clear of all Liens, except for Liens permitted by
clause (g) of the definition of "Permitted Encumbrances" in the Credit
Agreement, (iii) will make no assignment, pledge, hypothecation or transfer
of, or create or permit to exist any security interest in or other Lien on,
the Collateral, other than pursuant hereto, and (iv) subject to Section 5,
will cause any and all Collateral, whether for value paid by the Pledgor or
otherwise, to be forthwith deposited with the Collateral Agent and pledged
or assigned hereunder;
(c) the Pledgor (i) has the power and authority to pledge the
Collateral in the manner hereby done or contemplated and (ii) will defend
its title or interest thereto or therein against any and all Liens (other
than the Lien created by this Agreement), however arising, of all persons
whomsoever;
(d) no consent of any other person (including stockholders or
creditors of any Pledgor) and no consent or approval of any Governmental
Authority or any securities exchange was or is necessary to the validity of
the pledge effected hereby;
(e) by virtue of the execution and delivery by the Pledgors of this
Agreement, when the Pledged Securities, certificates or other documents
representing or evidencing the Collateral are delivered to the Collateral
Agent in accordance with this Agreement, the Collateral Agent will obtain,
subject to clause (g) of the definition of "Permitted Encumbrances" in the
Credit Agreement, a valid and perfected first lien upon and security
interest in such Pledged Securities as security for the payment and
performance of the Obligations;
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3
(f) the pledge effected hereby is effective to vest in the Collateral
Agent, on behalf of the Secured Parties, the rights of the Collateral Agent
in the Collateral as set forth herein;
(g) all of the Pledged Stock has been duly authorized and validly
issued and is fully paid and nonassessable;
(h) all information set forth herein relating to the Pledged Stock is
accurate and complete in all material respects as of the date hereof; and
(i) the pledge of the Pledged Stock pursuant to this Agreement does
not violate Regulation G, T, U or X of the Federal Reserve Board or any
successor thereto as of the date hereof.
SECTION 4. Registration in Nominee Name; Denominations. The Collateral
Agent, on behalf of the Secured Parties, shall have the right (in its sole and
absolute discretion) to hold the Pledged Securities in its own name as pledgee,
the name of its nominee (as pledgee or as sub-agent) or the name of the
Pledgors, endorsed or assigned in blank or in favor of the Collateral Agent.
Each Pledgor will promptly give to the Collateral Agent copies of any notices or
other communications received by it with respect to Pledged Securities
registered in the name of such Pledgor. The Collateral Agent shall at all times
have the right to exchange the certificates representing Pledged Securities for
certificates of smaller or larger denominations for any purpose consistent with
this Agreement.
SECTION 5. Voting Rights; Dividends and Interest, etc. (a) Unless and
until an Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any and all voting
and/or other consensual rights and powers inuring to an owner of Pledged
Securities or any part thereof for any purpose consistent with the terms of
this Agreement, the Credit Agreement and the other Loan Documents;
provided, however, that such Pledgor will not be entitled to exercise any
such right if the result thereof could materially and adversely affect the
rights inuring to a holder of the Pledged Securities or the rights and
remedies of any of the Secured Parties under this Agreement or the Credit
Agreement or any other Loan Document or the ability of the Secured Parties
to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each Pledgor,
or cause to be executed and delivered to each Pledgor, all such proxies,
powers of attorney and other instruments as such Pledgor may reasonably
request for the purpose of enabling such Pledgor to exercise the voting
and/or consensual rights and powers it is entitled to exercise pursuant to
subparagraph (i) above and to receive the cash dividends it is entitled to
receive pursuant to subparagraph (iii) below.
(iii) Each Pledgor shall be entitled to receive and retain any and all
cash dividends, interest and principal paid on the Pledged Securities to
the extent and only to the extent that such cash dividends, interest and
principal are permitted by, and otherwise paid in accordance with, the
terms and conditions of the Credit Agreement, the other Loan Documents and
applicable laws. All noncash dividends, interest and principal, and all
dividends, interest and principal paid or payable in cash or otherwise in
connection with a partial or total liquidation or dissolution, return of
capital, capital surplus or paid-in surplus, and all other distributions
(other than distributions referred to in the preceding sentence) made on or
in respect of the Pledged Securities, whether paid or payable in cash or
otherwise, whether resulting from a subdivision, combination or
reclassification of the outstanding capital stock of the issuer of any
Pledged Securities or received in exchange for Pledged Securities or any
part thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such issuer
may be a party or otherwise, shall be and become part of the Collateral,
and, if received by any Pledgor, shall not be commingled by such Pledgor
with any of its other funds or property but shall be held separate and
apart therefrom, shall be held in trust for the benefit of the Collateral
Agent and shall be forthwith delivered to the Collateral Agent in the same
form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Pledgor to dividends, interest or principal that such
Pledgor is authorized to receive pursuant to paragraph (a)(iii) above shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the
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4
sole and exclusive right and authority to receive and retain such dividends,
interest or principal. All dividends, interest or principal received by the
Pledgor contrary to the provisions of this Section 5 shall be held in trust for
the benefit of the Collateral Agent, shall be segregated from other property or
funds of such Pledgor and shall be forthwith delivered to the Collateral Agent
upon demand in the same form as so received (with any necessary endorsement).
Any and all money and other property paid over to or received by the Collateral
Agent pursuant to the provisions of this paragraph (b) shall be retained by the
Collateral Agent in an account to be established by the Collateral Agent upon
receipt of such money or other property and shall be applied in accordance with
the provisions of Section 7. After all Events of Default have been cured or
waived, the Collateral Agent shall, within five Business Days after all such
Events of Default have been cured or waived, repay to each Pledgor all cash
dividends, interest or principal (without interest), that such Pledgor would
otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii)
above and which remain in such account.
(c) Upon the occurrence and during the continuance of an Event of Default,
all rights of any Pledgor to exercise the voting and consensual rights and
powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section
5, and the obligations of the Collateral Agent under paragraph (a)(ii) of this
Section 5, shall cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall have the sole and exclusive right and authority
to exercise such voting and consensual rights and powers, provided that, unless
otherwise directed by the Required Lenders, the Collateral Agent shall have the
right from time to time following and during the continuance of an Event of
Default to permit the Pledgors to exercise such rights. After all Events of
Default have been cured or waived, such Pledgor will have the right to exercise
the voting and consensual rights and powers that it would otherwise be entitled
to exercise pursuant to the terms of paragraph (a)(i) above.
SECTION 6. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, subject to applicable regulatory and legal
requirements, the Collateral Agent may sell the Collateral, or any part thereof,
at public or private sale or at any broker's board or on any securities
exchange, for cash, upon credit or for future delivery as the Collateral Agent
shall deem appropriate. The Collateral Agent shall be authorized at any such
sale (if it deems it advisable to do so) to restrict the prospective bidders or
purchasers to persons who will represent and agree that they are purchasing the
Collateral for their own account for investment and not with a view to the
distribution or sale thereof, and upon consummation of any such sale the
Collateral Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the property sold absolutely free from any claim or
right on the part of any Pledgor, and, to the extent permitted by applicable
law, the Pledgors hereby waive all rights of redemption, stay, valuation and
appraisal any Pledgor now has or may at any time in the future have under any
rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall give a Pledgor 10 days' prior written notice
(which each Pledgor agrees is reasonable notice within the meaning of Section 9-
504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of such Pledgor's Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale at
a broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Collateral Agent may fix and state in the
notice of such sale. At any such sale, the Collateral, or portion thereof, to be
sold may be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may (in its sole and absolute discretion) determine. The
Collateral Agent shall not be obligated to make any sale of any Collateral if it
shall determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Collateral Agent until the sale price is paid in full by the
purchaser or purchasers thereof, but the Collateral Agent shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
be sold again upon like notice. At any public (or, to the extent permitted by
applicable law, private) sale made pursuant to this Section 6, any Secured Party
may bid for or
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5
purchase, free from any right of redemption, stay or appraisal on the part of
any Pledgor (all said rights being also hereby waived and released), the
Collateral or any part thereof offered for sale and may make payment on account
thereof by using any claim then due and payable to it from such Pledgor as a
credit against the purchase price, and it may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to such Pledgor therefor. For purposes hereof, (a) a written agreement to
purchase the Collateral or any portion thereof shall be treated as a sale
thereof, (b) the Collateral Agent shall be free to carry out such sale pursuant
to such agreement and (c) such Pledgor shall not be entitled to the return of
the Collateral or any portion thereof subject thereto, notwithstanding the fact
that after the Collateral Agent shall have entered into such an agreement all
Events of Default shall have been remedied and the Obligations paid in full. As
an alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to foreclose
upon the Collateral and to sell the Collateral or any portion thereof pursuant
to a judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the
provisions of this Section 6 shall be deemed to conform to the commercially
reasonable standards as provided in Section 9-504(3) of the Uniform Commercial
Code as in effect in the State of New York or its equivalent in other
jurisdictions.
SECTION 7. Application of Proceeds of Sale. The proceeds of any sale of
Collateral pursuant to Section 6, as well as any Collateral consisting of cash,
shall be applied by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses incurred by the
Collateral Agent in connection with such sale or otherwise in connection
with this Agreement, any other Loan Document or any of the Obligations,
including all court costs and the reasonable fees and expenses of its
agents and legal counsel, the repayment of all advances made by the
Collateral Agent hereunder or under any other Loan Document on behalf of
any Pledgor and any other costs or expenses incurred in connection with the
exercise of any right or remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in accordance
with the amounts of the Obligations owed to them on the date of any such
distribution); and
THIRD, to the Pledgors, their successors or assigns, or as a court of
competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 8. Reimbursement of Collateral Agent. (a) Each Pledgor agrees to
pay upon demand to the Collateral Agent the amount of any and all reasonable
expenses, including the reasonable fees, other charges and disbursements of its
counsel and of any experts or agents, that the Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder or (iv) the failure by such Pledgor to perform or
observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the other
Loan Documents, each Pledgor agrees to indemnify the Collateral Agent and the
Indemnitees (as defined in Section 9.05 of the Credit Agreement) against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees, other
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby or (ii) any claim,
litigation,
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6
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto, provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 8 shall remain operative and in full force and effect regardless
of the termination of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document or any investigation made by or on behalf of the Collateral Agent or
any other Secured Party. All amounts due under this Section 8 shall be payable
on written demand therefor and shall bear interest at the rate specified in
Section 2.11(c) of the Credit Agreement.
SECTION 9. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor
hereby appoints the Collateral Agent the attorney-in-fact of such Pledgor for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Collateral Agent may deem necessary
or advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest. Without limiting the generality of the foregoing,
the Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Collateral Agent's name or in the name of such Pledgor, to ask for, demand,
sue for, collect, receive and give acquittance for any and all moneys due or to
become due under and by virtue of any Collateral, to endorse checks, drafts,
orders and other instruments for the payment of money payable to the Pledgor
representing any interest or dividend or other distribution payable in respect
of the Collateral or any part thereof or on account thereof and to give full
discharge for the same, to settle, compromise, prosecute or defend any action,
claim or proceeding with respect thereto, and to sell, assign, endorse, pledge,
transfer and to make any agreement respecting, or otherwise deal with, the same;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Collateral Agent to make any commitment or to make any inquiry
as to the nature or sufficiency of any payment received by the Collateral Agent,
or to present or file any claim or notice, or to take any action with respect to
the Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts actually received as a
result of the exercise of the powers granted to them herein, and neither they
nor their officers, directors, employees or agents shall be responsible to any
Pledgor for any act or failure to act hereunder, except for their own gross
negligence or wilful misconduct.
SECTION 10. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provisions of this Agreement or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Pledgor in any case shall entitle such Pledgor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Collateral Agent and the Pledgor or Pledgors with respect to which such waiver,
amendment or modification is to apply, subject to any consent required in
accordance with Section 9.02 of the Credit Agreement.
SECTION 11. Securities Act, etc. In view of the position of the Pledgors
in relation to the Pledged Securities, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such Act and any such similar statute as from time to time in
effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct
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7
of the Collateral Agent if the Collateral Agent were to attempt to dispose of
all or any part of the Pledged Securities, and might also limit the extent to
which or the manner in which any subsequent transferee of any Pledged Securities
could dispose of the same. Similarly, there may be other legal restrictions or
limitations affecting the Collateral Agent in any attempt to dispose of all or
part of the Pledged Securities under applicable Blue Sky or other state
securities laws or similar laws analogous in purpose or effect. Each Pledgor
recognizes that in light of such restrictions and limitations the Collateral
Agent may, with respect to any sale of the Pledged Securities, limit the
purchasers to those who will agree, among other things, to acquire such Pledged
Securities for their own account, for investment, and not with a view to the
distribution or resale thereof. Each Pledgor acknowledges and agrees that in
light of such restrictions and limitations, the Collateral Agent, in its sole
and absolute discretion, (a) may proceed to make such a sale whether or not a
registration statement for the purpose of registering such Pledged Securities or
part thereof shall have been filed under the Federal Securities Laws and (b) may
approach and negotiate with a single potential purchaser to effect such sale.
Each Pledgor acknowledges and agrees that any such sale might result in prices
and other terms less favorable to the seller than if such sale were a public
sale without such restrictions. In the event of any such sale, the Collateral
Agent shall incur no responsibility or liability for selling all or any part of
the Pledged Securities at a price that the Collateral Agent, in its sole and
absolute discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a single purchaser were approached. The provisions of this Section
11 will apply notwithstanding the existence of a public or private market upon
which the quotations or sales prices may exceed substantially the price at which
the Collateral Agent sells.
SECTION 12. Registration, etc. Each Pledgor agrees that, upon the
occurrence and during the continuance of an Event of Default hereunder, if for
any reason the Collateral Agent desires to sell any of the Pledged Securities of
the Borrower at a public sale, it will, at any time and from time to time, upon
the written request of the Collateral Agent, use its best efforts to take or to
cause the issuer of such Pledged Securities to take such action and prepare,
distribute and/or file such documents, as are required or advisable in the
reasonable opinion of counsel for the Collateral Agent to permit the public sale
of such Pledged Securities. Each Pledgor further agrees to indemnify, defend and
hold harmless the Collateral Agent, each other Secured Party, any underwriter
and their respective officers, directors, affiliates and controlling persons
from and against all loss, liability, expenses, costs of counsel (including,
without limitation, reasonable fees and expenses to the Collateral Agent of
legal counsel), and claims (including the costs of investigation) that they may
incur insofar as such loss, liability, expense or claim arises out of or is
based upon any alleged untrue statement of a material fact contained in any
prospectus (or any amendment or supplement thereto) or in any notification or
offering circular, or arises out of or is based upon any alleged omission to
state a material fact required to be stated therein or necessary to make the
statements in any thereof not misleading, except insofar as the same may have
been caused by any untrue statement or omission based upon information furnished
in writing to such Pledgor or the issuer of such Pledged Securities by the
Collateral Agent or any other Secured Party expressly for use therein. Each
Pledgor further agrees, upon such written request referred to above, to use its
best efforts to qualify, file or register, or cause the issuer of such Pledged
Securities to qualify, file or register, any of the Pledged Securities under the
Blue Sky or other securities laws of such states as may be requested by the
Collateral Agent and keep effective, or cause to be kept effective, all such
qualifications, filings or registrations. Each Pledgor will bear all costs and
expenses of carrying out its obligations under this Section 12. Each Pledgor
acknowledges that there is no adequate remedy at law for failure by it to comply
with the provisions of this Section 12 and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section 12 may be specifically enforced.
SECTION 13. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the grant of a security interest in the Collateral and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any agreement with respect to any of the
Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of the foregoing,
(c) any exchange, release or nonperfection of any other collateral, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Pledgor in
respect of the Obligations or in respect of this Agreement (other than the
indefeasible payment in full of all the
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8
Obligations).
SECTION 14. Termination or Release. (a) This Agreement and the security
interests granted hereby shall terminate when all the Obligations have been
indefeasibly paid in full and the Lenders have no further commitment to lend
under the Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of any Collateral that
is permitted under the Credit Agreement to any person that is not a Pledgor, or,
upon the effectiveness of any written consent to the release of the security
interest granted hereby in any Collateral pursuant to Section 9.02(b) of the
Credit Agreement, the security interest in such Collateral shall be
automatically released.
(c) In connection with any termination or release pursuant to paragraph (a)
or (b), the Collateral Agent shall execute and deliver to any Pledgor, at such
Pledgor's expense, all documents that such Pledgor shall reasonably request to
evidence such termination or release. Any execution and delivery of documents
pursuant to this Section 14 shall be without recourse to or warranty by the
Collateral Agent.
SECTION 15. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Pledgor shall be given to
it in care of the Borrower at the address set forth in the Credit Agreement.
SECTION 16. Further Assurances. Each Pledgor agrees to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Collateral Agent may at any time
reasonably request in connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof or in order
better to assure and confirm unto the Collateral Agent its rights and remedies
hereunder.
SECTION 17. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Pledgor that are contained in
this Agreement shall bind and inure to the benefit of its successors and
assigns. This Agreement shall become effective as to any Pledgor when a
counterpart hereof executed on behalf of such Pledgor shall have been delivered
to the Collateral Agent and a counterpart hereof shall have been executed on
behalf of the Collateral Agent, and thereafter shall be binding upon such
Pledgor and the Collateral Agent and their respective successors and assigns,
and shall inure to the benefit of such Pledgor, the Collateral Agent and the
other Secured Parties, and their respective successors and assigns, except that
no Pledgor shall have the right to assign its rights hereunder or any interest
herein or in the Collateral (and any such attempted assignment shall be void),
except as expressly contemplated by this Agreement or the other Loan Documents.
If all of the capital stock of a Pledgor is sold, transferred or otherwise
disposed of to a person that is not an Affiliate of the Borrower pursuant to a
transaction permitted by Section 6.06 of the Credit Agreement, such Pledgor
shall be released from its obligations under this Agreement without further
action. This Agreement shall be construed as a separate agreement with respect
to each Pledgor and may be amended, modified, supplemented, waived or released
with respect to any Pledgor without the approval of any other Pledgor and
without affecting the obligations of any other Pledgor hereunder.
SECTION 18. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by each Pledgor herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans, regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or any other fee or amount payable under this Agreement or any other
Loan Document is outstanding and unpaid and as long as the Commitments have not
been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
<PAGE>
9
SECTION 19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 20. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute a single contract, and shall
become effective as provided in Section 17. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile transmission
shall be as effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 21. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to
this Agreement. Section headings used herein are for convenience of
reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting this
Agreement.
SECTION 22. Jurisdiction; Consent to Service of Process. (a) Each
Pledgor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that, to the extent permitted
by applicable law, all claims in respect of any such action or proceeding
may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in
any other manner provided by law. Nothing in this Agreement shall affect
any right that the Collateral Agent or any other Secured Party may
otherwise have to bring any action or proceeding relating to this Agreement
or the other Loan Documents against any Pledgor or its properties in the
courts of any jurisdiction.
(b) Each Pledgor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 15. Nothing in this
Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 23. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 24. Additional Pledgors. Pursuant to Section 5.12 of the
Credit Agreement, each Subsidiary of the Borrower that was not in existence
or not a Subsidiary on the date of the Credit Agreement is required to
enter in this Agreement as a Subsidiary Pledgor upon becoming a Subsidiary
if such Subsidiary owns or possesses property of a type that would be
considered Collateral hereunder. Upon execution and delivery by the
Collateral Agent and a Subsidiary of an instrument in the form of Annex 1,
such Subsidiary shall become a Subsidiary Pledgor hereunder with the same
force and effect as if originally named as a Subsidiary Pledgor herein.
The execution and delivery of such instrument shall not require the consent
of any Pledgor hereunder. The rights and obligations of each Pledgor
hereunder shall remain in full force and effect notwithstanding the
addition of any new Subsidiary Pledgor as a party to this Agreement.
<PAGE>
10
SECTION 25. Execution of Financing Statements. Pursuant to Section
9-402 of the Uniform Commercial Code as in effect in the State of New York,
each Pledgor authorizes the Collateral Agent to file financing statements
with respect to the Collateral owned by it without the signature of such
Pledgor in such form and in such filing offices as the Collateral Agent
reasonably determines appropriate to perfect the security interests of the
Collateral Agent under this Agreement. A carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement
for filing in any jurisdiction.
SECTION 26. FCC Consent. Notwithstanding anything herein which may
be construed to the contrary, no action shall be taken by any of the
Collateral Agent and the Secured Parties with respect to the Pledged
Securities (including termination or suspension of voting rights) unless
and until any required approval under the Federal Communications Act of
1934, and any applicable rules and regulations thereunder, requiring the
consent to or approval of such action by the FCC or any governmental or
other authority, have been satisfied.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
TRITON PCS, INC.,
By _______________________________________
Name:
Title:
TRITON PCS HOLDINGS, INC.,
By _______________________________________
Name:
Title:
TRITON MANAGEMENT COMPANY, INC.,
By _______________________________________
Name:
Title:
EACH OF THE OTHER SUBSIDIARIES LISTED ON
SCHEDULE I HERETO,
By: TRITON MANAGEMENT COMPANY, INC.,
its manager,
__________________________________
Name:
Title:
<PAGE>
11
THE CHASE MANHATTAN BANK, as Collateral
Agent,
By_______________________________________
Name:
Title:
<PAGE>
Schedule I to the
Pledge Agreement
SUBSIDIARY PLEDGORS
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
1. Triton Management Company, Inc. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
2. Triton PCS Holdings Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
3. Triton PCS Operating Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
4. Triton PCS License Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
5. Triton PCS Property Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
6. Triton PCS Equipment Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
</TABLE>
<PAGE>
Schedule II to the
Pledge Agreement
CAPITAL STOCK
<TABLE>
<CAPTION>
Number of Registered Number and Percentage of
Issuer Certificates Owner Class of Shares Shares
- ------ ------------ ---------- --------------- --------
<S> <C> <C> <C> <C>
Triton PCS, Inc. 1 Triton PCS 100 shares of
Holdings, Inc. common stock 100%
Triton Management
Company, Inc. 2 Triton PCS, Inc. 100 shares of common stock 100%
</TABLE>
LIMITED LIABILITY COMPANY MEMBERSHIP INTERESTS
<TABLE>
<CAPTION>
Number Percentage of
Number of Registered and Class Membership
Issuer Certificates Owner of Interests of Interests
- ------ ------------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Triton PCS Holdings Company L.L.C. 1 Triton PCS, Inc. 100 units 100%
Triton PCS Operating Company L.L.C. 1 Triton PCS Holdings
Company L.L.C. 100 units 100%
Triton PCS License Company L.L.C. 1 Triton PCS Holdings
Company L.L.C. 100 units 100%
Triton PCS Property Company L.L.C. 1 Triton PCS Holdings
Company L.L.C. 100 units 100%
Triton PCS Equipment Company L.L.C. 1 Triton PCS Holdings
Company L.L.C. 100 units 100%
</TABLE>
DEBT SECURITIES
None.
<PAGE>
Annex 1 to the
Pledge Agreement
SUPPLEMENT NO. dated as of , to the PLEDGE AGREEMENT dated
as of February , 1998, among TRITON PCS, INC., a Delaware
corporation (the "Borrower") and each subsidiary of the
Borrower listed on Schedule I thereto (each such subsidiary
individually a "Subsidiary Pledgor" and collectively, the
"Subsidiary Pledgors" and TRITON PCS HOLDINGS, INC., a
Delaware corporation ("Holdings"); the Borrower, the
Subsidiary Pledgors and Holdings are referred to collectively
herein as the "Pledgors") and THE CHASE MANHATTAN BANK, a
Delaware corporation ("Chase"), as collateral agent (in such
capacity, the "Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below)
A. Reference is made to (a) the Credit Agreement dated as of February
, 1998 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among the Borrower, the lenders from time to time
party thereto (the "Lenders") and Chase, as administrative agent for the
Lenders and Collateral Agent, and (b) the Guarantee Agreement dated as of
February , 1998 (as amended, supplemented or otherwise modified from time
to time, the "Guarantee Agreement") among the Pledgors and the Collateral
Agent.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
C. The Pledgors have entered into the Pledge Agreement in order to
induce the Lenders to make Loans. Pursuant to Section 5.12 of the Credit
Agreement, each Subsidiary of the Borrower that was not in existence or not
a Subsidiary on the date of the Credit Agreement is required to enter into
the Pledge Agreement as a Subsidiary Pledgor upon becoming a Subsidiary if
such Subsidiary owns or possesses property of a type that would be
considered Collateral under the Pledge Agreement. Section 24 of the Pledge
Agreement provides that such Subsidiaries may become Subsidiary Pledgors
under the Pledge Agreement by execution and delivery of an instrument in
the form of this Supplement. The undersigned Subsidiary (the "New
Pledgor") is executing this Supplement in accordance with the requirements
of the Credit Agreement to become a Subsidiary Pledgor under the Pledge
Agreement in order to induce the Lenders to make additional Loans and as
consideration for Loans previously made.
Accordingly, the Collateral Agent and the New Pledgor agree as follows:
SECTION 1. In accordance with Section 24 of the Pledge Agreement, the
New Pledgor by its signature below becomes a Pledgor under the Pledge
Agreement with the same force and effect as if originally named therein as
a Pledgor and the New Pledgor hereby agrees (a) to all the terms and
provisions of the Pledge Agreement applicable to it as a Pledgor thereunder
and (b) represents and warrants that the representations and warranties
made by it as a Pledgor thereunder are true and correct on and as of the
date hereof except for representations and warranties which by their terms
refer to a specific date. In furtherance of the foregoing, the New
Pledgor, as security for the payment and performance in full of the
Obligations (as defined in the Pledge Agreement), does hereby create and
grant to the Collateral Agent, its successors and assigns, for the benefit
of the Secured Parties, their successors and assigns, a security interest
in and lien on all of the New Pledgor's right, title and interest in and to
the Collateral (as defined in the Pledge Agreement) of the New Pledgor.
Each reference to a "Subsidiary Pledgor" or a "Pledgor" in the Pledge
Agreement shall be deemed to include the New Pledgor. The Pledge Agreement
is hereby incorporated herein by reference.
SECTION 2. The New Pledgor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally.
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Supplement shall become effective
when the Collateral Agent shall have received counterparts of this
Supplement that, when taken together, bear the signatures of the New
Pledgor and the Collateral Agent. Delivery of an executed signature
<PAGE>
2
page to this Supplement by facsimile transmission shall be as effective
as delivery of a manually signed counterpart of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants that set
forth on Schedule I attached hereto is a true and correct schedule of all
its Pledged Securities.
SECTION 5. Except as expressly supplemented hereby, the Pledge
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so
long as such provision is held to be invalid, illegal or unenforceable, but
the validity, legality and enforceability of the remaining provisions
contained herein and in the Pledge Agreement shall not in any way be
affected or impaired. The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 15 of the Pledge Agreement. All
communications and notices hereunder to the New Pledgor shall be given to
it in care of the Borrower as set forth in the Credit Agreement.
SECTION 9. The New Pledgor agrees to reimburse the Collateral Agent for
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel
for the Collateral Agent.
IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent have duly
executed this Supplement to the Pledge Agreement as of the day and year
first above written.
[NAME OF NEW PLEDGOR],
By_______________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral Agent,
By_______________________________________
Name:
Title:
<PAGE>
Schedule I to
Supplement No. [ ]
to the Pledge Agreement
Pledged Securities of the New Pledgor
-------------------------------------
CAPITAL STOCK OR OTHER EQUITY INTEREST
<TABLE>
<CAPTION>
Number and Percentage of
Class of Shares Shares
Number of Registered or Other or Other
Issuer Certificate Owner Equity Interest Equity Interest
- ------ ---------- ---------- --------------- ---------------
<S> <C> <C> <C> <C>
</TABLE>
DEBT SECURITIES
<TABLE>
<CAPTION>
Principal
Issuer Amount Date of Note Maturity Date
- ------ --------- ------------ -------------
<S> <C> <C> <C>
</TABLE>
<PAGE>
SECURITY AGREEMENT dated as of February 4, 1998, among
Triton PCS, Inc., a Delaware corporation (the "Borrower"),
TRITON PCS HOLDINGS, INC., a Delaware corporation
("Holdings"), each subsidiary of the Borrower listed on
Schedule I hereto (each such subsidiary individually a
"Subsidiary" and, together with Holdings, the "Guarantors";
the Guarantors and the Borrower are referred to collectively
herein as the "Grantors") and THE CHASE MANHATTAN BANK, a
Delaware corporation ("Chase"), as collateral agent (in such
capacity, the "Collateral Agent") for the Secured Parties
(as defined herein).
Reference is made to (a) the Credit Agreement dated as of February 3,
1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Holdings, the Borrower, the lenders from time to
time party thereto (the "Lenders") and Chase, as administrative agent for
the Lenders (in such capacity, the "Administrative Agent") and Collateral
Agent and (b) the Guarantee Agreement dated as of February , 1998 (as
amended, supplemented or otherwise modified from time to time, the
"Guarantee Agreement"), among the Guarantors and the Collateral Agent.
The Lenders have agreed to make Loans to the Borrower, pursuant to,
and upon the terms and subject to the conditions specified in, the Credit
Agreement. Each of the Guarantors has agreed to guarantee, among other
things, all the obligations of the Borrower under the Credit Agreement.
The obligations of the Lenders to make Loans are conditioned upon, among
other things, the execution and delivery by the Grantors of an agreement in
the form hereof to secure (a) the due and punctual payment by the Borrower
of (i) the principal of and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise and (ii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding),
of the Borrower to the Secured Parties under the Credit Agreement and the
other Loan Documents, (b) the due and punctual performance of all
covenants, agreements, obligations and liabilities of the Borrower under or
pursuant to the Credit Agreement and the other Loan Documents, (c) the due
and punctual payment and performance of all the covenants, agreements,
obligations and liabilities of each Loan Party under or pursuant to this
Agreement and the other Loan Documents and (d) the due and punctual payment
and performance of all obligations of the Borrower or any Loan Party under
each Hedging Agreement entered into with any counterparty that was a Lender
at the time such Hedging Agreement was entered into (all the monetary and
other obligations described in the preceding clauses (a) through (d) being
collectively called the "Obligations").
Accordingly, the Grantors and the Collateral Agent, on behalf of
itself and each Secured Party (and each of their respective successors or
assigns), hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall
have the meanings set forth in the Credit Agreement.
SECTION 1.02. Definition of Certain Terms Used Herein. As used
herein, the following terms shall have the following meanings:
"Account Debtor" shall mean any person who is or who may become
obligated to any Grantor under, with respect to or on account of an
Account.
<PAGE>
2
"Accounts" shall mean any and all right, title and interest of any
Grantor to payment for goods and services sold or leased, including any
such right evidenced by chattel paper, whether due or to become due,
whether or not it has been earned by performance, and whether now or
hereafter acquired or arising in the future, including accounts receivable
from Affiliates of the Grantors.
"Accounts Receivable" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles,
securities and guarantees with respect thereto, including any rights to
stoppage in transit, replevin, reclamation and resales, and all related
security interests, liens and pledges, whether voluntary or involuntary, in
each case whether now existing or owned or hereafter arising or acquired.
"Collateral" shall mean all (a) Accounts Receivable, (b) Documents,
(c) Equipment, (d) General Intangibles, (e) Inventory, (f) cash and cash
accounts, (g) Investment Property and (h) Proceeds.
"Commodity Account" shall mean an account maintained by a Commodity
Intermediary in which a Commodity Contract is carried out for a Commodity
Customer.
"Commodity Contract" shall mean a commodity futures contract, an
option on a commodity futures contract, a commodity option or any other
contract that, in each case, is (a) traded on or subject to the rules of a
board of trade that has been designated as a contract market for such a
contract pursuant to the federal commodities laws or (b) traded on a
foreign commodity board of trade, exchange or market, and is carried on the
books of a Commodity Intermediary for a Commodity Customer.
"Commodity Customer" shall mean a person for whom a Commodity
Intermediary carries a Commodity Contract on its books.
"Commodity Intermediary" shall mean (a) a person who is registered as
a futures commission merchant under the federal commodities laws or (b) a
person who in the ordinary course of its business provides clearance or
settlement services for a board of trade that has been designated as a
contract market pursuant to federal commodities laws.
"Copyright License" shall mean any written agreement, now or hereafter
in effect, granting any right to any third party under any Copyright now or
hereafter owned by any Grantor or which such Grantor otherwise has the
right to license, or granting any right to such Grantor under any Copyright
now or hereafter owned by any third party, and all rights of such Grantor
under any such agreement.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to
the copyright laws of the United States or any other country, whether as
author, assignee, transferee or otherwise, and (b) all registrations and
applications for registration of any such copyright in the United States or
any other country, including registrations, recordings, supplemental
registrations and pending applications for registration in the United
States Copyright Office, including those listed on Schedule II.
"Credit Agreement" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Documents" shall mean all instruments, files, records, ledger sheets
and documents covering or relating to any of the Collateral.
"Entitlement Holder" shall mean a person identified in the records of
a Securities Intermediary as the person having a Security Entitlement
against the Securities Intermediary. If a person acquires a Security
Entitlement by virtue of Section 8-501(b)(2) or (3) of the Uniform
Commercial Code, such person is the Entitlement Holder.
"Equipment" shall mean all equipment, furniture and furnishings, and
all tangible personal property similar to any of the foregoing, including
tools, parts and supplies of every kind and description, and all
improvements, accessions or appurtenances thereto, that are now or
hereafter owned by any Grantor. The term
<PAGE>
3
Equipment shall include Fixtures.
"Financial Asset" shall mean (a) a Security, (b) an obligation of a
person or a share, participation or other interest in a person or in
property or an enterprise of a person, which is, or is of a type, dealt
with in or traded on financial markets, or which is recognized in any area
in which it is issued or dealt in as a medium for investment or (c) any
property that is held by a Securities Intermediary for another person in a
Securities Account if the Securities Intermediary has expressly agreed with
the other person that the property is to be treated as a Financial Asset
under Article 8 of the Uniform Commercial Code. As the context requires,
the term Financial Asset shall mean either the interest itself or the means
by which a person's claim to it is evidenced, including a certificated or
uncertificated Security, a certificate representing a Security or a
Security Entitlement.
"Fixtures" shall mean all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular
real estate that an interest in them arises under any real estate law
applicable thereto.
"General Intangibles" shall mean all choses in action and causes of
action and all other assignable intangible personal property of any Grantor
of every kind and nature (other than Accounts Receivable) now owned or
hereafter acquired by any Grantor, including corporate or other business
records, indemnification claims, contract rights (including rights under
leases, whether entered into as lessor or lessee, Hedging Agreements and
other agreements), Intellectual Property, goodwill, registrations,
franchises, tax refund claims and any letter of credit, guarantee, claim,
security interest or other security held by or granted to any Grantor to
secure payment by an Account Debtor of any of the Accounts Receivable.
"Intellectual Property" shall mean all intellectual and similar
property of any Grantor of every kind and nature now owned or hereafter
acquired by any Grantor, including inventions, designs, Patents,
Copyrights, Licenses, Trademarks, trade secrets, confidential or
proprietary technical and business information, know-how, show-how or other
data or information, software and databases and all embodiments or
fixations thereof and related documentation, registrations and franchises,
and all additions, improvements and accessions to, and books and records
describing or used in connection with, any of the foregoing.
"Inventory" shall mean all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished
by any Grantor under contracts of service, or consumed in any Grantor's
business, including raw materials, intermediates, work in process,
packaging materials, finished goods, semi-finished inventory, scrap
inventory, manufacturing supplies and spare parts, and all such goods that
have been returned to or repossessed by or on behalf of any Grantor.
"Investment Property" shall mean all Securities (whether certificated
or uncertificated), Security Entitlements, Securities Accounts, Commodity
Contracts and Commodity Accounts of any Grantor, whether now owned or
hereafter acquired by any Grantor.
"License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which any Grantor is a party,
including those listed on Schedule III (other than those license agreements
in existence on the date hereof and listed on Schedule III and those
license agreements entered into after the date hereof, which by their terms
prohibit assignment or a grant of a security interest by such Grantor as
licensee thereunder).
"Obligations" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Patent License" shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any
invention on which a Patent, now or hereafter owned by any Grantor or which
any Grantor otherwise has the right to license, is in existence, or
granting to any Grantor any right to make, use or sell any invention on
which a Patent, now or hereafter owned by any third party, is in existence,
and all rights of any Grantor under any such agreement.
"Patents" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all
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4
letters patent of the United States or any other country, all registrations
and recordings thereof, and all applications for letters patent of the
United States or any other country, including registrations, recordings and
pending applications in the United States Patent and Trademark Office or
any similar offices in any other country, including those listed on
Schedule IV, and (b) all reissues, continuations, divisions, continuations-
in-part, renewals or extensions thereof, and the inventions disclosed or
claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
"Perfection Certificate" shall mean a certificate substantially in the
form of Annex 2 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Financial Officer
of the Borrower.
"Proceeds" shall mean any consideration received from the sale,
exchange, license, lease or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of the
possession of any Collateral and any payment received from any insurer or
other person or entity as a result of the destruction, loss, theft, damage
or other involuntary conversion of whatever nature of any asset or property
which constitutes Collateral, and shall include , (a) any claim of any
Grantor against any third party for (and the right to sue and recover for
and the rights to damages or profits due or accrued arising out of or in
connection with) (i) past, present or future infringement of any Patent now
or hereafter owned by any Grantor, or licensed under a Patent License, (ii)
past, present or future infringement or dilution of any Trademark now or
hereafter owned by any Grantor or licensed under a Trademark License or
injury to the goodwill associated with or symbolized by any Trademark now
or hereafter owned by any Grantor, (iii) past, present or future breach of
any License and (iv) past, present or future infringement of any Copyright
now or hereafter owned by any Grantor or licensed under a Copyright License
and (b) any and all other amounts from time to time paid or payable under
or in connection with any of the Collateral.
"Secured Parties" shall mean (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent, (d) each counterparty to an Hedging
Agreement entered into with the Borrower or any Loan Party if such
counterparty was a Lender at the time the Hedging Agreement was entered
into, (e) the beneficiaries of each indemnification obligation undertaken
by any Grantor under any Loan Document and (f) the successors and assigns
of each of the foregoing.
"Securities" shall mean any obligations of an issuer or any shares,
participations or other interests in an issuer or in property or an
enterprise of an issuer which (a) are represented by a certificate
representing a security in bearer or registered form, or the transfer of
which may be registered upon books maintained for that purpose by or on
behalf of the issuer, (b) are one of a class or series or by its terms is
divisible into a class or series of shares, participations, interests or
obligations and (c)(i) are, or are of a type, dealt with or trade on
securities exchanges or securities markets or (ii) are a medium for
investment and by their terms expressly provide that they are a security
governed by Article 8 of the Uniform Commercial Code.
"Securities Account" shall mean an account to which a Financial Asset
is or may be credited in accordance with an agreement under which the
person maintaining the account undertakes to treat the person for whom the
account is maintained as entitled to exercise rights that comprise the
Financial Asset.
"Security Entitlements" shall mean the rights and property interests
of an Entitlement Holder with respect to a Financial Asset.
"Security Interest" shall have the meaning assigned to such term in
Section 2.01.
"Security Intermediary" shall mean (a) a clearing corporation or (b) a
person, including a bank or broker, that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.
"Trademark License" shall mean any written agreement, now or hereafter
in effect, granting to any third party any right to use any Trademark now
or hereafter owned by any Grantor or which any Grantor otherwise has the
right to license, or granting to any Grantor any right to use any Trademark
now or hereafter owned by any third party, and all rights of any Grantor
under any such agreement.
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5
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, trade dress, logos, other source or business identifiers,
designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith,
including registrations and registration applications in the United States
Patent and Trademark Office, any State of the United States or any similar
offices in any other country or any political subdivision thereof, and all
extensions or renewals thereof, including those listed on Schedule V, (b)
all goodwill associated therewith or symbolized thereby and (c) all other
assets, rights and interests that uniquely reflect or embody such goodwill.
SECTION 1.03. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to
this Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor
hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges,
hypothecates and transfers to the Collateral Agent, its successors and
assigns, for the ratable benefit of the Secured Parties, and hereby grants
to the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, a security interest in, all of such
Grantor's right, title and interest in, to and under the Collateral (the
"Security Interest"). Without limiting the foregoing, the Collateral Agent
is hereby authorized to file one or more financing statements (including
fixture filings), continuation statements, filings with the United States
Patent and Trademark Office or United States Copyright Office (or any
successor office or any similar office in any other country) or other
documents for the purpose of perfecting, confirming, continuing, enforcing
or protecting the Security Interest granted by each Grantor, without the
signature of any Grantor, and naming any Grantor or the Grantors as debtors
and the Collateral Agent as secured party.
SECTION 2.02. No Assumption of Liability. The Security Interest is
granted as security only and shall not subject the Collateral Agent or any
other Secured Party to, or in any way alter or modify, any obligation or
liability of any Grantor with respect to or arising out of the Collateral.
ARTICLE III
Representations and Warranties
The Grantors jointly and severally represent and warrant to the
Collateral Agent and the Secured Parties that:
SECTION 3.01. Title and Authority. Each Grantor has good and valid
rights in and title to the Collateral with respect to which it has
purported to grant a Security Interest hereunder and has full power and
authority to grant to the Collateral Agent the Security Interest in such
Collateral pursuant hereto and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the
consent or approval of any other person other than any consent or approval
which has been obtained.
SECTION 3.02. Filings. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the
Collateral have been delivered to the Collateral Agent for filing in each
governmental, municipal or other office specified in Schedule 6 to the
Perfection Certificate, which are all the filings, recordings and
registrations (other than filings required to be made in the United States
Patent and Trademark Office and the United States Copyright Office in order
to perfect the Security Interest in Collateral consisting of United States
Patents, Trademarks and Copyrights) that are necessary to publish notice of
and protect the validity of and to establish a legal, valid and perfected
security interest in favor of
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6
the Collateral Agent (for the ratable benefit of the Secured Parties) in
respect of all Collateral in which the Security Interest may be perfected
by filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided
under applicable law with respect to the filing of continuation statements.
(b) Each Grantor represents and warrants that fully executed security
agreements in the form hereof and containing a description of all
Collateral consisting of Intellectual Property with respect to United
States Patents and United States registered Trademarks (and Trademarks for
which United States registration applications are pending) and United
States registered Copyrights have been delivered to the Collateral Agent
for recording by the United States Patent and Trademark Office and the
United States Copyright Office pursuant to 35 U.S.C. (S) 261, 15 U.S.C. (S)
1060 or 17 U.S.C. (S) 205 and the regulations thereunder, as applicable,
and otherwise as may be required pursuant to the laws of any other
necessary jurisdiction, to protect the validity of and to establish a
legal, valid and perfected security interest in favor of the Collateral
Agent (for the ratable benefit of the Secured Parties) in respect of all
Collateral consisting of Patents, Trademarks and Copyrights in which a
security interest may be perfected by filing, recording or registration in
the United States (or any political subdivision thereof) and its
territories and possessions, or in any other necessary jurisdiction, and no
further or subsequent filing, refiling, recording, rerecording,
registration or reregistration is necessary (other than such actions as are
necessary to perfect the Security Interest with respect to any Collateral
consisting of Patents, Trademarks and Copyrights (or registration or
application for registration thereof) acquired or developed after the date
hereof).
SECTION 3.03. Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in
all Collateral in which a security interest may be perfected by filing,
recording or registering a financing statement or analogous document in the
United States (or any political subdivision thereof) and its territories
and possessions pursuant to the Uniform Commercial Code or other applicable
law in such jurisdictions and (c) a security interest that shall be
perfected in all Collateral in which a security interest may be perfected
upon the receipt and recording of this Agreement with the United States
Patent and Trademark Office and the United States Copyright Office, as
applicable[, within the three month period (commencing as of the date
hereof) pursuant to 35 U.S.C. (S) 261 or 15 U.S.C. (S) 1060 or the one
month period (commencing as of the date hereof) pursuant to 17 U.S.C. (S)
205 and otherwise as may be required pursuant to the laws of any other
necessary jurisdiction]. The Security Interest is and shall be prior to any
other Lien on any of the Collateral, other than Liens expressly permitted
to be prior to the Security Interest pursuant to Section 6.02 of the Credit
Agreement.
SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.02 of the Credit Agreement. The Grantor has not filed
or consented to the filing of (a) any financing statement or analogous
document under the Uniform Commercial Code or any other applicable laws
covering any Collateral, (b) any assignment in which any Grantor assigns
any Collateral or any security agreement or similar instrument covering any
Collateral with the United States Patent and Trademark Office or the United
States Copyright Office or (c) any assignment in which any Grantor assigns
any Collateral or any security agreement or similar instrument covering any
Collateral with any foreign governmental, municipal or other office, which
financing statement or analogous document, assignment, security agreement
or similar instrument is still in effect, except, in each case, for Liens
expressly permitted pursuant to Section 6.02 of the Credit Agreement.
ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral; Records; Place
of Business. (a) Each Grantor agrees promptly to notify the Collateral
Agent in writing of any change (i) in its corporate name or in any trade
name used to identify it in the conduct of its business or in the ownership
of its properties, (ii) in the location of its chief executive office, its
principal place of business, any office in which it maintains books or
records relating to Collateral owned by it or any office or facility at
which Collateral owned by it is located
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7
(including the establishment of any such new office or facility), (iii) in
its identity or corporate structure or (iv) in its Federal Taxpayer
Identification Number. Each Grantor agrees not to effect or permit any
change referred to in the preceding sentence unless all filings have been
made under the Uniform Commercial Code or otherwise that are required in
order for the Collateral Agent to continue at all times following such
change to have a valid, legal and perfected first priority security
interest in all the Collateral. Each Grantor agrees promptly to notify the
Collateral Agent if any material portion of the Collateral owned or held by
such Grantor is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense,
such complete and accurate records with respect to the Collateral owned by
it as is consistent with its current practices and in accordance with such
prudent and standard practices used in industries that are the same as or
similar to those in which such Grantor is engaged, but in any event to
include complete accounting records indicating all payments and proceeds
received with respect to any part of the Collateral, and, at such time or
times as the Collateral Agent may reasonably request, promptly to prepare
and deliver to the Collateral Agent a duly certified schedule or schedules
in form and detail satisfactory to the Collateral Agent showing the
identity, amount and location of any and all Collateral.
SECTION 4.02. Periodic Certification. Each year, at the time of
delivery of annual financial statements with respect to the preceding
fiscal year pursuant to Section 5.01 of the Credit Agreement, the Borrower
shall deliver to the Collateral Agent a certificate executed by a Financial
Officer of the Borrower (a) setting forth the information required pursuant
to Section 2 of the Perfection Certificate or confirming that there has
been no change in such information since the date of such certificate or
the date of the most recent certificate delivered pursuant to Section 4.02
and (b) certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed
of record in each governmental, municipal or other appropriate office in
each jurisdiction identified pursuant to clause (a) above to the extent
necessary to protect and perfect the Security Interest for a period of not
less than 18 months after the date of such certificate (except as noted
therein with respect to any continuation statements to be filed within such
period). Each certificate delivered pursuant to this Section 4.02 shall
identify in the format of Schedule II, III, IV or V, as applicable, all
Intellectual Property of any Grantor in existence on the date thereof and
not then listed on such Schedules or previously so identified to the
Collateral Agent.
SECTION 4.03. Protection of Security. Each Grantor shall, at
its own cost and expense, take any and all actions necessary to defend
title to the Collateral against all persons and to defend the Security
Interest of the Collateral Agent in the Collateral and the priority thereof
against any Lien not expressly permitted pursuant to Section 6.02 of the
Credit Agreement.
SECTION 4.04. Further Assurances. Each Grantor agrees, at its own
expense, to execute, acknowledge, deliver and cause to be duly filed all
such further instruments and documents and take all such actions as the
Collateral Agent may from time to time request to better assure, preserve,
protect and perfect the Security Interest and the rights and remedies
created hereby, including the payment of any fees and taxes required in
connection with the execution and delivery of this Agreement, the granting
of the Security Interest and the filing of any financing statements
(including fixture filings) or other documents in connection herewith or
therewith. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be immediately pledged and
delivered to the Collateral Agent, duly endorsed in a manner satisfactory
to the Collateral Agent.
Without limiting the generality of the foregoing, each Grantor
hereby authorizes the Collateral Agent, with prompt notice thereof to the
Grantors, to supplement this Agreement by supplementing Schedule II, III,
IV or V hereto or adding additional schedules hereto to specifically
identify any asset or item that may constitute Copyrights, Licenses,
Patents or Trademarks; provided, however, that any Grantor shall have the
right, exercisable within 10 days after it has been notified by the
Collateral Agent of the specific identification of such Collateral, to
advise the Collateral Agent in writing of any inaccuracy of the
representations and warranties made by such Grantor hereunder with respect
to such Collateral. Each Grantor agrees that it will use its best efforts
to take such action as shall be necessary in order that all representations
and warranties hereunder shall be true and correct with respect to such
Collateral within 30 days after the date it has been
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8
notified by the Collateral Agent of the specific identification of such
Collateral.
SECTION 4.05. Inspection and Verification. The Collateral Agent
and such persons as the Collateral Agent may reasonably designate shall
have the right, at the Grantors' own cost and expense, to inspect the
Collateral, all records related thereto (and to make extracts and copies
from such records) and the premises upon which any of the Collateral is
located, to discuss the Grantors' affairs with the officers of the Grantors
and their independent accountants and to verify under reasonable procedures
the validity, amount, quality, quantity, value, condition and status of, or
any other matter relating to, the Collateral, including, in the case of
Accounts or Collateral in the possession of any third person, by contacting
Account Debtors in the event of and during the continuance of an Event of
Default or the third person possessing such Collateral for the purpose of
making such a verification. The Collateral Agent shall have the absolute
right to share any information it gains from such inspection or
verification with any Secured Party (it being understood that any such
information shall be deemed to be "Information" subject to the provisions
of Section 9.16).
SECTION 4.06. Taxes; Encumbrances. At its option, the
Collateral Agent may discharge past due taxes, assessments, charges, fees,
Liens, security interests or other encumbrances at any time levied or
placed on the Collateral and not permitted pursuant to Section 6.02 of the
Credit Agreement, and may pay for the maintenance and preservation of the
Collateral to the extent any Grantor fails to do so as required by the
Credit Agreement or this Agreement, and each Grantor jointly and severally
agrees to reimburse the Collateral Agent on demand for any payment made or
any expense incurred by the Collateral Agent pursuant to the foregoing
authorization; provided, however, that nothing in this Section 4.06 shall
be interpreted as excusing any Grantor from the performance of, or imposing
any obligation on the Collateral Agent or any Secured Party to cure or
perform, any covenants or other promises of any Grantor with respect to
taxes, assessments, charges, fees, liens, security interests or other
encumbrances and maintenance as set forth herein or in the other Loan
Documents.
SECTION 4.07. Assignment of Security Interest. If at any time
any Grantor shall take a security interest in any property of an Account
Debtor or any other person to secure payment and performance of an Account
to the extent permissible under the document granting a security interest,
such Grantor shall promptly assign such security interest to the Collateral
Agent. Such assignment need not be filed of public record unless necessary
to continue the perfected status of the security interest against creditors
of and transferees from the Account Debtor or other person granting the
security interest.
SECTION 4.08. Continuing Obligations of the Grantors. Each
Grantor shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it under each contract,
agreement or instrument relating to the Collateral, all in accordance with
the terms and conditions thereof, and each Grantor jointly and severally
agrees to indemnify and hold harmless the Collateral Agent and the Secured
Parties from and against any and all liability for such performance.
SECTION 4.09. Use and Disposition of Collateral. None of the
Grantors shall make or permit to be made an assignment, pledge or
hypothecation of the Collateral or shall grant any other Lien in respect of
the Collateral, except as expressly permitted by Section 6.02 of the Credit
Agreement. None of the Grantors shall make or permit to be made any
transfer of the Collateral and each Grantor shall remain at all times in
posses sion of the Collateral owned by it, except that (a) Inventory may be
sold in the ordinary course of business and (b) unless and until the
Collateral Agent shall notify the Grantors that an Event of Default shall
have occurred and be continuing and that during the continuance thereof the
Grantors shall not sell, convey, lease, assign, transfer or otherwise
dispose of any Collateral (which notice may be given by telephone if
promptly confirmed in writing), the Grantors may use and dispose of the
Collateral in any lawful manner not inconsistent with the provisions of
this Agreement, the Credit Agreement or any other Loan Document. Without
limiting the generality of the foregoing, each Grantor agrees that it shall
not permit any Inventory to be in the possession or control of any
warehouseman, bailee, agent or processor at any time unless such
warehouseman, bailee, agent or processor shall have been notified of the
Security Interest and shall have agreed in writing to hold the Inventory
subject to the Security Interest and the instructions of the Collateral
Agent and to waive and release any Lien held by it with respect to such
Inventory, whether arising by operation of law or otherwise.
SECTION 4.10. Limitation on Modification of Accounts. None of
the Grantors will, without the Collateral Agent's prior written consent,
grant any extension of the time of payment of any of the Accounts
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9
Receivable, compromise, compound or settle the same for less than the full
amount thereof, release, wholly or partly, any person liable for the
payment thereof or allow any credit or discount whatsoever thereon, other
than extensions, credits, discounts, compromises or settlements granted or
made in the ordinary course of business and consistent with its current
practices and in accordance with such prudent and standard practices used
in industries that are the same as or similar to those in which such
Grantor is engaged.
SECTION 4.11. Insurance. The Grantors, at their own expense,
shall maintain or cause to be maintained insurance covering physical loss
or damage to the Inventory and Equipment in accordance with Section 5.07
of the Credit Agreement. Each Grantor irrevocably makes, constitutes and
appoints the Collateral Agent (and all officers, employees or agents
designated by the Collateral Agent) as such Grantor's true and lawful agent
(and attorney-in-fact) for the purpose, during the continuance of an Event
of Default, of making, settling and adjusting claims in respect of
Collateral under policies of insurance, endorsing the name of such Grantor
on any check, draft, instrument or other item of payment for the proceeds
of such policies of insurance and for making all determinations and
decisions with respect thereto. In the event that any Grantor at any time
or times shall fail to obtain or maintain any of the policies of insurance
required hereby or to pay any premium in whole or part relating thereto,
the Collateral Agent may, without waiving or releasing any obligation or
liability of the Grantors hereunder or any Event of Default, in its sole
discretion, obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Collateral
Agent deems advisable. All sums disbursed by the Collateral Agent in
connection with this Section 4.11, including reasonable attorneys' fees,
court costs, expenses and other charges relating thereto, shall be payable,
upon demand, by the Grantors to the Collateral Agent and shall be
additional Obliga tions secured hereby.
SECTION 4.12. Legend. Each Grantor shall legend, in form and
manner satisfactory to the Collateral Agent, its Accounts Receivable and
its books, records and documents evidencing or pertaining thereto with an
appropriate reference to the fact that such Accounts Receivable have been
assigned to the Collateral Agent for the benefit of the Secured Parties and
that the Collateral Agent has a security interest therein.
SECTION 4.13. Covenants Regarding Patent, Trademark and
Copyright Collateral. (a) Each Grantor agrees that it will not, nor will
it permit any of its licensees to, do any act, or omit to do any act,
whereby any Patent which is material to the conduct of such Grantor's
business may become invalidated or dedicated to the public, and agrees that
it shall continue to mark any products covered by a Patent with the
relevant patent number as necessary and sufficient to establish and
preserve its maximum rights under applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such
Grantor's business, (i) maintain such Trademark in full force free from any
claim of abandonment or invalidity for non-use, (ii) maintain the quality
of products and services offered under such Trademark, (iii) display such
Trademark with notice of Federal or foreign registration to the extent
necessary and sufficient to establish and preserve its maximum rights under
applicable law and (iv) not knowingly use or knowingly permit the use of
such Trademark in violation of any third party rights.
(c) Each Grantor (either itself or through licensees) will, for
each work covered by a material Copyright, continue to publish, reproduce,
display, adopt and distribute the work with appropriate copyright notice as
necessary and sufficient to establish and preserve its maximum rights under
applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent immediately
if it knows or has reason to know that any Patent, Trademark or Copyright
material to the conduct of its business may become abandoned, lost or
dedicated to the public, or of any adverse determination or development
(including the institution of, or any such determination or development in,
any proceeding in the United States Patent and Trademark Office, United
States Copyright Office or any court or similar office of any country)
regarding such Grantor's ownership of any Patent, Trademark or Copyright,
its right to register the same, or to keep and maintain the same.
(e) In no event shall any Grantor, either itself or through any
agent, employee, licensee or designee, file an application for any Patent,
Trademark or Copyright (or for the registration of any Trademark or
Copyright) with the United States Patent and Trademark Office, United
States Copyright Office or any office
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10
or agency in any political subdivision of the United States or in any other
country or any political subdivision thereof, unless it promptly informs
the Collateral Agent, and, upon request of the Collateral Agent, executes
and delivers any and all agreements, instruments, documents and papers as
the Collateral Agent may request to evidence the Collateral Agent's
security interest in such Patent, Trademark or Copyright, and each Grantor
hereby appoints the Collateral Agent as its attorney-in-fact to execute and
file such writings for the foregoing purposes, all acts of such attorney
being hereby ratified and confirmed; such power, being coupled with an
interest, is irrevocable.
(f) Each Grantor will take all necessary steps that are
consistent with the practice in any proceeding before the United States
Patent and Trademark Office, United States Copyright Office or any office
or agency in any political subdivision of the United States or in any other
country or any political subdivision thereof, to maintain and pursue each
material application relating to the Patents, Trademarks and/or Copyrights
(and to obtain the relevant grant or registration) and to maintain each
issued Patent and each registration of the Trademarks and Copyrights that
is material to the conduct of any Grantor's business, including timely
filings of applications for renewal, affidavits of use, affidavits of
incontestability and payment of maintenance fees, and, if consistent with
good business judgment, to initiate opposition, interference and
cancelation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall
notify the Collateral Agent and shall, if consistent with good business
judgment, promptly sue for infringement, misappropriation or dilution and
to recover any and all damages for such infringement, misappropriation or
dilution, and take such other actions as are appropriate under the
circumstances to protect such Collateral.
(h) Upon and during the continuance of an Event of Default, each
Grantor shall use its best efforts to obtain all requisite consents or
approvals by the licensor of each Copyright License, Patent License or
Trademark License to effect the assignment of all of such Grantor's right,
title and interest thereunder to the Collateral Agent or its designee.
ARTICLE V
Power of Attorney
Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent and attorney-in-
fact, and in such capacity the Collateral Agent shall have the right, with
power of substitution for each Grantor and in each Grantor's name or
otherwise, for the use and benefit of the Collateral Agent and the Secured
Parties, upon the occurrence and during the continuance of an Event of
Default (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment
relating to the Collateral or any part thereof; (b) to demand, collect,
receive payment of, give receipt for and give discharges and releases of
all or any of the Collateral; (c) to sign the name of any Grantor on any
invoice or bill of lading relating to any of the Collateral; (d) to send
verifications of Accounts Receivable to any Account Debtor; (e) to commence
and prosecute any and all suits, actions or proceedings at law or in equity
in any court of competent jurisdiction to collect or otherwise realize on
all or any of the Collateral or to enforce any rights in respect of any
Collateral; (f) to settle, compromise, compound, adjust or defend any
actions, suits or proceedings relating to all or any of the Collateral; (g)
to notify, or to require any Grantor to notify, Account Debtors to make
payment directly to the Collateral Agent; and (h) to use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with
all or any of the Collateral, and to do all other acts and things necessary
to carry out the purposes of this Agreement, as fully and completely as
though the Collateral Agent were the absolute owner of the Collateral for
all purposes; provided, however, that nothing herein contained shall be
construed as requiring or obligating the Collateral Agent or any Secured
Party to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Collateral Agent or any Secured
Party, or to present or file any claim or notice, or to take any action
with respect to the Collateral or any part thereof or the moneys due or to
become due in respect thereof or any property covered thereby, and no
action taken or omitted to be taken by the Collateral Agent or any Secured
<PAGE>
11
Party with respect to the Collateral or any part thereof shall give rise to
any defense, counterclaim or offset in favor of any Grantor or to any claim
or action against the Collateral Agent or any Secured Party. It is
understood and agreed that the appointment of the Collateral Agent as the
agent and attorney-in-fact of the Grantors for the purposes set forth above
is coupled with an interest and is irrevocable. The provisions of this
Section shall in no event relieve any Grantor of any of its obligations
hereunder or under any other Loan Document with respect to the Collateral
or any part thereof or impose any obligation on the Collateral Agent or any
Secured Party to proceed in any particular manner with respect to the
Collateral or any part thereof, or in any way limit the exercise by the
Collateral Agent or any Secured Party of any other or further right which
it may have on the date of this Agreement or hereafter, whether hereunder,
under any other Loan Document, by law or otherwise.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence and
during the continuance of an Event of Default, each Grantor agrees to
deliver each item of Collateral to the Collateral Agent on demand, and it
is agreed that the Collateral Agent shall have the right to take any of or
all the following actions at the same or different times: (a) with respect
to any Collateral consisting of Intellectual Property, on demand, to cause
the Security Interest to become an assignment, transfer and conveyance of
any of or all such Collateral by the applicable Grantors to the Collateral
Agent, or to license or sublicense, whether general, special or otherwise,
and whether on an exclusive or non-exclusive basis, any such Collateral
throughout the world on such terms and conditions and in such manner as the
Collateral Agent shall determine (other than in violation of any then-
existing licensing arrangements to the extent that waivers cannot be
obtained), and (b) with or without legal process and with or without prior
notice or demand for performance, to take possession of the Collateral and
without liability for trespass to enter any premises where the Collateral
may be located for the purpose of taking possession of or removing the
Collateral and, generally, to exercise any and all rights afforded to a
secured party under the Uniform Commercial Code or other applicable law.
Without limiting the generality of the foregoing, each Grantor agrees that
the Collateral Agent shall have the right, subject to the mandatory
requirements of applicable law, to sell or otherwise dispose of all or any
part of the Collateral, at public or private sale or at any broker's board
or on any securities exchange, for cash, upon credit or for future delivery
as the Collateral Agent shall deem appropriate. The Collateral Agent shall
be authorized at any such sale (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing the Collateral for their own
account for investment and not with a view to the distribution or sale
thereof, and upon consummation of any such sale the Collateral Agent shall
have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Collateral so sold. Each such purchaser at any such
sale shall hold the property sold absolutely, free from any claim or right
on the part of any Grantor, and each Grantor hereby waives (to the extent
permitted by law) all rights of redemption, stay and appraisal which such
Grantor now has or may at any time in the future have under any rule of law
or statute now existing or hereafter enacted .
The Collateral Agent shall give the Grantors 10 days' written
notice (which each Grantor agrees is reasonable notice within the meaning
of Section 9-504(3) of the Uniform Commercial Code as in effect in the
State of New York or its equivalent in other jurisdictions) of the
Collateral Agent's intention to make any sale of Collateral. Such notice,
in the case of a public sale, shall state the time and place for such sale
and, in the case of a sale at a broker's board or on a securities exchange,
shall state the board or exchange at which such sale is to be made and the
day on which the Collateral, or portion thereof, will first be offered for
sale at such board or exchange. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as
the Collateral Agent may fix and state in the notice (if any) of such sale.
At any such sale, the Collateral, or portion thereof, to be sold may be
sold in one lot as an entirety or in separate parcels, as the Collateral
Agent may (in its sole and absolute discretion) determine. The Collateral
Agent shall not be obligated to make any sale of any Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Collateral Agent may, without notice
or publica tion, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and
place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or
<PAGE>
12
for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or
purchasers thereof, but the Collateral Agent shall not incur any liability
in case any such purchaser or purchasers shall fail to take up and pay for
the Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public (or, to the extent
permitted by law, private) sale made pursuant to this Section, any Secured
Party may bid for or purchase, free (to the extent permitted by law) from
any right of redemption, stay, valuation or appraisal on the part of any
Grantor (all said rights being also hereby waived and released to the
extent permitted by law), the Collateral or any part thereof offered for
sale and may make payment on account thereof by using any claim then due
and payable to such Secured Party from any Grantor as a credit against the
purchase price, and such Secured Party may, upon compliance with the terms
of sale, hold, retain and dispose of such property without further
accountability to any Grantor therefor. For purposes hereof, a written
agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof; the Collateral Agent shall be free to carry out
such sale pursuant to such agreement and no Grantor shall be entitled to
the return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Collateral Agent shall have entered
into such an agreement all Events of Default shall have been remedied and
the Obligations paid in full. As an alternative to exercising the power of
sale herein conferred upon it, the Collateral Agent may proceed by a suit
or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a
court or courts having competent jurisdiction or pursuant to a proceeding
by a court-appointed receiver.
SECTION 6.02. Application of Proceeds. The Collateral Agent shall apply
the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by the
Administrative Agent or the Collateral Agent (in its capacity as such
hereunder or under any other Loan Document) in connection with such
collection or sale or otherwise in connection with this Agreement or
any of the Obligations, including all court costs and the fees and
expenses of its agents and legal counsel, the repayment of all
advances made by the Collateral Agent hereunder or under any other
Loan Document on behalf of any Grantor and any other costs or expenses
incurred in connection with the exercise of any right or remedy
hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the
date of any such distribution); and
THIRD, to the Grantors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with
this Agreement. Upon any sale of the Collateral by the Collateral Agent
(including pursuant to a power of sale granted by statute or under a
judicial proceeding), the receipt of the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall
not be obligated to see to the application of any part of the purchase
money paid over to the Collateral Agent or such officer or be answerable in
any way for the misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies
under this Article at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants
to the Collateral Agent an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to the Grantors) to use,
license or sub-license any of the Collateral consisting of Intellectual
Property now owned or hereafter acquired by such Grantor, and wherever the
same may be located, and including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to
all computer software and programs used for the compilation or printout
thereof. The use of such license by the Collateral Agent shall be
exercised, at the option of the Collateral Agent, upon the occurrence and
during the continuation of an Event of Default; provided that any license,
sub-license or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantors notwithstanding any
<PAGE>
13
subsequent cure of an Event of Default.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices hereunder
shall (except as otherwise expressly permitted herein) be in writing and
given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Guarantor shall be given to it
at its address or telecopy number set forth on Schedule I, with a copy to
the Borrower.
SECTION 7.02. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the Security Interest and all obligations of
the Grantors hereunder shall be absolute and unconditional irrespective of
(a) any lack of validity or enforceability of the Credit Agreement, any
other Loan Document, any agreement with respect to any of the Obligations
or any other agreement or instrument relating to any of the foregoing, (b)
any change in the time, manner or place of payment of, or in any other term
of, all or any of the Obligations, or any other amendment or waiver of or
any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument, (c) any exchange, release or
non-perfection of any Lien on other collateral, or any release or amendment
or waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations, or (d) any other circumstance
that might otherwise constitute a defense available to, or a discharge of,
any Grantor in respect of the Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon
by the Secured Parties and shall survive the making by the Lenders of the
Loans, and the execution and delivery to the Lenders of any notes
evidencing such Loans, regardless of any investigation made by the Lenders
or on their behalf, and shall continue in full force and effect until this
Agreement shall terminate.
SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall
become effective as to any Grantor when a counterpart hereof executed on
behalf of such Grantor shall have been delivered to the Collateral Agent
and a counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon such Grantor and the
Collateral Agent and their respective successors and assigns, and shall
inure to the benefit of such Grantor, the Collateral Agent and the other
Secured Parties and their respective successors and assigns, except that no
Grantor shall have the right to assign or transfer its rights or
obligations hereunder or any interest herein or in the Collateral (and any
such assignment or transfer shall be void) except as expressly contemplated
by this Agreement or the Credit Agreement. This Agreement shall be
construed as a separate agreement with respect to each Grantor and may be
amended, modified, supplemented, waived or released with respect to any
Grantor without the approval of any other Grantor and without affecting the
obligations of any other Grantor hereunder.
SECTION 7.05. Successors and Assigns. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Grantor or the Collateral
Agent that are contained in this Agreement shall bind and inure to the
benefit of their respective successors and assigns.
SECTION 7.06. Collateral Agent's Fees and Expenses; Indemnification.
(a) Each Grantor jointly and severally agrees to pay upon demand to the
Collateral Agent the amount of any and all reasonable expenses, including
the reasonable fees, disbursements and other charges of its counsel and of
any experts or agents, which the Collateral Agent may incur in connection
with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from or other realization upon
any of the Collateral, (iii) the exercise, enforcement or protection of any
of the rights of the Collateral Agent hereunder or (iv) the failure of any
Grantor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each
<PAGE>
14
Grantor jointly and severally agrees to indemnify the Collateral Agent and
the other Indemnitees against, and hold each of them harmless from, any and
all losses, claims, damages, liabilities and related expenses, including
reasonable fees, disbursements and other charges of counsel, incurred by or
asserted against any of them arising out of, in any way connected with, or
as a result of, the execution, delivery or performance of this Agreement or
any claim, litigation, investigation or proceeding relating hereto or to
the Collateral, whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the
extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The
provisions of this Section 7.06 shall remain operative and in full force
and effect regardless of the termination of this Agreement or any other
Loan Document, the consummation of the transactions contemplated hereby,
the repayment of any of the Loans, the invalidity or unenforceability of
any term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Collateral Agent or any Lender.
All amounts due under this Section 7.06 shall be payable on written demand
therefor.
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.08. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Collateral Agent hereunder and of the Collateral Agent, the Administrative
Agent and the Lenders under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provisions of this Agreement or any other Loan Document or
consent to any departure by any Grantor therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) below, and
then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on
any Grantor in any case shall entitle such Grantor or any other Grantor to
any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in
writing entered into by the Collateral Agent and the Grantor or Grantors
with respect to which such waiver, amendment or modification is to apply,
subject to any consent required in accordance with Section 9.02 of the
Credit Agreement.
SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 7.09.
SECTION 7.10. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected
or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of
itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
<PAGE>
15
SECTION 7.11. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract (subject to
Section 7.04), and shall become effective as provided in Section 7.04.
Delivery of an executed signature page to this Agreement by facsimile
transmission shall be effective as delivery of a manually executed
counterpart hereof.
SECTION 7.12. Headings. Article and Section headings used herein are
for the purpose of reference only, are not part of this Agreement and are
not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 7.13. Jurisdiction; Consent to Service of Process. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of
any such action or proceeding may be heard and determined in such New York
State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law. Nothing in
this Agreement shall affect any right that the Collateral Agent, the
Administrative Agent or any Lender may otherwise have to bring any action
or proceeding relating to this Agreement or the other Loan Documents
against any Grantor or its properties in the courts of any jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection
which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the
other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in
this Agreement will affected the right of any party to this Agreement to
serve process in any other manner permitted by law.
SECTION 7.14. Termination. This Agreement and the Security Interest
shall terminate when all the Obligations have been indefeasibly paid in
full and the Lenders have no further commitment to lend under the Credit
Agreement, at which time the Collateral Agent shall execute and deliver to
the Grantors, at the Grantors' expense, all Uniform Commercial Code
termination statements and similar documents which the Grantors shall
reasonably request to evidence such termination. Any execution and delivery
of termination statements or documents pursuant to this Section 7.14 shall
be without recourse to or warranty by the Collateral Agent. A Guarantor
shall automatically be released from its obligations hereunder and the
Security Interest in the Collateral of such Guarantor shall be
automatically released in the event that all the capital stock of such
Guarantor shall be sold, transferred or otherwise disposed of to a person
that is not an Affiliate of the Borrower in accordance with the terms of
the Credit Agreement; provided that the Required Lenders shall have
consented to such sale, transfer or other disposition (to the extent
required by the Credit Agreement) and the terms of such consent did not
provide otherwise.
SECTION 7.15. Additional Grantors. Upon execution and delivery by
the Collateral Agent and a Subsidiary of an instrument in the form of Annex
3 hereto, such Subsidiary shall become a Grantor hereunder with the same
force and effect as if originally named as a Grantor herein. The execution
and delivery of any such instrument shall not require the consent of any
Grantor hereunder. The rights and obligations of each Grantor hereunder
shall remain in full force and effect notwithstanding the addition of any
new Grantor as a party to this Agreement.
SECTION 7.16. FCC Consent. Notwithstanding anything herein which may
be construed to the contrary, no action shall be taken by any of the
Collateral Agent and the Secured Parties with respect to the
<PAGE>
16
Licenses or any license of the Federal Communications Commission ("FCC")
unless and until any required approval under the Federal Communications Act
of 1934, and any applicable rules and regulations thereunder, requiring the
consent to or approval of such action by the FCC or any governmental or
other authority, have been satisfied.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
TRITON PCS, INC.,
By _______________________________________
Name:
Title:
TRITON PCS HOLDINGS, INC.,
By _______________________________________
Name:
Title:
TRITON MANAGEMENT COMPANY, INC.,
By _______________________________________
Name:
Title:
EACH OF THE OTHER GUARANTORS LISTED ON
SCHEDULE I HERETO,
By: TRITON MANAGEMENT COMPANY, INC.,
its manager,
_________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral
Agent,
By _______________________________________
Name:
Title:
<PAGE>
Schedule I to the
Security Agreement
SUBSIDIARY GUARANTORS
<TABLE>
<CAPTION>
Subsidiary Guarantors Address
--------------------- -------
<S> <C>
1. Triton Management Company, Inc. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
2. Triton PCS Holdings Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
3. Triton PCS Operating Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
4. Triton PCS License Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
5. Triton PCS Property Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
6. Triton PCS Equipment Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
</TABLE>
<PAGE>
Schedule II to the
Security Agreement
COPYRIGHTS
None.
<PAGE>
Schedule III to the
Security Agreement
LICENSES
The Network License Agreement, subject to the conditions for
assignment set forth in Section 3.1 thereof.
<PAGE>
Schedule IV to the
Security Agreement
PATENTS
None.
<PAGE>
Schedule V to the
Security Agreement
TRADEMARKS
None.
<PAGE>
Annex 2 to the
Security Agreement
[Form of]
PERFECTION CERTIFICATE
Reference is made to (a) the Credit Agreement dated as of February 3,
1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Triton PCS Holdings, Inc., the Borrower, the
lenders from time to time party thereto (the "Lenders") and The Chase
Manhattan Bank, as administrative agent for the Lenders (in such capacity,
the "Administrative Agent") and Collateral Agent and (b) the Guarantee
Agreement dated as of February , 1998 (as amended, supplemented or
otherwise modified from time to time, the "Guarantee Agreement"), among the
Guarantors and the Collateral Agent.
The undersigned, a Financial Officer of the Borrower, hereby certifies
the Collateral Agent and each other Secured Party as follows:
1. Names. (a) The exact corporate name of each Grantor, as such name
appears in its respective certificate of incorporation, is as follows:
(b) Set forth below is each other corporate name each Grantor has had
in the past five years, together with the date of the relevant change:
(c) Except as set forth in Schedule 1 hereto, no Grantor has changed
its identity or corporate structure in any way within the past five years.
Changes in identity or corporate structure would include mergers,
consolidations and acquisitions, as well as any change in the form, nature
or jurisdiction of corporate organization. If any such change has
occurred, include in Schedule 1 the information required by Sections 1 and
2 of this certificate as to each acquiree or constituent party to a merger
or consolidation.
(d) The following is a list of all other names (including trade names
or similar appellations) used by each Grantor or any of its divisions or
other business units in connection with the conduct of its business or the
ownership of its properties at any time during the past five years:
(e) Set forth below is the Federal Taxpayer Identification Number of
each Grantor:
2. Current Locations. (a) The chief executive office of each Grantor
is located at the address set forth opposite its name below:
Grantor Mailing Address County State
------- --------------- ------ -----
<PAGE>
2
(b) Set forth below opposite the name of each Grantor are all
locations where such Grantor maintains any books or records relating to any
Accounts Receivable (with each location at which chattel paper, if any, is
kept being indicated by an "*"):
Grantor Mailing Address County State
------- --------------- ------ -----
(c) Set forth below opposite the name of each Grantor are all the
places of business of such Grantor not identified in paragraph (a) or (b)
above:
Grantor Mailing Address County State
------- --------------- ------ -----
(d) Set forth below opposite the name of each Grantor are all the
locations where such Grantor maintains any Collateral not identified above:
Grantor Mailing Address County State
------- --------------- ------ -----
(e) Set forth below opposite the name of each Grantor are the names
and addresses of all persons other than such Grantor that have possession
of any of the Collateral of such Grantor:
Grantor Mailing Address County State
------- --------------- ------ -----
3. Unusual Transactions. All Accounts Receivable have been
originated by the Grantors and all Inventory has been acquired by the
Grantors in the ordinary course of business.
4. File Search Reports. Attached hereto as Schedule 4(A) are true
copies of file search reports from the Uniform Commercial Code filing
offices where filings described in Section 3.22 of the Credit Agreement are
to be made. Attached hereto as Schedule 4(B) is a true copy of each
financing statement or other filing identified in such file search reports.
5. UCC Filings. Duly signed financing statements on Form UCC-1 in
substantially the form of Schedule 5 hereto have been prepared for filing
in the Uniform Commercial Code filing office in each jurisdiction where a
Grantor has Collateral as identified in Section 2 hereof.
6. Schedule of Filings. Attached hereto as Schedule 6 is a schedule
setting forth, with respect to the filings described in Section 5 above,
each filing and the filing office in which such filing is to be made.
7. Filing Fees. All filing fees and taxes payable in connection with
the filings described in Section 5 above have been paid.
8. Stock Ownership. Attached hereto as Schedule 8 is a true and
correct list of all the duly authorized, issued and outstanding stock of
each Subsidiary and the record and beneficial owners of such stock. Also
set
<PAGE>
3
forth on Schedule 8 is each equity Investment of the Borrower and each
Subsidiary that represents 50% or less of the equity of the entity in which
such investment was made.
9. Notes. Attached hereto as Schedule 9 is a true and correct list
of all notes held by the Borrower and each Subsidiary and all intercompany
notes between the Borrower and each Subsidiary of the Borrower and between
each Subsidiary of the Borrower and each other such Subsidiary.
10. Advances. Attached hereto as Schedule 10 is (a) a true and
correct list of all advances made by the Borrower to any Subsidiary of the
Borrower or made by any Subsidiary of the Borrower to the Borrower or any
other Subsidiary of the Borrower, which advances will be on and after the
date hereof evidenced by one or more intercompany notes pledged to the
Collateral Agent under the Pledge Agreement, and (b) a true and correct
list of all unpaid intercompany transfers of goods sold and delivered by or
to the Borrower or any Subsidiary of the Borrower.
11. Mortgage Filings. Attached hereto as Schedule 11 is a schedule
setting forth, with respect to each Mortgaged Property, (i) the exact
corporate name of the entity that owns such property as such name appears
in its certificate of formation, (ii) if different from the name identified
pursuant to clause (i), the exact name of the current record owner of such
property reflected in the records of the filing office for such property
identified pursuant to the following clause and (iii) the filing office in
which a Mortgage with respect to such property must be filed or recorded in
order for the Collateral Agent to obtain a perfected security interest
therein.
IN WITNESS WHEREOF, the undersigned have duly executed this
certificate on this [ ] day of [ ].
TRITON PCS, INC.,
By_______________________________________
Name:
Title: [Financial Officer]
<PAGE>
Annex 3 to the
Security Agreement
SUPPLEMENT NO. __ dated as of , to the Security
Agreement dated as of February , 1998, among Triton PCS, Inc.,
a Delaware corporation (the "Borrower"), TRITON PCS HOLDINGS,
INC., a Delaware corporation ("Holdings") and each subsidiary of
the Borrower listed on Schedule I thereto (each such subsidiary
individually a "Subsidiary" and, together with Holdings, the
"Guarantors"; the Guarantors and the Borrower are referred to
collectively herein as the "Grantors") and THE CHASE MANHATTAN
BANK, a Delaware corporation ("Chase"), as collateral agent (in
such capacity, the "Collateral Agent") for the Secured Parties
(as defined herein).
A. Reference is made to (a) the Credit Agreement dated as of February
, 1998 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among the Borrower, the lenders from time to time
party thereto (the "Lenders") and Chase, as administrative agent for the
Lenders (in such capacity, the "Administrative Agent") and Collateral Agent
and (b) the Guarantee Agreement dated as of February , 1998 (as amended,
supplemented or otherwise modified from time to time, the "Guarantee
Agreement"), among the Guarantors and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Security Agreement
and the Credit Agreement.
C. The Grantors have entered into the Security Agreement in order to
induce the Lenders to make Loans. Section 7.15 of Security Agreement
provides that additional Subsidiaries of the Borrower may become Grantors
under the Security Agreement by execution and delivery of an instrument in
the form of this Supplement. The undersigned Subsidiary (the "New
Grantor") is executing this Supplement in accordance with the requirements
of the Credit Agreement to become a Grantor under the Security Agreement in
order to induce the Lenders to make additional Loans and as consideration
for Loans previously made.
Accordingly, the Collateral Agent and the New Grantor agree as
follows:
SECTION 1. In accordance with Section 7.15 of the Security Agreement,
the New Grantor by its signature below becomes a Grantor under the Security
Agreement with the same force and effect as if originally named therein as
a Grantor and the New Grantor hereby (a) agrees to all the terms and
provisions of the Security Agreement applicable to it as a Grantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Grantor thereunder are true and correct on and
as of the date hereof. In furtherance of the foregoing, the New Grantor,
as security for the payment and performance in full of the Obligations (as
defined in the Security Agreement), does hereby create and grant to the
Collateral Agent, its successors and assigns, for the benefit of the
Secured Parties, their successors and assigns, a security interest in and
lien on all of the New Grantor's right, title and interest in and to the
Collateral (as defined in the Security Agreement) of the New Grantor. Each
reference to a "Grantor" in the Security Agreement shall be deemed to
include the New Grantor. The Security Agreement is hereby incorporated
herein by reference.
SECTION 2. The New Grantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its
terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when
the Collateral Agent shall have received counterparts of this Supplement
that, when taken together, bear the signatures of the New Grantor and the
Collateral Agent. Delivery of an executed signature page to this
Supplement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants that (a)
set forth on Schedule I attached hereto is a true and correct schedule of
the location of any and all Collateral of the New Grantor and (b) set forth
under its signature hereto, is the true and correct location of the chief
executive office of the New Grantor.
<PAGE>
2
SECTION 5. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein and in the Security Agreement shall not in any
way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be in
writing and given as provided in Section 7.01 of the Security Agreement.
All communications and notices hereunder to the New Grantor shall be given
to it at the address set forth under its signature below.
SECTION 9. The New Grantor agrees to reimburse the Collateral Agent
for its reasonable out-of-pocket expenses in connection with this
Supplement, including the reasonable fees, other charges and disbursements
of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year
first above written.
[NAME OF NEW GRANTOR],
By_______________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral Agent,
By_______________________________________
Name:
Title:
<PAGE>
Schedule I
to Supplement No. [ ]
to the Security Agreement
LOCATION OF COLLATERAL
Description Location
----------- --------
<PAGE>
INDEMNITY, SUBROGATION and CONTRIBUTION AGREEMENT dated
as of February 4, 1998, among Triton PCS, Inc., a Delaware
corporation (the "Borrower"), TRITON PCS HOLDINGS, INC., a
Delaware corporation ("Holdings"), each Subsidiary of the
Borrower listed on Schedule I hereto (each a "Subsidiary"
and, together with Holdings, the "Guarantors") and THE CHASE
MANHATTAN BANK, a Delaware corporation ("Chase"), as
collateral agent (in such capacity, the "Collateral Agent")
for the Secured Parties (as defined in the Credit Agreement
referred to below).
Reference is made to (a) the Credit Agreement dated as of February 3,
1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Holdings, the Borrower, the lenders from time to
time party thereto (the "Lenders") and Chase, as administrative agent for
the Lenders (in such capacity, the "Administrative Agent") and Collateral
Agent, and (b) the Guarantee Agreement dated as of February , 1998,
among the Guarantors and the Collateral Agent (the "Guarantee Agreement").
Capitalized terms used herein and not defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower pursuant to, and
upon the terms and subject to the conditions specified in, the Credit
Agreement. The Guarantors have guaranteed such Loans and the other
Obligations (as defined in the Guarantee Agreement) of the Borrower under
the Credit Agreement pursuant to the Guarantee Agreement; certain
Guarantors have granted Liens on and security interests in certain of their
assets to secure such guarantees. The obligations of the Lenders to make
Loans are conditioned on, among other things, the execution and delivery by
the Borrower and the Guarantors of an agreement in the form hereof.
Accordingly, the Borrower, each Guarantor and the Collateral Agent
agree as follows:
SECTION 1. Indemnity and Subrogation. In addition to all such rights
of indemnity and subrogation as the Guarantors may have under applicable
law (but subject to Section 3), the Borrower agrees that (a) in the event a
payment shall be made by any Guarantor under the Guarantee Agreement, the
Borrower shall indemnify such Guarantor for the full amount of such payment
and such Guarantor shall be subrogated to the rights of the person to whom
such payment shall have been made to the extent of such payment and (b) in
the event any assets of any Guarantor shall be sold pursuant to any
Security Document to satisfy a claim of any Secured Party, the Borrower
shall indemnify such Guarantor in an amount equal to the greater of the
book value or the fair market value of the assets so sold.
SECTION 2. Contribution and Subrogation. Each Guarantor (a
"Contributing Guarantor") agrees (subject to Section 3) that, in the event
a payment shall be made by any other Guarantor under the Guarantee
Agreement or assets of any other Guarantor shall be sold pursuant to any
Security Document to satisfy a claim of any Secured Party and such other
Guarantor (the "Claiming Guarantor") shall not have been fully indemnified
by the Borrower as provided in Section 1, the Contributing Guarantor shall
indemnify the Claiming Guarantor in an amount equal to the amount of such
payment or the greater of the book value or the fair market value of such
assets, as the case may be, in each case multiplied by a fraction of which
the numerator shall be the net worth of the Contributing Guarantor on the
date hereof and the denominator shall be the aggregate net worth of all the
Guarantors on the date hereof (or, in the case of any Guarantor becoming a
party hereto pursuant to Section 12, the date of the Supplement hereto
executed and delivered by such Guarantor). Any Contributing Guarantor
making any payment to a Claiming Guarantor pursuant to this Section 2 shall
be subrogated to the rights of such Claiming Guarantor under Section 1 to
the extent of such payment.
SECTION 3. Subordination. Notwithstanding any provision of this
Agreement to the contrary, all rights of the Guarantors under Sections 1
and 2 and all other rights of indemnity, contribution or subrogation under
applicable law or otherwise shall be fully subordinated to the indefeasible
payment in full in cash of all Obligations which are then due and payable
whether at maturity, by acceleration or otherwise. No failure on the part
of the Borrower or any Guarantor to make the payments required by Sections
1 and 2 (or any other payments required under applicable law or otherwise)
shall in any respect limit the obligations and liabilities
<PAGE>
2
of any Guarantor with respect to its obligations hereunder, and each
Guarantor shall remain liable for the full amount of the obligations of
such Guarantor hereunder.
SECTION 4. Termination. This Agreement shall survive and be in full
force and effect so long as any Obligation is outstanding and has not been
indefeasibly paid in full in cash or any of the Commitments under the
Credit Agreement have not been terminated, and shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any Obligation is rescinded or must otherwise be
restored by any Secured Party or any Guarantor upon the bankruptcy or
reorganization of the Borrower, any Guarantor or otherwise.
SECTION 5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. No Waiver; Amendment. (a) No failure on the part of the
Collateral Agent or any Guarantor to exercise, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy by
the Collateral Agent or any Guarantor preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. All
remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law. None of the Collateral Agent and the Guarantors
shall be deemed to have waived any rights hereunder unless such waiver
shall be in writing and signed by such parties.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into
between the Borrower, the Guarantors and the Collateral Agent, with the
prior written consent of the Required Lenders (except as otherwise provided
in the Credit Agreement).
SECTION 7. Notices. All communications and notices hereunder shall
be in writing and given as provided in the Guarantee Agreement and
addressed as specified therein.
SECTION 8. Binding Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the parties that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns. Neither the Borrower nor any Guarantor
may assign or transfer any of its rights or obligations hereunder (and any
such attempted assignment or transfer shall be void) without the prior
written consent of the Required Lenders. Notwithstanding the foregoing, at
the time any Guarantor is released from its obligations under the Guarantee
Agreement in accordance with such Guarantee Agreement and the Credit
Agreement, such Guarantor will cease to have any rights or obligations
under this Agreement.
SECTION 9. Survival of Agreement; Severability. (a) All covenants
and agreements made by the Borrower and each Guarantor herein and in the
certificates or other instruments prepared or delivered in connection with
this Agreement or the other Loan Documents shall be considered to have been
relied upon by the Collateral Agent, the other Secured Parties and each
Guarantor and shall survive the making by the Lenders of the Loans and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loans or any other fee or amount payable under the
Credit Agreement or this Agreement or under any of the other Loan Documents
is outstanding and unpaid and as long as the Commitments have not been
terminated.
(b) In case any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect,
no party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal
or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 10. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts),
each of which shall constitute an original, but all of which when taken
together shall constitute a single contract. This Agreement shall be
effective with respect to any Guarantor
<PAGE>
3
when a counterpart bearing the signature of such Guarantor shall have been
delivered to the Collateral Agent. Delivery of an executed signature page
to this Agreement by facsimile transmission shall be as effective as
delivery of a manually signed counterpart of this Agreement.
SECTION 11. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to
this Agreement.
SECTION 12. Additional Guarantors. Pursuant to Section 5.12 of the
Credit Agreement, each Subsidiary Loan Party of the Borrower that was not
in existence or not a Subsidiary Loan Party on the date of the Credit
Agreement is required to enter into the Guarantee Agreement as a Guarantor
upon becoming a Subsidiary Loan Party. Upon execution and delivery, after
the date hereof, by the Collateral Agent and such a Subsidiary of an
instrument in the form of Annex 1 hereto, such Subsidiary shall become a
Guarantor here under with the same force and effect as if originally named
as a Guarantor hereunder. The execution and delivery of any instrument
adding an additional Guarantor as a party to this Agreement shall not
require the consent of any Guarantor hereunder. The rights and obligations
of each Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Guarantor as a party to this
Agreement.
SECTION 13. FCC Consent. Notwithstanding anything herein which may
be construed to the contrary, no action shall be taken by any of the
Collateral Agent and the Secured Parties with respect to the Licenses or
any license of the Federal Communications Commission ("FCC") unless and
until any required approval under the Federal Communications Act of 1934,
and any applicable rules and regulations thereunder, requiring the consent
to or approval of such action by the FCC or any governmental or other
authority, have been satisfied.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first
appearing above.
TRITON PCS, INC.,
By_______________________________________
Name:
Title:
TRITON PCS HOLDINGS, INC.,
By_______________________________________
Name:
Title:
TRITON MANAGEMENT COMPANY, INC.,
By_______________________________________
Name:
Title:
<PAGE>
4
EACH OF THE OTHER SUBSIDIARIES LISTED ON SCHEDULE I HERETO,
as a Guarantor,
By: TRITON MANAGEMENT COMPANY, INC.,
its manager,
______________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral Agent,
By_______________________________________
Name:
Title:
<PAGE>
Schedule I to the
Indemnity, Subrogation and
Contribution Agreement
SUBSIDIARY GUARANTORS
<TABLE>
<CAPTION>
Subsidiary Guarantor Address
-------------------- -------
<S> <C> <C>
1. Triton Management Company, Inc. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
2. Triton PCS Holdings Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
3. Triton PCS Operating Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
4. Triton PCS License Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
5. Triton PCS Property Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
6. Triton PCS Equipment Company L.L.C. 101 Lindenwood Drive, Suite 125, Malvern, PA 19355
</TABLE>
<PAGE>
Annex 1 to the
Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. [ ] dated as of [ ], to the Indemnity,
Subrogation and Contribution Agreement dated as of February ,
1998 (as the same may be amended, supplemented or otherwise
modified from time to time, the "Indemnity, Subrogation and
Contribution Agreement"), among TRITON PCS, INC., a Delaware
corporation (the "Borrower") TRITON PCS HOLDINGS, INC., a Delaware
corporation ("Holdings"), each Subsidiary of the Borrower listed
on Schedule I thereto (each, a "Subsidiary" and, together with
Holdings, the "Guarantors"), and THE CHASE MANHATTAN BANK, a New
York banking corporation ("Chase"), as collateral agent (the
"Collateral Agent") for the Secured Parties (as defined in the
Credit Agreement referred to below).
A. Reference is made to (a) the Credit Agreement dated as of February
, 1998 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among the Borrower, the lenders from time to time
party thereto (the "Lenders") and Chase, as administrative agent for the
Lenders (in such capacity, the "Administrative Agent") and Collateral
Agent, and (b) the Guarantee Agreement dated as of February , 1998, among
the Guarantors and the Collateral Agent (the "Guarantee Agreement").
B. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Indemnity,
Subrogation and Contribution Agreement and the Credit Agreement.
C. The Borrower and the Guarantors have entered into the Indemnity,
Subrogation and Contribution Agreement in order to induce the Lenders to
make Loans. Pursuant to Section 5.12 of the Credit Agreement, each
Subsidiary Loan Party of the Borrower that was not in existence or not a
Subsidiary Loan Party on the date of the Credit Agreement is required to
enter into the Guarantee Agreement as a Guarantor upon becoming a
Subsidiary Loan Party. Section 12 of the Indemnity, Subrogation and
Contribution Agreement provides that additional Subsidiaries of the
Borrower may become Guarantors under the Indemnity, Subrogation and
Contribution Agreement by execution and delivery of an instrument in the
form of this Supplement. The undersigned Subsidiary of the Borrower (the
"New Guarantor") is executing this Supplement in accordance with the
requirements of the Credit Agreement to become a Guarantor under the
Indemnity, Subrogation and Contribution Agreement in order to induce the
Lenders to make additional Loans and as consideration for Loans previously
made.
Accordingly, the Collateral Agent and the New Guarantor agree as
follows:
SECTION 1. In accordance with Section 12 of the Indemnity,
Subrogation and Contribution Agreement, the New Guarantor by its signature
below becomes a Guarantor under the Indemnity, Subrogation and Contribution
Agreement with the same force and effect as if originally named therein as
a Guarantor and the New Guarantor hereby agrees to all the terms and
provisions of the Indemnity, Subrogation and Contribution Agreement
applicable to it as a Guarantor thereunder. Each reference to a
"Guarantor" in the Indemnity, Subrogation and Contribution Agreement shall
be deemed to include the New Guarantor. The Indemnity, Subrogation and
Contribution Agreement is hereby incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has
been duly authorized, executed and delivered by it and constitutes its
legal, valid and binding obligation, enforceable against it in accordance
with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when
the Collateral Agent shall have received counterparts of this Supplement
that, when taken together, bear the signatures of the New Guarantor and the
Collateral Agent. Delivery of an executed signature page to this
Supplement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Indemnity,
Subrogation and Contribution Agreement shall remain in full force and
effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
2
SECTION 6. In case any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any
respect, neither party hereto shall be required to comply with such
provision for so long as such provision is held to be invalid, illegal or
unenforceable, but the validity, legality and enforceability of the
remaining provisions contained herein and in the Indemnity, Subrogation and
Contribution Agreement shall not in any way be affected or impaired. The
parties hereto shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in
writing and given as provided in Section 7 of the Indemnity, Subrogation
and Contribution Agreement. All communications and notices hereunder to
the New Guarantor shall be given to it at the address set forth under its
signature.
SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent
for its reasonable out-of-pocket expenses in connection with this
Supplement, including the reasonable fees, other charges and disbursements
of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have
duly executed this Supplement to the Indemnity, Subrogation and
Contribution Agreement as of the day and year first above written.
[NAME OF NEW GUARANTOR],
By_______________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral Agent,
By_______________________________________
Name:
Title:
<PAGE>
Schedule I to Supplement No. [ ]
to the Indemnity, Subrogation and
Contribution Agreement
GUARANTORS
Name Address
---- -------
<PAGE>
EXHIBIT 10.2
FIRST AMENDMENT, CONSENT AND WAIVER, dated as of April 24,
1998 (this "Amendment"), to the Credit Agreement, dated as of
---------
February 3, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among TRITON PCS,
----------------
INC., a corporation organized under the laws of the State of
Delaware (the "Borrower"), TRITON PCS HOLDINGS, INC., a
--------
corporation organized under the laws of the State of Delaware
("Holdings"), the several banks and other financial institutions
--------
and entities from time to time parties thereto (the "Lenders"),
-------
and THE CHASE MANHATTAN BANK, as administrative agent (the
"Administrative Agent") for the Lenders.
--------------------
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to
make certain loans to the Borrower; and
WHEREAS the Borrower has requested that certain provisions of the
Credit Agreement be modified in the manner provided for in this Amendment,
and the Lenders are willing to agree to such modifications as provided for
in this Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used and not defined herein
--------------
shall have the meanings given to them in the Credit Agreement, as amended
hereby.
2. Amendments to the Credit Agreement.
-----------------------------------
(a) Section 1.01 of the Credit Agreement is hereby amended by:
(i) inserting after the definition of "ABR" and before the definition
of "Adjusted EBITDA" the following definition:
"'Additional AW Licenses' has the meaning set forth in the definition
of AW Pops Acquisition.";
(ii) inserting after the definition of "AW Licenses" and before the
definition of "Board" the following definition:
<PAGE>
2
"'AW Pops Acquisition' means the acquisition by one or more of
-------------------
Triton PCS License Company, L.L.C., the Borrower or any Subsidiary
(the 'AW Pops Entities') of 20 MHz of the 30 MHz of PCS licenses owned
----------------
by AW covering the Washington, DC BTA, the Atlanta, Georgia MTA, the
Charlotte, North Carolina MTA, the Greensboro, North Carolina BTA, the
Burlington, North Carolina BTA and the Raleigh-Durham, North Carolina
BTA (collectively, the "Additional AW Licenses"), in exchange for the
20 MHz of the 30 MHz of PCS licenses owned by the Borrower and its
Subsidiaries covering the Cumberland, Maryland BTA and the Hagerstown,
Maryland BTA (collectively, the "Exchanged Licenses") and the issuance
to AW of 21,249,019 shares of Series A Preferred Stock and 10,624,509
shares of Series D Preferred Stock, all in accordance with the
Preferred Stock Agreement.";
(iii) deleting the definition of "Change in Law" in its entirety and
inserting in lieu thereof the following:
"'Change in Law' means (a) the adoption of any law, rule or
-------------
regulation after the date of this Agreement, (b) any change in any
law, rule or regulation or in the interpretation or application
thereof by any Governmental Authority after the date of this Agreement
or (c) compliance by any Lender or Issuing Bank (or, for purposes of
Section 2.15(b), by any lending office of such Lender or by such
Lender's or Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this
Agreement.";
(iv) replacing the words "the Borrower" in the definition of
"Committed Equity" with the word "Holdings";
(v) replacing the words "the Borrower" in the definition of "Common
Stock" with the word "Holdings";
(vi) deleting the definition of "Contributed Equity" in its entirety
and inserting in lieu thereof the following:
"'Contributed Equity' means at any time or for any period, the
------------------
aggregate amount which shall have been received by the Borrower and/or
Holdings prior to such time or during such period as consideration for
the issuance of stock of Holdings (valued, in the case of the AW
Licenses, at $109,850,200, the agreed value of
<PAGE>
3
the AW Licenses in the Securities Purchase Agreement and, in the case
of the Additional AW Licenses, at $31,873,528, the agreed value of the
Additional AW Licenses in the Preferred Stock Agreement) less any
amounts contributed by Holdings to any Unrestricted Subsidiary.";
(vii) inserting after the definition of "Environmental Laws" and
before the definition of "ERISA" the following definition:
"'Equipment Subsidiary' means Triton PCS Equipment Company LLC
--------------------
and/or any Wholly Owned Subsidiary of the Borrower designated by the
Borrower as the Equipment Subsidiary by notice to the Administrative Agent;
provided, however, that (i) such Subsidiary has no obligations or
-------- -------
liabilities other than as permitted by Section 3.13, (ii) the stock of such
Subsidiary is pledged to the Collateral Agent for the benefit of the
Lenders in accordance with the terms of the Pledge Agreement and (iii) the
Borrower and such Subsidiary have entered into a Special Purpose Subsidiary
Funding Agreement.";
(viii) amending the definition of "Excess Cash Flow" by deleting "."
at the end of clause (f) thereof and inserting in lieu thereof the
following:
"; plus
----
(g) any cash dividends or any other cash distributions paid or
made by, and received from, any Unrestricted Subsidiary.";
(ix) inserting after the definition of "Interest Period" and before
the definition of "Lenders" the following definitions:
"'Issuing Bank' means each of the Lenders, in its capacity as
------------
an issuer of Letters of Credit hereunder. Each Issuing Bank may, in
its discretion, arrange for one or more Letters of Credit to be issued
by Affiliates of such Issuing Bank, in which case the term "Issuing
Bank" shall include any such Affiliate with respect to Letters of
Credit issued by such Affiliate.
'LC Disbursement' means a payment made by an Issuing Bank
---------------
pursuant to a Letter of Credit.
'LC Exposure' means, at any time, the sum of (a) the aggregate
-----------
undrawn amount of all outstanding
<PAGE>
4
Letters of Credit at such time plus (b) the aggregate amount of all LC
----
Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time.
'LC Obligations' means all obligations of the Borrower with
--------------
respect to Letters of Credit in accordance with their terms and the
terms of any documentation the Borrower may enter into with any
Issuing Bank in connection with the issuance thereof, including any
letter of credit fees owed to the Issuing Banks and any payments in
respect of any Letter of Credit, when and as due, including payments
in respect of reimbursement of LC Disbursements, interest thereon and
obligations to provide cash collateral.";
(x) inserting after the definition of "Lenders" and before the
definition of "Leverage Ratio" the following definition:
"'Letter of Credit' means any letter of credit issued pursuant
----------------
to this Agreement.";
(xi) inserting after the definition of "Multiemployer Plan" and
before the definition of "Net Proceeds" the following definition:
"'Myrtle Acquisition' means the acquisition by one or more of
Triton PCS License Company L.L.C., Triton Myrtle Acquisition, L.L.C.
or any other Subsidiary (the 'Myrtle Entities') of substantially all
---------------
the assets of Vanguard Cellular Systems of South Carolina, Inc.
('Vanguard'), including the FCC cellular licence for the South
--------
Carolina 5--Georgetown RSA, Market 629A, for cash consideration of
$160,000,000 (subject to working capital and subscriber adjustments)
in accordance with the terms of the Asset Purchase Agreement (the
'Myrtle Asset Purchase Agreement') dated March 10, 1998, between the
-------------------------------
Borrower, the Myrtle Entities and Vanguard.";
(xii) inserting after the definition of "Net Working Capital" and
before the definition of "Obligations" the following definition:
"'Norfolk Acquisition' means the acquisition by one or more of
-------------------
Triton PCS License Company, L.L.C., the Borrower or any direct or
indirect subsidiary thereof (the 'Norfolk Entities') of substantially
----------------
all the assets of AW that are used in or useful to the
<PAGE>
5
operation of the PCS system operated in the Norfolk, Virginia BTA,
including 20 MHz of the 30 MHz of PCS licenses owned by AW covering
such market, for cash consideration of $95,000,000 and the issuance of
$10,000,000 of Series D Preferred Stock in accordance with the terms
of an asset purchase agreement (the 'Norfolk Asset Purchase
----------------------
Agreement') in form and substance reasonably satisfactory to the
---------
Lenders to be entered into between Holdings and AW.";
(xiii) inserting the phrase ", landlords'" after the word
"repairmen's" in clause (b) of the definition of "Permitted Encumbrances"
and deleting the words "Section 5.04" in clauses (a) and (b) of such
definition and substituting in lieu thereof the words "Section 5.05";
(xiv) inserting after the definition of "Pops" and before the
definition of "Prepayment Event" the following definition:
"'Preferred Stock Agreement' means the securities purchase
-------------------------
agreement or agreements (or an amendment or amendments to the
Securities Purchase Agreement entered into for such purpose) to be
entered into by some or all of the current equity investors in
Holdings, relating to (i) the contribution by AW of the Additional AW
Licenses in exchange for the Exchanged Licenses, 21,249,019 shares of
Series A Preferred Stock and 10,624,509 shares of Series D Preferred
Stock and (ii) the purchase by some or all of the current equity
investors in Holdings of (a) $25,000,000 of equity securities of
Holdings for the purpose of funding a portion of the buildout of the
Network in the geographic areas covered by the Additional Licenses,
(b) $35,000,000 of equity securities of Holdings for the purpose of
funding a portion of the purchase price of the Myrtle Acquisition and
(c) $30,000,000 of equity securities of Holdings for the purpose of
funding a portion of the purchase price of the Norfolk Acquisition, in
each case in form and substance reasonably satisfactory to the
Lenders.";
(xv) deleting clause (c) of the definition of "Prepayment Event" in
its entirety and substituting in lieu thereof the following:
"(c) the issuance by Holdings, the Borrower or any Subsidiary
of any equity securities for cash, or the receipt by Holdings, the
Borrower or any Subsidiary of any capital contribution in cash, other
than, in the
<PAGE>
6
case of the Borrower or any Subsidiary, any such issuance of equity
securities to, or receipt of any such capital contribution from, the
Borrower or a Subsidiary; provided that no such issuance or receipt
--------
shall constitute a Prepayment Event if (i) such equity is part of the
initial $140,000,000 cash contribution and commitment of capital to
Holdings pursuant to the Securities Purchase Agreement or the
immediate contribution by Holdings of such capital to the Borrower,
(ii) such equity is part of the $25,000,000 cash contribution to
Holdings pursuant to the Preferred Stock Agreement (without giving
effect to any amendments to or waivers of the Preferred Stock
Agreement (other than such amendments or waivers that are not adverse
in a material respect to the interests of the Lenders)) and the AW
Pops Acquisition is consummated substantially contemporaneously with
such issuance or receipt; (iii) such equity is part of the $35,000,000
contribution to Holdings pursuant to the Preferred Stock Agreement
(without giving effect to any amendments to or waivers of the
Preferred Stock Agreement (other than such amendments or waivers that
are not adverse in a material respect to the interests of the
Lenders)) and the Myrtle Acquisition is consummated substantially
contemporaneously with such issuance or receipt; (iv) such equity is
part of the $30,000,000 contribution to Holdings pursuant to the
Preferred Stock Agreement (without giving effect to any amendments to
or waivers of the Preferred Stock Agreement (other than such
amendments or waivers that are not adverse in a material respect to
the interests of the Lenders)) and the Norfolk Acquisition is
consummated substantially contemporaneously with such issuance or
receipt; (v) such equity is part of cash contributions in an aggregate
amount not to exceed $50,000,000 to be used by Holdings to capitalize
Unrestricted Subsidiaries in accordance with clause (vii) of the
definition of "Unrestricted Subsidiary" or (vi) after giving effect to
any such issuance or receipt, (x) Senior Leverage would be less than
5:1 and (y) the Borrower would be in Pro Forma Compliance; or";
(xvi) inserting the phrase "(other than Indebtedness of any
Unrestricted Subsidiary)" after the word "Holdings" in the definition of
"Total Debt"; and
(xvii) inserting after the definition of "UCC" and before the
definition of "Wholly Owned Subsidiary" the following definition:
<PAGE>
7
"'Unrestricted Subsidiary' means any subsidiary of Holdings or
-----------------------
any other direct or indirect investment by Holdings in the Capital
Stock of any other person (other than the Borrower) so long as at the
time such subsidiary is acquired or created or such investment is made
(i) no Default or Event of Default shall have occurred and be
continuing or would result therefrom, (ii) Holdings shall have
notified the Administrative Agent of its acquisition or creation of
such subsidiary or its making of such investment and its ownership
interest therein and its designation thereof as an Unrestricted
Subsidiary concurrently with such acquisition, creation or investment
and the intended purposes of such subsidiary or investment, (iii) all
transactions related thereto shall be consummated in accordance with
applicable laws, (iv) Holdings and the Borrower shall be in Pro Forma
Compliance, (v) none of Holdings, the Borrower or any Subsidiary shall
have any contingent liability in respect thereof (other than any
contingent tax liabilities in respect of which there shall exist a tax
sharing agreement with the other owners of such Unrestricted
Subsidiary providing for an allocation of tax liabilities and benefits
customary in similar circumstances), (vi) any management or service
provided by Holdings, the Borrower or any Subsidiary to such
subsidiary or investment shall be provided in consideration of cash
remuneration in an amount not less than could have been obtained from
a third party on an arms' length basis and (vii) such subsidiary or
investment shall be capitalized solely from (A) contributions to the
capital of Holdings in an aggregate amount not to exceed $50,000,000
to be contributed substantially contemporaneously by Holdings to such
Unrestricted Subsidiary, (B) investments by persons other than
Holdings, the Borrower or any Subsidiary and (C) the proceeds of
Indebtedness of persons other than Holdings, the Borrower or any
Subsidiary."
(b) Article II of the Credit Agreement is hereby amended by:
(i) inserting at the end of Section 2.10 the following:
"(d) The Borrower will pay to each Issuing Bank a fronting fee,
which shall accrue at the rate or rates per annum separately agreed
upon between the Borrower and such Issuing Bank on the average daily
amount of such Issuing Bank's LC Exposure (excluding any portion
thereof attributable to unreimbursed LC Disbursements),
<PAGE>
8
as well as such Issuing Bank's standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or
any processing of drawings thereunder.";
(ii) deleting Section 2.13 in its entirety and inserting in lieu
thereof the following:
"SECTION 2.13. Increased Costs. (a) If any Change in Law shall:
----------------
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Lender (except
any such reserve requirement reflected in the Adjusted LIBO Rate)
or any Issuing Bank; or
(ii) impose on any Lender or any Issuing Bank or the London
interbank market any other condition (other than a condition
relating to a Tax) affecting this Agreement or Eurodollar Loans
made by such Lender;
and the result of any of the foregoing shall be to increase the cost
to such Lender of making or maintaining any Eurodollar Loan (or of
maintaining its obligation to make any such Loan) or to increase the
cost to such Issuing Bank of issuing or maintaining any Letter of
Credit or to reduce the amount of any sum received or receivable by
such Lender or such Issuing Bank hereunder (whether of principal,
interest or otherwise), then the Borrower will pay to such Lender or
such Issuing Bank such additional amount or amounts as will compensate
such Lender or such Issuing Bank for such additional costs incurred or
reduction suffered.
(b) If any Lender or Issuing Bank determines that any Change in
Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's or Issuing Bank's capital
or on the capital of such Lender's or Issuing Bank's holding company,
if any, as a consequence of this Agreement or the Loans made by such
Lender or the Letters of Credit issued by such Issuing Bank, to a
level below that which such Lender or Issuing Bank or such Lender's or
Issuing Bank's holding company could have achieved but for such Change
in Law (taking into consideration such Lender's or Issuing Bank's
policies and the policies of such Lender's or Issuing Bank's holding
company with
<PAGE>
9
respect to capital adequacy), then from time to time the Borrower will
pay to such Lender or Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or Issuing
Bank or such Lender's or Issuing Bank's holding company for any such
reduction suffered.
(c) A certificate of a Lender or Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or Issuing Bank
or its holding company, as the case may be, as specified in paragraph
(a) or (b) of this Section shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay such
Lender or Issuing Bank the amount shown as due on any such certificate
within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or Issuing Bank
to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender's or Issuing Bank's right to demand such
compensation; provided that the Borrower shall not be required to
--------
compensate a Lender or Issuing Bank pursuant to this Section for any
increased costs or reductions incurred more than 270 days prior to the
date that such Lender or Issuing Bank, as the case may be, notifies
the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's or Issuing Bank's intention to
claim compensation therefor; provided further that, if the Change in
----------------
Law giving rise to such increased costs or reductions is retroactive,
then the 270-day period referred to above shall be extended to include
the period of retroactive effect thereof.";
(iii) inserting at the end of Article II the following:
"SECTION 2.18. Letters of Credit. Each Issuing Bank may issue,
-----------------
amend, renew or extend Letters of Credit for the account of the
Borrower, at any time and from time to time prior to the Revolving
Maturity Date, in a form and pursuant to documentation reasonably
acceptable to the Administrative Agent and such Issuing Bank, upon
the request of the Borrower submitted in acco rdance with such
Issuing Bank's standard procedures; provided that, after giving
--------
effect to such issuance, amendment, renewal or extension, the LC
Exposure shall not exceed $3,000,000; and, provided further, that such
----------------
Issuing Bank shall promptly notify
<PAGE>
10
the Administrative Agent of such issuance, amendment, renewal or
extension."
(c) Section 3.12(a) of the Credit Agreement is hereby amended by
inserting the phrase "or indirectly" after the word "directly" in the
second sentence thereof.
(d) Section 4.01 of the Credit Agreement is hereby amended by:
(i) deleting the phrase "within 30 days of the Effective Date" in
paragraph (p) thereof and substituting in lieu thereof the phrase "by April
15, 1998";
(ii) deleting the proviso in paragraph (r) thereof and inserting in
lieu thereof the following:
"provided, however, that the Consent to Assignment with respect to AW
-------- -------
shall be set forth in the Network License Agreement and, with respect
to the Network License Agreement, such Consent to Assignment will not
permit the Administrative Agent to assign the Network License
Agreement to any person other than the Lenders without first obtaining
AW's consent."
(e) Section 5.01 of the Credit Agreement is hereby amended by:
(i) inserting the phrase "(excluding any Unrestricted Subsidiaries)"
after the word "Holdings" in paragraph (g) thereof;
(ii) deleting "and" at the end of paragraph (j) thereof; and
(iii) deleting paragraph (k) thereof in its entirety and inserting in
lieu thereof the following:
"(k) concurrently with any delivery of financial statements under
clause (a) or (b) above, a balance sheet and related statements of
operations, stockholders' equity and cash flows for each Unrestricted
Subsidiary for the applicable period (each of which may be unaudited);
and
(l) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of Holdings, the Borrower or any Subsidiary, or compliance
with the terms of any Loan Document, or such consolidating
<PAGE>
11
financial statements, or such financial statements showing the results
of operations of any Unrestricted Subsidiary, as the Administrative
Agent or any Lender may reasonably request."
(f) Section 5.03(a) of the Credit Agreement is hereby amended by
deleting the word "corporate" where it appears therein and inserting in
lieu thereof the word "legal".
(g) Section 5.13(b) of the Credit Agreement is hereby amended by:
(i) inserting the phrase "(other than assets held by Holdings in
or through an Unrestricted Subsidiary)" after the phrase "Loan Party"
in the third line thereof; and
(ii) inserting the phrase "or with respect to the leasehold in
375 Technology Drive, Malvern Pennsylvania, Triton Management
Company Inc. ('Triton Management')" after the word "Subsidiary"
-----------------
at the end of clause (ii) thereof.
(h) Section 5.16 of the Credit Agreement is hereby amended to read in
its entirety:
"SECTION 5.16. Business of Holdings; Immediate Contributions to the
----------------------------------------------------
Borrower. (a) Holdings shall not engage in any business other than
---------
holding the Capital Stock of the Borrower and any Unrestricted Subsidiary
and issuing Indebtedness permitted by Section 6.01.
(b) Holdings shall cause the management, business and affairs of each
of Holdings, the Subsidiaries and the Unrestricted Subsidiaries to be
conducted in such a manner so that each of Holdings and the Unrestricted
Subsidiaries will be perceived as a legal entity separate and distinct
from one another and the Subsidiaries.
(c) Holdings shall immediately contribute to the Borrower upon
receipt (i) any cash capital contributions (other than those permitted to
be contributed to an Unrestricted Subsidiary pursuant to clause (vii) of
the definition of "Unrestricted Subsidiary"), (ii) any cash dividends or
any other cash distributions paid or made by, and received from, any
Unrestricted Subsidiary and (iii) the proceeds of the issuance of any
Indebtedness."
(i) Section 5.17 of the Credit Agreement is hereby amended by
deleting the phrase "Within 30 days of the
<PAGE>
12
Closing Date," and inserting in lieu thereof the phrase "By April 15,
1998,".
(j) Section 6.01(a) of the Credit Agreement is hereby amended by:
(i) deleting clause (ii) thereof in its entirety and substituting in
lieu thereof the following:
"(ii)(A) Subordinated Debt issued on terms reasonably
satisfactory to the Lenders with an aggregate initial public offering
price or purchase price not to exceed $150,000,000; provided that the
proceeds of such Subordinated Debt shall be used by the Borrower
solely to fund the build-out of the Network;
(B) Subordinated Debt issued in connection with the AW Pops
Acquisition on terms reasonably satisfactory to the Lenders with an
aggregate initial public offering price or purchase price not to
exceed $75,000,000; provided that either (I) the AW Pops Acquisition
is consummated by the AW Pops Entities by December 31, 1998, and the
proceeds of such Subordinated Debt are used by the AW Pops Entities
solely to fund the build-out of a mobile wireless telecommunications
network utilizing TDMA IS-136 technology or its successor serving the
MTA's and BTA's acquired in the AW Pops Acquisition or (II) if the AW
Pops Acquisition is not consummated by the AW Pops Entities by
December 31, 1998, the Borrower shall prepay Term Borrowings and
permanently reduce Revolving Commitments (such prepayments and
reductions to be applied ratably among the Tranche A Term Loans, the
Tranche B Term Loans and the Revolving Commitments based on their then
respective amounts) in an aggregate amount equal to the proceeds of
any Subordinated Debt permitted by this clause (B);
(C) Subordinated Debt issued in connection with the Myrtle
Acquisition on terms reasonably satisfactory to the Lenders with an
aggregate initial public offering price or purchase price not to
exceed $125,000,000; provided that the proceeds of such Subordinated
Debt shall be used by October 31, 1998 by the Myrtle Entities solely
to finance a portion of the Myrtle Acquisition (including related fees
and expenses) or, if not so used by such date, shall be used to prepay
Term Borrowings and permanently reduce Revolving Commitments (such
prepayments and reductions to be applied ratably among the Tranche A
Term Loans,
<PAGE>
13
the Tranche B Term Loans and the Revolving Commitments based on their
respective amounts);
(D) Subordinated Debt issued in connection with the Norfolk
Acquisition on terms reasonably satisfactory to the Lenders with an
aggregate initial public offering or purchase price not to exceed
$75,000,000; provided that the proceeds of such Subordinated Debt
shall be used by December 31, 1998 by the Norfolk Entities solely to
finance a portion of the Norfolk Acquisition (including related fees
and expenses) or, if not so used by such date, shall be used to prepay
Term Borrowings and permanently reduce Revolving Commitments (such
prepayments and reductions to be applied ratably among the Tranche A
Term Loans, the Tranche B Term Loans and the Revolving Commitments
based on their respective amounts); and
(E) Subordinated Debt issued on terms reasonably satisfactory to
the Lenders with an aggregate initial public offering price or
purchase price not to exceed $25,000,000; provided that the proceeds
of such Subordinated Debt are used to pay fees and expenses incurred
in connection with the issuance and sale of the Subordinated Debt
permitted by clause (ii) of Section 6.01(a) or incurred in connection
with the AW Pops Acquisition, the Myrtle Acquisition or the Norfolk
Acquisition, or for other general corporate purposes;";
The Subordinated Debt permitted by clauses (A), (B), (C), (D)
and (E) of this Section 6.01(a)(ii) may be issued in any number of
issuances.
(ii) deleting the phrase "within 30 days of the Closing Date" in
clause (v) thereof and substituting in lieu thereof the phrase "by April
15, 1998"; and
(iii) deleting the phrase "and (x)" at the end of clause (ix) thereof
and inserting in lieu thereof the following:
"(x) the lease by Triton Management of the property located at
375 Technology Drive, Malvern, Pennsylvania; and
(xi)".
(k) Section 6.01(b) of the Credit Agreement is hereby amended by
inserting the phrase "and the Preferred Stock Agreement" after the phrase
"Securities Purchase Agreement".
<PAGE>
14
(l) Section 6.05 of the Credit Agreement is hereby amended by deleting
"and" at the end of clause (e) thereof and deleting "." and adding the
following at the end of clause (f) thereof:
"; and
(g)(i) the acquisition of the Additional AW Licenses contemplated by
the Preferred Stock Agreement (without giving effect to any amendments to
or waivers of the Preferred Stock Agreement (other than such amendments or
waivers that are not adverse in a material respect to the interests of the
Lenders)), (ii) the purchase of assets contemplated by the Myrtle Asset
Purchase Agreement (without giving effect to any amendments to or waivers
of the Myrtle Asset Purchase Agreement (other than such amendments or
waivers that are not adverse in a material respect to the interests of the
Lenders)) and (iii) the purchase of assets contemplated by the Norfolk
Asset Purchase Agreement (without giving effect to any amendments to or
waivers of the Norfolk Asset Purchase Agreement (other than such amendments
or waivers that are not adverse in a material respect to the interests of
the Lenders))."
(m) Section 6.06 of the Credit Agreement is hereby amended by:
(i) inserting after the phrase "otherwise dispose of any asset" the
phrase "(other than assets of Holdings constituting an Unrestricted
Subsidiary)"; and
(ii) deleting "and" at the end of clause (b) thereof, deleting the
proviso at the end of Section 6.06 in its entirety and substituting in lieu
thereof the following:
"and
(d) the sale to AW of the Exchanged Licenses contemplated by
the Preferred Stock Agreement (without giving effect to any
amendments to or waivers of the Preferred Stock Agreement that
are not reasonably satisfactory to the Lenders);
provided that all sales, transfers, leases and other dispositions
--------
permitted hereby (other than those permitted by clause (d) above)
shall be made for fair value and solely for cash consideration."
<PAGE>
15
(n) Section 6.09 of the Credit Agreement is hereby amended by
deleting the phrase "and (c)" and inserting in lieu thereof the phrase ",
(c) the transactions contemplated by the Preferred Stock Agreement and the
Norfolk Asset Purchase Agreement and (d)".
(o) Section 6.12 of the Credit Agreement is hereby amended and
restated in its entirety as follows:
"SECTION 6.12. Financial Covenants. (a) Senior Debt to Total Capital.
-------------------- -----------------------------
Holdings and the Borrower will not permit the ratio of Senior Debt to Total
Capital in each case on any day on which a Borrowing occurs and the last
day of each fiscal quarter to exceed .50 to 1; provided, however, that if
-------- -------
(i) all Unfunded Commitments (as defined in the Securities Purchase
Agreement) have been contributed in full in cash to the Borrower and (ii)
Covered Pops meet or exceed 60% of the aggregate number of Pops within the
Licensed Territory (as defined in the Network License Agreement) then the
ratio of Senior Debt to Total Capital may exceed .50 to 1 but shall not
exceed .55 to 1.
(b) Total Debt to Total Capital. Holdings and the Borrower will not
----------------------------
permit the ratio of Total Debt to Total Capital in each case on any day on
which a Borrowing occurs and the last day of each fiscal quarter to exceed
(i) on or prior to March 31, 2005, .75 to 1 and (ii) thereafter, .70 to 1.
(c) Covered Pops. The Borrower will not permit Covered Pops as a
-------------
percentage of the total number of Pops in the BTAs and MTAs listed on
Schedule 3.14 on or after any date set forth below to be less than the
percentage set forth opposite such date.
<TABLE>
<CAPTION>
Minimum Covered
---------------
Date Pops
---- ----
<S> <C>
June 30, 1999 40%
June 30, 2000 60%
June 30, 2001 75%
June 30, 2002 and thereafter 80%
</TABLE>
(d) Subscribers. The Borrower will not permit the number of
------------
Subscribers on or after any date set forth below to be less than the number
of Subscribers set forth opposite such date:
<PAGE>
16
<TABLE>
<CAPTION>
Minimum
Date Subscribers
---- -----------
<S> <C>
December 31, 1999 155,000
June 30, 2000 210,000
December 31, 2000 295,000
June 30, 2001 345,000
December 31, 2001 and
thereafter 425,000
</TABLE>
(e) Aggregate Service Revenue. The Borrower will not permit Aggregate
--------------------------
Service Revenue for any period of four consecutive fiscal quarters ending
on or after any date set forth below to be less than Aggregate Service
Revenue set forth opposite such date.
<TABLE>
<CAPTION>
Minimum Aggregate
-----------------
Date Service Revenue
---- ---------------
<S> <C>
June 30, 1999 $ 15,000,000
December 31, 1999 $ 35,000,000
June 30, 2000 $ 65,000,000
December 31, 2000 $ 95,000,000
June 30, 2001 $125,000,000
December 31, 2001 $155,000,000
June 30, 2002 $180,000,000
December 31, 2002 and
thereafter $205,000,000
</TABLE>
(f) Total Debt to Annualized EBITDA. Holdings and the Borrower will
--------------------------------
not permit the ratio of (i) Total Debt outstanding on any day from and
including (A) the last day of any fiscal quarter set forth below through
(B) the day immediately preceding the last day of the immediately following
fiscal quarter to (ii) Annualized EBITDA for the period ending on the date
referred to in clause (i)(A) above to exceed the ratio set forth opposite
such date:
<TABLE>
<CAPTION>
Fiscal Quarter
Ending On Ratio
----------- -----
<S> <C>
December 31, 2001 19.0 to 1
March 31, 2002 17.0 to 1
June 30, 2002 14.0 to 1
September 30, 2002 11.0 to 1
December 31, 2002 8.0 to 1
March 31, 2003 8.0 to 1
June 30, 2003 8.0 to 1
September 30, 2003 6.0 to 1
December 31, 2003 6.0 to 1
March 31, 2004 6.0 to 1
June 30, 2004 6.0 to 1
September 30, 2004 and thereafter 4.5 to 1
</TABLE>
<PAGE>
17
(g) Total Debt to Annualized Adjusted EBITDA. Holdings and the
-----------------------------------------
Borrower will not permit the ratio of (i) Total Debt outstanding on any day
from and including (A) the last day of any fiscal quarter set forth below
through (B) the day immediately preceding the last day of the immediately
following fiscal quarter to (ii) Annualized Adjusted EBITDA for the period
ending on the date referred to in clause (i)(A) above to exceed the ratio
set forth opposite such date:
<TABLE>
<CAPTION>
Fiscal Quarter
Ending On Ratio
--------- -------
<S> <C>
September 30, 2000 23.0 to 1
December 31, 2000 17.0 to 1
March 31, 2001 14.0 to 1
June 30, 2001 12.0 to 1
September 30, 2001 10.0 to 1
December 31, 2001 8.0 to 1
March 31, 2002 and thereafter 6.0 to 1
</TABLE>
(h) Senior Debt to Annualized EBITDA. Holdings and the Borrower will
---------------------------------
not permit the ratio of (i) Senior Debt outstanding on any day from and
including (A) the last day of any fiscal quarter set forth below through
(B) the day immediately preceding the last day of the immediately following
fiscal quarter to (ii) Annualized EBITDA for the period ending on the date
referred to in clause (i)(A) above to exceed the ratio set forth opposite
such date:
<TABLE>
<CAPTION>
Fiscal Quarter
Ending On Ratio
------------- ---------
<S> <C>
September 30, 2001 9.0 to 1
December 31, 2001 7.0 to 1
March 31, 2002 7.0 to 1
June 30, 2002 6.0 to 1
September 30, 2002 5.0 to 1
December 31, 2002 4.0 to 1
March 31, 2002 4.0 to 1
June 30, 2003 4.0 to 1
September 30, 2003 3.0 to 1
December 31, 2003 and thereafter 3.0 to 1
</TABLE>
(i) Senior Debt to Annualized Adjusted EBITDA. Holdings and the
------------------------------------------
Borrower will not permit the ratio of (i) Senior Debt outstanding on any
day from and including (A) the last day of any fiscal quarter set forth
below through (B) the day immediately preceding the last day of the
immediately following fiscal quarter to (ii)
<PAGE>
18
Annualized Adjusted EBITDA for the period ending on the date referred to in
clause (i)(A) above to exceed the ratio set forth opposite such date:
<TABLE>
<CAPTION>
Fiscal Quarter
Ending On Ratio
------------ ---------
<S> <C>
March 31, 2000 14.0 to 1
June 30, 2000 8.0 to 1
September 30, 2000 8.0 to 1
December 31, 2000 7.0 to 1
March 31, 2001 6.0 to 1
June 30, 2001 5.0 to 1
September 30, 2001 5.0 to 1
December 31, 2001 4.0 to 1
March 31, 2002 and thereafter 4.0 to 1
</TABLE>
(j) Interest Coverage Ratio. Holdings and the Borrower will not
------------------------
permit the ratio of (i) Consolidated EBITDA for any period of four
consecutive fiscal quarters ending on any date or during any "Test Period"
set forth below to (ii) Cash Interest Expense for such period to be less
than the ratio set forth opposite such date or Test Period:
<TABLE>
<CAPTION>
Date or Test Period Ratio
---------------------- ----------
<S> <C>
September 30, 2002 1.25 to 1
December 31, 2002 -
March 31, 2004 1.50 to 1
June 30, 2004 - June 30, 2005 2.00 to 1
September 30, 2005 and thereafter 2.25 to 1
</TABLE>
(k) Fixed Charges Ratio. Holdings and the Borrower will not permit
--------------------
the ratio of (i) Consolidated EBITDA for any period of four consecutive
fiscal quarters ending during any "Test Period" set forth below to Fixed
Charges for such period to be less than the ratio set forth opposite such
Test Period.
<TABLE>
<CAPTION>
Test Period Ratio
------------ --------
<S> <C>
September 30, 2002 -
June 30, 2003 1.05 to 1
September 30, 2003 and thereafter 1.10 to 1
</TABLE>
<PAGE>
19
(l) Capital Expenditures. The Borrower will not permit Capital
---------------------
Expenditures of the Borrower and its Subsidiaries for any period set forth
below to exceed the sum set forth opposite such period:
<TABLE>
<CAPTION>
Period Amount
------- ---------
<S> <C>
Date of formation through $275,000,000
December 31, 1998
January 1, 1999 - December 31, $275,000,000
1999
January 1, 2000 - December 31, $ 75,000,000
2000
January 1, 2001 - December 31, $ 15,000,000
2001
January 1, 2002 - December 31, $ 30,000,000
2002
</TABLE>
; provided that any permitted amount which is not expended in any of the
--------
periods specified above may be carried over for expenditure in the
immediately subsequent period."
(p) Section 6.13(a) of the Credit Agreement is hereby amended by
inserting the phrase "; provided that a License Subsidiary may hold an
--------
asset which is to be immediately transferred in accordance with Section
5.13(b) hereof" after the word "Licenses".
3. Consent. The Lenders hereby consent to (a) the release by
--------
the Collateral Agent under the Security Documents of the Collateral necessary
to consummate the AW Pops Acquisition in accordance with the terms of the
Preferred Stock Agreement (without giving effect to any amendments to or
waivers of the Preferred Stock Agreement (other than such amendments or
waivers that are not adverse in a material respect to the interests of the
Lenders)), (b) the amendment of the Guarantee Agreement and the Security
Documents by the Borrower, the Administrative Agent and the Collateral Agent
(i) to include the Issuing Banks in the definition of "Secured Parties" and
(ii) to include the LC Obligations in the definition of "Obligations" and (c)
the amendment of the Pledge Agreement to exclude from the definition of
"Pledged Interests" thereunder any equity interests in Unrestricted
Subsidiaries held by Holdings.
4. Waiver. The Lenders hereby expressly waive any rights or
-------
remedies in connection with any breach of or failure to comply with any
provision of the Credit Agreement as in effect on the Effective Date to the
extent, and only to the extent, such provision is amended pursuant to Section
2 hereof.
<PAGE>
20
5. No Other Amendments; Confirmation. Except as expressly amended,
----------------------------------
waived, modified and supplemented hereby, the provisions of the Credit
Agreement are and shall remain in full force and effect.
6. Representations and Warranties. Each of Borrower and Holdings
------------------------------
hereby represents and warrants to the Administrative Agent and the Lenders
as of the date hereof:
(a) No Default or Event of Default has occurred and is continuing.
(b) The execution, delivery and performance by each of Borrower and
Holdings of this Amendment have been duly authorized by all necessary
corporate and other action and do not and will not require any registration
with, consent or approval of, notice to or action by, any person (including
any governmental agency) in order to be effective and enforceable. The
Credit Agreement as amended by this Amendment constitutes the legal, valid
and binding obligation of each of Borrower and Holdings, enforceable
against each in accordance with its terms, subject only to the operation of
the Bankruptcy Code and other similar statutes for the benefit of debtors
generally and to the application of general equitable principles.
(c) All representations and warranties of the Borrower and Holdings
contained in the Credit Agreement (other than representations or warranties
expressly made only on and as of the Effective Date) are true and correct
as of the date hereof.
7. Effectiveness. This Amendment shall become effective only
--------------
upon the satisfaction in full of the following conditions precedent:
(a) The Administrative Agent shall have received counterparts hereof,
duly executed and delivered by the Borrower, Holdings and the Requisite
Lenders;
(b) The Administrative Agent shall have received such opinions and
certificates from the Borrower and Holdings and their counsel as it may
reasonably request in form reasonably satisfactory to its counsel;
(c) The Administrative Agent shall have received each of the following
from the Borrower and Holdings:
<PAGE>
21
(i) A copy of resolutions passed by the board of directors of the
Borrower and Holdings, certified by the Secretary or an Assistant Secretary
of the Borrower and Holdings, as the case may be, as being in full force
and effect on the date hereof, authorizing the execution, delivery and
performance of this Amendment;
(ii) A certificate as to the name and signature of each officer of the
Borrower and Holdings authorized to sign this Amendment;
(iii) A certificate of the chief financial officer of the Borrower to
the effect that (x) all representations and warranties contained in this
Amendment are true and correct as of the date hereof, (y) since February 4,
1998, there has been no material adverse change in the business, assets,
operations, prospects, condition (financial or otherwise) of the Borrower
and its Subsidiaries taken as a whole, and (z) that no event has occurred
and is continuing which, under the terms hereof, is an Event of Default or
would, with the lapse of time or notice or both, become an Event of
Default; and
(d) The Borrower shall have paid to the Administrative Agent on
behalf of the Lenders that duly execute and deliver counterparts hereof on
or prior to April 24, 1998 a fee equal to 0.10 percent of the aggregate
amount of the outstanding Loans and Commitments under the Credit Agreement.
8. Expenses. The Borrower agrees to reimburse the
---------
Administrative Agent for its out-of-pocket expenses in connection with this
Amendment, including the reasonable fees, charges and disbursements of
Cravath, Swaine & Moore, counsel for the Administrative Agent.
9. Governing Law; Counterparts. (a) This Amendment and the
----------------------------
rights and obligations of the parties hereto shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New
York.
(b) This Amendment may be executed by one or more of the parties
to this Amendment on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
<PAGE>
22
This Amendment may be delivered by facsimile transmission of the relevant
signature pages hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered by their respective proper and duly
authorized officers as of the day and year first above written.
TRITON PCS, INC.
by
/s/ Patricia Gallagher
-----------------------
Name: Patricia Gallagher
Title: Vice President of Finance
and Treasurer
TRITON PCS HOLDINGS, INC.,
by
/s/ Patricia Gallagher
-----------------------
Name: Patricia Gallagher
Title: Vice President of
Finance and Treasurer
THE CHASE MANHATTAN BANK, individually and as
Administrative Agent,
by
/s/ Tracey A. Navin
--------------------
Name: Traceyn A. Navin
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
by
/s/ R. Blake Witherington
-------------------------
Name: R. Blake Witherington
Title: Vice President
<PAGE>
23
TORONTO DOMINION BANK (TEXAS),
by
/s/ Debbie A. Greene
--------------------------------
Name: Debbie A. Greene
Title: Vice President
BANKBOSTON, N.A.,
by
/s/ Shepard D.Rainie
--------------------------------
Name: Shepard D. Rainie
Title: Managing Director
BANK OF HAWAII,
by
/s/ Robert L. Wilson
--------------------------------
Name: Robert L. Wilson
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY,
by
/s/ Glenn B. Eckert
--------------------------------
Name: Glenn B. Eckert
Title: Vice President
BARCLAYS BANK PLC,
by
/s/ Les Bek
--------------------------------
Name: Les Bek
Title: Director
<PAGE>
24
BAYERISCHE HYPOTHEKEN- UND WECHSEL-BANK AG, NEW
YORK BRANCH,
by
/s/ David Rockwell
--------------------------------
Name: David Rockwell
Title: Senior Vice President
by
/s/ Christian Walter
-------------------------------
Name: Christian Walter
Title: Vice President
BHF BANK AKTIENGESELLSCHAFT,
by
/s/ Heidimarie Skor
---------------------
Name: Heidimarie Skor
Title: Vice President
by
/s/ Stephen B. Shelton
--------------------------------
Name: Stephen B. Shelton
Title: Vice President
FIRST UNION NATIONAL BANK,
by
/s/ Mark M. Harden
--------------------------------
Name: Mark M. Harden
Title: Senior Vice President
THE FUJI BANK, LIMITED
New York Branch,
by
/s/ Teiji Teramoto
--------------------------------
Name: Teiji Teramoto
Title: Vice President and
Manager
<PAGE>
25
GENERAL ELECTRIC CAPITAL CORPORATION,
by
/s/ Edward Smith Christie
-----------------------------------
Name: Edward Smith Christie
Title: Manager-Operations
ING HIGH INCOME PRINCIPAL PRESERVATION FUND
HOLDINGS, LDC, by ING CAPITAL ADVISORS, INC., as
Investment Advisor,
by
/s/ Michael D. Hatley
-----------------------------------
Name: Michael D. Hatley
Title: Vice President &
Portfolio Manager
LEHMAN COMMERCIAL PAPER, INC.,
by
/s/ Michele Swanson
-----------------------------------
Name: Michele Swanson
Title: Authorized Signatory
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.,
by
/s/ Lynn Callicott Baranski
-----------------------------------
Name: Lynn Callicott Baranski
Title: Authorized Signatory
UNION BANK OF CALIFORNIA, N.A.,
by
/s/ J. Kevin Sampson
-----------------------------------
Name: J. Kevin Sampson
Title: Vice President
<PAGE>
26
VAN KAMPEN AMERICIAN CAPITAL PRIME
RATE INCOME TRUST,
by
/s/ Jeffrey W. Maillet
--------------------------------------
Name: Jeffrey W. Maillet
Title: Senipr Vice President
& Director
<PAGE>
EXHIBIT 10.3
================================================================================
SECURITIES PURCHASE AGREEMENT
by and among
AT&T WIRELESS PCS INC.,
CASH EQUITY INVESTORS,
MANAGEMENT STOCKHOLDERS
and
TRITON PCS, INC.
Dated as of October 8, 1997
================================================================================
<PAGE>
SECURITIES PURCHASE AGREEMENT
-----------------------------
SECURITIES PURCHASE AGREEMENT, dated as of October 8, 1997, by and
among AT&T WIRELESS PCS INC., a Delaware corporation ("AT&T PCS"), the investors
--------
referred to on Schedule I (individually, an "Initial Cash Equity Investor" and,
----------------------------
collectively, the "Initial Cash Equity Investors"), the individuals listed on
-----------------------------
Schedule II (individually, a "Management Stockholder" and, collectively, the
----------------------
"Management Stockholders") and Triton PCS, Inc., a Delaware corporation (the
-----------------------
"Company"). AT&T PCS and the Cash Equity Investors are sometimes referred to
- --------
herein, individually, as a "Purchaser" and, collectively, as the "Purchasers."
--------- ----------
WHEREAS, AT&T PCS has been granted the PCS licenses described on
Schedule III (the "PCS Licenses");
------------
WHEREAS, the Management Stockholders organized the Company by the
filing of a Certificate of Incorporation (the "Original Certificate"), and as of
--------------------
the date hereof the Management Stockholders are the record and beneficial owners
of all of the issued and outstanding capital stock of the Company;
WHEREAS, the Management Stockholders have extensive experience and
expertise in the wireless telecommunications industry and have organized the
Company in order to construct and operate a mobile wireless telecommunications
system in the territory (the "Company Territory") described on Schedule IV;
-----------------
WHEREAS, each of the Purchasers wishes to purchase securities of the
Company in consideration of contributions of cash and/or other property to the
capital of the Company, and the Company wishes to accept such contributions and
issue securities to each of the Purchasers, all on the terms and subject to the
conditions herein set forth; and
WHEREAS, the parties wish to amend and restate the Original
Certificate in its entirety in order to reflect, among other things, the
authorization of the securities being issued hereunder, and the parties wish to
enter into certain agreements relating to the parties' rights and obligations in
connection with the Company;
NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the parties agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
-----------
As used herein, the following terms have the following meanings
(unless indicated otherwise, all Section and Article references are to Sections
and Articles in this Agreement, and all Schedule and Exhibit references are to
Schedules and Exhibits to this Agreement):
"Additional Purchaser" has the meaning set forth in Section 10.6.
--------------------
"Affiliate" means, with respect to any Person, any other Person that
---------
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with that Person. For purposes of this
definition, "control" (including the terms "controlling" and "controlled") means
------- ----------- ----------
the power to direct or cause the direction of the management and policies of a
Person, directly or indirectly, whether through the ownership of securities or
partnership or other ownership interests, by contract or otherwise.
"Aggregate Commitment" means, with respect to each Cash Equity
--------------------
Investor, the amount set forth opposite its name on Schedule I under the heading
"Aggregate Commitment."
"AT&T Party" means AT&T PCS and each Affiliate of AT&T PCS that is a
----------
party to any of the Related Agreements.
"AT&T PCS" has the meaning set forth in the preamble.
--------
"AT&T PCS Contributed Licenses" has the meaning set forth in Section
-----------------------------
2.1.
"AT&T PCS Retained Licenses" has the meaning set forth in Section 2.1.
--------------------------
"Bridge Notes" means promissory notes of Triton Communications LLC in
------------
favor of certain Cash Equity Investors in the aggregate principal amount of $1.5
million.
"Cash Equity Investors" means the Initial Cash Equity Investors and,
---------------------
from and after the date it executes a counterpart of this Agreement in
accordance with the terms of Section 10.6, any Additional Purchaser.
-2-
<PAGE>
"Cash Equity Investor Contributions" means the Aggregate Commitments,
----------------------------------
the Initial Capital Contributions and the additional cash contributions in
respect of the Unfunded Commitments, in each case of the Cash Equity Investors.
"Claim" has the meaning set forth in Section 8.6.
-----
"Closing" has the meaning set forth in Section 3.1.
-------
"Closing Date" has the meaning set forth in Section 3.1.
------------
"Common Stock" has the meaning set forth in Section 2.4.
-------------
"Company" has the meaning set forth in the preamble.
-------
"Company Territory" has the meaning set forth in the third recital.
-----------------
"Confidential Information" means any and all information regarding the
------------------------
business, finances, operations, products, services and customers of the Person
specified and its Affiliates, in written or oral form or in any other medium.
"Consents" means all consents and approvals of Governmental
--------
Authorities or other third parties necessary to authorize, approve or permit the
parties hereto to consummate the Transactions and for the Company to operate its
business after the Closing Date as currently contemplated.
"Contributions" means collectively the AT&T PCS Contributed Licenses
-------------
and the Cash Equity Investor Contributions.
"Credit Agreement" means the agreement among the Company, the lenders
----------------
and the agents referred to therein, and any other parties who become lenders or
agents thereunder, to be dated as of the Closing Date, to provide a credit
facility having aggregate commitments of at least $425 million, as the same may
be amended, modified or supplemented in accordance with the terms thereof.
"Credit Documents" means the Credit Agreement and all agreements,
----------------
instruments and documents executed and delivered pursuant thereto, as the same
may from time to time be amended, modified or supplemented in accordance with
the terms thereof.
"Employment Agreements" means the Employment Agreements between the
---------------------
Company and each of Michael E. Kalogris and Steven R. Skinner, each in
substantially the form of Exhibit A, to be dated as of the Closing Date, as the
same may be amended, modified or supplemented in accordance with the terms
thereof.
-3-
<PAGE>
"FCC" means the Federal Communications Commission or similar
---
regulatory authority established in replacement thereof.
"FCC Law" means the Communications Act of 1934, as amended, including
-------
as amended by the Telecommunications Act of 1996, and the rules, regulations and
policies promulgated thereunder.
"Final Order" has the meaning set forth in Section 7.1(b).
-----------
"Financing" has the meaning set forth in the SBIC Regulations.
---------
"Governmental Authority" means a Federal, state or local court,
----------------------
legislature, governmental agency (including, without limitation, the United
States Department of Justice), commission or regulatory or administrative
authority or instrumentality.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
-------
of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning set forth in Section 8.6.
-----------------
"Indemnifying Party" has the meaning set forth in Section 8.6.
------------------
"Initial Cash Contribution" means, with respect to each Cash Equity
-------------------------
Investor, the amount set forth opposite its name on Schedule I under the heading
"Initial Capital Contribution."
"Initial Cash Equity Investor" has the meaning set forth in the
----------------------------
preamble.
"Law" means applicable common law and any statute, ordinance, code or
---
other law, rule, permit, permit condition, regulation, order, decree, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority.
"License" means a license, permit, certificate of authority, waiver,
-------
approval, certificate of public convenience and necessity, registration or other
authorization, consent or clearance to construct or operate a facility,
including any emissions, discharges or releases therefrom, or to transact an
activity or business, to construct a tower or to use an asset or process, in
each case issued or granted by a Governmental Authority.
"License Transfer" has the meaning set forth in Section 3.2(a).
----------------
-4-
<PAGE>
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest, right of first refusal or right of others therein, or
encumbrance of any nature whatsoever in respect of such asset.
"Losses" has the meaning set forth in Section 8.1.
------
"Management Stockholder" has the meaning set forth in the preamble.
----------------------
"Material Adverse Effect" means a material adverse effect on the
-----------------------
business, financial condition, assets, liabilities or results of operations or
prospects of the Person specified.
"Morgan Entity" means J.P. Morgan Investment Corporation and Sixty
-------------
Wall Street SBIC Fund, L.P.
"Network Membership License Agreement" means the Network Membership
------------------------------------
License Agreement between the Company and AT&T Corp., a New York corporation, in
substantially the form of Exhibit B, to be dated as of the Closing Date, as the
same may be amended, modified or supplemented in accordance with the terms
thereof.
"New York Courts" has the meaning set forth in Section 10.7.
---------------
"Original Certificate" has the meaning set forth in the second
--------------------
recital.
"PCS Licenses" has the meaning set forth in the first recital.
------------
"Permitted Liens" means (i) Liens arising in favor of sellers or
---------------
lessors for indebtedness and obligations incurred to purchase or lease fixed or
capital assets, provided that such liens secure only the indebtedness and
obligations created thereunder and are limited to the assets purchased or leased
pursuant thereto and the proceeds thereof; (ii) mechanic's and workmen's liens,
liens for taxes assessments or other governmental charges; (iii) pledges or
deposits to secure obligations under workmen's compensation, unemployment
insurance or social security laws or similar legislation; (iv) deposits to
secure performance or payment bonds, bids, tenders, contracts, leases,
franchises or public and statutory obligations required in the ordinary course
of business; (v) deposits to secure surety, appeal or custom bonds required in
the ordinary course of business; and (vi) statutory landlord liens, in each case
to the extent incurred in accordance with the terms of Section 6.8.
"Person" means an individual, corporation, partnership, limited
------
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization, or other legal entity.
-5-
<PAGE>
"Pre-Closing Advances" has the meaning specified in Section 6.8(d).
--------------------
"Pre-Closing Commitment" has the meaning set forth in Section 6.8(a).
----------------------
"Pre-Closing Expenditures" means expenditures of the nature and up to
------------------------
the amount set forth on Schedule 1.1; provided, that such expenditures shall not
exceed $10 million in the aggregate and shall be for assets, properties or
rights that are (x) necessary or advisable, in the good faith determination of
the Company, in order to facilitate the construction of PCS systems in the
Company Territory following the Closing and (y) prior to the Closing, assignable
to AT&T PCS or its designee(s), free and clear of Liens (other than Permitted
Liens) and without penalty or cost to effect such assignment other than
penalties or costs that individually or in the aggregate are not material in
amount.
"Pre-Closing Notes" has the meaning set forth in Section 6.8(a).
-----------------
"Preferred Stock" means the shares of Series A Preferred Stock, Series
---------------
C Preferred Stock and Series D Preferred Stock being issued hereunder.
"Purchaser" has the meaning set forth in the preamble.
---------
"Regulatory Problem" means, with respect to any SBIC Holder providing
------------------
Financing under this Agreement, any set of facts or circumstances wherein it has
been asserted by any governmental regulatory agency (or any SBIC Holder
reasonably believes in good faith that there is a substantial risk of such
assertion) that such SBIC Holder and its Affiliates are not entitled to hold, or
exercise any significant right with respect to, the Securities.
"Related Agreements" means the Network Membership License Agreement,
------------------
Employment Agreements, Resale Agreement, Roaming Agreement and Stockholders
Agreement.
"Representatives" has the meaning set forth in Section 6.2(a).
---------------
"Resale Agreement" means the Resale Agreement between the Company and
----------------
AT&T Wireless Services, Inc., a Delaware corporation, or an Affiliate thereof,
in the form of Exhibit C, as the same may be amended, modified or supplemented
in accordance with the terms thereof.
"Restated Bylaws" means the Amended and Restated Bylaws of the
---------------
Company, in substantially the form of Exhibit D, to be adopted as of the Closing
Date, as the same may be amended, modified or supplemented in accordance with
the terms thereof.
-6-
<PAGE>
"Restated Certificate" means the Amended and Restated Certificate of
--------------------
Incorporation of the Company, in the form of Exhibit E, to be filed with the
office of the Secretary of State of the State of Delaware on the Closing Date,
as the same may be amended, modified or supplemented in accordance with the
terms thereof.
"Roaming Agreement" means the Intercarrier Roamer Service Agreement
-----------------
between the Company and AT&T Wireless Services, Inc., in substantially the form
of Exhibit F, to be dated as of the Closing Date, as the same may be amended,
modified or supplemented in accordance with the terms thereof.
"SBA" has the meaning set forth in Section 6.6(b).
---
"SBA Compliance Documents" has the meaning set forth in 7.4(j).
------------------------
"SBIC" means a small business investment company licensed under the
----
SBIC Act.
"SBIC Act" means the Small Business Investment Company Act of 1958, as
--------
amended.
"SBIC Holder" means each Purchaser that is an SBIC.
-----------
"SBIC Regulations" means the SBIC Act and the regulations issued
----------------
thereunder as set forth in 13 CFR 107 and 121, as amended.
"Section 8.2 Indemnified Party" has the meaning set forth in Section
-----------------------------
8.2.
"Section 8.3 Indemnified Party" has the meaning set forth in Section
-----------------------------
8.3.
"Section 8.4 Indemnified Party" has the meaning set forth in Section
-----------------------------
8.4.
"Section 8.5 Indemnified Party" has the meaning set forth in Section
-----------------------------
8.5.
"Securities" means the shares of Series A Preferred Stock, Series C
----------
Preferred Stock and Series D Preferred Stock being issued hereunder, together
with any shares of Series C Preferred Stock or Common Stock issued upon
conversion of any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Series A Preferred Stock" has the meaning set forth in Section 2.4.
------------------------
"Series C Preferred Stock" has the meaning set forth in Section 2.4.
------------------------
-7-
<PAGE>
"Series D Preferred Stock" has the meaning set forth in Section 2.4.
------------------------
"Stockholders Agreement" means the Stockholders Agreement, by and
----------------------
among the Company, AT&T PCS, the Cash Equity Investors and the Management
Stockholders, as stockholders, in substantially the form of Exhibit G, to be
dated as of the Closing Date, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Subsequent Offering" has the meaning set forth in Section 10.6.
-------------------
"Subsidiary" shall mean, with respect to any Person, a corporation or
----------
other entity of which 50% or more of the voting power or the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
"Transactions" means the transactions contemplated by this Agreement
------------
and the Related Agreements.
"Transfer Taxes" has the meaning set forth in Section 3.3.
--------------
"Unfunded Commitment" has the meaning set forth in Section 2.2.
-------------------
ARTICLE II
CONTRIBUTIONS; PURCHASE AND SALE
OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER
-----------------------------------------------
1.1 AT&T PCS Contribution. Upon the terms and subject to the
---------------------
conditions hereof and in reliance upon the representations, warranties and
agreements herein contained: (a) AT&T PCS shall partition and disaggregate each
PCS License to create, as more particularly described on Schedule 2.1, (i)
Licenses (the "AT&T PCS Contributed Licenses") providing in the aggregate the
-----------------------------
right to use 20 MHz of authorized frequencies within the entire Company
Territory, and (ii) Licenses (the "AT&T PCS Retained Licenses") providing in the
--------------------------
aggregate the right to use the balance of the authorized frequencies within the
Company Territory and the right to use the authorized frequencies outside of the
Company Territory (but within the area authorized by the PCS Licenses), and (b)
at the Closing, AT&T PCS shall assign to the Company (or one or more wholly
owned Subsidiaries of the Company designated by the Company) the AT&T PCS
Contributed Licenses.
1.2 Cash Equity Investor Contributions. (a) Upon the terms and
----------------------------------
subject to the conditions hereof and in reliance upon the representations,
warranties and
-8-
<PAGE>
agreements herein contained: (i) effective upon the Closing, each Cash Equity
Investor hereby irrevocably commits, severally and not jointly, to contribute to
the capital of the Company an amount equal to its Aggregate Commitment and (ii)
at the Closing, each Cash Equity Investor shall contribute to the capital of the
Company an amount equal to its Initial Cash Contribution and the Company shall
accept such contribution to the capital of the Company. Each Cash Equity
Investor shall contribute to the capital of the Company an additional amount
equal to the excess of its Aggregate Commitment over its Initial Cash
Contribution in the amounts and on the dates specified on Schedule I (or such
earlier dates as may be established in accordance with the terms of the
Stockholders Agreement). The obligation of each Cash Equity Investor to make
such additional cash contributions in accordance with this Section 2.2 and
Section 3.10 of the Stockholders Agreement is sometimes referred to herein as
the "Unfunded Commitment." Nothing herein shall be construed to require any
-------------------
Cash Equity Investor to make contributions in an aggregate amount in excess of
its Aggregate Commitment or later than the third anniversary of the Closing
Date.
(1) Each Cash Equity Investor acknowledges and agrees that, if the
Closing occurs, its obligation to make capital contributions to the Company
after the Closing Date in respect of its Unfunded Commitment constitutes an
irrevocable and unconditional obligation, and shall not be subject to
counterclaim, set-off, deduction or defense, or to abatement, suspension,
deferment, diminution or reduction for any reason whatsoever. By way of
amplification, and not in limitation of the foregoing, each Cash Equity Investor
further acknowledges and agrees to fulfill its obligations in respect of its
Unfunded Commitment regardless of any claims it may have against any other
Person (whether or not related to the Transactions) and regardless of the
existence or non-existence of any facts or circumstances (whether or not such
facts and circumstances existed on the date hereof or the Closing Date or were
then known by it).
1.3 Management Stockholder Contributions. Upon the terms and subject
------------------------------------
to the conditions hereof and in reliance upon the representations, warranties
and agreements herein contained, at the Closing, each Management Stockholder
shall contribute to the capital of the Company the amount (if any) set forth
opposite his name on Schedule II as his initial cash contribution.
1.4 Purchase and Sale of Securities. Upon terms and subject to the
-------------------------------
conditions hereof and in reliance upon the representations, warranties and
agreements herein contained, at the Closing, in consideration of the
Contributions, the Company shall issue, sell and deliver to the Purchasers the
following securities:
(1) to AT&T PCS, (i) 732,371 shares of the Company's Series A
Convertible Preferred Stock, par value $.01 per share (the "Series A Preferred
------------------
Stock"), the terms of which are set forth in the Restated Certificate, which,
- -----
subject to the terms thereof, are convertible on and after the eighth
anniversary of the Closing Date into shares
-9-
<PAGE>
of newly issued common stock, par value $.01 per share (the "Common Stock"), of
------------
the Company; and (ii) 366,131 shares of the Company's Series D Convertible
Preferred Stock, par value $.01 per share (the "Series D Preferred Stock"), the
------------------------
terms of which are set forth in the Restated Certificate, which, subject to the
terms thereof, are convertible at any time into shares of newly issued Series C
Preferred Stock or shares of newly issued Common Stock (as provided in the
Restated Certificate);
(2) to each Cash Equity Investor, the number of shares set forth
opposite its name on Schedule I under the heading "Number of Shares" of the
Company's Series C Convertible Preferred Stock, par value $.01 per share (the
"Series C Preferred Stock"), the terms of which are set forth in the Restated
------------------------
Certificate, which, subject to the terms thereof, are convertible at any time
into shares of newly issued Common Stock (as provided in the Restated
Certificate); and
(3) to each Management Stockholder, the number of shares (if any) set
forth opposite his name on Schedule II under the heading "Number of Shares" of
the Series C Preferred Stock.
1.5 Restrictive Legends. Each certificate representing Securities
-------------------
(including Securities originally issued hereunder or delivered upon conversion
of the Preferred Stock, or delivered in substitution or exchange for any of the
foregoing) will bear a legend reading substantially as follows until such
Securities have been sold pursuant to an effective registration statement under
the Securities Act, Rule 144 under the Securities Act, or an opinion of counsel
reasonably satisfactory in form and substance to the Company and otherwise in
full compliance with any other applicable restrictions on transfer, including
those contained in this Agreement and the Stockholders Agreement:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
SECURITIES OR 'BLUE SKY' LAWS. SAID SECURITIES MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF, UNLESS AND UNTIL REGISTERED UNDER THE ACT AND THE RULES AND
REGULATIONS THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR 'BLUE
SKY' LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND ALL APPLICABLE
STATE SECURITIES OR 'BLUE SKY' LAWS."
1.6 Use of Proceeds. The Company shall use the net cash proceeds of
---------------
its sale of Securities hereunder solely for capital and other expenditures
relating to the
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<PAGE>
conduct of the Business (as defined in the Stockholders Agreement) by the
Company and its Subsidiaries and fees and expenses incurred in connection with
the Transactions.
ARTICLE III
CLOSING
-------
1.7 Time and Place of Closing. Upon the terms and subject to the
-------------------------
conditions hereof, the closing of the Transactions (the "Closing") shall take
-------
place at the offices of Mayer, Brown & Platt, 1675 Broadway, New York, New York
at 10:00 a.m. local time on the twelfth business day following the date of
receipt of the last Consent required by subsections (a) through (c) of Section
7.1, or at such other place and/or time and/or on such other date as the parties
may agree or as may be necessary to permit the fulfillment or waiver of the
conditions set forth in Article VII (the "Closing Date").
------------
1.8 Closing Actions and Deliveries. Upon the terms and subject to
------------------------------
the satisfaction or waiver by the appropriate parties, if applicable, of the
conditions set forth in Article VII, to effect the purchase and sale of the
Securities and consummate the other Transactions, the parties shall on the
Closing Date take the following actions:
(1) AT&T PCS Contribution. AT&T PCS shall execute and deliver to the
---------------------
Company one or more instruments of assignment, substantially in the form of
Exhibit N, sufficient to assign to the Company the AT&T PCS Contributed Licenses
(such assignment being herein referred to as the "License Transfer").
----------------
(2) Cash Equity Investor Contributions; Bridge Notes. (i) Each Cash
------------------------------------------------
Equity Investor shall deliver to the Company by wire transfer of immediately
available funds to the account designated by the Company on or prior to the
Closing Date an amount equal to its respective Initial Cash Contribution, as set
forth on Schedule I. Each Cash Equity Investor may convert the principal amount
of its Pre-Closing Notes into a capital contribution, and the principal amount
of Pre-Closing Notes so converted shall be credited against its Initial Cash
Contribution.
(ii) Each Cash Equity Investor that holds Bridge Notes shall on
or prior to the Closing Date contribute to the capital of Triton Communications
LLC all of the outstanding Bridge Notes, together with accrued interest thereon.
In consideration of such contribution by such Cash Equity Investors, the Cash
Equity Investors consent to the allocation of shares of Series C Preferred Stock
set forth on Schedule I.
(3) Management Stockholder Contributions. Each Management
------------------------------------
Stockholder shall deliver to the Company by wire transfer of immediately
available funds to the account designated by the Company on or prior to the
Closing Date an amount equal to his respective initial cash contribution as set
forth on Schedule II.
-11-
<PAGE>
(4) Delivery of Securities. The Company shall deliver (i) to AT&T
----------------------
PCS, certificates, duly executed by authorized signatories of the Company,
representing the shares of Series A Preferred Stock and Series D Preferred Stock
to be issued to AT&T PCS in accordance with Section 2.4, (ii) to each Cash
Equity Investor, certificates, duly executed by authorized signatories of the
Company, representing the shares of Series C Preferred Stock to be issued to
each of them in accordance with the terms of Section 2.4, and (iii) to each
Management Stockholder, certificates, duly executed by authorized signatories of
the Company, representing the shares of Series C Preferred Stock (if any) to be
issued to each of them in accordance with the terms of Section 2.4.
(5) Restated Certificate. Duly authorized officers of the Company
--------------------
shall execute the Restated Certificate and cause it to be filed with the office
of the Secretary of State of the State of Delaware.
(6) Other Deliveries. The parties shall execute and deliver or cause
----------------
to be executed and delivered all other documents, instruments, opinions and
certificates contemplated by this Agreement or the Related Agreements to be
delivered at the Closing or necessary and appropriate in order to consummate the
Transactions contemplated to be consummated on the Closing Date.
1.9 Payment of Transfer Taxes. The Company shall pay or cause to be
-------------------------
paid at the Closing or, if due thereafter, promptly when due, all gross receipts
taxes, gains taxes (including, without limitation, real property gains tax or
other similar taxes), transfer taxes, sales taxes, stamp taxes, and any other
taxes, but excluding any Federal, State or local income taxes (collectively,
"Transfer Taxes"), payable in connection with the transfer of the Contributions.
--------------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
--------------------------------------------
Each of the Cash Equity Investors, as to itself, and AT&T PCS, as to
itself and each other AT&T Party, represents and warrants to the Company and
each of the other parties as follows:
1.10 Organization, Power and Authority. (a) Each AT&T Party is a
---------------------------------
corporation, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has the requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each Cash Equity Investor is a corporation,
general partnership or limited partnership, duly organized, validly existing and
in good standing under the laws of its jurisdiction of
-12-
<PAGE>
organization and has the requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted.
(1) It has the requisite power and authority to execute, deliver and
perform this Agreement, each of the Related Agreements to which it is a party
and each other instrument, document, certificate and agreement required or
contemplated to be executed, delivered and performed by it hereunder and
thereunder to which it is or will be a party.
(2) It is duly qualified to do business in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary other than any such jurisdiction
in which the failure to be so qualified would not have a Material Adverse Effect
on it or materially adversely affect the Transactions or its ability to perform
its obligations under the Related Agreements.
(3) The execution and delivery of this Agreement by it and the
consummation of the Transactions by it, including without limitation the
execution and delivery of the Related Agreements to which it is a party, have
been duly and validly authorized by its Board of Directors (or equivalent body)
and no other proceedings on its part which have not been taken (including,
without limitation, approval of its stockholders, partners or members) are
necessary to authorize this Agreement or to consummate the Transactions.
(4) This Agreement has been duly executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally and may be subject to general
principles of equity. Each of the Related Agreements to which it is a party
shall be duly executed and delivered by it at the Closing and, upon such
execution and delivery, shall constitute its valid and binding obligation,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to enforcement of creditors' rights generally
and may be subject to general principles of equity.
(5) As of the Closing Date, after giving effect to the Transactions,
it is not in breach of any obligation under this Agreement or any of the Related
Agreements.
1.11 Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance by it of this Agreement or the Related Agreements to which it is a
party nor the consummation of the Transactions will (a) conflict with, or result
in a breach or violation of, any provision of its organizational documents; (b)
constitute, with or without the giving of notice or passage of time or both, a
breach, violation or default, create a
-13-
<PAGE>
Lien, or give rise to any right of termination, modification, cancellation,
prepayment or acceleration, under (i) any Law or License or (ii) any note, bond,
mortgage, indenture, lease, agreement or other instrument, in each case which is
applicable to or binding upon it or any of its assets; or (c) require any
Consent, other than those set forth on Schedule 4.2 or the approval of its board
of directors, general partner, stockholders or similar constituent bodies, as
the case may be (which approvals have been obtained), except in each case, where
such breach, violation, default, Lien, right, or the failure to obtain or give
such Consent would not have a Material Adverse Effect on it or materially
adversely affect the Transactions or its ability to perform its obligations
under the Related Agreements. To its knowledge, there is no fact relating to it
or its Affiliates that would be reasonably expected to prevent it from
consummating the Transactions or performing its obligations under the Related
Agreements or disqualify the Company from obtaining the Consents (including
without limitation, FCC Consent) required in order to consummate the License
Transfer as provided for in this Agreement.
1.12 Litigation. There is no action, proceeding or investigation
----------
pending or, to its knowledge, threatened against it or any of its properties or
assets that would be reasonably expected to have an adverse effect on its
ability to consummate the Transactions to which it is a party or to fulfill its
obligations under this Agreement or any of the Related Agreements to which it is
a party, or which seeks to prevent or challenge the Transactions.
1.13 FCC Compliance. It complies with all eligibility rules issued by
--------------
the FCC to hold broadband PCS licenses, including without limitation, FCC rules
on foreign ownership and the CMRS spectrum cap. The fact that it owns an equity
interest in the Company will not cause the Company to be ineligible under FCC
rules to hold PCS licenses in general, the licenses to be held by the Company or
any other FCC licenses.
1.14 Brokers. It has not employed any broker, finder or investment
-------
banker or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the Transactions.
1.15 PCS Licenses. AT&T PCS is the authorized legal holder of the PCS
------------
Licenses, true and correct copies of which are attached to Schedule III, free
and clear of any Liens. The PCS Licenses are, and on the Closing Date each of
the PCS Licenses will be, valid and in full force and effect. Except as set
forth on Schedule 4.6 and for proceedings affecting the PCS or wireless
communications services industry generally, there is not pending, nor to the
knowledge of AT&T PCS, threatened against AT&T PCS or against the PCS Licenses,
any application, action, petition, objection or other pleading, or any
proceeding with the FCC which questions or contests the validity of, or seeks
the revocation, nonrenewal or suspension of, any of the PCS Licenses, which
seeks the imposition of any modification or amendment with respect thereto, or
which adversely
-14-
<PAGE>
effects the ability of the Company to employ the AT&T PCS Contributed Licenses
in its business after the Closing Date. The PCS Licenses are not subject to any
conditions other than those appearing on the face of the Licenses themselves and
those imposed by FCC Law. To the knowledge of AT&T PCS, except for matters set
forth on Schedule 4.6 (as to which AT&T PCS makes no representation or
warranty), AT&T PCS is not aware of any proceeding pending at the FCC on October
1, 1997 and affecting the wireless communications services industry generally
which is reasonably likely to result in an outcome that, in the judgment of AT&T
PCS, would very materially impair the value of the AT&T PCS Contributed
Licenses.
1.16 Capital Commitment. Each Cash Equity Investor has, and will have
------------------
on the Closing Date and on any subsequent date on which it is obligated to make
a capital contribution, cash available to it in an amount sufficient to make its
respective Cash Equity Investor Contributions in accordance with the terms of
Section 2.2.
1.17 No Distribution. It is acquiring the Securities to be purchased
---------------
by it hereunder for the purpose of investment and not with a view to or for sale
in connection with any distribution thereof (other than in compliance with the
Securities Act and all applicable state securities laws).
1.18 Investor Acknowledgments. (a) It is an "accredited investor" as
------------------------
defined in Regulation D of the Securities Act. Its representatives have been
provided an opportunity to ask questions of, and have received answers thereto
from, the Company and its representatives regarding the terms and conditions of
its purchase of Securities, and the Company and its proposed business generally,
and have obtained all additional information requested by it to verify the
accuracy of all information furnished to it in connection with such purchase.
(1) It has such knowledge and experience in financial and business
affairs that it is capable of evaluating the merits and risks of purchasing the
Securities it is purchasing hereunder.
(2) It is not relying on and acknowledges that no representation is
being made by any other Purchaser, the Company or any of its officers,
employees, Affiliates, agents or representatives, or any Management Stockholder,
except for representations and warranties expressly set forth in this Agreement
and the Related Agreements, and, in particular, it is not relying on, and
acknowledges that no representation is being made in respect of, (x) any
projections, estimates or budgets delivered to or made available to them of
future revenues, expenses or expenditures, or future results of operations and
(y) any other information or documents delivered or made available to it or its
representatives, except for representations and warranties expressly set forth
in this Agreement and the Related Agreements.
-15-
<PAGE>
(3) In deciding to invest in the Company, it has relied exclusively
on the representations and warranties expressly set forth in this Agreement and
the Related Agreements and the investigations made by itself and its
representatives and its and such representatives' knowledge of the industry in
which the Company proposes to operate. Based solely on such representations and
warranties and such investigations and knowledge, it has determined that the
Securities it is purchasing are a suitable investment for it.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE MANAGEMENT STOCKHOLDERS
-------------------------------------------
The Company and each Management Stockholder represent and warrant,
jointly and severally, as to the Company and its Subsidiaries (except that (x)
the representations and warranties as to the Company set forth in Sections
5.1(f), 5.7(b), 5.8, 5.11(b)(ii) and 5.13 are not being made by the Management
Stockholders and (y) the representations and warranties as to the Company set
forth in Sections 5.2 and 5.4 are being made by the Management Stockholders only
as of the date hereof and not as of the Closing Date), and each Management
Stockholder represents and warrants, severally and not jointly, as to itself, to
the Purchasers as follows:
1.19 Organization, Power and Authority. (a) Each of the Company and
---------------------------------
each of its Subsidiaries is a corporation, duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted and proposed to
be conducted. Each of the Company and each of its Subsidiaries has furnished to
the Purchasers a true and correct copy of its Certificate of Incorporation and
Bylaws as in effect on the date hereof and, in the case of each such Subsidiary,
as of the Closing Date. As of the Closing Date, the Bylaws of the Company shall
read in full as set forth in the Restated Bylaws, which shall be in full force
and effect.
(1) It has the requisite power, authority and/or legal capacity to
execute, deliver and perform this Agreement, each of the Related Agreements to
which it is a party and each other instrument, document, certificate and
agreement required or contemplated to be executed, delivered and performed by it
hereunder and thereunder to which it is or will be a party.
(2) Each of the Company and each of its Subsidiaries is duly
qualified to do business in each jurisdiction where the character of its
properties owned or held
-16-
<PAGE>
under lease or the nature of its activities makes such qualification necessary
other than any such jurisdiction in which the failure to be so qualified would
not have a Material Adverse Effect on the Company or such Subsidiary or
materially adversely affect the Transactions or its ability to perform its
obligations under the Related Agreements.
(3) The execution and delivery of this Agreement by the Company and
the consummation of the Transactions by the Company, including without
limitation the execution and delivery of the Related Agreements to which it is a
party, have been duly and validly authorized by the Board of Directors of the
Company and, except for the filing of the Restated Certificate with the office
of the Secretary of State of Delaware, no other proceedings on the part of the
Company which have not been taken (including, without limitation, approval of
its shareholders) are necessary to authorize this Agreement or to consummate the
Transactions.
(4) This Agreement has been duly executed and delivered by the
Company and each Management Stockholder and constitutes the valid and binding
obligation of the Company and such Management Stockholder, enforceable against
it in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally and may be subject to general
principles of equity. Each of the Related Agreements to which it is a party
shall be duly executed and delivered by it at the Closing and, upon such
execution and delivery, shall constitute the valid and binding obligation of it,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to enforcement of creditors' rights generally
and may be subject to general principles of equity.
(5) As of the Closing, after giving effect to the Transactions,
neither the Company nor any Management Stockholder is in breach of any
obligation under this Agreement, any Related Agreement or any of the Credit
Documents.
1.20 Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance by the Company and the Management Stockholders of this Agreement and
the Related Agreements to which it is a party nor the consummation of the
Transactions will (a) conflict with, or result in a breach or violation of, any
provision of the Company's organizational documents; (b) constitute, with or
without the giving of notice or passage of time or both, a breach, violation or
default, create a Lien, or give rise to any right of termination, modification,
cancellation, prepayment or acceleration, under (i) any Law or License, or (ii)
any note, bond, mortgage, indenture, lease, agreement or other instrument, in
each case which is applicable to or binding upon the Company or any of its
assets; or (c) require any Consent on the part of the Company or any Management
Stockholder, other than those set forth on Schedule 5.2 or the approval of the
Company's Board of Directors (which approval has been obtained), except in each
case where such breach,
-17-
<PAGE>
violation, default, Lien, right, or the failure to obtain or give such Consent
would not have a Material Adverse Effect on it or materially adversely affect
the Transactions, its ability to perform its obligations under the Related
Agreements or the operation of the Company's business after the Closing Date. To
its knowledge, there is no fact relating to it or its Affiliates that would be
reasonably expected to prevent it from consummating the Transactions or
performing its obligations under the Related Agreements or disqualify the
Company from obtaining the Consents (including without limitation, FCC Consent)
required in order to consummate the License Transfer as provided for in this
Agreement.
1.21 Litigation. There is no action, proceeding or investigation
----------
pending or, to the knowledge of the Company or the Management Stockholders,
threatened against the Company or any of the Management Stockholders or any of
their respective properties or assets that would have an adverse effect on its
ability to consummate the Transactions to which it is a party or to fulfill its
obligations under this Agreement or any of the Related Agreements to which it is
a party, or, in the case of the Company, to operate its business after the
Closing Date, or which seeks to prevent or challenge the Transactions. There is
no judgment, decree, injunction, rule or order outstanding against the Company
which would limit in any material respect the ability of the Company to operate
its business in the manner currently contemplated.
1.22 FCC Compliance. It complies with all eligibility rules issued by
--------------
the FCC to hold broadband PCS licenses, including without limitation, FCC rules
on foreign ownership and the CMRS spectrum cap. The fact that each Management
Stockholder owns an equity interest in the Company will not cause the Company to
be ineligible under FCC rules to hold PCS licenses in general, the licenses to
be held by the Company or any other FCC licenses.
1.23 Brokers. Neither the Company nor any of the Management
-------
Stockholders has employed any broker, finder or investment banker or incurred
any liability for any brokerage fees, commissions or finder's fees in connection
with the Transactions.
1.24 Newly Formed Company. The Company was organized on October 1,
--------------------
1997, and, except for assets and liabilities relating to Pre-Closing
Expenditures and Pre-Closing Advances and activities undertaken in connection
therewith, since its organization has at no time (i) had assets or liabilities
in excess of $1,000,000 in the aggregate or (ii) carried on any activities or
incurred any liabilities or obligations other than in connection with its
organization and with the consummation of the Transactions.
1.25 Capitalization. (a) As of the date hereof and as of the Closing
--------------
Date before giving effect to the filing of the Restated Certificate, the
authorized capital stock of the Company consists of 1,000,000 shares of Common
Stock, 137,365.90 of which
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<PAGE>
shares are issued and outstanding, have been validly issued and are fully paid
and non-assessable. The record and beneficial owners of such shares of Common
Stock as of the date hereof and as of the Closing Date, before giving effect to
the Transactions, are set forth on Schedule 5.7. Each Management Stockholder
owns the shares of Common Stock set forth opposite his name on Schedule 5.7,
free and clear of any Liens other than the Company's repurchase rights pursuant
to the Employment Agreements. There are not on the date hereof or as of the
Closing Date, before giving effect to the Transactions, any existing options,
warrants, calls, subscriptions, or other rights, or other agreements or
commitments, obligating the Company to issue, transfer or sell any shares of
capital stock of the Company.
(1) As of the Closing Date, after giving effect to the filing of the
Restated Certificate, the authorized capital stock of the Company will consist
of 10,000,000 shares of Common Stock, 1,000,000 shares of Series A Preferred
Stock, 2,000,000 shares of the Company's Series B Preferred Stock, par value
$.01 per share, 2,000,000 shares of Series C Preferred Stock, and 500,000 shares
of the Company's Series D Preferred Stock. As of the Closing Date, after giving
effect to the Transactions, there will be issued and outstanding 196,237 shares
of Common Stock, 732,371 shares of Series A Preferred Stock, no shares of such
Series B Preferred Stock, 1,400,000 shares of Series C Preferred Stock and
366,131 shares of Series D Preferred Stock. The record and beneficial owners of
such outstanding shares of Common Stock and Preferred Stock, as of the Closing
Date, after giving effect to the Transactions, are set forth on Schedule 5.7. On
the Closing Date, after giving effect to the Transactions, there will not be any
existing options, warrants, calls, subscriptions, or other rights, or other
agreements or commitments, obligating the Company to issue, transfer or sell any
shares of capital stock of the Company, except the Preferred Stock.
1.26 Shares. The shares of Preferred Stock being issued to the
------
Purchasers hereunder, when issued and paid for pursuant to the terms of this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will be free of any Liens caused or created by the Company,
except as set forth in the Stockholders Agreement and the Restated Certificate.
The shares of Common Stock or Preferred Stock, as the case may be, issued upon
conversion of the Preferred Stock, when issued pursuant to the terms of the
Preferred Stock, will be validly issued, fully paid and nonassessable, and will
be free of any Liens caused or created by the Company, except as set forth in
the Stockholders Agreement and the Restated Certificate.
1.27 No Undisclosed Liabilities; Subsidiaries. As of the date hereof
----------------------------------------
and as of the Closing Date, before giving effect to the Transactions, the
Company has no indebtedness or liability of any nature whatsoever, absolute or
contingent, liquidated or unliquidated, except for liabilities consisting of
Bridge Notes, Pre-Closing Advances or incurred in connection with Pre-Closing
Expenditures. The Company owns all of the outstanding shares of capital stock of
each of its Subsidiaries, free and clear of any Liens,
-19-
<PAGE>
except Liens granted to the lenders pursuant to the Credit Documents. Prior to
the Closing Date, the Company shall furnish to each of the Purchasers a complete
list of its direct and indirect Subsidiaries indicating the jurisdictions in
which each such Subsidiary is organized or qualified to conduct business.
1.28 Offering of Securities; Subsequent Offering. (a) None of the
-------------------------------------------
Company, any Management Stockholder or any Person acting on its behalf has
offered the Securities or any similar equity securities of the Company for sale
to, or solicited any offers to buy Securities or any similar equity securities
of the Company from, any Person, other than the Purchasers and a limited number
of other "accredited investors" (as defined in Rule 501(a) under the Securities
Act).
(1) None of the Company, any Management Stockholder or any Person
acting on its behalf will, directly or indirectly, take any action which might
subject the offering, issuance or sale of the Securities to the registration and
prospectus delivery requirements of Section 5 of the Securities Act.
(2) Assuming the accuracy of the representations and warranties of
the Purchasers contained in Section 4.9, each of the offering and sale of
Securities under this Agreement to AT&T PCS and the Initial Cash Equity
Investors and the offering and sale of Securities to the Additional Purchasers
pursuant to the Subsequent Offering complies or will comply with all applicable
requirements of Federal and state securities laws. The Subsequent Offering and
the issuance and sale of shares of Series C Preferred Stock pursuant thereto are
transactions exempt from the registration requirements of Section 5 of the
Securities Act.
(3) The offering documents, certificates, statements and other
materials furnished to any Additional Purchaser by or on behalf of the Company
will not contain any untrue statement of a material fact or omit a material fact
necessary in order to make the statements contained therein, in light of the
circumstance under which they were made, not misleading.
1.29 Loan Documents. (a) Prior to the date hereof, the Company has
--------------
delivered to each of the Purchasers a true and correct copy of a commitment
letter, dated October 8, 1997, from The Chase Manhattan Bank, Chase Securities
Inc., J.P. Morgan & Co. Incorporated, J.P. Morgan Securities Inc., Toronto
Dominion Bank and Toronto Dominion Securities USA, relating to a proposed $425
million senior secured credit facility. Such commitment letter has been executed
and delivered by the financial institutions referred to above and the Company,
and is in full force and effect and, as of the date hereof, such commitment
letter has not been modified or withdrawn.
(1) (i) Prior to the Closing, the Company shall have delivered to
each of the Purchasers a true and correct copy of each of the Credit Documents,
together with
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<PAGE>
all amendments and modifications thereto. Such documents (including the exhibits
and schedules thereto) shall comprise a full and complete copy of all agreements
between the parties thereto with respect to the subject matter thereof and
transactions related thereto, and there shall be no agreements or
understandings, oral or written, or side agreements not contained therein that
relate to or modify the substance thereof.
(ii) As of the Closing Date, the Credit Documents shall have been duly
authorized by all necessary corporate action on the part of the Company, shall
have been validly executed and delivered by the Company and shall be the legal,
valid and binding obligation of the Company, enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and may be subject to general principles of equity.
As of the Closing Date, the Credit Documents shall be in full force and effect,
none of the provisions thereof shall have been waived by any party thereto, and
no "Default" or "Event of Default" (as such terms are defined in the Credit
Agreement) shall have occurred and be continuing.
1.30 Minimum Build-Out Plan. The Company's Minimum Build-Out Plan in
----------------------
respect of the construction of a PCS system in the Company Territory is attached
as Schedule 5.12.
1.31 Small Business Matters. The Company, together with its
----------------------
"affiliates" (as that term is defined in Title 13, Code of Federal Regulations,
Section 121.103), is a "Small Business" within the meaning of the SBIC Act and
the regulations thereunder, including Title 13, Code of Federal Regulations,
Sections 107.50, 107.700 and 121.301(c). The information regarding the Company
and its Affiliates set forth in the Small Business Administration Form 480, Form
652 and Parts A and B of Form 1031 delivered at the Closing is accurate and
complete. Copies of such forms shall have been completed and executed by the
Company and delivered to each Purchaser which is an SBIC at the Closing together
with a written statement of the Company regarding its planned use of the
proceeds from the sale of the Securities. Neither the Company nor any
Subsidiary: (i) presently engages in, and none of them shall hereafter engage
in, any activities, or (ii) shall use directly or indirectly the proceeds from
the sale of the Securities for any purpose, which, in either case, a SBIC is
prohibited from engaging in or providing funds for by the SBIC Act and the
regulations thereunder (including Title 13, Code of Federal Regulations, Section
107.720).
1.32 No Distribution. Each Management Stockholder is acquiring the
---------------
Securities to be purchased by him hereunder for the purpose of investment and
not with a view to or for sale in connection with any distribution thereof
(other than in compliance with the Securities Act and all applicable state
securities laws).
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<PAGE>
1.33 Investor Acknowledgments. (a) Each Management Stockholder is an
------------------------
"accredited investor" as defined in Regulation D of the Securities Act. He has
been provided an opportunity to ask questions of, and has received answers
thereto from, the Company and its representatives regarding the terms and
conditions of his purchase of Securities, and the Company and its proposed
business generally, and has obtained all additional information requested by him
to verify the accuracy of all information furnished to him in connection with
such purchase.
(1) Each Management Stockholder has such knowledge and experience in
financial and business affairs that he is capable of evaluating the merits and
risks of purchasing the Securities he is purchasing hereunder.
(2) Each Management Stockholder is not relying on and acknowledges
that no representation is being made by any other Purchaser, the Company or any
of its officers, employees, Affiliates, agents or representatives, or any other
Management Stockholder, except for representations and warranties expressly set
forth in this Agreement and the Related Agreements, and, in particular, he is
not relying on, and acknowledges that no representation is being made in respect
of, (x) any projections, estimates or budgets delivered to or made available to
him of future revenues, expenses or expenditures, or future results of
operations and (y) any other information or documents delivered or made
available to him, except for representations and warranties expressly set forth
in this Agreement and the Related Agreements.
(3) In deciding to invest in the Company, each Management Stockholder
has relied exclusively on the representations and warranties expressly set forth
in this Agreement and the Related Agreements and the investigations made by
himself and his representatives and his and such representatives' knowledge of
the industry in which the Company proposes to operate. Based solely on such
representations and warranties and such investigations and knowledge, he has
determined that the Securities he is purchasing are a suitable investment for
him.
ARTICLE VI
COVENANTS
---------
1.34 Consummation of Transactions. Each party shall use all
----------------------------
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable and
consistent with applicable law to carry out all of their respective obligations
under this Agreement and the Related Agreements and to consummate the
Transactions, which efforts shall include, without limitation, the following:
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<PAGE>
(1) The parties shall use all commercially reasonable efforts to
cause the Closing to occur and the Transactions to be consummated in accordance
with the terms hereof, and, without limiting the generality of the foregoing, to
obtain all necessary Consents including, without limitation, the approval of
this Agreement and the Transactions by all Governmental Authorities and
agencies, including the FCC and any Consents necessary or advisable in the
reasonable judgment of AT&T PCS in connection with franchise laws applicable to
the execution, delivery and performance of this Agreement and the Related
Agreements or the consummation of the Transactions, and to make all filings with
and to give all notices to third parties which may be necessary or reasonably
required in order for the parties to consummate the Transactions.
(2) Each party shall furnish to the other parties all information
concerning such party and its Affiliates reasonably required for inclusion in
any application or filing to be made by AT&T PCS or the Company or any other
party in connection with the Transactions or otherwise to determine compliance
with applicable FCC Rules.
(3) Upon the request of any other party, each party shall forthwith
execute and deliver, or cause to be executed and delivered, such further
instruments of assignment, transfer, conveyance, endorsement, direction or
authorization and other documents as may reasonably be requested by such party
in order to effectuate the purposes of this Agreement and the Related
Agreements.
(4) To the extent that any franchise Laws shall be applicable to the
relationship between AT&T PCS (or its Affiliates) and the Company, each party
shall use commercially reasonable efforts to comply with such Laws.
Nothing in this Agreement shall be construed to require the parties to
consummate the Closing if any regulatory approval would require that it (i)
divest or hold separate any of its assets existing as of the date hereof other
than as contemplated by this Agreement and the Related Agreements or (ii)
otherwise take or commit to take any action that limits its freedom of action in
any material respect with respect to any of its businesses, product lines or
assets.
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<PAGE>
1.35 Confidentiality.
---------------
(1) Each party shall, and shall cause each of its Affiliates, and its
and their respective shareholders, members, managers, directors, officers,
employees and agents (collectively, "Representatives") to, keep secret and
---------------
retain in strictest confidence any and all Confidential Information relating to
any other party that it receives in connection with the negotiation or
performance of this Agreement, and shall not disclose such Confidential
Information, and shall cause its Representatives not to disclose such
Confidential Information, to anyone except the receiving party's Affiliates and
Representatives and any other Person that agrees in writing to keep in
confidence all Confidential Information in accordance with the terms of this
Section 6.2. Until the Closing, each party agrees to use Confidential
Information received from another party only (i) to evaluate its interest in
pursuing the Transactions and (ii) to pursue such Transactions, but not for any
other purpose. All Confidential Information furnished pursuant to this Agreement
shall be returned promptly to the party to whom it belongs upon request by such
party. Upon the Closing, the provisions of this Section 6.2 shall terminate and
the obligations of the parties in respect of Confidential Information shall be
governed by Section 7.12 of the Stockholders Agreement.
(2) The obligations set forth in Section 6.2(a) shall be inoperative
with respect to Confidential Information that (i) is or becomes generally
available to the public other than as a result of disclosure by the receiving
party or its Representatives, (ii) was available to the receiving party on a
non-confidential basis prior to its disclosure to the receiving party, or (iii)
becomes available to the receiving party on a non-confidential basis from a
source other than the providing party or its agents, provided that such source
--------
is not known by the receiving party to be bound by a confidentiality agreement
with the providing party or the providing party's agents.
(3) To the fullest extent permitted by law, if a party or any of its
Affiliates or Representatives breaches, or threatens to commit a breach of, this
Section 6.2, the party whose Confidential Information shall be disclosed, or
threatened to be disclosed, shall have the right and remedy to have this Section
6.2 specifically enforced by any court having jurisdiction, it being
acknowledged and agreed that money damages will not provide an adequate remedy
to such party. Nothing in this Section 6.2 shall be construed to limit the right
of any party to collect money damages in the event of breach of this Section
6.2.
(4) Anything else in this Agreement or the Related Agreements
notwithstanding, each party shall have the right to disclose any information,
including Confidential Information of the other party or such other party's
Affiliates, in any filing with any regulatory agency, court or other authority
or any disclosure to a trustee of public debt of a party to the extent that the
disclosing party determines in good faith that it is required by Law, regulation
or the terms of such debt to do so, provided that any
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<PAGE>
such disclosure shall be as limited in scope as possible and shall be made only
after giving the other party as much notice as practicable of such required
disclosure and an opportunity to contest such disclosure if possible.
1.36 Retained Licenses. AT&T PCS and its Affiliates may use the AT&T
-----------------
PCS Retained Licenses, and may market and sell to their customers or others any
services that use such Licenses permitted under applicable Laws, in each case as
it may determine, and may otherwise deal with and permit others to deal with the
AT&T PCS Retained Licenses, except from and after the Closing Date to the extent
otherwise expressly agreed by any AT&T Party in any of the Related Agreements.
1.37 No Further Commitment. The Cash Equity Investors and the
---------------------
Management Stockholders have arranged for the Company to obtain financing under
this Agreement and will use all reasonable efforts to arrange for financing
under the Credit Agreement. It is anticipated that the Company, in consultation
and cooperation with the Cash Equity Investors, will have responsibility for
arranging for all of the additional debt and equity financing required by the
Company. Further, the Management Stockholders, in their capacity as officers and
employees of the Company, shall be responsible for conducting the day-to-day
operations of the Company, all under the control and supervision of the
Company's Board of Directors. In connection with the execution and delivery of
this Agreement, each of the Purchasers is agreeing to acquire Securities of the
Company and each of the Purchasers and certain of their respective Affiliates
are agreeing to enter into the Related Agreements to which each of them is a
party. The parties acknowledge and agree that, except to the extent expressly
set forth in this Agreement and such Related Agreements, neither AT&T PCS nor
any of its Affiliates has any legal, contractual or other obligation to acquire
debt or equity securities of the Company, provide or arrange for debt or equity
financing required by the Company, provide services to or otherwise assist the
Company in connection with the conduct of its business or in any other manner,
refrain from exercising its rights under this Agreement and the Related
Agreements (including, without limitation, the right to terminate the Network
Membership License Agreement in accordance with its terms) or refrain from
competing, directly or indirectly, with businesses conducted by the Company.
Nothing herein shall be construed to relieve any Person of its express
contractual obligations under this Agreement and the Related Agreements or from
any common law obligation of good faith relating to its performance of such
contractual obligations.
1.38 Use of Proceeds. The Company shall use the proceeds of the sale
---------------
of Securities only for the purpose described in Section 2.6 and in the written
statement referred to in Section 5.13.
1.39 SBIC Regulatory Provisions. (a) The Company shall notify each
--------------------------
SBIC Holder as soon as practicable (and, in any event, not later than 15 days)
prior to taking any action after which the number of record holders of the
Company's voting stock
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<PAGE>
would be increased from fewer than 50 to 50 or more, and the Company shall
notify each SBIC Holder of any other action or occurrence after which the number
of record holders of the Company's voting stock was increased (or would
increase) from fewer than 50 to 50 or more, as soon as practicable after the
Company becomes aware that such other action or occurrence has occurred or is
proposed to occur.
(b) Within 75 days after the Closing, the Company shall deliver to
each SBIC Holder a written statement certified by the Company's president or
chief financial officer describing in reasonable detail the use of the proceeds
of the sale of Securities hereunder by the Company and its Subsidiaries. In
addition to any other rights granted hereunder, the Company shall grant each
SBIC Holder and the United States Small Business Administration (the "SBA")
---
access to the Company's records for the purpose of verifying the use of such
proceeds to the extent required pursuant to SBIC Regulations.
(c) Promptly after the end of each fiscal year (but in any event
prior to February 28 of each year), the Company shall deliver to each SBIC
Holder a written assessment of the economic impact of each SBIC Holder's
investment in the Company, specifying the full-time equivalent jobs created or
retained in connection with the investment, the impact of the investment on the
revenues and profits of the business and on taxes paid by the business and its
employees.
(d) During the one-year period commencing on the Closing Date, the
Company shall not engage in any activity which constitutes an ineligible
business activity (within the meaning of the SBIC Regulations as in effect on
the date hereof).
1.40 Regulatory Compliance Cooperation. In the event that any SBIC
---------------------------------
Holder reasonably determines that it has a Regulatory Problem, to the extent
reasonably necessary, such SBIC Holder shall have the right to transfer its
Securities (and any shares of Common Stock issued upon conversion thereof) to
another Person without regard to any restrictions on transfer set forth in this
Agreement or in Section 4.1(c) of the Stockholders Agreement and without
complying with the provisions of Section 4.3 of the Stockholders Agreement, but
subject to the other provisions of the Stockholders Agreement and federal and
state securities law restrictions, and the Company shall take all such actions
as are reasonably requested by such SBIC Holder in order to (i) effectuate and
facilitate such transfer by such SBIC Holder of any Securities of the Company
then held by such SBIC Holder to such Person, (ii) permit such SBIC Holder (or
any of its Affiliates) to exchange all or any portion of voting Securities then
held by it on a share-for-share basis for shares of a class of non-voting
Securities of the Company, which non-voting Securities shall be identical in all
respects to such voting Securities, except that such non-voting Securities (or
Common Stock, as applicable) shall be non-voting and shall be convertible into
voting Securities (or Common Stock, as applicable) on such terms as are
requested by such SBIC Holder in light of regulatory considerations then
prevailing, (iii) continue and preserve the respective allocation of the voting
interests with
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<PAGE>
respect to the Company arising out of the SBIC Holder's ownership of voting
Securities and/or provided for in the Stockholders Agreement before the
transfers and amendments referred to in this Section (including entering into
such additional agreements as are reasonably requested by such SBIC Holder to
permit any Person(s) designated by such SBIC Holder) to exercise any voting
power which is relinquished by such SBIC Holder and (iv) amend this Agreement,
the Restated Certificate, and any other related documents, agreements or
instruments to effectuate and reflect the foregoing. The parties to this
Agreement agree to vote their Securities in favor of such amendments and
actions.
1.41 Permitted Pre-Closing Expenditures.
----------------------------------
(1) AT&T PCS hereby irrevocably and unconditionally commits (the
"Pre-Closing Commitment") to repay Pre-Closing Advances in the aggregate amount
of up to $2.5 million in accordance with the terms of Section 6.8(f). AT&T PCS
may, in its sole discretion, by notice to the other parties given prior to the
later of (i) the date 60 days after the date hereof, and (ii) the date five
business days after the expiration of the initial 30-day public notice period in
respect of the FCC transfer applications filed in connection with the
Transactions, increase the amount of the Pre-Closing Commitment to $10 million.
(2) The Cash Equity Investors hereby irrevocably and unconditionally
commit, from time to time upon 6 business days' notice from the Company, to make
unsecured, non-interest bearing advances ("Pre-Closing Advances") to the Company
--------------------
evidenced by notes, such notes to be in form satisfactory to the majority-in-
interest of the Cash Equity Investors (the "Pre-Closing Notes"), pro rata based
-----------------
on their respective Aggregate Commitments, in an amount up to the aggregate
amount of the Pre-Closing Commitment (as it may be increased).
(3) Prior to the Closing, the Company shall request Pre-Closing
Advances and shall use the proceeds thereof only to make Pre-Closing
Expenditures. The Company shall not incur obligations (including any deferred or
contingent obligations) in excess of the amounts set forth on Schedule 1.1,
without regard to lease commitments.
(4) The Company shall furnish each of the Purchasers with written
monthly reports detailing any Pre-Closing Advances, Pre-Closing Expenditures and
related activities.
(5) Except to the extent Pre-Closing Notes are converted to capital
at the election of the Cash Equity Investors in accordance with the second
sentence of Section 3.2(b), the Company shall repay the Pre-Closing Advances (if
any) on the Closing Date, concurrently with the Closing.
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<PAGE>
(6) If this Agreement is terminated in accordance with the terms
hereof prior to the Closing, AT&T PCS shall repay any Pre-Closing Advances then
outstanding (up to the amount of the Pre-Closing Commitment) within five
business days after the date of termination, such payment to be made against the
transfer and assignment, if and to the extent requested by AT&T PCS, by the
Company to AT&T PCS or its designee(s), free and clear of all Liens (other than
Permitted Liens), of any asset, property or right acquired by the Company with
the proceeds of such Pre-Closing Advances.
ARTICLE VII
CLOSING CONDITIONS
------------------
1.42 Conditions to Obligations of All Parties. The obligation of each
----------------------------------------
of the parties to consummate the Transactions contemplated to occur at the
Closing shall be conditioned on the following, unless waived by each of the
parties:
(1) Any applicable waiting period under the HSR Act shall have
expired or been terminated.
(2) The Consent of the FCC to the License Transfer shall have been
obtained pursuant to a Final Order, free of any conditions materially adverse to
the Company or any of the Purchasers. For the purposes of this paragraph, "Final
-----
Order" means an action or decision that has been granted by the FCC as to which
- -----
(i) no request for a stay or similar request is pending, no stay is in effect,
the action or decision has not been vacated, reversed, set aside, annulled or
suspended and any deadline for filing such request that may be designated by
statute or regulation has passed, (ii) no petition for rehearing or
reconsideration or application for review is pending and the time for the filing
of any such petition or application has passed, (iii) the FCC does not have the
action or decision under reconsideration on its own motion and the time within
which it may effect such reconsideration has passed and (iv) no appeal is
pending including other administrative or judicial review, or in effect and any
deadline for filing any such appeal that may be designated by statute or rule
has passed.
(3) All Consents by any Governmental Authority (other than the
Consents referred to in paragraphs (a) and (b) above) required to permit the
consummation of the Transactions, the failure to obtain or make which would be
reasonably expected to have a Material Adverse Effect on the Company or any of
the Purchasers or materially adversely affect the Transactions or its ability to
perform its obligations under the Related Agreements, shall have been obtained
or made.
(4) No preliminary or permanent injunction or other order, decree or
ruling issued by a Governmental Authority, nor any statute, rule, regulation or
executive order promulgated or enacted by any Governmental Authority, shall be
in effect that
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<PAGE>
would (i) impose material limitations on the ability of any party to consummate
the Transactions or prohibit such consummation, or (ii) impair in any material
respect the operation of the Company.
1.43 Conditions to the Obligations of the Company and the Management
---------------------------------------------------------------
Stockholders. The obligation of the Company and the Management Stockholders to
- ------------
consummate the Transactions contemplated to occur at the Closing shall be
further conditioned upon the satisfaction or fulfillment, at or prior to the
Closing, of the following conditions, unless waived by the Company:
(1) The representations and warranties of each of the Purchasers
contained herein and in the Related Agreements shall be true and correct in all
material respects (except for representations and warranties that are qualified
as to materiality, which shall be true and correct), in each case when made and
at and as of the Closing (except for representations and warranties made as of a
specified date, which shall be true and correct as of such date) with the same
force and effect as though made at and as of such time, except for inaccuracies
in respect of the representations and warranties set forth in Sections 4.3, 4.5,
5.3 and 5.5 and the third sentence of Section 4.6 (disregarding any
qualifications as to materiality contained therein) that in the aggregate would
not be reasonably expected to have a Material Adverse Effect on the Company or
materially adversely affect the Transactions or its ability to perform its
obligations under the Related Agreements.
(2) Each Purchaser shall have performed in all material respects all
agreements contained herein or in the Related Agreements required to be
performed by it at or before the Closing.
(3) An officer of each of the Purchasers shall have delivered to the
Company and the Management Stockholders a certificate, dated the Closing Date,
certifying as to the fulfillment of the conditions set forth in paragraphs (a)
and (b) above as to such Purchaser.
(4) The Company shall have been furnished with an opinion of counsel
to each of AT&T PCS and each Cash Equity Investor, each dated the Closing Date,
in substantially the form of Exhibits H and J, respectively.
(5) The Company shall have been furnished with an opinion of special
FCC counsel to AT&T PCS, dated the Closing Date, in substantially the form of
Exhibit I.
(6) Each of the Related Agreements shall have been executed and
delivered by the parties thereto (other than the Company and the Management
Stockholders) and shall be in full force and effect.
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<PAGE>
(7) All corporate and other proceedings of each of the Purchasers in
connection with the License Transfer and the other Transactions, and all
documents and instruments incident thereto, shall be reasonably satisfactory in
form and substance to the Company, and each of the Purchasers shall have
delivered to the Company all such receipts, documents, instruments and
certificates, in form and substance reasonably satisfactory to the Company,
which the Company shall have reasonably requested.
1.44 Conditions to the Obligations of AT&T PCS. The obligation of
-----------------------------------------
AT&T PCS to consummate the Transactions contemplated to occur at the Closing
shall be further conditioned upon the satisfaction or fulfillment, at or prior
to the Closing, of the following conditions, unless waived by AT&T PCS:
(1) The representations and warranties of each of the Company, each
Cash Equity Investor and each Management Stockholder contained herein and in the
Related Agreements shall be true and correct in all material respects (except
for representations and warranties that are qualified as to materiality, which
shall be true and correct), in each case when made and at and as of the Closing
(except for representations and warranties made as of a specified date, which
shall be true and correct as of such date) with the same force and effect as
though made at and as of such time, except for inaccuracies in respect of the
representations and warranties set forth in Sections 4.3, 4.5, 5.3 and 5.5
(disregarding any qualifications as to materiality contained therein) that in
the aggregate would not be reasonably expected to have a Material Adverse Effect
on the Company or materially adversely affect the Transactions or its ability to
perform its obligations under the Related Agreements.
(2) Each of the Company, each Cash Equity Investor and each
Management Stockholder shall have performed in all material respects all
agreements contained herein and in the Related Agreements required to be
performed by it at or before the Closing.
(3) An officer of each of the Company and each Cash Equity Investor
and each Management Stockholder shall have delivered to AT&T PCS a certificate,
dated the Closing Date, certifying as to the fulfillment of the conditions set
forth in paragraphs (a) and (b) above as to itself and, in the case of each
Management Stockholder, the Company.
(4) AT&T PCS shall have been furnished with an opinion of counsel to
each Cash Equity Investor and the Company and the Management Stockholders, and
an opinion of special FCC counsel to the Company, each dated the Closing Date,
substantially in the form of Exhibits J, L and M respectively.
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<PAGE>
(5) Each of the Related Agreements shall have been executed and
delivered by the parties thereto (other than the AT&T Parties) and shall be in
full force and effect.
(6) The terms, conditions and provisions of the Credit Documents
shall be satisfactory to AT&T PCS in all material respects, including without
limitation provisions relating to principal amounts, rates of interest, terms of
mandatory and permitted prepayments, prepayment charges (if any), fees and
expenses, representations and warranties, affirmative and negative covenants,
conditions to disbursements of loan funds, defaults and remedies therefor, and
collateral, it being acknowledged that such terms, conditions and provisions
shall be deemed to be satisfactory to AT&T PCS if they are in the aggregate at
least as favorable to the Company as the terms of the commitment letter referred
to in Section 5.11(a). The disbursements of loan funds contemplated by the
Credit Agreement to occur on the Closing Date shall be made in accordance with
the terms thereof concurrently with the Closing and AT&T PCS shall have received
such evidence thereof as it may request.
(7) Each Cash Equity Investor and each Management Stockholder shall
have executed and delivered to the Company a Pledge Agreement, substantially in
the form of Exhibit K.
(8) All corporate and other proceedings of each of the Company and
each Cash Equity Investor in connection with the License Transfer and the other
Transactions, and all documents and instruments incident thereto, shall be
reasonably satisfactory in form and substance to AT&T PCS, and each of the
Company, each Cash Equity Investor and each Management Stockholder shall have
delivered to AT&T PCS all such receipts, documents, instruments and
certificates, in form and substance reasonably satisfactory to AT&T PCS, which
AT&T PCS shall have reasonably requested.
(9) On the Closing Date, counsel to AT&T PCS shall have received the
legal fees and expenses required to be paid or reimbursed by the Company as
provided in Section 10.4 for statements rendered on or prior to the Closing
Date.
1.45 Conditions to the Obligations of the Cash Equity Investors. The
----------------------------------------------------------
obligation of each Cash Equity Investor to consummate the Transactions
contemplated to occur at the Closing shall be further conditioned upon the
satisfaction or fulfillment, at or prior to the Closing, of the following
conditions, unless waived by such Cash Equity Investor:
(1) The representations and warranties of each of AT&T PCS, the
Company, each other Cash Equity Investor and each Management Stockholder
contained herein and in the Related Agreements shall be true and correct in all
material respects
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<PAGE>
(except for representations and warranties that are qualified as to materiality,
which shall be true and correct), in each case when made and at and as of the
Closing (except for representations and warranties made as of a specified date,
which shall be true and correct as of such date) with the same force and effect
as though made at and as of such time, except for inaccuracies in respect of the
representations and warranties set forth in Sections 4.3, 4.5, 5.3 and 5.5 and
the third sentence of Section 4.6 (disregarding any qualifications as to
materiality contained therein) that in the aggregate would not be reasonably
expected to have a Material Adverse Effect on the Company or materially
adversely affect the Transactions or its ability to perform its obligations
under the Related Agreements.
(2) Each of AT&T PCS, the Company, each other Cash Equity Investor
and each Management Stockholder shall have performed in all material respects
all agreements contained herein and in the Related Agreements required to be
performed by it at or before the Closing.
(3) An officer of each of AT&T PCS, the Company each other Cash
Equity Investor and each Management Stockholder shall have delivered to each
Cash Equity Investor a certificate, dated the Closing Date, certifying as to the
fulfillment of the conditions set forth in paragraphs (a) and (b) above as to
itself and, in the case of each Management Stockholder, the Company.
(4) Such Cash Equity Investor shall have been furnished with an
opinion of counsel to each of AT&T PCS, each other Cash Equity Investor, and the
Company and the Management Stockholders, each dated the Closing Date, in
substantially the form of Exhibits H, J and L, respectively.
(5) Each Cash Equity Investor shall have been furnished with an
opinion of special FCC counsel to each of AT&T PCS and the Company dated the
Closing Date, in substantially the form of Exhibits I and M, respectively.
(6) Each of the Related Agreements shall have been executed and
delivered by the parties thereto other than such Cash Equity Investor and shall
be in full force and effect.
(7) The terms, conditions and provisions of the Credit Documents
shall be satisfactory to each Cash Equity Investor in all material respects,
including without limitation provisions relating to principal amounts, rates of
interest, terms or mandatory and permitted payment and prepayment, prepayment
charges (if any), fees and expenses, representations and warranties, affirmative
and negative covenants, conditions to disbursements of loan funds, defaults and
remedies therefor, and collateral, it being acknowledged that such terms,
conditions and provisions shall be deemed to be satisfactory to each Cash Equity
Investor if they are in the aggregate at least as favorable
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<PAGE>
to the Company as the terms of the commitment letter referred to in Section
5.11(a). The disbursements of loan funds contemplated by the Credit Agreement to
occur on the Closing Date shall be made in accordance with the terms thereof
concurrently with the Closing and each Cash Equity Investor shall have received
such evidence thereof as it may request.
(8) All corporate and other proceedings of each of AT&T PCS, each
other Cash Equity Investor and the Company in connection with the License
Transfer and the other Transactions, and all documents and instruments incident
thereto, shall be reasonably satisfactory in form and substance to each Cash
Equity Investor, and each of AT&T PCS, each other Cash Equity Investor, the
Company and each Management Stockholder shall have delivered to each Cash Equity
Investor all such receipts, documents, instruments and certificates, in form and
substance reasonably satisfactory to such Cash Equity Investor, which such Cash
Equity Investor shall have reasonably requested.
(9) On the Closing Date, counsel to each Cash Equity Investor shall
have received the legal fees and expenses required to be paid or reimbursed by
the Company as provided in Section 10.4 for statements rendered on or prior to
the Closing Date.
(10) For each SBIC Holder, the Company shall have prepared the Size
Status Declaration on Form 480, the Assurance of Compliance for
Nondiscrimination on Form 652 and the Portfolio Financing Report on Form 1031
(Parts A and B) (collectively, the "SBA Compliance Documents"), the Company
------------------------
shall have duly executed and delivered the Forms 480 and 652 to each SBIC
Holder, and all of the information set forth in the SBA Compliance Documents
shall be true and correct in all respects. The Company shall have delivered a
list, after giving effect to the transactions contemplated by this Agreement,
of: (a) the name of each of the Company's directors, (b) the name and title of
each of the Company's officers and (c) the name of each of the Company's
stockholders and the number and class of shares held by each stockholder.
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
----------------------------
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<PAGE>
1.46 Survival. The representations and warranties made in this
--------
Agreement shall survive the Closing until the second anniversary thereof and
shall thereupon expire together with any right to indemnification in respect
thereof (except to the extent a written notice asserting a claim for breach of
any such representation or warranty and describing such claim in reasonable
detail shall have been given prior to such date to the party which made such
representation or warranty). The covenants and agreements contained herein to
be performed or complied with prior to the Closing shall expire at the Closing.
The covenants and agreements contained in this Agreement to be performed or
complied with after the Closing shall survive the Closing; provided that the
right to indemnification pursuant to this Article VIII in respect of a breach of
a representation or warranty shall expire on the second anniversary of the
Closing (except to the extent written notice asserting a claim thereunder and
describing such claim in reasonable detail shall have been given prior to such
date to the party from whom such indemnification is sought). After the Closing,
the sole and exclusive remedy of the parties for any breach or inaccuracy of any
representation or warranty contained in this Agreement, or any other claim
(whether or not alleging a breach of this Agreement) that arises out of the
facts and circumstances constituting such breach or inaccuracy, shall be the
indemnity provided in this Article VIII.
1.47 Indemnification by AT&T PCS. AT&T PCS shall indemnify and hold
---------------------------
harmless each of the Company, each Cash Equity Investor, each Management
Stockholder and their respective Affiliates, and the shareholders, members,
managers, officers, employees, agents and/or the legal representatives of any of
them (each, a "Section 8.2 Indemnified Party"), against all liabilities and
-----------------------------
expenses (including amounts paid in satisfaction of judgments, in compromise, as
fines and penalties, and as counsel fees) (collectively, "Losses") incurred by
------
him or it in connection with the investigation, defense, or disposition of any
action, suit or other proceeding in which any Section 8.2 Indemnified Party may
be involved or with which he or it may be threatened that arises out of or
results from (a) any representation or warranty of AT&T PCS contained in this
Agreement or any Related Agreement being untrue in any material respect as of
the date on which it was made or (b) any material default by AT&T PCS or any of
its Affiliates in the performance of their respective obligations under this
Agreement and any Related Agreement, except to the extent (but only to the
extent) any such Losses arise out of or result from the gross negligence or
willful misconduct of such Section 8.2 Indemnified Party or its Affiliates.
1.48 Indemnification by the Cash Equity Investors. Each Cash Equity
--------------------------------------------
Investor, severally and not jointly, shall indemnify and hold harmless each of
AT&T PCS, the other Cash Equity Investors, the Company and each Management
Stockholder and their respective Affiliates, and the shareholders, members,
managers, officers, employees, agents and/or the legal representatives of any of
them (each, a "Section 8.3 Indemnified Party"), against all Losses incurred by
-----------------------------
him or it in connection with the investigation, defense, or disposition of any
action, suit or other proceeding in which any
-34-
<PAGE>
Section 8.3 Indemnified Party may be involved or with which he or it may be
threatened that arises out of or results from (a) any representation or warranty
of such Cash Equity Investor contained in this Agreement or any Related
Agreement being untrue in any material respect as of the date on which it was
made or (b) any material default by such Cash Equity Investor or any of its
Affiliates in the performance of their respective obligations under this
Agreement and any Related Agreement, except to the extent (but only to the
extent) any such Losses arise out of or result from the gross negligence or
willful misconduct of such Section 8.3 Indemnified Party or its Affiliates.
1.49 Indemnification by the Management Stockholders. Each Management
----------------------------------------------
Stockholder, severally and not jointly, shall indemnify and hold harmless AT&T
PCS, the Cash Equity Investors and the Company and their respective Affiliates,
and the shareholders, members, managers, officers, employees, agents and/or the
legal representatives of any of them (each, a "Section 8.4 Indemnified Party"),
-----------------------------
against all Losses incurred by him or it in connection with the investigation,
defense, or disposition of any action, suit or other proceeding in which any
Section 8.4 Indemnified Party may be involved or with which he or it may be
threatened that arises out of or results from (a) any representation or warranty
of such Management Stockholder contained in this Agreement or any Related
Agreement being untrue in any material respect as of the date on which it was
made or (b) any material default by such Management Stockholder or any of his
Affiliates in the performance of their respective obligations under this
Agreement and any Related Agreement, except to the extent (but only to the
extent) any such Losses arise out of or result from the gross negligence or
willful misconduct of such Section 8.4 Indemnified Party or its Affiliates;
provided that the aggregate liability of each Management Stockholder to
- --------
indemnify Section 8.4 Indemnified Parties against Losses arising out of or
resulting from the untruth in any material respect of any representation or
warranty as to the Company made by such Management Stockholder in this Agreement
or any Related Agreement shall be limited to the shares of Common Stock of the
Company then held by such Management Stockholder, and Section 8.4 Indemnified
Parties seeking indemnification against any Management Stockholder for such
Losses hereunder shall not have recourse to any other assets of such Management
Stockholder.
1.50 Indemnification by the Company. The Company shall indemnify and
------------------------------
hold harmless each of AT&T PCS, each Cash Equity Investor and each Management
Stockholder and their respective Affiliates, and the shareholders, members,
managers, officers, employees, agents and/or the legal representatives of any of
them (each, a "Section 8.5 Indemnified Party"), against all Losses incurred by
-----------------------------
him or it in connection with the investigation, defense, or disposition of any
action, suit or other proceeding in which any Section 8.5 Indemnified Party may
be involved or with which he or it may be threatened that arises out of or
results from (a) any representation or warranty of the Company contained in this
Agreement or any Related Agreement being untrue in any material respect as of
the date on which it was made or (b) any material default by the
-35-
<PAGE>
Company or any of its Affiliates in the performance of their respective
obligations under this Agreement and any Related Agreement, except to the extent
(but only to the extent) any such Losses arise out of or result from the gross
negligence or willful misconduct of such Section 8.5 Indemnified Party or its
Affiliates.
1.51 Procedures.
----------
(1) The terms of this Section 8.6 shall apply to any claim (a
"Claim") for indemnification under the terms of Sections 8.2, 8.3, 8.4 or 8.5.
-----
The Section 8.2 Indemnified Party, Section 8.3 Indemnified Party, Section 8.4
Indemnified Party, or Section 8.5 Indemnified Party (each, an "Indemnified
-----------
Party"), as the case may be, shall give prompt written notice of such Claim to
- -----
the indemnifying party (the "Indemnifying Party") under the applicable Section,
------------------
which party may assume the defense thereof, provided that any delay or failure
to so notify the Indemnifying Party shall relieve the Indemnifying Party of its
obligations hereunder only to the extent, if at all, that it is materially
prejudiced by reason of such delay or failure. The Indemnified Party shall have
the right to approve any counsel selected by the Indemnifying Party and to
approve the terms of any proposed settlement, such approval not to be
unreasonably delayed or withheld (unless such settlement provides only, as to
the Indemnified Party, the payment of money damages actually paid by the
Indemnifying Party and a complete release of the Indemnified Party in respect of
the claim in question). Notwithstanding any of the foregoing to the contrary,
the provisions of this Article VIII shall not be construed so as to provide for
the indemnification of any Indemnified Party for any liability to the extent
(but only to the extent) that such indemnification would be in violation of
applicable law or that such liability may not be waived, modified or limited
under applicable law, but shall be construed so as to effectuate the provisions
of this Article VIII to the fullest extent permitted by law.
(2) In the event that the Indemnifying Party undertakes the defense
of any Claim, the Indemnifying Party will keep the Indemnified Party advised as
to all material developments in connection with such Claim, including, but not
limited to, promptly furnishing the Indemnified Party with copies of all
material documents filed or served in connection therewith.
(3) In the event that the Indemnifying Party fails to assume the
defense of any Claim within ten business days after receiving written notice
thereof, the Indemnified Party shall have the right, subject to the Indemnifying
Party's right to assume the defense pursuant to the provisions of this Article
VIII, to undertake the defense, compromise or settlement of such Claim for the
account of the Indemnifying Party. Unless and until the Indemnified Party
assumes the defense of any Claim, the Indemnifying Party shall advance to the
Indemnified Party any of its reasonable attorneys' fees and other costs and
expenses incurred in connection with the defense of any such action or
proceeding. Each Indemnified Party shall agree in writing prior to any
-36-
<PAGE>
such advancement that, in the event he or it receives any such advance, such
Indemnified Party shall reimburse the Indemnifying Party for such fees, costs
and expenses to the extent that it shall be determined that he or it was not
entitled to indemnification under this Article VIII.
(4) In no event shall an Indemnifying Party be required to pay in
connection with any Claim for more than one firm of counsel (and local counsel)
for each of the following groups of Indemnified Parties: (i) AT&T PCS, its
Affiliates and their respective shareholders, members, managers, officers,
employees, agents and/or the legal representatives; (ii) the Cash Equity
Investors, their respective Affiliates and the shareholders, members, managers,
officers, employees, agents and/or the legal represen tatives of any of them;
and (iii) the Company and the Management Stockholders, their respective
Affiliates and the shareholders, members, managers, officers, employees, agents
and/or the legal representatives of any of them.
1.52 Registration Rights. Notwithstanding anything to the contrary in
-------------------
this Article VIII, the indemnification and contribution provisions set forth in
Sections 5(e) and 5(f) of the Stockholders Agreement shall govern any claim made
with respect to the registration statements filed pursuant to Section 5 of the
Stockholders Agreement or sales made thereunder.
1.53 Limit on Indemnity. So long as the Company does not conduct any
------------------
business or engage in any activities other than those described in the first
sentence of the definition of "Business" (as such term is defined in the
Stockholders Agreement), each party waives its right to indemnification under
this Article VIII or any other right to assert any claim arising from any
inaccuracy in the Company's representations and warranties set forth in the
first and last sentence of Section 5.13 or the violation by the Company of the
covenant set forth in Section 6.6(d) to the extent such Section relates to
ineligible or prohibited activities of SBICs.
ARTICLE IX
TERMINATION
-----------
1.54 Termination. This Agreement may be terminated, and the
-----------
transactions contemplated hereby abandoned, without further obligation of any
party, except as set forth herein, at any time prior to the Closing Date:
(1) by mutual written consent of the parties;
(2) by Cash Equity Investors with Aggregate Commitments equal to at
least a majority of the Aggregate Commitments of all Cash Equity Investors, by
written notice to the other parties, if the Closing shall not have occurred on
or before the date 4
-37-
<PAGE>
months after the date hereof, which written notice shall be effective only if it
is given within 10 days after such 4-month anniversary date, provided that, the
Cash Equity Investors may not terminate this Agreement pursuant to this Section
9.1(b) if AT&T PCS has timely given notice increasing the Pre-Closing Commitment
to $10 million in accordance with the terms of the second sentence of Section
6.8(a);
(3) by Cash Equity Investors with Aggregate Commitments equal to at
least a majority of the Aggregate Commitments of all Cash Equity Investors, by
written notice to the other parties, if the Closing shall not have occurred on
or before the date 7 months after the date hereof, which written notice shall be
effective only if it is given within 10 days after such 7-month anniversary
date, provided that none of the Cash Equity Investors electing to exercise such
right is in material breach of its obligations under this Agreement;
(4) by any party by written notice to the other parties, if the
Closing shall not have occurred on or before the date 10 months after the date
hereof, provided that the party electing to exercise such right is not otherwise
in breach of its obligations under this Agreement; or
(5) by any party by written notice to the other parties, if the
consummation of the Transactions shall be prohibited by a final, non-appealable
order, decree or injunction of a court of competent jurisdiction.
1.55 Effect of Termination. (a) In the event of a termination of
---------------------
this Agreement, no party hereto shall have any liability or further obligation
to any other party to this Agreement, except as set forth in paragraph (b)
below, and except that nothing herein will relieve any party from liability for
any breach by such party of this Agreement.
(1) In the event of a termination of this Agreement pursuant to
Section 9.1, all provisions of this Agreement shall terminate, except Section
6.2 and paragraphs (a) and (f) of Section 6.8 and Articles VIII and X.
(2) Whether or not the Closing occurs, except as otherwise expressly
provided in this Agreement, all costs and expenses incurred in connection with
this Agreement and the Transactions shall be paid by the party incurring such
expenses.
ARTICLE X
MISCELLANEOUS PROVISIONS
------------------------
1.56 Amendment and Modification. This Agreement may be amended,
--------------------------
modified or supplemented only by written agreement of each of the parties.
-38-
<PAGE>
1.57 Waiver of Compliance; Consents. Any failure of any of the
------------------------------
parties to comply with any obligation, covenant, agreement or condition herein
may be waived by the party or parties entitled to the benefits thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires
or permits consent by or on behalf of any party hereto, such consent shall be
given in writing in a manner consistent with the requirement for a waiver of
compliance as set forth in this Section 10.2.
1.58 Notices. All notices or other communications hereunder shall be
-------
in writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by facsimile transmission, or by registered or
certified mail (return receipt requested), postage prepaid, with an
acknowledgment of receipt signed by the addressee or an authorized
representative thereof, addressed as follows (or to such other address for a
party as shall be specified by like notice; provided that notice of a change of
address shall be effective only upon receipt thereof):
If to AT&T PCS:
c/o AT&T Wireless Services, Inc.
5000 Carillon Point
Kirkland, Washington 98033
Attention: William W. Hague
Facsimile: (206) 828-8451
With a copy to:
AT&T Corp.
295 North Avenue
Basking Ridge, NJ 07920
Attention: Corporate Secretary
Facsimile: (908)
Friedman Kaplan & Seiler LLP
875 Third Avenue, 8th Floor
New York, New York 10022
Attention: Daniel M. Taitz
Facsimile: (212) 355-6401
-39-
<PAGE>
If to a Cash Equity Investor, to its address set forth on Schedule I.
With a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Mark S. Wojciechowski
Facsimile: (212) 262-1910
If to a Management Stockholder, to him:
c/o Triton Communications, L.L.C.
101 Lindenwood Drive, Suite 125
Malvern, PA 19355
Facsimile: (610) 993-2683
With a copy to:
Kleinbard Bell & Brecker
1900 Market Street, Suite 700
Philadelphia, PA 19103
Attention: Howard J. Davis
Facsimile: (215) 568-0140
If to the Company, to it:
c/o Triton Communications, L.L.C.
101 Lindenwood Drive, Suite 125
Malvern, PA 19355
Attention: Michael E. Kalogris
Steven R. Skinner
Facsimile: (610) 993-2683
With a copy to each other party sent to the addresses set forth in
this Section 10.3.
1.59 Expenses. The Company agrees, in the event the Transactions are
--------
consummated, to pay, and save the Purchasers harmless against, the reasonable
fees and disbursements of counsel to each of the Purchasers in connection with
the preparation, negotiation, execution and delivery of this Agreement, the
Related Agreements, the Credit Documents, the instruments and documents executed
pursuant hereto or thereto or in connection herewith or therewith, and the
consummation of the Transactions.
-40-
<PAGE>
1.60 Parties in Interest; Assignment. This Agreement is binding upon
-------------------------------
and is solely for the benefit of the parties hereto and their respective
permitted successors, legal representatives and permitted assigns. None of the
Company, any Cash Equity Investor or any Management Stockholder may assign its
rights and obligations hereunder without the prior written consent of each of
the other parties, except either Morgan Entity may assign its rights and
obligations hereunder to the other without any prior consent. AT&T PCS may not
assign its rights and obligations hereunder without the prior written consent of
the other parties, except that AT&T PCS shall have the right to assign to AT&T
Corp., or to one or more direct or indirect wholly-owned Subsidiaries of AT&T
Corp., any and all rights and obligations of AT&T PCS under this Agreement;
provided that such assignee shall have assumed in writing all the obligations of
AT&T PCS hereunder and no such assignment shall relieve AT&T PCS of its
obligations hereunder, except that the Company shall have the right to assign
its rights under this Agreement to the lenders (the "Lenders") named in the
Credit Agreement, as security pursuant to the terms of the Credit Documents, it
being understood that as a result of any such assignment to the Lenders, after
an event of default under the Credit Agreement and the expiration of any
applicable grace and cure periods thereunder, the Lenders shall have the right,
on behalf of the Company, to enforce the obligation of each Cash Equity Investor
to make capital contributions to the Company in the amounts and on the dates
specified on Schedule I (or such earlier dates as may be established in
accordance with the terms of the Stockholders Agreement) and that, in connection
with any such assignment to the Lenders, the Lenders shall not assume any
obligations of the Company hereunder.
1.61 Additional Cash Equity Investors. The Company anticipates
--------------------------------
offering (the "Subsequent Offering") to issue and sell up to 150,000 shares of
-------------------
Series C Preferred Stock to Fleet Equity Partners, First Union Capital Partners
Inc. and Duff Ackerman Goodrich & Associates, L.P. The Subsequent Offering
shall expire no later than 90 days after the date hereof. Any sale of Series C
Preferred Stock shall be on the terms and subject to the conditions of this
Agreement applicable to the Cash Equity Investors, as the same are modified and
supplemented by the terms of this Section 10.6.
(1) Any offeree in the Subsequent Offering may commit to purchase no
less than 50,000 shares of Series C Preferred Stock by executing a counterpart
of this Agreement (together with any other materials the Company may require in
connection with the Subsequent Offering) and delivering the same to the Company
no later than the expiration date of the Subsequent Offering. Any offeree
electing to purchase shares pursuant to the Subsequent Offering is sometimes
referred to herein, individually, as an "Additional Purchaser" and,
--------------------
collectively, as the "Additional Purchasers".
---------------------
(2) In the event that Additional Purchasers commit to purchase
shares of Series C Preferred Stock, the Aggregate Commitment, Initial Cash
Contribution and Unfunded Commitment of, and the number of shares of Series C
Preferred Stock to be
-41-
<PAGE>
purchased by, each of the Initial Cash Equity Investors shall be reduced
pro rata (or in such other proportion as may be agreed by the Initial Cash
Equity Investors) so that the Aggregate Commitment, Initial Cash Contribution
and Unfunded Commitment of, and the number of shares of Series C Preferred Stock
to be issued to, all Cash Equity Investors (including the Additional Purchasers)
is equivalent to such amounts set forth on Schedule I.
(3) In the event that Additional Purchasers commit to purchase
shares of Series C Preferred Stock, the Company shall furnish to the Purchasers,
promptly (and in any event within five days) following the expiration date of
the Subsequent Offering: (i) an amended form of Schedule I, reflecting the
commitments of the Additional Purchasers and the adjustments described in
Section 10.6(b), and (ii) copies of all documents executed and delivered by the
Additional Purchasers in connection with such Offering. From and after the date
of such delivery, all references in this Agreement to Schedule I shall be deemed
to refer to such amended form of Schedule I.
(4) At the Closing, each Additional Purchaser shall contribute to
the capital of the Company an amount equal to its Initial Cash Contribution.
1.62 Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of New York without giving
effect to the conflicts of law principles thereof. The parties hereto hereby
irrevocably and unconditionally consent to submit to the non-exclusive
jurisdiction of the courts of the State Of New York and of the United States of
America located in the County of New York, New York (the "New York Courts") for
---------------
any litigation arising out of or relating to this Agreement and the
Transactions, waive any objection to the laying of venue of any such litigation
in the New York Courts and agrees not to plead or claim in any New York Court
that such litigation brought therein has been brought in an inconvenient forum.
1.63 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
1.64 Interpretation. The article and section headings contained in
--------------
this Agreement are for convenience of reference only, are not part of the
agreement of the parties and shall not affect in any way the meaning or
interpretation of this Agreement. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the antecedent Person or Person may require.
1.65 Entire Agreement. This Agreement and the Related Agreements,
----------------
including the exhibits and schedules hereto and thereto and the certificates and
instruments delivered pursuant to the terms of this Agreement and the Related
-42-
<PAGE>
Agreements, embody the entire agreement and understanding of the parties hereto
in respect of the Transactions. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein or the Related Agreements. This
Agreement and the Related Agreements supersede all prior agreements and
understandings between the parties with respect to such Transactions.
1.66 Publicity. So long as this Agreement is in effect, the parties
---------
agree to consult with each other in issuing any press release or otherwise
making any public statement with respect to the Transactions, and no party shall
issue any press release or make any such public statement prior to such
consultation, except as may be required by Law. No press release or other
public statement by the parties hereto shall disclose any of the financial terms
of the Transactions without the prior consent of the other parties, except as
may be required by Law. A breach of the provisions of this Section 10.11 by a
party shall not give rise to any right to terminate this Agreement.
1.67 Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any New York Courts.
1.68 Remedies Cumulative. All rights, powers and remedies provided
-------------------
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
1.69 Authorized Agent of AT&T PCS. AT&T PCS hereby authorizes
----------------------------
Wireless PCS, Inc. as its agent, with full power to execute, in the name of and
on behalf of AT&T PCS, the Related Agreements to which AT&T PCS is a party and
any and all other documents that AT&T PCS is required to execute and deliver in
connection with the Closing, and to give and receive all notices, requests,
consents, amendments, demands and other communications to or from AT&T PCS
hereunder or thereunder. Each party hereto (other than AT&T PCS) shall be
entitled to rely on the full power and authority of Wireless PCS, Inc. to act on
behalf of AT&T PCS in accordance with this Section 10.14. Nothing contained in
this Section 10.14 shall relieve AT&T PCS from complying with its obligations
under this Agreement or any of the Related Agreements to which it is a party.
[signature pages follow]
-43-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
TRITON PCS, INC.
By:_________________________________
Name:
Title:
AT&T WIRELESS PCS INC.
By:_________________________________
Name:
Title:
Cash Equity Investors:
CB CAPITAL INVESTORS
By:_________________________________
Name:
Title:
J.P. MORGAN INVESTMENT CORPORATION
By:_________________________________
Name:
Title:
SIXTY WALL STREET SBIC FUND,
L.P.
By: Sixty Wall Street SBIC Corporation
its general partner
<PAGE>
By:_________________________________
PRIVATE EQUITY INVESTORS
III, L.P.
By: ______________, its general partner
By:_________________________________
Name:
Title:
EQUITY-LINKED INVESTORS-II
By: ______________, its general partner
By:_________________________________
Name:
Title:
TORONTO DOMINION CAPITAL (USA), INC.
By:_________________________________
Name:
Title:
Management Stockholders:
MICHAEL E. KALOGRIS
____________________________________
STEVEN R. SKINNER
____________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I DEFINITIONS................................................... 2
-----------
ARTICLE II CONTRIBUTIONS; PURCHASE AND SALE OF CERTAIN
-------------------------------------------
RESTRICTIONS ON TRANSFER..................................... 8
------------------------
2.1 AT & T PCS Contribution............................... 8
-----------------------
2.2 Cash Equity Invester Contributions.................... 8
----------------------------------
2.3 Management Stockholder Contributions.................. 9
------------------------------------
2.4 Purchase and Sale of Securities....................... 9
-------------------------------
2.5 Restrictive Legends................................... 10
-------------------
2.6 Use of Proceeds....................................... 10
---------------
ARTICLE III CLOSING....................................................... 11
-------
3.1 Time and Place of Closing............................. 11
-------------------------
3.2 Closing Actions and Deliveries........................ 11
------------------------------
3.3 Payment of Transfer Taxes............................. 12
-------------------------
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASERS.................. 12
--------------------------------------------
4.1 Organization, Power and Authority..................... 12
---------------------------------
4.2 Consents; No Conflicts................................ 13
----------------------
4.3 Litigation............................................ 14
----------
4.4 FCC Compliance........................................ 14
--------------
4.5 Brokers............................................... 14
-------
4.6 PCS Licenses.......................................... 14
------------
4.7 Capital Commitment.................................... 15
------------------
4.8 No Distribution....................................... 15
---------------
4.9 Investor Acknowledgments.............................. 15
------------------------
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
-----------------------------------------------------
MANAGEMENT STOCKHOLDERS....................................... 16
-----------------------
5.1 Organization, Power and Authority..................... 16
---------------------------------
5.2 Consents; No Conflicts................................ 17
----------------------
5.3 Litigation............................................ 18
----------
5.4 FCC Compliance........................................ 18
--------------
5.5 Brokers............................................... 18
-------
5.6 Newly Formed Company.................................. 18
--------------------
5.7 Capitalization........................................ 18
--------------
5.8 Shares................................................ 19
------
5.9 No Undisclosed Liabilities; Subsidiaries.............. 19
----------------------------------------
5.10 Offering of Securities; Subsequent Offering........... 20
-------------------------------------------
5.11 Loan Documents........................................ 20
--------------
5.12 Minimum Build-Out Plan................................ 21
----------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
5.13 Small Business Matters................................21
----------------------
5.14 No Distribution.......................................21
---------------
5.15 Investor Acknowledgments..............................21
------------------------
ARTICLE VI COVENANTS......................................................22
---------
6.1 Consummation of Transactions..........................22
----------------------------
6.2 Confidentiality.......................................23
---------------
6.3 Retained Licenses.....................................24
-----------------
6.4 No Further Commitment.................................24
---------------------
6.5 Use of Proceeds.......................................25
---------------
6.6 SBIC Regulatory Provisions............................25
--------------------------
6.7 Regulatory Compliance Cooperation.....................26
---------------------------------
6.8 Permitted Pre-Closing Expenditures....................26
----------------------------------
ARTICLE VII CLOSING CONDITIONS.............................................28
------------------
7.1 Conditions to Obligations of All Parties..............28
----------------------------------------
7.2 Conditions to the Obligations of the Company and the
----------------------------------------------------
Management Stockholders.............................28
-----------------------
7.3 Conditions to the Obligations of AT&T PCS.............30
-----------------------------------------
7.4 Conditions to the Obligations of
--------------------------------
the Cash Equity Investors...........................31
-------------------------
ARTICLE VIII SURVIVAL AND INDEMNIFICATION...................................33
----------------------------
8.1 Survival..............................................33
--------
8.2 Indemnification by AT&T PCS...........................34
---------------------------
8.3 Indemnification by the Cash Equity Investors..........34
--------------------------------------------
8.4 Indemnification by the Management Stockholders........34
----------------------------------------------
8.5 Indemnification By the Company........................35
------------------------------
8.6 Procedures............................................35
----------
8.7 Registration Rights...................................36
-------------------
8.8 Limit on Indemnity....................................37
------------------
ARTICLE IX TERMINATION................................................... 37
-----------
9.1 Termination...........................................37
-----------
9.2 Effect of Termination.................................38
---------------------
ARTICLE X MISCELLANEOUS PROVISIONS.......................................38
------------------------
10.1 Amendment and Modification............................38
--------------------------
10.2 Waiver of Compliance; Consents........................38
------------------------------
10.3 Notices...............................................38
-------
10.4 Expenses..............................................40
--------
10.5 Parties in Interest; Assignment.......................40
-------------------------------
10.6 Additional Cash Equity Investors......................41
--------------------------------
10.7 Applicable Law........................................42
--------------
10.8 Counterparts..........................................42
------------
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
10.9 Interpretation.......................................42
--------------
10.10 Entire Agreement.....................................42
----------------
10.11 Publicity............................................42
---------
10.12 Specific Performance.................................43
--------------------
10.13 Remedies Cumulative..................................43
-------------------
10.14 Authorized Agent of AT&T PCS.........................43
----------------------------
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS
-----------------
(continued)
<TABLE>
<CAPTION>
Page
<S> ----
<C>
Schedules
Schedule I - Cash Equity Investors and Commitments
Schedule II - Management Stockholders
Schedule III - PCS Licenses
Schedule IV - Company Territory
Schedule 1.1 - Pre-Closing Expenditures
Schedule 2.1 - Description of AT&T PCS Contributed and Retained Licenses
Schedule 4.2 - Purchaser Consents
Schedule 4.6 - AT&T PCS FCC Proceedings
Schedule 5.2 - Company and Management Stockholder Consents
Schedule 5.7 - Equity Ownership
Schedule 5.12 - Minimum Build-Out Plan
Exhibits
Exhibit A - Form of Employment Agreement
Exhibit B - Form of Network Membership License Agreement
Exhibit C - Form of Resale Agreement
Exhibit D - Form of Restated Bylaws
Exhibit E - Form of Restated Certificate
Exhibit F - Form of Roaming Agreement
Exhibit G - Form of Stockholders Agreement
Exhibit H - Form of Opinion of Counsel to AT&T PCS
Exhibit I - Form of Opinion of FCC Counsel to AT&T PCS
Exhibit J - Form of Opinion of Counsel to Cash
Equity Investors
Exhibit K - Form of Pledge Agreement
Exhibit L - Form of Opinion of Counsel to the Company and the
Management Stockholders
Exhibit M - Form of Opinion of FCC Counsel to the Company
Exhibit N - Form of Assignment
</TABLE>
iv
<PAGE>
EXHIBIT 10.4
AMENDMENT NO.1 TO SECURITIES PURCHASE AGREEMENT
AND CONSENT AGREEMENT
This AMENDMENT NO.1 TO SECURITIES PURCHASE AGREEMENT AND CONSENT AGREEMENT
(this "Agreement") is made as of March 10, 1998 by and among AT&T Wireless PCS,
---------
Inc., a Delaware corporation ("AT&T PCS"), the cash equity investors listed on
--------
the signature pages hereto (the "Cash Equity Investors"), the management
---------------------
stockholders listed on the signature pages hereto (the "Management
----------
Stockholders"), and Triton PCS Holdings, Inc., a Delaware corporation formerly
known as Triton PCS, Inc. (the "Company").
-------
Background. AT&T PCS, the Cash Equity Investors, the Management
----------
Stockholders, and the Company are parties to that certain Securities Purchase
Agreement dated as of October 8, 1997, as amended by that certain Closing
Agreement dated as of February 4, 1998 (as so amended, the "Securities Purchase
-------------------
Agreement"). Closing of the transactions contemplated by the Securities
- ---------
Purchase Agreement occurred as of February 4, 1998. The parties desire to
further amend the Securities Purchase Agreement as set forth herein.
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Securities Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing Background, the mutual
promises and agreements made herein and other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties, intending to be
legally bound hereby, agree as follows:
1. Myrtle Beach Acquisition. Notwithstanding anything to the contrary
------------------------
contained in the Securities Purchase Agreement or the Related Agreements
(including, without limitation, Sections 7.4, 7.11(b) and 8.4(a) of the
Stockholders Agreement), the parties hereby consent to the purchase by one or
more subsidiaries of the Company from Vanguard Cellular Systems of South
Carolina, Inc., a North Carolina corporation ("Vanguard"), of substantially all
--------
of Vanguard's assets that are used in or useful to the ownership and operation
by Vanguard of the cellular telecommunications system in South Carolina 5-
Georgetown Rural Service Area, Market No. 629 for approximately $160 million
(the "Myrtle Beach Acquisition"), $35 million of which is to be financed through
------------------------
additional equity commitments and contributions from the Cash Equity Investors
(the "Equity Financing") and $125 million of which is anticipated to be financed
----------------
by a proposed $135 million credit facility (the "Debt Financing") from The
--------------
Chase Manhattan Bank, Morgan Guaranty Trust Company of New York and Toronto
Dominion Bank (the "Debt Financing Lenders"); provided, however, that the
----------------------
parties acknowledge that, subject to the approval by the Company's board of
directors, the proceeds of a high-yield subordinated debt offering may be used
for all or a portion of the Debt Financing. Upon consummation of such
acquisition, the FCC licenses acquired from Vanguard shall constitute "Permitted
Cellular Licenses" as that term is defined and used in the Stockholders
Agreement.
<PAGE>
2. Equity Financing for Myrtle Beach Acquisition.
---------------------------------------------
(a) The Cash Equity Investors acknowledge that the Company intends to
seek commitments from the Cash Equity Investors in respect of the Equity
Financing. Each of the Equity Investors may elect to participate on a pro-rata
basis in the Equity Financing by the giving of written notice to the Company to
such effect within the period set forth in Section 7.2(b) of the Stockholders
Agreement.
(b) On the date hereof, $8 million (the "Deposit Financing") is being
-----------------
contributed to the capital of the Company by the Cash Equity Investor set forth
on Schedule I hereto (the "Deposit Financing Investor"), which amount represents
---------- --------------------------
the Deposit Investor's funding of its pro-rata portion of the Equity Financing
and which will be deposited into escrow by the Company in connection with the
signing of the definitive acquisition agreement for the Myrtle Beach
Acquisition. The Deposit Financing Investor will be issued as of the date hereof
the number of shares of Series C Preferred Stock set forth opposite its name on
Schedule I. As promptly as practicable after the date hereof, the Company will
- ----------
amend and distribute to all of the parties hereto a revised Schedule I to the
----------
Securities Purchase Agreement reflecting the revised Aggregate Commitments of
the Cash Equity Investors and the aggregate amount of shares of Series C
Preferred Stock issued to the Cash Equity Investors after giving effect to the
Deposit Financing.
(b) If the number of shares of authorized Series C Preferred Stock is
insufficient in order to issue shares of Series C Preferred Stock upon
conversion of the Series D Preferred Stock in accordance with the terms of the
Restated Certificate, (x) the Company will promptly amend the Restated
Certificate in order to authorize a sufficient number of shares of Series C
Preferred Stock, and (y) each of AT&T PCS, the Cash Equity Investors and the
Management Stockholders agrees to vote its shares of Preferred Stock and Common
Stock in favor of such amendment.
3. Preemptive Rights.
-----------------
(a) Each of the parties hereto waives the notice requirements set
forth in Section 7.2(b) of the Stockholders Agreement with respect to the
Deposit Financing.
(b) Each of AT&T PCS, the Management Stockholders and the Cash Equity
Investors hereby waives its preemptive rights that are afforded such party in
Section 7.2 of the Stockholders Agreement with respect to the Deposit Financing.
Each of AT&T PCS and the Management Stockholders hereby waives its preemptive
rights that are afforded such party in Section 7.2 of the Stockholders Agreement
with respect to the Equity Financing.
<PAGE>
4. Representations and Warranties.
------------------------------
(a) Each party hereto represents and warrants to the other parties
that (i) it has the full legal right and all power and authority required to
enter into, execute and deliver this Agreement and to perform fully its
obligations hereunder and (ii) this Agreement has been duly executed and
delivered and constitutes the valid and binding obligation of such party,
enforceable against such party in accordance with their respective terms, except
as such enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to enforcement of creditors' rights
generally and may be subject to general principles of equity.
(b) The Company ratifies for the Deposit Financing Investors the
representations and warranties of the Company set forth in Section 5.13 of the
------------
Securities Purchase Agreement.
(c) The shares of Series C Preferred Stock being issued to the Deposit
Financing Investor hereunder, when issued and paid for pursuant to the terms of
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will be free of any Liens caused or created by the Company,
except as set forth in the Stockholders Agreement and the Restated Certificate.
The shares of Common Stock issued upon conversion of the Series C Preferred
Stock, when issued pursuant to the terms of the Series C Preferred Stock, will
be validly issued, fully paid and nonassessable, and will be free of any Liens
caused or created by the Company, except as set forth in the Stockholders
Agreement and the Restated Certificate.
(d) Each Cash Equity Investor represents to the Company and each other
Cash Equity Investor as follows:
(i) It is an "accredited investor" as defined in Regulation D
of the Securities Act. Its representatives have been provided an opportunity to
ask questions of, and have received answers thereto from, the Company and its
representatives regarding the terms and conditions of its decision whether to
purchase additional Series C Preferred Stock, and the Company and its business
generally, and have obtained all additional information requested by it to
verify the accuracy of all information furnished to it in connection with such
purchase.
(ii) It has such knowledge and experience in financial and
business affairs that it is capable of evaluating the merits and risks of
purchasing the Series C Preferred Stock, if any, it is purchasing hereunder.
(iii) It is not relying on and acknowledges that no
representation is being made by any other Cash Equity Investor, the Company or
any of its officers, employees, Affiliates, agents or representatives, or any
Management Stockholder, except for representations and warranties expressly set
forth in this Agreement, and, in particular, it is not relying on, and
acknowledges that
<PAGE>
no representation is being made in respect of, (a) any projections, estimates or
budgets delivered to or made available to it of future revenues, expenses or
expenditures, or future results of operations and (b) any other information or
documents delivered or made available to it or its representatives, except for
representations and warranties expressly set forth in this Agreement.
(iv) In deciding to invest further in the Company, the Deposit
Financing Investor has relied exclusively on the representations and warranties
expressly set forth in this Agreement and the investigations made by itself and
its representatives and its and such representatives' knowledge of the industry
in which the Company operates. Based solely on such representations and
warranties and such investigations and knowledge, it has determined that the
Series C Preferred Stock it is purchasing is a suitable investment for it.
(e) The Company represents and warrants to each of the Cash Equity
Investors as follows:
(i) None of the Company, any Management Stockholder or any
Person acting on its behalf has offered the Series C Preferred Stock being
offered hereunder for sale to, or solicited any offers to buy Series C Preferred
Stock or any similar equity securities of the Company from, any Person, other
than the Cash Equity Investors .
(ii) Neither the Company nor any Person acting on its behalf
will, directly or indirectly, take any action which might subject the offering,
issuance or sale of the Series C Preferred Stock hereunder to the registration
and prospectus delivery requirements of Section 5 of the Securities Act.
(iii) Assuming the accuracy of the representations and warranties
of the Cash Equity Investors contained in Section 4(d) above, the offering and
------------
sale of Series C Preferred Stock under this Agreement complies or will comply
with all applicable requirements of Federal and state securities laws.
5. Conditions Precedent. The obligation of the Deposit Financing
--------------------
Investor to provide the Deposit Financing to occur on the date hereof is
conditioned on the following, unless waived by the Deposit Financing Investor:
(a) The execution of a commitment letter with the Debt Financing
Lenders to provide the Debt Financing on the terms and subject to the conditions
contained therein.
(b) This Agreement shall have been duly executed and delivered by all
of the parties hereto.
<PAGE>
6. Miscellaneous. Except for the modifications and other agreements
-------------
stated above, all other terms and conditions of the Securities Purchase
Agreement shall remain the same and continue in full force and effect and shall
constitute the legally valid and binding obligations of the parties hereto
enforceable in accordance with their terms.
[SIGNATURES CONTAINED ON NEXT PAGE]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Company:
TRITON PCS HOLDINGS, INC.
By: ______________________________________________
Name:
Title:
AT&T PCS:
AT&T PCS WIRELESS, INC.
By: ______________________________________________
Name:
Title:
Cash Equity Investors:
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc., its general
partner
By: ______________________________________________
Name:
Title:
J.P. MORGAN INVESTMENT CORPORATION
By: ______________________________________________
Name:
Title:
SIXTY WALL STREET SBIC FUND, L.P.
By: Sixty Wall Street SBIC Corporation its general
partner
By: ______________________________________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
PRIVATE EQUITY INVESTORS III, L.P.
By: Rohit M. Desai Associates III, L.L.C., its
general partner
By: ______________________________________________
Name:
Title:
EQUITY-LINKED INVESTORS-II
By: Rohit M. Desai Associates-II, its general
partner
By: ______________________________________________
Name:
Title:
TORONTO DOMINION CAPITAL (USA), INC.
By: ______________________________________________
Name:
Title:
FIRST UNION CAPITAL PARTNERS, INC.
By: ______________________________________________
Name:
Title:
DAG-TRITON PCS, INC.
By: Duff Ackerman Goodrich, LLC, its general
partner
By: ______________________________________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
Management Stockholders:
__________________________________________________
Michael E. Kalogris
__________________________________________________
Steven R. Skinner
<PAGE>
SCHEDULE I
Deposit Financing Investor
--------------------------
Cash Equity Investor Series C Preferred Shares
-------------------- -------------------------
1. CB Capital Investors, L.P. 80,000
<PAGE>
EXHIBIT 10.5
CLOSING AGREEMENT
-----------------
This CLOSING AGREEMENT (this "Agreement") is made as of February ______,
---------
1998 by and among AT&T Wireless PCS, Inc., a Delaware corporation ("AT&T PCS"),
--------
the cash equity investors listed on the signature pages hereto (the "Cash Equity
-----------
Investors"), the management stockholders listed on the signature pages hereto
- ---------
(the "Management Stockholders"), and Triton PCS Holdings, Inc., a Delaware
-----------------------
corporation formerly known as Triton PCS, Inc. (the "Company").
-------
Background. AT&T PCS, the Cash Equity Investors, the Management
----------
Stockholders, and the Company are parties to that certain Securities Purchase
Agreement dated as of October 8, 1997 (the "Securities Purchase Agreement").
-----------------------------
Closing of the transactions contemplated by the Securities Purchase Agreement is
occurring as of the date hereof. In connection therewith, the parties desire to
set forth their understandings regarding certain matters set forth herein.
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Securities Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing Background, the mutual
promises and agreements made herein and other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties, intending to be
legally bound hereby, agree as follows:
1. Additional Purchasers. Pursuant to the Joinder to Securities Purchase
---------------------
Agreement dated as of December 19, 1997 that is attached hereto as Exhibit "A",
-----------
each of First Union Capital Partners, Inc. and DAG-Triton PCS, L.P. (as assignee
of Duff Ackerman Goodrich & Associates, L.P.) agreed to invest an aggregate
amount of $4,973,215 in exchange for shares of Series C Preferred Stock in the
Subsequent Offering as contemplated by and in accordance with the terms of
Section 10.6 of the Securities Purchase Agreement.
- ------------
2. Name Changes. On January 6, 1998, "Triton PCS, Inc." (the signatory
------------
to the Securities Purchase Agreement) changed its name to "Triton PCS Holdings,
Inc.", and on January 7, 1998, "Triton PCS License Company, Inc." changed its
name to "Triton PCS, Inc.".
3. Initial Cash Contribution. Attached as Exhibit "B" is a schedule that
------------------------- -----------
sets forth the aggregate cash contributions of the Cash Equity Investors and the
Management Stockholders as of the date hereof.
4. Legal Structure. Attached hereto as Exhibit "C" is a legal structure
--------------- -----------
chart that depicts the ownership of the Company's Subsidiaries. All of such
Subsidiaries have been formed under the laws of the State of Delaware. Triton
PCS Operating Company L.L.C. ("Triton Operating") has been qualified to conduct
business in the Commonwealth of Virginia. Triton Management Company, Inc. has
been qualified to conduct business in the Commonwealth of Pennsylvania.
<PAGE>
5. Certain Definitional Changes. The following definitions shall
----------------------------
supersede and replace the definitions of such terms that are contained in
Article I of the Securities Purchase Agreement:
- ---------
"Bridge Notes" means promissory notes of Triton Communications L.L.C.
------------
(as assigned to Triton PCS Operating Company L.L.C. pursuant to a
certain Assignment and Assumption Agreement dated as of January 15,
1998) in favor of certain Cash Equity Investors in the aggregate
principal amount of $1.6 million."
"Credit Agreement" means the agreement among Triton PCS, Inc., a
----------------
Delaware corporation that is a wholly-owned Subsidiary of the Company,
the lenders and agents referred to therein, and any other parties who
become lenders or agents thereunder, dated as of February 3, 1998, to
provide a credit facility having aggregate commitments of at least
$425 million, as the same may be amended, modified or supplemented in
accordance with the terms thereof."
6. Assignment of Bridge Notes. Attached hereto as Exhibit "D" is the
-------------------------- -----------
Assignment and Assumption Agreement (referred to in the revised definition of
"Bridge Notes") assigning the Bridge Notes from Triton Communications L.L.C. to
Triton PCS Operating Company L.L.C. Therefore, the delivery on the date hereof
of the Bridge Notes by each Cash Equity Investor holding such Bridge Notes to
Triton PCS Operating Company L.L.C. constitutes the contribution of such Bridge
Notes as contemplated by Section 3.2(b)(ii) of the Securities Purchase
------------------
Agreement.
7. Contributions. Pursuant to Section 2.2 of the Securities Purchase
------------- -----------
Agreement and Section 3.10 of the Stockholders' Agreement, the Initial Cash
------------
Contributions and the Unfunded Commitments are required to be made to the
Company. The Company hereby directs that all cash contributions made after the
date hereof shall be made directly to Triton PCS, Inc., a Delaware corporation
that is a wholly-owned Subsidiary of the Company, but all such cash
contributions shall be treated as capital contributions to the capital of the
Company.
8. Resale Agreement. For purposes of Sections 7.2(f), 7.3(e) and 7.4(f)
---------------- ----------------------------------
of the Securities Purchase Agreement only, the term "Related Agreements" shall
exclude the Resale Agreement, which is not be executed on the date hereof, but
rather shall be executed and delivered in accordance with the provisions
contained in Section 8.11 of the Stockholders' Agreement.
------------
9. No Franchise or Business Opportunity Relationship. Each of the parties
-------------------------------------------------
acknowledges that (i) the Company and AT&T PCS and its Affiliates do not intend
to create a franchise or business opportunity relationship; (ii) the wireless
telephones ("Telephones") if any, purchased by the Company from AT&T PCS and its
----------
Affiliates and minutes for mobile wireless radiotelephonic service ("Minutes")
-------
purchased by the Company or its Affiliates under the terms of the Roaming
Agreement are being sold at bona fide wholesale prices; (iii) neither the
Company nor any of its Affiliates is required by the Purchase Agreement or the
Related Agreements or as a matter of
2
<PAGE>
practical necessity to purchase more than a reasonable quantity of Telephones or
Minutes; and (iv) neither AT&T PCS nor any of its Affiliates has made any
representation to the Company or its Affiliates that (a) the Company or its
Affiliates or its equity holders will earn, or are likely to earn, a gross or
net profit, (b) AT&T PCS or any of its Affiliates has knowledge of the market
that the Company or its Affiliates will operate in or that the market demand
will enable the Company or its Affiliates to earn a profit, (c) there is a
guaranteed market for the Company or its Affiliates, or (d) AT&T PCS or any of
its Affiliates will provide the Company or any of its Affiliates with locations
or assist the Company or it Affiliates in finding locations for use or operation
of their respective businesses. The Company has been informed at least seven
days prior to the execution of this Agreement that AT&T PCS's principal business
address is, and AT&T's agent for service of process is, c/o AT&T Corp., 32
Avenue of the Americas, New York, New York 10013.
10. Employment of Executives. The Employment Agreements with each of the
------------------------
Management Stockholders have been entered into by Triton Management Company,
Inc., a Subsidiary of the Company, as the employer of the Management
Stockholders.
11. Directors and Officers Liability Insurance. The Company does not have
------------------------------------------
directors and officers liability insurance coverage in place as of the date
hereof as contemplated by Section 4(e) of the Employment Agreements. The
------------
Company and the Management Stockholders agree to use commercially reasonable
efforts to obtain such insurance coverage as promptly as practicable after the
date hereof.
12. Network Membership License Agreement. All Licensed Activities (as
------------------------------------
defined in the Network Membership License Agreement) conducted pursuant to the
Network Membership License Agreement shall be conducted by Triton Operating or
other Subsidiaries of the Company that are directly or indirectly wholly-owned
by the Company. The Company shall cause Triton Operating and any such wholly-
owned Subsidiary of the Company to perform Triton Operating's obligations under
the Network Membership License Agreement.
13. Company Operations. It is contemplated that the operations of the
------------------
Company shall be conducted through wholly-owned Subsidiaries. However, certain
documents executed, or to be executed, in connection with the Closing
(including, without limitation, the Stockholders' Agreement, the Network
Membership License Agreement, the Roaming Agreement and the Resale Agreement)
provide that the Company shall enter into agreements or conduct the Company's
operations. Notwithstanding the foregoing, the parties acknowledge and consent
that one or more of the Company's Subsidiaries have entered, or may enter, into
such agreements or conduct such operations. The parties hereto consent to such
Subsidiaries entering into such agreements or conducting such operations on the
condition that (i) such Subsidiaries shall at all times be direct or indirect
wholly-owned Subsidiaries of the Company, and (ii) the Company shall cause such
wholly-owned Subsidiaries to perform the obligations and conduct such operations
of the Company or such
3
<PAGE>
wholly-owned Subsidiaries, as the case may be, required to be performed or
conducted by the Company or such wholly-owned Subsidiaries, as the case may be,
under such agreements.
14. Pre-Closing Operations. Each of the Management Stockholders hereby
----------------------
represents, severally and not jointly, as to itself that the funds expended from
the contributions reflected under the heading "Previous Contributions" set forth
on Exhibit "B" hereto were expended in furtherance of the Business (as defined
in the Stockholders' Agreement). The foregoing constitutes an additional
representation of the Management Stockholders under Article V of the Securities
Purchase Agreement, and the Management Stockholders' indemnifications
obligations, if any, as a result of the inaccuracy of such representations shall
be governed by the provisions of Article VIII (including, without limitation the
provisions of Section 8.4) of the Securities Purchase Agreement.
15. Miscellaneous. The provisions of this Agreement modify the provisions
-------------
of the Securities Purchase Agreement and any other document executed in
connection therewith; and it is intended that such modifications constitute
written amendments to the Securities Purchase Agreement or those documents, as
applicable. Except for the modifications and other agreements stated above, all
other terms and conditions of the Securities Purchase Agreement shall remain the
same and continue in full force and effect and shall constitute the legally
valid and binding obligations of the parties hereto enforceable in accordance
with their terms.
[SIGNATURES CONTAINED ON NEXT PAGE]
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Company:
TRITON PCS HOLDINGS, INC.
By:_______________________________________________
Name:
Title:
AT&T PCS:
AT&T PCS WIRELESS, INC.
By:_______________________________________________
Name:
Title:
Cash Equity Investors:
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc., its general
partner
By:_______________________________________________
Name:
Title:
J.P. MORGAN INVESTMENT CORPORATION
By:_______________________________________________
Name:
Title:
SIXTY WALL STREET SBIC FUND, L.P.
By: Sixty Wall Street SBIC Corporation its general
partner
By:_______________________________________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
PRIVATE EQUITY INVESTORS III, L.P.
By: Rohit M. Desai Associates III, L.L.C., its
general partner
By:_______________________________________________
Name:
Title:
EQUITY-LINKED INVESTORS-II
By: Rohit M. Desai Associates-II, its general
partner
By:_______________________________________________
Name:
Title:
TORONTO DOMINION CAPITAL (USA), INC.
By:_______________________________________________
Name:
Title:
FIRST UNION CAPITAL PARTNERS, INC.
By:_______________________________________________
Name:
Title:
DAG-TRITON PCS, L.P.
By: Duff Ackerman Goodrich, LLC, its general
partner
By:_______________________________________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
Management Stockholders:
--------------------------------------------------
Michael E. Kalogris
--------------------------------------------------
Steven R. Skinner
<PAGE>
EXHIBIT "A"
Joinder to Securities Purchase Agreement
----------------------------------------
Attached hereto.
<PAGE>
EXHIBIT "B"
Cash Equity Investor Contributions
----------------------------------
<TABLE>
<CAPTION>
REQUIRED
INITIAL CASH PREVIOUS CLOSING DATE
CONTRIBUTION CONTRIBUTIONS CONTRIBUTIONS
------------ ------------- -------------
<S> <C> <C> <C>
CB Capital Investors, L.P. $12,788,265.00 $ 3,417,857.14 $ 9,370,407.86
- ------------------------------------------------------- -------------- -------------- --------------
JP Morgan Capital Investment Corporation $12,148,852.00 $ 3,246,964.29 $ 8,901,887.71
Sixty Wall Street SBIC Fund, L.P. $ 639,413.00 $ 170,892.86 $ 468,520.14
Private Equity Investors III, L.P. $ 6,394,133.00 $ 1,708,928.57 $ 4,685,204.43
Equity-Linked Investors-II $ 6,394,133.00 $ 1,708,928.57 $ 4,685,204.43
Toronto Dominion Capital (USA) Inc. $ 3,197,067.00 $ 854,464.29 $ 2,342,602.71
First Union Capital Partners, Inc. $ 1,598,533.00 $ 427,232.14 $ 1,171,300.86
DAG-Triton PCS, L.P. $ 1,598,533.00 $ 427,232.14 $ 1,171,300.86
Michael E. Kalogris $ 160,714.00 0.00 $ 160,714.00
Steven R. Skinner $ 80,357.00 0.00 $ 80,357.00
-------------- -------------- --------------
Total $45,000,000.00 $11,962,500.00 $33,037,500.00
</TABLE>
<PAGE>
EXHIBIT "C"
Legal Structure Chart
---------------------
Attached hereto.
<PAGE>
EXHIBIT "D"
Assignment and Assumption
-------------------------
Attached hereto.
<PAGE>
JOINDER TO SECURITIES PURCHASE AGREEMENT
----------------------------------------
Each of the undersigned hereby (i) joins in and agrees to be bound (as an
"Additional Purchaser" and as a "Cash Equity Investor") by the terms of that
certain Securities Purchase Agreement, dated as of October 8, 1997 (the
"Purchase Agreement"), by and among AT&T Wireless PCS Inc., a Delaware
corporation, the Initial Cash Equity Investors referred to on Schedule I
thereto, the Management Stockholders listed on Schedule II thereto and Triton
PCS, Inc., a Delaware corporation and (ii) agrees that Schedule I attached
hereto accurately reflects the undersigned's Aggregate Commitment (as defined in
the Purchase Agreement) and (iii) acknowledges that of the $427,232.00 being
funded by the undersigned in connection with the execution of this Joinder that
$89,285.73 represents its pro-rata share of the Pre-Closing Commitment (as
defined in the Purchase Agreement) funded prior to the date hereof.
IN WITNESS WHEREOF, intending to be legally bound, each of the undersigned
has executed this Joinder to Securities Purchase Agreement as of this ___th day
of December, 1997.
FIRST UNION CAPITAL PARTNERS, INC.
By: _______________________________
Name:
Title:
DUFF ACKERMAN GOODRICH & ASSOCIATES, L.P.
By: ________________________________,
its general partner
By: __________________________
Name:
Title:
<PAGE>
SCHEDULE I
(AS OF DECEMBER _____, 1997)
CASH EQUITY INVESTORS
---------------------
<TABLE>
<CAPTION>
AGGREGATE INITIAL CASH
COMMITMENT # OF SHARES/1/ CONTRIBUTION
---------- -------------- ------------
<S> <C> <C> <C>
CB Capital Investors $39,785,713 $12,788,265
JP Morgan Capital Investment Corporation $37,796,428 $12,148,852
Sixty Wall Street SBIC Fund, L.P. $ 1,989,285 $ 639,413
Private Equity Investors III, L.P. $19,892,857 $ 6,394,133
Equity-Linked Investors-II $19,892,857 $ 6,394,133
Toronto Dominion Capital (USA) Inc. $ 9,946,430 $ 3,197,067
First Union Capital Partners, Inc. $ 4,973,215 $ 1,598,533
Duff Ackerman Goodrich & Assoc., L.P. $ 4,973,215 $ 1,598,533
----------- -----------
Total $139,250,000 $44,758,929
</TABLE>
________________________
/1/ The aggregate number of shares of Series C Preferred Stock to be
issued to the Cash Equity Investors shall be 1,392,500. The number of shares of
Series C Preferred Stock issued to each Cash Equity Investor shall be determined
as follows:
(i) to each holder of Bridge Notes, a number of shares equal to (x) the
product of the aggregate principal amount of all Bridge Notes held
by such holder multiplied by two (2), divided by (y) one hundred
(100).
(ii) to each Cash Equity Investor (including each holder of Bridge
Notes), a number of shares equal to its pro rata share (based upon
such Cash Equity Investor's pro rata share of the Aggregate
Commitments of all of the Cash Equity Investors) of a number equal
to the aggregate number of shares of Series C Preferred Stock to be
issued to the Cash Equity Investors minus the aggregate number of
shares to be issued to the Bridge Note holders in accordance with
paragraph (i) above.
<PAGE>
ADDITIONAL CONTRIBUTION SCHEDULE/2/
--------------------------------
<TABLE>
<CAPTION>
TOTAL 1ST
ANNIVERSARY
-----------
<S> <C>
CB Capital Investors $ 9,946,428
JP Morgan Capital Investment Corporation $ 9,449,107
Sixty Wall Street SBIC Fund, L.P. $ 497,321
Private Equity Investors III, L.P. $ 4,973,214
Equity-Linked Investors-II $ 4,973,214
Toronto Dominion Capital (USA) Inc. $ 2,486,608
First Union Capital Partners, Inc. $ 1,243,304
Duff Ackerman Goodrich & Assoc., L.P. $ 1,243,304
-----------
Total $34,812,500
TOTAL 2ND
ANNIVERSARY
-----------
CB Capital Investors $ 9,946,428
JP Morgan Capital Investment Corporation $ 9,449,107
Sixty Wall Street SBIC Fund, L.P. $ 497,321
Private Equity Investors III, L.P. $ 4,973,214
Equity-Linked Investors-II $ 4,973,214
Toronto Dominion Capital (USA) Inc. $ 2,486,608
First Union Capital Partners, Inc. $ 1,243,304
Duff Ackerman, Goodrich & Assoc., L.P. $ 1,243,304
-----------
Total $34,812,500
</TABLE>
___________________
/2/ Additional Contributions shall be made within 20 business days
after receipt of written notice from the Company in accordance with the terms
of the Stockholders Agreement.
<PAGE>
<TABLE>
<CAPTION>
TOTAL 3RD
ANNIVERSARY
-----------
<S> <C>
CB Capital Investors $ 7,104,592
JP Morgan Capital Investment Corporation $ 6,749,362
Sixty Wall Street SBIC Fund, L.P. $ 355,229
Private Equity Investors III, L.P. $ 3,552,296
Equity-Linked Investors-II $ 3,552,296
Toronto Dominion Capital (USA) Inc. $ 1,776,148
First Union Capital Partners, Inc. $ 888,074
Duff Ackerman Goodrich & Assoc., L.P. $ 888,074
-----------
Total $24,866,071
</TABLE>
<PAGE>
ADDRESS FOR NOTICES
-------------------
CB Capital Investors Toronto Dominion Capital (USA), Inc.
380 Madison Avenue, 12th Floor 31 West 52nd Street
New York, NY 10017 New York, NY 10019
Attn: Arnie Chavkin Attn: Brian Rich
Tel: (212) 622-3100 Tel: (212) 468-0740
Fax: (212) 622-3101 Fax: (212) 974-0429
J.P. Morgan Investment Corporation Toronto Dominion Capital (USA), Inc.
101 California Street, 38th Floor 909 Fannin
San Francisco, CA 94111 Suite 1700
Attn: John Watkins Houston, TX 77010
Tel: (415) 954-3200 Attn: Martha Gariepy
Fax: (415) 954-4737 Tel: (713) 653-8225
Fax: (713) 652-2647
Sixty Wall Street SBIC Fund, L.P.
101 California Street, 38th Floor First Union Capital Partners, Inc.
San Francisco, CA 94111 One First Union Center
Attn: John Watkins 301 South College Street / 5th Floor
Tel: (415) 954-3200 Charlotte, NC 28288-0732
Fax: (415) 954-4737 Attn: Watts Hamrick
Tel: (704) 374-4791
Private Equity Investors III, L.P. Fax: (704) 374-6711
540 Madison Avenue, 36th Floor
New York, NY 10022 Duff Ackerman Goodrich & Associates, L.P.
Attn: Damon Ball Two Embarcadero Center
Tel: (212) 838-9191 Suite 2930
Fax: (212) 838-9807 San Francisco, CA 94111
Attn: John Duff
Equity-Linked Investors-II Tel: (415) 788-2755
540 Madison Avenue, 36th Floor Fax: (415) 788-7311
New York, NY 10022
Attn: Damon Ball
Tel: (212) 838-9191
Fax: (212) 838-9807
<PAGE>
EXHIBIT 10.6
_______________________________________
ASSET PURCHASE AGREEMENT
DATED MARCH 10, 1998
BY AND BETWEEN
TRITON PCS, INC.
AND
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
_______________________________________
-1-
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<C> <S> <C>
RECITALS................................................................... 1
SECTION 1. DEFINITIONS..................................................... 1
SECTION 2. PURCHASE OF ASSETS; CONSIDERATION............................... 11
2.1 Purchase of Assets............................................. 11
2.2 Purchase Price................................................. 12
2.3 Escrow......................................................... 12
2.4 Holdback....................................................... 12
2.5 Payment of Purchase Price...................................... 12
2.6 Capital Expenditure Payment.................................... 12
2.7 Purchase Price Adjustment...................................... 13
2.8 Taxes.......................................................... 14
2.9 Non-Compete/Non-Solicitation................................... 14
SECTION 3. ASSUMPTION OF OBLIGATIONS....................................... 14
3.1 Assumption of Obligations...................................... 14
3.2 Limitation..................................................... 15
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER........................ 16
4.1 Authority...................................................... 16
4.2 Qualification.................................................. 16
4.3 Authorization and Binding Obligation........................... 16
4.4 Absence of Certain Changes or Events; Material Adverse Change.. 16
4.5 Use of Assets.................................................. 18
4.6 No Conflict or Violation....................................... 18
4.7 Consents....................................................... 19
4.8 Governmental Authorizations.................................... 19
4.9 Real Property.................................................. 20
4.10 Personal Property.............................................. 20
4.11 Subscribers and Suppliers...................................... 21
4.12 Resale Agreements.............................................. 21
4.13 Financial Statements........................................... 21
4.14 Contracts...................................................... 21
4.15 Intangibles.................................................... 22
4.16 Taxes.......................................................... 22
4.17 Insurance...................................................... 23
4.18 Labor Matters.................................................. 23
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
4.19 Employee Benefit Plans......................................... 23
4.20 Litigation..................................................... 24
4.21 Compliance With Laws........................................... 24
4.22 Bankruptcy..................................................... 24
4.23 Environmental and Safety Compliance............................ 24
4.24 Broker......................................................... 25
4.25 Accounts Receivable............................................ 25
4.26 Inventory...................................................... 26
4.27 Title; Location of Assets...................................... 26
4.28 Transactions with Related Parties.............................. 26
4.29 Books and Records.............................................. 26
4.30 No Other Agreements to Sell the Assets......................... 26
4.31 Disclosure..................................................... 26
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER......................... 27
5.1 Organization, Standing and Authority........................... 27
5.2 Authorization and Binding Obligation........................... 27
5.3 No Conflict or Violation....................................... 27
5.4 Consents....................................................... 27
5.5 Buyer Qualifications........................................... 28
5.6 Litigation..................................................... 28
5.7 Compliance With Laws........................................... 28
5.8 Bankruptcy..................................................... 28
5.9 Broker......................................................... 28
5.10 Financial Capability........................................... 28
5.11 Knowledge of Claims............................................ 29
SECTION 6. COVENANTS OF SELLER............................................. 29
6.1 Pre-Closing Covenants.......................................... 29
6.2 Closing Covenant............................................... 33
6.3 Title; Risk of Loss............................................ 33
6.4 Environmental Obligations...................................... 33
6.5 Notice of Certain Events....................................... 34
6.6 Audited Financial Statements................................... 34
6.7 Seller to Remain In Control.................................... 35
SECTION 7. CLOSING COVENANTS OF BUYER...................................... 35
7.1 Pre-Closing Covenants.......................................... 35
7.2 Notice of Certain Events....................................... 35
7.3 Closing Covenant............................................... 35
SECTION 8. SPECIAL COVENANTS AND AGREEMENTS................................ 35
8.1 FCC Consents................................................... 35
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
8.2 Other Consents................................................. 36
8.3 Cooperation.................................................... 36
8.4 HSR Filings.................................................... 36
8.5 Employees...................................................... 36
8.6 Schedule Revision.............................................. 37
8.7 Transition Services............................................ 37
8.8 Best Efforts to Obtain Financing............................... 37
8.9 Best Efforts to Obtain Extensions.............................. 37
SECTION 9. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER.................. 37
9.1 Conditions to Obligations of Buyer............................. 37
9.2 Conditions to Obligations of Seller............................ 40
SECTION 10. CLOSING; CLOSING DELIVERIES.................................... 42
10.1 Closing; Termination........................................... 42
10.2 Deliveries by Seller........................................... 42
10.3 Deliveries by Buyer............................................ 43
10.4 Form of Instruments............................................ 44
SECTION 11. ACTIONS BY SELLER AND BUYER AFTER THE CLOSING.................. 44
11.1 Tax Matters; Payments of Debts and Liabilities................. 44
11.2 Closing Financial Statements................................... 45
11.3 Rescission..................................................... 41
SECTION 12. TERMINATION.................................................... 46
12.1 Grounds for Termination........................................ 46
12.2 Breaches and Defaults; Opportunity to Cure..................... 46
SECTION 13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION................................................ 47
13.1 Representations and Warranties................................. 47
13.2 Indemnification by Seller...................................... 47
13.3 Indemnification by Buyer....................................... 48
13.4 Limitation of Damages.......................................... 49
13.5 Procedure for Indemnification.................................. 49
13.6 Knowledge and Materiality...................................... 50
SECTION 14. REMEDIES....................................................... 51
14.1 By Seller...................................................... 51
14.2 By Buyer....................................................... 51
14.3 Generally; No Implied Release.................................. 51
14.4 Specific Performance........................................... 51
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
SECTION 15. ARBITRATION................................................... 51
SECTION 16. MISCELLANEOUS................................................. 52
16.1 Allocation of Purchase Price................................... 52
16.2 Fees and Expenses.............................................. 52
16.3 Notices........................................................ 52
16.4 Further Assurances............................................. 53
16.5 Governing Law.................................................. 54
16.6 Headings....................................................... 54
16.7 Gender and Number.............................................. 54
16.8 Entire Agreement............................................... 54
16.9 Severability................................................... 54
16.10 Benefit and Assignment......................................... 54
16.11 Confidential Information....................................... 55
16.12 Counterparts................................................... 55
</TABLE>
SCHEDULES AND EXHIBITS
Seller's Disclosure Schedule
-5-
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of March 10,
1998 by and between TRITON PCS, INC., a Delaware corporation ("Buyer"), and
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA , INC., a North Carolina corporation
("Seller").
RECITALS
--------
WHEREAS, Seller is the holder of a non-wireline cellular license bearing
the call sign KNKN557, issued by the FCC, and owns certain related assets, for
the operation of the South Carolina 5-Georgetown Rural Service Area, Market No.
629A (the "System");
WHEREAS, Seller also holds microwave licenses, issued by the FCC which are
used in the operation of the System; and
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:
"Accounts Receivable" means all subscriber accounts receivable and accounts
---------------------
receivable-installment and excluding accounts receivable-roamers, accounts
receivable-employees, accounts receivable-credit cards and accounts receivable-
other (as so designated in the Closing Date Balance Sheet).
"Actions" shall have the meaning assigned to it in Section 4.20.
---------
"Actual Qualified Subscriber Number" shall have the meaning assigned to it
------------------------------------
in Section 2.7(a).
-6-
<PAGE>
"Affiliate" means with respect to any Person, any other Person controlling,
-----------
controlled by or under common control with such Person. For the purposes of
this definition, "control" when used with respect to any Person means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"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, wherever situated and located, on or
prior to the Closing Date and used or useful in, or accounted for as part of, or
necessary for the operation of the System, whether or not reflected on the Books
and Records or the Financial Statements, other than the Excluded Assets, but
otherwise including, without limitation, the Real Property, the Personal
Property, the Contracts, the Governmental Authorizations (to the extent
assignable), the Intangibles, the Books and Records, the Financial Statements,
the Accounts Receivable, the Subscriber Agreements and all Cash and Cash
Equivalents, and other current assets, as reflected in the Financial Statements.
The Assets do not include any assets of Seller's Affiliates used to provide
billing, legal, customer service, accounting, roaming support or other
consolidated administrative or technical support functions (including networking
facilities such as North American Cellular Networks ("NACN"), Cellular Digital
Packet Data ("CDPD") and Short Messaging Service ("SMS")) located outside of the
Market, none of which are reflected on the Books and Records.
"Assignment Applications" shall have the meaning assigned to it in Section
-------------------------
8.1.
"Assumed Liabilities" shall have the meaning assigned to it in Section 3.1.
---------------------
"Audited Financial Statements" shall have the meaning assigned to it in
------------------------------
Section 6.6.
"Balance Sheet Date" means December 31,1997.
--------------------
"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 any other form of incentive
compensation or post-retirement insurance, compensation or benefits which:
-7-
<PAGE>
1. is not a Welfare Plan, Pension Plan or Multi-employer Plan,
2. 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
3. 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 (excluding the
-------------------
Financial Statements) 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, billing records and
subscriber information, (ii) public file materials, logs and engineering
records, computer software and data in computer-readable and/or machine-readable
form used to maintain such books and records, together with the media on which
such software and data are stored which are located and maintained in the Market
by Seller, (iii) plans, diagrams, blueprints, schematics, filings with
Governmental Authorities and executed copies of Contracts, Subscriber Agreements
and maintenance records.
"Business Days" means all days except Saturday, Sunday and the holidays
---------------
recognized by the government of the United States for its employees.
"Buyer Total Claim Cap" shall have the meaning assigned to it in Section
-----------------------
13.3(c).
"Buyer's Closing Certificate" shall have the meaning assigned to it in
-----------------------------
Section 9.2(a).
"Capital Expenditures Payment" shall have the meaning assigned to it in
------------------------------
Section 2.6.
"Capital Expenditures Summary" shall have the meaning assigned to it in
------------------------------
Section 2.6.
"Cash and Cash Equivalents" means all cash on hand and in financial
---------------------------
institutions, including in the Lockbox, and cash equivalents.
"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" shall have the meaning assigned to it in Section 13.5(a).
----------
-8-
<PAGE>
"Claim Period" shall have the meaning assigned to it in Section 13.4(a).
--------------
"Claims" shall have the meaning assigned to it in Section 13.2(c).
--------
"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 Seller as of, and for the period ended on, the
Closing Date, 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 for the period then ended.
"Closing Date" means the date on which the Closing occurs, as determined
--------------
pursuant to Section 10.1(a).
"Closing Date Balance Sheet " shall have the meaning assigned to it in
-----------------------------
Section 2.7(c).
"Closing Statement" have the meaning assigned to it in Section 2.7(c).
-------------------
"Code" means the Internal Revenue Code of 1986, as amended, and the
------
regulations promulgated thereunder.
"CMRS" means Domestic Public Cellular Radio Telephone Service (47 C.F.R.
------
Part 22) or Broadband Personal Communications Services (47 C.F.R. Part 24), as
the case may be.
"Communications Act" means the Communications Act of 1934, as amended, and
--------------------
the regulations promulgated thereunder.
"Consents" means the FCC Consents, 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,
including those Consents which are set forth in Seller's Disclosure Schedule.
"Contracts" means all contracts, leases (for real or personal property),
-----------
non-governmental licenses, commitments, understandings, and other agreements,
including, without limitation, interconnection, agency, contour incursion, and
contour excursion 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 Seller's Disclosure Schedule, together with any
additions thereto between the date hereof and the Closing Date, but excluding
Excluded Assets.
-9-
<PAGE>
"Current Assets" means the following current Assets, excluding the Excluded
----------------
Assets, calculated in accordance with generally accepted accounting principles
("GAAP"), of Seller presented on the Closing Date Balance Sheet: (a) Cash and
Cash Equivalents; (b) Accounts Receivable, net of reserves equal to 15% of
Accounts Receivable; (c) Inventory for new cellular telephones, pagers and
accessories reflected at the lower of cost or fair market value in accordance
with GAAP and refurbished or used cellular telephones, pagers and accessories
which Buyer has agreed to purchase at the price agreed between Buyer and Seller;
and (d) prepaid rent that Buyer will receive the benefit of after the Closing.
"Current Liabilities" means the following current Liabilities, excluding
---------------------
the Excluded Liabilities, calculated in accordance with GAAP, of Seller as
presented on the Closing Date Balance Sheet: (a) subscriber deposits received;
(b) deferred revenue received; and (c) ordinary trade payables incurred in the
normal course of business.
"Damages" shall have the meaning assigned to it in Section 13.2(a).
---------
"Dispute" shall have the meaning assigned to it in Section 15.
---------
"Effective Order" shall have the meaning assigned to it in Section 9.1(b).
-----------------
"Effective Time" means 12:01 a.m., Washington, D.C. time, on the Closing
----------------
Date.
"Employee Plans" means all Benefit Arrangements, Multi-employer Plans,
----------------
Pension Plans and Welfare Plans of Seller and its Affiliates in which Seller's
employees participate, including those Employee Plans which 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 4.23.
--------------------
"Environmental Liabilities" means any and all liabilities of Seller or any
---------------------------
of its Affiliates arising in connection with or in any way relating to the
System, the Assets or activities or operations occurring or conducted in any
Real Property constituting part of the Assets (including, without limitation,
offsite disposal), whether vested or unvested, contingent or fixed, actual or
potential, known or unknown, which (i) arise under any Environmental Laws and
(ii) arise as a result of actions occurring or conditions existing as a result
of any action of Seller or its Affiliates on or prior to the Closing Date.
-10-
<PAGE>
"Environmental Notice" shall have the meaning assigned to it in Section
----------------------
6.4.
"Environmental Response" shall have the meaning assigned to it in Section
------------------------
6.4.
"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
Section 413(b), (c), (m), or (o) of the Code.
"Escrow Agent" shall have the meaning assigned to it in Section 2.3.
--------------
"Escrow Agent Instructions" shall have the meaning assigned to it in
---------------------------
Section 2.4.
"Escrow Agreement" shall have the meaning assigned to it in Section 2.3.
------------------
"Escrow Amount" shall have the meaning assigned to it in Section 2.3.
---------------
"Excluded Assets" means the following assets of Seller which are retained
-----------------
by Seller and are not being sold or assigned to Buyer hereunder:
1. 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;
2. 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;
3. all trademarks and trade names used in connection with the operation
of the System other than (i) the right to use the service mark "Roaming The
Carolinas", "Cellular Plus" and "Advance" and (ii) the agreement which permits
the Seller to use the "Cellular One" trade name;
-11-
<PAGE>
4. confidentiality and noncompete agreements between Seller and its
employees whom Buyer does not elect to hire;
5. used or refurbished telephones which Buyer elects not to accept prior
to the Closing;
6. certain assets of the Seller's engineering office in the Market which
are listed on the Seller's Disclosure Schedule;
7. membership in the Dunes Club;
8. Accounts Receivable - roamers, accounts receivable - employees,
accounts receivable - credit cards and accounts receivable - other (as so
designated in the Closing Date Balance Sheet); and
9. deferred revenue (as indicated in the Closing Date Balance Sheet).
"Excluded Liabilities" shall have the meaning assigned to it in Section
----------------------
3.2.
"FCC" means the Federal Communications Commission and any successor
-----
agency.
"FCC Authorizations" means those authorizations issued by the FCC to
--------------------
operate the non-wireline cellular radio telephone system and related microwave
system for the Market, including those FCC Authorizations which 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.
"Final Order" means a written action or order issued by the FCC or other
-------------
Governmental Authority (i) which has not been reversed, stayed, enjoined, set
aside, annulled, or suspended and (ii) with respect to which (A) 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 has expired, (B) in the event of review, reconsideration, or
appeal, the time for further review, reconsideration, or appeal has expired, and
(C) 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 and related statements of
----------------------
income of Seller as of and for the twelve month periods ended as of December
31, 1997 and 1996, all of which are contained in Seller's Disclosure Schedule.
-12-
<PAGE>
"FTC" means the Federal Trade Commission.
-----
"Governmental Authority" means those federal, state and local government
------------------------
agencies or organizations with regulatory or licensing jurisdiction over the
Seller's business and the operation of the System.
"Governmental Authorizations" means all licenses, permits, franchises, and
-----------------------------
other authorizations (except for local business licenses and occupancy permits)
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.
"Indemnification Escrow" shall have the meaning assigned to it in Section
------------------------
2.4.
"Indemnitor" shall have the meaning assigned to it in Section 13.5(a).
------------
"Independent Accountant" shall have the meaning assigned to it in Section
------------------------
2.7(c).
"Initial Adjustment Amount" shall have the meaning assigned to it in
----------------------------
Section 2.7(b).
"Intangibles" means any and all copyrights, licenses, patents, permits,
-------------
privileges, proprietary information, technical information and data, machinery
and equipment warranties, customer lists, the right to use the "Cellular One"
trade name pursuant to the agreement which permits such use 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.
"Inventory" means all new cellular telephones and pagers and related
-----------
accessories and all used or refurbished cellular telephones or pagers and
related accessories, which Buyer agrees to purchase.
"Liabilities" means liabilities, obligations or commitments of any nature,
-------------
whether absolute, accrued, contingent or otherwise, known or unknown, whether
matured or unmatured, as reflected on the Financial Statements.
-13-
<PAGE>
"Lockbox" shall have the meaning assigned to it in Section 4.25.
---------
"Market" means the South Carolina 5-Georgetown Rural Service Area (Market
--------
No. 629A), as defined by the FCC.
"Minimum Qualified Subscriber Number" shall have the meaning assigned to it
-------------------------------------
in Section 2.7(a).
"Multi-employer Plan" means any "multi-employer plan" as defined in Section
---------------------
4001(a)(3) or (3)(37) of ERISA, (i) 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 (ii) which covers any employee or former employee of Seller or its
ERISA Affiliate (with respect to their relationship with such entities).
"Net Working Capital" shall have meaning assigned to it in Section 2.7(a).
---------------------
"Objection Notice" shall have the meaning assigned to it in Section 2.7(c).
------------------
"Pension Plan" means any "employee pension benefit plan" as defined in
--------------
Section 3(2) of ERISA (other than a Multi-employer Plan) (i) 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 (ii) which covers any
employee or former employee of Seller or its ERISA Affiliate (with respect to
their relationship with such entities).
"Permitted Encumbrances" means (i) 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, (ii) easements,
rights of way and other similar property rights which do not and will not have a
material adverse effect on Seller's or Buyer's use in a similar manner of any
particular parcel of Real Property and (iii) materialman and workman's liens
created by operation of law in the ordinary course of Seller's business for
Liabilities which are reflected on the Closing Date Balance Sheet.
"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.
-14-
<PAGE>
"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 Conservation and Recovery Act, as amended, and
regulations adopted and publications promulgated pursuant to said laws.
"Purchase Price" shall have the meaning assigned to it in Section 2.2.
----------------
"Purchase Price Adjustment" shall have the meaning assigned to it in
---------------------------
Section 2.7(a).
"Qualified Subscriber" means cellular accounts that (a) are active in both
----------------------
Seller's switch and billing subscriber data bases, (b) are suspended and active
(suspended not to exceed ten percent (10%) of the aggregate of the number of
active and suspended subscribers), (c) are not a result of any special
promotions instituted on or after the date hereof by Seller outside of the
ordinary course of business consistent with past practice unless approved in
writing by Buyer (which approval shall not be unreasonably withheld), and (d)
are not agent or employee accounts.
"Real Property" means all real estate and all interests in real property
---------------
(other than Excluded Assets), 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.
-15-
<PAGE>
"Related Party" means (a) any past or present stockholder or Affiliate of
---------------
Seller or (b) any director or officer of Seller or any Affiliate of Seller or
(c) any spouse, parent or child of any such Person.
==
"Representatives" shall have the meaning assigned to it in Section 6.1(d).
-----------------
"Resolution Period" shall have the meaning assigned to it in Section
-------------------
2.7(c).
"Restoration Actions" shall have the meaning assigned to it in Section 6.3.
---------------------
"SEC" means the Securities and Exchange Commission and any successor
-----
agency.
"Seller Total Claim Cap" shall have the meaning assigned to it in Section
------------------------
13.2(c).
"Seller's Accountant" shall have the meaning assigned to it is Section 6.6.
---------------------
"Seller's Closing Certificate" shall have the meaning assigned to it in
------------------------------
Section 9.1(a).
"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 and paging service and/or cellular telephone and paging
equipment to end users.
"System" means the non-wireline cellular radio telephone system and related
--------
point-to-point microwave system that are 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.
"Third-Party Action" shall have the meaning assigned to it in Section
--------------------
13.5(c).
-16-
<PAGE>
"Third-Party Action Notice" shall have the meaning assigned to it in
---------------------------
Section 13.5(c).
"To Buyer's knowledge" or "to the best of Buyer's knowledge" or words of
---------------------- ----------------------------------
similar effect means the actual knowledge of Buyer through its executive
employees.
"To Seller's knowledge" or "to the best of Seller's knowledge" or words of
----------------------- -----------------------------------
similar effect means the actual knowledge of the following executive employees
of Seller: Dennis Francis, Stephen Holcombe, Rete Stearns, Tom Prestwood, Terry
Brady and Tim Biltz after due inquiry.
"Welfare Plan" means any "employee welfare benefit plan" as defined in
--------------
Section 3(l) of ERISA, (i) 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 (ii) which covers any
employee or former employee of Seller or its ERISA Affiliate (with respect to
their relationship with such entities).
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, 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 2.7
--------------
below, the total purchase price (the "Purchase Price") to be paid for the Assets
shall be One Hundred Sixty Million Dollars ($160,000,000).
2.3 Escrow. Concurrently with the execution of this Agreement, Buyer
------
shall deliver to CoreStates Bank, N.A. as escrow agent (the "Escrow Agent"),
the amount of Eight Million Dollars ($8,000,000) in immediately- available
funds, which amount (including, unless otherwise stated herein, any interest
earned on such sum thereafter, the "Escrow Amount") shall be held by the Escrow
Agent pursuant to the terms of a certain escrow agreement of even date herewith
(the "Escrow Agreement") in the form of Exhibit 2.3. In the event of a
termination of this Agreement by Seller in accordance with the terms of Section
12.1(b)(ii), Seller shall be entitled to retain the entire Escrow Amount in
accordance with Section 13.3(d).
2.4 Holdback. As security for the indemnification covenants of Seller
--------
contained in this Agreement, Eight Million Dollars ($8,000,000) (including,
unless otherwise stated herein, any interest earned thereon, the
"Indemnification Escrow") shall be held and released by the Escrow Agent
pursuant to the terms of the Escrow Agreement. The Indemnification Escrow shall
be funded at the Closing through the
-17-
<PAGE>
retention of the Escrow Amount (excluding interest thereon), by the Escrow Agent
after Closing as provided in the Escrow Agreement. Buyer and Seller shall
provide joint written instructions to Escrow Agent (the "Escrow Agent
Instructions") instructing Escrow Agent to retain Eight Million Dollars
($8,000,000) of the Escrow Amount as the Indemnification Escrow and to deliver
the balance thereof (i.e., the interest earned thereon) to Buyer. Buyer shall be
entitled to draw upon the Indemnification Escrow for payment of all
indemnification claims made by Buyer pursuant to Section 13 to the extent, but
only to the extent, provided in the Escrow Agreement.
2.5 Payment of Purchase Price. Subject to adjustment as provided in
-------------------------
Section 2.7, and subject to a credit for Eight Million Dollars ($8,000,000) of
the Escrow Amount which is to be used to fund the Indemnification Escrow, Buyer
shall pay to Seller at Closing the Purchase Price in immediately available U.S.
funds.
2.6 Capital Expenditure Payment. In addition to the Purchase Price, Buyer
---------------------------
shall pay to Seller at Closing, in immediately available U.S. funds, the sum of
(a) Seller's capital expenditures previously approved by Buyer, as set forth in
Schedule 2.6, and then made by Seller and (b) any other capital expenditures
made on or after the date hereof and approved in writing by Buyer (collectively,
the "Capital Expenditures Payment") to be reflected in the capital expenditures
summary (the "Capital Expenditures Summary"), to be delivered by Seller to
Purchaser at Closing minus (c) the amount of Five Hundred Thousand Dollars
($500,000). In the event that between the Balance Sheet Date and Closing, the
Capital Expenditures Payment does not exceed $500,000, the Purchase Price shall
be reduced by an amount equal to $500,000 minus the amount of the Capital
Expenditures Payment made by Seller between the Balance Sheet Date and Closing.
2.7 Purchase Price Adjustment.
-------------------------
1. The Purchase Price shall be increased or decreased (the "Purchase
Price Adjustment") on a dollar-for-dollar basis for the cumulative net
adjustment required by the following: the Purchase Price shall be adjusted by a
dollar amount (positive or negative) of the Net Working Capital of Seller on the
Closing Date. As used herein, the term "Net Working Capital" shall mean (i)
Current Assets minus (ii) Current Liabilities, as such amounts are reflected on
the Closing Date Balance Sheet (as hereinafter defined), and (iii) if at Closing
the number of actual ending Qualified Subscribers for the System ("Actual
Qualified Subscriber Number") is less than 33,400 (the "Minimum Qualified
Subscriber Number"), then there shall be deducted from the Purchase Price an
amount equal to Three Hundred and Fifty Dollars ($350.00) times the difference
between the Minimum Qualified Subscriber Number for the System as of the month
prior to Closing and the Actual Qualified Subscriber Number.
-18-
<PAGE>
2. The initial adjustments to the Purchase Price based on Net Working
Capital will be made at the Closing using a good faith estimate by Seller of the
Net Working Capital of Seller (the "Initial Adjustment Amount") based upon an
unaudited balance sheet to be prepared by Seller as of the end of the month
immediately preceding the Closing Date, such estimate to be delivered by Seller
to Buyer at least seven (7) Business Days prior to Closing along with such
balance sheet. If after receipt of the Seller's estimate of the Initial
Adjustment Amount Buyer notifies Seller not later than three (3) Business Days
prior to Closing that Buyer disagrees with that estimate, then that portion of
the Initial Adjustment Amount which Buyer disputes in good faith (provided that
the amount in dispute must be at least three hundred thousand dollars
($300,000)) shall be deposited with the Escrow Agent and shall be resolved in
accordance with the procedures set forth in Section 2.7(c).
3. As promptly as practicable after the Closing Date (but in no event
later than sixty (60) days thereafter) Seller shall prepare and deliver to Buyer
for its review and comment (i) a balance sheet dated as of the close of business
on the Closing Date (the "Closing Date Balance Sheet") and (ii) an accompanying
closing statement (the "Closing Statement") reasonably detailing as of the close
of business on the Closing Date Seller's determination of each element of the
Purchase Price Adjustment. The Closing Date Balance Sheet shall fairly present
the financial position of the Seller as at the close of business on the Closing
Date in accordance with GAAP (except for the omission of certain footnotes and
other presentation items required by GAAP with respect to such financial
statements). If Buyer objects to any amount reflected on the Closing Date
Balance Sheet or the Closing Statement, Buyer must, within thirty (30) days
after Buyer's receipt of the Closing Date Balance Sheet and Closing Statement,
give written notice (the "Objection Notice") to Seller specifying in reasonable
detail its objections, or Seller's determination of the Purchase Price
Adjustment shall be final, binding and conclusive on the parties. With respect
to any disputed amounts, the parties shall meet in person to negotiate in good
faith during the thirty (30) day period (the "Resolution Period") after the date
of Seller's receipt of the Objection Notice to resolve any such disputes. If
the parties are unable to resolve all such disputes within the Resolution
Period, then within five (5) Business Days after the expiration of the
Resolution Period, all disputes shall be submitted to Deloitte & Touche, LLP or,
if such firm is unavailable or unwilling to resolve such disputes, to another
nationally recognized accounting firm mutually acceptable to Buyer and Seller
(the "Independent Accountant") who shall be engaged to provide a final and
conclusive resolution of all unresolved disputes within forty-five (45) days
after such engagement. Buyer and Seller each represent and warrant that, as to
itself, it is not currently retaining nor during the prior three (3) years has
it or any predecessor entity controlled by its management group retained
Deloitte & Touche, LLP to provide accounting or other services and agrees on
behalf of itself and its Affiliates not to retain such firm until a final
determination of the Purchase Price Adjustment has been made. The determination
of the Independent Accountant shall be final, binding and conclusive on the
parties hereto,
-19-
<PAGE>
and the fees and expenses of the Independent Accountant shall be borne by the
party, who, in the Independent Accountant's determination submitted a disputed
amount that differs more significantly from the amount finally determined by the
Independent Accountant. From and after the Closing Date, Buyer will provide
Seller with access to the books, records and personnel of Buyer that Seller
reasonably requests.
4. If the Purchase Price Adjustment (as finally determined in accordance
with the provisions set forth above) less the Initial Adjustment Amount is a
positive (negative) amount, then, within five (5) Business Days after such final
determination, Buyer (Seller) shall pay to Seller (Buyer) such amount in
immediately available funds. The parties shall provide the appropriate written
instructions to the Escrow Agent to disburse any funds escrowed in connection
with the Initial Adjustment Amount pursuant to Section 2.7(b).
2.8 Taxes. Except for Taxes which are not yet due (for which the Closing
-----
Date Balance Sheet shall reflect appropriate amounts) all Taxes and other
assessments on the Assets which are due and payable shall be paid by Seller as
of the Closing Date.
2.9 Non-Compete/Non-Solicitation. In further consideration of Buyer's
----------------------------
payment of the Purchase Price, Seller and its Affiliates and Rete Stearns and
Tom Prestwood or each of those individual's successors, if any, hired by Seller
prior to Closing shall each enter into a non-compete/non-solicitation agreement
substantially in the form of Schedule 2.9, with appropriate conforming
modifications for the agreements to be executed by individuals.
SECTION 3. ASSUMPTION OF OBLIGATIONS.
-------------------------
3.1 Assumption of Obligations. Buyer shall assume and undertake to pay,
-------------------------
in accordance with the terms thereof, satisfy or discharge (a) the Current
Liabilities of Seller on and as of the Closing Date, and (b) the Liabilities,
obligations and commitments of Seller arising on or after the Closing Date under
the executory portion of: (i) the Contracts listed in Seller's Disclosure
Schedule and the other Contracts not required to be listed pursuant to Section
4.14; and (ii) the Subscriber Agreements (taken together, the "Assumed
Liabilities"). Buyer shall also assume and be responsible for (y) all
Liabilities arising from the ownership and use of the Assets and the operation
of the System on and after the Closing Date and (z) all Taxes and assessments
(including, but not limited to those relating to federal and state universal
service funds) for which and to the extent accruals are reflected on the Closing
Date Balance Sheet relating to periods prior to Closing or arising from the
ownership and use of the Assets and the operation of the System on and after the
Closing Date.
-20-
<PAGE>
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 (the "Excluded Liabilities"), which include, without
limitation:
1. Any liability or obligation for legal, accounting and audit fees and
any other expenses incurred by Seller in connection with the preparation of,
negotiation of, and performance under this Agreement;
2. Any liability or obligation of Seller with respect to 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, (iii) any claim under any
state unemployment compensation or worker's compensation law, 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 and (iv) any liability to pay severance
benefits to any employees of Seller whose employment is terminated by Seller
prior to or in connection with the sale of the Assets;
3. Any liability or obligation of Seller in respect of any Taxes or
assessments arising from or with respect to the Assets incurred or attributable
to any period prior to the Closing Date for which and to the extent accruals are
not reflected on the Closing Date Balance Sheet;
4. Any liability or obligation of Seller resulting from any Action
against Seller, which shall have been asserted prior to the Closing Date;
5. Any liability or obligation of Seller resulting from entering into,
performing its obligations pursuant to or consummating the transactions
contemplated by, this Agreement;
6. Any liability or obligation under any material Contract not listed in
Seller's Disclosure Schedule. For purposes of the foregoing, "material"
Contracts shall be those that provide for total payments in excess of Five
Thousand Dollars ($5,000);
7. Any liability or obligation of Seller to a Related Party;
8. Any liabilities or obligations with respect to any Excluded Asset;
-21-
<PAGE>
9. Any Environmental Liability; and
10. The balance of the purchase price due pursuant to the Asset Purchase
Agreement between Seller and Chris Hall dated January 31, 1998.
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 North Carolina 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 now being conducted.
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 Qualification. Seller is duly qualified to do business and is in good
-------------
standing as a foreign corporation in South Carolina which is the only
jurisdiction in which the nature of its business or the character of its assets
or properties requires such qualification.
4.3 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 and
each of the other agreements and documents to be delivered hereunder when
executed and delivered by Seller will have been duly executed and delivered by
Seller and 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.
4.4 Absence of Certain Changes or Events; Material Adverse Change. Since
-------------------------------------------------------------
the Balance Sheet Date, unless otherwise indicated in Seller's Disclosure
Schedule, there has not been any:
1. (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;
-22-
<PAGE>
2. 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);
3. cancellation of any material indebtedness or waiver of any rights of
material value to Seller;
4. amendment, cancellation or termination of any Contract, Governmental
Authorization or other instrument material to the operation of the System;
5. change in accounting methods or practices by Seller;
6. damage, destruction or loss not covered by insurance, materially and
adversely affecting the Assets;
7. imposition of any Encumbrance on any of the Assets except for
Permitted Encumbrances;
8. capital expenditure by Seller, or incurrence of an obligation to make
any capital expenditures, other than as (i) set forth in the Capital
Expenditures Summary, (ii) required in order to replace damaged or inoperable
equipment which is necessary to the continued operation of the System as
currently configured or (iii) authorized by Buyer in writing, which shall not be
unreasonably conditioned or withheld;
9. amendment of Seller's Articles of Incorporation or Bylaws;
10. payment, discharge or satisfaction of Liabilities, other than in the
ordinary course of business and consistent with past practice;
11. material adverse change in the business and, to the knowledge of
Seller, no such change is threatened;
12. conduct of the business outside the ordinary course;
13. loss or interruption in the use of the System;
14. acquisition of any assets outside of the ordinary course of business;
15. assumption of any liability except in the ordinary course of business;
16. execution of any agreement with a labor union;
-23-
<PAGE>
17. execution of any lease affecting Real Property with annual payments in
excess of $5,000;
18. execution of any agreement or plan of merger, consolidation or
recapitalization;
19. loan, advance or capital contribution made to or investment made in
any entity in excess of $10,000;
20. execution of any other material contract or other agreement with
respect to the System;
21. action by Seller which has materially and adversely affected the
business relationship between Seller and its customers, the loss of which would
have a material adverse effect on the Seller's business, or its suppliers or any
Governmental Authority; or
22. payment or distribution of Assets other than Cash or Cash Equivalents
to any equity interest holder of Seller.
4.5 Use of Assets. Other than the Excluded Assets and except for certain
--------------
assets used in connection with billing and other administrative services, 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
utilized in the operation of the System as it is presently conducted.
4.6 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: (i) will not violate or
conflict with any provision of Seller's Articles of Incorporation or Bylaws;
(ii) 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; (iii) provided the FCC 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 Contract, Governmental Authorization,
or other agreement, instrument, license, or permit to which Seller is a party or
by which Seller is bound or subject that is necessary to the lawful conduct of
Seller's business, which relates directly or indirectly to the System, or
results in an event which with notice, lapse of time or both, would result in
any such conflict, grounds, breach, default, or acceleration; and (iv) 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.
-24-
<PAGE>
4.7 Consents. Except for the Consents set forth in Seller's Disclosure
--------
Schedule and as otherwise agreed to in this Agreement, no consent, approval,
permit, or authorization of, declaration to or filing or registration with any
Governmental 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.
4.8 Governmental Authorizations. 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. The Governmental Authorizations comprise all the licenses, permits, and
other authorizations required from Governmental Authorities for the lawful
conduct of the operation of the System as it is currently being operated (except
for local business licenses and occupancy permits). To the best of Seller's
knowledge, 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
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. Seller 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 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. 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. Seller's point-to-point
microwave facilities used in the operation of the System, as reflected on the
FCC Authorizations attached to Seller's Disclosure
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<PAGE>
Schedule, include facilities which operate in the 2110-2200 MHz bands which are
potentially subject to relocation pursuant to Part 101 of the FCC's rules, 47
C.F.R. Part 101. Seller has received no request or notification that it will be
required to relocate, pursuant to Part 101, any of the point-to-point microwave
facilities licensed to Seller and used in the operation of the System. Except as
reflected on Seller's Disclosure Schedule, there are no unserved areas, as
defined in Section 22.99 of the FCC's rules with respect to the Cellular
Radiotelephone Service, 47 C.F.R (S) 22.99, in connection with the System.
Seller has obtained the requisite approval of or agreement for the service area
boundary extensions, as defined in Section 22.912 of the FCC's rules, 47 C.F.R.
(S) 22.912, which are material and necessary to operate the System as it is
currently configured. Seller has made all material filings required to be made
with the FCC or the South Carolina Public Service Commission in connection with
the operation of the System.
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 leases a portion of the 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, except as reflected on Seller's Disclosure Schedule. There are
no pending or to the best of Seller's knowledge threatened condemnation
proceedings relating to any of the Real Property. All towers and other
structures on the Real Property which are part of the Assets are marked in
accordance with the requirements of the FCC Authorizations and all applicable
state and local laws, except with respect to state and local laws to the extent
that failure to do so would not have a material adverse effect on the Assets or
the operation of the System. 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. 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. To Seller's
knowledge, the improvements to the Real Property have no material defects, are
in good operating condition (ordinary wear and tear excepted) and are sufficient
for the operation of the business as presently conducted. None of the
improvements to the Real Property is subject to any commitment or other
arrangement for their use by any Related Party or third party.
4.10 Personal Property. 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
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Personal 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. The Personal Property is sufficient to permit the System to operate in
all material respects in accordance with the terms of the FCC Authorizations. To
Seller's knowledge, the Personal Property is in good operating condition
(ordinary wear and tear excepted), usable for the purposes used. To Seller's
knowledge, the Personal Property located at each of the Cell Sites has been
maintained in accordance with applicable warranties and manufacturer's
specifications. Seller's Disclosure Schedule also lists all motor vehicles and
other Personal Property for which a certificate of title or origin is required
in order to transfer title from Seller to Buyer.
4.11 Subscribers and Suppliers. A copy of each current form of
-------------------------
Subscriber Agreement is attached to Seller's Disclosure Schedule. As of the
Balance Sheet Date, Seller had approximately 27,990 active cellular subscriber
accounts (including rental accounts and not including employee and agent
accounts) and approximately 3,100 suspended accounts, each telephone number
being a separate account. In addition to the subscriber accounts, as of
February 28, 1998 there were approximately 110 agent accounts and 440 employee
accounts. Seller does not have accounts which are designated as demo accounts.
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. To Seller's knowledge, no material supplier of
the business or party to any other Contract with Seller intends to cancel its
relationship with Seller or the business.
4.12 Resale Agreements. Seller is a party to certain resale agreements
-----------------
for paging services which are listed in the Seller's Disclosure Schedule.
Seller has no resale agreements for cellular services.
4.13 Financial Statements. The Financial Statements are contained in
--------------------
Seller's Disclosure Schedule. The Financial Statements, the pro-forma Closing
Date Balance Sheet and the Closing Statement do and will, as appropriate, fairly
present the Assets, Liabilities and financial condition and results of the
Seller's operations 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 all of Seller's Contracts (including Real Property Leases, but
excluding Subscriber Agreements) which (i) as of the date hereof, involve the
receipt or payment by Seller of more than $25,000 annually; (ii) involve the
receipt or payment after the date hereof of more than $10,000 annually (but less
than $25,000 annually) that are not terminable on thirty (30) days or less
notice at any time without penalty; or (iii) although not meeting the monetary
thresholds set forth above (which shall be dispositive with respect to the
materiality of any purely monetary obligations) are otherwise material to the
operation of
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the System or Seller's business. Seller has delivered to Buyer true and complete
copies of all such Contracts, together with all amendments and extensions to
date. All such Contracts are in full force and effect, are valid, binding, and
enforceable in accordance with their terms, are paid in accordance with their
terms, have not been materially impaired by any acts or omissions of Seller.
Except as set forth in Seller's Disclosure Schedule, no Contracts described in
Section 4.14(i), (ii) and (iii) above require 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 default by any party
thereto or any event that, after notice or lapse of time or both, would permit
any party to terminate such Contract or deprive any party of the benefits of
such Contract.
4.15 Intangibles. Seller's Disclosure Schedule contains a true and
-----------
complete list of Seller's Intangibles, all of which are valid, in good standing,
and, to the best of Seller's knowledge, 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 Intangibles.
4.16 Taxes.
-----
1. Filing of Tax Returns. Seller has delivered to Buyer complete and
-- ---------------------
accurate copies of Seller's income and sales and use tax returns for Seller's
past three (3) years. 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 (and appropriate reserves set forth on the Financial Statements
with respect thereto) with notice thereof being given to Buyer. The tax returns
and other information filed are complete and accurate in all material respects.
2. Payment of Taxes. Except as reflected on Seller's Disclosure
-- ----------------
Schedule, 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 known liability for Taxes in excess of the amounts so
paid or accrual so established.
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<PAGE>
3. Audits, Investigations or Claims. Except as reflected on Seller's
-- --------------------------------
Disclosure Schedule, the federal income tax returns of Seller have not been
audited by the Internal Revenue Service, and no deficiencies for Taxes have been
claimed, proposed or assessed by any taxing or other Governmental Authority
against Seller. Except as reflected on Seller's Disclosure Schedule, there are
(i) no pending or, to the best of Seller's knowledge, threatened audits,
investigations or claims for or relating to any additional liability in respect
of Taxes, (ii) no matters under discussion with any Governmental Authority with
respect to Taxes that in the reasonable judgment of Seller are likely to result
in an additional liability for Taxes, and (iii) no extensions of a statute of
limitations relating to Taxes in effect with respect to Seller.
4. Liens. There are no liens for Taxes (other than for current Taxes not
-- -----
yet due and payable) on the Assets.
5. Foreign Person. Seller is not a Person other than a United States
-- --------------
Person within the meaning of the Code.
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. 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. Except as
set forth on Seller's Disclosure Schedule, there are no outstanding unpaid
claims under any policies or binders. No notice of reduction in coverage,
increase in premium, or cancellation or non-renewal with respect to, or
disallowance of any material claim under, any such policy or binder has been
received by Seller.
4.18 Labor Matters. 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. Seller
is not subject to any unfair labor practice by the National Labor Relations
Board (NLRB).
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
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<PAGE>
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, to the best of Seller's knowledge, 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 employees has been a participant in a
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 Litigation. Except for legal administrative proceedings affecting
----------
the cellular telephone and paging industries generally and as otherwise set
forth in the Seller's Disclosure Schedule, there is no action, suit, claim,
arbitration or other legal or administrative proceeding (collectively,
"Actions") pending or, to the best of Seller's knowledge, threatened against
Seller with respect to the Assets. There is not outstanding any order, writ,
injunction, decree, or judgment of any Governmental Authority applicable to
Seller, the business or the Assets. Except as reflected on Seller's Disclosure
Schedule, there are no pending Actions that have been brought by or on behalf of
Seller with respect to the business or the Assets before any Governmental
Authority.
4.21 Compliance With Laws. Except as set forth on Seller's Disclosure
--------------------
Schedule, Seller is in material compliance with all laws, regulations and
governmental orders applicable to the Assets and the operation of the System.
Seller has not received notice to the effect that, or otherwise been advised
that, it is not in compliance with any laws, and Seller has not taken any action
or failed to take any action that is a violation of any such laws, except for
actions or failures to take action that, individually or in the aggregate, have
not and would not reasonably be expected to have a material adverse effect on
the operation of the System or the Assets.
4.22 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.
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<PAGE>
4.23 Environmental and Safety Compliance. Neither Seller's 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 not caused and to
Seller's knowledge 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
damage, loss, cost, expense, claim, demand, order or liability to or against
Seller or Buyer by a Governmental Authority or other entity 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 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 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. To the best of Seller's knowledge or as
otherwise disclosed in the Phase I and Phase II environmental reports delivered
by Seller to Buyer prior to execution of this Agreement, none of the properties
included in the Assets or to be leased by Buyer has underground or above ground
storage tanks, or has had any leak, spill, disposal, discharge, or release of
any Pollutant. To Seller's knowledge without any inspection or investigation
whatsoever, there are no (a) friable asbestos-containing materials on or in the
Assets or any buildings or facilities thereon or to be leased to Buyer, or (b)
electrical transformers, fluorescent light fixtures with ballasts, or other
equipment containing PCB's in excess of legal requirements on such properties.
4.24 Broker. Seller has not employed the services of any broker or any
------
similar Person that will require the payment of any finder's fee, commission or
similar payment in connection with this Agreement or any matter related hereto.
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<PAGE>
4.25 Accounts Receivable. The Accounts Receivable reflected on the
-------------------
Financial Statements represent (and the accounts receivable created thereafter
will represent) bona fide claims of Seller against debtors for sales,
performance of services or other transactions in the ordinary course of
business. The Accounts Receivable are, to Seller's knowledge, subject to no
defenses, counterclaims or rights of set-off. Seller maintains a lock box for
the collection of accounts receivable at Quest Point (a wholly-owned subsidiary
of CoreStates) in Tampa, Florida (the "Lock Box"). Seller's Disclosure Schedule
attached hereto sets forth a true, complete and accurate list as of January 10,
1998 listing the total amounts of subscriber receivables and the aging of such
subscriber receivables based on the following past due schedule: 0-29 days, 30-
59 days, 60-90 days and over 90 days.
4.26 Inventory. The inventory as reflected on the Financial Statements
---------
(a) was valued at the lower of cost (determined on a first-in, first-out
inventory valuation basis) or market in accordance with generally accepted
accounting principles consistently applied, and (b) was purchased in the
ordinary course of business. All inventory that is obsolete, discontinued or of
below standard quality was discounted in value to net realizable value on such
Schedule. No write-offs or charges against inventory have been made since the
Balance Sheet Date, except for charges in the ordinary course of business for
sales of inventory. None of the inventory is unusable or not salable in the
lawful and ordinary course of business because of legal restrictions, failure to
meet specifications, damage, physical deterioration or for any other cause.
4.27 Title; Location of Assets. Seller has good and marketable title (fee
-------------------------
or leasehold) to all of the Assets. Seller will at Closing convey to Buyer good
and marketable title to all Assets, in each case free and clear of any lien.
All of Seller's Assets used in the business of Seller are located within the
state of South Carolina at the locations set forth on Seller's Disclosure
Schedule. The Assets are technically sufficient and capable of providing
cellular telephone service in accordance with Part 22 of the FCC's rules, 47
C.F.R. Part 22. The Assets constitute all of the assets that are necessary or
used in the operation of Seller's business, as currently conducted, except for
the Excluded Assets and the assets referenced in the definition of "Assets"
which are owned by Seller's Affiliates and located outside of the Market.
4.28 Transactions with Related Parties. Except as set forth in the
---------------------------------
Financial Statements, no Related Party has (a) borrowed money from or loaned
money to Seller that remains outstanding, (b) any contractual or other claims,
express or implied, of any kind whatsoever against Seller, (c) any interest in
any property or assets used by or useful to Seller or Seller's business, or (d)
been a director, officer, or employee of, or had any direct or indirect interest
in, any entity that has done business with Seller or Seller's business.
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4.29 Books and Records. Seller has given Buyer access to the Books and
-----------------
Records which are, with respect to those records which form the basis for the
Financial Statements, true, complete and correct in all material respects and
otherwise are, to the best of Seller's knowledge, true, complete and correct.
4.30 No Other Agreements to Sell the Assets. Neither Seller nor any
--------------------------------------
Related Party has any commitment or legal obligation, absolute or contingent, to
any other Person other than Buyer to sell, assign, transfer or effect a sale of
any of the Assets (other than inventory in the ordinary course of business), to
effect any merger, consolidation, liquidation, dissolution or other
reorganization of Seller, or to enter into any agreement or cause the entering
into of any agreement with respect to any of the foregoing.
=
4.31 Disclosure. No representation, warranty or statement of Seller
----------
contained in this Agreement, in any Schedule or Exhibit, or any agreement
delivered in connection herewith contains or will contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements contained herein and therein not misleading. To the best of Seller's
knowledge, there is no fact that Seller has not disclosed to Buyer that could
reasonably be expected to have a material adverse effect on Seller, Seller's
business or the Assets.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER.
---------------------------------------
Buyer represents and warrants to Seller as follows:
5.1 Organization, Standing and Authority. Buyer is a corporation 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. Prior to the Closing, to the extent
required by law, Buyer will be qualified to do business in South Carolina.
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 and each of the
other agreements and documents to be delivered by Buyer when executed and
delivered by Buyer will have 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.
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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: (i) will not conflict with
the Certificate of Incorporation or By-Laws of Buyer, (ii) 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 (iii) 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 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.
5.5 Buyer Qualifications. Buyer is legally, technically, financially and
--------------------
otherwise qualified under the Communications Act 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. Except for legal administrative proceedings affecting the
----------
cellular and paging industries generally, Buyer is not subject to any judgment,
award, order, writ, injunction, 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 except
for defaults that, individually or in the aggregate, have not had and will not
have a material adverse effect on Buyer's ability to perform its obligations
hereunder.
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<PAGE>
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. Buyer has not employed the services of any broker or any
------
similar Person that will require the payment of any finder's fees, commission or
similar payment in connection with this Agreement or any matter relating hereto.
5.10 Financial Capability. Buyer represents that Triton Myrtle
--------------------
Acquisition, L.L.C. has obtained a commitment letter from The Chase Manhattan
Bank, Morgan Guaranty Trust Company of New York and TD Securities (USA) Inc. to
provide, in combination with equity and other funding available to Buyer,
funding of the Purchase Price. Buyer will have available on the Closing Date
sufficient funds to consummate the transactions contemplated by this Agreement,
including, without limitation, payment of the Purchase Price and Buyer shall be
solvent on the Closing Date with the financial capability to meet its other
obligations when they become due.
5.11 Knowledge of Claims. As of the date hereof, none of Michael
-------------------
Kalogris, David Clark or Patricia Gallagher have actual knowledge, without
independent inquiry, of any breach of the representations and warranties of
Seller contained in this Agreement.
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:
1. Maintenance of the System. Seller shall carry on its business in the
-- -------------------------
ordinary course consistent with past practice. 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. From the date hereof until the Closing
Date, Seller agrees that it will, unless otherwise consented to in writing by
Buyer:
1. use commercially reasonable efforts to keep available the services of
the present employees of Seller's business (except as provided in Section 8.5);
encourage such employees to accept employment with Buyer (if such employment is
offered); and use commercially reasonable efforts to preserve its relationships
with customers, suppliers and others having business dealings with Seller to the
end that its goodwill and ongoing business shall be conducted on substantially
the same basis on the Closing Date as on the date hereof;
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<PAGE>
2. maintain, in accordance with Seller's past practices and in accordance
with any vendor or manufacturer warranties, the Personal Property in the same
condition as on the date hereof, except for depletion, depreciation, ordinary
wear and tear and damage by unavoidable casualty;
3. perform all of its material obligations under all Contracts relating
to Seller's business, including the discharge of all accounts payable of the
business according to the terms and conditions of all invoices therefore, unless
contested in good faith by Seller and appropriate reserves are provided therefor
on the Financial Statements;
4. maintain true, correct and complete Books and Records relating to
Seller's business;
5. comply in all material respects with all laws applicable to the
conduct of Seller's business; and
6. reasonably promptly upon its knowledge thereof, advise Buyer in
writing of the termination or resignation of any key employee of Seller.
1. 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 conditioned or withheld):
1. change or permit to be changed the relative ownership interests in
Seller or issue any rights or options to acquire any interest in Seller;
2. change any of its credit and collection policies or any of its
marketing programs (including instituting any promotional or other special
programs) except in the ordinary course of business;
3. change or modify in any respect any roaming Contract or roaming rates
except in the ordinary course of business;
4. make a change in any material equipment vendors except in the ordinary
course of business;
5. hire any employees except in the ordinary course of business;
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<PAGE>
6. 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 System equipment when replaced by equipment of
substantially equivalent value and function;
7. cancel, release or assign any Subscriber Agreements except in the
ordinary course of business;
8. except as set forth in Seller's Disclosure Schedule, enter into any
material contract or commitment relating to the System or the Assets except for
entry into or termination or modification of Subscriber Agreements in the
ordinary course of business, 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);
9. make any material change in any method of accounting or accounting
practice;
10. enter into any agreement to make any commitment or offer to provide
cellular telephone or paging service to subscribers other than in the ordinary
course of business; or waive any material rights relating to the System or the
Assets;
11. 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) related to the
operation of the System that is not in the ordinary course of business;
12. make Capital Expenditures other than as (i) set forth in the Capital
Expenditures Summary, (ii) required in order to replace damaged or inoperable
equipment which is necessary to the continued operation of the System as
currently configured or (iii) otherwise approved by Buyer in writing (which
approval shall not be unreasonably conditioned or withheld).
1. Governmental Authorizations. Seller shall not cause or, to the extent
-- ---------------------------
within its control, 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 Authorizations in connection with the
operation of the System, or take or, to the extent within its control, permit
any other action that would result in the System being in noncompliance with the
requirements of any law, rule or regulation.
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<PAGE>
2. Access to Information. Subject to Section 16.11 hereof, Seller shall
-- ---------------------
give to Buyer and its counsel, lenders, accountants, engineers, and other
representatives (the "Representatives") reasonable access to the System, and to
all Books and Records, and to the officers, employees, and agents of Seller, 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. No investigation by Buyer shall diminish, obviate or constitute a
waiver as to the enforcement of any of the representations, warranties,
covenants or agreements of Seller under this Agreement. Seller shall furnish
the Representatives during such period with all information and copies of
documents concerning the affairs of the Seller as such Representatives may
reasonably request and shall cause the appropriate officers, employees,
consultants, agents, accountants and attorneys of Seller to cooperate fully with
such Representatives in connection with such review and examination and to make
full disclosure to Buyer of all material facts affecting the financial
condition, business operations and prospects of Seller and the Assets.
3. Monthly Reports. Seller shall provide Buyer with a balance sheet and
-- ---------------
related statements of income and those other reports identified on Schedule
6.1(e) 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 Seller's operations in accordance with generally
accepted accounting principles consistently applied, subject to normal year-end
adjustments.
4. Maintenance of Assets. Seller shall maintain all the Assets in good
-- ---------------------
and working order and in the condition represented in this Agreement, except for
obsolescence and ordinary wear and tear, and will maintain supplies of inventory
and spare parts consistent with past practice but in any event, not to exceed
that amount of supplies or inventory and spare parts required during sixty (60)
days of normal usage. If any loss, damage, impairment, confiscation, or
condemnation to any of the Assets occurs, Seller shall take all commercially
reasonable 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.
5. 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 law, rule or regulation, Seller shall contest in good faith or
cure the violation prior to the Closing Date.
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<PAGE>
6. 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.
7. 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.
8. 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 or entertain or consider any unsolicited offer 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
with respect to the transactions contemplated by this Agreement) in connection
with any inquiry or offer for any purchase or sale or merger, acquisition,
combination, sale or other disposition involving the System, the Assets or any
material part of the Assets.
9. Roamer Agreements. Seller and Buyer covenant and agree that prior to
-- -----------------
the Closing Date each shall enter into roaming agreements with the other,
consistent with standard industry practice for such agreements, so that from and
after the Closing Date subscribers of the CMRS systems owned or operated by each
or its Affiliates who use appropriate dual-mode wireless telephones may roam on
the CMRS systems owned or operated by the other and its Affiliates.
10. Accounts Receivable. Subject to Section 6.1(b)(ii), between the date
--- -------------------
hereof and the Closing Date, Seller will continue its existing credit and
collection procedures to collect its Accounts Receivable.
====
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.
6.3 Title; Risk of Loss. Legal title and risk of loss with respect to the
-------------------
Assets shall not pass to Buyer or any of its subsidiaries until the Assets are
transferred at Closing. If prior to the Closing Date any of the Assets are
destroyed or damaged by fire or other casualty, Seller may, at its option,
either (a) replace or restore such Assets with Assets of comparable quality or
(b) include an amount equal to a mutually agreed upon
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<PAGE>
cost of completing the replacement or repair of such property as a deduction in
the calculation of the Purchase Price or, in the absence of such mutual
agreement, the parties agree to extend the time for Closing as reasonably
necessary to permit Seller to complete such repairs or replacement; provided,
however, that nothing in this Section 6.3 shall be deemed to require Buyer to
waive any condition to Closing, and the decision to waive any such condition
will be in the sole discretion of Buyer, or (c) if there are sufficient
insurance proceeds available to cover such damage or destruction (including any
loss due to interruption of business after the Closing Date) assign its rights
to such insurance proceeds to Buyer (the options referred to in (a), (b) and (c)
above, collectively, the "Restoration Actions"); provided, however, that if the
estimated cost of the Restoration Actions actually implemented by Seller exceeds
$20,000,000, Seller shall only be obligated with respect to the Restoration
Actions in the aggregate up to a total of $20,000,000. Seller shall have the
right to implement one or more of the Restoration Actions concurrently subject
to the written consent of Buyer not to be unreasonably conditioned or withheld.
Notwithstanding the foregoing, if the estimated cost of the Restoration Actions
exceeds $20,000,000, Buyer may by written notice to Seller elect to terminate
this Agreement.
6.4 Environmental Obligations. Buyer may obtain Phase I and/or Phase II
-------------------------
environmental reports for any of the Real Property. If any environmental report
reveals any condition that would require remediation under applicable
Environmental Laws, then Buyer shall deliver a written notice specifying the
required remediation and the approximate cost therefore (the "Environmental
Notice") to Seller who shall, within fifteen (15) Business Days after receipt of
such Environmental Notice, respond to Buyer in writing (the "Environmental
Response") and agree either to (a) complete such remediation prior to Closing or
(b) permit Buyer to have such remediation completed and granting Buyer the right
to include such costs incurred by Buyer in completing such remediation as a
deduction in the calculation of the Purchase Price. If Seller does not deliver
the Environmental Response within such time period and the approximate
remediation cost is an amount in excess of $20,000,000, then Buyer shall have
the right, at its option, by written notice to Seller to (x) terminate this
Agreement or (y) to include such costs as a deduction in the calculation of the
Purchase Price. If the estimated cost of remediation exceeds $20,000,000 Seller
shall only be required to have deducted from the Purchase Price and/or to incur
the cost to remediate up to a total of $20,000,000. If Seller does not deliver
the Environmental Response within such time period and the approximate
remediation cost is less than $20,000,000, then Buyer shall have the right by
written notice to include such costs as a deduction in the calculation of the
Purchase Price. In the event Buyer and Seller disagree as to whether
remediation is required or the cost of such remediation, irrespective of whether
an Environmental Response is provided on a timely basis, the dispute shall be
submitted to a mutually acceptable independent third-party expert of nationally
recognized repute for determination which shall be binding upon the parties and,
if necessary, the funds necessary for the remediation, if any, shall be reserved
from the Purchase Price and placed in escrow pending the determination;
provided, however, that in the event Buyer exercises its termination right
pursuant to this Section 6.4, no funds shall be required to be placed in escrow.
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<PAGE>
6.5 Notice of Certain Events. Promptly upon its knowledge thereof, Seller
------------------------
shall advise Buyer in writing of: (i) any material adverse change in Seller,
the Seller's business or the Assets, (ii) any event, condition or circumstance
occurring from the date hereof until the Closing Date that would constitute a
violation or breach of any representation, warranty, covenant, agreement or
provision contained in this Agreement (provided that such disclosure shall not
be deemed to cure any violation or breach of any such representation, warranty,
covenant, agreement or provision), or (iii) any event, occurrence, transaction
or other item that would have been required to have been disclosed on any
Schedule delivered hereunder, had such event, occurrence, transaction or item
existed on the date hereof.
6.6 Audited Financial Statements. Seller will obtain and deliver to Buyer
----------------------------
the unqualified report of Arthur Andersen ("Seller's Accountant") on the audited
balance sheet of Seller as of December 31, 1997, and the related statements of
income and cash flow for the year then ended (collectively, "Audited Financial
Statements"), prepared in accordance with the Rules of the SEC, including
Regulation S-X thereof. Additionally, as promptly as practicable after
providing the Audited Financial Statements, Seller shall use its reasonable best
efforts to deliver prior to the Closing Date (i) the unqualified report of
Seller's Accountant on the audited balance sheets of Seller as of December 31,
1996 and 1995 and the related statements of income and cash flows for the years
then ended (if required to be included in the securities filings), (ii) related
comfort letters to underwriters, if required and (iii) the consent of Seller's
Accountant, consenting to the inclusion of the Audited Financial Statements in
both an 8-K Statement and an appropriate form of Registration Statement under
the Securities Act of 1933, as amended, as applicable, of Buyer or any of its
Affiliates . The fees and disbursements of Seller's Accountant for the
foregoing and all related services shall be borne and paid solely by Buyer, and
if requested by Seller, directly to Seller's Accountant and Seller and Seller's
Accountant shall be entitled to reasonable and customary indemnities and/or
other protections in connection with the use of information which is furnished
to Buyer in Buyer's 8-K Statement and Registration Statement.
6.7 Seller To Remain In Control. Notwithstanding any provision of this
---------------------------
Agreement that may be construed to the contrary, pending the Closing the Seller
shall maintain full, complete, actual (de facto) and legal (de jure) control
over the FCC Authorizations and the operation of the System in accordance with
the requirements of the Communications Act.
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<PAGE>
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.
7.2 Notice of Certain Events. Promptly upon its knowledge thereof, Buyer
------------------------
shall advise Seller in writing of: (i) any material adverse change in Buyer
which could affect Buyer's ability to perform its obligations under this
Agreement, (ii) any event, condition or circumstance occurring from the date
hereof until the Closing Date that would constitute a violation or breach of any
representation, warranty, covenant, agreement or provision contained in this
Agreement (provided that such disclosure shall not be deemed to cure any
violation or breach of any such representation, warranty, covenant, agreement or
provision), or (iii) any event, occurrence, transaction or other item that would
have been required to have been disclosed on any Schedule delivered hereunder,
had such event, occurrence, transaction or item existed on the date hereof.
7.3 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 Consents. The sale of the Assets as contemplated by this
------------
Agreement is subject to the prior consent and approval of the FCC. Not later
than ten (10) Business Days after the date of this Agreement, Buyer and Seller
shall file with the FCC applications for the FCC Consents (the "Assignment
Applications"). Buyer and Seller agree to use their best efforts to: (i)
prosecute the Assignment Applications with all reasonable diligence; (ii) amend
the Assignment Applications 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 Applications; and (iv) otherwise use
their best efforts to obtain a grant of the Assignment Applications 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 Consents. The failure by either party to timely
file or diligently prosecute its portion of the Assignment Applications 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 Applications shall
be split equally between Buyer and Seller.
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<PAGE>
8.2 Other Consents.
--------------
1. To the extent necessary, within ten (10) Business Days after the date
of this Agreement, Seller and Buyer shall join in any applications, filings or
registrations required by any state or local Governmental Authority (including,
without limitation, the South Carolina 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 Buyer and Seller.
2. Seller shall commence, as soon as practicable, all action reasonably
necessary to obtain all other Consents, provided that, such action does not
cause a 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 existing 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.
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 twenty (20) Business Days after 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 split equally between Buyer and Seller.
8.5 Employees. Seller shall terminate all of its employees as of the
---------
Closing Date. It is Buyer's current intention to offer employment to some or
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 employment 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. Buyer will
consult with Seller prior to any communications with Seller's employees
regarding future employment.
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<PAGE>
8.6 Schedule Revision. Prior to Closing, Seller shall compile a revised
-----------------
Seller's Disclosure Schedule, which revised Seller's Disclosure Schedule shall
reflect accurate and complete information as of the Closing Date.
8.7 Transition Services. Prior to Closing, Buyer and Seller shall
-------------------
negotiate in good faith a transition services agreement, whereby Seller shall
provide to Buyer, (i) for sixty (60) days after the Closing Date, with one
option to extend for an additional sixty (60) days, transition billing and call
center backup services, and (ii) for up to six (6) months after the Closing
Date, on a month-to-month basis, to the extent permitted under Seller's
Affiliate's existing agreements with the providers of such services, access to
the NACN, CDPD and SMS platforms. The transition services agreement shall
provide that Seller shall charge Buyer for billing services $2.00 per billing
record during the first sixty (60) days and $2.25 per billing record for the
sixty (60) day extension period and shall charge Buyer its costs for providing
call center backup services and access to the NACN and CDPD and SMS platforms.
The agreement shall include provisions which are customary in the industry for
cellular billing agreements but shall recognize that Seller is not in the
business of providing these transition services.
8.8 Best Efforts to Obtain Financing. Prior to the Closing, Buyer shall
--------------------------------
use its best efforts to obtain the financing required to pay the Purchase Price
at Closing.
8.9 Best Efforts to Obtain Extensions. Prior to the Closing, if requested
---------------------------------
by Buyer, Seller shall use its best efforts to extend Contracts that the parties
agree in good faith are necessary or useful for the continued operation of the
System.
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:
1. Representations, Warranties and Covenants. All representations and
-- -----------------------------------------
warranties of Seller contained in this Agreement shall be true and correct in
all material respects (except for representations and warranties qualified by
materiality which will be true and correct in all 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; provided that 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
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<PAGE>
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 (except as limited by the time periods set forth in Section
12.2 if notice is given pursuant to that Section). There shall be delivered to
Buyer at Closing a certificate signed by the President of Seller to the
foregoing effect ("Seller's Closing Certificate").
2. 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.
Notwithstanding anything to the contrary contained in this Section 9.1, Section
9.2 or otherwise, if no petitions to deny the Assignment Applications have been
filed within the applicable public comment period, and the FCC thereafter grants
said Applications and such grant becomes legally effective by the release of an
FCC Public Notice announcing the grant (the "Effective Order"), Buyer may, with
the written consent of Seller, waive on behalf of the parties the requirement
that the FCC Consents shall have become Final Orders. 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 and adverse
change in the terms or conditions of any such Real Property Lease or Contract,
unless (i) such Consent is waived by the Buyer, (ii) Seller agrees, in its sole
discretion, to indemnify Buyer for increased costs or other damages resulting
from the failure to obtain such Consent, or (iii) the parties mutually agree on
an alternative course of action to resolving the absence of any such Consent.
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.
3. Governmental Authorizations. Seller shall be the holder 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's 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.
4. Deliveries. Seller shall have made all the deliveries to Buyer set
-- ----------
forth in Section 10.2.
5. Opinions of Counsel. Seller shall have delivered to Buyer one or more
-- -------------------
opinions of Seller's counsel (which may be in-house counsel with respect to the
matter to be addressed pursuant to Section 9.1(e)(iv)(A)(iii)), dated as of the
Closing Date, addressed to Buyer and providing substantially as follows:
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<PAGE>
1. Seller's existence and good standing are as stated in Sections 4.1 and
4.2 hereof;
2. Seller has full corporate power and authority to consummate the
transactions contemplated by this Agreement;
3. 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 (other than the
noncompete/nonsolicitation agreements referenced in Section 2.9) 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;
4. Neither the execution and delivery of this Agreement by Seller nor the
consummation by Seller of the transactions contemplated hereby (A) will violate,
conflict with, or constitute a breach of any of the terms of (i) Seller's
Articles of Incorporation or Bylaws, or, (ii) to the best knowledge of such
counsel, violate any federal, North Carolina or New York law or regulation or
any presently existing order, judgment, injunction award or decree applicable to
Seller or the Assets or (iii) subject to the receipt of any required consent or
the providing of any required notice or similar action, any Contract listed
pursuant to Section 4.14 in Seller's Disclosure Schedule; or (B) requires the
authorization, consent, order, permit, approval of or providing of notice to, or
filing with, any federal, North Carolina or New York 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 Applications;
5. Seller holds all the FCC Authorizations, which include all of the FCC
licenses, permits and authorizations necessary for the Seller to operate a
Cellular Radiotelephone system on Frequency Block A in the Market as currently
configured, and the FCC Authorizations are in full force and effect;
6. There is no final adverse order, decree or other ruling that has been
issued by the FCC against Seller or the System or, to the best of counsel's
knowledge, no complaint, investigation, proceeding, petition, notice of
violation, or notice of apparent liability pending or threatened by or before
the FCC against Seller or the System; and
7. All FCC Consents 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 unless the parties close on Effective Order. 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.
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<PAGE>
1. Adverse Changes. Between the Balance Sheet Date and the Closing Date
-- ---------------
there shall have been no material adverse change in the Assets or the condition
(financial or otherwise) of the System.
2. 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.
3. 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.
4. 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:
1. Representations, Warranties and Covenants. All representations and
-- -----------------------------------------
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects (except for representations and warranties qualified by
materiality which will be true and correct in all 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").
2. Deliveries. Buyer shall have made all the deliveries set forth in
-- ----------
Section 10.3.
3. Buyer's Opinion. Buyer shall have delivered to Seller one or more
-- ---------------
opinions of Buyer's counsel, dated as of the Closing Date, addressed to Seller
and
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providing with respect to Buyer (or with respect to its permitted assignees to
the extent assigned as though they were a party hereto) substantially as
follows:
1. Buyer's existence and good standing are as stated in Section 5.1
hereof;
2. Buyer has full corporate (or other entity) power and authority to
consummate the transactions contemplated by this Agreement;
3. 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 Buyer 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;
4. Neither the execution and delivery of this Agreement by Buyer nor the
consummation by Buyer of the transactions contemplated hereby (i) will violate,
conflict with, or constitute a default under Buyer's Certificate of
Incorporation or applicable formation document, or, to the best knowledge of
such counsel, any United States federal law or regulation applicable to Buyer;
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 Buyer of the transactions
contemplated hereby other than the filings under the HSR Act and the Assignment
Applications; and
5. All FCC Consents 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 unless the parties close on Effective Order. 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.
1. 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.
2. FCC and Other Consents. The FCC Consents shall have been granted.
-- ----------------------
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SECTION 10. CLOSING; CLOSING DELIVERIES.
---------------------------
10.1 Closing; Termination.
--------------------
1. Closing Date. The Closing shall take place within five (5) Business
-- ------------
Days after the grants of the FCC Consents become Final Order (or Effective
Order, if applicable), or on such other date that is agreed upon in writing by
Buyer and Seller.
2. Closing Place. The Closing shall be held at the offices of Patton
-- -------------
Boggs, L.L.P., 2550 M Street, N.W. 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:
1. 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:
1. one or more assignments of lease with respect to the Real Property
Leases;
2. one or more bills of conveyance with respect to the Personal Property;
3. one or more assignments with respect to the Contracts and Subscriber
Agreements;
4. one or more assignments with respect to the Governmental
Authorizations;
5. one or more assignments with respect to the Intangibles; and
6. 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.
1. the Books and Records;
2. all Consents required pursuant to Section 9.1(b);
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3. evidence of the satisfaction of any Seller indebtedness, including
UCC-3 termination statements;
4. 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;
5. Seller's Closing Certificate;
6. the opinion described in Section 9.1(e);
7. certified copies of Seller's Articles of Incorporation and a
Certificate of Existence;
8. a copy of Seller's Bylaws which have been certified by its Secretary;
9. 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;
10. the Non-foreign Affidavit described in Section 9.1(i);
11. the Capital Expenditures Summary;
12. a calculation of the Initial Adjustment Amount pursuant to Section
2.7;
13. the Closing Date Balance Sheet and accompanying Closing Statement; and
14. a revised Seller's Disclosure Schedule pursuant to Section 8.7.
15. the non-compete agreement required by Section 2.9, and
16. payoff letters satisfactory to Buyer and its lenders, if applicable.
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:
1. The Purchase Price, as adjusted pursuant to Section 2.7, payable on
the Closing Date in cash by wire transfer of immediately available funds to an
account
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designated by Seller in writing and delivered to Buyer no later than two (2)
Business Days prior to the Closing Date;
2. The Capital Expenditures Payment;
3. Copies of resolutions adopted by the board of directors or members or
managers, as the case may be, of Buyer, and each permitted assignee, if any,
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;
4. Buyer's Closing Certificate;
5. certified copies of Buyer's Certificate of Incorporation and each
permitted assignee, if any, constituent document;
6. a copy of Buyer's By-Laws which have been certified by its Secretary;
7. an assumption by Buyer of all the Assumed Liabilities set forth in
Section 3.1;
8. the opinion described in Section 9.2(c);
9. a Certificate of Good Standing for Buyer and each permitted assignee,
if any, from the appropriate state authority; and
10. 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 Buyer's counsel and Seller's counsel.
SECTION 11. ACTIONS BY SELLER AND BUYER AFTER THE CLOSING.
---------------------------------------------
11.1 Tax Matters: Payments of Debts and Liabilities.
----------------------------------------------
1. 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
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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.
2. 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 dispose of any such records without
first providing the other party with a reasonable opportunity to review and copy
the same.
3. Following the Closing Date. Seller shall promptly pay when due all of
-- --------------------------
its debts and Liabilities, including any liability for income 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. 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 Rescission. In the event that Closing occurs on Effective Order and
----------
if the FCC Consents are subsequently withdrawn and if at such time or thereafter
the parties are legally obligated to rescind the transactions contemplated by
this Agreement, the parties shall rescind the transaction in a manner that puts
each party in the position it would have been in as of the Closing Date, had the
transactions contemplated hereby not been consummated. Buyer further covenants
and agrees that in the event of a
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rescission pursuant to this Section 11.3, Buyer will transfer, assign and
deliver the Assets and the System to Seller in substantially the same condition
as the Assets and System existed on the Closing Date, except and, to the extent
there is a net diminution in the value of the Assets, subject to appropriate
compensation, except for (i) ordinary wear and tear, (ii) Assets sold,
transferred or otherwise disposed of in the ordinary course of business and
(iii) changes in any Assets (including the loss or destruction thereof) after
the Closing Date to the extent such changes are not due to the acts or omissions
of Buyer or would have occurred absent the Closing and Seller shall return the
Purchase Price to Buyer net of compensation if Seller and Buyer agree to the
amount of such compensation or, otherwise, Seller shall pay the Purchase Price
less the amount in controversy to Buyer with the amount in controversy to be
placed in escrow pending resolution of the dispute pursuant to Section 15
hereof.
SECTION 12. TERMINATION.
-----------
12.1 Grounds for Termination.
------------------------
1. Unless Buyer elects to close upon the issuance of an Effective Order,
either party may terminate this Agreement if Final Orders granting the FCC
Consents are not obtained within twelve (12) months after the filing of the
Assignment Applications.
2. Either party may terminate this Agreement if the terminating party is
not then in material breach hereof, 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:
1. If on the Closing Date 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;
2. If, subject to Section 12.2, the other party has breached any
representations, warranties, covenants or agreements contained herein; provided,
however, with respect to breaches of representations and warranties, the
nonbreaching party shall not have a right to terminate this Agreement unless the
damages reasonably expected to result from such breaches exceed $1,000,000;
provided further that the Closing hereunder pursuant to this Section 12.1(b)(ii)
shall not affect the nonbreaching party's right to indemnity hereunder; or
3. If, subject to Section 12.2, there shall be in effect any judgment,
decree, or order that would prevent or make the Closing unlawful.
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12.2 Breaches and Defaults; Opportunity to Cure. Prior to the exercise by
------------------------------------------
a party of any termination rights afforded under this Agreement, if either party
(the "Non-Breaching Party") is basing such termination upon a breach by the
other party (the "Breaching Party"), the Non-Breaching Party shall provide the
Breaching Party with written notice specifying in reasonable detail the nature
of such breach, whereupon the Breaching Party shall have thirty (30) days from
the receipt of such notice to cure such breach; provided, however, that if such
breach is not capable of being cured within such period and if the Breaching
Party shall have commenced action to cure such breach within such period and is
diligently attempting to cure such breach and such breach can reasonably be
expected to be cured during the additional time period, the Breaching Party
shall be afforded an additional reasonable amount of time to cure such breach
but not to exceed an additional sixty (60) days; provided, further, however,
that Buyer shall have no opportunity to cure the breach of its obligation to
deliver any required portion of the Purchase Price to be delivered to Seller at
Closing. If the breach is not cured within such time period, then the Breaching
Party shall be in default hereunder and the Non-Breaching Party shall be
entitled to terminate this Agreement (as provided in Section 12.1).
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 one
(1) year from the Closing Date; provided, however, that the representation and
warranty contained in Section 4.19 shall survive the Closing for a period of two
(2) years and the representations and warranties contained in Sections 4.3,
4.16, 4.24, 4.27, 5.2 and 5.9 shall survive the Closing for a period equal to
the statute of limitations for breach of contract under the governing law
specified by Section 16.5. 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
and its shareholders, members, partners, managers, officers, employees and their
agents, representatives and permitted assigns harmless against and with respect
to, and shall reimburse Buyer for:
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1. Breach. Any and all losses, Liabilities, damages, lawsuits, claims,
-- ------
deficiencies and related interest, demands, costs, expenses, penalties and
reasonable attorney's fees (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
2. Ownership. Any and all Damages resulting from the ownership of the
-- ---------
Assets prior to the Effective Time including, without limitation, the Excluded
Liabilities; and
3. 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 Two Hundred and Fifty Thousand
Dollars ($250,000), in which event Seller shall indemnify and hold Buyer
harmless for the full amount of such Damages and/or Claims, provided further
that in no event shall the aggregate liability of Seller for all Damages and/or
Claims arising out of or relating to this Agreement exceed Eight Million Dollars
($8,000,000) (the "Seller Total Claim Cap"); provided, however, that the Seller
Total Claim Cap shall not apply to claims by Buyer based (predominantly with
respect to (i) only) on (i) Seller's knowing and intentional misrepresentation
of material facts actually known by one or more of those executive employees
listed in the definition of "To Seller's knowledge", (ii) Excluded Liabilities,
(iii) failure to proceed to Closing if all conditions precedent are not met and
Buyer is not in default, (iv) failure to comply with the obligations to
creditors of Seller, which obligations are not extinguished by compliance with
the terms of the South Carolina Bulk Sales Act (v) failure to comply with the
post-closing covenants contained in Section 11.1, 16.2, 16.4 and 16.11 or (vi)
failure of Seller or its Affiliates to comply with the terms of the
noncompetition/nonsolicitation agreements referenced in Section 2.9.
13.3 Indemnification by Buyer. Subject to Section 13.4 hereof,
------------------------
notwithstanding the Closing, Buyer hereby agrees to indemnify and hold Seller
its shareholder, members, partners, managers, officers, employees and their
agents, representatives and permitted assigns harmless against and with respect
to, and shall reimburse Seller for:
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1. 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;
2. Ownership. Any and all Damages resulting from the ownership of the
-- ---------
Assets after the Effective Time; and
3. 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, provided, however, that
Buyer shall not be required to indemnify and hold harmless Seller under this
Section 13.3 with respect to any Damages or claims arising out of any breach of
the representations and warranties contained in Section 5, unless and until
Damages and/or claims for which such indemnification is sought under this
Section 13.3 shall exceed in the aggregate Two Hundred and Fifty Thousand
Dollars ($250,000), in which event Buyer shall indemnify and hold Seller
harmless for the full amount of such Damages and/or Claims; provided, further,
however, that in no event shall the aggregate liability of Buyer for all Damages
and/or Claims arising out of or relating to this Agreement exceed Eight Million
Dollars ($8,000,000) (the "Buyer Total Claim Cap"); provided further, however,
that the Buyer Total Claim Cap shall not apply to Claims by the Seller for (i)
Assumed Liabilities, (ii) Buyer's knowing and intentional misrepresentation of
material facts actually known to Michael Kalogris, David Clark or Patricia
Gallagher and (iii) failure to comply with the post-closing covenants contained
in Sections 11.1, 16.2, 16.4 and 16.11; and
4. Liquidated Damages. In the event of a termination of this Agreement
-- ------------------
by Seller in accordance with the terms of Section 12.1(b)(ii) prior to Closing,
as Seller's sole and exclusive remedy and in lieu of any other claims Seller may
have against Buyer pursuant to this Agreement, Seller shall be entitled to
retain the Escrow Amount as liquidated damages.
13.4 Limitation of Damages. The foregoing obligations described in
---------------------
Sections 13.2 and 13.3 shall be subject to and limited by the following
principles and limitations.
1. 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 one (1) year following the Closing
Date ("Claim Period") and shall thereafter terminate; provided, however, that
the representations and warranties contained in Section 4.19 shall survive for a
period through the date that is two (2) years following the Closing Date and the
representations and warranties contained in Sections 4.3, 4.16, 4.24, 4.27, 5.2
and 5.9 shall survive the Closing for a period equal to the statute of
limitations for breach of contract under the governing law specified by Section
16.5. 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.
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13.5 Procedure for Indemnification. The procedure for indemnification
-----------------------------
shall be as follows:
1. Notice. The party entitled to be indemnified (the "Claimant") shall,
-- ------
as soon as practicable after Claimant becomes aware of the facts, condition or
event that gives rise to a Damage or Claim, give notice to the party required to
provide indemnification (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 thereof.
2. 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 (30) day period (or any mutually agreed upon extension
thereof), the Claimant may seek appropriate legal remedy.
3. If any lawsuit or enforcement action (a "Third-Party Action") is
filed against a Claimant entitled to the benefit of indemnity hereunder, written
notice (the "Third-Party Action Notice") shall be given by the Claimant to the
Indemnitor as promptly as practicable (and in any event within ten (10) Business
Days after the service of the citation or summons or other manner of process).
After such notice, if the Indemnitor shall acknowledge in writing to the
Claimant that the Indemnitor shall be obligated under the terms of its indemnity
hereunder in connection with such Third-Party Action, then the Indemnitor shall
be entitled, if it so elects, (i) to take control of the defense and
investigation of such Third-Party Action, (ii) to employ and engage attorneys of
its choice to handle and defend the same, at the Indemnitor's cost, risk and
expense, and (iii) to compromise or settle such Third-Party Action, which
compromise or settlement shall be made only with the written consent of the
Claimant (such consent not to be unreasonably withheld, conditioned or delayed)
unless such compromise or settlement involves only the payment of money damages
and does not impose an injunction or other equitable relief upon the Claimant.
If the Indemnitor fails to assume the defense of such Third-Party Action within
fifteen (15) Business Days after receipt of the Third-Party Notice, the Claimant
will (upon delivering notice to such effect to the Indemnitor) have the right to
undertake the defense, compromise or settlement of such Third-Party Action;
provided, however, that such Third-Party Action shall not be compromised or
settled without the prior written consent of the Indemnitor, which consent shall
not be unreasonably withheld, conditioned or delayed. In the event the Claimant
assumes the defense of the Third-Party Action, the Claimant will keep the
Indemnitor timely informed of the progress of any such defense, compromise or
settlement.
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4. Bulk Sales. It may not be practicable to comply or attempt to comply
-- ----------
with the procedures of the "Bulk Sales Act" or similar law of the state in which
the Assets are situated or of any other state that may be asserted to be
applicable to this Agreement. Accordingly, to induce Buyer to waive any
requirements for compliance with any or all of such laws, Seller hereby agrees
that the indemnity provisions of this Article 13 hereof shall apply to any
Damages of Buyer arising out of or resulting from the failure of Seller to
comply with any such laws.
13.6 Knowledge and Materiality. Notwithstanding anything to the contrary
-------------------------
contained herein, for purposes of this Section 13 only, the representations and
warranties contained in Sections 4 and 5 shall be deemed to be made without
qualification with respect to knowledge. Notwithstanding anything to the
contrary contained herein, for purposes of this Section 13 only, all claims
shall be deemed to be material until the basket of $250,000 referenced in 13.2
and 13.3 has been attained and thereafter a claim with respect to any item
qualified by materiality shall be deemed to be material only if the damages
associated with such item exceeds $5,000.
SECTION 14. REMEDIES.
--------
14.1 By Seller. If Seller has the right 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 Section 13); 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 Section 13); or (ii) terminate the Agreement and seek all remedies
to which it is entitled by law.
14.3 Generally; No Implied Release. 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.
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SECTION 15. ARBITRATION.
-----------
The parties agree that any controversy, dispute or claim (collectively, a
"Dispute") between the parties arising out of or relating to this Agreement or
the breach, termination or validity thereof shall be resolved by arbitration;
provided, however, that nothing contained in this Section 15 shall be construed
to limit or preclude a party from bringing any action in any court of competent
jurisdiction for injunctive or other provisional relief solely to compel the
other party to comply with its non-monetary obligations under this Agreement,
including the right to specific performance set forth in Section 14.4. Within
ten (10) days following the date that a dispute arises hereunder, Buyer and
Seller shall select a mutually acceptable arbitrator located in the Washington,
D.C. 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 Washington, D.C. 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.
SECTION 16. MISCELLANEOUS.
-------------
16.1 Allocation of Purchase Price. On the Closing Date, Buyer and Seller
----------------------------
shall mutually agree in writing upon the allocation of the Purchase Price among
the Assets. Such allocation shall be adjusted as necessary in connection with
the final determination of the Purchase Price Adjustment. The parties agree
that such allocation shall be made based upon the relative fair market values of
the Assets as of the Closing Date and the noncompete/nonsolicitation agreements
which the parties agree shall be allocated an aggregate value of $100,000)
referred to in Section 2.9. In the absence of mutual agreement within such
period, the parties shall submit promptly the determination of such allocation
to the Independent Accountant who will be engaged by the parties to allocate the
Purchase Price among the Assets based upon the relative fair market values as of
the Closing Date and the noncompete/nonsolicitation agreements referred to in
Section 2.9. The determination of the Independent Accountant shall be final,
binding and conclusive on the parties hereto, and the fees and expenses of the
Independent Accountant shall be borne by the party whose proposed allocations of
the Purchase Price differs to the greater extent from that of the Independent
Accountant (as to be determined by the Independent Accountant). 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 (or determined by the Independent Accountant)
allocation without the written consent of the other.
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16.2 Fees and Expenses. 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 shall be split equally between Buyer and Seller. 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 (i) 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), (ii) on the
date of receipt (as shown on the return receipt) if mailed by registered or
certified mail, postage prepaid and return receipt requested or (iii) on the
next day if sent by overnight courier, in each case addressed as follows:
If to Seller:
Vanguard Cellular Systems of South Carolina, Inc.
2002 Pisgah Church Road
Greensboro, NC 27455
Attention: Richard C. Rowlenson, Vice President and General
Counsel
Facsimile: (336)545-2219
With copies (which shall not constitute notice) to:
Paul C. Besozzi, Esq.
Patton Boggs, L.L.P.
2550 M Street, N.W.
Washington, DC 20037
Facsimile: (202) 457-6315
If to Buyer:
Triton PCS, Inc.
101 Lindenwood Drive
Suite 125 Malvern, PA 19355
Attention: Michael E. Kalogris, CEO
Facsimile: 610-993-2683
-60-
<PAGE>
With copies (which shall not constitute notice) to:
Howard Davis, Esq.
Kleinbard, Bell & Brecker, LLP
1900 Market Street, Suite 700
Philadelphia, PA 19103
Facsimile: (215) 568-0140
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
implement 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 New York, including
principles of conflicts of law; provided, however, that with respect to the Real
Property this Agreement shall be governed, construed and enforced in accordance
with the laws of the State of South Carolina.
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 confidentiality agreement between the parties
dated December 18,1997 and that certain letter agreement between the parties,
dated February 18, 1998, and all other 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.
-61-
<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; provided no such consent shall be required
upon assignment by Buyer of any of its rights and obligations to an Affiliate of
Buyer (which Affiliate shall join in the representations and warranties of Buyer
in Section 5 hereof as though it were a party hereto to the extent such
representations and warranties are applicable to such Affiliate) or a transferee
of the FCC Authorizations and Buyer shall remain responsible for all of the
assignee's obligations; provided that such assignment will not reasonably be
expected to cause any delay or postponement of the Closing in excess of five (5)
Business Days.
16.11 Confidential Information. Neither party shall disclose the
------------------------
transaction contemplated herein until after the date of execution of this
Agreement after which date 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 and
its Representatives shall treat such information as confidential, preserve the
confidentiality thereof and not duplicate or use such information, except among
Representatives in connection with the transactions contemplated hereby or as
otherwise required by law, including securities laws or as required by either
party to enforce its rights under this Agreement. 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
-62-
<PAGE>
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.
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.
-63-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BUYER:
ATTEST: TRITON PCS, INC.
_______________________ By: _____________________________________
Secretary Title: ____________________________________
SELLER:
VANGUARD CELLULAR SYSTEMS OF SOUTH
ATTEST: CAROLINA, INC.
_______________________ By: _____________________________________
Secretary Title: ____________________________________
-64-
<PAGE>
SELLER'S DISCLOSURE SCHEDULE
- ----------------------------
Schedule 1 Excluded Assets
Schedule 2.6 Previously Approved Capital Expenditures
Schedule 2.9 Form of Noncompetition/Nonsolicitation Agreement
Schedule 3.1 Assumed Obligations
Schedule 4.4 Certain Changes or Events
Schedule 4.7 Consents
Schedule 4.8 Governmental Authorizations
Schedule 4.9 Description of Real Property
Schedule 4.10 Description of Personal Property
Schedule 4.11 Subscriber Agreements Not in Ordinary Course of Business
Schedule 4.12 Resale Agreements
Schedule 4.13 Financial Statements
Schedule 4.14 Contracts
Schedule 4.15 Description of Intangibles
Schedule 4.16 Taxes
Schedule 4.17 Insurance Policies
Schedule 4.19 Employee Plans
Schedule 4.20 Litigation
Schedule 4.21 Compliance with Laws
Schedule 4.25 Accounts Receivable
Schedule 6.1(e) Monthly Reports
-65-
<PAGE>
EXHIBIT 10.7
March 10, 1998
Triton PCS Holdings, Inc.
101 Lindenwood Drive / Suite 125
Malvern, PA 19355
Re: Additional Equity Financing
Ladies and Gentlemen:
Reference is hereby made to the Amendment No.1 to Securities Purchase
Agreement and Consent Agreement (the "Agreement") dated as of the date hereof by
---------
and among AT&T Wireless PCS, Inc., a Delaware corporation, the cash equity
investors listed on the signature pages thereto, the management stockholders
listed on the signature pages thereto, and Triton PCS Holdings, Inc., a Delaware
corporation formerly known as Triton PCS, Inc. (the "Company"). Capitalized
-------
terms used but not defined herein shall have the meanings given to such terms in
the Agreement.
In connection with the Company's intention to seek $27 million of
additional commitments from the Cash Equity Investors in respect of the balance
of the Equity Financing, and subject to the terms and conditions contained in
the Agreement, each of the undersigned confirms for the Company's benefit the
undersigned's commitment to contribute to the Company in exchange for shares of
Series C Preferred Stock at the original issuance price therefor the amount set
forth opposite the undersigned's name on Schedule I hereto; provided that at the
----------
time of the Company's issuance of the Series C Preferred Stock the Company shall
ratify for the benefit of the undersigned the representations and warranties of
the Company set forth in Section 5.13 of the Securities Purchase Agreement;
------------
provided further that the foregoing commitment shall expire automatically 120
days after the date hereof.
Each of the undersigned has executed this Agreement, intending to be
legally bound, as of the date first above written.
[SIGNATURES CONTAINED ON NEXT PAGE]
<PAGE>
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc., its general partner
By:_______________________________________________
Name:
Title:
J.P. MORGAN INVESTMENT CORPORATION
By:_______________________________________________
Name:
Title:
FIRST UNION CAPITAL PARTNERS, INC.
By:_______________________________________________
Name:
Title:
<PAGE>
SCHEDULE I
Commitments
-----------
Cash Equity Investor Commitment
-------------------- ----------
1. CB Capital Investors, L.P. $10,000,000 (in the aggregate, i.e.,
inclusive of the $8 million
funded on the date hereof)
2. J.P. Morgan Investment Corporation $10,000,000
3. First Union Capital Partners, Inc. $20,000,000
<PAGE>
EXHIBIT 10.8
AT&T WIRELESS SERVICES
NETWORK MEMBERSHIP LICENSE AGREEMENT
between
AT&T CORP.
and
TRITON PCS OPERATING COMPANY L.L.C.
Dated as of February 4, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. Definitions............................................ 1
2. Grant of License, Etc.................................. 5
2.1 Grant of License................................... 5
2.2 No Other Services or Products...................... 6
2.3 Exclusivity........................................ 6
2.4 Use of Licensed Marks on Mobile Phones............. 6
3. Agreement Personal..................................... 7
3.1 Personal to Licensee............................... 7
3.2 Licensee Acknowledgment............................ 7
4. Use of Licensed Marks and Other Marks.................. 7
4.1 Approved Licensee Marks............................ 7
4.2 Marks To Be Used................................... 8
4.3 Modification of Licensed Marks..................... 8
4.4 Use of Additional Marks at Licensor's Request...... 8
5. Retention of Rights.................................... 8
6. System Requirements.................................... 9
7. Quality Control........................................ 9
7.1 General............................................ 9
7.2 Quality Standards.................................. 9
7.3 Quality Service Reviews; Right of Inspection....... 9
7.4 Authorized Dealers................................. 10
7.5 Sponsorship........................................ 10
7.6 Universal Wireless Consortium...................... 11
8. Remedies for Noncompliance With Quality Standards...... 11
8.1 Cure Period........................................ 11
8.2 Potential Injury to Persons or Property............ 11
9. Protection of Licensed Marks........................... 11
9.1 Ownership and Rights............................... 11
9.2 Similar Marks...................................... 12
9.3 Infringement....................................... 12
</TABLE>
-1-
<PAGE>
TABLE OF CONTENTS
-----------------
continued
---------
<TABLE>
<CAPTION>
Page
----
<S> <C>
9.4 Compliance With Laws............................ 13
10. No Sublicensing...................................... 13
11. Term and Termination................................. 13
11.1 Term........................................... 13
11.2 Breach by Licensee............................. 14
11.3 Termination Obligations........................ 15
11.4 No Waiver of Rights............................ 15
11.5 Survival....................................... 15
12. Indemnity............................................ 15
13. Consent of Licensor.................................. 16
14. Notices and Demands.................................. 17
15. Compliance With Law.................................. 18
16. Governmental Licenses, Permits and Approvals......... 18
17. Applicable Law; Jurisdiction......................... 18
18. Confidentiality of Information and Use Restriction... 18
19. Miscellaneous........................................ 19
19.1 Name, Captions................................. 19
19.2 Entire Agreement............................... 19
19.3 Amendments, Waivers............................ 19
19.4 Specific Performance........................... 20
19.5 Remedies Cumulative............................ 20
19.6 No Waiver...................................... 20
19.7 No Third Party Beneficiaries................... 20
19.8 Counterparts................................... 20
</TABLE>
-2-
<PAGE>
Schedules
- ---------
Schedule A -- Licensed Logo
Schedule B -- Licensed Trade Dress
Schedule B1 -- United States Service Mark Registrations or Applications
Schedule C -- Initial Licensed Territory
Schedule D -- Quality Control Standards
Schedule E -- Guidelines for Use of the Licensed Logo and Licensed Phrase
Schedule F -- Permitted Events
-3-
<PAGE>
AT&T WIRELESS SERVICES
NETWORK MEMBERSHIP LICENSE AGREEMENT
NETWORK MEMBERSHIP LICENSE AGREEMENT (the "Agreement") dated as of
February 4, 1998, by and between AT&T Corp., a New York corporation, with
offices located at 32 Avenue of the Americas, New York, New York 10013, for
itself and its affiliated companies, including AT&T Wireless Services, Inc.
(collectively "Licensor"), and Triton PCS Operating Company L.L.C., a Delaware
limited liability company, with offices located at 101 Lindenwood Drive, Suite
125, Malvern, PA 19355 ("Licensee"). Certain capitalized terms used herein are
defined in Section 1.
WHEREAS, Licensor has, for many years, used and Licensor desires that
Licensee use, the AT&T Service Marks, and Licensor desires that Licensee use the
Licensed Marks, in connection with Telecommunications Services; and
WHEREAS, Licensee, an Affiliate of Licensor and the other stockholders
of Licensee's parent corporation Triton PCS, are parties to that certain
Stockholders Agreement, dated as of the date hereof (as the same may be amended,
modified or supplemented in accordance with the terms thereof, the "Stockholders
Agreement;" capitalized terms defined therein and not otherwise defined herein
being used herein as therein defined) and the execution and delivery of the
Stockholders Agreement and the other agreements contemplated therein is a
condition to Licensee entering into this Agreement;
WHEREAS, Licensee wishes to use the Licensed Marks in a limited manner
in the Licensed Territory in connection with the Licensed Activities; and
WHEREAS, Licensor is willing to license and allow Licensee to use the
Licensed Marks under the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Definitions. As used herein, the following terms shall have the
-----------
meanings set forth below:
"Affiliate": A Person that directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control with
the Person specified.
"Approval": The granting by all appropriate Regulatory Authorities of
all necessary licenses, permits, approvals, authorizations and clearances for
this Agreement and the registration or recording of this Agreement as required
by all Regulatory Authorities.
<PAGE>
"Approved Licensee Marks": As defined in Section 4.1.
"AT&T Service Marks": The service marks and trademarks AT&T, and AT&T
with a fanciful globe design.
"Authorized Dealers": Any distributor or other agent of Licensee
authorized to market, advertise or otherwise offer, on behalf of Licensee, any
Licensed Services under the Licensed Marks in the Licensed Territory.
"Bankruptcy": With respect to a Person, means (i) the filing by such
Person of a voluntary petition seeking liquidation, dissolution, reorganization,
rearrangement or readjustment, in any form, of its debts under Title 11 of the
United States Code (or corresponding provisions of future laws) or any other
bankruptcy or insolvency law, or such Person's filing an answer consenting to,
or acquiescing in any such petition; (ii) the making by such Person of any
assignment for the benefit of its creditors, or the admission by such Person in
writing of its inability to pay its debts as they mature; (iii) or the
expiration of sixty (60) days after the filing of an involuntary petition under
Title 11 of the United States Code (or corresponding provisions of future laws),
an application for the appointment of a receiver for the assets of such Person,
or an involuntary petition seeking liquidation, dissolution, reorganization,
rearrangement or readjustment of its debts or similar relief under any
bankruptcy or insolvency law, provided that the same shall not have been
vacated, set aside or stayed within such sixty (60) day period; or (iv) the
entry of an order for relief against such Person under Title 11 of the United
States Bankruptcy Code.
"Change of Control": Any transaction or event, whether voluntary or
involuntary, that results in, or as a consequence of which, any of the following
events shall occur (I) except as a result of a sale, transfer or other
disposition by Licensor or any of its Affiliates: (i) any Person, excluding any
Person that is an owner of shares of capital stock of Triton PCS on the date
hereof or the Lenders (as defined in Section 3.1(b)) or any Person to whom the
Lenders, with the consent of Licensor, assign this Agreement, shall acquire,
directly or indirectly, Beneficial Ownership (as defined in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of (x) more than 50% of the voting
stock of Triton PCS, or (y) more than 33-1/3% of the voting stock of Triton PCS,
unless the Persons owning capital stock of Licensee on the date hereof
collectively own a percentage of such voting stock that is higher than such
Person; (ii) any Disallowed Transferee shall acquire, directly or indirectly,
Beneficial Ownership of more than 15% of the voting stock of Triton PCS;
provided that, for purposes of this Agreement, purchases of Triton PCS's capital
stock made by third parties in the open market shall not be deemed to be
acquisitions of Triton PCS's capital stock by Disallowed Transferees; or (iii)
a proxy contest for the election of directors of Triton PCS results in the
persons constituting the Board of Directors of Triton PCS immediately prior to
the initiation of such proxy contest ceasing to constitute a majority of the
Board of Directors upon the conclusion of such proxy contest, or (II) Triton PCS
ceases to Beneficially Own or control 100% of the membership interests of
Licenser.
-2-
<PAGE>
"Company Communications Services": Mobile wireless telecommunications
services (including the transmission of voice, data, image or other messages or
content) provided solely within the Licensed Territory, initiated or terminated
using TDMA and frequencies licensed by the FCC, to or from subscriber equipment
that is capable of usage during routine movement throughout the area covered by
a cell site and routine handing-off between cell sites, and is either intended
for such usage or is temporarily fixed to a specific location on a short-term
basis (e.g., a bank of wireless telephones temporarily installed during a
special event of limited duration). Without limiting the foregoing, Company
Communications Services shall include wireless office services if such services
comply with this definition. Company Communications Services shall also include
the transmissions between Licensee's cell sites and Licensee's switch or
switches in the Licensed Territory, handing-off transmissions at Licensee's
switch or switches for termination by other carriers, and receiving
transmissions to Licensee's customers handed-off at Licensee's switch or
switches.
"Company Systems": The systems operated by Licensee to provide
Company Communications Services in the Licensed Territory.
"Control": For purposes of the definitions of "Affiliate" and "Change
of Control", the term "control" (including the terms "controlling," "controlled
by", and "under common control with") of a Person means the possession, direct
or indirect, of the power to (i) vote 50% or more of the voting securities of
such Person, or (ii) direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Disallowed Transferee": Any Prohibited Transferee, or any Regional
Bell Operating Companies, Microsoft, GTE, SNET or any of their respective
Affiliates, successors or assigns.
"FCC": The Federal Communications Commission and any successor
governmental authority.
"Licensed Activities": Each of the following activities: (a) the
provision to end-users and resellers, solely within the Licensed Territory, of
Company Communications Services on frequencies licensed to an Affiliate of
Licensee for Commercial Mobile Radio Services pursuant to the AT&T PCS
Contributed Licenses and Permitted Cellular Licenses, and the provision in
connection with such Company Communications Services of Adopted Service Features
(as defined in the Stockholders Agreement), and (b) marketing and offering the
services and features described in clause (a) within the Licensed Territory,
including advertising such services and features using broadcast and other
media, so long as such advertising extends beyond the Licensed Territory only
when and to the extent necessary to reach end-users and potential end-users in
the Licensed Territory.
"Licensed Logo": The logo containing the AT&T and globe design, as
such logo may be modified or replaced pursuant to Section 4.3, and the
expression "Member, AT&T
-3-
<PAGE>
Wireless Services Network," as set forth in Schedule A attached hereto.
Registrations and pending applications covering the Licensed Logo in the United
States are set forth in Schedule B1 attached hereto. The listing of goods or
services in the specification of any of these registrations or applications
which are outside the scope of services authorized under this Agreement shall
not be construed as inclusion of such goods or services in the license granted
by this Agreement; it being understood that the only services authorized under
this Agreement are as expressly set forth in this Agreement.
"Licensed Marks": Collectively, the Licensed Logo, the Licensed
Phrase, the Licensed Trade Dress, and any additional Marks that may be licensed
hereunder pursuant to Section 4.3 or 4.4.
"Licensed Phrase": The expression "Member, AT&T Wireless Services
Network" or the expression "[Licensee] is a member of the AT&T Wireless Services
Network" and the form of such expression as it may be modified or replaced
pursuant to Section 4.3 or 4.4.
"Licensed Services": The services described in clause (a) of the
definition of the term "Licensed Activities."
"Licensed Territory": The Territory (as defined in the Stockholders
Agreement). The Licensed Territory as of the date hereof is comprised of those
geographic areas set forth in Schedule C.
"Licensed Trade Dress": The general image or appearance of the
marketing of services performed under the Licensed Logo, including without
limitation, the colors, designs, sizing configurations, publication formats and
the like as set forth in Schedule B attached hereto and as such trade dress may
be modified or replaced pursuant to Section 4.3, and such other trade dress as
may be added thereto or substituted therefor in accordance with Section 4.3 or
4.4.
"Licensee": As defined in the preamble.
"Licensor": As defined in the preamble.
"Mark": Any name, brand, mark, trademark, service mark, sound mark,
trade dress, trade name, business name, slogan, or other indicia of origin.
"Marketing Materials": Any and all materials, whether written, oral,
visual or in any other medium, used by Licensee or its Authorized Dealers to
market, advertise or otherwise offer any Licensed Services under the Licensed
Marks.
"Person": Any individual, corporation, partnership, firm, joint
venture, limited liability company, limited liability partnership, association,
joint-stock company, trust, estate,
-4-
<PAGE>
incorporated or unincorporated association, government or regulatory body, or
other entity of any kind.
"Quality Control Representatives": Representatives of Licensor
appointed in accordance with Section 7 .
"Quality Standards": The TDMA Quality Standards and the Guidelines
for Use of the Licensed Logo and Licensed Phrase set forth in Schedules D and E
to this Agreement.
"Regulatory Authority": Any regulatory, administrative or
governmental entity, authority or agency, including without limitation, the FCC,
and the Export Licensing Office of the U.S. Department of Commerce.
"Significant Breach by Licensee": As defined in Section 11.2 .
"Stockholders Agreement": As defined in the second recital.
"Successor": With respect to any party, any successor, transferee or
assignee, including without limitation, any receiver, debtor in possession,
trustee, conservator or similar Person with respect to such party or such
party's assets.
"TDMA Quality Standards": The quality standards applicable to TDMA
PCS Systems and Cellular Systems (as such terms are defined in the Stockholders
Agreement) owned and operated by Licensor's Affiliates in the Southeast Region,
which, as currently in effect, are set forth on Schedule D, as the same may be
amended from time to time, provided any such amended standards shall become
effective one hundred twenty (120) days after notice thereof is given to
Licensee.
"Telecommunications Service": Any service providing the transmission
of voice, data, image or other messages or content, by radio or by aid of wire,
cable or other means now known or later developed between the points of origin
and reception of such transmission, or by means of any combination of the
foregoing.
"Triton PCS": Triton PCS Holdings, Inc., a Delaware corporation and
the indirect owner of 100% of the membership interests of Licensee.
2. Grant of License, Etc.
----------------------
2.1 Grant of License. Subject to the terms and conditions of this
----------------
Agreement, Licensor hereby grants to Licensee a royalty free, non-transferable,
non-sublicensable, non-exclusive limited right and license to use the Licensed
Marks, solely in connection with Licensed Activities.
-5-
<PAGE>
2.2 No Other Services or Products. The Licensed Marks may not be
-----------------------------
used by Licensee in connection with any service, except as expressly set forth
in this Agreement, or any product, except as expressly permitted by the terms of
Section 2.4. Specifically, but not by way of limitation, this Agreement does
not grant Licensee the right to use the Licensed Marks in connection with (a)
the manufacture or distribution of any products other than the distribution of
mobile phones to the extent expressly permitted by the terms of Section 2.4, or
(b) any Telecommunications Services, including, but not limited to long distance
services, other than Licensed Services. Accordingly, this Agreement does not
grant any license, authorization or permission to Licensee to appear on an equal
access ballot, or in any other fashion, as a long distance provider using the
Licensed Marks, or to use the Licensed Marks in connection with the reselling of
long distance or local service or any other service. Licensee shall identify to
Licensee's customers that Licensor is their long distance carrier and refer to
Licensor by its Marks and trade dress. This Agreement does not grant Licensee
the right to use any AT&T Service Mark or any other Mark of Licensor in any
manner, except as part of the Licensed Logo, Licensed Phrase and Licensed Trade
Dress as specifically set forth in this Agreement, or in the manner specifically
set forth in Sections 2.4, 4.1, 4.3 and 4.4.
2.3 Exclusivity. Licensor (on behalf of itself and its Affiliates)
-----------
shall not grant to any Person (other than a Subsidiary of Licensor) a right or
license to provide or resell, or act as agent for any Person offering, Company
Communications Services under the Licensed Marks except to any Person that (i)
resells, or acts as Licensee's agent for, Company Communications Services
provided by Licensee, including bundling any such Company Communications
Services with other Telecommunications Services marketed, offered and provided
or resold by such Person pursuant to an agreement between such Person and
Licensor or its Affiliates (in its capacity as reseller or agent) or Licensee,
or (ii) provides or resells wireless Telecommunications Services to or from
specific locations (such as buildings or office complexes), even if the
subscriber equipment used in connection with such service may be capable of
routine movement within a limited area (such as a building or office complex),
and even if such subscriber equipment may be capable of obtaining other
telecommunications services beyond such limited area (which other services may
include routine movement beyond such limited area) and hand-off between the
service to such specific location and such other telecommunications services. To
the extent the "other telecommunications services" referred to in clause (ii) of
the immediately preceding sentence constitute Company Communications Services,
Licensor (on behalf of itself and its Affiliates) shall not grant to any Person
a right or license to provide or resell such "other telecommunications services"
under the Licensed Marks, except in accordance with the terms of clause (i) of
the immediately preceding sentence. Nothing herein shall be construed to affect
the obligations of AT&T Wireless PCS Inc. and its Affiliates set forth in
Section 8.6 of the Stockholders Agreement.
2.4 Use of Licensed Marks on Mobile Phones. In connection with its
--------------------------------------
marketing, offering and provision of Licensed Services, Licensee may offer and
distribute to end-users mobile phones branded with the same Marks of Licensor,
and in the same manner, as the mobile phones distributed by or on behalf of
Licensor and its Affiliates, provided that such mobile
-6-
<PAGE>
phones (a) are purchased from Licensor or its Affiliates, (b) are identical to
mobile phones offered and distributed by Licensor and its Affiliates and are
purchased from the same manufacturer (or its authorized dealers), or (c) are
manufactured and distributed by a manufacturer authorized by Licensor to
manufacture mobile phones branded with such Marks (or its authorized dealers).
3. Agreement Personal.
------------------
3.1 Personal to Licensee.
--------------------
(a) In recognition of the unique nature of the relationship between
Licensor and Licensee, the fact that Licensor would not be willing to enter into
an agreement such as this Agreement with any other party in any other
circumstances, and the unique nature of Licensee (including without limitation,
the fact that Licensee is partially owned indirectly by Licensor's Affiliate,
AT&T Wireless PCS Inc.), the parties agree that the rights, obligations and
benefits of this Agreement shall be personal to Licensee, and Licensor shall not
be required to accept performance from, or render performance to an entity other
than Licensee or even to Licensee itself in the event of a Change of Control.
Pursuant to 11 U.S.C. (S) 365(c)(1)(A) (as it may be amended from time to time,
and including any successor to such provision), in the event of the Bankruptcy
of Licensee, this Agreement may not be assigned or assumed by Licensee (or any
Successor) and Licensor shall be excused from rendering performance to, or
accepting performance from, Licensee or any Successor.
(b) Notwithstanding the foregoing, this Agreement may be assigned to
the lenders (the "Lenders") named in the $425 million Credit Agreement dated
February 3, 1998 (the "Credit Agreement"), entered into between Triton PCS,
Inc., a wholly-owned subsidiary of Triton PCS, and the Lenders, and, after a
default under the Credit Agreement and the expiration of any applicable grace
and cure periods thereunder, the Lenders may enforce Licensee's rights hereunder
and the Lenders may assign this Agreement to any Person with the consent of
Licensor.
3.2 Licensee Acknowledgment. Licensee acknowledges and agrees that
-----------------------
it understands it may have, or, in the future, may elect to enter into,
agreements with Licensor's Affiliates and that neither the execution or
continuation nor the renewal of any of these agreements will have any effect on
this Agreement and Licensee may choose to contract, or not, with Licensor's
Affiliates as it deems appropriate.
4. Use of Licensed Marks and Other Marks.
-------------------------------------
4.1 Approved Licensee Marks. Licensee shall have the right from time
-----------------------
to time during the term hereof to create and use its own Marks, together with
the Licensed Marks, in connection with the Licensed Activities; provided that
Licensee provides Licensor with prior written notice of its desire to use any
such Marks owned by Licensee and Licensor approves
-7-
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Licensee's proposed use of such Marks (which approval shall not be unreasonably
withheld, delayed or conditioned). Licensor shall use commercially reasonable
efforts to approve or disapprove any Marks proposed to be used by Licensee
within 30 days of its receipt of a written request for such approval. If
Licensee has not received a response from Licensor by the end of such 30-day
period, Licensee shall have the right to send a second written request for such
approval to Licensor that states expressly that, if Licensee does not receive a
response from Licensor within 30 days after Licensor's receipt of such second
request, Licensor shall be deemed to have approved Licensee's proposed Mark or
Marks. If Licensee does not receive such response by the end of such second 30-
day period, Licensor shall be deemed to have approved such proposed Mark or
Marks. Marks approved by Licensor in accordance with this Section 4.1 shall be
sometimes referred to herein as "Approved Licensee Marks."
4.2 Marks To Be Used. Licensee shall conduct all Licensed Activities
----------------
solely under the Approved Licensee Marks, together with the Licensed Marks, all
in accordance with guidelines set forth on Schedule E.
4.3 Modification of Licensed Marks. In the event Licensor modifies
------------------------------
or replaces any of the Licensed Marks as they are used in any portion of
Licensor's business, and if Licensor requests Licensee to adopt and use any such
modified or replaced Licensed Marks, Licensee will adopt and use such modified
or replaced Licensed Marks and, in such event, such modified or replaced
Licensed Marks shall be considered the Licensed Marks contemplated by this
Agreement; provided that in such event, Licensee shall be granted a 180-day
period during which to phase-out its use of the superseded forms of the Licensed
Marks, as applicable, and during such 180-day period Licensee shall have the
right to use its existing inventory of Marketing Materials bearing the
superseded forms of the Licensed Marks, as applicable.
4.4 Use of Additional Marks at Licensor's Request. Licensor may,
---------------------------------------------
from time to time, request Licensee to adopt and use a Mark or Marks of
Licensor, in addition to the then existing Licensed Marks in connection with the
Licensed Activities. Such additional Mark or Marks shall be licensed hereunder
on the same terms as the then existing Licensed Marks and Licensee shall within
a reasonable time, but in any event within one hundred eighty (180) days, comply
with Licensor's request by adopting and using such additional Mark or Marks;
provided that during such 180-day period Licensee shall have the right to use
its existing inventory of Marketing Materials that do not contain the additional
Mark or Marks.
5. Retention of Rights. Except as otherwise expressly provided in
-------------------
Section 2 , nothing in this Agreement shall be deemed or construed to limit in
any way Licensor's rights in and to the AT&T Service Marks and the Licensed
Marks, including without limitation:
(a) all rights of ownership in and to the AT&T Service Marks and the
Licensed Marks, including the right to license or transfer the same; and
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(b) the unimpaired right to use the AT&T Service Marks and the
Licensed Marks in connection with marketing, offering or providing any products
or services (including, without limitation Licensed Services) whether within or
without the Licensed Territory.
6. System Requirements. The terms of Sections 8.1(a), 8.2, 8.3, and
-------------------
8.5(a) of the Stockholders Agreement are hereby incorporated herein by reference
with the same effect as if set forth herein in their entirety and Licensee shall
comply with the obligations of Triton PCS therein.
7. Quality Control.
---------------
7.1 General. Licensee acknowledges that the services and activities
-------
covered by this Agreement must be of sufficiently high quality as to provide
maximum enhancement to and protection of the Licensed Marks and the good will
they symbolize. Licensee further acknowledges that the maintenance of high
quality services is of the essence of this Agreement, as is the use of Licensed
Marks in connection therewith and that it will utilize only Marketing Materials
which enhance (and do not disparage or place in disrepute) Licensor, its
businesses or its business reputation, and enhance (and do not adversely affect
or detract from) Licensor's good will and will use the Licensed Marks in ways
(but only in ways) which will so enhance Licensor's business, reputation and
good will.
7.2 Quality Standards. Licensee shall use commercially reasonable
-----------------
efforts to cause the Company Systems to comply with the TDMA Quality Standards
at a level of compliance at least equal to the average level of compliance of
PCS and Cellular Systems owned and operated by AT&T PCS. Without limiting the
foregoing, with respect to each material portion of a Company System (such as a
city) that Licensee places in commercial service, on or prior to the first
anniversary of the date such material portion is placed in commercial service,
Licensee shall cause each such material portion to achieve a level of compliance
with the TDMA Quality Standards equal to at least the average level of
compliance achieved by comparable PCS and Cellular Systems owned and operated by
AT&T PCS taking into account, among other things, the relative stage of
development thereof.
Licensee shall also comply with the Guidelines for Use of the Licensed
Logo and Licensed Phrase as set forth in Schedule E to this Agreement, and which
shall be considered part of the Quality Standards.
7.3 Quality Service Reviews; Right of Inspection. Licensor shall
--------------------------------------------
have the right to designate from time to time, one or more Quality Control
Representatives, who shall have the right at any time, upon fifteen (15) days
notice to Licensee, to conduct during regular business hours an inspection,
test, survey and review of Licensee's facilities and the facilities of
Licensee's Authorized Dealers, if any, and otherwise to determine compliance
with the Quality Standards (each, an "Inspection"); provided that Licensor shall
--------
use its best efforts to ensure that such Inspections shall not unreasonably
interfere with Licensee's conduct of its business; and
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provided further that Licensor shall not be permitted to conduct more than two
- -------- -------
(2) Inspections during each 12-month period of the term of this Agreement unless
Licensor reasonably believes that Licensee is not in compliance with the Quality
Standards, in which case Licensor shall be permitted to conduct Inspections from
time to time until Licensee has been determined to be in compliance. Licensee
agrees to collect, maintain and furnish to the Quality Control Representatives:
(i) all performance data relating to Licensee's Licensed Services reasonably
requested by the Quality Control Representatives and representative samples of
Marketing Materials that are marketed or provided under the Licensed Marks for
Inspections to assure conformance of the Licensed Services and the Marketing
Materials with the Quality Standards; and (ii) all performance data in its
control reasonably requested by the Quality Control Representatives relating to
the conformance of Licensed Services with the Quality Standards. Any such data
provided to Licensor shall be treated confidentially in accordance with Section
18. Licensor may independently conduct continuous customer satisfaction and
other surveys to determine if Licensee is meeting the Quality Standards.
Licensee shall cooperate with Licensor fully in the distribution and conduct of
such surveys so long as such cooperation shall not unreasonably interfere with
the conduct of Licensee's business. If Licensee learns that it is not complying
with the Quality Standards in any material respect, it shall notify Licensor,
and the provisions of Section 8 shall apply to such noncompliance.
7.4 Authorized Dealers. Licensee shall provide to Licensor within 10
------------------
days after the expiration of each calendar quarter during the term of this
Agreement a list of all Authorized Dealers. Licensor shall have the right,
exercisable in its reasonable discretion, to give Licensee written notice
requiring Licensee to terminate any Authorized Dealer that Licensor reasonably
believes is not in compliance with the Quality Standards (after notice of such
non-compliance and a reasonable opportunity to cure has been granted to such
Authorized Dealer) effective no later than 30 days from the date such written
notice is given by Licensor to Licensee. All Authorized Dealers shall be bound
by Licensor's Quality Standards and by Licensee's obligations under this
Agreement. A breach by any such Authorized Dealer of this Agreement shall be
deemed a breach of this Agreement by Licensee; provided that Licensee's
termination of such breaching Authorized Dealer shall be deemed to cure any such
breach.
7.5 Sponsorship. Licensee shall not use the Licensed Marks to
-----------
sponsor, endorse, or claim affiliation with any event, meeting, charitable
endeavor or any other undertaking (each, an "Event") without the express written
permission of Licensor; provided however that, the categories of Events
-------- -------
described on Schedule F attached hereto shall be deemed pre-approved by Licensor
and Licensee shall not be required to seek permission from Licensor to sponsor,
endorse or claim affiliation with such Events using the Licensed Marks. In the
event that Licensee desires to sponsor, endorse or claim affiliation with an
Event not described on Schedule F, Licensee shall provide Licensor with at least
three (3) business days prior written notice of such Event and Licensor shall be
deemed to have granted Licensee permission to sponsor, endorse or claim
affiliation with such Event if a denial of permission is not received by
Licensee by the date or time specified in such notice. Any breach of this
provision reasonably determined to have a
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material adverse effect on Licensor or the Licensed Marks shall be deemed a
Significant Breach by Licensee.
7.6 Universal Wireless Consortium. Licensee shall, throughout the
-----------------------------
term of this Agreement, and any renewals or extensions thereof, be a member of
the Universal Wireless Consortium.
8. Remedies for Noncompliance With Quality Standards.
-------------------------------------------------
8.1 Cure Period. If Licensor becomes aware that Licensee or its
-----------
Authorized Dealers, if any, are not complying with any Quality Standards in any
material respect, and notifies Licensee in writing thereof, setting forth, in
reasonable detail, a written description of the noncompliance and any
suggestions for curing such noncompliance, then Licensee shall cure such
noncompliance as soon as is practicable but in any event within thirty (30) days
thereafter or, in the case of noncompliance with the TDMA Quality Standards, if
such breach is not capable of being cured on commercially reasonable terms
within such thirty (30) day period, within one-hundred eighty (180) days of such
notice, provided that Licensee is using commercially reasonable efforts to cure
--------
such material breach as soon as reasonably practicable. In the event that the
non-compliance with the Quality Standards is being caused by an Authorized
Dealer, Licensee's termination of such Authorized Dealer shall be deemed to cure
such non-compliance. If such non-compliance with the Quality Standards
continues beyond the applicable cure period described above, Licensee shall
then: (i) cease any Licensed Activities under the Licensed Marks in the
Licensed Territory until it can comply with the Quality Standards; and (ii) at
Licensor's election, be deemed to be in breach of this Agreement.
8.2 Potential Injury to Persons or Property. Notwithstanding the
---------------------------------------
foregoing, in the event that Licensor reasonably determines that any
noncompliance creates a material threat of personal injury or injury to property
of any third party, upon written notice thereof by Licensor to Licensee,
Licensee shall cure such non-compliance as soon as practicable but in any event
within thirty (30) days after receiving such notice. If the non-compliance
continues beyond such cure period, Licensee shall either cease any Licensed
Activities under the Licensed Marks in the Licensed Territory until it can
comply with the Quality Standards, or be deemed to be in breach of this
Agreement.
9. Protection of Licensed Marks.
----------------------------
9.1 Ownership and Rights. Licensee admits the validity of, and
--------------------
agrees not to challenge the ownership or validity of the Licensed Marks.
Licensee acknowledges that it will not obtain any ownership interest in the
Licensed Marks or any other right or entitlement to continued use of them,
regardless of how long this Agreement remains in effect and regardless of any
reason or lack of reason for the termination thereof by Licensor; provided that
by making this acknowledgment Licensee is not waiving, and does not intend to
waive, any contractual rights hereunder or its remedies upon a breach hereof by
Licensor. Licensee shall not disparage, dilute
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<PAGE>
or adversely affect the validity of the Licensed Marks. Licensee agrees that any
and all good will and other rights that may be acquired by the use of the
Licensed Marks by Licensee shall inure to the sole benefit of Licensor, except a
security interest granted to the Lenders in accordance with the terms of the
Credit Agreement. Licensee will not grant or attempt to grant a security
interest in the Licensed Marks or this Agreement, or to record any such security
interest in the United States Patent and Trademark Office or elsewhere, against
any trademark application or registration belonging to Licensor. Licensee agrees
to execute all documents reasonably requested by Licensor to effect registration
of, maintenance and renewal of the Licensed Marks. For purposes of this
Agreement, Licensee shall be considered a "related company" under the U.S.
Trademark Act, 15 U.S.C. (S) 1051 et seq.
9.2 Similar Marks. Licensee further agrees not to register in any
-------------
country any Mark resembling or confusingly similar to the Licensed Marks or the
AT&T Service Marks, or which dilutes the Licensed Marks or the AT&T Service
Marks and not to use the Licensed Marks or the AT&T Service Marks or any part
thereof as part of its corporate name, nor use (except in accordance with
Section 4.1) any Mark confusingly similar, deceptive or misleading with respect
to the Licensed Marks or the AT&T Service Marks. Licensee further agrees not to
use or register in any country any Mark similar to the Licensed Marks or the
AT&T Service Marks, or which dilutes the Licensed Marks or the AT&T Service
Marks. If any application for registration is, or has been filed in any country
by Licensee which relates to any Mark which, in the sole opinion of Licensor, is
confusingly similar, deceptive or misleading with respect to the Licensed Marks
or the AT&T Service Marks, or which dilutes the Licensed Marks or the AT&T
Service Marks, Licensee shall, at Licensor's sole discretion, immediately
abandon any such application or registration or assign it (free and clear of any
Liens, and for consideration of $1.00) to Licensor. If Licensee uses any Mark
which, in the sole opinion of Licensor, is confusingly similar, deceptive,
dilutive or misleading with respect to the Licensed Marks or the AT&T Service
Marks, or which dilutes the Licensed Marks or the AT&T Service Marks, or if
Licensee uses the Licensed Marks or the AT&T Service Marks in connection with
any product, or in connection with any service not specifically authorized
hereunder, Licensee shall, immediately upon receiving written request from
Licensor, permanently cease such use. Notwithstanding anything to the contrary
contained in this Section 9.2, Licensee shall have the right to use and register
the Approved Licensee Marks that are used together with the Licensed Marks in
accordance with the terms of this Agreement and the Approved Licensee Marks
shall not be deemed by Licensor to resemble or to be confusingly similar to the
Licensed Marks.
9.3 Infringement. In the event that either party learns of any
------------
infringement or threatened infringement of the Licensed Marks, or any unfair
competition, passing-off or dilution with respect to the Licensed Marks, or any
third party alleges or claims that any of the Licensed Marks are liable to cause
deception or confusion to the public, or is liable to dilute or infringe any
right of such third party (each such event, an "Infringement"), such party shall
promptly notify the other party or its authorized representative giving
particulars thereof, and Licensee shall provide necessary information and
reasonable assistance to Licensor or its authorized representatives in the event
that Licensor decides that proceedings should be commenced or
-12-
<PAGE>
defended. For purposes of this Agreement, Licensee shall be deemed to have
"learned" of an Infringement when either (i) the General Manager of one of the
Licensee's operating subsidiaries or divisions or (ii) an executive officer of
Licensee obtains actual knowledge of the Infringement. Licensor shall have
exclusive control of any litigation, opposition, cancellation or related legal
proceedings. The decision whether to bring, defend, maintain or settle any such
proceedings shall be at the exclusive option and expense of Licensor, and all
recoveries shall belong exclusively to Licensor. Licensee will not initiate any
such litigation, opposition, cancellation or related legal proceedings in its
own name but, at Licensor's request, agrees to be joined as a party in any
action taken by Licensor to enforce its rights in the Licensed Marks; provided
that Licensor shall reimburse Licensee for all reasonable out-of-pocket costs
and expenses incurred by Licensee, its Affiliates and authorized representatives
(and their respective directors, officers, stockholder, employees and agents) in
connection with their participation in such action. Nothing in this Agreement
shall require, or be deemed to require Licensor to enforce the Licensed Marks or
the AT&T Service Marks against others.
9.4 Compliance With Laws. In the performance of this Agreement,
--------------------
Licensee shall comply in all material respects with all applicable laws and
regulations and administrative orders, including those laws and regulations
particularly pertaining to the proper use and designation of Marks in the
Licensed Territory. Should Licensee be or become aware of any applicable laws
or regulations which are inconsistent with the provisions of this Agreement,
Licensee shall promptly notify Licensor of such inconsistency. In such event,
Licensor may, at its option, either waive the performance of such inconsistent
provisions, or negotiate with Licensee to make changes in such provisions to
comply with applicable laws and regulations.
10. No Sublicensing. Licensee shall not: (i) assign, license,
---------------
transfer, dispose or relinquish any of its rights or obligations hereunder
(whether by merger, consolidation, sale, operation of law or otherwise) other
than as contemplated by Section 3.1(b); or (ii) grant or purport to grant any
sublicense in respect of the Licensed Marks; provided that Licensee's Authorized
Dealers and Subsidiaries of Triton PCS that are directly or indirectly wholly-
owned by Triton PCS shall have the right to use the Licensed Marks in accordance
with the Quality Standards in connection with Licensed Activities. Any such
purported assignment, license, transfer, disposition, relinquishment or
sublicense shall be void and of no effect.
11. Term and Termination.
--------------------
11.1 Term.
----
(a) This Agreement shall commence on the date hereof and shall be in
effect for five (5) years following such date, unless terminated earlier
pursuant to this Section 11. At the end of the initial term, this Agreement
shall automatically renew for an additional five (5) year term unless the
Agreement is terminated by Licensee or Licensor giving written notice to the
other party no later than ninety (90) days prior to the end of the initial term.
In the event that AT&T Wireless PCS Inc. shall convert any shares of Series A
Preferred Stock of the Triton PCS
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into Common Stock of Triton PCS (as such terms are defined in the Stockholders
Agreement), the term of this Agreement shall expire on the later of (x) two (2)
years from the Series A Conversion Date (as such term is defined in the
Licensee's Restated Certificate of Incorporation), and (y) the then existing
expiration date of this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Section 11.1, this Agreement may be terminated by Licensor upon written notice
to Licensee at any time following the later to occur of (x) the termination by
AT&T Wireless PCS Inc. of its obligations under Section 8.6 of the Stockholders
Agreement pursuant to Section 8.8(c) of the Stockholders Agreement, and (y) the
second anniversary of the date Licensor (or an affiliate of Licensor) gives
written notice to Licensee that it has entered into a letter of intent or
binding agreement to engage in a Disqualifying Transaction (as defined in the
Stockholders Agreement); provided, however, that in no event shall Licensor have
the right to terminate this Agreement as of a date prior to the fifth
anniversary of the date hereof; provided further however that, in the event that
this Agreement is terminated pursuant to this Section 11.1(b) and Licensee does
not exercise its right pursuant to Section 6.1 of the Stockholders Agreement to
convert all of the shares of Company Stock (as defined in the Stockholders
Agreement) owned by AT&T Wireless PCS Inc. into Series B Preferred Stock (as
defined in the Stockholders Agreement), the termination shall only apply to the
portion of the Territory that constitutes the "Overlap Territory" (as defined in
the Stockholders Agreement) and this Agreement shall remain in full force and
effect with respect to the remainder of the Territory.
11.2 Breach by Licensee. Licensor may terminate this Agreement at any
------------------
time in the event of a Significant Breach by Licensee. A "Significant Breach by
Licensee" shall mean, after exhaustion of any applicable cure periods set forth
in this Agreement, any of the following:
(a) Licensee's use of any Mark (including the Licensed Marks and the
AT&T Service Marks) contrary to the provisions of this Agreement, or the use by
an Authorized Dealer of any Mark (including the Licensed Marks and the AT&T
Service Marks) contrary to the provisions of this Agreement, including a
violation by Licensee of Section 4.2 in each case which continues for more than
30 days after written notice thereof has been given to Licensee;
(b) Subject to the provisions of Section 8.1, Licensee's use of the
Licensed Marks in connection with any Marketing Materials, or the offering,
marketing or provision of any Licensed Services, or the conduct of any Licensed
Activities or any other aspect of its business conducted by it, which fail to
meet the Quality Standards in any material respect;
(c) Licensee's refusing or neglecting a request by Licensor pursuant
to Section 7.3 for access to Licensee's facilities or Marketing Materials, which
refusal or neglect continues for more than five business days after written
notice thereof is given to Licensee;
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(d) Licensee's licensing, assigning, transferring, disposing of or
relinquishing (or purporting to license, assign, transfer, dispose of or
relinquish) any of the rights granted in this Agreement to others, except as
permitted by Section 10;
(e) Licensee's failure to maintain the Quality Standards and other
information furnished under this Agreement in confidence pursuant to Section 18,
or failing to restrict the transmission of information, products and commodities
as required by Section 18;
(f) The occurrence of a Change of Control;
(g) Licensee's loss, for any reason whatsoever, of (x) its rights to
hold, directly or indirectly, the FCC licenses for Company Communications
Services in the Licensed Territory or (y) its right to provide the Company
Communications Services under such licenses, unless such loss results, directly
or indirectly, from the actions or inactions of Licensor or its Affiliates;
(h) The Bankruptcy of Licensee or Triton PCS;
(i) Licensee's failure in any material respect to obtain Licensor's
permission as provided in, or any other material breach of the provisions of,
Section 7.5; or
(j) Any Substantial Company Breach.
11.3 Termination Obligations. In the event this Agreement terminates
-----------------------
pursuant to this Section 11:
(a) Licensee shall immediately cease use of the Licensed Marks upon
notice of termination, except that Licensee shall have the right to continue to
use the Licensed Marks (including without limitation, Licensee's then existing
inventory of Marketing Materials bearing the Licensed Marks) to the extent such
use is otherwise in accordance with the provisions of this Agreement for a
period of up to ninety (90) days following such termination; and
(b) Licensee shall have no further rights under this Agreement,
except as amended in Section 11.5.
11.4 No Waiver of Rights. In addition to any other provision of this
-------------------
Section 11, each party will retain all rights to any other remedy it may have at
law or equity for any breach by the other of this Agreement.
11.5 Survival. Sections 11.3(a), 12.1 and 18 shall survive any
--------
expiration or termination of this Agreement.
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12. Indemnity.
---------
12.1 Licensor shall defend, indemnify and hold Licensee and its
authorized representatives (including the Authorized Dealers), and their
respective directors, officers, stockholders, employees and agents, harmless
against all claims, suits, proceedings, costs, damages, losses and expenses
(including reasonable attorneys' fees) and judgments incurred, claimed or
sustained by Licensee or such persons arising out of: (i) claims by third
parties that Licensee's use of the Licensed Marks in accordance with this
Agreement constitutes trademark, service mark or trade dress infringement (or
infringement of any other intellectual property or other proprietary right owned
by a third party), dilution, unfair competition, misappropriation or
false/misleading advertising; (ii) any third party claims as to the lack of
validity or enforceability of (A) the registrations of the Licensed Marks or (B)
Licensor's ownership rights in the Licensed Marks; and (iii) any lack of
validity or enforceability of this Agreement caused by Licensor. Subject to
Licensor's indemnification obligations in the previous sentence, Licensee shall
defend, indemnify and hold Licensor, its Affiliates and authorized
representatives, and their respective directors, officers, stockholders,
employees and agents, harmless against all claims, suits, proceedings, costs,
damages and judgments incurred, claimed or sustained by third parties, whether
for personal injury or otherwise, arising out of Licensee's or any Authorized
Dealer's marketing, sale, or use of services under the Licensed Marks and shall
indemnify Licensor and the foregoing persons for all damages, losses, costs and
expenses (including reasonable attorneys' fees) arising out of such use, sale or
marketing and also for any improper or unauthorized use of the Licensed Marks or
any use of its own Marks. Licensee shall also defend, indemnify and hold
Licensor, its Affiliates and authorized representatives, and their respective
directors, officers, stockholders, employees and agents, harmless against all
claims, suits, proceedings, costs, damages, losses and expenses (including
reasonable attorneys' fees) and judgments incurred, claimed or sustained by
Licensor or such persons arising out of: (i) any third party claims as to the
lack of validity or enforceability of (x) the registrations (if any) of the
Approved Licensee Marks or (y) Licensee's ownership rights in the Approved
Licensee Marks; and (ii) any lack of validity or enforceability of this
Agreement caused by Licensee.
12.2 Licensee shall maintain, at its own expense, in full force and
effect at all times during which Licensed Services bearing the Licensed Marks
are being sold, with a responsible insurance carrier acceptable to Licensor, at
least a Two Million Five Hundred Thousand Dollar ($2,500,000.00) products
liability insurance policy with respect to the Licensed Services offered under
the Licensed Marks. This insurance shall be primary to any of Licensor's
coverage, shall name Licensor as an insured party, shall be for the benefit of
Licensor and Licensee and shall provide for at least ten (10) days' prior
written notice to Licensor and Licensee of the cancellation or any substantial
modification of the policy. This insurance may be obtained for Licensor by
Licensee in conjunction with a policy which covers services and/or products
other than the services covered under this Agreement.
12.3 Licensee shall from time to time, upon reasonable request by
Licensor, promptly furnish or cause to be furnished to Licensor, evidence in
form and substance
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<PAGE>
satisfactory to Licensor, of the maintenance of the insurance required by
Section 12.2, including without limitation, originals or copies of policies,
certificates of insurance (with applicable riders and endorsements) and proof of
premium payments.
13. Consent of Licensor. Except where another standard is expressly
-------------------
provided for herein, whenever reference is made to Licensor's consent or
approval in this Agreement, such consent or approval may be granted or withheld
in Licensor's sole discretion and, if granted, may be done so conditionally or
unconditionally; provided, however, that such standard shall not be interpreted
-----------------
by Licensor as justifying arbitrary rejection, but will connote a reasonable
application of judgment, taking into consideration Licensor's licensing
practices and customs in telecommunications licensing transactions.
14. Notices and Demands. All notices, requests, demands or other
-------------------
communications required by, or otherwise with respect to this Agreement shall be
in writing and shall be deemed to have been duly given to any party when
delivered personally (by courier service or otherwise), against receipt, when
delivered by telecopy and confirmed by return telecopy, or when actually
received when mailed by registered first-class mail, postage prepaid and return
receipt requested in each case to the applicable addresses set forth below: If
to Licensee:
c/o Triton Communications, L.L.C.
101 Lindenwood Drive, Suite 125
Malvern, PA 19355
Attention: Michael E. Kalogris
Steven R. Skinner
Fax No.: (610) 993-2683
With a copy to:
Kleinbard Bell & Brecker LLP
1900 Market Street, Suite 700
Philadelphia, Pennsylvania 19103
Attention: Howard J. Davis
Fax No.: (215) 568-0140
If to Licensor:
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attention: General Counsel
Fax No.: (908) 953-8360
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With a copies to:
AT&T Corp.
131 Morristown Road
Basking Ridge, New Jersey 07920-1650
Attention: Frank L. Politano, General Attorney
Fax No.: (908) 204-8537
AT&T Corp.
131 Morristown Road
Basking Ridge, NJ 07920
Attention: Corporate Secretary
Fax No.: (908) 953-4657
AT&T Wireless Services Inc.
5000 Carillon Point
Kirkland, Washington 98033
Attention: William W. Hague
Fax No.: (425) 827-4500
or to such other address as such party shall have designated by notice so given
to each other party.
15. Compliance With Law. Subject to the provisions of Section 9.4,
-------------------
nothing in this Agreement shall be construed to prevent Licensor or Licensee
from complying fully with all applicable laws and regulations, whether now or
hereafter in effect.
16. Governmental Licenses, Permits and Approvals. Licensee, at its
--------------------------------------------
expense, shall be responsible for obtaining and maintaining all licenses,
permits and approvals which are required by all Regulatory Authorities with
respect to this Agreement, and to comply with any requirements of such
Regulatory Authorities for the registration or recording of this Agreement.
Licensee shall furnish to Licensor written evidence from such Regulatory
Authorities of any such licenses, permits, clearances, authorizations,
approvals, registration or recording.
17. Applicable Law; Jurisdiction. The construction, performance and
----------------------------
interpretation of this Agreement shall be governed by the U.S. Trademark Act, 15
U.S.C. 1051 et seq., and the internal, substantive laws of the State of New
York, without regard to its principles of conflicts of law; provided that if the
foregoing laws should be modified during the term hereof in such a way as to
adversely affect the original intent of the parties, the parties will negotiate
in good faith to amend this Agreement to effectuate their original intent as
closely as possible. Except as otherwise provided herein, Licensor and Licensee
hereby irrevocably submit to the exclusive jurisdiction of the United States
District Court for the Southern District of New York, or absent subject matter
jurisdiction in that court, the state courts of the State of New York located in
New
-18-
<PAGE>
York County for all actions, suits or proceedings arising in connection with
this Agreement, and agree that any such action, suit or proceeding shall be
brought only in such courts (and waive any objection based on forum non
conveniens or any other objection to venue therein). Licensee and Licensor
hereby waive any right to a trial by jury.
18. Confidentiality of Information and Use Restriction. The Quality
--------------------------------------------------
Standards and other technical information furnished to Licensee under this
Agreement and other confidential and proprietary information, know-how and trade
secrets of Licensor that are disclosed or otherwise provided to Licensee in
connection with this Agreement, shall remain the property of Licensor, and shall
be returned to Licensor upon request and upon termination of this Agreement.
Unless such information was previously known to Licensee free of any obligation
to keep it confidential, or has been or is subsequently made public (a) by any
person other than Licensee and Licensor is not attempting to limit further
dissemination of such information, (b) by Licensor, or (c) by Licensee, as
required by law (including securities laws) or to enforce its rights under this
Agreement, it shall be held in confidence, and shall be used only for the
purposes of this Agreement. All confidential and proprietary information, know-
how and trade secrets of Licensee that are disclosed or otherwise provided to
Licensor hereunder (including without limitation, during any Inspection)
(collectively, "Licensee Information") shall remain the property of Licensee and
shall be returned to Licensee upon request and upon termination of this
Agreement. Unless such Licensee Information was previously known to Licensor
free of any obligation to keep it confidential, or has been or is subsequently
made public (a) by any person other than Licensor and Licensee is not attempting
to limit further dissemination of such information, (b) by Licensee, or (c) by
Licensor, as required by law (including securities law) or to enforce its rights
under this Agreement, it shall be held in confidence and shall be used only for
purposes of this Agreement.
19. Miscellaneous.
-------------
19. Name, Captions. The name assigned this Agreement and the section
--------------
captions used herein are for convenience of reference only and shall not affect
the interpretation or construction hereof.
19.2 Entire Agreement. The provisions of this Agreement contain the
----------------
entire agreement between the parties relating to use by Licensee of the Licensed
Marks, and supersede all prior agreements and understandings relating to the
subject matter hereof. This Agreement shall be interpreted to achieve the
objectives and intent of the parties as set forth in the text and factual
recitals of the Agreement. It is specifically agreed that no evidence of
discussions during the negotiation of the Agreement, or drafts written or
exchanged, may be used in connection with the interpretation or construction of
this Agreement. No rights are granted to use the Licensed Marks or any other
marks or trade dress except as specifically set forth in this Agreement. In the
event of any conflict between the provisions of this Agreement and provisions in
any other agreement involving Licensee, the provisions of this Agreement shall
prevail. This Agreement is not a franchise under federal or state law, does not
create a partnership or joint venture, and shall
-19-
<PAGE>
not be deemed to constitute an assignment of any rights of Licensor to Licensee.
Licensee is an independent contractor, not an agent or employee of Licensor, and
Licensor is not liable for any acts or omissions by Licensee.
19.3 Amendments, Waivers. This Agreement may not be amended, changed,
-------------------
supplemented, waived or otherwise modified except by an instrument in writing
signed by the party against whom enforcement is sought.
19.4 Specific Performance. The parties acknowledge that money damages
--------------------
are not an adequate remedy for violations of this Agreement and that any party
may, in its sole discretion, apply to the court set forth in paragraph 17 for
specific performance, or injunctive, or such other relief as such court may deem
just and proper, in order to enforce this Agreement or prevent any violation
hereof, and to the extent permitted by applicable law, each party waives any
objection to the imposition of such relief.
19.5 Remedies Cumulative. All rights, powers and remedies provided under
-------------------
this Agreement, or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
19.6 No Waiver. The failure of any party hereto to exercise any right,
---------
power or remedy provided under this Agreement, or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
19.7 No Third Party Beneficiaries. Except with respect to the persons
----------------------------
entitled to indemnification under Section 12.1, this Agreement is not intended
to be for the benefit of, and shall not be enforceable by any person or entity
who or which is not a party hereto.
19.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all the
parties hereto.
-20-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in duplicate originals by its duly authorized representatives as of the
date first stated above.
AT&T CORP.
By_________________________________
Name:
Title:
TRITON PCS OPERATING COMPANY L.L.C.
By Triton Management Company,
Inc., its manager
By____________________________
Name:
Title:
-21-
<PAGE>
SCHEDULE A
----------
LICENSED LOGO
-------------
[to be provided by AT&T]
<PAGE>
SCHEDULE B
----------
LICENSED TRADE DRESS
--------------------
1. The overall configurations of the AT&T and globe design corporate signature
as set forth more fully in the attached AT&T document Corporate Identity
------------------
Program: Graphic Standards Manual ("Graphic Standards Manual"), and solely
----------------------------------
as expressed in the Licensed Logo set forth in Schedules A and E.
2. The acceptable color applications of the AT&T and globe design corporate
signature as set forth in the Graphic Standards Manual, and solely as
------------------------
expressed in the Licensed Logo set forth in Schedules A and E.
3. The acceptable graphic techniques relating to the AT&T and globe design
corporate signature as set forth in the Graphic Standards Manual, and solely
------------------------
as expressed in the Licensed Logo set forth in Schedules A and E.
4. The acceptable applications of the AT&T globe design corporate signature as
set forth in Schedule E.
5. Nothing in this Schedule shall restrict or limit AT&T's claim to trade dress
rights in or protection of AT&T's Trade Dress.
<PAGE>
SCHEDULE B1
-----------
UNITED STATES SERVICE MARK REGISTRATIONS OR APPLICATIONS
- --------------------------------------------------------
<TABLE>
<CAPTION>
Registration No. Registration Date
Mark (Application No.) (Application Date) Services
---- ---------------- ----------------- --------
<S> <C> <C> <C>
AT&T and Globe (75/378,611) (October 24, 1997) Telecommunication
Design/Member services, namely, the
AT&T Wireless mobile wireless
Services Network electronic transmission
of voice, data, paging
and facsimile services;
electronic voice and
data messaging services,
namely, the recording,
storage, and subsequent
wireless transmission of
voice and data messages
from and to mobile
wireless telephones
</TABLE>
<PAGE>
SCHEDULE C
----------
INITIAL LICENSED TERRITORY
--------------------------
[TO BE PROVIDED]
<PAGE>
SCHEDULE D
----------
QUALITY CONTROL STANDARDS
-------------------------
(see attached)
<PAGE>
SCHEDULE D
----------
QUALITY AND REPORTING STANDARDS
-------------------------------
GENERAL OVERVIEW
This Schedule VII sets out the Network and Reporting Standards with which
Licensee shall comply pursuant to Section 8.2 of this Agreement. These
Standards set out the network performance metrics and the process by which such
metrics will be established, measured and reported. All metrics which represent
a defined standard of quality for acceptable network operations have, or will
have, specific targets which the Licensee must comply with in accordance with
the following network standards.
I. NETWORK STANDARDS
There are three categories of Network Standards: network quality (the "Network
Quality Category"); system performance (the "System Performance Category"); and
audio quality (the "Audio Quality Category") (each hereafter referred to
generally as a "Category"). For each Category of Network Standards, specific
metrics have been identified to measure performance in each such Category. The
detailed description of how to measure and interpret the metrics for each
Category is set out in the following AWS documents (each referred to generally
as a "Network Standards Document"):
. NETWORK QUALITY CATEGORY: Document ES-4034, Revision 1.1, dated July 30,
------------------------
1997 entitled "Network Quality Scorecard User Guide" (as referred to as
the "Network Quality Standards Document"). This document is a collection
of key network performance and traffic indicators (metrics) that are
measured and reported on a regular basis. Included in this category,
Licensee shall perform the ANS Consistency Test, as attached to this
Schedule VII.
. SYSTEM PERFORMANCE CATEGORY: OSS draft document, Revision 0.7, dated
---------------------------
June 17, 1997 entitled "Key Metrics for System Performance Document" (as
referred to as the "System Performance Standards Document"). This
document identifies the network-wide key metrics for Ericsson and Lucent
switching systems, as well as cell sites, which will provide a high level
assessment of the system.
. AUDIO QUALITY CATEGORY: Document PP-4027E, Revision 1.1, dated May 30,
----------------------
1996 entitled "Audio Quality Measurement (AQM)" (as referred to as the
"Audio Quality Standards Document"). This document provides the basis for
assessing the quality of RF transmission by describing the standards for
performing audio quality measurements and the reporting of their results.
AWS measures the metrics for the Audio Quality Category using the "Radio
Quality Scorecard". The Radio Quality
<PAGE>
Scorecard is comprised of performance statistics derived from driving the
PCS system using the Buzzard tool or a tool with similar measurement and
reporting capability.
These Network Standards Documents are collectively attached to this Schedule VII
which, subject to the terms and conditions of this Agreement including, without
limitation, this Schedule VII, is hereby incorporated into and forms a part of
this Agreement. In the event of any inconsistency between any part of a Network
Standards Document and the provisions of this Schedule VII, the provisions of
this Schedule VII shall govern.
Notwithstanding anything else in this Agreement including, without limitation,
this Schedule VII, the parties acknowledge and confirm that the Network
Standards Documents represent the standards and metrics currently identified by
AWS as applicable to each Category. Target values for key quality related
metrics are contained herein and Licensee agrees to comply with the specific
metric target values as specified in Schedule VII.
In addition, the parties acknowledge and confirm that the Network Standards
Documents are subject to revision and the Licensee shall comply with subsequent
revisions to these Network Standards Documents, as well as with Call Center
Quality Standards which will constitute an additional Category once they are
formally implemented, in accordance with Section 8.2 of this Agreement.
Set out below is a brief description of each Category of Network Standard and
the currently established metrics for each such Category.
II. TARGETS FOR NETWORK STANDARDS
Licensee shall meet the following targets for key metrics which represent
overall network and system quality. These targets are subject to revision and
shall be implemented in accordance with Section 8.2 of this Agreement.
. % ESTABLISHED CALLS: The percentage of call attempts to and from a mobile
-------------------
phone that result in a successful voice channel assignment. The target
goal for this metric is 93%.
. % DROPPED CALLS: The percentage of established calls, as defined below,
---------------
which terminate abnormally. The target, goal for this metric is a drop
call rate of 1.7% or less.
. % HANDOFF FAILURES: The target goal for this metric is a handoff failure
------------------
rate of 1.5%.
. FAILURES PER ERANG: The ratio of failed calls to carried traffic, where
------------------
failed calls are measured utilizing switch counters for originating and
terminating traffic, and carried traffic is measured in erlangs. The
target goal for this metric is 1.68
-2-
<PAGE>
. SWITCH OUTAGE TIME: The amount of time (in minutes) in a month when
------------------
subscribers are impacted by a cellular switch outage. Target for this
metric is 10 minutes per switch per year, with all ten minutes occurring
the maintenance window between 12:00 am and 5:00 am.
. % BLOCKING - CELL ROUTES: Percentage of time all cellular traffic
------------------------
channels (voice paths in a trunk group) are unavailable within a given
measurement interval. Target for this metric is 5%.
. % BLOCKING- - NETWORK ROUTES: Percentage of time all network traffic
----------------------------
channels are unavailable within the measurement interval. Target for this
metric is 5%.
. ANS CONSISTENCY TEST: The percentage of successful ANS feature
--------------------
deliveries, based on the following sequence: feature
activation/deactivation (when applicable), test call, correct response,
and call termination. The target goal for this metric is 96% for all ANS
features. This target metric includes feature delivery failures due to
call processing failures (i.e. call delivery, call origination, handoff
failures, or dropped calls. These failures are estimated to be
approximately 4%.)
III. REPORTING STANDARDS
Licensee agrees to comply with the reporting requirements as specified in the
Network Standards Documents and as specified below:
. Except as specified Audio Quality Network Standards, Licensee will submit
the metric reports required pursuant to this Schedule VII (the "Results")
to AWS no less than quarterly.
. With respect to Audio Quality Network Standards, Licensee shall only
submit quarterly Results for markets with 10,000 or more subscribers; for
markets with less than 10,000 subscribers, Licensee shall only submit
Results on a semi-annual basis.
. Licensee shall submit all Results by the fifteenth day of the month
following the end of the applicable reporting period.
. Licensee will report the Results to AWS on an aggregated national basis;
the aggregated national Results will reflect the distribution of the
metric measured across Licensee's Territory. Licensee may also be
required to provide a breakdown, by market, of any metric.
AT&T Brand Values
Marketing, Advertising & Promotion Guidelines
-3-
<PAGE>
The Licensed Logo as set forth in Schedules A and E should not be placed on any
content relating to or containing any of the following, unless it has redeeming
social value:
. Illegal activities
. Content which demeans, ridicules or attacks an individual or group
on the basis of age, color, national origin, race, religion, sex.
secular orientation, or handicap
. Pornographic, obscene or sexually explicit suggestive material or
content
. Material targeted to children, which is deemed to be obscene,
vulgar or pornographic
. Tobacco and/or alcoholic beverages
. Firearms/Ammunition/Fireworks
. Gambling
. Contraceptives
. Violence
. Vulgar/obscene language
. Solicitation of funds
-4-
<PAGE>
SCHEDULE E
----------
GUIDELINES FOR USE OF THE LICENSED LOGO
AND LICENSED PHRASE
-------------------
AT&T welcomes Members of the AT&T Wireless Services Network (Member) to use the
enclosed icon ("icon") and the expression "Member, AT&T Wireless Services
Network" (the "expression") for their advertising and promotion needs.
There are only a few requirements to follow:
. The icon or the expression may never be used in connection with services or
products that are not provided or approved by AT&T in accordance with the
Network Membership License Agreement.
. Only authorized Members of the AT&T Wireless Services Network marketing
AT&T services under a written Network Membership License Agreement may use
the icon and the expression.
. The authorized member's identity or logo must be at least 3 times the
overall size of the icon; provided, however, for stationery and business
cards the authorized members identity or logo must be at least 2 times the
overall size of the icon.
. Use of the icon or expression must never give the impression that the
member is a part of AT&T.
. There must be a reference in the authorized member's advertising body copy,
to the extent that it refers to the nature, character or quality of AT&T's
service or network, that states the value, quality, and reliability of
AT&T's services and network.
. The icon must be used only as illustrated and specified in this document.
Do not alter the design in any way.
. The expression may not appear in type size or style that is larger or more
prominent than the largest or most prominent type size or style of
surrounding or accompanying text or body copy.
. Any misuse of the icon or the expression or misrepresentation of the AT&T
Member relationship may result in termination of permission to use the icon
and the expressions cancellation of agreements between Member and AT&T,
and/or additional legal action.
For questions regarding the use of these materials please contact the AT&T
Corporate Identity Office, (973) 564-4942.
<PAGE>
Permission to use the icon or the expression may not be granted to any
telecommunications aggregator or reseller.
For additional copies of this document call AT&T Corporate Identity at (973)
564-4942 or e-mail [email protected].
The "icon" on disk
Always reproduce the icon so that it appears with a solid white or black field.
See Illustrations.
There are two versions of the icon on the disk. One is for larger size
reproduction (i.e., advertisements) and one is for smaller sizes (i.e.,
stationery). It is important to use the correct one because failing to do so
will result in poor legibility.
Versions AW, AB, AWC and ABC are for larger than P in height. Versions BW, BB,
BWC and BBC are for 1" and smaller.
Legal Information:
1. Permission to use the icon and expression will not be granted to any
telecommunications aggregator or reseller.
2. Permission to use the icon and expression must be contained in a written
Network Membership License Agreement between AT&T and the entity using the
icon and expression.
3. The user of the icon and expression must abide by all terms and conditions
outlined in this document.
4. The icon or expression may never be used in connection with products or
services not provided by the representative through or approved by AT&T.
With respect to a specific AT&T service, a person or entity is a Member of
the AT&T Wireless Network for that specific service under these guidelines if
(1) the person or entity has executed a written contract with AT&T that
expressly grants that status for that service; and (2) the contract is in effect
and grants the right to use. in accordance with these guidelines and such other
limitations as are contained in the contract, AT&Ts logo, signature and
trademarks as expressed in the icon and expression in connection with the
marketing, sale, or provision of that specific product or service. The written
contract may not alter these guidelines or grant more rights to use AT&Ts logo,
signature and trademarks than are expressly set forth in these guidelines.
Furthermore, the authorization to use the AT&T logo, signature and trademarks
under these guidelines for a specific service does not allow use of the AT&T
logo, signature and trademarks tor any other product or service.
-2-
<PAGE>
Subscription to an AT&T tariffed service does not make the subscriber a Member
of the AT&T Wireless Services Network.
-3-
<PAGE>
SCHEDULE F
----------
PERMITTED EVENTS
----------------
1. Local community events such as school athletic and cultural events
(elementary, secondary and college) and athletic tournaments (golf, tennis,
fishing, etc.).
2. Local events in conjunction with regionally or nationally recognized
service organizations such as Rotary International, Exchange Club, Heart
Association, Red Cross, Make-A-Wish Foundation, etc.
3. Events in direct support of local community major charity and/or non-profit
organizations such as local Children's Hospitals, March of Dimes, Heart
Association, etc.
<PAGE>
EXHIBIT 10.9
================================================================================
STOCKHOLDERS' AGREEMENT
by and among
AT&T WIRELESS PCS INC.,
CASH EQUITY INVESTORS,
MANAGEMENT STOCKHOLDERS,
and
TRITON PCS HOLDINGS, INC.
dated as of February 4, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Certain Definitions..................................................... 2
2. Restated Certificate and Restated By-Laws............................... 13
3. Management of Company................................................... 13
3.1 Board of Directors......................................... 13
3.2 Removal; Filling of Vacancies.............................. 14
3.3 Initial Directors.......................................... 15
3.4 Compensation and Reimbursement............................. 15
3.5 Business of the Company.................................... 15
3.6 Required Votes............................................. 15
3.7 Transactions between the Company and the
Stockholders or their Affiliates.......................... 15
3.8 Board Committees........................................... 16
3.9 Voting Agreements and Voting Trusts........................ 16
3.10 Additional Capital Contributions........................... 16
4. Transfers of Shares..................................................... 16
4.1 General.................................................... 16
4.2 Right of First Offer....................................... 18
4.3 Rights of Inclusion........................................ 19
4.4 Right of First Negotiation................................. 22
4.5 Additional Conditions to Permitted Transfers............... 22
4.6 Representations and Warranties............................. 23
4.7 Stop-Transfer.............................................. 23
5. Registration Rights..................................................... 24
6. Disqualifying Transactions.............................................. 37
6.1 Company Conversion Rights.................................. 37
6.2 Joint Marketing Right...................................... 38
7. Additional Rights and Covenants......................................... 39
7.1 Financial Statements....................................... 39
7.2 Purchase Right............................................. 39
7.3 Access..................................................... 40
7.4 Merger, Sale or Liquidation of the Company................. 41
7.5 Wholly-Owned Subsidiaries.................................. 42
7.6 Amendments of the Restated Certificate and By-Laws......... 42
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
7.7 Confidentiality............................................ 42
7.8 IPO Date................................................... 43
7.9 AT&T PCS Retained Licenses................................. 43
7.10 Regulatory Cooperation..................................... 43
7.11 Permitted Transactions..................................... 44
8. Operating Arrangements.................................................. 44
8.1 Construction of Company Systems............................ 44
8.2 Service Features........................................... 45
8.3 Quality Standards.......................................... 45
8.4 No Change of Business...................................... 45
8.5 Preferred Provider......................................... 46
8.6 Exclusivity................................................ 47
8.7 Other Business; Duties; Etc................................ 48
8.8 Acknowledgments and Termination of Exclusivity............. 48
8.9 Equipment, Discounts and Roaming........................... 49
8.10 ANS Agreement.............................................. 49
8.11 Resale Agreements.......................................... 49
8.12 Non-Solicitation........................................... 50
8.13 Co-Location................................................ 51
9. After-Acquired Shares; Recapitalization................................. 51
9.1 After Acquired Shares; Recapitalization.................... 51
9.2 Amendment of Restated Certificate.......................... 51
10. Share Certificates..................................................... 51
10.1 Restrictive Endorsements; Replacement Certificates......... 51
11. Equitable Relief....................................................... 52
12. Miscellaneous.......................................................... 52
12.1 Notices.................................................... 53
12.2 Entire Agreement; Amendment; Consents...................... 55
12.3 Term....................................................... 55
12.4 Survival................................................... 56
12.5 Waiver..................................................... 56
12.6 Obligations Several........................................ 57
12.7 Governing Law.............................................. 57
12.8 Dispute Resolution......................................... 57
12.9 Benefit and Binding Effect; Severability................... 60
12.10 Amendment of By-Laws....................................... 60
12.11 Authorized Agent of AT&T PCS............................... 60
12.12 FCC Approval............................................... 60
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
12.13 Expenses................................................... 60
12.14 Attorneys' Fees............................................ 61
12.15 Headings................................................... 61
12.16 Counterparts............................................... 61
</TABLE>
Schedules
- ---------
Schedule I Cash Equity Investors
Schedule II Management Stockholders
Schedule III Stockholders
Schedule IV Core Service Features
Schedule V Minimum Build-Out Plan
Schedule VI PCS Territory
Schedule VII TDMA Quality Standards
Schedule VIII Initial Directors
Schedule IX Capital Budgets
Schedule X Voting Agreements
Schedule XI Critical Network Elements
Exhibits
Exhibit A Restated By-Laws
Exhibit B Restated Certificate
Exhibit C Form of Advanced Network Services Agreement
iii
<PAGE>
STOCKHOLDERS' AGREEMENT
-----------------------
STOCKHOLDERS' AGREEMENT, dated as of February 4, 1998 (this "Agreement"),
by and among AT&T WIRELESS PCS INC., a Delaware corporation (together with its
Affiliated Successors, "AT&T PCS"), the investors listed on Schedule I
(individually, each a "Cash Equity Investor" and, collectively, with any of its
Affiliated Successors, the "Cash Equity Investors"), the individuals listed on
Schedule II (individually, each a "Management Stockholder" and, collectively,
the "Management Stockholders") and Triton PCS Holdings, Inc., a Delaware
corporation (the "Company"). Each of the foregoing Persons, together with all
other Persons who, in connection with a Transfer (as hereinafter defined) are
required to become a party to this Agreement (other than the Company) are
sometimes referred to herein, indi vidually, as a "Stockholder" and,
collectively, as the "Stockholders."
RECITALS
--------
WHEREAS, the authorized capital stock of the Company consists of: (a)
10,000,000 shares of common stock, par value $0.01 per share ("Common Stock"),
of which 196,237 shares are issued and outstanding; and (b) 5,500,000 shares of
preferred stock, par value $0.01 per share ("Preferred Stock"), including (i)
1,000,000 shares designated Series A Convertible Preferred Stock, par value
$0.01 per share ("Series A Preferred Stock"), of which 732,371 shares are
issued and outstanding, (ii) 2,000,000 shares designated Series B Preferred
Stock, par value $0.01 per share ("Series B Preferred Stock"), of which no
shares are issued and outstanding, (iii) 2,000,000 shares designated Series C
Convertible Preferred Stock, par value $0.01 per share ("Series C Preferred
Stock"), of which 1,400,000 shares are issued and outstanding, and (iv) 500,000
shares designated Series D Convertible Preferred Stock, par value $0.01 per
share ("Series D Preferred Stock"), of which 366,131 shares are issued and
outstanding; and
WHEREAS, each share of Common Stock and each share of the Series C
Preferred Stock, voting as a single class, is entitled to one vote on all
matters on which the holders of Common Stock are entitled to vote; and
WHEREAS, each Stockholder is the registered owner of the respective shares
of Common Stock, Series A Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock set forth opposite its name on Schedule III; and
WHEREAS, the parties desire to enter into this Agreement in order to
provide for the management of the Company and to impose certain restrictions
with respect to the sale, transfer or other disposition of Common Stock on the
terms and conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the parties agree as follows:
<PAGE>
1. Certain Definitions.
-------------------
"Adopted Service Features" shall mean the Core Service Features and
------------------------
additional service features that are adopted by the Company's PCS Systems in
accordance with the terms of Section 8.2.
"Advice" shall have the meaning set forth in Section 5(d)(xvii).
------
"Affiliate" shall mean, with respect to any Person other than a natural
---------
person, any other Person that, either directly or indirectly through one or more
intermediaries, controls, or is controlled by or is under common control with
such Person and, with respect to any natural Person, any trust for the exclusive
benefit of such natural Person and/or any member of such natural Person's
Immediate Family in which such Person is the sole trustee thereof; provided,
--------
however, for purposes of Section 8.6, "Affiliate" shall not include (x) Persons
- -------
who conduct business in the Territory in whom a Cash Equity Investor or any of
their respective Affiliates has made an investment or holds securities on the
date hereof in the ordinary course of their business, or any such Person who
conducts business in the Territory in whom a Cash Equity Investor or any of
their respective Affiliates makes an investment after the date hereof if such
Cash Equity Investor or Affiliate thereof controls such Person on a temporary
basis where reasonably necessary to protect its investment, or any person who
serves as an officer, director or is a partner of any such Person who is
affiliated with a Cash Equity Investor, or (y) The Chase Manhattan Bank, The
Toronto Dominion Bank, Morgan Guaranty Trust Company of New York and First Union
Corporation. As used in this Agreement, "control", "controlled" or
"controlling" shall mean possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Affiliated Successor" shall mean, with respect to any Person, an Affiliate
--------------------
thereof that is a transferee or a successor in interest to any or all of such
Person's Company Stock and that is required to become a party to this Agreement
in accordance with the terms hereof; provided, however, that, for purposes of
-------- -------
Section 4, with respect to any Cash Equity Investor, "Affiliated Successor"
shall also include partners, limited partners or members of a Cash Equity
Investor that are transferees of Series C Preferred Stock or Common Stock
pursuant to distributions in accordance with the partnership agreement or
operating agreement of such Cash Equity Investor.
"Arbitration Rules" shall have the meaning set forth in Section 12.8(d).
-----------------
"AT&T Licensee" shall mean any Person that owns FCC licenses to provide
-------------
Commercial Mobile Radio Service, which Person is authorized to provide any such
services using the phrase "Member, AT&T Wireless Services Network" or other
service marks of AT&T Corp.
"AT&T PCS" shall have the meaning set forth in the preamble.
---------
2
<PAGE>
"AT&T PCS Contributed Licenses" shall have the meaning assigned to such
-----------------------------
term in the Securities Purchase Agreement.
"AT&T PCS Retained Licenses" shall have the meaning assigned to such term
--------------------------
in the Securities Purchase Agreement.
"AWS" shall mean AT&T Wireless Services, Inc., a Delaware corporation.
---
"Beneficially Own" shall have the meaning set forth in Rule 13d-3 of the
----------------
Exchange Act.
"Board of Directors" shall mean the Board of Directors of the Company.
------------------
"BTA" shall mean a geographic area established by the Rand McNally 1992
---
Commercial Atlas & Marketing Guide, 123rd Edition, pp. 38-39, as modified by the
FCC to form the initial geographic area of license for the C, D, E and F blocks
of broadband PCS spectrum as defined in Section 24.202 of the FCC's rules.
"Business" shall mean the business of (a) owning, constructing and
--------
operating systems to provide Company Communications Services on frequencies
licensed to the Company for Commercial Mobile Radio Services pursuant to the
AT&T PCS Contributed Licenses and Permitted Cellular Licenses, (b) providing to
end-users and resellers, solely within the Territory, Company Communications
Services available on such systems, (c) providing in connection with such
Company Communications Services, solely within the Territory, the Adopted
Service Features and (subject to the immediately following sentence)
telecommunications services incidental or ancillary to such Company
Communications Services (including, by way of example, bundling additional
telecommunications services with Company Communications Services), and (d)
marketing and offering the services and features described in clauses (b) and
(c) within the Territory, including advertising such services and features using
broadcast and other media, so long as such advertising extends beyond the
Territory only when and to the extent necessary to reach customers and potential
customers in the Territory. The activities described in clauses (a) and (b)
shall be the indispensable requisite, and primary business, of the Company and,
to the extent the Company provides telecommunications services incidental or
ancillary thereto, the Company and its Subsidiaries shall be only the agent or
reseller for the provider thereof and shall not own or lease the facilities used
to provide such services, except that (i) the Company may own or lease
facilities that, in the aggregate, do not have a purchase price to the Company
and its Subsidiaries in excess of $10 million, and the Company may be a
facilities-based provider of services using such facilities, and (ii) after
completion of the Minimum Build-Out Plan and certification that Company Systems
meet the TDMA Quality Standards, the amount of $10 million set forth in clause
(i) hereof shall be increased to $100 million.
"Cash Equity Investors" shall have the meaning set forth in the preamble.
---------------------
3
<PAGE>
"Cellular System" shall mean a cellular mobile radio telephone system
---------------
constructed and operated in a "metropolitan statistical area" as defined by the
FCC or a "rural service area" as defined by the FCC (or any successor
territorial designation or subdivision thereof authorized by the FCC)
exclusively using the 824 MHZ to 894 MHZ frequencies pursuant to a License
therefor issued by the FCC.
"Cellular Territory" shall mean the geographic area in respect of which the
------------------
Company acquires Permitted Cellular Licenses.
"Commission" shall mean the Securities and Exchange Commission or any other
----------
federal agency at the time administering the Securities Act.
"Common Stock" shall have the meaning set forth in the first recital.
------------
"Company" shall have the meaning set forth in the preamble.
-------
"Company Asset Sale" shall have the meaning set forth in Section 7.4(a).
------------------
"Company Communications Services" shall mean mobile wireless
-------------------------------
telecommunications services (including the transmission of voice, data, image or
other messages or content) provided solely within the Territory, initiated or
terminated using TDMA and frequencies licensed by the FCC, to or from
subscriber equipment that is capable of usage during routine movement throughout
the area covered by a cell site and routine handing-off between cell sites, and
is either intended for such usage or is temporarily fixed to a specific location
on a short-term basis (e.g., a bank of wireless telephones temporarily installed
during a special event of limited duration). Without limiting the foregoing,
Company Communications Services shall include wireless office services if such
services comply with this definition. Company Communications Services shall
also include the transmissions between the Company's cell sites and the
Company's switch or switches in the Territory, handing-off transmissions at the
Company's switch or switches for termination by other carriers, and receiving
transmissions to the Company's customers handed-off at the Company's switch or
switches, in each case for the purpose of facilitating Company Communications
Services described in the first sentence.
"Company Merger" shall have the meaning set forth in Section 7.4(a).
--------------
"Company Offer Period" shall have the meaning set forth in Section 6.2(b).
--------------------
"Company Purchase Notice" shall have the meaning set forth in Section
-----------------------
6.2(b).
"Company Sale Notice" shall have the meaning set forth in Section 6.2(a).
-------------------
"Company Stock" shall mean the Series A Preferred Stock, the Series C
-------------
Preferred Stock, the Series D Preferred Stock and the Common Stock.
4
<PAGE>
"Company Systems" shall mean the systems owned and operated by the Company
---------------
to provide Company Communications Services in the Territory.
"Confidential Information" shall have the meaning assigned to such term in
------------------------
Section 7.7(a).
"Core Service Features" shall mean the service features set forth on
---------------------
Schedule IV.
"CPR" shall have the meaning set forth in Section 12.8(c).
---
"Desai" shall mean Private Equity Investors III, L.P. and Equity-Linked
-----
Investors-II.
"Dispute" shall have the meaning set forth in Section 12.8(a).
-------
"Disqualifying Transaction" shall mean a merger, consolidation, asset
-------------------------
acquisition or disposition, or other business combination involving AT&T Corp.
(or its Affiliates) and another Person, which other Person (together with its
Affiliates) (a) derives from telecommunications businesses annual revenues in
excess of five billion dollars (based on its most recently ended fiscal year),
(b) derives less than one-third of its aggregate revenues from the provision of
wireless telecommunications (based on its most recently ended fiscal year for
which such information is available), (c) owns FCC Licenses to offer (and does
offer) mobile wireless telecommunications services serving more than 25% of the
POPs within the Territory, and (d) with respect to which AT&T PCS has given
written notice to the Company and the other Stockholders specifying that such
merger, consolidation, asset acquisition or disposition or other business
combination shall be a Disqualifying Transaction for purposes of this Agreement
and the transactions contemplated hereby.
"Employment Agreements" shall mean the Employment Agreements between Triton
---------------------
Management Company, Inc., a wholly-owned Subsidiary of the Company, and each of
Michael E. Kalogris and Steven R. Skinner, as the same may be amended, modified
or supplemented in accordance with the terms thereof.
"Equity Securities" shall have the meaning set forth in Section 7.2(a).
-----------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
------------
"FAA" shall have the meaning set forth in Section 12.8(e).
---
"FCC" shall mean the Federal Communications Commission or similar
---
regulatory authority established in replacement thereof.
"Federal Arbitration Act" shall have the meaning set forth in Section
-----------------------
12.8(e).
5
<PAGE>
"Final Order" shall mean an action or decision that has been granted by the
-----------
FCC as to which (i) no request for a stay or similar request is pending, no stay
is in effect, the action or decision has not been vacated, reversed, set aside,
annulled or suspended and any deadline for filing such request that may be
designated by statute or regulation has passed, (ii) no petition for rehearing
or reconsideration or application for review is pending and the time for the
filing of any such petition or application has passed, (iii) the FCC does not
have the action or decision under reconsideration on its own motion and the time
within which it may effect such reconsideration has passed, and (iv) no appeal
is pending including other administrative or judicial review, or in effect and
any deadline for filing any such appeal that may be designated by statute or
rule has passed.
"First Offer" shall have the meaning set forth in Section 4.2(a).
-----------
"First Offer Period" shall have the meaning set forth in Section 4.2(b).
------------------
"First Offeree" shall have the meaning set forth in Section 4.2(a).
-------------
"Governmental Authority" means a Federal, state or local court,
----------------------
legislature, governmental agency (including, without limitation, the United
States Department of Justice), commission or regulatory or administrative
authority or instrumentality.
"Inclusion Event" shall have the meaning set forth in Section 4.3(a).
---------------
"Inclusion Event Offeree" shall have the meaning set forth in Section
-----------------------
4.3(a).
"Inclusion Event Purchaser" shall have the meaning set forth in Section
-------------------------
4.3(a).
"Inclusion Notice" shall have the meaning set forth in Section 4.3(a).
----------------
"Inclusion Shares" shall have the meaning set forth in Section 4.3(c).
----------------
"Indemnified Party" shall have the meaning set forth in Section 5(e)(v).
-----------------
"Indemnified Stockholder" shall have the meaning set forth in Section
-----------------------
5(e)(i).
"Indemnifying Party" shall have the meaning set forth in Section 5(e)(v).
------------------
"Immediate Family" shall mean an individual's spouse, children (including
----------------
adopted children), grandchildren, parents, grandparents, and siblings.
"IPO Date" shall mean the first date on which (a) the Common Stock shall
--------
have been registered pursuant to an effective Registration Statement under the
Securities Act, (b) the aggregate gross proceeds received by the Company in
connection with such Registration
6
<PAGE>
Statement(s) equals or exceeds $20 million, and (c) the Common Stock shall be
listed for trading on the New York Stock Exchange or the American Stock Exchange
or authorized for trading on NASDAQ, including without limitation its National
Market System.
"Issuance Notice" shall have the meaning set forth in Section 7.2(a).
---------------
"Joint Marketing Period" shall have the meaning set forth in Section
----------------------
6.2(c).
"Law" shall mean applicable common law and any statute, ordinance, code or
---
other law, rule, permit, permit condition, regulation, order, decree, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority.
"License" shall mean a license, permit, certificate of authority, waiver,
-------
approval, certificate of public convenience and necessity, registration or other
authorization, consent or clearance to construct or operate a facility,
including any emissions, discharges or releases therefrom, or to transact an
activity or business, to construct a tower or to use an asset or process, in
each case issued or granted by a Governmental Authority.
"Liens" shall mean, with respect to any asset, any mortgage, lien, pledge,
-----
charge, security interest, right of first refusal or right of others therein or
encumbrance of any nature whatsoever in respect of such asset.
"Management Stockholder" shall have the meaning set forth in the preamble.
-----------------------
"Majority in Interest" shall mean, with respect to the Cash Equity
--------------------
Investors, Persons that Beneficially Own, in the aggregate more than 50% of the
aggregate number of shares of Common Stock Beneficially Owned by all such
Persons.
"Majority of the Southeast Region" shall mean PCS Systems and Cellular
--------------------------------
Systems owned by AT&T PCS and its Affiliates covering a majority of the POPs in
all such PCS Systems and Cellular Systems in the Southeast Region.
"Majority of the United States" shall mean PCS Systems and Cellular Systems
-----------------------------
owned by AT&T PCS and its Affiliates covering a majority of the POPs in all such
PCS Systems and Cellular Systems in the United States.
"Minimum Build-Out Plan" shall mean the build-out plan for the Company's
----------------------
PCS Systems set forth on Schedule V hereto.
"Model Procedures" shall have the meaning set forth in Section 12.8(c).
----------------
7
<PAGE>
"MTA" shall mean a geographic area established by the Rand McNally 1992
---
Commercial Atlas & Marketing Guide, 123rd Edition, pp. 38-39, as modified by the
FCC to form the initial geographic area of license for the A and B blocks of
broadband PCS spectrum as defined in Section 24.202 of the FCC's rules.
"NASD" shall mean the National Association of Securities Dealers, Inc.
----
"NASDAQ" shall mean the National Association of Securities Dealers'
------
Automated Quotation System.
"Network Membership License Agreement" shall mean the Network Membership
------------------------------------
License Agreement between Triton Operating and AT&T Corp., dated of even date
herewith, as the same may be amended, modified or supplemented in accordance
with the terms thereof.
"Offer Notice" shall have the meaning set forth in Section 4.2(a).
------------
"Offered Shares" shall have the meaning set forth in Section 4.2(a).
--------------
"Overlap Territory" shall mean that portion of the Territory in which a
-----------------
Person or its Affiliates (other than AT&T PCS and its Affiliates) that is party
to a transaction meeting the description of a transaction set forth in clauses
(a), (b) and (c) of the definition of a Disqualifying Transaction owns an FCC
License to offer Commercial Mobile Radio Services.
"PCS System" shall mean a mobile communication system constructed and
----------
operated in a BTA or a MTA (or any successor territorial designations or
subdivision thereof authorized by the FCC) exclusively using the 1850 MHZ to
1910 MHZ and 1930 MHZ to 1990 MHZ frequencies, or portions thereof, pursuant to
a License therefor issued by the FCC.
"PCS Territory" shall mean the territory described on Schedule VI hereto.
-------------
"Permitted Cellular License" shall have the meaning assigned to such term
--------------------------
in Section 7.11(b).
"Permitted Consolidation Transaction" shall have the meaning set forth in
-----------------------------------
Section 7.11(a).
"Permitted Merger Participant" shall mean an AT&T Licensee that (i) owns
----------------------------
one or more FCC Licenses to provide Commercial Mobile Radio Services that were
acquired from AT&T PCS or its Affiliates in all or any part of the Knoxville,
TN, Memphis, TN, Little Rock, AK, Detroit, MI, St. Louis, MO, Atlanta, GA,
Boston, MA, Louisville, KY, Nashville, TN and Columbus, OH MTAs and (ii) on the
date of acquisition from AT&T PCS of any such FCC Licenses to provide Commercial
Mobile Radio Service referred to in clause (i) hereof, owned
8
<PAGE>
FCC Licenses covering at least 8 million POPs, and in which AT&T PCS or its
Affiliates has not disposed of more than one-half of its original equity
interest therein.
"Person" shall mean an individual, corporation, partnership, limited
------
liability company, association, joint stock company, Governmental Authority,
business trust or other legal entity.
"POPs" shall mean, with respect to any Licensed area, the residents of such
----
area based on the most recent publication by Equifax Marketing Decision Systems,
Inc.
"Prohibited Transferee" shall mean any Person that is one of the three
---------------------
(excluding any Person excluded from this definition by reason of the proviso
hereto) largest carriers (other than AT&T Corp.) of telecommunications services
that as of the date hereof constitute interexchange services (based on revenue
derived from the provision of such telecommunications services during the most
recent fiscal year for which such information is available) or an Affiliate
thereof; provided, however, that such Person shall not constitute a Prohibited
-------- -------
Transferee if (a) a material portion of such Person's business is also the
business of providing wireless communications systems, and (b) TDMA is utilized
in a substantial majority of such Person's wireless communications systems.
"Prospectus" shall have the meaning set forth in Section 5(d)(i).
----------
"Purchase Notice" shall have the meaning set forth in Section 4.2(a).
---------------
"Purchase Right" shall have the meaning set forth in Section 7.2(a).
--------------
"Qualified Holder" shall mean (a) any Stockholder or group of Stockholders
----------------
that Beneficially Owns (x) for purposes of Section 7.8, greater than 33 %
percent of the outstanding shares of Series C Preferred Stock and Common Stock,
in the aggregate, (as appropriately adjusted for stock splits, stock dividends
and the like), (y) for purposes of Section 5, shares of Series C Preferred Stock
and Common Stock reasonably expected to, upon sale, result in aggregate gross
proceeds of at least $25 million, or (b) AT&T PCS for so long as it Beneficially
Owns, greater than two-thirds of the initial issuance to AT&T PCS of shares of
Series A Preferred Stock (as appropriately adjusted for stock splits, stock
dividends and the like).
"Registrable Securities" shall mean (a) the Common Stock now owned or
----------------------
hereafter acquired by any Stockholder or issuable upon conversion or exchange
of any Equity Security, and (b) all Common Stock issued or issuable upon
conversion, exchange or exercise of any Equity Security which is issued
pursuant to a stock split, stock dividend or other similar distribution or event
with respect to Common Stock but with respect to any Common Stock, only until
such time as such Common Stock (i) has been effectively registered under the
Securities Act and disposed of in accordance with the Registration Statement
covering it, (ii) has been sold to the public pursuant to Rule 144 (or any
similar provision then in force), (iii) shall otherwise have been transferred, a
new certificate evidencing such Common Stock without a
9
<PAGE>
legend restricting further transfer shall have been delivered by the Company,
and subsequent public distribution of such Common Stock shall neither require
registration under the Securities Act nor qualification (or any similar filing)
under any state securities or "blue sky" law then in effect, or (iv) shall have
ceased to be issued and outstanding.
"Registration" shall have the meaning set forth in Section 5(d).
------------
"Registration Expenses" shall have the meaning set forth in Section 5(g).
---------------------
"Registration Statement" shall have the meaning set forth in Section
----------------------
5(d)(i).
"Regulatory Problem" shall have the meaning assigned to such term in the
------------------
Securities Purchase Agreement.
"Related Agreements" shall mean each of the Network Membership License
------------------
Agreement, the Employment Agreements, the Resale Agreement and the Roaming
Agreement.
"Representative" shall have the meaning set forth in Section 7.7.
--------------
"Resale Agreement" shall mean the Resale Agreement between Triton Operating
----------------
and AWS or an Affiliate thereof, dated of even date herewith, as the same may be
amended, modified or supplemented in accordance with the terms thereof.
"Restated By-Laws" shall mean the Amended and Restated By-Laws of the
----------------
Company in the form of Exhibit A, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Restated Certificate" shall mean the Amended and Restated Certificate of
--------------------
Incorporation of the Company, in the form of Exhibit B, as the same may be
amended, modified or supplemented in accordance with the terms thereof.
"Roaming Agreement" shall mean the Intercarrier Roamer Service Agreement
-----------------
between Triton Operating and AWS, dated of even date herewith, as the same may
be amended, modified or supplemented in accordance with the terms thereof.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act (or
--------
any similar rule as may be in effect from time to time).
"Sale Notice" shall have the meaning set forth in Section 7.4(d).
-----------
"Sale Offer" shall have the meaning set forth in Section 7.4(d).
----------
"Sale Transaction" shall have the meaning set forth in Section 7.4(c).
----------------
10
<PAGE>
"SBIC" shall have the meaning assigned to such term in the Securities
----
Purchase Agreement.
"SBIC Holder" shall have the meaning assigned to such term in the
-----------
Securities Purchase Agreement.
"Section 6.2 Period" shall have the meaning set forth in Section 6.2.
-------------------
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Securities Purchase Agreement" shall mean the Securities Purchase
-----------------------------
Agreement, dated as of October 8, 1997, among the Company and the Stockholders.
"Seller" shall have the meaning set forth in Section 4.2(a).
------
"Selling Stockholder" shall have the meaning set forth in Section 4.3(a).
-------------------
"Series A Preferred Director" shall have the meaning set forth in Section
---------------------------
3.1.
"Series A Preferred Stock" shall have the meaning set forth in the first
------------------------
recital.
"Series B Preferred Stock" shall have the meaning set forth in the first
------------------------
recital.
"Series C Preferred Stock" shall have the meaning set forth in the first
------------------------
recital.
"Series D Preferred Stock" shall have the meaning set forth in the first
------------------------
recital.
"Southeast Region" shall mean the geographic area comprising Washington,
----------------
D.C., and the States of Alabama, Florida, Georgia, Kentucky, Maryland,
Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West
Virginia.
"Stockholder" shall have the meaning set forth in the preamble.
-----------
"Subject Market" shall mean, with respect to any announcement by AT&T PCS
--------------
or its Affiliates of a transaction meeting the description of a transaction set
forth in clauses (a), (b) and (c) of the definition of a Disqualifying
Transaction, the PCS System owned and operated by AT&T PCS and its Affiliates in
any of Charlotte, North Carolina, Atlanta, Georgia, Baltimore/Washington, D.C.
or Richmond, Virginia BTA.
"Subsidiary" shall mean, with respect to any Person, a corporation or other
----------
entity of which 50% or more of the voting power of the voting equity securities
or equity interests is owned, directly or indirectly, by such Person.
11
<PAGE>
"Substantial Company Breach" shall mean a material breach by the Company or
--------------------------
its Subsidiaries of their respective obligations under any of Sections 8.1(a),
8.2, 8.3, or 8.5(a) of this Agreement, if and only if any such material breach
is not cured within 30 days of notice thereof from AT&T PCS to the Company or,
if such breach is not capable of being cured within such thirty (30) day period,
within one-hundred eighty (180) days of such notice, provided the Company is
--------
using best efforts to cure such material breach as soon as reasonably
practicable.
"TDMA" shall mean the North American Time Division Multiple Access
----
standard set by the Cellular Telecommunications Industry Association, IS-54/136,
and any standard that is based upon, or is an upgrade from, or is a successor
to, such standard, if and only if such new or upgraded standard is (i) adopted
by AT&T PCS and its Affiliates in a Majority of the Southeast Region, (ii)
technologically compatible in all material respects with the standard then being
used in a Majority of the United States (including without limitation for the
purpose of facilitating roaming, hand-off and automatic call delivery between
systems), and the User Interface in PCS Systems using such new or upgraded
standard will not differ from the User Interface in a Majority of the United
States in a manner that would be material to customers, or (iii) is approved in
writing by AT&T PCS.
"TDMA Quality Standards" shall mean the quality standards applicable to
----------------------
TDMA PCS Systems and Cellular Systems owned and operated by AT&T PCS and its
Affiliates in the Southeast Region, which, as currently in effect, are set forth
on Schedule VII, as the same may be amended from time to time, provided any such
amended standards shall become effective one hundred twenty (120) days after
notice thereof is given to the Company.
"Territory" shall mean the PCS Territory and the Cellular Territory;
---------
provided, however, that in the event that, after consummation of a Disqualifying
Transaction, AT&T PCS terminates its and its Affiliates' obligations under
Section 8.6 with respect to any Overlap Territory, the "Territory" shall exclude
the Overlap Territory solely for the purpose of determining the rights and
obligations of AT&T PCS and the Company hereunder.
"Transfer" shall have the meaning set forth in Section 4.1.
--------
"Triton Operating" shall mean Triton PCS Operating Company L.L.C., a
----------------
Delaware limited liability company, which is a wholly-owned Subsidiary of the
Company.
"Unfunded Commitment" shall have the meaning assigned to such term in the
-------------------
Securities Purchase Agreement.
"User Interface" shall mean the process, functional commands, and look and
--------------
feel by which a mobile wireless telecommunications service subscriber operates
and utilizes the mobile wireless telecommunications services and service
features provided by a PCS System, including the sequence and detail of specific
commands or service codes, the detailed operation and response of subscriber
equipment to the sequence of keys pressed to effect subscriber equipment
12
<PAGE>
function, the response of subscriber equipment to the activation of these keys
or signals or data from the PCS System, the manner in which information is
displayed on the screen of subscriber equipment, and the use of announcement
tones and messages.
Each definition or pronoun herein shall be deemed to refer to the singular,
plural, masculine, feminine or neuter as the context requires. Words such as
"herein," "hereinafter," "hereof," "hereto" and "hereunder" refer to this
Agreement as a whole, unless the context otherwise requires.
2. Restated Certificate and Restated By-Laws. The Restated Certificate
-----------------------------------------
in effect as of the date hereof is in the form of Exhibit B hereto. The
Restated By-Laws of the Company in effect as of the date hereof are in the form
of Exhibit A hereto.
3. Management of Company.
---------------------
3.1 Board of Directors. The Board of Directors shall consist of
------------------
seven (7) directors; provided, however, that the number of directors
-------- -------
constituting the Board of Directors shall be reduced in the circumstances set
forth in this Section 3.1. Each of the Stockholders hereby agrees that it will
vote all of the shares of its Series C Preferred Stock or Common Stock owned or
held of record by it (whether now owned or hereafter acquired), in person or by
proxy, to cause the election of directors and thereafter the continuation in
office of such directors as follows:
(a) (i) two (2) individuals selected by holders of a Majority in
Interest of the Common Stock Beneficially Owned by the Cash Equity Investors, in
their sole discretion, and (ii) two (2) additional individuals selected by
holders of a Majority in Interest of the Common Stock held by the Cash Equity
Investors, which two (2) additional individuals shall be acceptable to Michael
E. Kalogris and Steven R. Skinner (in each case so long as he is an officer of
the Company) and AT&T PCS, in the discretion of Mr. Kalogris and Mr. Skinner,
on the one hand, and AT&T PCS, on the other hand;
(b) Michael E. Kalogris (so long as he is an officer of the
Company) who shall be Chairman of the Board of Directors;
(c) Steven R. Skinner (so long as he is an officer of the
Company); and
(d) one (1) individual (the "Series A Preferred Director")
elected by AT&T PCS in its capacity as holder of Series A Preferred Stock so
long as it has the right to elect one director in accordance with the Restated
Certificate.
In the event that Mr. Kalogris or Mr. Skinner shall cease to be an officer of
the Company, such individual shall resign (or the other directors or
Stockholders shall remove him) from the Board of Directors and the Board of
Directors shall select a replacement from the executives of the
13
<PAGE>
Company who shall be acceptable to a Majority in Interest of the Cash Equity
Investors and AT&T PCS, in each case in its sole discretion. In the event that
AT&T PCS shall cease to be entitled to elect the Series A Preferred Director,
such director shall resign (or the other directors or Stockholders shall remove
him) from the Board of Directors and the remaining directors shall take such
action so that the number of directors constituting the entire Board of
Directors shall be reduced accordingly. In the event that CB Capital Investors,
L.P., or J.P. Morgan Investment Corporation ("JPMI") or Sixty Wall Street SBIC
Fund, L.P. ("Sixty Wall Street"; JPMI and Sixty Wall Street are hereinafter
referred to collectively as "J.P. Morgan") shall fail to satisfy any portion of
their respective Unfunded Commitments when due in accordance with Section 2.2 of
the Securities Purchase Agreement or Section 3.10 hereof, and such failure is
not cured by CB Capital Investors, L.P. or J.P. Morgan, as applicable, or any
other Cash Equity Investor within thirty- five (35) days thereof, then, until
such failure is cured, the right of the Cash Equity Investors to designate two
(2) directors pursuant to Section 3.1(a)(i) shall be reduced to a right to
designate one (1) director (subject to reinstatement upon cure of such failure)
and the director designated by CB Capital Investors, L.P. or J.P. Morgan, as
applicable, pursuant to such right of the Cash Equity Investors, or, in the case
of a default by CB Capital Investors, L.P. and J.P. Morgan the two (2) directors
designated by the Cash Equity Investors pursuant to Section 3.1(a)(i), shall
resign (or the other directors or Stockholders shall remove them) from the Board
of Directors and the remaining directors shall take such action so that the
number of directors constituting the entire Board of Directors shall be reduced
accordingly.
Desai shall have the right, so long as it Beneficially Owns at least
200,000 shares of Common Stock, to designate one (1) one person who shall be
entitled to attend each meeting of the Board of Directors as an observer,
including meetings during which the Company's annual budget is discussed and
presented. Such observer shall have the right to receive all Board of Directors
materials and shall also have the right to meet quarterly with management of the
Company to consult on the business affairs of the Company. In addition, so long
as AT&T PCS has the right to designate one director in accordance with the
Restated Certificate, up to two (2) Regional Directors (in regions overlapping
with or in geographic proximity to the Territory) shall have the right to attend
each meeting of the Board of Directors as an observer.
Any nomination or designation of directors and the acceptance thereof
pursuant to Section 3.1 shall be evidenced in writing.
3.2 Removal; Filling of Vacancies. Except as set forth in Section 3.1,
-----------------------------
each Stockholder agrees it will not vote any shares of Series C Preferred Stock
and/or Common Stock Beneficially Owned by such Stockholder, and shall not permit
any Affiliated Successor of such Stockholder holding any Series C Preferred
Stock and/or Common Stock, to vote for the removal without cause of any director
designated by any other Stockholder in accordance with Section 3.1. Any
Stockholder or group of Stockholders who has the right to designate any
member(s) of the Board of Directors shall have the right to replace any
member(s) so designated by it (whether or not such member is removed from the
Board of Directors with or without cause or ceases to be a member of the Board
of Directors by reason of death, disability or for any other reason) upon
14
<PAGE>
written notice to the other Stockholders, the Company and the members of the
Board of Directors which notice shall set forth the name of the member(s) being
replaced and the name of the new
15
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member(s); provided, however, that if a director designated pursuant to Section
-------- -------
3.1(a)(ii) is replaced, the individual replacing such director must be
acceptable to Messrs. Kalogris and Skinner and AT&T PCS in accordance with the
terms of Section 3.1(a)(ii). Each of the Stockholders agrees to vote, and to
cause its Affiliated Successors to vote, its shares of Series C Preferred Stock
and/or Common Stock, or shall otherwise take any action as is necessary to cause
the election of any successor director designated by any Stockholder pursuant to
this Sec tion 3.2.
3.3 Initial Directors. In accordance with Section 228 of the Delaware
-----------------
General Corporation Law and pursuant to the provisions of Section 3.1 of this
Agreement, the Stockholders hereby consent to the election of and do hereby
elect in accordance with Section 3.1 hereof the persons designated in Schedule
VIII hereto as directors of the Company. Such persons shall hold office until
their successors are duly elected and qualified, except as otherwise provided in
this Agreement or the Restated Certificate or the Restated By-Laws.
3.4 Compensation and Reimbursement. The members of the Board of Directors
------------------------------
(other than the directors selected pursuant to Section 3.1(a)(ii)) shall not be
compensated for their services as a director or as a member of any committee of
the Board of Directors. The Board of Directors shall determine the compensation
payable, if any, to the directors selected pursuant to Section 3.1(a)(ii) for
their services as a director. The Company shall reimburse each member of the
Board of Directors for all out-of-pocket expenses reasonably incurred by such
director in connection with the performance of his service as a director or as a
member of any committee of the Board of Directors.
3.5 Business of the Company. The business and affairs of the Company
-----------------------
shall be conducted by the officers of the Company under the supervision of the
Board of Directors, substantially in accordance with operating and capital
expenditure budgets approved by the Board of Directors from time to time. The
Stockholders and the directors hereby approve the five (5) year build-out plan
for the Business and the capital budget for the first two (2) years of the
Business in the forms attached hereto as Schedule IX.
3.6 Required Votes. All actions of the Board of Directors of the Company
--------------
shall require the vote of at least a majority of the entire Board of Directors,
unless otherwise required by Law, the Restated Certificate, the Restated By-
Laws or this Agreement.
3.7 Transactions between the Company and the Stockholders or their
--------------------------------------------------------------
Affiliates. Except for this Agreement, the Securities Purchase Agreement and the
- ----------
Related Agreements and the transactions contemplated hereby and thereby and any
other arms-length agreements or transactions entered into from time to time
between the Company and its Subsidiaries, on the one-hand, and AT&T PCS and its
Affiliates, on the other hand, no Stockholder or any Affiliate of any
Stockholder shall enter into any transaction with the Company or any Subsidiary
of the Company unless such transaction is approved by a majority of the
disinterested members of the Board of Directors. For purposes hereof, a
director shall be deemed to be disinterested with respect to any such
transaction if such director was not designated a director by the Stockholder
16
<PAGE>
that (or an Affiliate of which) proposed to engage in such transaction with the
Company or any Subsidiary of the Company and such member is not an officer,
director, partner, employee, stockholder of, or consultant to, such Stockholder
or any of its Affiliates; provided, however, that for purposes of this Section
-------- -------
3.7 the directors designated pursuant to Section 3.1(a)(ii) shall not be deemed
to have been designated by the Cash Equity Investors, AT&T PCS or the Management
Stockholders.
3.8 Board Committees. If an executive committee of the Board of Directors
----------------
(or a committee of the Board of Directors having substantially the same mandate
and powers of such a committee) is established, the Series A Preferred Director,
one of the directors selected by the Cash Equity Investors pursuant to Section
3.1(a)(i) and Michael E. Kalogris (so long as he is an officer of the Company)
shall each serve as a member of such committee (or such other committee having
substantially the same mandate and powers).
3.9 Voting Agreements and Voting Trusts. Except as disclosed on Schedule
-----------------------------------
X, each Stockholder agrees that it will not, directly or indirectly, deposit any
of his or its shares of Series C Preferred Stock, Series D Preferred Stock
and/or Common Stock in a voting trust or other similar arrangement or, except
as expressly provided herein, subject such shares to a voting agreement or other
similar arrangements. AT&T PCS covenants and agrees that it will not, directly
or indirectly, enter into a voting or similar agreement with any Transferee of
shares of Series A Preferred Stock.
3.10 Additional Capital Contributions. In accordance with the Securities
--------------------------------
Purchase Agreement, each Cash Equity Investor shall contribute to the capital
of the Company an aggregate additional amount equal to its Unfunded Commitment,
such contributions to be made by each of the Cash Equity Investors in the
amounts and on the dates specified on Schedule I thereto. In the event that the
Board of Directors determines in good faith that the Company requires all or
any portion of the Unfunded Commitment prior to the dates specified on such
Schedule, then upon notice given by the Company to the Cash Equity Investors,
the Cash Equity Investors shall contribute, pro rata in accordance with their
ownership of Series C Preferred Stock on the date hereof, the additional capital
set forth in such notice up to the amount, in the case of each Cash Equity
Investor, of its Unfunded Commitment. Any such additional capital required to
be contributed by the Cash Equity Investors shall be contributed by the Cash
Equity Investors within twenty (20) business days of receipt of written notice
from the Company.
4. Transfers of Shares.
-------------------
4.1 General.
-------
(a) Each Stockholder agrees that at all times prior to the IPO
Date it shall not, directly or indirectly, transfer, sell, assign, pledge,
tender or otherwise grant, create or suffer to exist a Lien in or upon, give,
place in trust, or otherwise voluntarily or involuntarily (including transfers
by testamentary or intestate succession) dispose of by operation of law, offer
17
<PAGE>
or otherwise (any such action being referred to herein as a "Transfer") any of
the shares of Company Stock Beneficially Owned by such Stockholder as of the
date hereof or which may hereafter be acquired by such Stockholder, except that
(i) a Stockholder may Transfer shares of Series C Preferred Stock, Series D
Preferred Stock and Common Stock to an Affiliated Successor, (ii) a Stockholder
may Transfer shares of Series C Preferred Stock and Common Stock to any other
Person after complying first with Section 4.2 and next with Section 4.3, if
applicable, or (iii) a Cash Equity Investor may Transfer shares of Series C
Preferred Stock or Common Stock to another Cash Equity Investor.
(b) Each Stockholder agrees that at all times on and after the IPO
Date it shall not, directly or indirectly, Transfer any of the shares of Series
D Preferred Stock or Common Stock Beneficially Owned by such Stockholder as of
the date hereof or which may hereafter be acquired by such Stockholder except
that a Cash Equity Investor may Transfer shares of Series C Preferred Stock and
Common Stock to another Cash Equity Investor and a Stockholder may Transfer (i)
shares of Series D Preferred Stock and Common Stock to an Affiliated Successor,
and (ii) shares of Common Stock after complying first with Section 4.2 and next
with Section 4.3, if applicable, provided, however, a Stockholder shall not be
-------- -------
required to comply with Section 4.2 if such Stockholder first complies with the
applicable provisions of Section 4.4 in connection with Transfers of Common
Stock (x) pursuant to a Registration of Common Stock under Section 5 which is an
underwritten offering and constitutes a bona fide distribution of such Common
Stock pursuant to such Registration, (y) pursuant to Rule 144, or (z) in any
single transaction or series of related transactions to one or more Persons
which results in the Transfer by such Stockholder (together with any other
Stockholder participating in such single transaction or series of related
transactions) of not more than ten percent (10%) of the Common Stock on a fully
diluted basis (excluding for such purposes the Series A Preferred Stock).
(c) Notwithstanding anything to the contrary contained in Sections
4.1(a) or (b), prior to the third anniversary of the date hereof, each
Stockholder agrees that it will not Transfer any shares of Series C Preferred
Stock or Common Stock Beneficially Owned by it as of the date hereof or which
may hereafter be acquired by it to any Person other than an Affiliated
Successor.
(d) AT&T PCS agrees that it will not (i) Transfer any shares of
Series D Preferred Stock held by it to any Person other than to an Affiliated
Successor; provided, however, that nothing contained in this Section 4.1(d)
-------- -------
shall limit AT&T PCS' right to Transfer in accordance with the terms of this
Agreement any shares of Series C Preferred Stock or Common Stock issued upon
conversion of any such shares of Series D Preferred Stock. Prior to the IPO
Date, AT&T PCS agrees that it will not Transfer any shares of Series A Preferred
Stock held by it except that AT&T PCS may transfer Series A Preferred Stock (i)
to an Affiliated Successor, or (ii) to any other Person after complying with
Section 4.2; it being understood that on and after the IPO Date, AT&T PCS may
Transfer its shares of Series A Preferred Stock free from any restrictions on
Transfer of such shares under this Agreement.
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<PAGE>
(e) Notwithstanding anything to the contrary contained in this
Section 4, (i) Section 4.1 shall not apply to the pledge by the Cash Equity
Investors of the Series C Preferred Stock as security for their Unfunded
Commitments pursuant to a pledge agreement in favor of the Company or to any
Transfer of shares of Series C Preferred Stock in connection with the exercise
by the Company of its remedies pursuant to any such pledge agreement, and (ii) a
Cash Equity Investor that is a SBIC Holder that is required to dispose of its
investment in the Company by reason of a breach by the Company of Section 6.6(d)
of the Securities Purchase Agreement or a Regulatory Problem, may Transfer its
shares of Series C Preferred Stock or Common Stock without complying with the
terms of Section 4.3.
4.2 Right of First Offer.
--------------------
(a) If a Stockholder (each a "Seller") desires to Transfer any
or all of its shares of Company Stock (collectively, the "Offered Shares"), such
Seller shall give written notice (the "Offer Notice") to the Company and to each
Stockholder entitled to become the First Offeree of such Offered Shares, as
determined below. Each Offer Notice shall describe in reasonable detail the
number of shares of each class of Offered Shares, the cash purchase price
requested and all other material terms and conditions of the proposed Transfer.
The Offer Notice shall constitute an irrevocable offer (a "First Offer") to sell
all (and not less than all) of the Offered Shares to the First Offeree(s) at a
cash price equal to the price contained in such Offer Notice and upon the same
terms as the terms contained in such Offer Notice. The First Offeree(s) shall
have the irrevocable right and option, exercisable as provided below, but not
the obligation, to accept the First Offer as to all (and not less than all) of
the Offered Shares. The "First Offeree(s)" shall be determined as follows:
(i) If the Seller is a Cash Equity Investor, AT&T PCS
shall be First Offeree;
(ii) If the Seller is AT&T PCS, each Cash Equity Investor
shall be the First Offeree; and
(iii) If the Seller is any Stockholder other than a Cash
Equity Investor, AT&T PCS shall be the First Offeree.
(b) The option provided for herein shall be exercisable by the
First Offeree(s) by giving written notice (a "Purchase Notice"), that the First
Offeree desires to purchase all (and not less than all) of such Offered Shares
from the Seller, the Stockholders (other than the Seller) and the Company not
later than ten (10) business days (the "First Offer Period") after the date of
the Offer Notice. If the Cash Equity Investors are First Offerees and two or
more Cash Equity Investors notify the Seller of their desire to purchase all of
the Offered Shares, then each Cash Equity Investor shall acquire the proportion
of such Offered Shares as the number of shares of Company Stock owned by such
Cash Equity Investor bears to the total number of shares of Company Stock owned
by all Cash Equity Investors who elected to
19
<PAGE>
purchase all of the Offered Shares. If Offered Shares are purchased by more than
one purchaser, the purchase price shall be allocated among the parties
purchasing the shares on the basis of the number of shares being so purchased.
The purchase of the Offered Shares by the First Offeree(s) shall be closed at
the principal executive offices of the Company on a date specified by the First
Offeree(s) upon at least five (5) business days' notice, that is within thirty
(30) days after the expiration of the First Offer Period; provided, however,
-------- -------
that if such purchase is subject to the consent of the FCC or any public service
or public utilities commission, the purchase of the Offered Shares shall be
closed on the first business day after all such consents shall have been
obtained by Final Order.
(c) If the First Offeree(s) decline (which shall include the failure
to give timely notice of acceptance) to purchase all of the Offered Shares
subject to the First Offer within the First Offer Period, the Seller shall have
the right (for a period of ninety (90) days following the expiration of the
First Offer Period) to consummate the sale of the Offered Shares to any Person;
provided, however, that the purchase price of such Offered Shares payable by
- -------- -------
such Person must be at least equal to the cash purchase price thereof set forth
in the Offer Notice and all other terms and conditions of any such sale shall
not be more beneficial to such third party than those contained in the Offer
Notice. If any Offered Shares are not sold pursuant to the provisions of this
Section 4.2 prior to the expiration of the ninety (90) day period specified in
the immediately preceding sentence, such Offered Shares shall become subject
once again to the provisions and restrictions hereof.
(d) The purchase price of any Offered Shares Transferred pursuant to
this Section 4.2 shall be payable in cash by certified bank check or by wire
transfer of immediately available funds.
4.3 Rights of Inclusion.
-------------------
(a) No Stockholder shall, directly or indirectly, Transfer, in any
single transaction or series or related transactions to one or more Persons who
are not Affiliated Successors of such Stockholder (each such Person an
"Inclusion Event Purchaser") shares of Series C Preferred Stock or Common Stock
(collectively, "Inclusion Stock") in circumstances in which, after giving
effect to such Transfer, whether acting alone or in concert with any other
Stockholder (such parties referred to herein as "Selling Stockholders") would
result in such Selling Stockholder(s) Transferring twenty-five percent (25%) or
more of the outstanding shares of Inclusion Stock outstanding on the date of
such proposed Transfer on a fully diluted basis (excluding for such purposes the
Series A Preferred Stock) (an "Inclusion Event"), unless the terms and
conditions of such sale to such Inclusion Event Purchaser shall include an offer
to AT&T PCS, the Cash Equity Investors and the Management Stockholders other
than the Selling Stockholder (each, an "Inclusion Event Offeree") to Transfer to
such Inclusion Event Purchasers up to that number of shares of any class of
Inclusion Stock then Beneficially Owned by each Inclusion Event Offeree that
bears the same proportion to the total number of shares of Inclusion Stock at
that time Beneficially Owned (without duplication) by each such Inclusion Event
20
<PAGE>
Offeree as the number of shares of Inclusion Stock being Transferred by the
Selling Stockholders (including shares of Inclusion Stock theretofore
Transferred if in any applicable series of related transactions) bears to the
total number of shares of Inclusion Stock at the time Beneficially Owned
(without duplication) by the Selling Stockholders (including shares of Inclusion
Stock theretofore Transferred if in any applicable series of related
transactions). If the Selling Stockholders receive a bona fide offer from an
Inclusion Event Purchaser to purchase shares of Inclusion Stock in circumstances
in which, after giving effect to such sale would result in an Inclusion Event,
and which offer such Selling Stockholders wish to accept, the Selling
Stockholders shall then cause the Inclusion Event Purchaser's offer to be
reduced to writing (which writing shall include an offer to purchase shares of
Inclusion Stock from each Inclusion Event Offeree according to the terms and
conditions set forth in this Section 4.3) and the Selling Stockholders shall
send written notice of the Inclusion Event Purchaser's offer (the "Inclusion
Notice") to each Inclusion Event Offeree, which Inclusion Notice shall specify
(i) the names of the Selling Stockholders, (ii) the names and addresses of the
proposed acquiring Person, (iii) the amount of shares proposed to be Transferred
and the price, form of consideration and other terms and conditions of such
Transfer (including, if in a series of related transactions, such information
with respect to shares of Inclusion Stock theretofore Transferred), (iv) that
the acquiring Person has been informed of the rights provided for in this
Section 4.3 and has agreed to purchase shares of Inclusion Stock in accordance
with the terms hereof, and (v) the date by which each other Selling Stockholder
may exercise its respective rights contained in this Section 4.3, which date
shall not be less than thirty (30) days after the giving of the Inclusion
Notice. The Inclusion Notice shall be accompanied by a true and correct copy of
the Inclusion Event Purchaser's offer. At any time within thirty (30) days after
receipt of the Inclusion Notice, each Inclusion Event Offeree may accept the
offer included in the Inclusion Notice for up to such number of shares of
Inclusion Stock as is determined in accordance with this Section 4.3, by
furnishing written notice of such acceptance to each Selling Stockholder, and
delivering, to an escrow agent (which shall be a bank or a law or accounting
firm designated by the Company), on behalf of the Selling Stockholders, the
certificate or certificates representing the shares of Inclusion Stock to be
sold pursuant to such offer by each Inclusion Event Offeree, duly endorsed in
blank, together with a limited power-of-attorney authorizing the escrow agent,
on behalf of the Inclusion Event Offeree, to sell the shares to be sold pursuant
to the terms of such Inclusion Event Purchaser's offer.
In the event that the Inclusion Event Purchaser does not agree to
purchase all of the shares of Inclusion Stock proposed to be sold by the Selling
Stockholders and the Inclusion Event Offerees, then each Selling Stockholder and
Inclusion Event Offeree shall have the right to sell to the Inclusion Event
Purchaser that number of shares of Inclusion Stock as shall be equal to (x) the
number of shares of Inclusion Stock which the Inclusion Event Purchaser has
agreed to purchase times (y) a fraction, the numerator of which is the number of
shares of Inclusion Stock Beneficially Owned (without duplication) by such
Selling Stockholder or Inclusion Event Offeree and the denominator of which is
the aggregate number of shares of Inclusion Stock Beneficially Owned (without
duplication) by all Selling Stockholders and Inclusion Event Offerees. If any
Inclusion Event Offeree desires to sell less than its proportionate amount of
shares of Inclusion Stock that it is entitled to sell pursuant to this Section
4.3, then the Selling
21
<PAGE>
Stockholders and the remaining Inclusion Event Offerees shall have the right to
sell to the Inclusion Event Purchaser an additional amount of shares of
Inclusion Stock as shall be equal to (x) the number of shares of Inclusion Stock
not being sold by any such Inclusion Event Purchasers times (y) a fraction, the
numerator of which is the number of shares of Inclusion Stock owned such Selling
Stockholder or remaining Inclusion Event Offeree and the denominator of which is
the aggregate number of shares of Inclusion Stock Beneficially Owned (without
duplication) by all Selling Stockholders and remaining Inclusion Event Offerees.
Such process shall be repeated in series until all of the remaining Inclusion
Event Offerees agree to sell their remaining proportionate number of shares of
Inclusion Stock.
(b) The purchase from each Inclusion Event Offeree pursuant to this
Section 4.3 shall be on the same terms and conditions, including the price per
share received by the Selling Stockholders and stated in the Inclusion Notice
provided to each Inclusion Event Offeree. In the event that the Inclusion Stock
is Common Stock, all Inclusion Event Offerees shall be required, as a condition
of participating in such transaction, to convert its Preferred Stock into
Common Stock and Transfer Common Stock to the Inclusion Event Purchaser. In the
event that the Inclusion Stock is Series C Preferred Stock and after giving
effect to the rights of the Inclusion Event Offerees to sell their pro rata
share of Series C Preferred Stock or Common Stock pursuant to this Section 4.3
the Inclusion Event Purchaser shall be required to purchase both Series C
Preferred Stock and Common Stock, the purchase price allocable to holders of
Series C Preferred Stock, on the one hand, and to holders of Common Stock, on
the other hand, shall be determined by an independent committee of the Board of
Directors selected from among those directors who were not designated by any
Selling Stockholders or Inclusion Event Offerees, it being understood that the
directors selected pursuant to Section 3.1(a)(ii) shall be deemed independent
for such purposes.
(c) Simultaneously with the consummation of the sale of the shares of
Inclusion Stock of the Selling Stockholders and each Inclusion Event Offeree to
the Inclusion Event Purchaser pursuant to the Inclusion Event Purchaser's offer,
the Selling Stockholders shall notify each Inclusion Event Offeree and shall
cause the purchaser to remit to each Inclusion Event Offeree the total sales
price of the shares of Inclusion Stock held by each Inclusion Event Offeree sold
pursuant thereto and shall furnish such other evidence of the completion and
time of completion of such sale and the terms thereof as may be reasonably
requested by each Inclusion Event Offeree.
(d) If within thirty (30) days after receipt of the Inclusion Notice,
an Inclusion Event Offeree has not accepted the offer contained in the Inclusion
Notice, such Inclusion Event Offeree shall be deemed to have waived any and all
rights with respect to the sale described in the Inclusion Notice (but not with
respect to any subsequent sale, to the extent this Section 4.3 is applicable to
such subsequent sale) and the Selling Stockholders shall have sixty (60) days in
which to sell not more than the number of shares of Inclusion Stock described in
the Inclusion Notice, on terms not more favorable to the Selling Stockholders
than were set forth in the Inclusion Notice; provided, however, that if such
-------- -------
purchase is subject to the consent of
22
<PAGE>
the FCC or any public service or public utilities commission, the purchase of
the Offered Shares shall be closed on the first business day after all such
consents shall have been obtained by Final Order.
4.4 Right of First Negotiation. In the event that a Stockholder
--------------------------
desires to Transfer any shares of Common Stock following the IPO Date in a
Transfer described in clauses (x), (y) or (z) of Section 4.1(b), such
Stockholder shall give written notice thereof to AT&T PCS, such notice to
specify, among other things, the number of shares that such Stockholder desires
to sell. For the applicable first negotiation period hereinafter set forth,
AT&T PCS shall have the exclusive right to negotiate with such Stockholder with
respect to the purchase of such shares; it being understood and agreed that such
exclusive right shall not be deemed to be a right of first offer or right of
first refusal for the benefit of AT&T PCS and such Stockholder shall have the
right to reject any offer made by AT&T PCS during such applicable first
negotiation period. Upon the expiration of such applicable first negotiation
period, such Stockholder shall have the right (for the applicable offer period
hereinafter set forth with respect to each applicable first negotiation period),
following the expiration of such applicable first negotiation period, to offer
and sell such shares included in such written notice on such terms and
conditions as shall be acceptable to such Stockholder in its sole discretion.
If any of such shares included in such written notice are not sold pursuant to
the provisions of this Section 4.4 prior to the expiration of the applicable
offer period, such shares shall become subject once again to the provision and
restrictions hereof.
If a Stockholder desires to Transfer shares of Common Stock (a) pursuant to
a Registration of Common Stock under Section 5 in an underwritten offering that
constitutes a bona fide distribution of such Common Stock pursuant to such
Registration, the applicable first negotiation period shall be ten (10) days and
the applicable offer period upon the expiration of such first negotiation period
shall be one hundred twenty (120) days, (b) pursuant to Rule 144, the applicable
first negotiation period shall be three (3) hours (it being understood and
agreed that such Stockholder shall, in addition to giving written notice of such
proposed Transfer by facsimile, use commercially reasonable efforts to contact
AT&T PCS by telephone in accordance with Section 12.1) and the applicable offer
period upon the expiration of such first negotiation period shall be five (5)
business days, and (c) in any single transaction or series of related
transactions to one or more Persons which will result in the Transfer by such
Stockholder (together with any other Stockholder participating in such single
transaction or series of related transactions) of not more than ten percent
(10%) of the Common Stock on a fully diluted basis (excluding for such purposes
the Series A Preferred Stock), the applicable first negotiation period shall be
one (1) business day, so long as notice of such proposed Transfer is given to
AT&T PCS prior to 9:00 A.M. on the day prior to the date of such proposed
Transfer (it being understood and agreed that such Stockholder shall, in
addition to giving written notice of such proposed Transfer by facsimile, use
commercially reasonable efforts to contact AT&T PCS by telephone in accordance
with Section 12.1) and the applicable offer period upon the expiration of such
first negotiation period shall be ten (10) business days.
23
<PAGE>
4.5 Additional Conditions to Permitted Transfers.
--------------------------------------------
(a) As a condition to any Transfer to an Affiliated Successor
permitted pursuant to Section 4.1, or any Transfer pursuant to Section 4.2 or
Section 4.3, each transferee that is not a party hereto shall, prior to such
Transfer, agree in writing to be bound by all of the provisions of this
Agreement applicable to the Stockholders (and shall thereby become a Stockholder
for all purposes of this Agreement). Any Transfer without compliance with such
provisions of this Agreement shall be null and void and such transferee shall
have no rights as a Stockholder of the Company.
(b) Notwithstanding anything to the contrary contained in this
Agreement, each Stockholder agrees that it will not effect a Transfer of shares
of Company Stock to a Prohibited Transferee; provided, however, that nothing
contained in this Section 4.5(b) shall be construed to prohibit a Transfer of
Common Stock by a Stockholder after the IPO Date pursuant to an underwritten
Registration or in accordance with the provisions of Rule 144. It shall be
deemed a breach of this Section 4.5(b) by a Stockholder Beneficially Owning more
than 10% of the Common Stock outstanding if any Prohibited Transferee shall
acquire, directly or indirectly, in a private sale Beneficial Ownership of more
than 33-1/3% of any class of equity securities or equity interest in, such
Stockholder.
(c) Subject to Section 4.2, prior to the IPO Date, the Cash Equity
Investors and AT&T PCS may not Transfer shares of Series C Preferred Stock or
Common Stock to any Person that is not an Affiliated Successor of such
Stockholder or another Cash Equity Investor unless after giving effect to such
Transfer each of such Stockholder and such Person shall after giving effect to
such Transfer Beneficially Own more than the lesser of (x) five percent (5%) of
the Common Stock, and (y) one-half of the Common Stock Beneficially Owned by the
transferor on the date hereof, upon such Transfer unless the Transfer by such
Cash Equity Investor or AT&T PCS is a Transfer of all of the shares of Series C
Preferred Stock or Common Stock, as applicable, Beneficially Owned by it.
Subject to Section 4.2, prior to the IPO Date, no Management Stockholder may
effect more than one (1) Transfer of its shares of Common Stock to a Person that
is not an Affiliated Successor of such Management Stockholder during any twelve
(12) month period.
4.6 Representations and Warranties. A Stockholder purchasing shares
------------------------------
of Company Stock pursuant to Section 4.2 shall be entitled to receive
representations and warranties from the transferring Stockholder that such
Stockholder has the authority (corporate or otherwise) to sell such shares, is
the sole owner of such shares, and has good and valid title to such shares, free
and clear of any and all Liens (other than pursuant to this Agreement, the
Restated Certificate or any Related Agreement), and that the sale of such shares
does not violate any agreement to which it is a party or by which it is bound.
4.7 Stop-Transfer.
-------------
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<PAGE>
(a) The Company agrees not to effect any Transfer of shares of Company
Stock by any Stockholder whose proposed Transfer is subject to Sections 4.2, 4.3
or 4.4 until it has received evidence reasonably satisfactory to it that the
rights provided to any other Stockholders pursuant to such Sections, if
applicable to such Transfer, have been complied with and satisfied in all
respects. If any portion of such Stockholder's Unfunded Commitment shall remain
unpaid on the date of such proposed Transfer, then, as a condition of such
Transfer, such Person purchasing such Company Stock shall, or another Cash
Equity Investor may, execute an instrument in form satisfactory to the Company
agreeing to pay in full such Stockholder's Unfunded Commitment outstanding on
the date of such proposed Transfer, provided, however, that such Stockholder
-------- -------
shall not be released from its obligation in respect of such Unfunded
Commitment. No Transfer of any shares of Preferred Stock and/or Common Stock
shall be made except in compliance with all applicable securities laws. Any
Transfer made in violation of this Agreement shall be null and void.
(b) The Company agrees that it will not, without the prior written
consent of AT&T PCS, Transfer, issue or dispose of any Equity Securities to a
Prohibited Transferee except that purchases of Common Stock by a Prohibited
Transferee in connection with a Registration of Common Stock shall not
constitute a violation of this Section 4.7(b).
5. Registration Rights.
-------------------
(a) Demand Registration Rights.
--------------------------
(i) Right to Demand Registration. From and after the ninety-first
----------------------------
(91st) day following the IPO Date (or such longer period as may be required by
the managing underwriters of the Company's initial public offering) and, subject
to Section 4.1(d), each of (A) AT&T PCS, (B) a Qualified Holder, and (C)
Management Stockholders that in the aggregate Beneficially Own at least 50.1% of
the shares of Common Stock then Beneficially Owned by the Management
Stockholders (each a "Demanding Stockholder" and, collectively, the "Demanding
Stockholders") shall have the right to make a written request to the Company for
registration with the Commission, under and in accordance with the provisions of
the Securities Act, of all or part of their Registrable Securities pursuant to
an underwritten offering (a "Demand Registration"), which request shall specify
the number of Registrable Securities proposed to be s old by each Demanding
Stockholder; provided, however, that (x) the Company need not effect a Demand
--------- -------
Registration unless the sale of the Registrable Securities proposed to be sold
by the Demanding Stockholder shall reasonably be expected to result in aggregate
gross proceeds to such Demanding Stockholder of at least $10 million, and (y)
if the Board of Directors determines that a Demand Registration would interfere
with any pending or contemplated material acquisition, disposition, financing or
other material transaction, the Company may defer a Demand Registration
(including by withdrawing any Registration Statement filed in connection with a
Demand Registration); so long as that the aggregate of all such deferrals shall
not exceed one hundred twenty (120) days in any 360-day period. Demand
Registration shall not be deemed a Demand
25
<PAGE>
Registration hereunder until such Demand Registration has been declared
effective by the Commission (without interference by any stop order, injunction
or other order or requirement of the Commission or other governmental agency,
for any reason), and maintained continuously effective for a period of at least
three (3) months or such shorter period when all Registrable Securities included
therein have been sold in accordance with such Demand Registration; provided,
--------
however, that a Qualified Holder may, not more frequently than once in any
- -------
twelve (12) month period, request that the Demand Registration be a shelf
registration that is maintained continuously effective for a period of at least
six (6) months or such shorter period when all Registrable Securities included
therein have been sold in accordance with such Demand Registration. A Demanding
Stockholder may make a written request for a Demand Registration in accordance
with the foregoing in respect of Equity Securities that it intends to convert
into shares of Common Stock upon the effectiveness of the Registration Statement
prepared in connection with such demand, and the Company shall fulfill its
obligations under this Section 5 in a manner that permits such Demanding
Stockholder to exercise its conversion rights in respect of such Equity
Securities and substantially contemporaneously sell the shares of Common Stock
issuable upon such conversion under such Registration Statement.
The Company will not be obligated to effect more than two (2) separate
Demand Registrations during any twelve (12) month period; provided, however,
-------- -------
that only one (1) request for a Demand Registration may be exercised by AT&T PCS
and/or Management Stockholders that in the aggregate Beneficially Own at least
50.1% of the shares of Common Stock then Beneficially Owned by the Management
Stockholders during any twelve (12) month period.
Within ten (10) days after receipt of the request for a Demand
Registration, the Company will send written notice (the "Demand Notice") of such
Registration request and its intention to comply therewith to all Stockholders
who are holders of Registrable Securities and, subject to Section 5(a)(ii), the
Company will include in such Demand Registration all Registrable Securities of
such Stockholders with respect to which the Company has received written
requests for inclusion therein within twenty (20) days after the last date such
Demand Notice was deemed to have been given pursuant to Section 12.1.
(ii) Priority on Demand Registration. If the managing
-------------------------------
underwriter or underwriters advise the Company and the holders of the
Registrable Securities to be registered in writing that in its or their opinion
that, the number of Registrable Securities proposed to be sold in such
Registration and any other securities of the Company requested or proposed to be
included in such Registration exceeds the number that can be sold in such
offering without (A) creating a substantial risk that the proceeds or price per
share that will be derived from such Registration will be reduced or that the
number of Registrable Securities to be registered is too large a number to be
reasonably sold, or (B) materially and adversely affecting such Registration in
any other respect, the Company will (x) include in such Registration the
aggregate number of Registrable Securities recommended by the managing
underwriter (the number of Registrable Securities to be registered for each
Stockholder to be reduced pro rata based on the amount of Registrable Securities
--- ----
each of the Stockholders requested to be included
26
<PAGE>
in such Registration), and (y) not allow any securities s other than Registrable
Securities to be included in such Registration unless all Registrable Securities
requested to be included shall have been included therein, and then only to the
extent recommended by the managing underwriter or determined by the Company
after consultation with an investment banker of nationally recognized standing
(notification of which number shall be given by the Company to the holders of
Registrable Securities).
(iii) Selection of Underwriters. The offering of such Registrable
-------------------------
Securities pursuant to such Demand Registration shall be in the form of an
underwritten offering. The Demanding Stockholder that initiated such Demand
Registration will select a managing underwriter or underwriters of recognized
national standing to administer the offering, which managing underwriter or
underwriters shall be reasonably acceptable to the Company.
(b) Piggyback Registration Rights.
-----------------------------
(i) Right to Piggyback. If the Company proposes to register
------------------
any shares of Common Stock (or securities convertible into or exchangeable for
Common Stock) with the Commission under the Securities Act (other than a
Registration on Form S-4 or Form S-8, or any successor forms), and the
Registration form to be used may be used for the Registration of the Registrable
Securities (a "Piggyback Registration"), the Company will give written notice (a
"Piggyback Notice") to all Stockholders, at least thirty (30) days prior to the
anticipated filing date, of its intention to effect such a Registration, which
notice will specify the proposed offering price (if determined at that time),
the kind and number of securities proposed to be registered, the distribution
arrangements and will, subject to Section 5(b)(ii), include in such Piggyback
Registration all Registrable Securities with respect to which the Company has
received written requests (which requests have not been withdrawn) for inclusion
therein within twenty (20) days after the last date such Piggyback Notice was
deemed to have been given pursuant to Section 12.1. If at any time after giving
the Piggyback Notice and prior to the effective date of the Registration
Statement filed in connection with such Registration, the Company determines for
any reason not to register or to delay Registration, the Company may, at its
election, give written notice of such determination to each holder of
Registrable Securities that has requested inclusion of Registrable Securities in
such Registration and (A) in the case of a determination not to register, shall
be relieved of its obligation to register any Registrable Securities in
connection with such Registration, and (B) in the case of a determination to
delay registering, shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering such other
securities.
(ii) Priority on Piggyback Registrations. If the managing
-----------------------------------
underwriter or underwriters, if any, advise the Company and the holders of
Registrable Securities in writing that in its or their opinion, that the number
or kind of securities proposed to be sold in such Registration (including
Registrable Securities to be included pursuant to Section 5(b)(i)) exceeds the
number that can be sold in such offering without (A) creating a substantial risk
that
27
<PAGE>
the proceeds or price per share the Company will derive from such Registration
will be reduced, or that the number of shares to be registered is too large a
number to be reasonably sold or (B) materially and adversely affecting such
Registration in any other respect, without any reduction in the amount of
securities the Company proposes to issue and sell for its own account or in the
amount of securities any other security holder proposes to sell for its own
account pursuant to a demand Registration right, the number of Registrable
Securities to be registered for each Demanding Stockholder shall be reduced pro
---
rata based on the amount of Registrable Securities ea each of the Demanding
- ----
Stockholders requested to be included in such Registration, to the extent
necessary to reduce the number of Registrable Securities to be registered to the
number recommended by the managing underwriter or determined by the Company
after consultation with an investment banker of nationally recognized standing
(notification of which number shall be given by the Company to the holders of
Registrable Securities of such determination).
(c) Selection of Underwriters. Except as set forth in Section
-------------------------
5.1(a)(iii), the Company (by action of the Board of Directors) will select a
managing underwriter or underwriters to administer the offering, which managing
underwriter or underwriters will be of nationally recognized standing.
(d) Registration Procedures. With respect to any Demand Registration
-----------------------
or Piggyback Registration (each, a "Registration"), the Company shall, subject
to Sections 5(a)(i) and (5)(a)(ii) and Sections 5(b)(i) and 5(b)(ii), as
expeditiously as practicable:
(i) prepare and file with the Commission, as promptly as
reasonably practicable (but in no event more than forty-five (45) days) after
the receipt of the Registration requests under Sections 5(a) or 5(b), a
registration statement or registration statements (each, a "Registration
Statement") relating to the applicable Registration on any appropriate form
under the Securities Act, which form shall be available for the sale of the
Registrable Securities in accordance with the intended method or methods of
distribution thereof; cooperate and assist in any filings required to be made
with the NASD; and use its reasonable best efforts to cause such Registration
Statement to become and (to the extent provided herein) remain effective;
provided, however, that before filing a Registration Statement or prospectus
- -------- -------
related thereto (a "Prospectus") or any amendments or supplements thereto, the
Company shall furnish to the holders of the Registrable Securities covered by
such Registration Statement and the underwriters, if any, copies of all such
documents proposed to be filed, which documents will be subject to the
reasonable review of such holders and underwriters and their respective counsel,
and the Company shall not file any Registration Statement or amendment thereto
or any Prospectus or any supplement thereto to which the holders of a majority
of the Registrable Securities covered by such Registration Statement or the
underwriters, if any, shall reasonably object;
(ii) prepare and file with the Commission such amendments and
supplements to the Registration Statement as may be necessary to keep each
Registration Statement effective for three (3) months (six (6) months in the
case of any shelf registration
28
<PAGE>
requested by a Qualified Holder pursuant to this Section 5) or such shorter
period that will terminate when all Registrable Securities covered by such
Registration Statement have been sold; cause each Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act; and comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set forth in
such Registration Statement or supplement to the Prospectus;
(ii) promptly notify the selling holders of Registrable
Securities and the managing underwriters, if any (and, if requested by any such
person or entity, confirm such advice in writing), (A) when the Prospectus or
any Prospectus supplement or post-effective amendment has been filed, and, with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective; (B) of any request by the Commission for amendments
or supplements to the Registration Statement or the Prospectus or for additional
information; (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose; (D) if at any time the representations and
warranties of the Company contemplated by subsection (xiv) of this subsection
(d) below cease to be true and correct; (E) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; and (F) of the happening of any event which makes any statement made in
the Registration Statement, the Prospectus or any document incorporated therein
by reference untrue or which requires the making of any changes in the
Registration Statement, the Prospectus or any document incorporated therein by
reference in order to make the statements therein not misleading;
(iv) use its reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of (I) the Registration Statement, or
(II) the qualification of the Registrable Securities for sale under the
securities or blue sky laws of any jurisdiction at the earliest possible time;
(v) if requested by the managing underwriter or underwriters or
a holder of Registrable Securities being sold in connection with an underwritten
offering, promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters and the holders of a
majority of the Registrable Securities being sold agree should be included
therein relating to the plan of distribution with respect to such Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being sold to such underwriters, the purchase
price being paid therefor by such underwriters and any other terms of the
underwritten (or best efforts underwritten) offering of the Registrable
Securities to be sold in such offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
29
<PAGE>
(vi) furnish to each selling holder of Registrable Securities
and each managing underwriter, without charge, at least one signed copy of the
Registration Statement and any amendment thereto, including financial statements
and schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(vii) deliver to each selling holder of Registrable Securities
and the underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such selling holder of Registrable Securities underwriters may reasonably
request in order to facilitate the public sale or other disposition of the
securities owned by such selling holder;
(viii) prior to any public offering of Registrable Securities,
use its reasonable best efforts to register or qualify or cooperate with the
selling holders of Registrable Securities, the underwriters, if any, and their
respective counsel in connection with the Registration or qualification of such
Registrable Securities for offer and sale under the securities or "blue sky"
laws of such jurisdictions in the United States as any seller or underwriter
reasonably requests in writing, use its reasonable best efforts to obtain all
appropriate registrations, permits and consents required in connection
therewith, and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided, however, that the
-------- -------
Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject it to taxation or general service of process in any such jurisdiction
where it is not then so subject;
(ix) cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and not bearing any restrictive legends and to be in such denominations
and registered in such names as the managing underwriters may request at least
two (2) business days prior to any sale of Registrable Securities to the
underwriters;
(x) use its reasonable best efforts to cooperate with any
selling holder to cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary to
enable the seller or sellers thereof or the underwriters, if any, to consummate
the disposition of such Registrable Securities;
(xi) upon the occurrence of any event contemplated by
subsection (iii)(F) above, promptly prepare a supplement or post-effective
amendment to the Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of
30
<PAGE>
the Registrable Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(xii) cause all Registrable Securities covered by any
Registration Statement to be listed on each securities exchange on which similar
securities issued by the Company are then listed, or, if not so listed, cause
such Registrable Securities to be authorized for trading on the NASDAQ National
Market System if any similar securities issued by the Company are then so
authorized, if requested by the holders of a majority of such Registrable
Securities or the managing underwriters, if any;
(xiii) not later than the effective date of the applicable
Registration, provide a CUSIP number for all Registrable Securities;
(xiv) enter into such customary agreements (including in the
case of a Demand Registration that is an underwritten offering, an underwriting
agreement in customary form) and take all such other actions reasonably required
in connection therewith in order to expedite or facilitate the disposition of
such Registrable Securities and in such connection, whether or not an
underwriting agreement is entered into and whether or not the Registration is an
underwritten Registration, (A) make such representations and warranties to the
holders of such Registrable Securities and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters in
primary underwritten offerings; (B) use reasonable best efforts to obtain
opinions of counsel to the Company and updates thereof (which opinions of
counsel shall be in form, scope and substance reasonably satisfactory to the
managing underwriters, if any, and to the holders of a majority of the
Registrable Securities being sold), addressed to each selling holder and the
underwriters, if any, covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be reasonably
requested by such holders and underwriters; (C) use reasonable best efforts to
obtain "cold comfort" letters and updates thereof from the Company's independent
certified public accountants addressed to the selling holders of Registrable
Securities and the underwriters, if any, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort" letters
by underwriters in connection with primary underwritten offerings; and (D)
deliver such documents and certificates as may be reasonably requested by the
holders of a majority of the Registrable Securities being sold and the managing
underwriters, if any, to evidence compliance with subsection (xi) above and with
any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company. All the above in this Section 5(d)(xiv)
shall be done at each closing under each underwriting or similar agreement or as
and to the extent required thereunder;
(xv) make available for inspection by a representative of each
Demanding Stockholder, any underwriter participating in any disposition pursuant
to such Registration, and any attorney or accountant retained by the sellers or
underwriter, copies or extracts of all financial and other records, pertinent
corporate documents and properties of the Company as shall be reasonably
necessary, in the opinion of the holders' or underwriter's
31
<PAGE>
counsel, to enable them to fulfill their due diligence responsibilities; and
cause the Company's officers, directors and employees to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with such Registration Statement; provided, however,
-------- -------
that the Company shall not be required to comply with this paragraph (xv) unless
such person executes confidentiality agreements whereby such person agrees that
any records, information or documents that are designated by the Company in
writing as confidential shall be kept confidential by such Persons and used only
in connection with the proposed Registration unless disclosure of such records,
information or documents is required by court or administrative order or any
regulatory body having jurisdiction; and each seller of Registrable Securities
agrees that it will, upon learning that disclosure of such records, information
or documents is sought in a court of competent jurisdiction or by a governmental
agency, give notice to the Company and allow the Company, at the Company's
expense, to undertake appropriate action to prevent disclosure of any records,
information or documents deemed confidential; provided further, however,
-------- ------- -------
notwithstanding any designation of confidentiality by the Company, confidential
information shall not include information which (i) becomes generally available
to the public other than as a result of a disclosure by or on behalf of any such
Person, or (ii) becomes available to any such Person on a non-confidential basis
from a source other than the Company or its advisors, provided that such source
is not to such Person's knowledge bound by a confidentiality agreement with or
other obligations of secrecy to the Company or another party with respect to
such information;
(xvi) otherwise use its reasonable best efforts to comply
with all applicable rules and regulations of the Commission, and make generally
available to its security holders, earnings statements satisfying the provisions
of Section 11(a) of the Securities Act, no later than forty-five (45) days after
the end of any twelve (12)-month period (or ninety (90) days, if such period is
a fiscal year) (A) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm or best efforts
underwritten offering, or (B) if not sold to underwriters in such an offering,
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the Registration Statement, which statements shall
cover said twelve (12)-month periods; and
(xvii) promptly prior to the filing of any document that is to
be incorporated by reference into any Registration Statement or Prospectus
(after initial filing of the Registration Statement), provide copies of such
document to counsel to the selling holders of Registrable Securities and to the
managing underwriters, if any, make the Company's executive officers and other
representatives available for discussion of such document and make such changes
in such document prior to the filing thereof as counsel for such selling holders
or underwriters may reasonably request.
The Company may require each seller of Registrable Securities as to which
any Registration is being effected to furnish to the Company such information
regarding the proposed distribution of such securities as the Company may from
time to time reasonably request in writing. Each holder of Registrable
Securities agrees by acquisition of such Registrable
32
<PAGE>
Securities that, upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 5(d)(xi), such holder shall forthwith
discontinue disposition of Registrable Securities until such holder's receipt of
the copies of the supplemented or amended prospectus contemplated by Section
5(d)(xi), or until it is advised in writing (the "Advice") by the Company that
the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference in the
Prospectus; and, if so directed by the Company, such holder shall deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such seller's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company gives any such notice, the time periods regarding the maintenance of the
effectiveness of any Registration Statement in Sections 5(d)(ii) shall be
extended by the number of days during the period from and including the date of
the receipt of such notice pursuant to Section 5(d)(iii)(F) hereof to and
including the date when each seller of Registrable Securities covered by such
Registration Statement shall have received the copies of the supplemented or
amended prospectuses contemplated by Section 5(d)(xi) or the Advice.
(e) Indemnification.
---------------
(i) In the event of the Registration or qualification of any
Registrable Securities under the Securities Act or any other applicable
securities laws pursuant to the provisions of this Section 5, the Company agrees
to indemnify and hold harmless each Stockholder thereby offering such
Registrable Securities for sale (an "Indemnified Stockholder"), underwriter,
broker or dealer, if any, of such Registrable Securities, and each other person,
if any, who controls any such Indemnified Stockholder, underwriter, broker or
dealer within the meaning of the Securities Act or any other applicable
securities laws, from and against any and all losses, claims, damages, expenses
or liabilities (or actions in respect thereof), joint or several, to which such
Indemnified Stockholder, underwriter, broker or dealer or controlling person may
become subject under the Securities Act or any other applicable federal or state
securities laws or otherwise, insofar as such losses, claims, damages, expenses
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in any Registration Statement under which such Registrable Securities were
registered or qualified under the Securities Act or any other applicable
securities laws, any preliminary prospectus or final prospectus relating to such
Registrable Securities, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or any violation by the Company of any rule or regulation under
the Securities Act or any other applicable federal or state securities laws
applicable to the Company or relating to any action or inaction required by the
Company in connection with any such Registration or qualification, and will
reimburse each such Indemnified Stockholder, underwriter, broker or dealer and
each such controlling person for any legal or other expenses reasonably incurred
by such Indemnified Stockholder, underwriter, broker or dealer or controlling
person in connection with investigating or defending any such loss, claim,
damage, expense, liability or action; provided, however, that the Company will
-------- ------
not be liable in any such
33
<PAGE>
case to the extent that any such loss, claim, damage, expense or liability
arises out of or is based upon an untrue statement or omission contained in such
Registration Statement, such preliminary prospectus, such final prospectus or
such amendment or supplement thereto, made in reliance upon and in conformity
with written information furnished to the Company by such Indemnified
Stockholder, underwriter, broker, dealer or controlling person specifically and
expressly for use in the preparation thereof or by the failure of such
Indemnified Stockholder, underwriter, broker or dealer, or controlling person to
deliver a copy of the Registration Statement, such preliminary prospectus, such
final prospectus or such amendment or supplement thereto after the Company has
furnished such party with a sufficient number of copies of the same and such
party failed to deliver or otherwise provide a copy of the final prospectus to
the person asserting an untrue statement or omission or alleged untrue statement
or omission at or prior to the written confirmation of the sale of securities to
such person, if such statement or omission was in fact corrected in such final
prospectus.
(ii) In the case of an underwritten offering in which the
Registration Statement covers Registrable Securities, the Company agrees to
enter into an underwriting agreement in customary form and substance with such
underwriters and to indemnify the underwriters, their officers and directors, if
any, and each person, if any, who controls such underwriters within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act, to the
same extent as provided in the preceding paragraph with respect to the
indemnification of the holders of Registrable Securities; provided, however, the
-------- -------
Company shall not be required to indemnify any such underwriter, or any officer
or director of such underwriter or any person who controls such underwriter
within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act, to the extent that the loss, claim, damage, expense or liability
(or actions in respect thereof) for which indemnification is sought results from
such underwriter's failure to deliver or otherwise provide a copy of the final
prospectus to the person asserting an untrue statement or omission or alleged
untrue statement or omission at or prior to the written confirmation of the sale
of securities to such person, if such statement or omission was in fact
corrected in such final prospectus.
(iii) In the event of the Registration or qualification of any
Registrable Securities of the Stockholders under the Securities Act or any other
applicable federal or state securities laws for sale pursuant to the provisions
hereof, each Indemnified Stockholder agrees severally, and not jointly, to
indemnify and hold harmless the Company, each person who controls the Company
within the meaning of the Securities Act, and each officer and director of the
Company from and against any losses, claims, damages, expenses or liabilities
(or actions in respect thereof), joint or several, to which the Company, such
controlling person or any such officer or director may become subject under the
Securities Act or any other applicable securities laws or otherwise, insofar as
such losses, claims, damages, expenses or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement of any material
fact contained in any Registration Statement under which such Registrable
Securities were registered or qualified under the Securities Act or any other
applicable securities laws, any preliminary prospectus or final prospectus
relating to such Registrable Securities, or any amendment or
34
<PAGE>
supplement thereto, or arise out of or are based upon an untrue statement
therein or the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, which untrue
statement or omission was made therein in reliance upon and in conformity with
written information furnished to the Company by such Indemnified Stockholder
specifically and expressly for use in connection with the preparation thereof,
and will reimburse the Company, such controlling person and each such officer or
director for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
expense, liability or action; provided, however, an Indemnified Stockholder's
-------- ------
liability under this Section 5(e)(iii) shall not exceed the net proceeds
received by such Indemnified Stockholder with respect to the sale of any
Registrable Securities.
(iv) In the case of an underwritten offering of Registrable
Securities, each holder of a Registrable Security included in a Registration
Statement shall agree to enter into an underwriting agreement in customary form
and substance with such underwriters, and to indemnify such underwriters, their
officers and directors, if any, and each person, if any, who controls such
underwriters within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act, to the same extent as provided in the preceding
paragraph with respect to indemnification by such holder of the Company, but
subject to the same limitation as provided in Section 5(e)(ii) with respect to
indemnification by the Company of such underwriters, officers, directors and
control persons.
(v) Promptly after receipt by a person entitled to
indemnification under this Section 5(e) (an "Indemnified Party") of notice of
the commencement of any action or claim relating to any Registration Statement
filed under this Section 5 as to which indemnity may be sought hereunder, such
Indemnified Party will, if a claim for indemnification hereunder in respect
thereof is to be made against any other party hereto (an "Indemnifying Party"),
give written notice to each such Indemnifying Party of the commencement of such
action or claim, but the omission to so notify each such Indemnifying Party will
not relieve any such Indemnifying Party from any liability which it may have to
any Indemnified Party otherwise than pursuant to the provisions of this Section
5(e) and shall also not relieve any such Indemnifying Party of its obligations
under this Section 5(e) except to the extent that any such Indemnifying Party is
actually prejudiced thereby. In case any such action is brought against an
Indemnified Party, and such Indemnified Party notifies an Indemnifying Party of
the commencement thereof, such Indemnifying Party will be entitled (at its own
expense) to participate in and, to the extent that it may wish, jointly with any
other Indemnifying Party similarly notified, to assume the defense, with counsel
reasonably satisfactory to such Indemnified Party, of such action and/or to
settle such action and, after notice from the Indemnifying Party to such
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party will not be liable to such Indemnified Party for any legal or
other expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof, other than the reasonable cost of investigation;
provided, however, that no Indemnifying Party shall consent to the entry of any
- -------- ------
judgment or enter into any settlement agreement without the prior written
consent of the Indemnified Party unless such Indemnified Party is fully released
and
35
<PAGE>
discharged from any such liability, and no Indemnified Party shall consent
to the entry of any judgment or enter into any settlement of any such action the
defense of which has been assumed by an Indemnifying Party without the consent
of each Indemnifying Party. Notwithstanding the foregoing, the Indemnified Party
shall have the right to employ its own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
unless (a) the employment of such counsel shall have been authorized in writing
by the Indemnifying Party in connection with the defense of such suit, action,
claim or proceeding; (b) the Indemnifying Party shall not have employed counsel
(reasonably satisfactory to the Indemnified Party) to take charge of the defense
of such action, suit, claim or proceeding; or (c) such Indemnified Party shall
have reasonably concluded, based upon the advice of counsel, that there may be
defenses available to it which are different from or additional to those
available to the Indemnifying Party which, if the Indemnifying Party and the
Indemnified Party were to be represented by the same counsel, could result in a
conflict of interest for such counsel or materially prejudice the prosecution of
the defenses available to such Indemnified Party. If any of the events specified
in clauses (a), (b) or (c) of the preceding sentence shall have occurred or
shall otherwise be applicable, then the fees and expenses of one counsel or firm
of counsel selected by a majority in interest of the indemnified parties (and
reasonably acceptable to the Indemnifying Party) shall be borne by the
Indemnifying Party. If, in any such case, the Indemnified Party employs separate
counsel, the Indemnifying Party shall not have the right to direct the defense
of such action, suit, claim or proceeding on behalf of the Indemnified Party and
the Indemnified Party shall assume such defense and/or settle such action;
provided, however, that an Indemnifying Party shall not be liable for the
- -------- ------
settlement of any action, suit, claim or proceeding effected without its prior
written consent, which consent shall not be unreasonably withheld.
The provisions of this Section 5(e) shall be in addition to any
liability which any party may have to any other party and shall survive any
termination of this Agreement.
(f) Contribution. If for any reason the indemnification provided for
------------
in Section 5(e)(i) or 5(e)(iii) is unavailable to an Indemnified Party as
contemplated therein, then the Indemnifying Party, in lieu of indemnification
shall contribute to the amount paid or payable by the Indemnified Party as a
result of such loss, claim, damage, expense or liability (or action in respect
thereof) in such proportion as is appropriate to reflect not only the relative
benefits received by the Indemnified Party and the Indemnifying Party, but also
the relative fault of the Indemnified Party and the Indemnifying Party, as well
as any other relevant equitable considerations, provided that no Stockholder
shall be required to contribute in an amount greater than the difference between
the net proceeds received by such Stockholder with respect to the sale of any
Registrable Securities and all amounts already contributed by such Stockholder
with respect to such claims, including amounts paid for any legal or other fees
or expenses incurred by such Stockholder. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of any such
fraudulent misrepresentation. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in
36
<PAGE>
question, including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been made by, or
relates to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action.
(g) Registration Expenses. Except as hereinafter provided, all
---------------------
expenses incident to the Company's performance of or compliance with this
Section 5 will be borne by the Company, including, without limitation, all
Registration and filing fees under the Securities Act and the Exchange Act, the
fees and expenses of the counsel and accountants for the Company (including the
expenses of any "cold comfort" letters and special audits required by or
incident to the performance of such persons), all other costs and expenses of
the Company incident to the preparation, printing and filing under the
Securities Act of the Registration Statement (and all amendments and supplements
thereto), and furnishing copies thereof and of the Prospectus included therein,
all out-of-pocket expenses of underwriters customarily paid for by issuers to
the extent provided for in any underwriting agreement, the costs and expenses
incurred by the Company in connection with the qualification of the Registrable
Securities under the state securities or "blue sky" laws of various
jurisdictions, the costs and expenses associated with filings required to be
made with the NASD, the costs and expenses of listing the Registrable Securities
for trading on a national securities exchange or authorizing them for trading on
NASDAQ and all other costs and expenses incurred by the Company in connection
with any Registration hereunder. In addition, the Company shall pay or
reimburse the sellers of Registrable Securities the reasonable fees and expenses
of one attorney to such sellers incurred in connection with a registration
(collectively, with the expenses referred to in the immediately preceding
sentence, the "Registration Expenses"). Except as provided in the immediately
preceding sentence, each Stockholder shall bear the costs and expenses of any
underwriters' discounts and commissions, brokerage fees or transfer taxes
relating to the Registrable Securities sold by such Stockholder and the fees and
expenses of any attorneys, accountants or other representatives retained by the
Stockholder.
(h) Participation in Underwritten Registrations. No Stockholder may
-------------------------------------------
participate in any underwritten Registration hereunder unless such Stockholder
(i) agrees to sell its Registrable Securities on the basis provided in any
customary and reasonable underwriting arrangements approved by the persons
entitled hereunder to select the underwriter, and (ii) accurately completes in a
timely manner and executes all questionnaires, powers of attorney, underwriting
agreements, indemnities and other documents customarily required under the terms
of such underwriting arrangements.
(i) Holdback Agreements.
-------------------
(i) Each holder of Registrable Securities whose securities are
included in a Registration Statement agrees not to effect any public sale or
distribution of the issue being registered or a similar security of the Company,
or any securities convertible into or exchangeable or exercisable for such
securities, including a sale pursuant to Rule 144 or Rule
37
<PAGE>
144A under the Securities Act, during the fifteen (15) days prior to, and during
the ninety (90)-day period (or such longer period as requested by the managing
underwriter or underwriters in the case of an underwritten public offering)
beginning on, the effective date of such Registration Statement (except as part
of such Registration), if and to the extent requested by the managing
underwriter or underwriters in an underwritten public offering.
(ii) The Company agrees not to effect any public sale or
distribution of the issue being registered or a similar security of the Company,
or any securities convertible into or exchangeable or exercisable for such
securities (other than any such sale or distribution of such securities in
connection with any merger or consolidation by the Company or any Subsidiary or
the acquisition by the Company or any Subsidiary of the capital stock or
substantially all of the assets of any other Person), during the fifteen (15)
days prior to, and during the ninety (90)-day period beginning on, the effective
date of each Demand Registration.
(j) Public Information Reporting. The Company hereby covenants and
----------------------------
agrees to and with the Stockholders that at all times following the IPO Date it
shall provide and file such financial and other information concerning the
Company as may from time to time be required by the Commission and any other
governmental authority having jurisdiction, so as to comply with all reporting
requirements under the Exchange Act, and shall, upon request, state in writing
that it has complied with all such requirements, and further agrees that, for so
long as (following the IPO Date) the Company is not subject to Section 13 or
15(d) of the Exchange Act, the Company shall comply in all respects with
paragraph (c)(2) of Rule 144.
6. Disqualifying Transactions.
--------------------------
6.1 Company Conversion Rights. In the event AT&T PCS terminates its
-------------------------
obligations under Section 8.6 pursuant to Section 8.8(c) with respect to any
Overlap Territory, the Company shall have the following rights which may be
exercised by the Company in its sole discretion during the sixty (60) day period
commencing on the date of such termination:
(a) (i) The Company shall have the right in accordance with
the Restated Certificate to cause AT&T PCS and such Section 4.8 Transferee (as
defined in the Restated Certificate) to exchange either (A) all, or (B) a
proportionate number of shares of Series A Preferred Stock then owned by AT&T
PCS and each Section 4.8 Transferee equal to a fraction, the numerator of which
is the number of POPS in the Overlap Territory and the denominator of which is
the total number of POPS in the Territory, of the shares of Series A Preferred
Stock then owned by AT&T PCS and each Section 4.8 Transferee for an equivalent
number of shares of Series B Preferred Stock determined in accordance with the
Restated Certificate; and
(ii) The Company shall have the right in accordance with the
Restated Certificate to cause AT&T PCS and each Section 4.8 Transferee to
exchange either (A) all or (B) a proportionate number equal to a fraction, the
numerator of which is the number of
38
<PAGE>
POPs in the Overlap Territory, and the denominator of which is the total number
of POPs in the Territory, of the shares of Series D Preferred Stock owned by
AT&T PCS on the date hereof (or Series C Preferred Stock or Common Stock into
which such shares shall have been converted) and that AT&T PCS continues to own
on the date such right is exercised by the Company for that number of shares of
Series B Preferred Stock as shall be equal to the aggregate purchase price paid
by AT&T PCS for all of such shares of Series D Preferred Stock, Series C
Preferred Stock or Common Stock that AT&T PCS or such Section 4.8 Transferee
then owns (including any Series C Preferred Stock or Common Stock into which
such Series D Preferred Stock shall have been converted) divided by the
liquidation preference of the Series B Preferred Stock determined in accordance
with the Restated Certificate;
provided, however, that (x) if the Company exercises its right under clause
- -------- -------
(i)(A) of this Section 6.1(a) it shall be required to exercise its right under
clause (ii)(A) of this Section 6.1(a), and vice versa; and if the Company
exercises its right under clause (i)(B) of the Section 6.1(a) it shall be
required to exercise its right under clause (ii)(B) of this Section 6.1(a) and
vice versa, and (y) the provisions of this Section 6.1(a) shall not apply to any
Section 4.8 Transferee which is a Cash Equity Investor.
(b) The Company may redeem the shares of Series B Preferred Stock
at any time as provided in the Restated Certificate.
6.2 Joint Marketing Right. During the period commencing on the date
---------------------
of announcement by AT&T PCS of a transaction meeting the description of a
transaction set forth in clauses (a), (b) and (c) of the definition of a
Disqualifying Transaction (unless AT&T PCS notifies the Company it has waived
its right to declare such transaction a Disqualifying Transaction in which
event, this Section 6.2 shall not be applicable to such transaction) and
terminating on the later of (x) six (6) months after the date of consummation of
such transaction, and (y) if applicable, the date by which AT&T PCS is required
under applicable law to dispose of any PCS System or Cellular System serving a
Subject Market (the "Section 6.2 Period"), the following provisions shall apply:
(a) If AT&T PCS proposes to sell, transfer or assign to any
Person which is not an Affiliate of AT&T PCS any Subject Market, AT&T PCS shall
give written notice (the "Company Sale Notice") to the Company and the Company
shall have the right, exercisable by written notice given within ten (10) days
of receipt of the Company Sale Notice, to elect to cause AT&T PCS to offer for
sale jointly with the Company for a period of one hundred eighty (180) days the
Subject Markets covered by the Company Sale Notice together with all of the
Territory included in the MTA that includes the Subject Markets (the "Joint
Marketing Period"). In the event that AT&T PCS has granted similar rights to the
rights set forth in this Section 6.2 to any Permitted Merger Participant and any
Subject Market is also a "Subject Market" under the terms of any agreement
between AT&T PCS and any such Permitted Merger Participant, the Company agrees
that any territory of the Permitted Merger Participant that is required under
the terms of such agreement to be offered for sale jointly with any Subject
39
<PAGE>
Markets shall be offered for sale jointly with such Subject Markets and all of
the Territory included in the MTA that includes such Subject Markets. During
the Joint Marketing Period, AT&T PCS shall not sell the Subject Markets other
than in a transaction that includes the Subject Markets and the Territory
included in the MTA that includes the Subject Markets, provided, however, that
-------- -------
neither AT&T PCS nor the Company shall be obligated to enter into a transaction
for such Subject Markets and such Territory other than on terms acceptable to
each of them in their sole discretion. This Section 6.2 shall cease to apply to
any Subject Market upon the earlier of (x) if the Company fails to make the
joint marketing election with respect to the applicable Subject Market within
the ten (10) day period referred to above, the expiration of such ten (10) day
period, or (y) if the Company makes the joint marketing election with respect to
the applicable Subject Market, upon the expiration of the Joint Marketing
Period.
(b) Nothing contained in this Section 6.2 shall (x) be construed
to require AT&T PCS to deliver a Company Sale Notice with respect to any Subject
Market except during the Section 6.2 Period, (y) extend the obligation of AT&T
PCS set forth in this Section 6.2 beyond the expiration of the Section 6.2
Period or (z) apply to any sale, transfer or assignment of any Subject Market
pursuant to an agreement executed on any date not within the Section 6.2 Period.
(c) Nothing in this Agreement shall be construed to require AT&T
PCS to deliver the notice described in clause (d) of the definition of a
Disqualifying Transaction, including, without limitation, circumstances in which
AT&T PCS or its Affiliates enters into any transaction meeting the description
of a transaction set forth in clauses (a), (b) and (c) of the definition of a
Disqualifying Transaction.
7. Additional Rights and Covenants.
-------------------------------
7.1 Financial Statements. The Company shall provide to each
--------------------
Stockholder (a) within seventy-five (75) days after the end of each fiscal
quarter (other than the fourth fiscal quarter) or such shorter periods as is
required pursuant to the terms of the Company's senior indebtedness, the
unaudited consolidated balance sheet of the Company and its Subsidiaries as at
the end of such period and the related unaudited consolidated statements of
income, surplus and cash flows for such period and year-to-date and (b) within
one hundred twenty (120) days after the end of each fiscal year, the audited
consolidated balance sheet of the Company and its Subsidiaries as at the end of
such year and the related unaudited consolidated statements of income, surplus
and cash flows for such year. All financial statements and information provided
pursuant to this Section 7.1 shall constitute Confidential Information under
Section 7.7.
7.2 Purchase Right.
--------------
(a) If on or prior to the IPO Date the Company proposes to
offer, issue, sell or otherwise dispose of shares of any class or series of
common stock or preferred stock, or options, rights, warrants, conversion rights
or appreciation rights relating thereto, or any other
40
<PAGE>
type of equity security (collectively, "Equity Securities") of the Company for
cash to any Person, including pursuant to an initial public offering, (x) the
Company shall, prior to any such offer, issuance, sale or other disposition,
give written notice (an "Issuance Notice") to each of the Stockholders setting
forth the purchase price of such Equity Securities (or, in the case of an
initial public offering, the anticipated price range), the type and aggregate
number of Equity Securities or rights to acquire Equity Securities to be so
offered, issued, sold or otherwise disposed of, the terms and conditions of such
offer, issuance, sale or other disposition, and the rights, powers and duties
inhering in such additional Equity Securities or rights to acquire Equity
Securities, and (y) each Stockholder shall have the right (the "Purchase Right")
to acquire the percentage of Equity Securities proposed to be offered, issued,
sold or otherwise disposed of equal to the number of shares of Common Stock then
Beneficially Owned by such Stockholder divided by the aggregate number of shares
of Common Stock outstanding immediately prior to such offer, issuance, sale or
other disposition of Equity Securities (including any shares of Common Stock
Beneficially Owned by such Stockholder); provided, however, that the terms and
-------- -------
conditions of this Section 7.2 shall not apply to any offer, issuance, sale or
other disposition of Equity Securities or rights to acquire Equity Securities to
any Person pursuant to a stock option or stock appreciation rights plan
established by the Company for the benefit of its employees, officers,
directors, agents or consultants, or otherwise granted to an employee of the
Company in connection with such person's employment by the Company.
(b) Each Stockholder may exercise such Purchase Right, in whole or in
part, on the terms and conditions and for the purchase price set forth in the
Issuance Notice, by giving to the Company notice to such effect, within thirty
(30) days after the giving of the Issuance Notice. In the case of an initial
public offering, the following conditions shall apply to the Purchase Right set
forth herein: (i) In the event that a Stockholder exercises such Purchase
Right, such Stockholder shall be obligated to exercise such right if the public
offering price is not greater than the highest price in the anticipated range
specified in the applicable notice, and (ii) in the event that a Stockholder
exercises such Purchase Right and the public offering price is greater than the
highest price in the anticipated range specified in the applicable notice, such
Stockholder shall have the right but not the obligation, to exercise such right
at such public offering price. After the expiration of such thirty (30) day
period, the Company shall have the right to offer, issue, sell and otherwise
dispose of any or all of the Equity Securities referred to in the applicable
Issuance Notice as to which no Purchase Right has been exercised but only upon
the terms and conditions, and for a purchase price not lower than the purchase
price set forth in the Issuance Notice; provided, however, that in the case of
an initial public offering, such right of the Company shall be the right to
offer, issue, sell and otherwise dispose of such Equity Securities at any price.
In the event of an initial public offering of Equity Securities at a price more
than 20% below such lowest price, AT&T PCS shall have the right, exercisable at
the time of pricing of such initial public offering, to exercise such Purchase
Right. If the Company does not offer, issue, sell or otherwise dispose of the
Equity Securities referred to in the applicable Issuance Notice on the terms and
conditions set forth in such Issuance Notice within one hundred twenty (120)
days after the expiration of such thirty (30) day period, then any subsequent
41
<PAGE>
proposal by the Company to offer, issue, sell or otherwise dispose of such
Equity Securities shall be subject to this Section 7.2.
7.3 Access. The Company shall permit, and shall cause each of its
------
Subsidiaries to permit, upon reasonable notice, during normal business hours,
each Qualified Holder and Desai, for so long as it has the right to an observer
to the Board of Directors pursuant to Section 3.1, and its directors, officers,
employees, attorneys, accountants, representatives, consultants and other
agents, at the sole expense of such Qualified Holder, to (a) visit and inspect
any of the properties and facilities of the Company and its Subsidiaries, (b)
examine and make copies of and extracts from the corporate and financial records
of the Company and its Subsidiaries, (c) discuss the affairs, finances and
accounts of the Company or any such Subsidiary with any of its officers,
directors and key employees and its independent accountants, and (d) otherwise
investigate the properties, businesses and operations of the Company and its
Subsidiaries, in each case as such Qualified Holder reasonably deems necessary;
provided, however, that each Qualified Holder may exercise its rights pursuant
- -------- -------
to this Section 7.3 no more than three times in any 12-month period. The
Company shall, and shall cause each of its Subsidiaries and the officers,
directors and employees of the Company and its Subsidiaries to, cooperate fully
in connection with such inspection, examinations and discussions. The
presentation of a copy of this Agreement by any Qualified Holder to the
independent accountants of the Company or any of its Subsidiaries shall
constitute permission by the Company or such Subsidiary to its independent
accountants to participate in discussions with such Qualified Holder.
7.4 Merger, Sale or Liquidation of the Company.
------------------------------------------
(a) Except for transactions permitted pursuant to Section 7.11
and to the extent permitted in this Section 7.4, the Company shall not, and
shall not permit any of its Subsidiaries to, except with the prior written
consent of AT&T PCS or in accordance with Sections 7.4(b) and 7.4(c), effect (i)
any merger, combination or consolidation of the Company or such Subsidiary with
or into any other entity (regardless of whether the Company or such Subsidiary
is the surviving entity in any such transaction) (any such merger, combination
or consolidation is referred to as a "Company Merger"), (ii) any sale or
disposition of a substantial portion of its assets (a "Company Asset Sale"), or
(iii) the liquidation, dissolution or winding up of the Company or such
Subsidiary.
(b) The Company and its Subsidiaries may effect a Company Merger,
without the prior written consent of AT&T PCS, (i) in which the only constituent
corporations are two or more of the Company's wholly owned Subsidiaries, (ii) in
which the only constituent corporations are the Company and one or more of its
wholly owned Subsidiaries and the Company is the surviving corporation, or (iii)
between a Subsidiary of the Company and another entity for the purpose of
acquiring such other entity; provided, that (x) such transaction does not affect
---------
the capital structure of the Company, except to the extent the Company issues
common stock to the stockholders of the other entity pursuant to the terms of
such Company Merger, (y)
42
<PAGE>
the surviving corporation is a direct or indirect wholly owned Subsidiary of the
Company, and (z) the consummation of such transaction does not violate Section
8.1(a).
(c) The Company and its Subsidiaries may effect any of the
transactions described in clauses (i) or (ii) of Section 7.4(a) (a "Sale
Transaction"), without the prior written consent of AT&T PCS, if (a) such
transaction has no material effect on AT&T PCS' equity interest in the Company
(and the seniority thereof) or its rights under this Agreement, (b) the
Company's direct or indirect interest in its assets is unaffected by such
transaction in any material respect, and (c) such transaction is otherwise
equivalent in all material respects to AT&T PCS to the sale by each of the other
Stockholders of its equity interests in the Company for cash or marketable
securities; provided, that any such Sale Transaction shall nevertheless be
---------
subject to a right of first offer in accordance with the provisions of Section
7. 4(d).
(d) Prior to entering into a Sale Transaction, the Company shall
give written notice (the "Sale Notice") to AT&T PCS. Each Sale Notice shall
describe in reasonable detail all material terms of the proposed Sale
Transaction. The Sale Notice shall constitute an irrevocable offer (a "Sale
Offer") to enter into the Sale Transaction with AT&T PCS on the terms set forth
in the Sale Notice. AT&T PCS shall have the irrevocable right and option, but
not the obligation, to accept the Sale Offer in whole but not in part by giving
written notice of its acceptance of such offer within thirty (30) days of the
date of the Sale Notice is given. The Sale Transaction shall be closed at the
principal executive offices of the Company within thirty (30) days after the
acceptance by AT&T PCS of the Sale Offer; provided, however, that, if the Sale
-------- --------
Transaction is subject to the consent of the FCC or any public service or public
utilities commission, the Sale Transaction shall be closed on the fifth business
day after all such consents shall have been obtained by Final Order. If AT&T PCS
declines (which shall include the failure to give timely notice of acceptance)
to accept the Sale Offer, the Company shall have the right (for a period of
ninety (90) days following the expiration of the thirty (30) day acceptance
period referred to above) to close a Sale Transaction on the terms described in
the Sale Offer (except that the price must be at least 95% of the price set
forth in the Sale Offer); provided however that, if the consent of the FCC or
-------- -------
any public service or public utilities commission is required, the Sale
Transaction may be closed not later than the fifth business day after all such
consents shall have been obtained by Final Order. If, after giving a Sale Offer,
the Company does not close a Sale Transaction in accordance with the terms of
the immediately preceding sentence, the Company shall not effect any Sale
Transaction without giving another Sale Notice in accordance with this Section
7.4(d).
7.5 Wholly-Owned Subsidiaries. All of the Company's Subsidiaries
-------------------------
shall be direct or indirect wholly owned Subsidiaries of the Company, and the
Company shall not, and shall not permit any Subsidiary to, sell or issue,
transfer, encumber or otherwise dispose of any shares of capital stock of any
of the Company's Subsidiaries to any Person other than the Company and its
direct or indirect wholly owned Subsidiaries, except for a pledge of any such
shares in connection with the incurrence of indebtedness.
43
<PAGE>
7.6 Amendments of the Restated Certificate and By-Laws. Prior to the
--------------------------------------------------
IPO Date, the Company shall not, without the prior written consent of AT&T PCS,
authorize or adopt any amendment, modification or repeal of any provision of the
Restated Certificate or the Restated By-Laws, unless such amendment is
consistent with the terms of this Agreement.
7.7 Confidentiality.
---------------
(a) Each party shall, and shall cause each of its Affiliates, and
its and their respective stockholders, members, managers, directors, officers,
employees and agents (collectively "Representatives") to, keep secret and retain
in strictest confidence any and all information relating to the Company or any
other party that is designated in writing by the party providing such
information or the Company as confidential ("Confidential Information") and
shall not disclose such information, and shall cause its Representatives not to
disclose such information, to anyone except such Affiliates, Representatives or
any other Person that agrees in writing to keep in confidence all such
information in accordance with the terms of this Section 7.7. Each party agrees
to use such information received from another party or the Company only in
connection with its ownership interest in the Company but not for any other
purpose. All such information furnished pursuant to this Agreement shall be
returned promptly to the party to whom it belongs upon request by such party.
(b) To the fullest extent permitted by law, if a party or any of
its Affiliates or Representatives breaches, or threatens to commit a breach of,
this Section 7.7, the party whose Confidential Information shall be disclosed,
or threatened to be disclosed, shall have the right and remedy to have this
Section 7.7 specifically enforced by any court having jurisdiction, it being
acknowledged and agreed that money damages will not provide an adequate remedy
to such party. Nothing in this Section 7.7 shall be construed to limit the right
of any party to collect money damages in the event of breach of this Section
7.7.
(c) Anything else in this Agreement notwithstanding, each party
shall have the right to disclose any information, including Confidential
Information of the other party or such other party's Affiliates, in any filing
with any regulatory agency, court or other authority or any disclosure to a
trustee of public debt of a party to the extent that the disclosing party
determines in good faith that it is required by Law, regulation or the terms of
such debt to do so; provided, however, that any such disclosure shall be as
-------- -------
limited in scope as possible and shall be made only after giving the other party
as much notice as practicable of such required disclosure and an opportunity to
contest such disclosure if possible.
7.8 IPO Date. In the event that the IPO Date shall not have occurred
--------
on or prior to the fifth (5th) anniversary of the date hereof, the Company
shall, at the request of any Qualified Holder, as promptly as is reasonably
practicable after the date of such request, undertake a registration of Common
Stock pursuant to an effective Registration Statement that results in the
occurrence of the IPO Date; provided, however, that if the Board of Directors
-------- -------
determines that such registration would interfere with any pending or
contemplated material
44
<PAGE>
acquisition, disposition, financing or other material transaction, the Company
may defer such registration (including by withdrawing any Registration Statement
filed in connection with such registration); provided that the aggregate of all
--------
such deferrals shall not exceed one hundred twenty (120) days in any 360-day
period. Any such registration pursuant shall be pursuant to an underwritten
offering. Each Stockholder agrees to cooperate in such registration, including,
without limitation, entering into customary holdback agreements.
7.9 AT&T PCS Retained Licenses. In the event that AT&T PCS desires
--------------------------
to Transfer all or any of the AT&T PCS Retained Licenses in the Territory at any
time prior to the eighth anniversary of the date hereof, AT&T PCS shall give
written notice thereof to the Company at least thirty (30) days prior to
entering into a binding agreement to sell such AT&T PCS Retained Licenses in the
Territory such notice to specify among other things, the AT&T PCS Retained
Licenses in the Territory that it desires to sell. For a period of thirty (30)
days after the date such notice is given, the Company shall have the right to
negotiate with AT&T PCS with respect to the purchase of all, but not less than
all, of such AT&T Retained Licenses in the Territory; it being understood and
agreed that such right shall not be deemed to be a right of first offer or right
of first refusal for the benefit of the Company and AT&T PCS shall have the
right to reject any offer made by the Company during such thirty (30) day
period. In the event no binding agreement to sell all or any of such AT&T PCS
Retained Licenses in the Territory is entered into prior to the expiration of
the one hundred and eighty (180) day period following the expiration of such
(30) day period, such Licenses shall become subject once again to the provision
and restrictions hereof.
7.10 Regulatory Cooperation. Each of the Stockholders severally
----------------------
agrees to comply with the last sentence of Section 6.7 of the Securities
Purchase Agreement.
7.11 Permitted Transactions. Notwithstanding the terms of Section
----------------------
7.4(a) and 8.4(a):
(a) after completion of the Minimum Build-Out Plan and
certification that Company Systems meet the TDMA Quality Standards, the Company
and its Subsidiaries may effect a merger, combination of consolidation with or
into a Permitted Merger Participant or acquire all or substantially all of the
assets of a Permitted Merger Participant or sell all or substantially all of the
assets of the Company and its Subsidiaries to a Permitted Merger Participant
(any such transaction being referred to as a "Permitted Consolidating
Transaction"), so long as such transaction is approved by the Board of Directors
and the holders of the Company's capital stock to the extent such approval is
required pursuant to the Restated Certificate or applicable law; and
(b) the Company may acquire FCC Licenses (each such License a
"Permitted Cellular License") authorizing the holder to provide in a specified
geographic area using specified frequencies in respect of which the Board of
Directors has determined that the acquisition of such License (and any other
assets being acquired together therewith) is a
45
<PAGE>
demonstrably superior alternative to constructing a PCS System in the applicable
area within the PCS Territory, provided that, (i) a majority of the POPs
--------
included in the geographic area covered by such License are within the PCS
Territory, (ii) none of AT&T PCS, any Affiliate thereof or any AT&T Licensee
owns an interest in an FCC License to provide Commercial Mobile Radio Service in
such geographic area, and (iii) the ownership of such License will not conflict
with, or cause AT&T PCS, any Affiliate thereof or any AT&T Licensee to be in
violation or breach of any agreement, instrument, Law or License applicable to
or binding upon such Person or its assets. Notwithstanding the foregoing, the
Company shall not acquire any Permitted Cellular License if the acquisition of
such License would adversely affect the Company's ability to satisfy its
obligations under the first sentence of Section 8.1(b).
8. Operating Arrangements.
----------------------
8.1 Construction of Company Systems.
-------------------------------
(a) The Company hereby agrees to construct, or cause its
Subsidiaries to construct, Company Systems covering the Territory on a schedule
no less rapid than is set forth in the Minimum Build-Out Plan. Company Systems
shall be technologically compatible in all material respects with systems being
used in a Majority of the Southeast Region (including without limitation for the
purpose of facilitating roaming and hand-off between systems), and will to the
extent technologically feasible implement the same User Interface as such
systems, with the intention that the User Interface in Company Systems will not
differ from the User Interface in a Majority of the Southeast Region in a manner
that would be material to customers.
(b) The Company and AT&T PCS hereby agree that the Company shall
assume and be obligated to satisfy the construction requirements set forth in 47
CFR 24.203 with respect to the AT&T PCS Retained Licenses in the Territory and
the AT&T PCS Contributed Licenses. The Company and AT&T PCS agree from time to
time at the request of the Company or AT&T PCS, as applicable, to provide the
other with information concerning the status of construction of its PCS Systems
to enable such party to determine the level of compliance with such construction
requirements with respect to the AT&T PCS Retained Licenses and AT&T PCS
Contributed Licenses, as applicable.
(c) The Company will arrange for all necessary microwave
relocation in connection with the AT&T PCS Contributed Licenses and pay, assume
or (if applicable) reimburse AT&T PCS or its Affiliates for any obligation to
pay, any reasonable costs incurred by it or AT&T PCS in connection with any such
microwave relocation, provided, that nothing contained herein shall require the
--------
Company to pay any costs incurred in connection with microwave relocation in
connection with the AT&T PCS Retained Licenses.
8.2 Service Features. Company Systems will offer the Core Service
----------------
Features. Company Systems will also offer, at the written request of AT&T PCS,
additional service features that AT&T PCS has notified the Company it will
provide in a Majority of the Southeast
46
<PAGE>
Region, unless the Board of Directors reasonably determines that the provision
of such additional features would be financially detrimental to the Company.
Unless the Board of Directors makes such a determination, any such additional
features shall be adopted within one hundred twenty (120) days after the request
by AT&T PCS. The Critical Network Elements are set forth on Schedule XI.
8.3 Quality Standards. The Company shall use commercially reasonable
-----------------
efforts to cause the Company Systems to comply with the TDMA Quality Standards.
Without limiting the foregoing, with respect to each material portion of a
Company System (such as a city) that the Company places in commercial service,
on or prior to the first anniversary of the date such material portion is placed
in commercial service, the Company shall cause each such material portion to
achieve a level of compliance with the TDMA Quality Standards equal to at least
the average level of compliance achieved by comparable PCS and Cellular Systems
owned and operated by AT&T PCS taking into account, among other things, the
relative stage of development thereof. In the event that the Company fails to
achieve such level of compliance, the Company shall not be deemed to be in
material breach of this provision if such non-compliance is cured within thirty
(30) days of notice thereof from AT&T PCS to the Company, or, if such breach is
not capable of being cured within such thirty (30) day period using commercially
reasonable efforts, within one hundred eighty (180) days of such notice,
provided the Company is using commercially reasonable efforts to cure such
- --------
material breach as soon as reasonably practicable.
8.4 No Change of Business.
---------------------
(a) Subject to Section 7.11, the Company will not, and will not
permit any of its Subsidiaries to, without obtaining the prior written consent
of AT&T PCS, do any of the following: (i) conduct, directly or indirectly, any
business other than the Business, (ii) make any material change to the Minimum
Build-Out Plan in the Territory, or (iii) effect any transaction, agreement or
arrangement which has or could reasonably be expected to have the effect of
materially impairing or materially limiting the ability of (x) subscribers to
Cellular Systems and PCS Systems in which AT&T PCS or its Affiliates have an
ownership interest to utilize the Company Systems for roaming, or (y) AT&T PCS
or its Affiliates to resell wireless service on the Company Systems; it being
understood that clause (i) shall not be deemed to restrict the business of the
Company in any Overlap Territory.
(b) During the period commencing on the date hereof through and
including the first anniversary of the date hereof, without obtaining the prior
written consent of each SBIC Holder, the Company will not, and will not permit
any of its Subsidiaries, to conduct, directly or indirectly, any business other
than the Business.
(c) If at any time during the term of this Agreement AT&T PCS and
its Affiliates determine to discontinue use of TDMA in a Majority of the United
States: (i) the Company will have the right to cease to use TDMA and may adopt
the new technology adopted
47
<PAGE>
by AT&T PCS and its Affiliates in a Majority of the United States or implement
any other alternative technology in Company Systems, and, if it exercises such
right, the definition of Company Systems shall be automatically deemed to be
modified by substituting a reference to such new or alternative technology in
lieu of the reference in such definition to TDMA, and (ii) the obligations of
AT&T PCS and its Affiliates pursuant to Section 8.6 shall terminate and be of no
further force or effect, unless within sixty (60) days of notice by AT&T PCS to
the Company specifying that AT&T PCS and its Affiliates have determined to
discontinue use of TDMA in a Majority of the United States, the Company agrees
to implement in Company Systems on a reasonable schedule the new technology
adopted by AT&T PCS and its Affiliates in a Majority of the United States. In
the event AT&T PCS desires to test any technology that is an alternative to TDMA
in any PCS System or Cellular System contiguous to the Territory, AT&T PCS
hereby agrees to notify the Company at least thirty (30) days before conducting
such test and will conduct such tests in a manner that does not have a material
adverse effect on the Company.
8.5 Preferred Provider.
------------------
(a) The Company and its Subsidiaries shall not market, offer,
provide or resell interexchange services, except (i) interexchange services that
constitute Company Communication Services and (ii) interexchange services
procured from AT&T Corp. or an Affiliate thereof designated by AT&T Corp. Such
interexchange services shall be provided by AT&T Corp. or such Affiliate at a
reasonable rate per minute, subject to mutual agreement as to all the terms of
the agreement to provide such services, including, without limitation, the
volume commitment and duration.
(b) With respect to services other than interexchange services,
when the Company or a Subsidiary does not itself develop, or is not permitted to
develop, one or more telecommunications services that are offered or provided in
connection with the conduct of its Business (including, by way of example, local
telephone services or voicemail), but instead procures such services, the
Company shall request in writing that AT&T PCS provide such services (directly
or through an Affiliate designated by it) and , provided, that AT&T PCS (or a
--------
designated Affiliate) offers to provide such telecommunication services to the
Company on reasonably competitive terms, the Company or such Subsidiary shall
procure such services from AT&T PCS (or such Affiliate thereof).
8.6 Exclusivity.
-----------
(a) None of the Stockholders or their respective Affiliates will
provide or resell, or act as the agent for any Person offering, within the
Territory, Company Communications Services except that, AT&T PCS and its
Affiliates may (i) resell, or act as the Company's agent for, Company
Communications Services provided by the Company in accordance with the Resale
Agreement (or any other agreement between AT&T PCS and its Affiliates, on the
one hand, and the Company, on the other hand), including bundling any such
Company Communications Services with other telecommunications services marketed,
offered
48
<PAGE>
and provided or resold by such Person, (ii) provide or resell wireless
telecommunications services to or from specific locations (such as buildings or
office complexes), even if the subscriber equipment used in connection with such
service may be capable of routine movement within a limited area (such as a
building or office complex), and even if such subscriber equipment may be
capable of obtaining other telecommunications services beyond such limited area
(which other services may include routine movement beyond such limited area) and
hand-off between the service to such specific locations and such other
telecommunications services; provided, however, that if AT&T PCS or any of its
Affiliates sells such mobile wireless subscriber equipment such equipment shall
be capable of providing (but not necessarily on an exclusive basis) Company
Communications Services and (iii) resell Company Communications Services
provided by a Person other than the Company in any geographical area within the
Territory in which the Company has not placed a Company System into commercial
service on or prior to four and one-half years from the date hereof (it being
understood that in the event that AT&T PCS or any of its Affiliates that is
reselling Company Communication Services of a Person other than the Company in a
geographic area within the Territory at the time the Company places a portion of
a Company System including such geographic area into commercial service, AT&T
PCS or its Affiliates, as applicable, shall terminate such resale arrangement
with respect to such geographic areas within thirty (30) days of the date such
portion of a Company System is placed in commercial service). To the extent the
"other telecommunications services" referred to in clause (ii) of the
immediately preceding sentence constitute Company Communications Services,
neither AT&T PCS nor any of its Affiliates may provide or resell, or act as
agent for any Person offering, such "other telecommunications services" except
in accordance with the terms of clause (i) of the immediately preceding
sentence. Nothing herein shall be construed to limit in any respect any
advertising and promotional and similar activities by AT&T PCS or its Affiliates
or any Cash Equity Investor or any of its Affiliates.
(b) With respect to the markets listed on Schedules 1 and 2 to
the Roaming Agreement, each of AT&T PCS and the Company shall, and shall cause
each of its Affiliates to, in its and such Affiliates' capacity as Home Carrier:
(i) program and direct its authorized dealers to program the subscriber
equipment provided by it or such authorized dealers to its customers, at the
time it is provided to such customers, (to the extent such programming is
technologically feasible) so that the Company or AT&T PCS, as the case may be,
and such Affiliates, in its and such Affiliates' capacity as Serving Carrier, is
the preferred provider of service in the markets listed on such Schedules 1 and
2, and (ii) refrain, and direct its authorized dealers to refrain, from inducing
any of its customers to change or, except at such customer's request in the
event the quality of the Company's services do not meet industry standards,
changing the programming described in clause (i) above. For the purpose of this
Section 8.6(b), the terms "Affiliate," "Home Carrier" and "Serving Carrier"
shall have the meanings ascribed thereto in the Roaming Agreement.
8.7 Other Business; Duties; Etc. Except to the extent expressly set
----------------------------
forth in Section 8.6, AT&T PCS and each Cash Equity Investor and any Person
affiliated with AT&T PCS or a Cash Equity Investor may engage in or possess an
interest in other business ventures,
49
<PAGE>
and may engage in any other activities, of every kind and description (whether
or not competitive with the business of the Company or otherwise affecting the
Company), independently or with others and shall owe no duty or liability to the
Company, the other Stockholders or their Affiliates in connection therewith.
None of the Company or the other Stockholders shall have any rights in or to
such independent ventures or the income or profits therefrom by virtue of this
Agreement or any of the Related Agreements. Without limiting the generality of
the foregoing, in the event that AT&T PCS or a Cash Equity Investor or a Person
affiliated with AT&T PCS or a Cash Equity Investor develops inventions which are
patentable or are otherwise trade secrets relevant to the Business, AT&T PCS or
such Cash Equity Investor or affiliated Person shall nevertheless retain
ownership of such invention and may license it to the Company if the Company so
desires and if mutually satisfactory terms are agreed to. The Company shall also
have the right to develop any inventions related to the Business deemed
desirable by it and to retain title to such inventions. To the extent that, at
law or in equity, AT&T PCS or a Cash Equity Investor or any Person affiliated
with AT&T PCS or a Cash Equity Investor would have duties (including fiduciary
duties) and liabilities to the Company, or to the Stockholders, different from
or in addition to those provided in this Section 8.7 and Section 8.6 with
respect to the subject matter of such Sections, all rights of the Company and
the Stockholders arising out of such duties and liabilities are hereby waived
and no such Person shall be liable to the Company or to any Stockholder for its
good faith reliance on the provisions of this Section 8.7.
8.8 Acknowledgments and Termination of Exclusivity.
----------------------------------------------
(a) The Stockholders hereby expressly acknowledge that none of
the Stockholders would have been willing to enter into this Agreement or make
contributions to the capital of the Company, except for each other Stockholder's
and its Affiliates willingness to enter into this Agreement (including without
limitation the provisions set forth in this Section 8) and the Related
Agreements.
(b) Without limiting the foregoing, and without limiting the
remedies that may be available to it at law or in equity, in the event of a
Substantial Company Breach, the obligations of AT&T PCS and its Affiliates under
Section 8.6 shall automatically terminate and be of no further force or effect.
(c) Upon consummation of a Disqualifying Transaction, AT&T PCS
may, by notice to the Company, terminate its and its Affiliates' obligations
under Section 8.6 with respect to any Overlap Territory, provided that the
--------
obligations of AT&T PCS and its Affiliates pursuant to Section 8.6(b)(ii) shall
continue in effect with respect to the then existing customers of the PCS
Systems and Cellular Systems owned and operated by AT&T PCS and its Affiliates
(and their respective successors pursuant to the applicable Disqualifying
Transaction) before giving effect to such Disqualifying Transaction, so long as
such customers remain customers of such systems and such systems continue to be
owned or operated by AT&T PCS or its Affiliates. Notwithstanding the foregoing,
in the event that the Company exercises its right pursuant to Section 6.1 to
convert all of the shares of Company Stock owned by AT&T PCS into
50
<PAGE>
Series B Preferred Stock, the reference in this Section 8.8(c) to the "Overlap
Territory" shall be deemed to refer to the Territory.
8.9 Equipment, Discounts and Roaming. AT&T PCS acknowledges and
--------------------------------
agrees that, subject to the terms of Sections 8.1 and 8.5, the Company shall
have the sole discretion to select (a) the equipment vendor(s) for the
infrastructure to be constructed by the Company and (b) billing and other
vendors providing goods and services to the Company. If reasonably requested by
the Company, AT&T PCS agrees to use all commercially reasonable efforts to
assist representatives of the Company in obtaining discounts from any AT&T PCS
vendor with whom the Company is negotiating for the purchase of any such
subscriber or infrastructure equipment or billing services. In addition, AT&T
PCS agrees to use all commercially reasonable efforts to enable the Company to
become a party to the roaming agreements between AT&T PCS and its Affiliates and
operators of other Cellular Systems and PCS Systems or, subject to the Company
agreeing to the obligations thereunder, entitled to the rights and benefits of
AT&T PCS under such roaming agreements. The two immediately preceding sentences
shall not be construed to require AT&T PCS or its Affiliates to take any action
that AT&T PCS or such Affiliate determines in its sole discretion to be adverse
to its interests.
8.10 ANS Agreement. At the request of the Company, AT&T PCS shall
-------------
cause AWS to enter into an Advanced Network Services Agreement with the Company,
substantially in the form of Exhibit C.
8.11 Resale Agreements.
-----------------
(a) From time to time, upon the request of AT&T PCS, the Company
shall enter into a Resale Agreement relating to the Territory, substantially in
the form of Exhibit C to the Securities Purchase Agreement, with AT&T PCS and
any of its Affiliates and, with respect to any geographic area within the
Territory, one other Person designated by AT&T PCS, provided such other Person
--------
is licensed to provide telecommunications services in such geographic area under
the service marks used by AT&T Corp. and such other Person qualifies as a
reseller under any generally applicable standards the Company establishes for
its resellers from time to time and upon the request of AT&T PCS, the Company
shall enter into an agency agreement authorizing AT&T PCS and any of its
Affiliates and, with respect to any geographic area within the Territory, one
other Person designated by AT&T PCS, provided such other Person is licensed to
--------
provide telecommunications services in such geographic area under the service
marks used by AT&T Corp. and such other Person qualifies as an agent under any
generally applicable standards the Company establishes for its agents from time
to time. Any such agency agreements shall provide that the Company shall pay the
agent a commission at the rate then generally offered to the Company's agents
and shall otherwise be on commercially reasonable terms. At no time shall there
be more than one Person (other than AT&T PCS and its Affiliates) designated by
AT&T PCS as a reseller or an agent with respect to any geographic area within
the Territory.
51
<PAGE>
(b) It is the intention of the parties that, in light of AT&T
PCS's equity interest in the Company and the other arrangements between AT&T PCS
and its Affiliates and the Company (including the roaming revenues anticipated
to be earned by the Company from subscribers of AT&T PCS and its Affiliates),
the rates, terms and conditions of Service (as defined in the Resale Agreement)
provided by the Company pursuant to the Resale Agreement or any other agreement
between AT&T PCS or such other reseller and the Company shall be at least as
favorable to AT&T PCS or such other reseller, taken as a whole, as the rates,
terms and conditions of Service, taken as a whole, provided by the Company to
any other Customer (as defined in the Resale Agreement) and, to the extent
permitted by applicable law, such rates, terms and conditions shall be superior
to those provided to any other Customer. Without limiting the foregoing, the
rate plans offered by the Company pursuant to any Resale Agreement shall be
designed to result in the average actual rate per minute paid by the Reseller
for Service being at least 25% below the weighted average actual rate per minute
billed by the Company to its subscribers for access and air time, but excluding
revenues for features, taxes, toll or other non-rate items. The Company and
Reseller shall negotiate commercially reasonable reductions to such resale rate
based upon increased volume commitments (including roaming charges incurred by
subscribers of AT&T PCS and its Affiliates).
8.12 Non-Solicitation.
----------------
(a) AT&T PCS hereby covenants and agrees that from and after the
date hereof until six months after the date on which it shall cease to own any
Equity Securities that neither AT&T PCS nor its Affiliates shall solicit for
employment any employee of the Company; provided however that, nothing contained
-------- -------
in this Section 8.12(a) shall prevent AT&T PCS or its Affiliates from engaging
in a general solicitation for employment that is not directed at employees of
the Company.
(b) The Company hereby covenants and agrees that from and after
the date hereof until six months after the date on which AT&T PCS or its
Affiliates shall cease to own any Equity Securities that neither the Company nor
its Affiliates shall solicit for employment any employee of the AT&T PCS or its
Affiliates; provided, however that nothing contained in this Section 8.12(b)
shall prevent the Company or its Affiliates from engaging in a general
solicitation for employment that is not directed at employees of AT&T PCS and
its Affiliates.
8.13 Co-Location. The Company agrees to permit on commercially
-----------
reasonable terms AT&T PCS and its Affiliates to install, operate and maintain
cell site equipment owned or used by AT&T PCS and its Affiliates in their
respective businesses on the towers, buildings and other locations at which the
Company's cell site equipment is installed, operated and maintained. AT&T PCS
and its Affiliates agree to permit on commercially reasonable terms the Company
to install, operate and maintain cell site equipment owned or used by the
Company in its business on the towers, buildings and other locations at which
AT&T PCS and its Affiliates cell site equipment is installed, operated and
maintained.
52
<PAGE>
9. After-Acquired Shares; Recapitalization.
---------------------------------------
9.1 After Acquired Shares; Recapitalization.
----------------------------------------
(a) All of the provisions of this Agreement shall apply to all of
the shares of Equity Securities now owned or hereafter issued or transferred to
a Stockholder or to his, her or its Affiliated Successors in consequence of any
additional issuance, purchase, exchange or reclassification of shares of Equity
Securities, corporate reorganization, or any other form of recapitalization, or
consolidation, or merger, or share split, or share dividend, or which are
acquired by a Stockholder or its Affiliated Successors in any other manner.
(b) Whenever the number of outstanding shares of Equity
Securities is changed by reason of a stock dividend or a subdivision or
combination of shares effected by a reclassification of shares, each specified
number of shares referred to in this Agreement shall be adjusted accordingly.
9.2 Amendment of Restated Certificate. Whenever the number of shares
---------------------------------
of authorized Common Stock is not sufficient in order to issue shares of Common
Stock upon conversion of Preferred Stock in accordance with the Restated
Certificate, (i) the Company shall promptly amend the Restated Certificate in
order to authorize a sufficient number of shares of Common Stock, and (ii) each
Stockholder agrees to vote its shares of Preferred Stock and Common Stock in
favor of such amendment.
10. Share Certificates.
------------------
10.1 Restrictive Endorsements; Replacement Certificates. (a) Each
--------------------------------------------------
certificate representing the shares of Equity Securities now or hereafter held
by a Stockholder (including any such certificate delivered upon conversion of
the Preferred Stock) or delivered in substitution or exchange for any of the
foregoing certificates shall be stamped with legends in substantially the
following form:
The shares represented by this Certificate have been acquired for
investment and have not been registered under the Securities Act of 1933,
as amended (the "Act"), or under any state securities or "Blue Sky" laws.
Said securities may not be sold, transferred, assigned, pledged,
hypothecated or otherwise disposed of, unless and until registered under
the Act and the rules and regulations thereunder and all applicable state
securities or "Blue Sky" laws or exempted therefrom under the Act and all
applicable state securities or "Blue Sky" laws.
The shares represented by this Certificate are also subject to a
Stockholders' Agreement dated as of February __, 1998, a copy of which is
on file at the offices of the Company and will be furnished by the Company
to the holder hereof upon
53
<PAGE>
written request. Such Stockholders' Agreement provides, among other things,
for the granting of certain restrictions on the sale, transfer, pledge
hypothecation or other disposition of the shares represented by this
Certificate, and that under certain circumstances, the holder hereof may be
required to sell the shares represented by this Certificate. By acceptance
of this Certificate, each holder hereof agrees to be bound by the
provisions of such Stockholders' Agreement. The Company reserves the rights
to refuse to transfer the shares represented by this Certificate unless and
until the conditions to transfer set forth in such Stockholders' Agreement
have been fulfilled.
Each Stockholder agrees that he, she or it will deliver all certificates
for shares of Equity Securities owned by him, her or it to the Company for the
purpose of affixing such legends thereto.
(b) Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of any certificate
representing shares of Equity Securities subject to this Agreement and of a bond
or other indemnity reasonably satisfactory to the Company, and upon
reimbursement to the Company of all reasonable expenses incident thereto, and
upon surrender of such certificate, if mutilated, the Company will make and
deliver a new certificate of like tenor in lieu of such lost, stolen, destroyed
or mutilated certificate.
11. Equitable Relief. The parties hereto agree and declare that legal
----------------
remedies may be inadequate to enforce the provisions of this Agreement and that,
in addition to being entitled to exercise all of the rights provided herein or
in the Restated Certificate or granted by law, including recovery of damages,
equitable relief, including specific performance and injunctive relief, may be
used to enforce the provisions of this Agreement.
12. Miscellaneous.
-------------
12. Notices. All notices or other communications hereunder shall be
-------
in writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by facsimile transmission, or by registered or
certified mail (return receipt requested), postage prepaid, with an
acknowledgment of receipt signed by the addressee or an authorized
representative thereof, addressed as follows (or to such other address for a
party as shall be specified by like notice; provided that notice of a change of
address shall be effective only upon receipt thereof:
If to AT&T PCS:
c/o AT&T Wireless Services, Inc.
5000 Carillon Point
Kirkland, Washington 98033
Attention: William W. Hague
54
<PAGE>
Telephone: (425) 828-8461
Facsimile: (425) 828-8451
With a copy to:
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920
Attention: Corporate Secretary
Telephone:
Facsimile: (908)
and
Friedman Kaplan & Seiler LLP
875 Third Avenue, 8th Floor
New York, New York 10022
Attention: Daniel M. Taitz
Telephone: (212) 833-1109
Facsimile: (212) 355-6401
and
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, New York 10112
Attention: Gregg S. Lerner, Esq.
Telephone: (212) 698-7705
Facsimile: (212) 698-7825
If to a Cash Equity Investor, to its address set forth on Schedule I.
With a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Mark S. Wojciechowski
Telephone: (212) 506-2525
Facsimile: (212) 262-1910
55
<PAGE>
If to a Management Stockholder:
c/o Triton Communications, L.L.C.
101 Lindenwood Drive, Suite 125
Malvern, Pennsylvania 19355
Attention: Michael E. Kalogris
Steven R. Skinner
Telephone: (610) 651-5900
Facsimile: (610) 993-2683
With a copy to:
Kleinbard Bell & Brecker LLP
1900 Market Street, Suite 700
Philadelphia, Pennsylvania 19103
Attention: Howard J. Davis
Telephone: (215) 568-2000
Facsimile: (215) 568-0140
If to the Company, to it:
c/o Triton Communications, L.L.C.
101 Lindenwood Drive, Suite 125
Malvern, PA 19355
Attention: Michael E. Kalogris
Steven R. Skinner
Facsimile: (610) 993-2683
With a copy to each other party sent to the addresses set forth in
this Section 12.1.
12.2 Entire Agreement; Amendment; Consents.
-------------------------------------
(a) This Agreement, together with the Closing Agreement, dated
as of the date hereof, among the Company, the Cash Equity Investors, Michael E.
Kalogris, and Steven R. Skinner constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof.
(b) No change or modification of this Agreement shall be
valid, binding or enforceable unless the same shall be in writing and signed by
the Company and the holders of a majority of the shares of each class of capital
stock, including AT&T PCS, 66 2/3% of the Common Stock Beneficially Owned by the
Cash Equity Investors, and 60.1% of the
56
<PAGE>
Common Stock Beneficially Owned by the Management Stockholders; provided,
--------
however, that in the event any party hereto shall cease to own any shares of
- -------
Equity Securities such party hereto shall cease to be a party to this Agreement
and the rights and obligations of such party hereunder shall terminate, except
to the extent otherwise provided in Section 4.7(a) with respect to any Unfunded
Commitment.
(c) Whenever in this Agreement the consent or approval of a
Stockholder is required, except as expressly provided herein, such consent or
approval may be given or withheld in the sole and absolute discretion of each
Stockholder.
12.3 Term.
----
(a) Subject to Sections 12.3(b), 12.3(c) and 12.4, this
Agreement shall terminate upon the earliest to occur of any of the following
events:
(i) The consent in writing of all of the parties
hereto; or
(ii) The expiration of eleven (11) years from the date
of execution and delivery of this Agreement; or
(iii) One Stockholder shall Beneficially Own all of the
Common Stock.
(b) Notwithstanding anything contained herein to the contrary,
(i) the provisions of Sections 3.1(a)(ii), (b), (c) and (d), 3.2, 3.3, 3.4, 3.5,
3.6, 4.1(a), 4.5 (other than Section 4.5(b)), 7.1, 7.2 and 7.6 shall terminate
on the earlier to occur of a termination pursuant to Section 12.3(a) and the IPO
Date, (ii) the provisions of Sections 3 and 4 shall terminate on the earlier to
occur of a termination pursuant to Section 12.3(a) and the expiration of ten
(10) years from the date hereof, and (iii) the provisions of Sections 3.1(a)
(relating to AT&T PCS' right to approve the directors selected by the Cash
Equity Investors pursuant to Section 3.1(a)(ii) and any replacement for Messrs.
Kalogris or Skinner to the Board of Directors), 4.7(b), 7.4, 7.6 and 8.4(a),
shall terminate, and neither the Company nor any Stockholder shall be required
to obtain AT&T PCS's prior written consent as required under such Sections, on
the earlier to occur of (i) a termination pursuant to Section 12.3(a) and (ii)
(x) with respect to the period prior to the eighth anniversary of the date
hereof, the date on which AT&T PCS shall cease to Beneficially Own more than
two-thirds of the number of shares of Series A Preferred Stock that AT&T PCS
Beneficially Owns on the date hereof and (y) with respect to the period after
the eighth anniversary of the date hereof on which AT&T PCS shall cease to
Beneficially Own more than two-thirds of the number of shares of Common Stock
that AT&T PCS Beneficially Owns on such eighth anniversary date.
(c) Notwithstanding anything contained herein to the contrary,
in the event the Cash Equity Investors shall Beneficially Own less than (i) one-
half but more than one-
57
<PAGE>
quarter of the number of shares of Common Stock Beneficially Owned by the Cash
Equity Investors on the date hereof, the number of directors the Cash Equity
Investors shall be permitted to designate under Section 3.1(a)(i) shall be
reduced to one, and (ii) one-quarter of the number of shares of Common Stock
Beneficially Owned by the Cash Equity Investors on the date hereof, the
provisions of Section 3.1(a) shall terminate. In the event the number of
directors the Cash Equity Investors are entitled to designate is reduced
pursuant to Section 12.3(c)(i), one of the directors designated by the Cash
Equity Investors under Section 3.1(a)(i) shall resign (or the other directors or
Stockholders shall remove them from the Board of Directors) and the remaining
directors shall take such action so that the number of directors constituting
the entire Board of Directors shall be reduced accordingly. In the event the
provisions of Section 3.1(a) are terminated pursuant to Section 12.3(c)(ii), the
directors designated by the Cash Equity Investors pursuant to Section 3.1(a)(i)
shall resign (or the other directors or Stockholders shall remove them from the
Board of Directors) and the remaining directors shall take such action so that
the number of directors constituting the entire Board of Directors is reduced by
two (2) individuals. Messrs. Skinner and Kalogris (in each case so long as he is
an officer of the Company) shall thereafter have the right to designate two (2)
individuals to the Board of Directors provided such individual is acceptable to
AT&T PCS (so long as AT&T PCS continues to Beneficially Own more than two-thirds
of the Common Stock Beneficially Owned by AT&T PCS on the date hereof). For all
purposes of this Agreement (other than Section 3.1(a)), all references in this
Agreement to directors designated pursuant to Section 3.1(a)(ii) shall
thereafter be deemed to refer to the two directors designated pursuant to the
immediately preceding sentence.
12.4 Survival. Nothing contained in Section 12.3 shall impair any
--------
rights or obligations of any party hereto arising prior to the time of the
termination of this Agreement, or which may arise by an event causing the
termination of this Agreement. The provisions of Section 5 shall survive any
termination of this Agreement pursuant to Section 12.3 and shall continue in
full force and effect until the twentieth anniversary of the date hereof. The
provisions of Section 7.7 and Article 12 shall survive the termination of this
Agreement.
12.5 Waiver. No failure or delay on the part of any Stockholder in
------
exercising any right, power or privilege hereunder, nor any course of dealing
between the Company and any Stockholder shall operate as a waiver thereof nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude the simultaneous or later exercise of any other right, power or
privilege. The rights and remedies herein expressly provided are cumulative and
not exclusive of any rights and remedies which any Stockholder would otherwise
have. No notice to or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Stockholders or any of
them to take any other or further action in any circumstances without notice or
demand.
12.6 Obligations Several. The obligations of each Stockholder under
-------------------
this Agreement shall be several with respect to each such Stockholder.
58
<PAGE>
12.7 Governing Law. This Agreement shall be governed and construed
-------------
in accordance with the law of the State of Delaware.
12.8 Dispute Resolution.
------------------
(a) The parties shall use and strictly adhere to the following
dispute resolution processes, except as otherwise expressly provided in this
Section 12.8, to resolve any and all disputes, controversies or claims, whether
based on contract, tort, statute, fraud, misrepresentation or any other legal or
equitable theory (hereinafter, "Dispute(s)"), arising out of or relating to this
Agreement (and any prior agreement this Agreement supersedes), including without
limitation, its making, termination, non-renewal, its alleged breach and the
subject matter of this Agreement (e.g., products or services furnished hereunder
or those related to those furnished):
(b) The parties shall first attempt to settle each Dispute
through good faith negotiations. The aggrieved party shall initiate such
negotiations by giving the other party(ies) written notice of the existence and
nature of the Dispute. The other party(ies) shall in a writing to the aggrieved
party acknowledge such notice of Dispute within ten (10) business days. Such
acknowledgment may also set forth any Dispute that the acknowledging party
desires to have resolved in accordance with this Section.
(c) Thereafter, if any Dispute is not resolved by the parties
through negotiation within thirty (30) calendar days of the date of the notice
of acknowledgment, either party may terminate informal negotiations with respect
to that Dispute and request that the Dispute be submitted to non-binding
mediation. Any mediation of a Dispute under this Section shall be conducted by
the CPR Institute for Dispute Resolution ("CPR") in accordance with the then
current CPR "Model Mediation Procedure for Business Disputes" ("Model
Procedures") and the procedures specified in this Section to the extent that
they conflict with, modify or add to such Model Procedures. Any demand for
initiation of mediation of a Dispute must be given in writing to both the other
party(ies) involved and to the CPR and must set forth the nature of the Dispute.
Each party to the mediation shall bear its own expenses with respect to
mediation and the parties shall share equally the fees and expenses of the CPR
and the mediator. The failure by a party to timely pay its share of the
mediation fees and expenses of the CPR and the mediator shall be a bar to
arbitration under Section 12.8(d) of that party's Dispute(s). Any mediation
under this Section shall be conducted within the State of New York at a site
selected by the mediator that is reasonably convenient to the parties. Each
party shall be represented in the mediation by representatives having final
settlement authority with respect to the Dispute(s). All information and
documents disclosed in mediation by any party shall remain private and
confidential to the disclosing party and may not be disclosed by any party
outside the mediation. No privilege or right with respect to any information or
document disclosed in mediation shall be waived or lost by such disclosure.
59
<PAGE>
(d) Any Dispute not finally resolved after negotiation and
mediation in accordance with Section 12.8(b) and 12.8(c) shall, upon the written
demand of any involved party delivered to the other party(ies) and the CPR, be
finally resolved through binding arbitration in accordance with the then current
CPR "Non-Administered Arbitration Rules" ("Arbitration Rules") and the
procedures specified in this Section to the extent that they conflict with,
modify or add to such Arbitration Rules. Any Dispute of any other party not
finally resolved after negotiation and mediation pursuant to this Section may be
made a part of the arbitration demanded by another party, provided that the
written notice of demand for arbitration of that Dispute is received by the CPR
before selection of an arbitrator by the CPR. Any demand for arbitration of a
Dispute received by the CPR after the selection of the arbitrator must be
resolved through a separate arbitration proceeding in accordance with this
Section. Each party shall bear its own expenses with respect to arbitration and
the parties shall share equally the fees and expenses of the CPR and the
arbitrator. Unless otherwise mutually agreed by the parties in writing, the
arbitration shall be conducted by one (1) neutral arbitrator. The arbitration
shall be conducted in the State of New York at a site selected by the arbitrator
that is reasonably convenient to the parties. The arbitrator shall be bound by
and strictly enforce the terms of the Agreement and may not limit, expand, or
otherwise modify the terms of this Agreement. The arbitrator shall make a good
faith effort to apply applicable law, but an arbitration decision and award
shall not be subject to review because of errors of law. The arbitrator shall
have the sole authority to resolve issues of the arbitrability of any Dispute,
including the applicability or running of any statute of limitation. The
arbitrator shall not have power to award damages in connection with any Dispute
in excess of actual compensatory damages or to award punitive damages and each
party irrevocably waives any claim thereto. The arbitrator shall not have the
power to order pre-hearing discovery of documents or the taking of depositions.
The arbitrator may compel, to the extent provided by the FAA, attendance of
witnesses and the production of documents at the hearing. The arbitrator's
decision and award shall be made and delivered to the parties within six (6)
months of selection of the arbitrator by the CPR and judgment on the award by
the arbitrator may be entered by any court having jurisdiction thereof.
(e) This Section shall be interpreted, governed by and
enforced in accordance with the United States Arbitration Act, 9 U.S.C. Sections
1-14 (the "Federal Arbitration Act" or "FAA"). The laws of the State of New
York, except those pertaining to choice of law, arbitration of disputes and
those pertaining to the time limits for bringing an action that conflict with
the terms of this Dispute Resolution provision, shall govern all other
substantive matters pertaining to the interpretation and enforcement of the
other terms of this Agreement with respect to any Dispute. Any party to a
Dispute, which is the subject of a notice initiating the Dispute resolution
procedures under this Section, may seek a temporary injunction in any state or
federal court of competent jurisdiction to the limited extent necessary to
preserve the status quo during the pendency of final resolution of a Dispute in
accordance with this Section. If court proceedings to stay litigation of a
Dispute or compel arbitration of a Dispute are necessary, the party who
unsuccessfully opposes such proceedings shall pay all associated costs,
expenses, and attorneys' fees that the other party reasonably incurs in
connection with such court proceedings. An order to pay such costs, expenses and
attorney fees shall become part of any
60
<PAGE>
decision and award of the arbitrator of the Dispute. An arbitrator appointed
pursuant to Section 12.8(d) to resolve a Dispute may also issue such injunctive
orders and shall have the power to modify or dissolve the injunctive order of
any court to the extent it pertains to the Dispute which the arbitrator has been
selected to finally resolve. The parties, their representatives, other
participants, and the mediator and arbitrator shall hold the existence, content,
and result of the mediation and arbitration of a Dispute in confidence except to
the limited extent necessary to enforce a final settlement agreement or to
obtain and secure enforcement of or a judgment on an arbitration decision and
award.
(f) The statute(s) of limitation applicable to any Dispute
shall be tolled upon initiation of the Dispute resolution procedures under this
Section and shall remain tolled until the Dispute is resolved by mediation or
arbitration under this Section. Tolling shall cease if the aggrieved party with
a Dispute does not initiate mediation within sixty (60) calendar days after good
faith negotiations are terminated by any party and, after mediation of a
Dispute, if the aggrieved party with a Dispute does not initiate a demand for
arbitration within sixty (60) calendar days after mediation is terminated.
However, any Dispute is forever barred that has not expressly been made the
subject of the written notice required under Section 12.8(b) above within 365
days after the date the Party asserting the Dispute first knows or should have
known of the existence of the acts or omissions that give rise to such Dispute.
(g) Unless the parties mutually agree in writing, Disputes
relating to trademarks (including service marks), patents and copyrights shall
not be resolved in accordance with the Dispute resolution procedures set forth
in this Section and shall be resolved as otherwise provided in this Agreement.
(h) The Company and each of the Stockholders hereby
irrevocably consents to the exclusive jurisdiction of the state or federal
courts in the State of New York, and all state or federal courts competent to
hear appeals therefrom, over any actions which may be commenced against any of
them under or in connection with this Agreement. The Company and each
Stockholder hereby irrevocably waive, to the fullest extent permitted by
applicable law, any objection which any of them may now or hereafter have to the
laying of venue of any such dispute brought in such court or any defense of
inconvenient forum for the maintenance of such dispute in the Southern District
of New York and New York County. The Company and each Stockholder hereby agree
that a judgment in any such dispute may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. The Company and
each Stockholder hereby consent to process being served by any party to this
Agreement in any actions by the transmittal of a copy thereof in accordance with
the provisions of Section 12.1.
12.9 Benefit and Binding Effect; Severability. This Agreement shall
----------------------------------------
be binding upon and shall inure to the benefit of the Company, its successors
and assigns, and each of the Stockholders and their respective executors,
administrators and personal representatives and heirs and permitted assigns. If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any law or public policy or any listing requirement
applicable to
61
<PAGE>
the Common Stock, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto affected by such determination in any material respect 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 in order
that the provisions hereof are given effect as originally contemplated to the
greatest extent possible.
12.10 Amendment of By-Laws. The Stockholders agree that the terms of
--------------------
this Agreement shall supersede any inconsistent provision that is contained in
the Restated By-Laws and, to the extent required by Delaware law or the Restated
By-Laws, this Agreement shall be deemed to constitute a written action taken by
the Stockholders of the Company and shall be deemed an amendment of the Restated
By-Laws.
12.11 Authorized Agent of AT&T PCS. AT&T PCS hereby authorizes
----------------------------
Wireless PCS, Inc. as its agent, with full power to execute, in the name of and
on behalf of AT&T PCS, the Related Agreements to which AT&T PCS is a party and
any and all other documents that AT&T PCS is required to execute and deliver,
and to give and receive all notices, requests, consents, amendments, demands and
other communications to or from AT&T PCS, hereunder or thereunder. Each party
hereto (other than AT&T PCS) shall be entitled to rely on the full power and
authority of Wireless PCS, Inc. to act on behalf of AT&T PCS in accordance with
this Section 12.11. Nothing contained in this Section 12.11 shall relieve AT&T
PCS from complying with its obligations under this Agreement or any of the
Related Agreements to which it is a party.
12.12 FCC Approval. Notwithstanding anything contained in this
------------
Agreement to the contrary, no transaction or action contemplated herein shall be
consummated and no interests or rights transferred, converted or exchanged prior
to receiving FCC approval with respect thereto to the extent such approval is
necessary.
12.13 Expenses. The Company shall pay the reasonable fees and
--------
expenses of counsel to the Stockholders incurred in connection with the
preparation, negotiation and execution of this Agreement and of any amendment or
modification hereof. Except as provided in Sections 5(g) and 12.14, all other
attorneys' fees incurred by the Stockholders in connection with this Agreement
(including, without limitation, in the preparation of notices (and responses
thereto) and consents) shall be borne by the Stockholder(s) incurring such fees.
12.14 Attorneys' Fees. In any action or proceeding brought to enforce
---------------
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
62
<PAGE>
12.15 Headings. The captions in this Agreement are for convenience
--------
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
12.16 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
63
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed or consent this
Agreement to be executed by its duly authorized officers as of the date first
written above.
AT&T WIRELESS PCS INC.
By: _____________________________________
Name:
Title:
TRITON PCS HOLDINGS, INC.
By: ____________________________________
Name:
Title:
CASH EQUITY INVESTORS: CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc., its general
partner
By: ______________________________________
Name:
Title:
J.P. MORGAN INVESTMENT CORPORATION
By: ______________________________________
Name:
Title:
SIXTY WALL STREET SBIC FUND, L.P.
By: Sixty Wall Street SBIC Corporation, its
general partner
By: ______________________________________
64
<PAGE>
PRIVATE EQUITY INVESTORS III, L.P.
By: Rohit M. Desai Associates, III, L.L.C.,
its general partner
By: __________________________________________
Name:
Title:
EQUITY-LINKED INVESTORS-II
By Rohit M. Desai Associates-II, its general
partner
By: _________________________________________
Name:
Title:
TORONTO DOMINION CAPITAL (USA) INC.
By: __________________________________________
Name: Martha Gariepy
Title: Vice President
FIRST UNION CAPITAL PARTNERS, INC.
By: __________________________________________
Name:
Title:
DAG-TRITON PCS, L.P.
By: Duff Ackerman Goodrich, L.L.C., its general
partner
By: __________________________________________
Name:
Title:
65
<PAGE>
MANAGEMENT STOCKHOLDERS: MICHAEL E. KALOGRIS
____________________________________________
STEVEN R. SKINNER
____________________________________________
DAVID D. CLARK
____________________________________________
CLYDE SMITH
____________________________________________
PATRICIA GALLAGHER
____________________________________________
DAVID STANDIG
____________________________________________
<PAGE>
MICHAEL MEARS
____________________________________________
MICHAEL E. KALOGRIS, as trustee under the Common
Stock Trust Agreement For Management Employees
Dated February 4, 1998
By: ________________________________________
Name: Michael E. Kalogris
Title: Trustee
<PAGE>
Schedule I
Cash Equity Investors:
- ---------------------
CB Capital Investors, L.P. Toronto Dominion Capital (USA) Inc.
380 Madison Avenue, 12th Floor 31 West 52nd Street
New York, NY 10017 New York, NY 10019
Attn: Arnie Charkin Attn: Brian Rich
J.P. Morgan Investment Corporation Toronto Dominion Capital (USA) Inc.
101 California Street, 38th Floor 909 Fannin, Suite 1700
San Francisco, CA 94111 Houston, TX 77010
Attn: John Watkins Attn: Martha Gariepy
Sixty Wall Street SBIC Fund, L.P. First Union Capital Partners, Inc.
101 California Street, 38th Floor One First Union Center
San Francisco, CA 94111 301 South College Street, 5th Floor
Attn: John Watkins Charlotte, NC 28288-0732
Attn: Watts Hamrick
Private Equity Investors III, L.P. Dag-Triton PCS, L.P.
540 Madison Avenue, 36th Floor Two Embarcadero Center, Suite 2930
New York, NY 10022 San Francisco, CA 94111
Attn: Damon Ball Attn: John Duff
Equity-Linked Investors-II
540 Madison Avenue, 36th Floor
New York, NY 10022
Attn: Damon Ball
<PAGE>
Schedule II
Management Stockholders
-----------------------
Michael E. Kalogris
Steven R. Skinner
David D. Clark
Clyde Smith
Patricia Gallagher
David Standig
Michael Mears
Michael E. Kalogris, as trustee under the
Common Stock Trust Agreement For
Management Employees Dated February 4, 1998
<PAGE>
Schedule III
Superceded
Stockholders
------------
<TABLE>
<CAPTION>
Number of
Series A Preferred Stock Shares
- ------------------------ ---------
<S> <C>
AT&T Wireless PCS Inc. 732,371
=========
Series C Preferred Stock
- ------------------------
CB Capital Investors, L.P. 404,714
J.P. Morgan Investment Corporation 383,679
Sixty Wall Street SBIC Fund, L.P. 21,036
Private Equity Investors III, L.P. 194,357
Equity-Linked Investors - II 194,357
Toronto Dominion Capital (USA) Inc. 97,179
First Union Capital Partners, Inc. 48,589
DAG-Triton PCS, L.P. 48,589
Michael E. Kalogris 5,000
Steven R. Skinner 2,500
---------
1,400,000
=========
Series D Preferred Stock
- ------------------------
AT&T Wireless PCS, Inc. 366,131
=========
Common Stock
- ------------
Michael E. Kalogris 78,494.80
Steven R. Skinner 58,871.10
David D. Clark 5,887.11
Clyde Smith 3,139.79
Patricia Gallagher 2,943.56
David Standig 2,943.56
Michael Mears 1,962.37
Michael E. Kalogris, as trustee under the
Common Stock Trust Agreement For
Management Employees Dated February 4, 1998 41,994.71
---------
196,237.00
==========
</TABLE>
<PAGE>
SCHEDULE IV
I. From Washington MTA BTA Market Designator
Charlottesville, VA B075
Cumberland, MD B100
Fredericksburg, VA B156
Harrisonburg, VA B183
Hagerstown, MD-Chambersburg,
PA,-Martinsburg, WV
Winchester, VA B179
B479
II. From Richmond MTA
Danville, VA B104
Lynchburg, VA B266
Martinsville, VA B284
Richmond, VA B374
Roanoke.VA B376
Staunton-Waynesboro, VA B430
III. From Knoxville MTA
Kingsport, Johnson City, TN-Bristol VA
B229
<PAGE>
EXHIBIT 10.10
================================================================================
INVESTORS STOCKHOLDERS' AGREEMENT
by and among
CB CAPITAL INVESTORS, L.P.,
J. P. MORGAN INVESTMENT CORPORATION,
SIXTY WALL STREET SBIC FUND, L.P.,
PRIVATE EQUITY INVESTORS III, L.P.,
EQUITY-LINKED INVESTORS-II
TORONTO DOMINION CAPITAL (USA), INC.,
DAG-TRITON PCS, L.P.,
FIRST UNION CAPITAL PARTNERS, INC.
and
THE STOCKHOLDERS NAMED HEREIN
dated as of February 4, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Certain Definitions............................................................................. 2
2. Management of Company........................................................................... 2
2.1 Board of Directors......................................................................... 2
2.2 Removal; Filling of Vacancies.............................................................. 3
2.3 Election of Initial Board of Directors..................................................... 3
2.4 Board Committees........................................................................... 3
3. Transfers of Shares............................................................................. 3
3.1 General.................................................................................... 3
3.2 Right of First Offer....................................................................... 4
3.3 Tag Along Rights........................................................................... 4
3.4 Drag-Along Rights.......................................................................... 7
4. Unfunded Commitment; Additional Capital Contributions........................................... 8
5. Purchase Rights................................................................................. 9
5.1 Right to Exercise Purchase Rights.......................................................... 9
6. Registration Rights............................................................................. 9
6.1 Right to Exercise Registration Rights...................................................... 9
7. After-Acquired Shares; Recapitalization......................................................... 10
7.1 After-Acquired Shares; Recapitalization.................................................... 10
8. Equitable Relief................................................................................ 10
8.1 Equitable Relief........................................................................... 10
9. Miscellaneous................................................................................... 10
9.1 Notices.................................................................................... 10
9.2 Entire Agreement; Amendment; Consents...................................................... 10
9.3 Term....................................................................................... 11
9.4 Obligations Several........................................................................ 11
9.5 Governing Law.............................................................................. 11
9.6 Jurisdiction............................................................................... 11
9.7 Benefit and Binding Effect; Severability................................................... 11
9.8 Headings................................................................................... 12
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
9.9 Counterparts............................................................................... 12
</TABLE>
Schedules
- ---------
Schedule I Cash Equity Investors
Schedule II Stock Ownership
Schedule III Initial Director Nominees
ii
<PAGE>
INVESTORS STOCKHOLDERS' AGREEMENT
---------------------------------
STOCKHOLDERS' AGREEMENT, dated as of February 4, 1998 (this "Agreement"),
---------
by and among CB CAPITAL INVESTORS, L.P., together with its Affiliated Successors
("Chase"), J.P. MORGAN INVESTMENT CORPORATION, SIXTY WALL STREET SBIC FUND,
-----
L.P., together with their Affiliated Successors ("J.P. Morgan"), PRIVATE EQUITY
-----------
INVESTORS III, L.P. ("PEI III"), EQUITY-LINKED INVESTORS-II ("ELI II"), TORONTO
------- ------
DOMINION CAPITAL (USA), INC. ("TD"), DAG-TRITON PCS, L.P. ("DAG"), FIRST UNION
-- ---
CAPITAL PARTNERS, INC. ("First Union") and the investors listed on Schedule I
----------- ----------
(individually, each a "Cash Equity Investor" and, collectively with Chase, J.P.
--------------------
Morgan, PEI III, ELI II, TD, DAG and First Union and any of their respective
Affiliated Successors who become a Stockholder and a party to this Agreement in
accordance with the terms hereof, the "Cash Equity Investors"), Michael E.
---------------------
Kalogris, Steven R. Skinner and David D. Clark (the "Management Stockholders").
-----------------------
Each of the foregoing Persons (other than the Company) are sometimes referred to
herein, individually, as a "Stockholder" and, collectively, as the
-----------
"Stockholders."
------------
RECITALS
--------
WHEREAS, the Cash Equity Investors, the Company and the other Stockholders
named therein are party to that certain Stockholders Agreement, dated the date
hereof (as amended from time to time, in accordance with its terms, the "Company
-------
Stockholder Agreement") pursuant to which the Cash Equity Investors and the
- ---------------------
other parties thereto have agreed to provide for the management of the Company
and to impose certain restrictions with respect to the sale, transfer or other
disposition of Company Stock on the terms set forth therein; and
WHEREAS, each Stockholder is the registered owner of the respective shares
of Common Stock and Series C Preferred Stock set forth opposite its name on
Schedule II; and
- -----------
WHEREAS, the parties hereto desire to enter into this Agreement in order to
impose certain further restrictions with respect to the sale, transfer or other
disposition of Company Stock and to provide for certain rights with respect to
the management of the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the parties agree as follows:
<PAGE>
1. Certain Definitions.
-------------------
Capitalized terms not otherwise defined herein shall have the meanings set
forth in the Company Stockholder Agreement.
Each definition or pronoun herein shall be deemed to refer to the singular,
plural, masculine, feminine or neuter as the context requires. Words such as
"herein," "hereinafter," "hereof," "hereto" and "hereunder" refer to this
Agreement as a whole, unless the context otherwise requires.
2. Management of Company.
---------------------
2.1 Board of Directors. (a) Each of the Cash Equity Investors hereby
------------------
agrees, so long as such Stockholder continues to hold any shares of Class C
Preferred Stock or Common Stock, in exercising its rights under Section 3 of the
Company Stockholder Agreement, that it will vote or cause to be voted all of the
shares of its Class C Preferred Stock or Common Stock owned or held of record by
it (whether now owned or hereafter acquired), in person or by proxy, to cause
the selection of directors, the election of directors and thereafter the
continuation in office of the following persons as members of the Board of
Directors as follows:
(i) one (1) individual selected by Chase, in its sole discretion,
to be nominated pursuant to Section 3.1(a)(i) of the Company Stockholder
Agreement;
(ii) one (1) individual selected by J.P. Morgan, in its sole
discretion, to be nominated pursuant to Section 3.1(a)(i) of the Company
Stockholder Agreement; and
(iii) two (2) additional individuals selected by Chase and J.P.
Morgan, after consultation with the other Cash Equity Investors, to be
nominated and approved pursuant to Section 3.1(a)(ii) of the Company
Stockholder Agreement.
(b) Any nomination or designation of directors and the acceptance thereof
pursuant to this Section 2.1 shall be evidenced in writing.
-----------
(c) The rights set forth in clauses (a) (i) and (iii) above with respect
to Chase shall terminate if Chase owns less than 25% of the shares of Common
Stock Beneficially Owned by Chase on the date hereof. The rights set forth in
clauses (a)(ii) and (a)(iii) above with respect to J.P. Morgan shall terminate
if J.P. Morgan owns less than 25% of the shares of Common Stock Beneficially
Owned by J.P. Morgan on the date hereof. Upon any termination of the rights set
forth in clause (a), such right(s) shall be exercisable in accordance with the
Company Stockholder Agreement by the holders of a Majority in Interest of the
Common Stock held by the Cash Equity Investors.
-2-
<PAGE>
(d) If the right of the Cash Equity Investors to nominate directors under
the Company Stockholder Agreement is reduced to the right to nominate one
director pursuant to Section 12.3(c) therein, such right shall be exercisable by
either Chase or J.P. Morgan, whichever Cash Equity Investor holds a greater
percentage of shares of Common Stock Beneficially Owned by the Cash Equity
Investors at the time of the nomination right of the director.
2.2 Removal; Filling of Vacancies. Except as set forth in Section 2.1,
----------------------------- -----------
each Cash Equity Investor agrees it will not vote any shares of Series C
Preferred Stock and/or Common Stock owned or controlled by such Cash Equity
Investor, for the removal without cause of any director designated by any other
Cash Equity Investor in accordance with Section 2.1. Any Cash Equity Investor
-----------
who has the right to designate any member(s) of the Board of Directors pursuant
to Section 2.1 shall have the right to replace any member(s) so designated by it
-----------
in accordance with the Company Stockholder Agreement. Each of the Cash Equity
Investors agrees to vote its shares of Series C Preferred Stock and/or Common
Stock, or shall otherwise take any action as is necessary to cause the election
of any successor director designated by any Stockholder pursuant to this
Section 2.2.
- -----------
2.3 Election of Initial Board of Directors. The Cash Equity Investors
--------------------------------------
hereby consent to the nomination of the persons designated on Schedule III
------------
hereto to be directors of the Company pursuant to the Company Stockholder
Agreement.
2.4 Board Committees. If the Cash Equity Investors have the right to
----------------
appoint a member of a committee of the Board of Directors, such member shall be
selected by Chase and J.P. Morgan, after consultation with the other Cash Equity
Investors.
3. Transfers of Shares.
-------------------
3.1 General. Each Stockholder agrees that it shall not, directly or
-------
indirectly, Transfer Company Stock held by such Stockholder as of the date
hereof or which may hereafter be acquired by such Stockholder except in
accordance with the Company Stockholder Agreement and as set forth in this
Article 3. Each Stockholder further agrees that it shall not, directly or
- ---------
indirectly, Transfer Company Stock held by such Stockholder as of the date
hereof or which may hereafter be acquired by such Stockholder to a Disallowed
Transferee (as such term is defined in that certain Network Membership License
Agreement, dated the date hereof, between AT&T Corp. and the Company) except in
connection with a sale of capital stock of the Company held by the parties
hereto holding 66 2/3% of the shares of Common Stock Beneficially Owned by such
parties at the time of the proposed sale. Each Stockholder agrees to cause each
of its Affiliated Successors to become a party to and become bound by this
Agreement (and shall thereby become a Stockholder for all purposes of this
Agreement) prior to any transfer of Company Stock.
-3-
<PAGE>
3.2 Right of First Offer. (a) If a Cash Equity Investor (each a "CEI
-------------------- ---
Seller") desires to Transfer any or all of its shares of Company Stock
- ------
(collectively, the "Offered Shares"), other than a Transfer to an Affiliate or
an Affiliated Successor, such CEI Seller shall give written notice (the "CEI
---
Offer Notice") to each Cash Equity Investor. Each CEI Offer Notice shall
- ------------
describe in reasonable detail the number of shares of each class of Offered
Shares, the cash purchase price requested and all other material terms and
conditions of the proposed Transfer. The CEI Offer Notice shall constitute an
irrevocable offer (a "First Offer") to sell the Offered Shares to the Cash
-----------
Equity Investors at a cash price equal to the price contained in such CEI Offer
Notice and upon the same terms as the terms contained in such Offer Notice. The
Cash Equity Investors shall have the irrevocable right and option exercisable as
provided below, but not the obligations, to accept the First Offer as to the
Offered Shares.
(b) If the Cash Equity Investors have a right of First Offer pursuant to
clause (a) Cash Equity Investors shall exercise their right of First Offer by
- ----------
giving a Purchase Notice to the CEI Seller, the other Cash Equity Investors and
the Company not later than twenty-five (25) days (the "Cash Equity First Offer
-----------------------
Period") after the date of the Offer Notice. If the Cash Equity Investors notify
- ------
the Seller of their desire to purchase less than all of the Offered Shares, the
Company shall deliver notice to all Cash Equity Investors who have notified the
CEI Seller and the Company of their desire to purchase Offered Shares (the
"Purchasing Cash Equity Investors") within twenty-nine (29) days after the Offer
- ---------------------------------
Notice, and the Purchasing Cash Equity Investors shall have the right to
purchase any excess Offered Shares which other Cash Equity Investors do not
desire to purchase by written notice to the Seller and the Company so that each
Purchasing Cash Equity Investor shall have the right to acquire the proportion
of such excess Offered Shares as the number of shares of Company Stock owned by
such Purchasing Cash Equity Investor bears to the total number of shares of
Company Stock owned by all Purchasing Cash Equity Investors.
(c) The purchase of the Offered Shares by the Purchasing Cash Equity
Investors shall be closed at the principal executive offices of the Company on a
date specified by the Purchasing Cash Equity Investors at least five (5)
business days' notice, that is within thirty (30) days after the expiration of
the Cash Equity First Offer Period; provided, however, that if such purchase is
-------- -------
subject to the consent of the FCC or any public service or public utilities
commission, the purchase of the Offered Shares shall be closed on the first
business day after all such consents shall have been obtained by Final Order.
The purchase price of any Offered Shares Transferred pursuant to this Section
3.2 shall be payable in cash by certified bank check or by wire transfer of
immediately available funds.
3.3 Tag Along Rights.
----------------
(a) No Stockholder shall, directly or indirectly, Transfer, in any single
transaction or series or related transactions to one or more Persons who are not
Affiliated Successors of such Stockholder (a "CEI Inclusion Event Purchaser")
-----------------------------
shares of Inclusion Stock in
-4-
<PAGE>
circumstances in which, after giving effect to such Transfer, whether acting
alone or in concert with any other Stockholder (such parties referred to herein
as "Selling Stockholders") would result in such Selling Stockholder(s)
--------------------
Transferring, (x) ten (10%) or more of the outstanding shares of Inclusion Stock
Beneficially Owned by such Selling Stockholder to a Person who is a party, or an
Affiliated Successor of a party, to the Company Stockholder Agreement or (y) 10%
--
or more of the outstanding shares of Inclusion Stock outstanding on the date of
such proposed Transfer on a fully diluted basis to a Person who is not a party,
or an Affiliated Successor to a party, to the Company Stockholder Agreement,
but, in either case, not more than twenty-five percent (25%) of the outstanding
shares of Inclusion Stock outstanding on the date of such proposed Transfer on a
fully diluted basis (a "Tag Along Event"), unless the terms and conditions of
---------------
such sale to such CEI Inclusion Event Purchaser shall include an offer to the
Cash Equity Investors and the Management Stockholders other than the Selling
Stockholder (each, a "Tag Along Offeree") to Transfer to such CEI Inclusion
-----------------
Event Purchasers up to that number of shares of any class of Inclusion Stock
then Beneficially Owned by each Tag Along Offeree that bears the same proportion
to the total number of shares of Inclusion Stock at that time Beneficially Owned
(without duplication) by each such Tag Along Offeree as the number of shares of
Inclusion Stock being Transferred by the Selling Stockholders (including shares
of Inclusion Stock theretofore Transferred if in any applicable series of
related transactions) bears to the total number of shares of Inclusion Stock at
the time Beneficially Owned (without duplication) by the Selling Stockholders
(including shares of Inclusion Stock theretofore Transferred if in any
applicable series of related transactions). If the Selling Stockholders receive
a bona fide offer from an Inclusion Event Purchaser to purchase shares of
Inclusion Stock in circumstances in which, after giving effect to such sale
would result in a Tag Along Event, and which offer such Selling Stockholders
wish to accept, the Selling Stockholders shall then cause the Inclusion Event
Purchaser's offer to be reduced to writing (which writing shall include an offer
to purchase shares of Inclusion Stock from each Tag Along Offeree according to
the terms and conditions set forth in this Section 3.3) and the Selling
-----------
Stockholders shall send written notice of the CEI Inclusion Event Purchaser's
offer (the "Tag Along Notice") to each Tag Along Offeree, which Tag Along Notice
----------------
shall specify (i) the names of the Selling Stockholders, (ii) the names and
addresses of the proposed acquiring Person, (iii) the amount of shares proposed
to be Transferred and the price, form of consideration and other terms and
conditions of such Transfer (including, if in a series of related transactions,
such information with respect to shares of Inclusion Stock theretofore
Transferred), (iv) that the acquiring Person has been informed of the rights
provided for in this Section 3.3 and has agreed to purchase shares of Inclusion
-----------
Stock in accordance with the terms hereof, and (v) the date by which each other
Selling Stockholder may exercise its respective rights contained in this
Section 3.3, which date shall not be less than thirty (30) days after the giving
- -----------
of the Tag Along Notice. The Tag Along Notice shall be accompanied by a true and
correct copy of the CEI Inclusion Event Purchaser's offer. At any time within
thirty (30) days after receipt of the Tag Along Notice, each Tag Along Offeree
may accept the offer included in the Tag Along Notice for up to such number of
shares of Inclusion Stock as is determined in accordance with this Section 3.3,
-----------
by furnishing written notice of such acceptance to each Selling Stockholder, and
-5-
<PAGE>
delivering, to an escrow agent (which shall be a bank or a law or accounting
firm designated by the Company), on behalf of the Selling Stockholders, the
certificate or certificates representing the shares of Inclusion Stock to be
sold pursuant to such offer by each Tag Along Offeree, duly endorsed in blank,
together with a limited power-of-attorney authorizing the escrow agent, on
behalf of the Tag Along Offeree, to sell the shares to be sold pursuant to the
terms of such CEI Inclusion Event Purchaser's offer.
In the event that the CEI Inclusion Event Purchaser does not agree to
purchase all of the shares of Inclusion Stock proposed to be sold by the Selling
Stockholders and the Tag Along Offerees, then each Selling Stockholder and Tag
Along Offeree shall have the right to sell to the CEI Inclusion Event Purchaser
that number of shares of Inclusion Stock as shall be equal to (x) the number of
shares of Inclusion Stock which the Inclusion Event Purchaser has agreed to
purchase times (y) a fraction, the numerator of which is the number of shares of
Inclusion Stock Beneficially Owned (without duplication) by such Selling
Stockholder or Tag Along Offeree and the denominator of which is the aggregate
number of shares of Inclusion Stock Beneficially Owned (without duplication) by
all Selling Stockholders and Tag Along Offerees. If any Tag Along Offeree
desires to sell less than its proportionate amount of shares of Inclusion Stock
that it is entitled to sell pursuant to this Section 3.3, then the Selling
-----------
Stockholders and the remaining Tag Along Offerees shall have the right to sell
to the CEI Inclusion Event Purchaser an additional amount of shares of Inclusion
Stock as shall be equal to (x) the number of shares of Inclusion Stock not being
sold by any such Inclusion Event Purchasers times (y) a fraction, the numerator
of which is the number of shares of Inclusion Stock owned such Selling
Stockholder or remaining Tag Along Offeree and the denominator of which is the
aggregate number of shares of Inclusion Stock Beneficially Owned (without
duplication) by all Selling Stockholders and remaining Tag Along Offerees. Such
process shall be repeated in series until all of the remaining Tag Along
Offerees agree to sell their remaining proportionate number of shares of
Inclusion Stock.
(b) The purchase from each Tag Along Offeree pursuant to this Section 3.3
-----------
shall be on the same terms and conditions, including the price per share
received by the Selling Stockholders and stated in the Tag Along Notice provided
to each Tag Along Offeree. In the event that the Inclusion Stock is Common
Stock, all Tag Along Offerees shall be required, as a condition of participating
in such transaction, to Transfer Common Stock to the CEI Inclusion Event
Purchaser. In the event that the Tag Along Offerees elect to sell their pro rata
share of Series C Preferred Stock or Common Stock pursuant to this Section 3.3
-----------
the CEI Inclusion Event Purchaser shall be required to purchase both Series C
Preferred Stock and Common Stock, the purchase price allocable to holders of
Series C Preferred Stock, on the one hand, and to holders of Common Stock, on
the other hand, shall be determined by an independent committee of the Board of
Directors selected from along those directors who were not designated by any
Selling Stockholders or Tag Along Offerees, it being understood that the
directors selected pursuant to Section 2.1(c) shall be deemed independent for
--------------
such purposes.
-6-
<PAGE>
(c) Simultaneously with the consummation of the sale of the shares of
Inclusion Stock of the Selling Stockholders and each Tag Along Offeree to the
CEI Inclusion Event Purchaser pursuant to the Inclusion Event Purchaser's offer,
the Selling Stockholders shall notify each Tag Along Offeree and shall cause the
Inclusion Event Purchaser to remit to each Tag Along Offeree the total sales
price of the shares of Inclusion Stock by each Tag Along Offeree sold pursuant
thereto and shall furnish such other evidence of the completion and time of
completion of such sale and the terms thereof as may be reasonably requested by
each Tag Along Offeree.
(d) If within thirty (30) days after receipt of the Tag Along Notice, Tag
Along Offeree has not accepted the offer contained in the Tag Along Notice, such
Tag Along Offeree shall be deemed to have waived any and all rights with respect
to the sale described in the Tag Along Notice (but not with respect to any
subsequent sale, to the extent this Section 3.3 is applicable to such subsequent
-----------
sale) and the Selling Stockholders shall have sixty (60) days in which to sell
not more than the number of shares of Inclusion Stock described in the Tag Along
Notice, on terms not more favorable to the Selling Stockholders than were set
forth in the Tag Along Notice; provided, however, that if such purchase is
-------- -------
subject to the consent of the FCC or any public service or public utilities
commission, the purchase of the Offered Shares shall be closed on the first
business day after all such consents shall have been obtained by Final Order.
3.4 Drag-Along Rights. (a) If at any time a group of Cash Equity
-----------------
Investors, which group shall include (x) each of Chase and J.P. Morgan for so
long as either of the foregoing holds 50% or more of the Common Stock
Beneficially Owned by it on the date hereof or (y) if each of Chase and J.P.
Morgan no longer holds 50% or more of the Common Stock Beneficially Owned by it
on the date hereof or if either Chase or J.P. Morgan fails to satisfy its
Unfunded Commitment which shall remain uncured, holders of 66 2/3 or more of the
Common Stock Beneficially Owned by the Cash Equity Investors at the time of the
proposed sale, proposes in a single transaction or series of transactions to
Transfer Company Stock, which Company Stock shall include 75% or more of the
outstanding Common Stock Beneficially Owned by each of Chase and J.P. Morgan for
so long as either of the foregoing holds 50% or more of the Common Stock
Beneficially owned by it on the date hereof and neither Chase nor J.P. Morgan
has failed to satisfy its Unfunded Commitment which shall remain uncured (each
member of the group, a "Selling Investor"), in a bona fide arm's-length
----------------
transaction to a third party in which the same price per share shall be payable
in respect of all shares of any class of the Common Stock Beneficially Owned,
then, upon the written request of such Selling Investors, each other Cash Equity
Investor shall be obligated to, and shall, if so requested by such third party
(a) sell, transfer and deliver or cause to be sold, transferred and delivered to
such third party, up to all shares of Common Stock Beneficially Owned by them at
the same price per share (irrespective of class) and on the same terms as are
applicable to the Selling Investors, and (b) if approval of the transaction is
required of the stockholders of the Company, vote his, her or its shares of
Series C Preferred Stock and Common Stock in favor
-7-
<PAGE>
thereof and, in the event such sale or transfer is in connection with a merger
or consolidation, each Cash Equity Investor shall waive any dissenters' rights,
appraisal rights or similar rights in connection with such merger or
consolidation.
(b) The obligation of each Cash Equity Investor to sell shares of capital
stock pursuant to clause (a) shall be conditioned upon the following: (i) the
maximum liability with respect to indemnification granted by each selling Cash
Equity Investor to the purchaser in such sale shall not exceed the proceeds of
the sale to such Cash Equity Investor and (ii) any such liability with respect
to indemnification shall be a several (and not joint and several) obligation of
each selling Cash Equity Investor.
4. Unfunded Commitment; Additional Capital Contributions. (a) In the
-----------------------------------------------------
event any Cash Equity Investor (a "Defaulting Cash Equity Investor") fails to
-------------------------------
satisfy any portion of its Unfunded Commitment pursuant to Section 2.2 of the
-----------
Securities Purchase Agreement (a "Payment Default"), the Company shall give
---------------
prompt written notice, but no later than one (1) business day following such
default (a "Default Notice"), to each Cash Equity Investor other than the
--------------
Defaulting Cash Equity Investor (each a "Non-Defaulting Cash Equity Investor")
-----------------------------------
of the amount of such Payment Default (the "Default Amount"). In the event the
--------------
Defaulting Cash Equity Investor has failed to cure such Payment Default, or in
the case of a Payment Default by either PEI III or ELI II, in the event PEI III
and ELI II have failed to cure such Payment Default, within five (5) days of the
Payment Default, each Non-Defaulting Cash Equity Investor may, acting on its own
or in conjunction with one or more of the other Non-Defaulting Cash Equity
Investors (each a "Participating Cash Equity Investor"), agree to fund all or
----------------------------------
any portion of such Payment Default by providing written notice to the Company
(a "Payment Notice") no later than 12:00 Noon (New York time) twenty (20) days
--------------
following the date on which the Default Notice is delivered (the "Payment Notice
--------------
Period") and the Company shall thereafter provide each Participating Cash Equity
- ------
Investor with copies of such Payment Notice or Payment Notices; provided,
--------
however, that if the aggregate amount agreed to be funded by the Participating
- -------
Cash Equity Investors shall exceed the Payment Default, then the amount to be
funded by each such Participating Cash Equity Investor shall be divided amongst
the Participating Cash Equity Investors pro rata in accordance with the shares
of Common Stock Beneficially Owned by the Participating Cash Equity Investors;
provided, further, however, that if the aggregate amount agreed to be funded by
- -------- ------- -------
the Participating Cash Equity Investors shall be less than the Payment Default
(a "Payment Default Shortfall"), the Company shall give prompt written notice,
-------------------------
but no later than one (1) business day following the end of the Payment Notice
Period, of such Payment Default Shortfall (a "Payment Default Shortfall Notice")
--------------------------------
to all Non-Defaulting Cash Equity Investors and all such Non-Defaulting Cash
Equity Investors may agree to fund the Payment Default Shortfall by providing
written notice to the Company within five (5) days of delivery of the Payment
Notice and payment shall be made in accordance with the preceding two provisos.
-8-
<PAGE>
(b) Upon payment of the Default Amount (or any portion thereof), each
Participating Cash Equity Investor (i) shall be deemed to be the record and
beneficial owner of that number of shares of Common Stock Beneficially Owned by
the Defaulting Cash Equity Investor equal to the total number of shares of
Common Stock Beneficially Owned by the Defaulting Cash Equity Investor
multiplied by the amount equal to the amount paid by such Participating Cash
Equity Investor pursuant to this Section 4 divided by the Default Amount, and
---------
(ii) shall become obligated to the Company pursuant to Section 2.2 of the
-----------
Securities Purchase Agreement with respect to the remaining Unfunded Commitment,
if any, of the Defaulting Cash Equity Investor in an amount equal to the product
of the amount of such remaining Unfunded Commitment multiplied by the percentage
of the Unfunded Commitment the Defaulting Cash Equity Investor failed to satisfy
which such Participating Cash Equity Investor funded pursuant to this Section 4.
---------
(c) Upon a Payment Default by either Chase or J.P. Morgan which shall
remain uncured by Chase or J.P. Morgan, respectively, the rights of Chase and
Morgan, as the case may be, pursuant to Sections 2.1, 2.4, 6.1 shall terminate.
------------ --- ---
5. Purchase Rights.
---------------
5.1 Right to Exercise Purchase Rights. If Equity Securities are issued by
---------------------------------
the Company pursuant to Section 7.2 of the Company Stockholder Agreement, then,
-----------
notwithstanding the notice provisions in Section 7.2 of the Company Stockholder
-----------
Agreement, each Cash Equity Investor may exercise such Purchase Right, in whole
or in part, on the terms and conditions and for the purchase price set forth in
the Issuance Notice, by giving to the Company notice to such effect, within
twenty-five (25) days after the giving of the Issuance Notice pursuant to the
Company Stockholder Agreement. If Cash Equity Investors give notice to exercise
Purchase Rights (each, a "Purchase Right Cash Equity Investor") with respect to
-----------------------------------
less than the entire percentage of Equity Securities proposed to be offered,
issued, sold or otherwise disposed of equal to the number of shares of Common
Stock then Beneficially Owned by all Cash Equity Investors divided by the
aggregate number of shares of Common Stock outstanding immediately prior to such
offer, issuance, sale or disposition of Equity Securities (the "Purchase Right
--------------
Shares"), then the Purchase Right Cash Equity Investors shall have the right by
- ------
written notice to the Company within twenty-nine (29) days after the giving of
the Issuance Notice to acquire the excess Purchase Right Shares in such
proportion as such excess Purchase Right Shares bears to the number of shares of
Common Stock Beneficially owned by such Purchase Right Cash Equity Investor
immediately prior to such offer of Equity Securities by the Company.
6. Registration Rights.
-------------------
6.1 Right to Exercise Registration Rights. (a) The Cash Equity Investors
-------------------------------------
will not exercise registration rights pursuant to Sections 5 of the Company
----------
Stockholder Agreement
-9-
<PAGE>
unless the Registrable Securities proposed to be sold by the Cash Equity
Investors which are Demanding Stockholders shall reasonably be expected to
result in aggregate gross proceeds to such Demanding Stockholders of at least
$25 million.
(b) The Cash Equity Investors will not exercise registration rights
pursuant to Section 7.8 of the Company Stockholder Agreement unless Cash Equity
Investors Beneficially Owning 33 1/3% of all shares of Common Stock Beneficially
Owned by all Cash Equity Investors, one of which shall be either Chase or J.P.
Morgan, elect to exercise such rights. Notwithstanding the foregoing, from and
after the eighth anniversary of the date hereof, the Cash Equity Investors will
not exercise registration rights pursuant to Section 7.8 of the Company
Stockholder Agreement unless Cash Equity Investors Beneficially Owning 33 1/3%
of all shares of Common Stock Beneficially Owned by all Cash Equity Investors
elect to exercise such rights.
7. After-Acquired Shares; Recapitalization.
---------------------------------------
7.1 After-Acquired Shares; Recapitalization. (a) All of the provisions
---------------------------------------
of this Agreement shall apply to all of the shares of Equity Securities now
owned or hereafter issued or transferred to a Stockholder or to his, her or its
Affiliates in consequence of any additional issuance, purchase, exchange or
reclassification of shares of Equity Securities, corporate reorganization, or
any other form of recapitalization, or consolidation, or merger, or share split,
or share dividend, or which are acquired by a Stockholder or its Affiliate in
any other manner.
(b) Whenever the number of outstanding shares of Equity Securities is
changed by reason of a stock dividend or a subdivision or combination of shares
effected by a reclassification of shares, each specified number of shares
referred to in this Agreement shall be adjusted accordingly.
8. Equitable Relief.
----------------
8.1 Equitable Relief. The parties hereto agree and declare that legal
----------------
remedies may be inadequate to enforce the provisions of this Agreement and that,
in addition to being entitled to exercise all of the rights provided herein or
in the Restated Certificate or granted by law, including recovery of damages,
equitable relief, including specific performance and injunctive relief, may be
used to enforce the provisions of this Agreement.
9. Miscellaneous.
-------------
9.1 Notices. All notices or other communications hereunder shall be in
-------
writing and shall be given in the manner prescribed in the Company Stockholder
Agreement.
-10-
<PAGE>
9.2 Entire Agreement; Amendment; Consents. (a) This Agreement and the
-------------------------------------
Company Stockholder Agreement constitute the entire agreement among the parties
with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof. The Stockholders agree that
the terms of this Agreement shall supersede any inconsistent provision contained
in the Company Stockholder Agreement.
(b) No change or modification of this Agreement shall be valid, binding or
enforceable unless the same shall be in writing and signed by Stockholders
holding 66 2/3% of all shares of Common Stock Beneficially Owned by all Cash
Equity Investors; provided, however, that no change or modification to this
-------- -------
Agreement which adversely effects the rights of any Stockholder or the Company
shall be valid, binding and enforceable unless the same shall be in writing and
signed by such Stockholder or the Company. In the event any party hereto shall
cease to own any shares of Equity Securities such party hereto shall cease to be
a party to this Agreement and the rights and obligations of such party hereunder
shall terminate.
(c) Whenever in this Agreement the consent or approval of a Stockholder is
required, except as expressly provided herein, such consent or approval may be
given or withheld in the sole and absolute discretion of each Stockholder.
(d) Whenever the Company Stockholder Agreement is amended in accordance
with its terms, the Stockholders hereto agree to enter into such amendments to
this Agreement necessary to effectuate the intent of this Agreement. The
Stockholder shall not enter into any such amendment the effect of which
adversely effects the rights of any Stockholder hereto without the consent of
such Stockholder.
9.3 Term. This Agreement shall terminate upon the termination of the
----
Company Stockholder Agreement. Section 2.1(c) shall terminate upon termination
--------------
of Section 3.1(a)(ii) of the Company Stockholder Agreement.
9.4 Obligations Several. The obligations of each Stockholder under this
-------------------
Agreement shall be several with respect to each such Stockholder.
9.5 Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the law of the State of Delaware.
9.6 Jurisdiction. (a) The Company and each of the Stockholders hereby
------------
irrevocably consents to the exclusive jurisdiction of the state or federal
courts in the State of New York, and all state or federal courts competent to
hear appeals therefrom, over any actions which may be commenced against any of
them under or in connection with this Agreement. The Company and each
Stockholder hereby irrevocably waive, to the fullest extent permitted by
applicable law, any objection which any of them may now or hereafter have to the
laying of venue of any
-11-
<PAGE>
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute in the Southern District of New York and New York
County. The Company and each Stockholder hereby agree that a judgment in any
such dispute may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. The Company and each Stockholder hereby
consent to process being served by any party to this Agreement in any actions by
the transmittal of a copy thereof in accordance with the provisions of
Section 9.1.
- -----------
9.7 Benefit and Binding Effect; Severability. This Agreement shall be
----------------------------------------
binding upon and shall inure to the benefit of the Company (solely with respect
to Sections 3.2, 3.3 and 4), its successors and assigns, and each of the
------------ --- -
Stockholders and their respective executors, administrators and personal
representatives and heirs and permitted assigns. If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by any law
or public policy or any listing requirement applicable to the Common Stock, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto affected by
such determination in any material respect 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 in order that the provisions hereof
are given effect as originally contemplated to the greatest extent possible.
9.8 Headings. The captions in this Agreement are for convenience only
--------
and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
9.9 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
-12-
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed or consent this
Agreement to be executed by its duly authorized officers as of the date first
written above.
CASH EQUITY INVESTORS:
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc.,
its general partner
By___________________________________________
Name:
Title:
J.P. MORGAN INVESTMENT CORPORATION
By___________________________________________
Name:
Title:
SIXTY WALL STREET SBIC FUND, L.P.
By: Sixty Wall Street SBIC Corporation,
its general partner
By___________________________________________
Name:
Title:
PRIVATE EQUITY INVESTORS III, L.P.
By: ROHIT M. DESAI ASSOCIATES III, L.L.C.,
its general partner
By___________________________________________
Name:
Title:
-13-
<PAGE>
EQUITY-LINKED INVESTORS-II
By: ROHIT M. DESAI ASSOCIATES-II,
its general partner
By___________________________________________
Name:
Title:
TORONTO DOMINION CAPITAL (USA), INC.
By___________________________________________
Name: Martha Gariepy
Title: Vice President
DAG-TRITON PCS, L.P.
By: Duff Ackerman Goodrich LLC,
its general partner
By___________________________________________
Name:
Title:
FIRST UNION CAPITAL PARTNERS, INC.
By___________________________________________
Name:
Title:
MANAGEMENT STOCKHOLDERS:
MICHAEL E. KALOGRIS
_____________________________________________
-14-
<PAGE>
STEVEN R. SKINNER
_____________________________________________
DAVID D. CLARK
_____________________________________________
with respect to Sections 3.2, 3.3 and 4 only
TRITON PCS HOLDINGS, INC.
By___________________________________________
Name:
Title:
-15-
<PAGE>
SCHEDULE I
CASH EQUITY INVESTORS
CB Capital Investors, L.P. Toronto Dominion Capital (USA), Inc.
380 Madison Avenue, 12th Floor 31 West 52nd Street
New York, NY 10017 New York, NY 10019
Attn: Arnie Chavkin Attn: Brian Rich
Tel: (212) 622-3100 Tel: (212) 468-0740
Fax: (212) 622-3101 Fax: (212) 974-0429
J.P. Morgan Investment Corporation Toronto Dominion Capital (USA), Inc.
101 California Street, 38th Floor 909 Fannin
San Francisco, CA 94111 Suite 1700
Attn: John Watkins Houston, TX 77010
Tel: (415) 954-3200 Attn: Martha Gariepy
Fax: (415) 954-4737 Tel: (713) 653-8225
Fax: (713) 652-2647
Sixty Wall Street SBIC Fund, L.P.
101 California Street, 38th Floor First Union Capital Partners, Inc.
San Francisco, CA 94111 One First Union Center
Attn: John Watkins 301 South College Street / 5th Floor
Tel: (415) 954-3200 Charlotte, NC 28288-0732
Fax: (415) 954-4737 Attn: Watts Hamrick
Tel: (704) 374-4791
Private Equity Investors III, L.P. Fax: (704) 374-6711
540 Madison Avenue, 36th Floor
New York, NY 10022 DAG-TRITON PCS, L.P.
Attn: Damon Ball Two Embarcadero Center
Tel: (212) 838-9191 Suite 2930
Fax: (212) 838-9807 San Francisco, CA 94111
Attn: John Duff
Equity-Linked Investors-II Tel: (415) 788-2755
540 Madison Avenue, 36th Floor Fax: (415) 788-7311
New York, NY 10022
Attn: Damon Ball
Tel: (212) 838-9191
Fax: (212) 838-9807
<PAGE>
SCHEDULE II
STOCK OWNERSHIP
<TABLE>
<CAPTION>
Shares of Series C
Common Preferred
Stockholder Stock Shares
- ---------------------------------- ---------- ----------
<S> <C> <C>
CB Capital Investors 0 404,714
J.P. Morgan Investment Corporation 0 383,679
Sixty Wall Street SBIC Fund, L.P. 0 21,036
Private Equity Investors III, L.P. 0 194,357
Equity-Linked Investors-II 0 194,357
Toronto Dominion Capital (USA) Inc. 0 97,179
First Union Capital Partners, Inc. 0 48,589
DAG-TRITON PCS, Inc. 0 48,589
Michael E. Kalogris 78,494.80 5,000
Steven R. Skinner 58,871.10 2,500
----------- ------------
Total 137,365.90 1,400,000
</TABLE>
<PAGE>
SCHEDULE III
INITIAL DIRECTOR NOMINEES
Arnie Chavkin
John Watkins
Scott Anderson
John Beletic
<PAGE>
EXHIBIT 10.11
INTERCARRIER ROAMER SERVICE AGREEMENT
THIS INTERCARRIER ROAMER SERVICE AGREEMENT (the "Agreement") is dated
as of the 4th day of February, 1998 by and between AT&T Wireless Services, Inc.,
a Delaware corporation, on behalf of its Affiliates (individually and
collectively, "AT&T") for the markets listed on Schedule 1 hereto, and Triton
PCS Operating Company L.L.C., a Delaware limited liability company, on behalf of
itself and its Affiliates (individually and collectively, "Triton") for the
markets listed on Schedule 2. AT&T and Triton are sometimes referred to,
individually, as a "Party" and together as "Parties."
R E C I T A L
WHEREAS, each of AT&T and Triton desire to make arrangements to facilitate
the provision of mobile wireless radiotelephone service ("Service") to the
customers of the other Party, while such customers are using the wireless
radiotelephone facilities of such Party, in accordance with the terms of this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein set forth
and intending to be legally bound hereby, the Parties do hereby agree as
follows:
ARTICLE 1.
DEFINITIONS
As used in this Agreement, the terms below shall have the following
meanings:
Affiliate means, with respect to a Party, any facilities-based CMRS
operating company that is (a) controlled by the Party, (b) an entity in which
the Party has at least fifty percent (50%) voting interest, (c) an entity that
shares switching facilities with the Party, (d) managed by the Party, or (e) an
entity that has purchased a portion of CMRS spectrum from the Party in a market
listed on Schedule 1 and in which the Party maintains an ownership interest.
Approved CIBERNET Negative File Guidelines means the negative file
guidelines appearing in the CIBER Record in effect from time to time.
Authorized Receipt Point or "ARP" means the location or address of the
Person designated by the Home Carrier as the delivery point for its CIBER
records and authorized agent for performing CIBER edits.
Authorized Roamer means a Roamer using equipment and an assigned telephone
number with the NPA/NXX combinations listed in accordance with Article 4 below
for whom the
<PAGE>
Serving Carrier has not received a negative notification in accordance with the
provisions of this Agreement.
CIBER means Cellular Intercarrier Billing Exchange Record.
CIBER Record means the publication prepared by CIBERNET Corporation, a
wholly-owned subsidiary of the Cellular Telecommunications Industry Association,
as a service to the wireless communications industry. Unless specifically
provided otherwise in this Agreement, all words and phrases defined in the CIBER
Record shall have the meaning herein that they have therein.
Clearinghouse means that entity which provides for the exchange of CIBER
records and performs industry accepted CIBER edits, including edits to verify
Industry Negative File information.
CMRS means Commercial Mobile Radio Service.
ESN means the Electronic Serial Number that is encoded in a wireless
telephone set by the manufacturer and which is broadcast by such telephone.
Home Carrier means a Party who is providing Service to its registered
customers in a geographic area where it holds a license or permit to construct
and operate a mobile wireless radiotelephone system and station.
Home Rate is the average actual rate per minute billed to customer by the
Home Carrier for access and airtime, but excluding revenues for features, taxes,
toll or other non-rate items.
Industry Negative File means the negative file maintained by the authorized
Clearinghouses in accordance with approved CIBERNET Negative File Guidelines.
MIN means the "Mobile Identification Number" which is assigned by a Home
Carrier to each of its registered customers.
NPA/NXX combinations means the six-digit numerical combinations assigned by
regulatory authorities to identify the area code and telephone number prefix for
Service.
Roamer means a customer of one Party who seeks Service in a geographic area
outside of the area served by such Party with whom it is registered and within
the geographic area served by the other Party.
Service shall have the meaning set forth in the Recital of this Agreement.
2
<PAGE>
Serving Carrier means a Party who provides Service for registered customers
of another Party while such customers are out of their Home Carrier's geographic
area and in the geographic area where the Serving Carrier directly or through
Affiliates holds a license or permit to construct and operate a mobile wireless
radiotelephone system and station.
ARTICLE II.
PROVISION OF SERVICE
2.1 Each Party shall provide, to any Authorized Roamer who so requests,
Service in accordance with its own tariffs, if applicable, and with the terms
and conditions of this Agreement.
2.2 Notwithstanding anything in this Agreement to the contrary, a Serving
Carrier may suspend or terminate Service to an Authorized Roamer in accordance
with the terms of its own tariffs, but such suspension or termination shall not
affect the rights and obligations of the Parties for Service furnished hereunder
prior to such termination or suspension.
2.3 In connection with its Service to Roamers, no Serving Carrier shall
use recorded announcements or other inducements for an Authorized Roamer to
discontinue the Service of its Home Carrier or, unless otherwise authorized
herein, Roamer's use of a Serving Carrier's system.
2.4 Nothing in this Agreement shall be construed to require either Party
to provide Service using technology compatible with the technology used by the
other Party.
2.5 Either Party may from time to time add to the list of markets owned or
operated by such Party or its Affiliates set forth on Schedule 1 or 2, as the
case may be, by giving notice thereof to the other Party, together with a copy
of the modified Schedule. Any modified Schedule 1 or 2 so furnished shall be
substituted for Schedule 1 or 2, as the case may be, as in effect prior to such
modification, and shall become part of this Agreement effective upon thirty (30)
days' notice to the other Party.
ARTICLE III.
CHARGES
Each Home Carrier, whose customers (including the customers of its
resellers) receive service from a Serving Carrier as Authorized Roamers under
this Agreement, shall pay to the Serving Carrier who provided such service 100%
of the Serving Carrier's charges for wireless service and one hundred percent
(100%) of pass-through charges (i.e., any toll or other charges owed by the
Serving Carrier hereunder to any toll provider or other carrier in connection
with
3
<PAGE>
providing such Service rates on Exhibit A). The amount of the charges for the
use of each Serving Carrier's Service are set forth in Exhibit A attached to
this Agreement.
ARTICLE IV.
EXCHANGE OF INFORMATION
4.1 Exhibit B to this Agreement is a list furnished by the respective
Parties of the valid NPA/NXX combinations used by their respective customers.
These combinations shall be accepted by the other Party. Each NPA/NXX
combination is and shall be within the entire line range (0000-9999), or a
specified portion thereof. The minimum line range to be exchanged by the
Parties shall be 1,000 line numbers. Each Party shall be responsible for all
billings otherwise properly made under this Agreement to any number listed by
such Party within the range or ranges specified by it in Exhibit B. Additions,
deletions, or changes to NPA/NXX combinations and line number range(s) for the
Home Carrier's customers may be made upon at least fifteen (15) days prior
written notice to the Serving Carrier. Such notice shall be in the form
attached as Exhibit B to this Agreement and shall include the requested
effective date for the addition, deletion or change.
4.2 Each Party shall provide to each other Party, a list of MINs (from
among those within the NPA/NXX combination(s) identified pursuant to Section 4.1
hereof) and ESNs (used by customers with such MINs) of the telephones to which
the other Party is not authorized to provide Service pursuant to this Agreement,
which shall be entered into the Industry Negative File. The approved CIBERNET
Negative File Guidelines, as amended from time to time, shall be the governing
criteria for the Parties. Thereafter, from time to time, as agreed by the
Parties, each Party shall notify each other Party of all additions to, and
deletions from, these lists for the customers of that particular Party. Such
notifications shall be made during normal business hours of the Party being
notified by facsimile or by telephone with a written confirmation and shall be
effective one (1) hour after receipt.
4.3 Each Party hereby agrees to indemnify the other Party, together with
its partners and any and all of their officers, directors, employees, agents
and/or affiliates, against, and hold them harmless from, any and all third party
claims, suits, demands, losses and expenses, including attorneys' fees and
disbursements, which may result in any way whatsoever from the indemnified
Party's denial of Roamer or local Service to any NPA/NXX and MIN combination
which has been listed by the indemnifying Party as not being authorized to
receive Service.
4.3.1 Each Party, due to system limitations, may purge or delete
numbers of its customers from the lists as referred to in Section 4.2 hereof,
but in all such cases, such purging or deletion must be done in accordance with
the approved CIBERNET Negative File Guidelines. If purging or deletion of
numbers is done prior to the time periods established by such Guidelines, or
through procedures not otherwise set forth, in the approved CIBERNET Negative
File Guidelines, the Party implementing the purge or deletion will assume
financial liability for any
4
<PAGE>
charges incurred by those numbers. All purges or deletions made pursuant to this
Section 4.3.1 shall be given through the Parties and shall be in the form
mutually agreed upon by the Parties and effective as of the time established by
the approved CIBERNET Negative File Guidelines (unless otherwise modified by
mutual agreement of the Parties.)
4.4 All information not of public record that is exchanged pursuant to
this Agreement shall be treated as confidential. Parties obtaining such
confidential information through this Agreement shall use it only as necessary
to carry out the purposes of this Agreement or as necessary to comply with
federal, state or local law. Parties obtaining confidential information through
this Agreement shall not disclose its contents except as necessary to its duly
authorized agents to carry out the purposes of this Agreement or as necessary to
comply with federal, state or local law. The obligation to protect the
confidentiality of information shall survive the termination of the agreement
for a period of five years.
ARTICLE V.
FRAUD
5.1 The Parties will cooperate and, as necessary, supplement this
Agreement in order to minimize fraudulent or other unauthorized use of their
systems. If any Party reasonably decides that, in its sole judgment, despite
due diligence and cooperation pursuant to the preceding sentence, fraudulent or
other unauthorized use has reached an unacceptable level of financial loss and
is not readily remediable, such Party may suspend this Agreement, in whole or in
part, pursuant to the terms of this Agreement.
5.2 To control fraudulent Roamer usage, each Party shall use a positive
validation/verification ("PV") system provided by a mutually agreed upon
validation/verification service under which the ESN, MIN and/or NPA/NXX used in
a call in the Serving Carrier's system is compared against a list of Authorized
Roamers. The Parties agree that calls completed by a Serving Carrier, either
(a) after a PV request has determined that a Roamer is not a valid customer of
the Home Carrier or (b) for any unauthorized ESN after entry to the Industry
Negative File has become effective, shall be the sole responsibility of the
Serving Carrier.
5.3 The Serving Carrier shall make PV checks with respect to all Roamer
calls made by purported customers of the Home Carrier. If the Serving Carrier
fails to make such a check with respect to call, the Serving Carrier shall not
charge the Home Carrier any amounts for that call in the event the call was the
result of fraudulent or unauthorized use.
5.4 The Parties may agree to use an alternative method of call validation,
including but not limited to the use of SS-7 connections either through a
network of carriers or directly between the systems of the Parties.
5
<PAGE>
5.5 In addition to other procedures set forth in this Agreement, a Home
Carrier may notify a Serving Carrier by facsimile, with written confirmation,
that certain NPA/NXX combinations are not to receive Service. Any calls
completed using such NPA/NXX combinations made one full business day or more
after such notice has been given shall be the sole responsibility of the Serving
Carrier and the Home Carrier shall not be charged any amount for such calls.
5.6 Each Serving Carrier shall use commercially reasonable efforts to
provide each Home Carrier with real-time visibility of call detail records
delivered through a network compatible with AT&T's network. Such information
shall be delivered within one hour of the applicable call. In the event that
the Serving Carrier provides such a real-time visibility system, the Serving
Carrier shall not be liable in any event for a temporary failure of the system
unless the Serving Carrier has been notified of such failure by the Home Carrier
and the Serving Carrier does not take commercially reasonable steps to remedy
the failure. If the Serving Carrier has been so notified and has so failed to
take such commercially reasonable steps, the Serving Carrier shall be liable for
all unauthorized usage attributed to Home Carrier's subscribers during the
period from the time Serving Carrier was notified of the problem to the time
that the problem has been resolved to the reasonable satisfaction of the Home
Carrier.
5.7 For purposes of notification under this Article 5, the following
addresses and facsimile numbers shall be used:
If to AT&T:
AT&T Wireless Services, Inc.
5000 Carillon Point
Kirkland, WA 98033
Attn: Billing and ICS Operations
Tel. No.: (206) 827-4500
Fax No.: (206) 828-1390
If to Triton:
101 Lindenwood Drive
Suite 125
Malvern, PA 19355
Attn: Mr. Michael E. Kalogris
Mr. Steven R. Skinner
Tel. No.: (610) 651-5900
Fax No.: (610) 993-2683
Each Party may change the names, addresses and numbers set forth above by
providing notice to the other Party as provided in Article 13 below.
6
<PAGE>
ARTICLE VI.
BILLING
6.1 Each Home Carrier shall be responsible for billing to, and collecting
from, its own customers all charges that are incurred by such customers as a
result of service provided to them as Authorized Roamers by the Serving Carrier.
The Home Carrier shall also be responsible for billing its customers for, and
remitting to, the Federal Government all federal excise tax that may be due in
connection with the service being billed by it to its customers. While the
Serving Carrier will be responsible for the computation and remittance of all
state and local taxes, each Home Carrier shall be liable to the Serving Carrier
for all such state and local taxes remitted by the Serving Carrier, for
Authorized Roamers regardless of whether these amounts are paid to the Home
Carrier by its customers.
6.2 Each Serving Carrier who provides Service to an Authorized Roamer
pursuant to this Agreement shall forward Roamer billing information, within five
business days of the call date, in accordance with the procedures and standards
set forth in the CIBER Record to the Home Carrier's Authorized Receipt Point.
CIBER Type 50 and CIBER Type 70 records shall not be accepted without mutual
signed agreement and if such mutual agreement is reached it will be attached to
this Agreement. Any future revisions of the CIBER Record or additional record
types must be mutually agreed upon before implementation. In the event the
parties use the CIBERNET Net Settlement Program, or alternative settlement
program such information must be in a format in compliance with the CIBER Record
requirements or agreed upon format.
6.3 Where the Authorized Roamer billing information required to be
provided by the Serving Carrier in accordance with Section 6.2 above is not in
accordance with the CIBER Record, the Home Carrier may return a record to the
Serving Carrier as provided in the CIBER Record. Returning the defective record
will be in accordance with CIBER Record established procedures. The Serving
Carrier may correct the defective record and return it to the Home Carrier for
billing, provided that the time period from the date of the Service call at
issue to the receipt of the corrected record does not exceed sixty (60) days.
6.4 No credit for insufficient data or defective records shall be
permitted except as provided in Section 6.3 above, unless mutually agreed upon
by both Parties.
6.5 Each Home Carrier may at its discretion perform any necessary edits at
its Clearinghouse on in collect or out collect call records to ensure compliance
with the terms of this Agreement.
ARTICLE VII.
SETTLEMENT
7
<PAGE>
7.1 Each Party will settle its accounts with the other Parties on the
basis of billing information received as described in this Article VII. In the
event both Parties use Net Financial Settlement procedures, the Parties shall
not submit a paper invoice but will make payments in accordance with such Net
Financial Settlement procedures, provided that the Parties may submit call
records for payment that relate to calls made more than sixty (60) days from the
date of the call if such call was the subject of a dispute or investigation
regarding fraudulent or unauthorized use.
7.1.1 If an incorrect roaming rate is charged by the Serving Carrier
to the Home Carrier, the Serving Carrier shall refund all amounts in excess of
the contract rate back to the Home carrier within forty five days of
notification by the Home Carrier. Each carrier shall have ninety (90) days from
the end of the settlement period to invoice for amounts in excess of the
contract rate. The Home Carrier will send a collection letter within sixty (60)
days of the invoice date, within ninety (90) days of the invoice date, and
within one hundred (120) days of the invoice date. If the invoice remains unpaid
after one hundred twenty (120) days from the original invoice date, the Home
Carrier may withhold the amounts from the CIBERNET Net Settlement Program or
alternative settlement program.
7.2 In the event that either Party does not use Net Financial Settlement
procedures, the billing and payment for charges incurred under this Agreement
shall be as set forth below.
7.2.1 The parties shall determine amounts owed to each other for
Service provided to Roamers in one-month periods with the end of such period
beginning on the sixteenth of each calendar month and ending on the fifteenth of
the following month in which Service is provided. The end of this Period shall
be referred to as "Close of Billing."
7.2.2 The Parties shall send each other an invoice for Services used
under this Agreement within fifteen (15) days after the Close of Billing.
7.2.3 Each invoice shall contain the following information.
a. Billing period used by Serving Carrier
b. Batch sequence number
c. Serving and Home Carrier System Identification Number
d. Air Service charges
e. Total toll charges (both intrastate and interstate)
f. All other charges and credits
g. Total taxes
h. Total charges
7.2.4 Payment on such invoices shall be made in the form of a
check or a wire transfer which must be received by the invoicing party within
thirty (30) days from the date of the invoice. Late payments shall be charged
with a late payment fee of one and one half percent
8
<PAGE>
(1.5%) of the outstanding balance for each thirty-day period (or portion
thereof) that such payments are late.
7.2.5 Each Party may offset the amount owed to the other Party under
this Agreement and a single payment of the balance to the Party entitled to
receive such balance shall be made.
ARTICLE VIII.
AUTOMATIC CALL DELIVERY AND HAND-OFF
8.1 Each Party shall provide for automatic call delivery for customers of
the other Party who are Roamers in such Party's system. To this end, each Party
shall continuously provide the hardware, software and transmission facilities
required for such call delivery either directly between the systems of the
Parties or indirectly through a separate network of wireless communications
carriers. The hardware, software and transmission facilities provided by each
Party hereunder shall at all times be operated and maintained to provide the
most efficient level of service technically feasible to minimize transmission
errors and Service interruptions.
8.2 To the extent that each Home Carrier's customers may use the system of
a Serving Carrier whose geographic license area abuts the Home Carrier's
geographic license area, the Parties shall provide for automatic call hand-off
between such Home and Serving Carrier's systems. To this end, each Party shall
continuously provide the hardware, software and transmission facilities required
for such call hand-off either directly between the systems of such Home and
Serving Carrier or indirectly through a separate network of wireless
communications carriers. The hardware, software and transmission facilities
provided by each Party hereunder shall at all times be operated and maintained
to provide the most efficient level of service technically feasible to minimize
transmission errors and Service interruption.
8.3 Neither of the Parties will be liable for nonperformance or defective
performance of its obligations under this Article 8 to the extent and for such
periods of time as such nonperformance or defective performance is due to
reasons outside such Party's control, including, without limitation, acts of
God, war, acts of any governmental authority, riots, revolutions, fire, floods,
explosions, sabotage, nuclear incidents, lightning, weather, earthquakes,
storms, sinkholes, epidemics, strikes, or delays of suppliers or subcontractors
for the same causes. Neither Party shall be required to settle any labor
dispute or other third party dispute in any manner which is deemed by that Party
to be less than totally advantageous, in that Party's sole discretion.
8.4 If the Serving Carrier provides pre-call validation of the Home
Carrier's customers, the Home Carrier agrees to implement Negative File
Suppression at the Clearinghouse and the CIBERNET Negative File Guidelines and
procedures do not apply.
9
<PAGE>
ARTICLE IX.
TERM, TERMINATION AND SUSPENSION OF AGREEMENT
9.1 This Agreement shall have a term commencing on the date first written
above and shall continue for a period of twenty (20) years until the twentieth
(20th) anniversary of the date hereof.
9.2 This Agreement may be terminated or suspended by either Party
immediately upon written notice to the other upon a default (as defined in
Paragraph 10.1) by the other Party. The Parties shall work together to resolve
as expeditiously as possible any difficulty that causes a suspension. At such
time as the Party originally giving notice of suspension concludes that the
problem causing the suspension has been resolved, that Party shall give to the
other written notice to this effect. This Agreement shall resume in full effect
within five (5) business days after the Parties have mutually agreed that the
problem has been resolved, unless either Party thereafter gives written notice
that in its reasonable view the problem necessitating the suspension has not
been resolved. If the problem causing the suspension of this Agreement remains
unresolved for thirty (30) days, this Agreement may be terminated by written
notification by either Party.
9.3 This Agreement may be suspended, in whole or in part, by either Party
immediately upon written notice to the other Party, in the event that such Party
determines, in its reasonable discretion, that fraudulent or unauthorized use on
the other Party's system is unacceptable. In such event, the notifying Party
shall defend, indemnify and hold harmless the other Party, and the other Party's
officers, directors, employees, agents and representatives from any claims by
any person or entity relating to such suspension of Service.
9.4 In the event that a market listed on Schedule 1 or Schedule 2, as the
case may be, ceases to be owned or operated by such Party or an Affiliate
thereof, such Party may terminate this Agreement with respect to such market
upon written notice to the other Party.
9.5 The termination or suspension of this Agreement shall not affect the
rights and liabilities of the Parties under this Agreement with respect to all
Authorized Roamer charges incurred prior to the effective date of such
termination or suspension.
ARTICLE X.
DEFAULT
10.1 A Party will be in default under this Agreement upon the occurrence of
any of the following events:
10
<PAGE>
10.1.1 Breach of any term of this Agreement, if such breach shall
continue for thirty (30) days after receipt of written notice thereof;
10.1.3 Voluntary liquidation or dissolution; or
10.1.4 A final order by the Federal Communications Commission ("FCC")
revoking or denying renewal of the CMRS license or permit granted to such Party.
10.2 All claims and disputes relating in any way to the performance,
interpretation, validity, or breach of this Agreement shall be referred to final
and binding arbitration in accordance with rules established by the American
Arbitration Association ("Rules") as amended by this Agreement. A single
neutral arbitrator shall decide all claims hereunder. The costs of arbitration,
including the fees and expenses of the arbitrator shall be shared equally by the
Parties. Each Party shall bear the cost of preparing and presenting its case.
The arbitration shall take place in a city agreed upon by the Parties. The
award of any arbitration shall be final, conclusive and binding on the Parties.
Judgment on the award may be entered in any court having jurisdiction over the
Party against which the award was made. The arbitrator shall be limited, in
granting relief, to comply with the express provisions of this Agreement
relating to damages or the limitation thereof and neither Party may seek
punitive damages. Nothing contained in this Section 10.2 shall be deemed to
prevent either party from seeking any interim equitable relief, such as a
preliminary injunction or temporary restraining order, pending the results of
the arbitration.
ARTICLE XI.
SUCCESSORS AND ASSIGNS
Neither Party may sell, assign, transfer, or convey its interest in this
Agreement or any of its rights or obligations hereunder without the written
consent of both Parties, except that a Party may assign its rights and
obligations hereunder to an assignee of all or any part of its Service license
or permit issued by the FCC, provided that such assignee expressly assumes, by
written instrument approved by the other Party, all or the applicable part of
the obligations of such Party hereunder and thereby becomes a Party hereunder.
No person other than a Party to this Agreement shall acquire any rights
hereunder as a third-party beneficiary or otherwise by virtue of this Agreement.
ARTICLE XII.
NO PARTNERSHIP OR AGENCY RELATIONSHIP IS CREATED
Nothing contained in this Agreement shall constitute the Parties as
partners with one another or render any Party liable for any debts or
obligations of any other Party, nor shall any Party hereby be constituted the
agent of any other Party.
11
<PAGE>
ARTICLE XIII.
NOTICES AND AUTHORIZED REPRESENTATIVES
Unless otherwise provided herein, any notice, request, instruction or other
document to be given hereunder by any Party to the other shall be in writing and
delivered by hand delivery, certified mail (postage prepaid, return receipt
requested), telex, facsimile, or overnight air delivery service, as follows:
If to AT&T, to:
AT&T Wireless Services, Inc.
5000 Carillon Point
Kirkland, WA 98033
Attn: Intercarrier Services
Fax No.: (206) 828-1390
with a copy to:
AT&T Wireless Services, Inc.
5000 Carillon Point
Kirkland, WA 98033
Attn: Legal Department
Fax No.: (206) 828-1385
If to Triton, to:
101 Lindenwood Drive
Suite 125
Malvern, PA 19355
Attn: Mr. Michael E. Kalogris
Mr. Steven R. Skinner
Fax No.: (610) 993-2683
with a copy to:
Kleinbard Bell & Brecker LLP
1900 Market Street, Suite 700
Philadelphia, Pennsylvania 19103
Attention: Howard J. Davis
Fax No.: (215) 568-0140
or such other address as any Party may from time to time furnish to the other
Party by a notice given in accordance with the terms of this Section. All such
notices and communications shall be deemed to have been duly given at the time
delivered by hand, if personally delivered; three business days after being
deposited in the mail, if mailed; when receipt is confirmed, if by telex or
facsimile; and the next business day if sent by overnight air delivery service.
12
<PAGE>
ARTICLE XIV.
MISCELLANEOUS
14.1 The Parties agree to comply with, conform to, and abide by all
applicable and valid laws, regulations, rules and orders of all governmental
agencies and authorities, and agree that this Agreement is subject to such laws,
regulations, rules and orders.
14.2 The Parties agree to use their respective best, diligent, and good
faith efforts to fulfill all of their obligations under this Agreement. The
Parties recognize, however, that to effectuate all the purposes of this
Agreement, it may be necessary either to enter into future agreements or to
amend this Agreement, or both. In that event, the Parties agree to negotiate
with each other in good faith.
14.3 This Agreement constitutes the full and complete agreement of the
Parties. Any prior agreements among the Parties with respect to this specific
subject matter are hereby superseded. This Agreement may not be amended, except
by the written consent of the Parties. Waiver of any breach of any provision of
the Agreement must be in writing signed by the Party waiving such breach or
provision and such waiver shall not be deemed to be a waiver of any preceding or
succeeding breach of the same or any other provision. The failure of a Party to
insist upon strict performance of any provision of this Agreement or any
obligation under this Agreement shall not be a waiver of such Party's right to
demand strict compliance therewith in the future.
14.4 The headings in this Agreement are inserted for convenience and
identification only and are not intended to describe, interpret, define or limit
the scope, extent or intent of this Agreement or any provision thereof.
14.5 This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
Agreement.
14.6 (a) The parties shall use and strictly adhere to the following dispute
resolution processes, except as otherwise expressly provided in this Section
14.6, to resolve any and all disputes, controversies or claims, whether based on
contract, tort, statute, fraud, misrepresentation or any other legal or
equitable theory (hereinafter, "Dispute(s)"), arising out of or relating to this
Agreement (and any prior agreement this Agreement supersedes), including without
limitation, its making, termination, non-renewal, its alleged breach and the
subject matter of this Agreement (e.g., products or services furnished hereunder
or those related to those furnished):
(b) The parties shall first attempt to settle each Dispute through
good faith negotiations. The aggrieved party shall initiate such negotiations
by giving the other party(ies) written notice of the existence and nature of the
Dispute. The other party(ies) shall in a writing
13
<PAGE>
to the aggrieved party acknowledge such notice of Dispute within ten (10)
business days. Such acknowledgment may also set forth any Dispute that the
acknowledging party desires to have resolved in accordance with this Section.
(c) Thereafter, if any Dispute is not resolved by the parties through
negotiation within thirty (30) calendar days of the date of the notice of
acknowledgment, either party may terminate informal negotiations with respect to
that Dispute and request that the Dispute be submitted to non-binding mediation.
Any mediation of a Dispute under this Section shall be conducted by the CPR
Institute for Dispute Resolution ("CPR") in accordance with the then current CPR
"Model Mediation Procedure for Business Disputes" ("Model Procedures") and the
procedures specified in this Section to the extent that they conflict with,
modify or add to such Model Procedures. Any demand for initiation of mediation
of a Dispute must be given in writing to both the other party(ies) involved and
to the CPR and must set forth the nature of the Dispute. Each party to the
mediation shall bear its own expenses with respect to mediation and the parties
shall share equally the fees and expenses of the CPR and the mediator. The
failure by a party to timely pay its share of the mediation fees and expenses of
the CPR and the mediator shall be a bar to arbitration under Section 14.6(d) of
that party's Dispute(s). Any mediation under this Section shall be conducted
within the State of New York at a site selected by the mediator that is
reasonably convenient to the parties. Each party shall be represented in the
mediation by representatives having final settlement authority with respect to
the Dispute(s). All information and documents disclosed in mediation by any
party shall remain private and confidential to the disclosing party and may not
be disclosed by any party outside the mediation. No privilege or right with
respect to any information or document disclosed in mediation shall be waived or
lost by such disclosure.
(d) Any Dispute not finally resolved after negotiation and mediation
in accordance with Section 14.6(b) and 14.6(c) shall, upon the written demand of
any involved party delivered to the other party(ies) and the CPR, be finally
resolved through binding arbitration in accordance with the then current CPR
"Non-Administered Arbitration Rules" ("Arbitration Rules") and the procedures
specified in this Section to the extent that they conflict with, modify or add
to such Arbitration Rules. Any Dispute of any other party not finally resolved
after negotiation and mediation pursuant to this Section may be made a part of
the arbitration demanded by another party, provided that the written notice of
demand for arbitration of that Dispute is received by the CPR before selection
of an arbitrator by the CPR. Any demand for arbitration of a Dispute received
by the CPR after the selection of the arbitrator must be resolved through a
separate arbitration proceeding in accordance with this Section. Each party
shall bear its own expenses with respect to arbitration and the parties shall
share equally the fees and expenses of the CPR and the arbitrator. Unless
otherwise mutually agreed by the parties in writing, the arbitration shall be
conducted by one (1) neutral arbitrator. The arbitration shall be conducted in
the State of New York at a site selected by the arbitrator that is reasonably
convenient to the parties. The arbitrator shall be bound by and strictly
enforce the terms of the Agreement and may not limit, expand, or otherwise
modify the terms of this Agreement. The arbitrator shall make a good faith
effort to apply applicable law, but an arbitration decision and
14
<PAGE>
award shall not be subject to review because of errors of law. The arbitrator
shall have the sole authority to resolve issues of the arbitrability of any
Dispute, including the applicability or running of any statute of limitation.
The arbitrator shall not have power to award damages in connection with any
Dispute in excess of actual compensatory damages or to award punitive damages
and each party irrevocably waives any claim thereto. The arbitrator shall not
have the power to order pre-hearing discovery of documents or the taking of
depositions. The arbitrator may compel, to the extent provided by the FAA,
attendance of witnesses and the production of documents at the hearing. The
arbitrator's decision and award shall be made and delivered to the parties
within six (6) months of selection of the arbitrator by the CPR and judgment on
the award by the arbitrator may be entered by any court having jurisdiction
thereof.
(e) This Section shall be interpreted, governed by and enforced in
accordance with the United States Arbitration Act, 9 U.S.C. Sections 1-14 (the
"Federal Arbitration Act" or "FAA"). The laws of the State of New York, except
those pertaining to choice of law, arbitration of disputes and those pertaining
to the time limits for bringing an action that conflict with the terms of this
Dispute Resolution provision, shall govern all other substantive matters
pertaining to the interpretation and enforcement of the other terms of this
Agreement with respect to any Dispute. Any party to a Dispute, which is the
subject of a notice initiating the Dispute resolution procedures under this
Section, may seek a temporary injunction in any state or federal court of
competent jurisdiction to the limited extent necessary to preserve the status
quo during the pendency of final resolution of a Dispute in accordance with this
Section. If court proceedings to stay litigation of a Dispute or compel
arbitration of a Dispute are necessary, the party who unsuccessfully opposes
such proceedings shall pay all associated costs, expenses, and attorneys' fees
that the other party reasonably incurs in connection with such court
proceedings. An order to pay such costs, expenses and attorney fees shall become
part of any decision and award of the arbitrator of the Dispute. An arbitrator
appointed pursuant to Section 14.6(d) to resolve a Dispute may also issue such
injunctive orders and shall have the power to modify or dissolve the injunctive
order of any court to the extent it pertains to the Dispute which the arbitrator
has been selected to finally resolve. The parties, their representatives, other
participants, and the mediator and arbitrator shall hold the existence, content,
and result of the mediation and arbitration of a Dispute in confidence except to
the limited extent necessary to enforce a final settlement agreement or to
obtain and secure enforcement of or a judgment on an arbitration decision and
award.
(f) The statute(s) of limitation applicable to any Dispute shall be
tolled upon initiation of the Dispute resolution procedures under this Section
and shall remain tolled until the Dispute is resolved by mediation or
arbitration under this Section. Tolling shall cease if the aggrieved party with
a Dispute does not initiate mediation within sixty (60) calendar days after good
faith negotiations are terminated by any party and, after mediation of a
Dispute, if the aggrieved party with a Dispute does not initiate a demand for
arbitration within sixty (60) calendar days after mediation is terminated.
However, any Dispute is forever barred that has not expressly been made the
subject of the written notice required under Section 14.6(b) above
15
<PAGE>
within 365 days after the date the Party asserting the Dispute first knows or
should have known of the existence of the acts or omissions that give rise to
such Dispute.
(g) Unless the parties mutually agree in writing, Disputes relating to
trademarks (including service marks), patents and copyrights shall not be
resolved in accordance with the Dispute resolution procedures set forth in this
Section and shall be resolved as otherwise provided in this Agreement.
(h) Each of the Parties hereby irrevocably consents to the exclusive
jurisdiction of the state or federal courts in the State of New York, and all
state or federal courts competent to hear appeals therefrom, over any actions
which may be commenced against any of them under or in connection with this
Agreement. Each of the Parties hereby irrevocably waives, to the fullest extent
permitted by applicable law, any objection which any of them may now or
hereafter have to the laying of venue of any such dispute brought in such court
or any defense of inconvenient forum for the maintenance of such dispute in the
Southern District of New York and New York County. Each of the Parties hereby
agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Each of the Parties hereby consents to process being served by any party to this
Agreement in any actions by the transmittal of a copy thereof in accordance with
the provisions of Article XIII.
14.7 Except for claims by third parties which fall within the scope of a
Party's indemnification obligations, neither Party shall be liable to the other
Party for any special, indirect or consequential damages.
14.8 The Parties agree that they will not use the name, service marks or
trademarks of the other party or any of its Affiliates in any advertising,
publicity releases or sales presentations, without such Party's written consent.
Neither Party is licensed hereunder to conduct business under any logo,
trademark, service or trade name (or any derivative thereof) of the other Party.
EXECUTED as of the date first written above.
AT&T WIRELESS SERVICES, INC. TRITON PCS OPERATING COMPANY L.L.C.
By Triton Management Company, Inc.,
its Manager
By _____________________________ By ________________________________
Name: Name:
Title: Title:
16
<PAGE>
SCHEDULE 1
AT&T Wireless Markets
<PAGE>
SCHEDULE 2
Triton Markets
<PAGE>
EXHIBIT A
SERVICE CHARGES
Service rates
- -------------
1st Yr: $.40 per minute or partial minute
2nd Yr: $.35 per minute or partial minute
3rd Yr: $.30 per minute or partial minute
4th - 20th Yr: The Adjusted Average Home Rate or such
lower rate as the Parties negotiate
from time to time
Notwithstanding the foregoing, the per minute or partial minute Service rate in
respect of Service provided to customers of either Party's markets within the
Expanded Home Calling Area, while roaming in the Expanded Home Calling Area,
shall be $.25 during the first three years.
Notwithstanding the foregoing, after the expiration of the first three years,
the Service rate charged by the Parties for Service in any geographic area
consisting of at least three contiguous BTAs shall be reasonably competitive,
taking into account price, coverage and quality, with the rates charged for
comparable telecommunications services by the alternative carriers in such
geographic area, disregarding any carriers that do not service a material number
of customers in such geographic area, and, if it is not so competitive, such
Service Rates shall be reduced with respect to the applicable geographic area to
a reasonably competitive rate.
Toll charges
- ------------
InterLATA
- ---------
1st Yr: $.10 per minute
2nd Yr: $.08 per minute
3rd Yr: $.08 per minute
4th - 20th Yr: $.08 per minute or such other rate as the
Parties negotiate from time to time in
light of cost adjustments.
IntraLATA
- ---------
1st Yr - 3rd Yr: $.02 per minute
4th - 20th Yr: $.02 per minute or such other rate as the
Parties negotiate from time to time in
light of cost adjustments.
<PAGE>
Taxes
- -----
Amount charged Serving Carrier by applicable taxing authority
Miscellaneous
- -------------
Service rates are charged in full minute increments with each partial minute
rounded to the next full minute. Neither Party shall be charged for incomplete
calls, busy calls, feature activations, 611, #611 or interconnect fees.
Definitions
- -----------
"Adjusted Average Home Rate" means an amount equal to the lesser of (a) the
--------------------------
average of the Applicable Home Rates of AT&T and Triton and (b) the sum of the
lower of such Applicable Home Rates, plus ten cents ($.10).
"Applicable Home Rate" means, with respect to any Person, its Home Rate,
--------------------
calculated based on the revenues from access and airtime and the minutes of use,
in each case for such Person's customers in the Expanded Home Calling Area
during the most recent calendar year for which such amounts are available as of
the date of calculation.
"Expanded Home Calling Area" means the geographical area of, and markets
--------------------------
included within, the Charlotte, North Carolina, Atlanta, Georgia, Baltimore,
Maryland/Washington, D.C., and Richmond, Virginia, MTAs, and the State of
Florida.
A-2
<PAGE>
EXHIBIT B
Technical Data
METHODS AND PROCEDURES
The following information is furnished by ___________ to __________
pursuant to Section 4.1 of the Intercarrier Roamer Service Agreement between
AT&T Wireless Services, Inc. and Triton, by __________________:
NPA/NXX LINE RANGE SID/ BID CITY START DATE END DATE
By:_______________________________
Title:____________________________
Issue Date:_______________________
The effective date shall be
__________________________________
<PAGE>
EXHIBIT 10.16
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT ("Agreement"), dated as of February ____, 1998,
by and among TRITON MANAGEMENT COMPANY, INC., a Delaware corporation (the
"Company"), TRITON PCS HOLDINGS, INC., a Delaware corporation formerly known as
Triton PCS, Inc. ("Triton"), and MICHAEL E. KALOGRIS ("Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is an indirect wholly-owned subsidiary of Triton
that has been formed primarily as a management company to provide management
services on behalf of Triton to all of its direct and indirect subsidiaries;
WHEREAS, the Company desires to employ Executive and to enter into an
agreement embodying the terms of such employment;
WHEREAS, Executive desires to accept such employment and enter into
such Agreement;
WHEREAS, Executive is the record and beneficial owner of 78,494.80
shares (the "Shares") of Triton's common stock, par value $.01 per share (the
"Common Stock");
WHEREAS, in order to induce the Purchasers referred to in the
Securities Purchase Agreement, dated as of October 8, 1997, to purchase the
securities issued by Triton thereunder, Executive desires to grant to Triton the
repurchase rights with respect to the Shares as referred to in Paragraph 7; and
-----------
WHEREAS, Triton desires to accept the grant of such repurchase rights;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company, Triton and Executive, intending to be legally bound,
hereby agree as follows:
1. Employment.
----------
(a) Agreement to Employ. Upon the terms and subject to the conditions
-------------------
of this Agreement, the Company hereby employs Executive, and Executive hereby
accepts employment by the Company.
(b) Employment Period. The initial term (the "Initial Term") of
-----------------
Executive's employment shall be for a period of five (5) years commencing on the
date hereof (the "Commencement Date") and continuing until February _____, 2003
(the "Expiration Date"). Unless
<PAGE>
this Agreement shall have been earlier terminated in accordance with the terms
of Paragraph 5(a), the term of this Agreement will be extended automatically for
--------------
successive one (1) year terms commencing on the Expiration Date unless either
party elects to terminate this Agreement by providing written notice to the
other party at least sixty (60) days prior to the expiration of the Initial Term
or any renewal term of this Agreement. As used herein, the term "Employment
Period" shall mean the Initial Term plus any renewal terms as provided above.
2. Position and Duties.
-------------------
During the Employment Period, Executive shall serve as the Chairman
and Chief Executive Officer of the Company and be responsible for the duties set
forth on Schedule I, reporting directly to the Board of Directors of Triton.
----------
During the Employment Period, except as set forth herein, Executive shall devote
his entire business time to the services required of him hereunder, except for
vacation time and reasonable periods of absence due to sickness, personal injury
or other disability. Nothing contained herein shall preclude Executive from (i)
devoting reasonable periods of time to the management of Triton Cellular, Inc.
and Triton Cellular Partners, L.P. (collectively, "Triton Cellular"), entities
that have been formed to acquire, operate and dispose of cellular telephone
companies that are strategic to certain affiliates of the Company (namely, AT&T
Wireless Services, Inc., J.P. Morgan & Co. Incorporated, Chase Capital Partners,
First Union Capital Partners, Inc. and Duff Ackerman Goodrich & Associates,
L.P.), (ii) serving on the board of directors (or comparable governing body) of
General Magic, Inc., Horizon G.P., Inc. and Triton Cellular, (iii) serving on
the board of directors of any other business corporation or entity with the
consent of the Board of Directors of Triton, (iv) serving on the board (or
comparable governing body) of, or working for, any charitable or community
organization, (v) pursing his personal financial and legal affairs or (vi)
serving on the board of directors (or comparable governing body) of Triton or
any direct or indirect Subsidiary of Triton (including the Company) so long as
such activities referred to in clauses (i) through (v), individually or
collectively, do not interfere in any material respect with the performance of
Executive's duties hereunder.
3. Compensation.
------------
(a) Base Salary. The Company shall pay Executive an annual salary of
-----------
$350,000. Upon the first anniversary hereof, and annually thereafter, the
Compensation Committee of the Board of Directors of Triton shall review
Executive's base salary in light of the performance of Executive and Triton and
its subsidiaries and affiliates, and may, in its discretion, increase (but not
decrease) such base salary by an amount it determines to be appropriate.
Executive's annual base salary payable hereunder, as it may be increased from
time to time, is referred to herein as "Base Salary". The Company shall pay
Executive his Base Salary in equal monthly installments, or in such other
installments as the parties may agree.
(b) Annual Bonus. For each calendar year or part thereof during the
------------
Employment Period, Executive shall be eligible to receive an annual bonus in an
amount and in the manner determined pursuant to Schedule II. Any bonuses
-----------
payable under this Paragraph 3(b) shall be paid
--------------
<PAGE>
to Executive at the same time as bonuses are paid to other executive officers of
the Company, but in no event later than 30 days after the close of the Company's
fiscal year for which the bonus is payable.
4. Benefits, Perquisites and Expenses.
----------------------------------
(a) Benefit Plans. During the Employment Period, Executive shall be
-------------
eligible to participate in any welfare benefit plan sponsored or maintained by
the Company, including, without limitation, any group life, hospitalization,
medical, dental, health, accident or disability insurance or similar plan or
program of the Company, in each case, whether now existing or established
hereafter, to the extent that Executive is eligible to participate in any such
plan under the generally applicable provisions thereof. It is acknowledged that
the Company intends to establish for Executive and other senior management
employees welfare benefit plans comparable to those provided to senior
management employees of Horizon Cellular Group, of which Executive was an
executive officer, a summary of such plans being set forth on Schedule III.
------------
Without Executive's consent, the Company may not (i) amend any such plan unless,
after giving effect to such amendment, the amended plan is a comparable plan, or
(ii) terminate any such plan unless a comparable plan is substituted therefor.
(b) Perquisites. Executive shall be entitled to up to five weeks paid
-----------
vacation annually in accordance with the Company's policies and practices.
Executive shall also be entitled to receive such perquisites as are generally
provided to other senior officers of the Company in accordance with the policies
and practices of the Company, including a monthly automobile allowance of $800.
Executive shall also be entitled to receive tax advisory, preparation and
related services from Triton's independent accountants, provided that the cost
to the Company in connection therewith shall not exceed $5,000 per annum.
(c) Business Expenses. The Company shall pay or reimburse Executive
-----------------
for all reasonable expenses incurred or paid by Executive in performance of
Executive's duties hereunder, upon presentation of expense statements or
vouchers and such other information as the Company may reasonably require.
(d) Indemnification. Each of Triton and the Company shall, to the
---------------
maximum extent permitted by applicable law, its certificate of incorporation or
its bylaws, indemnify Executive and hold Executive harmless from and against any
claim, loss or cause of action arising from or out of Executive's performance as
an officer, director or employee of Triton or the Company or any of their
respective subsidiaries or in any other capacity, including serving as a
fiduciary, in which Executive serves at the request of Triton or the Company.
If any claim is asserted hereunder for which Executive reasonably believes in
good faith he is entitled to be indemnified, Triton and/or the Company, as
applicable, shall pay Executive's legal expenses (or cause such expenses to be
paid) on a quarterly basis, provided that Executive shall reimburse such
--------
entity(ies) for such amounts, plus simple interest thereon at the 90-day United
States Treasury Bill rate as in effect from time to time, compounded annually,
if Executive shall be found by a final, non-appealable order of a court of
<PAGE>
competent jurisdiction not to be entitled to indemnification. This
indemnification obligations of Triton and the Company in this paragraph shall
survive any termination of this Agreement.
(e) Directors and Officers Liability Insurance. Triton shall maintain
------------------------------------------
directors and officers liability insurance coverage covering Executive in
amounts customary for similarly situated companies in the telecommunications
industry and with insurers reasonably acceptable to Executive. All policies for
such coverage shall provide for insurance on an "occurrence" (versus "claims-
made") basis.
(f) Stock Purchase Plan.
-------------------
(i) As promptly as practicable after the date hereof, Triton
shall create a stock purchase plan (the "Stock Purchase Plan") relating to
shares of Triton's Series C Convertible Preferred Stock, par value $0.01 per
share, or, following the IPO Date (as defined in Triton's Stockholders'
Agreement), shares of the class of Triton's common stock that is registered in
the Registration (as defined in Triton's Stockholders' Agreement) pertaining
thereto. Executive shall be entitled to acquire shares of such stock in
accordance with the terms of the Stock Purchase Plan.
(ii) Furthermore, Executive agrees that during the Employment
Period, Executive will invest towards the purchase of such shares 30% of any
amounts Executive receives on account of an annual bonus in excess of his Bonus
Target (as defined in Schedule II). Triton will use its reasonable best efforts
-----------
to include in the Stock Purchase Plan provisions that will enable Executive to
purchase the shares referred to in this Paragraph 4(f) with pre-tax dollars.
--------------
5. Termination of Employment.
-------------------------
(a) Early Termination of the Employment Period. This Agreement may be
------------------------------------------
terminated in any of the following manners:
(i) Executive may voluntarily terminate employment with the
Company at any time at the sole discretion of Executive upon 30 days' prior
written notice to the Company (a "Voluntary Termination").
(ii) Executive may, upon written notice to the Company,
terminate employment with the Company immediately at any time for "Good Reason"
(as defined in Paragraph 5(e)), it being agreed that any such termination,
--------------
although effected by Executive, shall not constitute a Voluntary Termination.
(iii) Executive's employment may, upon written notice to
Executive, be terminated by the Company at any time without Cause (as defined in
Paragraph 5(d)) at the sole discretion of the Company ("Without Cause"). The
- --------------
Company shall give Executive 30 days' written notice if Executive is being
terminated Without Cause.
<PAGE>
(iv) Executive's employment may be terminated by the Company at
any time for Cause.
(v) This Agreement shall terminate automatically upon
Executive's death.
(vi) The Company may, upon written notice to Executive,
terminate this Agreement upon Executive's Disability. As used herein, the term
"Disability" shall mean a determination that Executive suffers from illness or
other physical or mental impairment that prevents Executive from substantially
performing his duties for a period of 270 days during any 12-month period during
the Employment Period or for 365 days during any 24-month period during the
Employment Period. The determination of whether (and, if appropriate, when) a
Disability has occurred shall be made by two licensed physicians, one chosen by
a majority of the Board of Directors of Triton and one chosen by Executive (or
his personal representative); provided, however, that if the two physicians do
not agree with respect to whether (or, if appropriate, when) a Disability has
occurred, such determination shall be made by a third licensed physician chosen
by said two physicians.
(b) Benefits Payable Upon Termination.
---------------------------------
(i) Following the end of the Employment Period pursuant to any
manner described in Paragraph 5(a), the Company shall pay to Executive (or, in
the event of his death, his surviving spouse, if any, or his estate): (A) any
Base Salary earned, but unpaid, for services rendered to the Company on or prior
to the date on which the Employment Period ended, and (B) amounts which are
vested or which Executive is otherwise entitled to receive under the terms of or
in accordance with any plan, policy, practice or program of, or any contract or
agreement with, the Company or any of its affiliated companies (including
Triton), at or subsequent to the date the Employment Period ends without regard
to the performance by Executive of further services or the resolution of a
contingency.
(ii) Following the end of the Employment Period pursuant to a
termination by Executive for Good Reason or a termination by the Company Without
Cause:
(x) If such termination occurs prior to the Expiration
Date, Executive shall be entitled to receive the following severance benefits:
(A) the Company shall pay to Executive (or, in the event of his death, his
surviving spouse, if any, or his estate) the amount of $1,000,000, (B) although
Executive shall use reasonable efforts to secure employment in a senior
executive capacity, if, by the second anniversary date of the end of the
Employment Period Executive has not secured such employment, the Company shall
also pay to Executive for the ensuing 12-month period the amount of $500,000
less any amounts received by Executive from any such employment during such 12-
- ----
month period, (C) depending upon when any such termination occurs, a portion of
the Shares that would have otherwise been deemed Unvested Shares (as hereinafter
defined in Paragraph 7(b)) shall vest in the manner set forth on Schedule IV,
-------------- -----------
and (D) for a period of
<PAGE>
2 years following the end of the Employment Period, the Company shall continue
to provide to Executive the benefits afforded to Executive pursuant to Paragraph
---------
4(a); and
- ----
(y) If such termination occurs on or after the Expiration
Date or if this Agreement terminates due to the Company's non-renewal of the
Employment Term as provided in Paragraph 1(b), the Company shall pay to
--------------
Executive (or, in the event of his death, his surviving spouse, if any, or his
estate) a severance benefit in the amount of his Base Salary in effect at such
time.
(iii) It is expressly acknowledged by the Company that the
amounts and benefits afforded to Executive pursuant to clauses (A), (C), and (D)
of Paragraph 5(b)(ii)(x) and pursuant to Paragraph 5(b)(ii)(y) shall not be
--------------------- ---------------------
treated as damages but as severance compensation and benefits to which Executive
is entitled by reason of termination of his employment for Good Reason or
Without Cause. Accordingly, Executive shall not be required to mitigate the
amount of any payment or benefits provided for in clauses (A), (C) or (D) of
Paragraph 5(b)(ii)(x) or as provided for in Paragraph 5(b)(ii)(y) by seeking
- --------------------- ---------------------
employment or otherwise, nor, except as expressly set forth in Paragraph
---------
5(b)(ii)(x)(B), shall the Company be entitled to set off against the amounts and
- --------------
benefits payable to Executive hereunder against any amounts or benefits earned
by Executive in other employment after termination of his employment with the
Company hereunder or any amounts or benefits that might have been earned by
Executive in other employment had he sought such other employment.
(iv) If this Agreement terminates due to Executive's death or
Disability, that portion of the Unvested Shares that would have vested on the
next anniversary date of this Agreement (as set forth on by Schedule IV) shall
-----------
vest immediately upon such death or Disability, as applicable.
(c) Timing of Payments.
------------------
(i) Amounts payable pursuant to clause (A) of Paragraph
-----------------
5(b)(i), or pursuant to clause (A) of Paragraph 5(b)(ii)(x), or pursuant to
- ------- ---------------------
Paragraph 5(b)(ii)(y) will be paid in a single lump sum as soon as practicable,
- ---------------------
but in no event more than 10 business days, following the end of the Employment
Period.
(ii) Amounts payable pursuant to Paragraph 5(b)(ii)(x)(B) will
------------------------
be paid monthly on the last day of each month in said 12-month period.
(iii) Vested benefits referred to in clause (B) of Paragraph
---------
5(b)(i) shall be payable in accordance with the terms of the plan, policy,
- -------
practice, program, contract or agreement under which such benefits have accrued.
(d) Definition of Cause. For purposes of this Agreement, "Cause"
-------------------
means only:
<PAGE>
(i) Executive's conviction of a felony (other than felonies
related solely to automobile infractions, unless Executive is incarcerated as a
result thereof); or
(ii) Executive's willful malfeasance or gross misconduct in
connection with his employment hereunder which has materially adversely affected
Triton as determined by a majority vote of the Board of Directors of Triton
(excluding Executive, but which such majority vote shall require the affirmative
vote of one of the directors selected pursuant to Section 3.1(a)(i) of Triton's
-----------------
Stockholders' Agreement, one of the directors selected pursuant to Section
-------
3.1(a)(ii) of Triton's Stockholders' Agreement, and the Series A Preferred
- ----------
Director, if any, as such director is referred to in Section 3.1 of Triton's
-----------
Stockholders' Agreement); or
(iii) a substantial and continual refusal by Executive to
perform the material duties required of him hereunder as determined by a
majority vote of the Board of Directors of Triton (excluding Executive, but
which such majority vote shall require the affirmative vote of one of the
directors selected pursuant to Section 3.1(a)(i) of Triton's Stockholders'
-----------------
Agreement, one of the directors selected pursuant to Section 3.1(a)(ii) of
------------------
Triton's Stockholders' Agreement, and the Series A Preferred Director, if any,
as such director is referred to in Section 3.1 of Triton's Stockholders'
-----------
Agreement), which refusal is not cured within 30 days after the date of receipt
by Executive from the Board of Directors of Triton of its written notice
referring to this provision and describing such refusal.
(e) Definition of Good Reason. For purposes of this Agreement, "Good
-------------------------
Reason" means any of the following:
(i) Executive is demoted, removed or not re-elected to the
Board of Directors of Triton or any of his positions or offices (including those
of Chairman of the Board of Directors of Triton and Chief Executive Officer of
Triton and the Company);provided, however, that following the IPO Date (as
defined in Triton's Stockholders' Agreement), so long as Executive remains a
member of the Board of Directors of Triton and the Chief Executive Officer of
Triton and the Company, it shall not be considered "Good Reason" if Executive is
no longer the Chairman of the Board of Directors of Triton; or
(ii) there is a material diminishment of Executive's
responsibilities, duties or status, which diminishment is not rescinded within
30 days after the date of receipt by the Board of Directors of Triton from
Executive of his written notice referring to this provision and describing such
diminishment; or
(iii) the Company fails to pay or provide when due (or there is
a reduction in) Executive's Base Salary, annual bonus or benefits, which failure
is not cured (or which reduction is not corrected) within 10 days after the
receipt by the Board of Directors of Triton from Executive of his written notice
referring to this provision and describing such failure (or reduction); or
<PAGE>
(iv) Triton or the Company relocates its principal offices
without Executive's consent to a location more than 30 miles from the principal
offices of Triton or the Company in Malvern, Pennsylvania; or
(v) any purported termination by the Company of Executive for
Cause for any reason other than as set forth in Paragraph 5(d); or
--------------
(vi) a "Change of Control" (as hereinafter defined) occurs;
provided, however, that if a Change of Control shall exist as a result of the
circumstances set forth in clause (A) of the definition thereof, Executive
agrees that he will, for a period of time equal to the greater of (x) one year
after the date of the occurrence of such Change of Control and (y) the balance
of time remaining until the Expiration Date (such greater period of time being
referred to herein as the "Change of Control Period"), defer his right to
terminate this Agreement pursuant to Paragraph 5(a)(ii) and continue his
------------------
employment hereunder on the terms and subject to the conditions contained in
this Agreement; provided, further however, that upon such subsequent termination
of this Agreement by Executive after the expiration of the Change of Control
Period or if this Agreement is terminated during the Change of Control Period by
Executive for Good Reason or by the Company Without Cause, the date of any such
termination of this Agreement shall be deemed to be the date of the occurrence
of the Change of Control for purposes of benefits to which Executive is entitled
pursuant to Paragraph 5(b).
--------------
(f) Definition of Change of Control. For purposes of this Agreement,
-------------------------------
a "Change of Control" shall mean any transaction or event, or series of
transactions or events, whether voluntary or involuntary, that results in, or as
a consequence of which, any of the following events shall occur: (A) any Person
(as defined in Triton's Stockholders' Agreement) that is not an owner of shares
of capital stock of Triton on the Commencement Date shall acquire, directly or
indirectly, Beneficial Ownership (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of more than 50% of the voting stock of Triton
except in connection with any initial public offering of Triton's equity
securities, (B) any sale of all or substantially all of the assets of Triton or
(C) a proxy contest for the election of directors of Triton results in the
persons constituting the Board of Directors of Triton immediately prior to the
initiation of such proxy contest ceasing to constitute a majority of the Board
of Directors of Triton upon the conclusion of such proxy contest.
6. Noncompetition and Confidentiality.
----------------------------------
(a) Noncompetition. Except as set forth in the next sentence, during
--------------
the Employment Period and for one year thereafter, Executive shall not, without
the consent of the Company, assist or become associated with any person or
entity, whether as a principal, partner, employee, consultant or shareholder
(other than as a holder of not in excess of 5% of the outstanding voting shares
of any publicly traded company) that is actively engaged in the business of
providing mobile wireless telecommunications services in the Territory (as
defined in Triton's Stockholders' Agreement). It is expressly acknowledged that
Executive's affiliation with Triton Cellular (whether as officer, employee,
director, shareholder, partner or otherwise) shall not constitute a violation of
<PAGE>
the foregoing prohibition so long as Triton Cellular's principal business
remains as described in Paragraph 2. Additionally, in addition to any other
-----------
right or remedy available to Executive, the foregoing prohibition shall not
apply to Executive if the Company fails to pay and to provide to Executive when
due the amounts and benefits set forth in Paragraph 5(b), and Executive's
--------------
pursuit of such remedy shall not relieve the Company from its obligations to pay
such amounts and to provide such benefits to Executive.
(b) Confidentiality. Without the prior written consent of the
---------------
Company, except to the extent required by an order of a court having competent
jurisdiction or under subpoena from a governmental body or agency, Executive
shall not disclose any trade secrets, customer lists, drawings, designs,
information regarding product development, marketing plans, sales plans,
manufacturing plans, management organization (including data and other
information relating to members of the Board of Directors of Triton and
management), operating policies and manuals, business plans, financial records,
packaging design or other financial, commercial, business or technical
information relating to Triton or the Company or any of their respective
subsidiaries or affiliates (collectively, "Confidential Information"), to any
third person, unless such Confidential Information has been previously disclosed
to the public by the Company or is in the public domain (other than by reason of
Executive's breach of this Paragraph 6(b)), except that Executive may disclose
--------------
Confidential Information to the extent advisable in his sole discretion in
connection with (i) the performance of Executive's duties hereunder, or (ii) the
issuance of Triton's securities, or (iii) obtaining financing for Triton, or
(iv) the enforcement of Executive's rights under this Agreement, or (v) any
disclosures that may be required by law, including securities laws.
(c) Inventions. Executive hereby sells, transfers and assigns to the
----------
Company all of the right, title and interest of Executive in and to all
inventions, ideas, disclosures and improvements, whether patented or unpatented,
and copyrightable material, made or conceived by Executive, solely or jointly,
or in whole or in part, during the Employment Term which (i) relate to methods,
apparatus, designs, products, processes or devices sold, leased, used or under
construction or development by Triton, the Company or any of their respective
subsidiaries or affiliates or (ii) otherwise relate to or pertain to the
business, functions or operations of Triton, the Company or any of their
respective subsidiaries or affiliates, or (iii) arise (wholly or partly) from
the efforts of Executive during the Employment Period. Executive shall
communicate promptly and disclose to the Company, in such form as the Company
reasonably requests, all information, details and data pertaining to the
aforementioned inventions, ideas, disclosures and improvements; and, whether
during the Employment Period or thereafter, Executive shall execute and deliver
to the Company (at the Company's sole cost and expense) such formal transfers
and assignments and such other papers and documents as may be required of
Executive to permit the Company to file and prosecute the patent applications
and, as to copyrightable material, to obtain copyright thereon.
(d) Company Property. Promptly following Executive's termination of
----------------
employment, Executive shall return to the Company all property of the Company,
and all copies thereof in Executive's possession or under his control, and all
tangible embodiments of Confidential
<PAGE>
Information in Executive's possession in whatever media such Confidential
Information is maintained.
(e) Non-Solicitation of Employees. Except as set forth in the next
-----------------------------
sentence, during the Employment Period and for one year thereafter, Executive
will not directly or indirectly induce any employee of Triton, the Company or
any of their respective subsidiaries or affiliates to terminate employment with
such entity, and will not directly or indirectly, either individually or as
owner, agent, employee, consultant or otherwise, employ or offer employment to
any person who is or was employed by any such entity, unless such person shall
have ceased to be employed by such entity for a period of at least six months;
provided, however, that nothing contained in this Agreement shall prevent
Executive from engaging in a general solicitation for employment that is not
directed at employees of any such entity. In addition to any other right or
remedy available to Executive, the foregoing prohibition shall not apply to
Executive if the Company fails to pay and to provide to Executive when due the
amounts and benefits set forth in Paragraph 5(b), and Executive's pursuit of
--------------
such remedy shall not relieve the Company from its obligations to pay and to
provide such amounts and benefits to Executive.
(f) Injunctive Relief with Respect to Covenants. Executive
-------------------------------------------
acknowledges and agrees that the covenants and obligations of Executive with
respect to noncompetition, inventions, confidentiality and Company property
contained in this Paragraph 6 relate to special, unique and extraordinary
-----------
matters and that a violation of any of the terms of such covenants and
obligations will cause the Company irreparable injury for which adequate
remedies are not available at law. Therefore, Executive agrees that the Company
shall be entitled to an injunction, restraining order, or such other equitable
relief as a court of competent jurisdiction may deem necessary or appropriate to
restrain Executive from committing any violation of the covenants and
obligations contained in this Paragraph 6. These injunctive remedies are
-----------
cumulative and are in addition to any other rights and remedies the Company may
have at law or in equity.
7. Vesting and Repurchase of Unvested Shares, Etc.
-----------------------------------------------
(a) Vesting. The Shares shall vest in accordance with the terms of
-------
Schedule IV. Executive hereby agrees that as of any date, the Shares shall be
- -----------
subject to repurchase by Triton in accordance with the terms of this Paragraph
---------
7, except to the extent the Shares shall have theretofore vested in accordance
- -
with the terms of Schedule IV.
-----------
(b) Repurchase Upon Termination. As promptly as practicable following
---------------------------
the termination of Executive's employment for any reason, Executive shall sell
to Triton, and Triton shall purchase from Executive, all of the Shares that have
not theretofore vested in accordance with the terms of Schedule IV (the
-----------
"Unvested Shares") at a price per Share equal to Executive's original per Share
purchase price ($0.01).
(c) Closing of Repurchase; Assignment of Repurchase Right. The
-----------------------------------------------------
closing of a purchase and sale pursuant to Paragraph 7(b), if any, shall take
---------------
place on a date mutually agreed by
<PAGE>
Executive or his legal representative and Triton no later than 30 days after the
date that the Employment Period ends. At such closing, Triton shall deliver to
Executive or such legal representative a check in the amount of the aggregate
repurchase price and, upon delivery thereof, Triton shall become the legal and
beneficial owner of the Unvested Shares being repurchased and all rights and
interests therein or relating thereto, and Triton shall have the right to retain
and transfer to its own name the shares of Common Stock being repurchased by
Triton. Whenever Triton shall have the right to repurchase Common Stock
hereunder, Triton may designate and assign one or more employees, officers,
directors or shareholders of Triton or other persons or organizations to
exercise all or a part of Triton's repurchase rights under this Agreement and
purchase all or a part of such Common Stock.
(d) Restriction on Transfer. Except for the escrow described in
-----------------------
Paragraph 7(e) or transfer of the Shares to Triton or its assignees contemplated
- --------------
by this Agreement, none of the Unvested Shares or any beneficial interest
therein shall be transferred, encumbered or otherwise disposed of in any way.
(e) Escrow of Shares. The Certificate(s) representing Unvested Shares
----------------
shall be held by the Secretary of Triton as escrow holder (the "Escrow Holder"),
along with a stock power executed by Executive in blank. The Escrow Holder is
hereby directed to permit transfer of the Shares only in accordance with this
Agreement. In the event further instructions are desired by the Escrow Holder,
he shall be entitled to rely upon directions executed by a majority of the
authorized number of Triton's Board of Directors. The Escrow Holder shall have
no liability for any act or omission hereunder while acting in good faith in the
exercise of his own judgment. If Triton or any assignee repurchases any of the
Shares pursuant to this Paragraph 7, the Escrow Holder, upon receipt of written
-----------
notice of such repurchase from the proposed transferee, shall take all steps
necessary to accomplish such repurchase. From time to time, upon Executive's
request, the Escrow Holder shall: (i) cancel the certificate(s) held by the
Escrow Holder and Executive representing the Shares, (ii) cause a new
certificate to be issued representing all the Shares that have vested in
accordance with the terms of Schedule IV, which certificate the Escrow Holder
-----------
shall deliver to Executive, and (iii) cause a new certificate to be issued
representing the then remaining Unvested Shares, which certificate shall be held
in escrow by the Escrow Holder in accordance with the provisions of this
Paragraph 7(e). Subject to the terms hereof, Executive shall have all the
- --------------
rights of a stockholder with respect to the Shares while they are held in
escrow, including without limitation, the right to vote the Shares and receive
any cash dividends declared thereon. If, from time to time during the term of
Triton's repurchase right, there is (i) any stock dividend, stock split or other
change in the Shares, or (ii) any merger or sale of all or substantially all of
the assets or other acquisition of Triton, any and all new, substituted or
additional securities to which Executive is entitled by reason of his ownership
of the Shares shall be immediately subject to this escrow, deposited with the
Escrow Holder and included thereafter as "Shares" for purposes of this Agreement
and Triton's repurchase right.
(f) Legends. The share certificate evidencing the Shares shall be
-------
endorsed with the following legends (in addition to any legend required to be
placed thereon by applicable state securities laws or Triton's Stockholders'
Agreement dated as of the date hereof):
<PAGE>
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CON NECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGIS TRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
8. No Conflict With Prior Agreements; Due Authorization.
----------------------------------------------------
(a) Executive represents to the Company that neither Executive's
execution of this Agreement or commencement of employment hereunder nor the
performance of Executive's duties hereunder conflicts with any contractual
commitment on Executive's part to any third party. Each of Triton and the
Company represents to Executive that it is fully authorized and empowered by
action of Triton's Board of Directors to enter into this Agreement and that
performance of its obligations under this Agreement will not violate any
agreement between it and any other person, firm or other entity.
(b) Nothing herein shall be construed to require Executive to use or
disclose any information that he is prohibited from using or disclosing as a
result of legal or contractual obligations.
9. Miscellaneous.
-------------
(a) Survival. Paragraphs 4(d), 5, 6, 7 and 9 shall survive the
-------- ------------------------------
termination hereof.
(b) Binding Effect. Subject to the Executive's rights as set forth in
--------------
Paragraph 5(e)(vi), this Agreement shall be binding on Triton and the Company in
- ------------------
accordance with its terms and any person or entity which succeeds to the
interest of Triton or the Company (regardless of whether such succession occurs
by operation of law) by reason of the sale of all or a portion of Triton's
stock, a merger, consolidation, or reorganization involving Triton or a sale of
the assets of the business of Triton (or portion thereof) in which Executive
performs a majority of his services. This Agreement shall also inure to the
benefit of Executive's heirs, executors, administrators and legal
representatives.
<PAGE>
(c) Assignment. Except as provided under Paragraph 9(b), neither this
---------- --------------
Agreement nor any of the rights or obligations hereunder shall be assigned or
delegated by any party hereto without the prior written consent of the other
party.
(d) Entire Agreement. This Agreement, together with the Schedules
----------------
attached hereto, constitutes the entire agreement between the parties hereto
with respect to the matters referred to herein, and no other agreement, oral or
otherwise, shall be binding among the parties unless it is in writing and signed
by the party against whom enforcement is sought. There are no promises,
representations, inducements or statements between the parties other than those
that are expressly contained herein. Executive acknowledges that he is entering
into this Agreement of his own free will and accord, and with no duress, that he
has been represented and fully advised by competent counsel in entering into
this Agreement, that he has read it and that he understands it and its legal
consequences. No parol or other evidence may be admitted to alter, modify or
construe this Agreement, which may be altered, modified or amended only by a
writing signed by the parties hereto.
(e) Severability; Reformation. In the event that one or more of the
-------------------------
provisions of this Agreement shall become invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event that
any of Paragraphs 6(a), (b) or (c) is not enforceable in accordance with its
---------------------------
terms, Executive and the Company agree that such Paragraph shall be reformed to
make such Paragraph enforceable in a manner which provides the Company the
maximum rights permitted at law.
(f) Waiver. Waiver by any party hereto of any breach or default by
------
the other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from the
breach or default waived. No waiver of any provision of this Agreement shall be
implied from any course of dealing between the parties hereto or from any
failure by either party hereto to assert its or his rights hereunder on any
occasion or series of occasions.
(g) Notices. Any notice required or desired to be delivered under
-------
this Agreement shall be in writing and shall be delivered personally against
receipt, by courier service or by registered mail, return receipt requested, and
shall be effective upon actual receipt by the party to which such notice shall
be directed, and shall be addressed as follows (or to such other address as the
party entitled to notice shall hereafter designate in accordance with the terms
hereof):
<PAGE>
If to Triton or the Company, to the attention of the Board of
Directors of Triton at Triton's principal executive offices.
If to Executive:
Michael E. Kalogris
25 Mountain Laurel Lane
Malvern, PA 19355
with a copy to:
Kleinbard, Bell & Brecker LLP
1900 Market Street, Suite 700
Philadelphia, PA 19103
Attention: Howard J. Davis
Facsimile: (215) 568-0140
(h) Headings. Headings to paragraphs in this Agreement are for the
--------
convenience of the parties only and are not intended to be part of or to affect
the meaning or interpretation hereof.
(i) Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
(j) Withholding. Any payments provided for herein shall be reduced by
-----------
any amounts required to be withheld by the Company from time to time under
applicable Federal, State or local income or employment tax laws or similar
statutes or other provisions of law then in effect.
(k) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the internal laws of the State of New York.
(l) No Set-Off. Notwithstanding anything to the contrary herein, at
----------
law or otherwise, no payment required to be made by Triton or the Company to
Executive under this Agreement shall be subject to any right of set-off,
counterclaim, defense, abatement, suspension, deferment or reduction by reason
of any claim by Triton or the Company against Executive based upon an alleged
breach by Executive of any provision of this Agreement or any other agreement
between Triton or the Company and Executive except upon execution of an
unsatisfied final, unappealable judgment rendered by a court of competent
jurisdiction.
(m) Joint and Several. The obligations of Triton and the Company
-----------------
under this Agreement shall be joint and several.
<PAGE>
(n) Resolution of Disputes. All disputes, controversies and claims
----------------------
arising in connection with this Agreement that are not settled by agreement
between the parties shall be finally settled under the Commercial Arbitration
Rules of the American Arbitration Association ("AAA") in effect from time to
time. A single arbitrator shall be appointed by agreement between the parties
or, failing such agreement, by AAA. The arbitrator may grant any remedy that
(s)he deems just and equitable within the scope of this Agreement, including
specific performance. The award of the arbitrator shall be final and binding
and judgment thereon may be entered in any court having jurisdiction. The costs
and expenses (including reasonable attorney's fees) of the prevailing party
shall be borne and paid by the party that the arbitrator determines is the non-
prevailing party.
[SIGNATURES CONTAINED ON NEXT PAGE]
<PAGE>
IN WITNESS WHEREOF, each of the Company and Triton has caused this
Agreement to be executed by a duly authorized officer, and Executive has
hereunto set his hand as of the day and year first above written.
COMPANY:
TRITON MANAGEMENT COMPANY, INC.
By:__________________________________________
David D. Clark, Senior Vice President
TRITON:
TRITON PCS HOLDINGS, INC.
By:__________________________________________
David D. Clark, Senior Vice President
EXECUTIVE:
_____________________________________________
Michael E. Kalogris
<PAGE>
SCHEDULE I
----------
Duties
------
As Chairman of the Board of Directors of Triton and Chief Executive Officer of
Triton and the Company, Executive is responsible for the overall direction of
the business and for achieving maximum return on invested capital. Executive
shall also coordinate the efforts of the senior executives and work with them to
develop current and long-range objectives, policies and procedures for Triton
and the Company. Executive shall represent Triton and the Company to customers,
the financial community, and the general public. Additionally, Executive shall
have supervision over, and the responsibility for, the day-to-day management,
finances and operations of Triton and the Company, with all of the powers and
authority typically exercised by a chief executive officer of a company,
including, without limitation, the authority to hire and dismiss employees, to
select agents, representatives and consultants, to determine the prices of
services provided and products sold by Triton and the Company, and to determine
Triton's and the Company's methods of operation and financial strategies.
<PAGE>
SCHEDULE II
-----------
Annual Bonuses
--------------
- - For the year ending December 31, 1997, $350,000 payable on the later of
December 31, 1997 or execution of the Agreement.
- - For all other years, Executive shall be entitled to an annual bonus based upon
achievement of certain stated objectives reflected on Annex A to this Schedule
------- --------
II. The calculated weighted score from Annex A shall be utilized to determine
- -- -------
the bonus payable. The "Bonus Target" for Executive for any year is equal to
50% of his Base Salary for that year. The portion, if any, of the Bonus Target
that shall be payable in any given year shall be determined as follows:
PAYMENT PERCENTAGE
WEIGHTED SCORE OF BONUS TARGET
Less than 80% 0 payment
80.0% to 84.9% 50% payment
85.0% to 89.9% 75% payment
90.0% to 100.0% As scored
101.0% to 104.9% 125% payment
105.0% to 109.9% 150% payment
110.0% to 114.9% 175% payment
115.0% and over 200% (maximum
payment)
<PAGE>
ANNEX A TO
SCHEDULE II
-----------
Objectives
----------
To be attached hereto after adoption by the Compensation Committee of the Board
of Directors of Triton.
<PAGE>
SCHEDULE III
Former Horizon Welfare Plans
----------------------------
HEALTH
- ------
Medical, dental and prescription coverage to its regular full time employees.
The Company pays 100% of the aggregate insurance premium, but requires that the
employee contribute a percentage of the premium for any covered family members.
VISION
- ------
Vision insurance coverage to its regular full time employees at a rate of $425
per family member per two year period. Coverage is limited to reimbursement for
glasses, contacts and annual eye examinations.
LIFE INSURANCE
- --------------
Life insurance coverage to its regular full time employees equal to two times
base salary up to a maximum of $75,000 at no cost to the employee. In the event
that a covered employee's death results directly from injury the benefit paid is
equal to four times the base salary to a maximum of $150,000. Benefits payable
in the event that a covered employee sustains a dismemberment loss which is a
direct result of an injury range from one to two times base salary.
DISABILITY INSURANCE
- --------------------
Reimbursement of premiums for existing personal disability insurance policy with
Equitable Insurance Company.
<PAGE>
SCHEDULE IV
-----------
Vesting Schedule
----------------
General
- -------
Except as set forth below, the Shares shall vest on the Commencement Date,
the System Activation Date (as hereinafter defined) and on each anniversary of
the Commencement Date as follows:
Vesting Date
------------
Commencement Date 10%
First Anniversary 17%
Second Anniversary 17%
Third Anniversary 17%
Fourth Anniversary 17%
Fifth Anniversary 17%
System Activation Date 5%
----
Total 100%
As used herein, the term "System Activation Date" shall mean the date
(regardless of when such date occurs) that Triton completes Phase I of the
Minimum Buildout Schedule attached as Schedule V to the Stockholders' Agreement.
----------
Good Reason (other than due to Change of Control) or Without Cause
- ------------------------------------------------------------------
In the event of a termination of the Agreement by Executive for Good Reason
(except under circumstances constituting a Change of Control as discussed below)
or by the Company Without Cause, in addition to any Shares that had theretofore
vested in accordance with the foregoing general schedule, the following
percentages of the aggregate Unvested Shares shall vest immediately upon any
such termination:
Termination Date Percentage of Aggregate Unvested
----------------
Shares that Vest
--------------------------------
Prior to Third Anniversary Date 50%
From Third Anniversary Date and
Prior to Fourth Anniversary Date 25%
Thereafter 0%
<PAGE>
Change of Control
- -----------------
In the event of any Change of Control (whether or not (i) Executive elects
to terminate the Agreement for Good Reason on account thereof or (ii) Executive
has deferred his right to terminate the Agreement as provided in Paragraph
---------
5(e)(vii)), in addition to any Shares that had theretofore vested in accordance
- ---------
with the foregoing general schedule, all Unvested Shares shall vest immediately
upon such Change of Control.
<PAGE>
EXHIBIT 10.17
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January __, 1998, by and between
TRITON MANAGEMENT COMPANY, INC., a Delaware corporation (the "Company"), and
CLYDE SMITH ("Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Triton PCS, Inc., a Delaware corporation ("PCS"), and its
affiliates (collectively, the "Triton PCS Group") are engaged in the business of
providing mobile wireless telecommunication services in the southeastern United
States (the "Business");
WHEREAS, the Company has been organized to provide management services to
the Triton PCS Group;
WHEREAS, Executive possesses substantial experience and ability in the
Business; and
WHEREAS, the Company desires to secure and retain the experience, ability,
and services of Executive, and Executive desires to be so employed, in
accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and intending to be legally bound hereby, the parties agree as follows:
1. Employment.
----------
(a) Agreement to Employ. The Company hereby employs Executive, and
-------------------
Executive hereby accepts such employment with the Company, upon the terms and
conditions stated in this Agreement.
(b) Employment Period. The term of Executive's employment shall be for a
-----------------
period of five (5) years (the "Employment Period") commencing on a date to be
mutually agreed upon (the "Commencement Date") and continuing until five (5)
years from the Commencement Date (the "Expiration Date").
2. Position and Duties. During the Employment Period, Executive
-------------------
shall serve as the Executive Vice President and Chief Technical Officer of the
Company and shall report directly to the President and Chief Operating Officer
of the Company. Executive shall be responsible for the efficient performance
of Executive's duties hereunder and will at all times operate within the goals,
guidelines, budgets, policies and procedures now or hereafter established by the
Company. It is anticipated that Executive shall participate in certain industry
association activities with the approval of the President of the Company.
During the Employment Period, Executive shall devote his entire business time to
the services required of him hereunder, except for vacation time and reasonable
periods of absence due to sickness, personal injury or other disability.
<PAGE>
3. Compensation.
------------
(a) Base Salary. The Company shall pay Executive an annual salary of
-----------
$220,000. Upon the first anniversary of the Commencement Date, and annually
thereafter, the Company shall review Executive's base salary in light of the
performance of Executive and the Company, and may, in its discretion, increase
such base salary by an amount it determines to be appropriate. Executive's
annual base salary payable hereunder, as it may be increased from time to time,
is referred to herein as "Base Salary". The Company shall pay Executive his
Base Salary in equal semi-monthly installments, or in such other installments as
the Company pays other similarly situated executive officers of the Company.
(b) Annual Bonus. For each calendar year or part thereof during the
------------
Employment Period (other than the first calendar year as provided in subsection
(c) below), Executive shall be eligible to receive an annual performance-
oriented incentive bonus. Such bonus, if any, shall range from 50%-100% of
Executive's Base Salary as determined by the Company in accordance with the
Executive achieving or exceeding certain budgeted and other objectives
established by the President and the Company consistent with the Company's
annual budgets. Any bonuses payable under this Section 3(b) shall be paid to
------------
Executive at the same time as bonuses are paid to other similarly situated
executive officers of the Company.
(c) Guaranteed Bonus . After the first calendar year of the Employment
----------------
Period, the Company agrees to pay Executive a guaranteed bonus of 100% of
Executive's Base Salary (the "Guaranteed Bonus").
4. Equity Interest.
---------------
(a) Grant of Equity Interest. Within 30 days of the date hereof,
------------------------
Executive shall receive 3,139.79 shares of common stock (the "Shares") of PCS.
(b) Vesting of Shares. The Shares will vest in accordance with the
-----------------
following schedule:
Vesting Date
------------
(i) First Anniversary of the later of the Commencement Date
or the consummation of the transactions contemplated by that
certain Securities Purchase Agreement dated as of
October 8, 1997 by and among AT&T Wireless PCS Inc.,
the Initial Cash Equity Investors referred to on Schedule I thereto,
the Management Stockholders listed on Schedule II thereto
and PCS (the "Closing") 17%
2
<PAGE>
(ii) Second Anniversary of the later of the Commencement Date
or the Closing 17%
(iii) Third Anniversary of the later of the Commencement Date
or the Closing 17%
(iv) Fourth Anniversary of the later of the Commencement Date
or the Closing 17%
(v) Fifth Anniversary of the later of the Commencement Date
or the Closing 17%
The remaining 15% of the Shares shall vest based upon PCS achieving certain
performance milestones established by the President of the Company consistent
with the Company's annual budgets.
Assuming that PCS achieves its projected earnings (as specified in PCS'
projections used to secure PCS' permanent financing) on the seventh year of its
business plan, and Executive has been employed by the Company through the
vesting period, it is anticipated that the Shares will have a value of
$2,000,000, but in no event will the Shares be less than 8% of the unallocated
portion (i.e., 20%) of the management equity stake (i.e., 10% of PCS' common
equity); provided however, that the Company makes no guaranty that PCS will
-------- -------
achieve its projections.
Executive hereby agrees the Shares shall be subject to the terms and
conditions contained in a certain letter agreement and stockholders agreement to
be entered into between management executives of the Company and PCS.
(c) Additional Vesting Rights. In the event of a termination of this
-------------------------
Agreement pursuant to Section 6(e) or 6(f), in addition to any Shares that had
--------------------
theretofore vested in accordance with the foregoing schedule, (i) the percentage
of unvested Shares which would have vested in the year following the year in
which Executive's employment was terminated and (ii) a prorata amount (based on
the number of days Executive was employed during the year employment was
terminated divided by 365) of the Shares that would have vested at the end of
the year in which Executive's employment was terminated shall vest immediately
upon such termination.
5. Supplemental Employment Benefits.
--------------------------------
(a) Benefit Plans. During the Employment Period, Executive shall be
-------------
eligible to participate in those medical, health and disability insurance plans
that are offered to similarly situated executive officers of the Company (to the
extent that Executive is eligible to participate in any such plan under the
generally applicable provisions thereof). The benefit plans currently being
afforded to such executive officers are set forth on Schedule I. The Company
----------
may amend any such plan from time to time in its sole discretion.
3
<PAGE>
(b) Vacation. Executive shall be entitled to up to three (3) weeks
--------
paid vacation annually in accordance with the Company's policies and practices.
(c) Business Expenses. The Company shall pay or reimburse Executive for
-----------------
all reasonable expenses incurred or paid by Executive in performance of
Executive's duties hereunder, upon presentation of expense statements or
vouchers and such other information as the Company may reasonably require.
(d) Relocation Expenses. The Company shall reimburse Executive for the
-------------------
following relocation expenses incurred in connection with his employment
hereunder and shall pay Executive an additional amount in cash equal to his
income tax liability attributable to the receipt of such relocation expenses
("Relocation Expenses"): (i) customary broker's commission, legal fees, and real
estate transfer taxes related to the sale of Executive's current home; (ii) a
reasonable number of house hunting trips to find a new home; (iii) closing costs
associated with the purchase of a new home; (iv) reasonable professional
packing, delivery and unpacking expenses; (v) reasonable temporary housing
costs; and (vi) reasonable miscellaneous expenses to cover the loss of window
treatments and other similar furnishings that cannot be reused in the new home.
The Relocation Expenses shall be reimbursed by the Company as incurred by the
Executive; provided however, the Executive agrees to refund the Company for
-------- -------
Relocation Expenses as follows: (i) in the event the Executive's employment with
the Company is terminated at any time prior to the date which is 12 months from
the Commencement Date, Executive shall repay the Company 100% of the Relocation
Expenses previously paid by the Company; and (ii) in the event the Executive's
employment with the Company is terminated at any time between 12 and 18 months
from the Commencement Date, Executive shall repay the Company a percentage of
the Relocation Expenses previously paid by the Company as follows:
Percentage of Relocation
Date of Termination Expenses Repaid
- -------------------- ------------------------
Between 12 and 14 months from the Commencement Date 66 2/3
Between 14 and 15 months from the Commencement Date 50
Between 15 and 18 months from the Commencement Date 33 1/3
(e) Temporary Living Arrangement. Executive will be provided with
----------------------------
reasonable temporary living arrangements in the Malvern, PA vicinity for a
period of up to six months, commencing on the Commencement Date.
6. Termination of Employment. This Agreement and Executive's
-------------------------
employment hereunder may be terminated:
(a) at any time by the Company for Cause (as hereafter defined);
4
<PAGE>
(b) at any time voluntarily by Executive, upon sixty (60) days' prior
written notice to the Company;
(c) by the Company immediately upon Executive's death;
(d) at any time by the Company, immediately upon giving Executive written
notice of a determination that Executive has been incapacitated by accident,
sickness, or otherwise so as to render Executive mentally or physically
incapable of performing in any material respect the services required of
Executive under this Agreement for a period of one hundred twenty (120)
consecutive days within any twelve (12) month period or a period of one hundred
eighty days (180) within any twenty-four (24) month period, upon the expiration
of such period or at any time thereafter;
(e) at any time by the Company without Cause, at the sole discretion of
the Company, upon sixty (60) days' prior written notice to the Executive; and
(f) at any time by Executive, upon sixty (60) days' prior written notice
to the Company, in the event that the employment by the Company of each of
Michael Kalogris and Steven Skinner has been terminated during the Employment
Period.
For purposes of this Agreement, "Cause" shall mean any of the following: (i) any
material breach by Executive of any provision of this Agreement or obligation
owed to the Company or any of its affiliates under this Agreement; (ii)
Executive's commission of a felony, a crime of falsehood, or a crime involving
moral turpitude; (iii) Executive's failure to follow the lawful, good faith
instructions of the Company's Chairman and Chief Executive Officer or President
and Chief Operating Officer, or (iv) Executive's breach of a fiduciary duty;
provided, however, that (x) prior to the Company's termination of Executive for
- -------- -------
any breach or failure described in clauses (i), (iii) or (iv), during the
Employment Period Executive shall have one (and only one) period of thirty (30)
days after receipt of a written notice from the Company identifying such breach
or failure to cure such breach or failure; (y) Executive shall not have any
opportunity to cure any breach or failure described in clauses (i), (iii) or
(iv) that either by its nature is not susceptible to cure or that occurs
subsequent to the first of any such breaches or failures that was cured by
Executive pursuant to the immediately preceding clause (x); and (z) Executive
shall not have any opportunity to cure a commission described in clause (ii).
7. Amounts Due Upon Termination.
----------------------------
(a) In the event that this Agreement and Executive's employment by the
Company hereunder are terminated for any reason set forth in Section 6(a)
------------
through (d) prior to the Expiration Date, Executive shall be only entitled to
- -----------
receive unpaid Base Salary through the date of termination.
(b) In the event that Executive's employment is terminated prior to the
Expiration Date pursuant to Sections 6(e) or 6(f), Executive shall be entitled
----------------------
to severance pay equal to 150% of Executive's then current Base Salary, payable
over a twelve (12) month period.
5
<PAGE>
8. Covenant Not to Compete. Executive hereby acknowledges and recognizes
-----------------------
the highly competitive nature of the Business. Accordingly:
(a) Executive agrees that, during the Employment Period and continuing
during the Non-Competition Period (as hereinafter defined), Executive shall not:
i. be engaged, directly or indirectly, either for Executive's own
account or as agent, consultant, employee, partner, shareholder, investor,
creditor, officer, director, proprietor, investor, or otherwise of any person,
firm, corporation, or enterprise that is actively engaged in the business of
providing mobile wireless telecommunications services, in the Territory (as
hereinafter defined) unless the Company shall agree otherwise in writing;
ii. call on or solicit or divert or take away from the Company or the
Triton PCS Group (including by divulging to any competitor or potential
competitor of the Company or the Triton PCS Group) any person that is or was a
customer of the Company or the Triton PCS Group; or
iii solicit or employ or cause to be solicited or employed, for or on
behalf of Executive or any third party, any persons who are employees of the
Company or the Triton PCS Group at the date of termination of this Agreement or
at any time in the six (6) month period immediately prior thereto.
(b) For purposes of this Section 8, the phrase "Non-Competition Period"
---------
shall mean any period of time during which the Company is paying severance to
Executive pursuant to Section 7(b) hereof.
------------
(c) For purposes of this Section 8, the term "Territory" shall mean the
---------
geographic areas in which the Company or the Triton PCS Group conduct business
or have been granted licenses to conduct business. During the term hereof, and
continuing during the Non-Competition Period, the Territory shall be deemed to
be expanded and supplemented to reflect the then current geographic areas in
which the Company or the Triton PCS Group conduct business; provided, however,
-------- -------
that during the Non-Competition Period, the Territory shall not be deemed to be
expanded and supplemented for any geographic area in which Executive begins to
conduct business prior to the Company's or the Triton PCS Group's commencement
of business in that geographic area.
9. Nondisclosure.
-------------
(a) Executive acknowledges and agrees that during the term of this
Agreement Executive shall receive certain Confidential Information (as
hereinafter defined) relating to the Company and the Triton PCS Group. During
the term of Executive's employment hereunder and continuing after the
termination of this Agreement for any reason, Executive agrees that Executive
shall:
i. treat as secret and confidential all Confidential Information and
shall not, without the prior written consent of the Company, publish,
disseminate, disclose or otherwise make
6
<PAGE>
any Confidential Information available to any third party other than executives
of the Company having a reasonable need therefor; and
ii. not use or permit Confidential Information to be used (a) in any
manner that may injure or cause loss or may be calculated to injure or cause
loss whether directly or indirectly to the Company or any of its affiliates or
(b) other than for purposes of this Agreement.
(b) For purposes of this Agreement, "Confidential Information" shall mean
all information, data, know-how, trade secrets, systems and procedures of a
technical or commercial nature in any form relating to the Company or the Triton
PCS Group, including techniques, discoveries, ideas, concepts, models,
prototypes, diagrams, drawings, designs, information regarding product
development, marketing plans, sales plans, management organization, operating
policies and manuals, business plans, financial records, packaging design,
pricing, cost and sales information, contractual arrangements, lists of
customers and prospective customers, information about employees, customers and
suppliers or other financial, commercial, business or technical data and
information relating to the Company or the Triton PCS Group. Confidential
Information does not include any information that (i) was publicly known prior
----------------
to its disclosure to Executive, (ii) becomes public knowledge (other than by an
act or omission of Executive or an affiliate of Executive), or (iii) Executive
is required to disclose by law.
(c) Executive further agrees that Executive shall not, after the
termination of Executive's employment hereunder, use or permit to be used any
notes, memoranda, drawings, computer discs, specifications, programs, data or
other materials that contain, incorporate or embody Confidential Information, it
being agreed that the foregoing shall be and remain the sole and exclusive
property of the Company and that immediately upon termination of Executive's
employment hereunder, Executive shall deliver all of the foregoing and all
copies thereof in Executive's possession, to the Company at its main office.
(d) If Executive breaches, or threatens to commit a breach of, any of the
provisions of this Agreement, the Company and the Triton PCS Group shall have
the right (in addition to any other rights and remedies available to the Company
and the Triton PCS Group at law or in equity) to equitable relief (including
injunctions) against such breach or threatened breach, it being acknowledged and
agreed that any such breach or threatened breach will cause irreparable harm to
the Company and the Triton PCS Group and that money damages would not be an
adequate remedy to the Company and the Triton PCS Group.
(e) Executive hereby agrees that each provision of Sections 8 and 9 shall
----------------
be treated as a separate and independent clause, and the unenforceability of any
one clause shall in no way impair the enforceability of any of the other clauses
herein. Moreover, if one or more of the provisions contained in this Agreement
shall for any reason be held to be excessively broad as to scope, activity or
subject so as to be unenforceable, such provision or provisions shall be
construed by the appropriate judicial body by limiting and reducing it or them,
so as to be enforceable to the extent compatible with the applicable law as it
shall then appear.
7
<PAGE>
10. Notices. Any notice or other communication required or permitted
-------
hereunder shall be in writing and shall be deemed to have been duly given when
received if delivered personally against receipt; when transmitted if
transmitted by telecopy, electronic or digital transmission method with
electronic confirmation; the next business day if sent for next business day
delivery by a nationally recognized overnight courier service; or upon receipt
if sent by certified, registered or express mail, return receipt requested,
postage prepaid. In each case notice shall be sent as follows:
(a) if to the Company, to:
Triton Management Company, Inc.
101 Lindenwood Drive
Suite 125
Malvern, PA 19355
Phone: (610) 651-5900
FAX: (610) 993-2683
Attention: Mr. Steven Skinner
---------
with a required copy to:
Kleinbard, Bell & Brecker LLP
1900 Market Street, Suite 700
Philadelphia, PA 19103
Phone: (215) 568-2000
FAX: (215) 568-0140
Attention: Howard J. Davis, Esquire
---------
(b) if to Executive, to:
Mr. Clyde Smith
------------------------------------------------
-------------------------------------------------
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
11. Benefits of Agreement: Assignment.
---------------------------------
(a) This Agreement and all rights hereunder shall be binding upon and
shall inure to the benefit of the parties hereto and their personal
representatives, successors and permitted assigns
(b) Neither party hereto may assign this Agreement or any rights
hereunder, except that the Company, shall have the right to assign this
Agreement and its rights hereunder to:
(i) an affiliate of the Company; provided that the Company shall
continue to be obligated hereunder after any such assignment; and
8
<PAGE>
(ii) any successor in interest (not affiliated with the Company) to
all or substantially all of the business or assets of the Company pursuant to a
bona fide sale thereof and upon such assignment the Company shall be relieved of
its obligations hereunder.
12. Governing Law. This Agreement shall be governed by, construed and
-------------
enforced in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to principles of conflict of laws.
13. No Waiver. Either party's failure to enforce strictly any provision
---------
of this Agreement shall not be construed as a waiver thereof or excusing either
party from future performance.
14. Survival. Executive's obligations under this Agreement shall survive
--------
the termination of his employment to the extent set forth herein and shall be
binding upon Executive's heirs, executors and administrators.
15. Entire Agreement. This Agreement contains the entire understanding
----------------
between the parties with regard to the employment and compensation matters
described herein and may not be altered, amended, or modified except by writing
signed by both parties hereto.
16. Counterparts; Facsimile Signatures. This Agreement may be executed by
----------------------------------
the parties hereto in one or more separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute one in the same instrument. Facsimile signatures on this
Agreement shall be deemed original signatures.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of
the date first above written.
COMPANY:
TRITON MANAGEMENT COMPANY, INC.
By:__________________________________________
Steven Skinner, President
EXECUTIVE:
---------------------------------------------
Clyde Smith
9
<PAGE>
SCHEDULE I
Benefit Plans
-------------
HEALTH
- ------
Medical, dental and prescription coverage to its regular full time employees.
The Company pays 100% of the aggregate insurance premium, but requires that the
employee contribute a percentage of the premium for any covered family members.
VISION
- ------
Vision insurance coverage to its regular full time employees at a rate of $425
per family member per two year period. Coverage is limited to reimbursement for
glasses, contacts and annual eye examinations.
DISABILITY INSURANCE
- --------------------
Disability insurance to its regular full time employees who have more than six
months of continuous service. After ten continuous days of absence, employees
are eligible for payment under the company's short term disability plan.
Employees receive 60% of the gross wages to maximum of $1,000 per week for a
period of 60 days. On the 61st day of continuous absence employees are eligible
for payment under the company's long term disability policy. Employees shall
receive 60% of gross wages to a maximum of $6,000 per month until the earlier of
return to work or age 65.
10
<PAGE>
Exhibit 10.18
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT ("Agreement"), dated as of February ____,_1998,
by and among TRITON MANAGEMENT COMPANY, INC., a Delaware corporation (the
"Company"), TRITON PCS HOLDINGS, INC., a Delaware corporation formerly known as
Triton PCS, Inc. ("Triton"), and STEVEN R. SKINNER ("Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is an indirect wholly-owned subsidiary of Triton
that has been formed primarily as a management company to provide management
services on behalf of Triton to all of its direct and indirect subsidiaries;
WHEREAS, the Company desires to employ Executive and to enter into an
agreement embodying the terms of such employment;
WHEREAS, Executive desires to accept such employment and enter into
such Agreement;
WHEREAS, Executive is the record and beneficial owner of 58,871.10
shares (the "Shares") of Triton's common stock, par value $.01 per share (the
"Common Stock");
WHEREAS, in order to induce the Purchasers referred to in the
Securities Purchase Agreement, dated as of October 8, 1997, to purchase the
securities issued by Triton thereunder, Executive desires to grant to Triton the
repurchase rights with respect to the Shares as referred to in Paragraph 7; and
-----------
WHEREAS, Triton desires to accept the grant of such repurchase rights;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company, Triton and Executive, intending to be legally bound,
hereby agree as follows:
1. Employment.
----------
(a) Agreement to Employ. Upon the terms and subject to the conditions
-------------------
of this Agreement, the Company hereby employs Executive, and Executive hereby
accepts employment by the Company.
(b) Employment Period. The initial term (the "Initial Term") of
-----------------
Executive's employment shall be for a period of five (5) years commencing on the
date hereof (the "Commencement Date") and continuing until February _____, 2003
(the "Expiration Date"). Unless
<PAGE>
this Agreement shall have been earlier terminated in accordance with the terms
of Paragraph 5(a), the term of this Agreement will be extended automatically for
--------------
successive one (1) year terms commencing on the Expiration Date unless either
party elects to terminate this Agreement by providing written notice to the
other party at least sixty (60) days prior to the expiration of the Initial Term
or any renewal term of this Agreement. As used herein, the term "Employment
Period" shall mean the Initial Term plus any renewal terms as provided above.
2. Position and Duties.
-------------------
During the Employment Period, Executive shall serve as the President
and Chief Operating Officer of the Company and be responsible for the duties set
forth on Schedule I, reporting directly to the Chief Executive Officer of the
----------
Company. During the Employment Period, except as set forth herein, Executive
shall devote his entire business time to the services required of him hereunder,
except for vacation time and reasonable periods of absence due to sickness,
personal injury or other disability. Nothing contained herein shall preclude
Executive from (i) devoting reasonable periods of time to the management of
Triton Cellular, Inc. and Triton Cellular Partners, L.P. (collectively, "Triton
Cellular"), entities that have been formed to acquire, operate and dispose of
cellular telephone companies that are strategic to certain affiliates of the
Company (namely, AT&T Wireless Services, Inc., J.P. Morgan & Co. Incorporated,
Chase Capital Partners, First Union Capital Partners, Inc. and Duff Ackerman
Goodrich & Associates, L.P.), (ii) serving on the board of directors (or
comparable governing body) of Triton Cellular, (iii) serving on the board of
directors of any other business corporation or entity with the consent of the
Board of Directors of Triton, (iv) serving on the board (or comparable governing
body) of, or working for, any charitable or community organization, (v) pursing
his personal financial and legal affairs or (vi) serving on the board of
directors (or comparable governing body) of Triton or any direct or indirect
Subsidiary of Triton (including the Company) so long as such activities referred
to in clauses (i) through (v), individually or collectively, do not interfere in
any material respect with the performance of Executive's duties hereunder.
3. Compensation.
------------
(a) Base Salary. The Company shall pay Executive an annual salary of
-----------
$225,000. Upon the first anniversary hereof, and annually thereafter, the
Compensation Committee of the Board of Directors of Triton shall review
Executive's base salary in light of the performance of Executive and Triton and
its subsidiaries and affiliates, and may, in its discretion, increase (but not
decrease) such base salary by an amount it determines to be appropriate.
Executive's annual base salary payable hereunder, as it may be increased from
time to time, is referred to herein as "Base Salary". The Company shall pay
Executive his Base Salary in equal monthly installments, or in such other
installments as the parties may agree.
(b) Annual Bonus. For each calendar year or part thereof during the
------------
Employment Period, Executive shall be eligible to receive an annual bonus in an
amount and in the manner determined pursuant to Schedule II. Any bonuses
-----------
payable under this Paragraph 3(b) shall be paid
--------------
-2-
<PAGE>
to Executive at the same time as bonuses are paid to other executive officers of
the Company, but in no event later than 30 days after the close of the Company's
fiscal year for which the bonus is payable.
4. Benefits, Perquisites and Expenses.
----------------------------------
(a) Benefit Plans. During the Employment Period, Executive shall be
-------------
eligible to participate in any welfare benefit plan sponsored or maintained by
the Company, including, without limitation, any group life, hospitalization,
medical, dental, health, accident or disability insurance or similar plan or
program of the Company, in each case, whether now existing or established
hereafter, to the extent that Executive is eligible to participate in any such
plan under the generally applicable provisions thereof. It is acknowledged that
the Company intends to establish for Executive and other senior management
employees welfare benefit plans comparable to those provided to senior
management employees of Horizon Cellular Group, of which Executive was an
executive officer, a summary of such plans being set forth on Schedule III.
------------
Without Executive's consent, the Company may not (i) amend any such plan unless,
after giving effect to such amendment, the amended plan is a comparable plan, or
(ii) terminate any such plan unless a comparable plan is substituted therefor.
(b) Perquisites. Executive shall be entitled to up to five weeks paid
-----------
vacation annually in accordance with the Company's policies and practices.
Executive shall also be entitled to receive such perquisites as are generally
provided to other senior officers of the Company in accordance with the policies
and practices of the Company, including a monthly automobile allowance of $800.
Executive shall also be entitled to receive tax advisory, preparation and
related services from Triton's independent accountants, provided that the cost
to the Company in connection therewith shall not exceed $5,000 per annum.
(c) Business Expenses. The Company shall pay or reimburse Executive
-----------------
for all reasonable expenses incurred or paid by Executive in performance of
Executive's duties hereunder, upon presentation of expense statements or
vouchers and such other information as the Company may reasonably require.
(d) Indemnification. Each of Triton and the Company shall, to the
---------------
maximum extent permitted by applicable law, its certificate of incorporation or
its bylaws, indemnify Executive and hold Executive harmless from and against any
claim, loss or cause of action arising from or out of Executive's performance as
an officer, director or employee of Triton or the Company or any of their
respective subsidiaries or in any other capacity, including serving as a
fiduciary, in which Executive serves at the request of Triton or the Company.
If any claim is asserted hereunder for which Executive reasonably believes in
good faith he is entitled to be indemnified, Triton and/or the Company, as
applicable, shall pay Executive's legal expenses (or cause such expenses to be
paid) on a quarterly basis, provided that Executive shall reimburse such
--------
entity(ies) for such amounts, plus simple interest thereon at the 90-day United
States Treasury Bill rate as in effect from time to time, compounded annually,
if Executive shall be found by a final, non-appealable order of a court of
-3-
<PAGE>
competent jurisdiction not to be entitled to indemnification. This
indemnification obligations of Triton and the Company in this paragraph shall
survive any termination of this Agreement.
(e) Directors and Officers Liability Insurance. Triton shall maintain
------------------------------------------
directors and officers liability insurance coverage covering Executive in
amounts customary for similarly situated companies in the telecommunications
industry and with insurers reasonably acceptable to Executive. All policies for
such coverage shall provide for insurance on an "occurrence" (versus "claims-
made") basis.
(f) Stock Purchase Plan.
-------------------
(i) As promptly as practicable after the date hereof, Triton
shall create a stock purchase plan (the "Stock Purchase Plan") relating to
shares of Triton's Series C Convertible Preferred Stock, par value $0.01 per
share, or, following the IPO Date (as defined in Triton's Stockholders'
Agreement), shares of the class of Triton's common stock that is registered in
the Registration (as defined in Triton's Stockholders' Agreement) pertaining
thereto. Executive shall be entitled to acquire shares of such stock in
accordance with the terms of the Stock Purchase Plan.
(ii) Furthermore, Executive agrees that during the Employment
Period, Executive will invest towards the purchase of such shares 30% of any
amounts Executive receives on account of an annual bonus in excess of his Bonus
Target (as defined in Schedule II). Triton will use its reasonable best efforts
-----------
to include in the Stock Purchase Plan provisions that will enable Executive to
purchase the shares referred to in this Paragraph 4(f) with pre-tax dollars.
-------------
5. Termination of Employment.
-------------------------
(a) Early Termination of the Employment Period. This Agreement may be
------------------------------------------
terminated in any of the following manners:
(i) Executive may voluntarily terminate employment with the
Company at any time at the sole discretion of Executive upon 30 days' prior
written notice to the Company (a "Voluntary Termination").
(ii) Executive may, upon written notice to the Company, terminate
employment with the Company immediately at any time for "Good Reason" (as
defined in Paragraph 5(e)), it being agreed that any such termination, although
--------------
effected by Executive, shall not constitute a Voluntary Termination.
(iii) Executive's employment may, upon written notice to
Executive, be terminated by the Company at any time without Cause (as defined in
Paragraph 5(d)) at the sole discretion of the Company ("Without Cause"). The
- ---------------
Company shall give Executive 30 days' written notice if Executive is being
terminated Without Cause.
-4-
<PAGE>
(iv) Executive's employment may be terminated by the Company at
any time for Cause.
(v) This Agreement shall terminate automatically upon
Executive's death.
(vi) The Company may, upon written notice to Executive,
terminate this Agreement upon Executive's Disability. As used herein, the term
"Disability" shall mean a determination that Executive suffers from illness or
other physical or mental impairment that prevents Executive from substantially
performing his duties for a period of 270 days during any 12-month period during
the Employment Period or for 365 days during any 24-month period during the
Employment Period. The determination of whether (and, if appropriate, when) a
Disability has occurred shall be made by two licensed physicians, one chosen by
a majority of the Board of Directors of Triton and one chosen by Executive (or
his personal representative); provided, however, that if the two physicians do
not agree with respect to whether (or, if appropriate, when) a Disability has
occurred, such determination shall be made by a third licensed physician chosen
by said two physicians.
(b) Benefits Payable Upon Termination.
---------------------------------
(i) Following the end of the Employment Period pursuant to any
manner described in Paragraph 5(a), the Company shall pay to Executive (or, in
the event of his death, his surviving spouse, if any, or his estate): (A) any
Base Salary earned, but unpaid, for services rendered to the Company on or prior
to the date on which the Employment Period ended, and (B) amounts which are
vested or which Executive is otherwise entitled to receive under the terms of or
in accordance with any plan, policy, practice or program of, or any contract or
agreement with, the Company or any of its affiliated companies (including
Triton), at or subsequent to the date the Employment Period ends without regard
to the performance by Executive of further services or the resolution of a
contingency.
(ii) Following the end of the Employment Period pursuant to a
termination by Executive for Good Reason or a termination by the Company Without
Cause:
(x) If such termination occurs prior to the Expiration Date,
Executive shall be entitled to receive the following severance benefits: (A) the
Company shall pay to Executive (or, in the event of his death, his surviving
spouse, if any, or his estate) the amount of $675,000, (B) although Executive
shall use reasonable efforts to secure employment in a senior executive
capacity, if, by the second anniversary date of the end of the Employment Period
Executive has not secured such employment, the Company shall also pay to
Executive for the ensuing 12-month period the amount of $337,500 less any
----
amounts received by Executive from any such employment during such 12-month
period, (C) depending upon when any such termination occurs, a portion of the
Shares that would have otherwise been deemed Unvested Shares (as hereinafter
defined in Paragraph 7(b)) shall vest in the manner set forth on Schedule IV,
-------------- -----------
and (D) for a period of
-5-
<PAGE>
2 years following the end of the Employment Period, the Company shall continue
to provide to Executive the benefits afforded to Executive pursuant to Paragraph
---------
4(a); and
- ----
(y) If such termination occurs on or after the Expiration
Date or if this Agreement terminates due to the Company's non-renewal of the
Employment Term as provided in Paragraph 1(b), the Company shall pay to
--------------
Executive (or, in the event of his death, his surviving spouse, if any, or his
estate) a severance benefit in the amount of his Base Salary in effect at such
time.
(iii) It is expressly acknowledged by the Company that the amounts
and benefits afforded to Executive pursuant to clauses (A), (C), and (D) of
Paragraph 5(b)(ii)(x) and pursuant to Paragraph 5(b)(ii)(y) shall not be treated
- --------------------- ---------------------
as damages but as severance compensation and benefits to which Executive is
entitled by reason of termination of his employment for Good Reason or Without
Cause. Accordingly, Executive shall not be required to mitigate the amount of
any payment or benefits provided for in clauses (A), (C) or (D) of Paragraph
---------
5(b)(ii)(x) or as provided for in Paragraph 5(b)(ii)(y) by seeking employment or
- ----------- ---------------------
otherwise, nor, except as expressly set forth in Paragraph 5(b)(ii)(x)(B), shall
------------------------
the Company be entitled to set off against the amounts and benefits payable to
Executive hereunder against any amounts or benefits earned by Executive in other
employment after termination of his employment with the Company hereunder or any
amounts or benefits that might have been earned by Executive in other employment
had he sought such other employment.
(iv) If this Agreement terminates due to Executive's death or
Disability, that portion of the Unvested Shares that would have vested on the
next anniversary date of this Agreement (as set forth on by Schedule IV) shall
------------
vest immediately upon such death or Disability, as applicable.
(c) Timing of Payments.
------------------
(i) Amounts payable pursuant to clause (A) of Paragraph 5(b)(i),
-----------------
or pursuant to clause (A) of Paragraph 5(b)(ii)(x), or pursuant to Paragraph
--------------------- ---------
5(b)(ii)(y) will be paid in a single lump sum as soon as practicable, but in no
- -----------
event more than 10 business days, following the end of the Employment Period.
(ii) Amounts payable pursuant to Paragraph 5(b)(ii)(x)(B) will be
------------------------
paid monthly on the last day of each month in said 12-month period.
(iii) Vested benefits referred to in clause (B) of Paragraph
---------
5(b)(i) shall be payable in accordance with the terms of the plan, policy,
- -------
practice, program, contract or agreement under which such benefits have accrued.
(d) Definition of Cause. For purposes of this Agreement, "Cause"
-------------------
means only:
-6-
<PAGE>
(i) Executive's conviction of a felony (other than felonies related
solely to automobile infractions, unless Executive is incarcerated as a result
thereof); or
(ii) Executive's willful malfeasance or gross misconduct in
connection with his employment hereunder which has materially adversely affected
Triton as determined by a majority vote of the Board of Directors of Triton
(excluding Executive, but which such majority vote shall require the affirmative
vote of one of the directors selected pursuant to Section 3.1(a)(i) of Triton's
-----------------
Stockholders' Agreement, one of the directors selected pursuant to Section
-------
3.1(a)(ii) of Triton's Stockholders' Agreement, and the Series A Preferred
- ----------
Director, if any, as such director is referred to in Section 3.1 of Triton's
-----------
Stockholders' Agreement); or
(iii) a substantial and continual refusal by Executive to perform the
material duties required of him hereunder as determined by a majority vote of
the Board of Directors of Triton (excluding Executive, but which such majority
vote shall require the affirmative vote of one of the directors selected
pursuant to Section 3.1(a)(i) of Triton's Stockholders' Agreement, one of the
-----------------
directors selected pursuant to Section 3.1(a)(ii) of Triton's Stockholders'
------------------
Agreement, and the Series A Preferred Director, if any, as such director is
referred to in Section 3.1 of Triton's Stockholders' Agreement), which refusal
-----------
is not cured within 30 days after the date of receipt by Executive from the
Board of Directors of Triton of its written notice referring to this provision
and describing such refusal.
(e) Definition of Good Reason. For purposes of this Agreement, "Good
-------------------------
Reason" means any of the following:
(i) Executive is demoted, removed or not re-elected to the Board of
Directors of Triton or any of his positions or offices (including those of
President and Chief Operating Officer of Triton and the Company); provided,
however, that following the IPO Date (as defined in Triton's Stockholders'
Agreement), so long as Executive remains the President and Chief Operating
Officer of Triton and the Company, it shall not be considered "Good Reason" if
Executive is no longer a member of the Board of Directors of Triton; or
(ii) there is a material diminishment of Executive's
responsibilities, duties or status, which diminishment is not rescinded within
30 days after the date of receipt by the Board of Directors of Triton from
Executive of his written notice referring to this provision and describing such
diminishment; or
(iii) the Company fails to pay or provide when due (or there
is a reduction in) Executive's Base Salary, annual bonus or benefits, which
failure is not cured (or which reduction is not corrected) within 10 days after
the receipt by the Board of Directors of Triton from Executive of his written
notice referring to this provision and describing such failure (or reduction);
or
-7-
<PAGE>
(iv) Triton or the Company relocates its principal offices without
Executive's consent to a location more than 30 miles from the principal offices
of Triton or the Company in Malvern, Pennsylvania; or
(v) any purported termination by the Company of Executive for Cause
for any reason other than as set forth in Paragraph 5(d); or
--------------
(vi) a "Change of Control" (as hereinafter defined) occurs; provided,
however, that if a Change of Control shall exist as a result of the
circumstances set forth in clause (A) of the definition thereof, Executive
agrees that he will, for a period of time equal to the greater of (x) one year
after the date of the occurrence of such Change of Control and (y) the balance
of time remaining until the Expiration Date (such greater period of time being
referred to herein as the "Change of Control Period"), defer his right to
terminate this Agreement pursuant to Paragraph 5(a)(ii) and continue his
------------------
employment hereunder on the terms and subject to the conditions contained in
this Agreement; provided, further however, that upon such subsequent termination
of this Agreement by Executive after the expiration of the Change of Control
Period or if this Agreement is terminated during the Change of Control Period by
Executive for Good Reason or by the Company Without Cause, the date of any such
termination of this Agreement shall be deemed to be the date of the occurrence
of the Change of Control for purposes of benefits to which Executive is entitled
pursuant to Paragraph 5(b).
--------------
(f) Definition of Change of Control. For purposes of this Agreement,
-------------------------------
a "Change of Control" shall mean any transaction or event, or series of
transactions or events, whether voluntary or involuntary, that results in, or as
a consequence of which, any of the following events shall occur: (A) any Person
(as defined in Triton's Stockholders' Agreement) that is not an owner of shares
of capital stock of Triton on the Commencement Date shall acquire, directly or
indirectly, Beneficial Ownership (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of more than 50% of the voting stock of Triton
except in connection with any initial public offering of Triton's equity
securities, (B) any sale of all or substantially all of the assets of Triton or
(C) a proxy contest for the election of directors of Triton results in the
persons constituting the Board of Directors of Triton immediately prior to the
initiation of such proxy contest ceasing to constitute a majority of the Board
of Directors of Triton upon the conclusion of such proxy contest.
6. Noncompetition and Confidentiality.
----------------------------------
(a) Noncompetition. Except as set forth in the next sentence, during
--------------
the Employment Period and for one year thereafter, Executive shall not, without
the consent of the Company, assist or become associated with any person or
entity, whether as a principal, partner, employee, consultant or shareholder
(other than as a holder of not in excess of 5% of the outstanding voting shares
of any publicly traded company) that is actively engaged in the business of
providing mobile wireless telecommunications services in the Territory (as
defined in Triton's Stockholders' Agreement). It is expressly acknowledged that
Executive's affiliation with Triton Cellular (whether as officer, employee,
director, shareholder, partner or otherwise) shall not constitute a violation of
-8-
<PAGE>
the foregoing prohibition so long as Triton Cellular's principal business
remains as described in Paragraph 2. Additionally, in addition to any other
-----------
right or remedy available to Executive, the foregoing prohibition shall not
apply to Executive if the Company fails to pay and to provide to Executive when
due the amounts and benefits set forth in Paragraph 5(b), and Executive's
--------------
pursuit of such remedy shall not relieve the Company from its obligations to pay
such amounts and to provide such benefits to Executive.
(b) Confidentiality. Without the prior written consent of the
---------------
Company, except to the extent required by an order of a court having competent
jurisdiction or under subpoena from a governmental body or agency, Executive
shall not disclose any trade secrets, customer lists, drawings, designs,
information regarding product development, marketing plans, sales plans,
manufacturing plans, management organization (including data and other
information relating to members of the Board of Directors of Triton and
management), operating policies and manuals, business plans, financial records,
packaging design or other financial, commercial, business or technical
information relating to Triton or the Company or any of their respective
subsidiaries or affiliates (collectively, "Confidential Information"), to any
third person, unless such Confidential Information has been previously disclosed
to the public by the Company or is in the public domain (other than by reason of
Executive's breach of this Paragraph 6(b)), except that Executive may disclose
--------------
Confidential Information to the extent advisable in his sole discretion in
connection with (i) the performance of Executive's duties hereunder, or (ii) the
issuance of Triton's securities, or (iii) obtaining financing for Triton, or
(iv) the enforcement of Executive's rights under this Agreement, or (v) any
disclosures that may be required by law, including securities laws.
(c) Inventions. Executive hereby sells, transfers and assigns to the
----------
Company all of the right, title and interest of Executive in and to all
inventions, ideas, disclosures and improvements, whether patented or unpatented,
and copyrightable material, made or conceived by Executive, solely or jointly,
or in whole or in part, during the Employment Term which (i) relate to methods,
apparatus, designs, products, processes or devices sold, leased, used or under
construction or development by Triton, the Company or any of their respective
subsidiaries or affiliates or (ii) otherwise relate to or pertain to the
business, functions or operations of Triton, the Company or any of their
respective subsidiaries or affiliates, or (iii) arise (wholly or partly) from
the efforts of Executive during the Employment Period. Executive shall
communicate promptly and disclose to the Company, in such form as the Company
reasonably requests, all information, details and data pertaining to the
aforementioned inventions, ideas, disclosures and improvements; and, whether
during the Employment Period or thereafter, Executive shall execute and deliver
to the Company (at the Company's sole cost and expense) such formal transfers
and assignments and such other papers and documents as may be required of
Executive to permit the Company to file and prosecute the patent applications
and, as to copyrightable material, to obtain copyright thereon.
(d) Company Property. Promptly following Executive's termination of
----------------
employment, Executive shall return to the Company all property of the Company,
and all copies thereof in Executive's possession or under his control, and all
tangible embodiments of Confidential
-9-
<PAGE>
Information in Executive's possession in whatever media such Confidential
Information is maintained.
(e) Non-Solicitation of Employees. Except as set forth in the next
-----------------------------
sentence, during the Employment Period and for one year thereafter, Executive
will not directly or indirectly induce any employee of Triton, the Company or
any of their respective subsidiaries or affiliates to terminate employment with
such entity, and will not directly or indirectly, either individually or as
owner, agent, employee, consultant or otherwise, employ or offer employment to
any person who is or was employed by any such entity, unless such person shall
have ceased to be employed by such entity for a period of at least six months;
provided, however, that nothing contained in this Agreement shall prevent
Executive from engaging in a general solicitation for employment that is not
directed at employees of any such entity. In addition to any other right or
remedy available to Executive, the foregoing prohibition shall not apply to
Executive if the Company fails to pay and to provide to Executive when due the
amounts and benefits set forth in Paragraph 5(b), and Executive's pursuit of
--------------
such remedy shall not relieve the Company from its obligations to pay and to
provide such amounts and benefits to Executive.
(f) Injunctive Relief with Respect to Covenants. Executive
-------------------------------------------
acknowledges and agrees that the covenants and obligations of Executive with
respect to noncompetition, inventions, confidentiality and Company property
contained in this Paragraph 6 relate to special, unique and extraordinary
-----------
matters and that a violation of any of the terms of such covenants and
obligations will cause the Company irreparable injury for which adequate
remedies are not available at law. Therefore, Executive agrees that the Company
shall be entitled to an injunction, restraining order, or such other equitable
relief as a court of competent jurisdiction may deem necessary or appropriate to
restrain Executive from committing any violation of the covenants and
obligations contained in this Paragraph 6. These injunctive remedies are
-----------
cumulative and are in addition to any other rights and remedies the Company may
have at law or in equity.
7. Vesting and Repurchase of Unvested Shares, Etc.
-----------------------------------------------
(a) Vesting. The Shares shall vest in accordance with the terms of
-------
Schedule IV. Executive hereby agrees that as of any date, the Shares shall be
- -----------
subject to repurchase by Triton in accordance with the terms of this Paragraph
---------
7, except to the extent the Shares shall have theretofore vested in accordance
- -
with the terms of Schedule IV.
-----------
(b) Repurchase Upon Termination. As promptly as practicable following
---------------------------
the termination of Executive's employment for any reason, Executive shall sell
to Triton, and Triton shall purchase from Executive, all of the Shares that have
not theretofore vested in accordance with the terms of Schedule IV (the
-----------
"Unvested Shares") at a price per Share equal to Executive's original per Share
purchase price ($0.01).
(c) Closing of Repurchase; Assignment of Repurchase Right. The
-----------------------------------------------------
closing of a purchase and sale pursuant to Paragraph 7(b), if any, shall take
---------------
place on a date mutually agreed by
-10-
<PAGE>
Executive or his legal representative and Triton no later than 30 days after the
date that the Employment Period ends. At such closing, Triton shall deliver to
Executive or such legal representative a check in the amount of the aggregate
repurchase price and, upon delivery thereof, Triton shall become the legal and
beneficial owner of the Unvested Shares being repurchased and all rights and
interests therein or relating thereto, and Triton shall have the right to retain
and transfer to its own name the shares of Common Stock being repurchased by
Triton. Whenever Triton shall have the right to repurchase Common Stock
hereunder, Triton may designate and assign one or more employees, officers,
directors or shareholders of Triton or other persons or organizations to
exercise all or a part of Triton's repurchase rights under this Agreement and
purchase all or a part of such Common Stock.
(d) Restriction on Transfer. Except for the escrow described in
-----------------------
Paragraph 7(e) or transfer of the Shares to Triton or its assignees contemplated
- --------------
by this Agreement, none of the Unvested Shares or any beneficial interest
therein shall be transferred, encumbered or otherwise disposed of in any way.
(e) Escrow of Shares. The Certificate(s) representing Unvested Shares
----------------
shall be held by the Secretary of Triton as escrow holder (the "Escrow Holder"),
along with a stock power executed by Executive in blank. The Escrow Holder is
hereby directed to permit transfer of the Shares only in accordance with this
Agreement. In the event further instructions are desired by the Escrow Holder,
he shall be entitled to rely upon directions executed by a majority of the
authorized number of Triton's Board of Directors. The Escrow Holder shall have
no liability for any act or omission hereunder while acting in good faith in the
exercise of his own judgment. If Triton or any assignee repurchases any of the
Shares pursuant to this Paragraph 7, the Escrow Holder, upon receipt of written
-----------
notice of such repurchase from the proposed transferee, shall take all steps
necessary to accomplish such repurchase. From time to time, upon Executive's
request, the Escrow Holder shall: (i) cancel the certificate(s) held by the
Escrow Holder and Executive representing the Shares, (ii) cause a new
certificate to be issued representing all the Shares that have vested in
accordance with the terms of Schedule IV, which certificate the Escrow Holder
-----------
shall deliver to Executive, and (iii) cause a new certificate to be issued
representing the then remaining Unvested Shares, which certificate shall be held
in escrow by the Escrow Holder in accordance with the provisions of this
Paragraph 7(e). Subject to the terms hereof, Executive shall have all the
- --------------
rights of a stockholder with respect to the Shares while they are held in
escrow, including without limitation, the right to vote the Shares and receive
any cash dividends declared thereon. If, from time to time during the term of
Triton's repurchase right, there is (i) any stock dividend, stock split or other
change in the Shares, or (ii) any merger or sale of all or substantially all of
the assets or other acquisition of Triton, any and all new, substituted or
additional securities to which Executive is entitled by reason of his ownership
of the Shares shall be immediately subject to this escrow, deposited with the
Escrow Holder and included thereafter as "Shares" for purposes of this Agreement
and Triton's repurchase right.
(f) Legends. The share certificate evidencing the Shares shall be
-------
endorsed with the following legends (in addition to any legend required to be
placed thereon by applicable state securities laws or Triton's Stockholders'
Agreement dated as of the date hereof):
-11-
<PAGE>
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CON NECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGIS TRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANS FERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
8. No Conflict With Prior Agreements; Due Authorization.
----------------------------------------------------
(a) Executive represents to the Company that neither Executive's
execution of this Agreement or commencement of employment hereunder nor the
performance of Executive's duties hereunder conflicts with any contractual
commitment on Executive's part to any third party. Each of Triton and the
Company represents to Executive that it is fully authorized and empowered by
action of Triton's Board of Directors to enter into this Agreement and that
performance of its obligations under this Agreement will not violate any
agreement between it and any other person, firm or other entity.
(b) Nothing herein shall be construed to require Executive to use or
disclose any information that he is prohibited from using or disclosing as a
result of legal or contractual obligations.
9. Miscellaneous.
-------------
(a) Survival. Paragraphs 4(d), 5, 6, 7 and 9 shall survive the
-------- ------------------------------
termination hereof.
(b) Binding Effect. Subject to the Executive's rights as set forth in
--------------
Paragraph 5(e)(vi), this Agreement shall be binding on Triton and the Company in
- ------------------
accordance with its terms and any person or entity which succeeds to the
interest of Triton or the Company (regardless of whether such succession occurs
by operation of law) by reason of the sale of all or a portion of Triton's
stock, a merger, consolidation, or reorganization involving Triton or a sale of
the assets of the business of Triton (or portion thereof) in which Executive
performs a majority of his services. This Agreement shall also inure to the
benefit of Executive's heirs, executors, administrators and legal
representatives.
-12-
<PAGE>
(c) Assignment. Except as provided under Paragraph 9(b), neither this
---------- --------------
Agreement nor any of the rights or obligations hereunder shall be assigned or
delegated by any party hereto without the prior written consent of the other
party.
(d) Entire Agreement. This Agreement, together with the Schedules
----------------
attached hereto, constitutes the entire agreement between the parties hereto
with respect to the matters referred to herein, and no other agreement, oral or
otherwise, shall be binding among the parties unless it is in writing and signed
by the party against whom enforcement is sought. There are no promises,
representations, inducements or statements between the parties other than those
that are expressly contained herein. Executive acknowledges that he is entering
into this Agreement of his own free will and accord, and with no duress, that he
has been represented and fully advised by competent counsel in entering into
this Agreement, that he has read it and that he understands it and its legal
consequences. No parol or other evidence may be admitted to alter, modify or
construe this Agreement, which may be altered, modified or amended only by a
writing signed by the parties hereto.
(e) Severability; Reformation. In the event that one or more of the
-------------------------
provisions of this Agreement shall become invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event that
any of Paragraphs 6(a), (b) or (c) is not enforceable in accordance with its
---------------------------
terms, Executive and the Company agree that such Paragraph shall be reformed to
make such Paragraph enforceable in a manner which provides the Company the
maximum rights permitted at law.
(f) Waiver. Waiver by any party hereto of any breach or default by
------
the other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from the
breach or default waived. No waiver of any provision of this Agreement shall be
implied from any course of dealing between the parties hereto or from any
failure by either party hereto to assert its or his rights hereunder on any
occasion or series of occasions.
(g) Notices. Any notice required or desired to be delivered under
-------
this Agreement shall be in writing and shall be delivered personally against
receipt, by courier service or by registered mail, return receipt requested, and
shall be effective upon actual receipt by the party to which such notice shall
be directed, and shall be addressed as follows (or to such other address as the
party entitled to notice shall hereafter designate in accordance with the terms
hereof):
-13-
<PAGE>
If to Triton or the Company, to the attention of the Board
of Directors of Triton at Triton's principal executive
offices.
If to Executive:
Steven R. Skinner
1105 Brynllawn Lane
Villanova, PA 19085
with a copy to:
Kleinbard, Bell & Brecker LLP
1900 Market Street, Suite 700
Philadelphia, PA 19103
Attention: Howard J. Davis
Facsimile: (215) 568-0140
(h) Headings. Headings to paragraphs in this Agreement are for the
--------
convenience of the parties only and are not intended to be part of or to affect
the meaning or interpretation hereof.
(i) Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
(j) Withholding. Any payments provided for herein shall be reduced by
-----------
any amounts required to be withheld by the Company from time to time under
applicable Federal, State or local income or employment tax laws or similar
statutes or other provisions of law then in effect.
(k) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the internal laws of the State of New York.
(l) No Set-Off. Notwithstanding anything to the contrary herein, at
----------
law or otherwise, no payment required to be made by Triton or the Company to
Executive under this Agreement shall be subject to any right of set-off,
counterclaim, defense, abatement, suspension, deferment or reduction by reason
of any claim by Triton or the Company against Executive based upon an alleged
breach by Executive of any provision of this Agreement or any other agreement
between Triton or the Company and Executive except upon execution of an
unsatisfied final, unappealable judgment rendered by a court of competent
jurisdiction.
(m) Joint and Several. The obligations of Triton and the Company
-----------------
under this Agreement shall be joint and several.
-14-
<PAGE>
(n) Resolution of Disputes. All disputes, controversies and claims
----------------------
arising in connection with this Agreement that are not settled by agreement
between the parties shall be finally settled under the Commercial Arbitration
Rules of the American Arbitration Association ("AAA") in effect from time to
time. A single arbitrator shall be appointed by agreement between the parties
or, failing such agreement, by AAA. The arbitrator may grant any remedy that
(s)he deems just and equitable within the scope of this Agreement, including
specific performance. The award of the arbitrator shall be final and binding
and judgment thereon may be entered in any court having jurisdiction. The costs
and expenses (including reasonable attorney's fees) of the prevailing party
shall be borne and paid by the party that the arbitrator determines is the non-
prevailing party.
[Signatures Contained on Next Page]
-15-
<PAGE>
IN WITNESS WHEREOF, each of the Company and Triton has caused this Agreement
to be executed by a duly authorized officer, and Executive has hereunto set his
hand as of the day and year first above written.
COMPANY:
TRITON MANAGEMENT COMPANY, INC.
By:____________________________________________________
David D. Clark, Senior Vice President
TRITON:
TRITON PCS HOLDINGS, INC.
By:____________________________________________________
David D. Clark, Senior Vice President
EXECUTIVE:
______________________________________________________
Steven R. Skinner
-16-
<PAGE>
SCHEDULE I
----------
Duties
------
As President and Chief Operating Officer of Triton and the Company, Executive
shall maintain compliance with goals, policies, and objectives established by
the Chief Executive Officer and the Board of Directors of Triton and the
Company. Executive shall direct, coordinate, and administer all aspects of
Triton's and the Company's operations including system build-out and design and
subsidiary operations through subordinates. Executive shall assist in the
development of corporate policies that encompass such areas as personnel, Triton
and Company operations, operating financial performance and Company expansion.
Executive shall maintain supervision over, and responsibility for, the day-to-
day operations of Triton and the Company, with all of the powers and authority
typically exercised by a chief operating officer of a company.
<PAGE>
SCHEDULE II
-----------
Annual Bonuses
--------------
- - For the year ending December 31, 1997, $225,000, payable on the later of
December 31, 1997 or execution of the Agreement.
- - For all other years, Executive shall be entitled to an annual bonus based upon
achievement of certain stated objectives reflected on Annex A to this Schedule
------- --------
II. The calculated weighted score from Annex A shall be utilized to determine
- -- -------
the bonus payable. The "Bonus Target" for Executive for any year is equal to
50% of his Base Salary for that year. The portion, if any, of the Bonus Target
that shall be payable in any given year shall be determined as follows:
PAYMENT PERCENTAGE
WEIGHTED SCORE OF BONUS TARGET
Less than 80% 0 payment
80.0% to 84.9% 50% payment
85.0% to 89.9% 75% payment
90.0% to 100.0% As scored
101.0% to 104.9% 125% payment
105.0% to 109.9% 150% payment
110.0% to 114.9% 175% payment
115.0% and over 200% (maximum
payment)
<PAGE>
ANNEX A TO
SCHEDULE II
-----------
Objectives
----------
To be attached hereto after adoption by the Compensation Committee of the Board
of Directors of Triton.
<PAGE>
SCHEDULE III
Former Horizon Welfare Plans
----------------------------
HEALTH
- ------
Medical, dental and prescription coverage to its regular full time employees.
The Company pays 100% of the aggregate insurance premium, but requires that the
employee contribute a percentage of the premium for any covered family members.
VISION
- ------
Vision insurance coverage to its regular full time employees at a rate of $425
per family member per two year period. Coverage is limited to reimbursement for
glasses, contacts and annual eye examinations.
LIFE INSURANCE
- --------------
Life insurance coverage to its regular full time employees equal to two times
base salary up to a maximum of $75,000 at no cost to the employee. In the event
that a covered employee's death results directly from injury the benefit paid is
equal to four times the base salary to a maximum of $150,000. Benefits payable
in the event that a covered employee sustains a dismemberment loss which is a
direct result of an injury range from one to two times base salary.
DISABILITY INSURANCE
- --------------------
Disability insurance to its regular full time employees who have more than six
months of continuous service. After ten continuous days of absence, employees
are eligible for payment under the company's short term disability plan.
Employees receive 60% of the gross wages to maximum of $1,000 per week for a
period of 60 days. On the 61st day of continuous absence employees are eligible
for payment under the company's long term disability policy. Employees shall
receive 60% of gross wages to a maximum of $6,000 per month until the earlier of
return to work or age 65.
<PAGE>
SCHEDULE IV
-----------
Vesting Schedule
----------------
General
- -------
Except as set forth below, the Shares shall vest on the Commencement Date,
the System Activation Date (as hereinafter defined) and on each anniversary of
the Commencement Date as follows:
Vesting Date
------------
Commencement Date 10%
First Anniversary 17%
Second Anniversary 17%
Third Anniversary 17%
Fourth Anniversary 17%
Fifth Anniversary 17%
System Activation Date 5%
------
Total 100%
As used herein, the term "System Activation Date" shall mean the date
(regardless of when such date occurs) that Triton completes Phase I of the
Minimum Buildout Schedule attached as Schedule V to the Stockholders' Agreement.
----------
Good Reason (other than due to Change of Control) or Without Cause
- ------------------------------------------------------------------
In the event of a termination of the Agreement by Executive for Good Reason
(except under circumstances constituting a Change of Control as discussed below)
or by the Company Without Cause, in addition to any Shares that had theretofore
vested in accordance with the foregoing general schedule, the following
percentages of the aggregate Unvested Shares shall vest immediately upon any
such termination:
Termination Date Percentage of Aggregate Unvested
----------------
Shares that Vest
--------------------------------
Prior to Third Anniversary Date 50%
From Third Anniversary Date and
Prior to Fourth Anniversary Date 25%
Thereafter 0%
<PAGE>
Change of Control
- -----------------
In the event of any Change of Control (whether or not (i) Executive elects to
terminate the Agreement for Good Reason on account thereof or (ii) Executive has
deferred his right to terminate the Agreement as provided in Paragraph
---------
5(e)(vii)), in addition to any Shares that had theretofore vested in accordance
with the foregoing general schedule, all Unvested Shares shall vest immediately
upon such Change of Control.
-2-
<PAGE>
EXHIBIT 10.19
TRITON PCS HOLDINGS, INC.
COMMON STOCK TRUST AGREEMENT
FOR MANAGEMENT EMPLOYEES
This Common Stock Trust Agreement for Management Employees ("Trust
Agreement") is made this ____ day of February 1998, by and between Triton PCS
Holdings, Inc., a Delaware corporation (the "Company"), and Michael E. Kalogris
(the "Trustee"):
WHEREAS, the Company expects to incur liability with respect to certain
individuals that are expected to become employees of the Company or one of its
affiliates;
WHEREAS, the Company wishes to establish a Trust (the "Trust") and to
contribute to the Trust assets that shall be held therein, subject to the claims
of the Company's creditors in the event of the Company's "insolvency," as herein
defined, until distributed from the Trust;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement maintained for the purpose of providing
ownership in the Company for a select group of management employees ("Management
Employees") and
WHEREAS, it is the intention of the Company to make contributions to the
Trust to create and maintain a reserve of common stock for the purpose stated
above;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties, intending to be legally bound, do
hereby establish this Trust and agree that the Trust shall be comprised, held
and disposed of as follows:
Article 1. ESTABLISHMENT OF TRUST
1.01 The Company hereby deposits with Trustee in Trust 41,994.71
shares of the Company's common stock, par value $0.01 per share, which is the
current equivalent of approximately 21.4% the Company's outstanding common
stock, which shall become the principal of the Trust to be held, administered
and disposed of by Trustee as provided in this Trust Agreement.
1.02 The Trust hereby established shall be revocable by the Company;
provided, however, that the Trust shall become irrevocable upon a change of
control, as defined in Section 13.04.
-------------
<PAGE>
1.03 This Trust is intended to be a grantor Trust, of which the
Company is the grantor, within the meaning of Section 671 of the Internal
Revenue Code of 1986, as amended, and shall be construed accordingly.
1.04 The principal of the Trust, and any dividends or earnings thereon
shall be held separate and apart from other funds of the Company and shall be
used exclusively for the uses and purposes of compensating Management Employees
and of general creditors as herein set forth. No employee shall have a
preferred claim on, or beneficial ownership interest in, any assets of the
Trust. Any rights created under this Trust Agreement shall be unsecured
contractual rights of Management Employees against the Company based on written
agreement between the Company and Management Employee. Any assets held by the
Trust shall be subject to the claims of the Company's general creditors under
federal and state law in the event of "insolvency," as defined in Section 3.01
------------
herein.
1.05 Within 60 days following the end of the calendar year ending
after the Trust has become irrevocable pursuant to Section 1.02 hereof, the
------------
Company shall be required to irrevocably deposit additional shares of common
stock of the Company to the Trust in an amount sufficient to pay each Management
Employee the benefits payable pursuant to the terms of any written agreement
reached between such Management Employee and the Company as of the close of the
calendar year.
Article 2. DISTRIBUTIONS FROM TRUST
2.01 The Company shall deliver to Trustee a schedule (the
"Distribution Schedule") that indicates the number of shares to be distributed
in respect of each Management Employee or his or her beneficiaries), that
provides a formula or other instructions acceptable to the Trustee for
determining the shares distributable, the form in which such benefit is to be
distributed, and the time of distribution. Except as otherwise provided herein,
Trustee shall make distributions to a Management Employee (or his or her
beneficiaries) in accordance with such Distribution Schedule. The Trustee shall
make provision for the reporting and withholding of any federal, state or local
taxes that may be required to be withheld with respect to the distribution of
benefits pursuant to the terms of any written agreement between the Company and
the Management Employee and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported, withheld and paid
by the Company.
2.02 The entitlement of a Management Employee (or his or her
beneficiaries) to benefits under this Trust shall be determined by the Company
or such party as it shall designate, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the written agreement
between the Company and Management Employee.
2
<PAGE>
2.03 The Company may distribute benefits directly to the Management
Employee (or beneficiaries) as benefits become due under the terms of the
written agreement between the Company and Management Employee. The Company
shall notify the Trustee to distribute benefits directly to the Management
Employee prior to the time benefits are due. In addition, if the principal of
the Trust, and any dividends or earnings thereon, are insufficient for payment
of benefits, in accordance with the terms of the written agreement between the
Company and the Management Employee, the Company shall supplement the balance of
each such payment as it falls due. The Trustee shall notify the Company if
principal and dividends or earnings are insufficient to make the required
distribution of benefits following receipt of the Company's notice to distribute
benefits.
Article 3. INSOLVENCY OF THE COMPANY.
3.01 The Trustee shall cease distributions of benefits to Management
Employees and their beneficiaries if the Company becomes "insolvent."
"Insolvent" means, for purposes this Trust Agreement, that the Company is: (a)
unable to pay its debts as the debts become due, or (b) subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.
3.02 At all times during the continuance of this Trust, as provided in
Section 1.04 hereof, the principal and income of the Trust shall be subject to
- ------------
the claims of general creditors of the Company under federal and state law as
set forth below.
(a) The Board of Directors of the Company shall have the duty to
inform the Trustee in writing of the Company's "insolvency". If any person
claiming to be a creditor of the Company alleges in writing to the Trustee that
the Company has become "insolvent", the Trustee shall conduct the appropriate
inquiries to determine whether the Company is "insolvent" and pending such
determination, the Trustee shall discontinue any and all distributions from the
Trust.
(b) Unless the Trustee has actual knowledge of the Company's
"insolvency", or has received notice from the Company or a person claiming to be
a creditor alleging that the Company is "insolvent", the Trustee shall have no
duty to inquire whether the Company is "insolvent". The Trustee may, at all
times, rely on such evidence concerning the Company's solvency.
(c) If, at any time, the Trustee determines that the Company is
"insolvent", the Trustee shall discontinue distributions from the Trust and
shall hold the assets of the Trust for the benefit of the Company's general
creditors. Nothing in this Trust Agreement shall in any way diminish any rights
of a Management Employee (or his or her beneficiaries) to pursue their rights as
general creditors of the Company with respect to benefits due under this Trust
or otherwise.
3
<PAGE>
(d) The Trustee shall resume distribution of benefits in accordance
with Article 2 of this Trust Agreement only after the Trustee determines that
---------
the Company is "insolvent" (or is no longer "insolvent").
3.03 Provided that there are sufficient assets, if the Trustee
discontinues the distribution of benefits from the Trust pursuant to Section
-------
3.02 hereof, and subsequently resumes such distributions, the first distribution
- ----
following such discontinuance shall include the aggregate amount of all
distributions due to the Management Employee (or his or her beneficiaries) under
the terms of the written agreement between the Company and Management Employee
for the period of such discontinuance, less the aggregate amount of any payments
or transfers of common stock made to the Management Employee (or his or her
beneficiaries) by the Company in lieu of the payments provided for hereunder
during any such period of discontinuance.
Article 4. PAYMENTS TO COMPANY.
Except as provided in Article 3 hereof, upon the Trust's becoming
---------
irrevocable, the Company shall have no right or power to direct the Trustee to
return to the Company, or to divert to others, any of the Trust assets before
all required distributions of benefits have been made to Management Employees
(or their beneficiaries) pursuant to the terms of any written agreements between
the Company and the Management Employees.
Article 5. INVESTMENT AUTHORITY.
5.01 The Trustee may invest in securities (including stock or rights
to acquire stock) or obligations issued by the Company. All rights associated
with assets of the Trust shall be exercised by the Trustee or the Trustee's
delegate, and shall in no event be exercisable by or rest with the Management
Employee, except to the extent any Management Employee is appointed Trustee or
delegate of the Trustee.
Article 6. DISPOSITION OF INCOME.
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested in the common stock of
the Company.
Article 7. ACCOUNTING BY TRUSTEE.
The Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between the
Company and the Trustee. Within 60 days following the close of each calendar
year, and within 60 days after the removal or resignation of the Trustee, the
Trustee shall deliver to the Company a written account of his
4
<PAGE>
administration of the Trust during such year or during the period from the close
of the last preceding year to the date of such removal or resignation, setting
forth all investments, receipts, disbursements and other transactions occurring
during such period, including a description of all securities and investments
purchased and sold with the cost or net proceeds of such purchases or sales
(accrued interest paid or receivable being shown separately), and showing all
cash, securities and other property held in the Trust at the end of such year or
as of the date of such removal or resignation, as the case may be.
Article 8. RESPONSIBILITY OF TRUSTEE.
8.01 The Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting
in like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; provided, however, that the
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by the Company that is contemplated by,
and in conformity with the terms of any written agreement between the Company
and a Management Employee or this Trust and is given in writing by the Company.
In the event of a dispute between the Company and a party, the Trustee may apply
to a court of competent jurisdiction to resolve the dispute.
8.02 If the Trustee undertakes or defends any litigation arising in
connection with this Trust, the Company agrees to indemnify the Trustee against
the Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If the Company does not pay such costs, expenses and liabilities
in a reasonably timely manner, the Trustee may obtain payment from the Trust ,
to the extent that the Trust maintains any cash assets as a result of dividends
or other earnings paid on the common stock in Trust.
8.03 The Trustee may consult with legal counsel (who may also be
counsel for the Company generally) with respect to any of his duties or
obligations hereunder.
8.04 The Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist him in
performing any of the duties or obligations hereunder.
8.05 The Trustee shall have, without exclusion, all powers conferred
on trustees by applicable law, unless expressly provided otherwise herein.
8.06 Notwithstanding any powers granted to the Trustee pursuant to
this Trust Agreement or pursuant to applicable law, the Trustee shall not have
any power that could give this Trust the objective of carrying on a business and
dividing the gains therefrom,
5
<PAGE>
within the meaning of Section 301.7701-2 of the Procedure and Administrative
Regulations promulgated pursuant to the Internal Revenue Code.
Article 9. COMPENSATION AND EXPENSES OF TRUSTEE.
The Company shall pay all administrative expenses associated with the
implementation, maintenance and operation of the Trust and all Trustee's fees
and expenses.
Article 10. RESIGNATION AND REMOVAL OF TRUSTEE.
10.01 The Trustee may resign at any time by written notice to the
Company, which shall be effective 30 days following receipt of such notice
unless the Company and the Trustee agree otherwise.
10.02 The Trustee may be removed by the Company on 30 days notice or
upon shorter notice accepted by the Trustee.
10.03 If the Trustee resigns or is removed, a successor Trustee shall
be appointed, in accordance with Article 11 hereof, by the effective date of
----------
resignation or removal. If the Trustee resigns or is removed within one year of
a change of control, as defined in Section 13.04, the Trustee shall select a
-------------
successor Trustee in accordance with the provisions of Section 11.02 hereof
-------------
prior to the effective date of the Trustee's resignation or removal. If no such
appointment has been made, the Trustee may apply to a court of competent
jurisdiction for appointment of a successor Trustee or for instructions for
appointment of a successor Trustee. All expenses of the Trustee in connection
with the proceeding shall be paid by the Company.
10.04 Upon resignation or removal of the Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within 30 days after receipt of notice
of resignation, removal or transfer. The Company may extend the time limit for
transfer of assets, however, in the event of resignation of the Trustee.
Article 11. APPOINTMENT OF SUCCESSOR TRUSTEE.
11.01 If the Trustee resigns or is removed, other than within the time
period provided in Section 10.03 hereof, the Company may appoint any third
-------------
party, such as a bank Trust department or other party that may be granted
corporate Trustee powers under state law, as a Successor Trustee to replace the
Trustee upon resignation or removal. The appointment shall be effective when
accepted in writing by the Successor Trustee, who shall have all of the rights
and powers of the former Trustee, including ownership rights in the
6
<PAGE>
Trust assets. The former Trustee shall execute any instrument necessary or
reasonably requested by the Company or the Successor Trustee to evidence the
transfer.
11.02 If the Trustee resigns or is removed within the time period
provided in Section 10.03 hereof and selects a Successor Trustee, the Trustee
-------------
may appoint any third party, such as a bank Trust department or other party
that my be granted corporate Trustee powers under state law. The appointment of
a Successor Trustee shall be effective when accepted in writing by the Successor
Trustee. The Successor Trustee shall have all the rights and powers of the
former Trustee, including ownership rights in Trust assets. The former Trustee
shall execute any instrument necessary or reasonably requested by the Successor
Trustee to evidence the transfer.
11.03 The Successor Trustee need not examine the records and acts of
any prior Trustee and may retain or dispose of existing Trust assets, subject to
Articles 7 and 8 hereof. The Successor Trustee shall not be responsible for and
- ----------------
the Company shall indemnify and defend the Successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes Successor
Trustee.
Article 12. AMENDMENT OR TERMINATION.
12.01 This Trust Agreement may be amended by a written instrument
executed by the Trustee and the Company. Notwithstanding the foregoing, no such
amendment shall: (a) take effect less than one year following any change of
control; (b) conflict with the terms of any written agreement between the
Company and a Management Employee; or (c) shall make the Trust revocable after
it has become irrevocable in accordance with Section 1.02 hereof.
------------
12.02 The Trust shall not terminate until all Management Employees and
their beneficiaries are no longer entitled to benefits pursuant to the terms of
their written agreements with the Company. Upon termination of the Trust any
assets remaining in the Trust shall be returned to the Company.
12.03 Upon written approval of all Management Employees entitled to
distribution of benefits under this Trust, pursuant to the terms of their
written agreements with the Company, the Company may terminate this Trust prior
to the time all distributions have been made. All assets in the Trust at
termination shall be returned to the Company.
7
<PAGE>
Article 13. MISCELLANEOUS.
13.01 Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
13.02 Benefits payable under this Trust Agreement may not be
anticipated, assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy, execution or other
legal or equitable process insofar as the Management Employee or his or her
beneficiaries are concerned.
13.03 This Trust Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
13.04 For purposes of this Trust, "change of control" shall mean the
purchase or other acquisition by any person, entity or group of persons, within
the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934
("Act"), or any comparable successor provisions, or beneficial ownership within
the meaning of Rule 13d-3 promulgate under the stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally, or the approval by the stockholders of the Company of a
reorganization, merger, or consolidation, in each case, with respect to which
persons who were stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than 50 percent of the combined voting power entitled to vote generally in the
election of directors of the reorganized, merged or consolidated Company's then
outstanding securities, or a liquidation or dissolution of Company or of the
sale of all or substantially all of the Company's assets.
[SIGNATURES CONTAINED ON THE NEXT PAGE]
8
<PAGE>
IN WITNESS WHEREOF, the Company and Trustee have executed this Trust
Agreement as of the date first above written.
TRITON PCS HOLDINGS, INC.
By:_______________________________________________
David D. Clark, Senior Vice President
TRUSTEE:
--------------------------------------------------
Michael E. Kalogris
9
<PAGE>
EXHIBIT 10.31
TRITON MANAGEMENT COMPANY, INC.
101 Lindenwood Drive / Suite 125
Malvern, PA 19355
February _____, 1998
Mr. Clyde Smith
- ----------------
- ----------------
Re: Issuance of Shares
Dear Clyde:
In connection with your employment by Triton Management Company, Inc., a
Delaware corporation (hereinafter referred to as the "Company"), on the date
hereof you (hereinafter referred to as "Employee") have been issued 3,139.79
shares (the "Shares") of the common stock, par value $0.01 per share (the
"Common Stock") of Triton PCS Holdings, Inc., a Delaware corporation ("Triton")
that indirectly owns all of the issued and outstanding capital stock of the
Company.. As a condition to such issuance, Employee has joined in the
Stockholders' Agreement dated February _____, 1998 between Triton and its
stockholders, pursuant to which Employee (as a "Management Member" and a
"Stockholder" as referred to therein) has agreed to be bound by all of the
provisions contained therein.
The Shares shall vest in accordance with the terms contained in that
certain Employment Agreement dated as of January 8, 1998 (the "Employment
Agreement") between the Company and Employee; provided, however, that in the
event of any Change of Control (as hereinafter defined) prior to the termination
of Employee's employment with the Company for any reason, in addition to any
Shares that had theretofore vested in accordance with the foregoing general
schedule, all Unvested Shares (as hereinafter defined) shall vest immediately
upon such Change of Control. As used herein, the term "Change of Control" shall
mean any transaction or event, or series of transactions or events, whether
voluntary or involuntary, that results in, or as a consequence of which, any of
the following events shall occur: (A) any Person (as defined in Triton's
Stockholders' Agreement) that is not an owner of shares of capital stock of
Triton on the date of execution of the Stockholders' Agreement shall acquire,
directly or indirectly, Beneficial Ownership (as defined in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of more than 50% of the voting
stock of Triton except in connection with any initial public offering of
Triton's equity securities, (B) any sale of all or substantially all of the
assets of Triton, or (C) a proxy contest for the election of directors of Triton
results in the persons constituting the Board of Directors of Triton immediately
prior to the initiation of such proxy contest ceasing to constitute a majority
of the Board of Directors upon the conclusion of such proxy contest.
<PAGE>
In order to induce Triton to issue the Shares to Employee, Employee hereby
agrees that as of any date, the Shares shall be subject to repurchase by Triton
in accordance with the terms of this letter agreement, except to the extent the
Shares shall have theretofore vested in accordance with the terms set forth
above.
As promptly as practicable following the termination of Employee's
employment with the Company for any reason, Employee shall sell to Triton, and
Triton shall purchase from Employee, all of the Shares that have not theretofore
vested in accordance with the terms set forth above (the "Unvested Shares") at a
price per Share equal to Employee's original per Share purchase price ($0.01).
The closing of any such purchase and sale shall take place at Triton's
offices on a date mutually agreed by Employee or his legal representative and
Triton, but not later than 30 days after the date of Employee's termination. At
such closing, Triton shall deliver to Employee or such legal representative a
check in the amount of the aggregate repurchase price and, upon delivery
thereof, Triton shall become the legal and beneficial owner of the Unvested
Shares being repurchased and all rights and interests therein or relating
thereto, and Triton shall have the right to retain and transfer to its own name
the shares of Common Stock being repurchased by Triton. Whenever Triton shall
have the right to repurchase Common Stock hereunder, Triton may designate and
assign one or more employees, officers, directors or stockholders of Triton or
other persons or organizations to exercise all or a part of Triton's repurchase
rights hereunder and purchase all or a part of such Common Stock.
Except for the escrow described herein or the transfer of the Shares to
Triton or its assignees contemplated hereby, none of the Unvested Shares or any
beneficial interest therein shall be transferred, encumbered or otherwise
disposed of in any way.
The Certificate(s) representing Unvested Shares shall be held by the
Secretary of Triton as escrow holder (the "Escrow Holder"), along with a stock
power executed by Employee in blank. The Escrow Holder is hereby directed to
permit transfer of the Shares only in accordance with this Agreement. In the
event further instructions are desired by the Escrow Holder, he shall be
entitled to rely upon directions executed by a majority of the authorized number
of Triton's Board of Directors. The Escrow Holder shall have no liability for
any act or omission hereunder while acting in good faith in the exercise of his
own judgment. If Triton or any assignee repurchases any of the Shares pursuant
hereto, the Escrow Holder, upon receipt of written notice of such repurchase
from the proposed transferee, shall take all steps necessary to accomplish such
repurchase. From time to time, upon Employee's request, the Escrow Holder
shall: (i) cancel the certificate(s) held by the Escrow Holder and Employee
representing the Shares, (ii) cause a new certificate to be issued representing
all the Shares that have vested in accordance with the terms set forth above,
which certificate the Escrow Holder shall deliver to Employee, and (iii) cause a
new certificate to be issued representing the then remaining Unvested Shares,
which certificate shall be held in escrow by the Escrow Holder in accordance
with the provisions of this paragraph. Subject to the terms hereof, Employee
shall have all the rights of a stockholder
-2-
<PAGE>
with respect to the Shares while they are held in escrow, including without
limitation, the right to vote the Shares and receive any cash dividends declared
thereon. If, from time to time during the term of Triton's repurchase right,
there is (a) any stock dividend, stock split or other change in the Shares, or
(b) any merger or sale of all or substantially all of the assets or other
acquisition of Triton, any and all new, substituted or additional securities to
which Employee is entitled by reason of his ownership of the Shares shall be
immediately subject to this escrow, deposited with the Escrow Holder and
included thereafter as "Shares" for purposes hereof and Triton's repurchase
right.
The share certificates evidencing the Shares shall be endorsed with the
following legends (in addition to any legend required to be placed thereon by
applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
Nothing contained in this letter agreement is intended to alter the rights
and obligations of the Company and Employee pursuant to the terms of the
Employment Agreement.
[SIGNATURES CONTAINED ON NEXT PAGE]
-3-
<PAGE>
Intending to be legally bound, the parties have executed this letter
agreement as of the date first above written.
EMPLOYEE: COMPANY:
TRITON MANAGEMENT COMPANY, INC.
______________________________ By:___________________________________
Clyde Smith Steven R. Skinner, President
TRITON:
TRITON PCS HOLDINGS, INC.
By:___________________________________
Steven R. Skinner, President
-4-
<PAGE>
EXHIBIT 10.32
TRITON MANAGEMENT COMPANY, INC.
101 Lindenwood Drive / Suite 125
Malvern, PA 19355
February _____, 1998
Mr. David D. Clark
501 Contention Lane
Berwyn, PA 19312
Re: Issuance of Shares
Dear David:
In connection with your employment by Triton Management Company, Inc., a
Delaware corporation (hereinafter referred to as the "Company"), on the date
hereof you (hereinafter referred to as "Employee") have been issued 5,887.11
shares (the "Shares") of the common stock, par value $0.01 per share (the
"Common Stock") of Triton PCS Holdings, Inc., a Delaware corporation ("Triton")
that indirectly owns all of the issued and outstanding capital stock of the
Company. As a condition to such issuance, Employee has joined in the
Stockholders' Agreement dated February _____, 1998 between Triton and its
stockholders, pursuant to which Employee (as a "Management Member" and a
"Stockholder" as referred to therein) has agreed to be bound by all of the
provisions contained therein.
The Shares shall vest over a five-year period, commencing with the first
anniversary of the date hereof, as follows:
First Anniversary 20%
Second Anniversary 20%
Third Anniversary 20%
Fourth Anniversary 20%
Fifth Anniversary 20%
---
Total 100%
provided, however, that in the event of any Change of Control (as hereinafter
defined) prior to the termination of Employee's employment with the Company for
any reason, in addition to any Shares that had theretofore vested in accordance
with the foregoing general schedule, all Unvested Shares (as hereinafter
defined) shall vest immediately upon such Change of Control. As used herein, the
term "Change of Control" shall mean any transaction or event, or series of
transactions or events, whether voluntary or involuntary, that results in, or as
a consequence of which, any of the following events shall occur: (A) any Person
(as defined in Triton's Stockholders' Agreement) that is not an owner of shares
of capital stock of Triton on the date of
<PAGE>
execution of the Stockholders' Agreement shall acquire, directly or indirectly,
Beneficial Ownership (as defined in Rule 13d-3 of the Securities Exchange Act of
1934, as amended) of more than 50% of the voting stock of Triton except in
connection with any initial public offering of Triton's equity securities, (B)
any sale of all or substantially all of the assets of Triton, or (C) a proxy
contest for the election of directors of Triton results in the persons
constituting the Board of Directors of Triton immediately prior to the
initiation of such proxy contest ceasing to constitute a majority of the Board
of Directors upon the conclusion of such proxy contest.
In order to induce Triton to issue the Shares to Employee, Employee hereby
agrees that as of any date, the Shares shall be subject to repurchase by Triton
in accordance with the terms of this letter agreement, except to the extent the
Shares shall have theretofore vested in accordance with the terms set forth
above.
As promptly as practicable following the termination of Employee's
employment with the Company for any reason, Employee shall sell to Triton, and
Triton shall purchase from Employee, all of the Shares that have not theretofore
vested in accordance with the terms set forth above (the "Unvested Shares") at a
price per Share equal to Employee's original per Share purchase price ($0.01).
The closing of any such purchase and sale shall take place at Triton's
offices on a date mutually agreed by Employee or his legal representative and
Triton, but not later than 30 days after the date of Employee's termination. At
such closing, Triton shall deliver to Employee or such legal representative a
check in the amount of the aggregate repurchase price and, upon delivery
thereof, Triton shall become the legal and beneficial owner of the Unvested
Shares being repurchased and all rights and interests therein or relating
thereto, and Triton shall have the right to retain and transfer to its own name
the shares of Common Stock being repurchased by Triton. Whenever Triton shall
have the right to repurchase Common Stock hereunder, Triton may designate and
assign one or more employees, officers, directors or stockholders of Triton or
other persons or organizations to exercise all or a part of Triton's repurchase
rights hereunder and purchase all or a part of such Common Stock.
Except for the escrow described herein or the transfer of the Shares to
Triton or its assignees contemplated hereby, none of the Unvested Shares or any
beneficial interest therein shall be transferred, encumbered or otherwise
disposed of in any way.
The Certificate(s) representing Unvested Shares shall be held by the
Secretary of Triton as escrow holder (the "Escrow Holder"), along with a stock
power executed by Employee in blank. The Escrow Holder is hereby directed to
permit transfer of the Shares only in accordance with this Agreement. In the
event further instructions are desired by the Escrow Holder, he shall be
entitled to rely upon directions executed by a majority of the authorized number
of Triton's Board of Directors. The Escrow Holder shall have no liability for
any act or omission hereunder while acting in good faith in the exercise of his
own judgment. If Triton or any assignee repurchases any of the Shares pursuant
hereto, the Escrow Holder, upon receipt of written notice
-2-
<PAGE>
of such repurchase from the proposed transferee, shall take all steps necessary
to accomplish such repurchase. From time to time, upon Employee's request, the
Escrow Holder shall: (i) cancel the certificate(s) held by the Escrow Holder and
Employee representing the Shares, (ii) cause a new certificate to be issued
representing all the Shares that have vested in accordance with the terms set
forth above, which certificate the Escrow Holder shall deliver to Employee, and
(iii) cause a new certificate to be issued representing the then remaining
Unvested Shares, which certificate shall be held in escrow by the Escrow Holder
in accordance with the provisions of this paragraph. Subject to the terms
hereof, Employee shall have all the rights of a stockholder with respect to the
Shares while they are held in escrow, including without limitation, the right to
vote the Shares and receive any cash dividends declared thereon. If, from time
to time during the term of Triton's repurchase right, there is (a) any stock
dividend, stock split or other change in the Shares, or (b) any merger or sale
of all or substantially all of the assets or other acquisition of Triton, any
and all new, substituted or additional securities to which Employee is entitled
by reason of his ownership of the Shares shall be immediately subject to this
escrow, deposited with the Escrow Holder and included thereafter as "Shares" for
purposes hereof and Triton's repurchase right.
The share certificates evidencing the Shares shall be endorsed with the
following legends (in addition to any legend required to be placed thereon by
applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
Notwithstanding anything to the contrary contained herein, Employee
expressly agrees that (i) Employee's employment with the Company is "at-will",
and either the Company or Employee may terminate such employment at any time for
any reason or for no reason, and (ii) the award of the Shares by Triton to
Employee shall not limit in any way the right of the Company to alter or
terminate Employee's employment with the Company at any time and from time to
time, or be evidence of any agreement or understanding, express or implied, that
the Company will employ an Employee in any particular position or at any
particular rate of remuneration or for any particular period of time.
-3-
<PAGE>
Intending to be legally bound, the parties have executed this letter
agreement as of the date first above written.
EMPLOYEE: COMPANY:
TRITON MANAGEMENT COMPANY, INC.
By:
- -------------------------- ------------------------------
David D. Clark Steven R. Skinner, President
TRITON:
TRITON PCS HOLDINGS, INC.
By:
------------------------------
Steven R. Skinner, President
-4-
<PAGE>
EXHIBIT 10.33
TRITON MANAGEMENT COMPANY, INC.
101 Lindenwood Drive / Suite 125
Malvern, PA 19355
February _____, 1998
Mr. David Standig
- ----------------------------------------
- ----------------------------------------
Re: Issuance of Shares
Dear David:
In connection with your employment by Triton Management Company, Inc., a
Delaware corporation (hereinafter referred to as the "Company"), on the date
hereof you (hereinafter referred to as "Employee") have been issued 2,943.56
shares (the "Shares") of the common stock, par value $0.01 per share (the
"Common Stock") of Triton PCS Holdings, Inc., a Delaware corporation ("Triton")
that indirectly owns all of the issued and outstanding capital stock of the
Company. As a condition to such issuance, Employee has joined in the
Stockholders' Agreement dated February _____, 1998 between Triton and its
stockholders, pursuant to which Employee (as a "Management Member" and a
"Stockholder" as referred to therein) has agreed to be bound by all of the
provisions contained therein.
The Shares shall vest over a five-year period, commencing with the first
anniversary of the date hereof, as follows:
First Anniversary 20%
Second Anniversary 20%
Third Anniversary 20%
Fourth Anniversary 20%
Fifth Anniversary 20%
---
Total 100%
provided, however, that in the event of any Change of Control (as hereinafter
defined) prior to the termination of Employee's employment with the Company for
any reason, in addition to any Shares that had theretofore vested in accordance
with the foregoing general schedule, all Unvested Shares (as hereinafter
defined) shall vest immediately upon such Change of Control. As used herein, the
term "Change of Control" shall mean any transaction or event, or series of
transactions or events, whether voluntary or involuntary, that results in, or as
a consequence of which, any of the following events shall occur: (A) any Person
(as defined in Triton's Stockholders' Agreement) that is not an owner of shares
of capital stock of Triton on the date of
<PAGE>
execution of the Stockholders' Agreement shall acquire, directly or indirectly,
Beneficial Ownership (as defined in Rule 13d-3 of the Securities Exchange Act of
1934, as amended) of more than 50% of the voting stock of Triton except in
connection with any initial public offering of Triton's equity securities, (B)
any sale of all or substantially all of the assets of Triton, or (C) a proxy
contest for the election of directors of Triton results in the persons
constituting the Board of Directors of Triton immediately prior to the
initiation of such proxy contest ceasing to constitute a majority of the Board
of Directors upon the conclusion of such proxy contest.
In order to induce Triton to issue the Shares to Employee, Employee hereby
agrees that as of any date, the Shares shall be subject to repurchase by Triton
in accordance with the terms of this letter agreement, except to the extent the
Shares shall have theretofore vested in accordance with the terms set forth
above.
As promptly as practicable following the termination of Employee's
employment with the Company for any reason, Employee shall sell to Triton, and
Triton shall purchase from Employee, all of the Shares that have not theretofore
vested in accordance with the terms set forth above (the "Unvested Shares") at a
price per Share equal to Employee's original per Share purchase price ($0.01).
The closing of any such purchase and sale shall take place at Triton's
offices on a date mutually agreed by Employee or his legal representative and
Triton, but not later than 30 days after the date of Employee's termination. At
such closing, Triton shall deliver to Employee or such legal representative a
check in the amount of the aggregate repurchase price and, upon delivery
thereof, Triton shall become the legal and beneficial owner of the Unvested
Shares being repurchased and all rights and interests therein or relating
thereto, and Triton shall have the right to retain and transfer to its own name
the shares of Common Stock being repurchased by Triton. Whenever Triton shall
have the right to repurchase Common Stock hereunder, Triton may designate and
assign one or more employees, officers, directors or stockholders of Triton or
other persons or organizations to exercise all or a part of Triton's repurchase
rights hereunder and purchase all or a part of such Common Stock.
Except for the escrow described herein or the transfer of the Shares to
Triton or its assignees contemplated hereby, none of the Unvested Shares or any
beneficial interest therein shall be transferred, encumbered or otherwise
disposed of in any way.
The Certificate(s) representing Unvested Shares shall be held by the
Secretary of Triton as escrow holder (the "Escrow Holder"), along with a stock
power executed by Employee in blank. The Escrow Holder is hereby directed to
permit transfer of the Shares only in accordance with this Agreement. In the
event further instructions are desired by the Escrow Holder, he shall be
entitled to rely upon directions executed by a majority of the authorized number
of Triton's Board of Directors. The Escrow Holder shall have no liability for
any act or omission hereunder while acting in good faith in the exercise of his
own judgment. If Triton or any assignee repurchases any of the Shares pursuant
hereto, the Escrow Holder, upon receipt of written notice
-2-
<PAGE>
of such repurchase from the proposed transferee, shall take all steps necessary
to accomplish such repurchase. From time to time, upon Employee's request, the
Escrow Holder shall: (i) cancel the certificate(s) held by the Escrow Holder and
Employee representing the Shares, (ii) cause a new certificate to be issued
representing all the Shares that have vested in accordance with the terms set
forth above, which certificate the Escrow Holder shall deliver to Employee, and
(iii) cause a new certificate to be issued representing the then remaining
Unvested Shares, which certificate shall be held in escrow by the Escrow Holder
in accordance with the provisions of this paragraph. Subject to the terms
hereof, Employee shall have all the rights of a stockholder with respect to the
Shares while they are held in escrow, including without limitation, the right to
vote the Shares and receive any cash dividends declared thereon. If, from time
to time during the term of Triton's repurchase right, there is (a) any stock
dividend, stock split or other change in the Shares, or (b) any merger or sale
of all or substantially all of the assets or other acquisition of Triton, any
and all new, substituted or additional securities to which Employee is entitled
by reason of his ownership of the Shares shall be immediately subject to this
escrow, deposited with the Escrow Holder and included thereafter as "Shares" for
purposes hereof and Triton's repurchase right.
The share certificates evidencing the Shares shall be endorsed with the
following legends (in addition to any legend required to be placed thereon by
applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
Notwithstanding anything to the contrary contained herein, Employee
expressly agrees that (i) Employee's employment with the Company is "at-will",
and either the Company or Employee may terminate such employment at any time for
any reason or for no reason, and (ii) the award of the Shares by Triton to
Employee shall not limit in any way the right of the Company to alter or
terminate Employee's employment with the Company at any time and from time to
time, or be evidence of any agreement or understanding, express or implied, that
the Company will employ an Employee in any particular position or at any
particular rate of remuneration or for any particular period of time.
-3-
<PAGE>
Intending to be legally bound, the parties have executed this letter
agreement as of the date first above written.
EMPLOYEE: COMPANY:
TRITON MANAGEMENT COMPANY, INC.
By:
- ------------------------------ ------------------------------
David Standig Steven R. Skinner, President
TRITON:
TRITON PCS HOLDINGS, INC.
By:
------------------------------
Steven R. Skinner, President
-4-
<PAGE>
EXHIBIT 10.34
TRITON MANAGEMENT COMPANY, INC.
101 Lindenwood Drive / Suite 125
Malvern, PA 19355
February _____, 1998
Mr. Michael Mears
- ------------------
- ------------------
Re: Issuance of Shares
Dear Mike:
In connection with your employment by Triton Management Company, Inc., a
Delaware corporation (hereinafter referred to as the "Company"), on the date
hereof you (hereinafter referred to as "Employee") have been issued 1,962.37
shares (the "Shares") of the common stock, par value $0.01 per share (the
"Common Stock") of Triton PCS Holdings, Inc., a Delaware corporation ("Triton")
that indirectly owns all of the issued and outstanding capital stock of the
Company. As a condition to such issuance, Employee has joined in the
Stockholders' Agreement dated February _____, 1998 between Triton and its
stockholders, pursuant to which Employee (as a "Management Member" and a
"Stockholder" as referred to therein) has agreed to be bound by all of the
provisions contained therein.
The Shares shall vest over a five-year period, commencing with the first
anniversary of the date hereof, as follows:
First Anniversary 20%
Second Anniversary 20%
Third Anniversary 20%
Fourth Anniversary 20%
Fifth Anniversary 20%
---
Total 100%
provided, however, that in the event of any Change of Control (as hereinafter
defined) prior to the termination of Employee's employment with the Company for
any reason, in addition to any Shares that had theretofore vested in accordance
with the foregoing general schedule, all Unvested Shares (as hereinafter
defined) shall vest immediately upon such Change of Control. As used herein, the
term "Change of Control" shall mean any transaction or event, or series of
transactions or events, whether voluntary or involuntary, that results in, or as
a consequence of which, any of the following events shall occur: (A) any Person
(as defined in Triton's Stockholders' Agreement) that is not an owner of shares
of capital stock of Triton on the date of execution of the Stockholders'
Agreement shall acquire, directly or indirectly, Beneficial
<PAGE>
Ownership (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) of more than 50% of the voting stock of Triton except in connection
with any initial public offering of Triton's equity securities, (B) any sale of
all or substantially all of the assets of Triton, or (C) a proxy contest for the
election of directors of Triton results in the persons constituting the Board of
Directors of Triton immediately prior to the initiation of such proxy contest
ceasing to constitute a majority of the Board of Directors upon the conclusion
of such proxy contest.
In order to induce Triton to issue the Shares to Employee, Employee hereby
agrees that as of any date, the Shares shall be subject to repurchase by Triton
in accordance with the terms of this letter agreement, except to the extent the
Shares shall have theretofore vested in accordance with the terms set forth
above.
As promptly as practicable following the termination of Employee's
employment with the Company for any reason, Employee shall sell to Triton, and
Triton shall purchase from Employee, all of the Shares that have not theretofore
vested in accordance with the terms set forth above (the "Unvested Shares") at a
price per Share equal to Employee's original per Share purchase price ($0.01).
The closing of any such purchase and sale shall take place at Triton's
offices on a date mutually agreed by Employee or his legal representative and
Triton, but not later than 30 days after the date of Employee's termination. At
such closing, Triton shall deliver to Employee or such legal representative a
check in the amount of the aggregate repurchase price and, upon delivery
thereof, Triton shall become the legal and beneficial owner of the Unvested
Shares being repurchased and all rights and interests therein or relating
thereto, and Triton shall have the right to retain and transfer to its own name
the shares of Common Stock being repurchased by Triton. Whenever Triton shall
have the right to repurchase Common Stock hereunder, Triton may designate and
assign one or more employees, officers, directors or stockholders of Triton or
other persons or organizations to exercise all or a part of Triton's repurchase
rights hereunder and purchase all or a part of such Common Stock.
Except for the escrow described herein or the transfer of the Shares to
Triton or its assignees contemplated hereby, none of the Unvested Shares or any
beneficial interest therein shall be transferred, encumbered or otherwise
disposed of in any way.
The Certificate(s) representing Unvested Shares shall be held by the
Secretary of Triton as escrow holder (the "Escrow Holder"), along with a stock
power executed by Employee in blank. The Escrow Holder is hereby directed to
permit transfer of the Shares only in accordance with this Agreement. In the
event further instructions are desired by the Escrow Holder, he shall be
entitled to rely upon directions executed by a majority of the authorized number
of Triton's Board of Directors. The Escrow Holder shall have no liability for
any act or omission hereunder while acting in good faith in the exercise of his
own judgment. If Triton or any assignee repurchases any of the Shares pursuant
hereto, the Escrow Holder, upon receipt of written notice of such repurchase
from the proposed transferee, shall take all steps necessary to accomplish
-2-
<PAGE>
such repurchase. From time to time, upon Employee's request, the Escrow Holder
shall: (i) cancel the certificate(s) held by the Escrow Holder and Employee
representing the Shares, (ii) cause a new certificate to be issued representing
all the Shares that have vested in accordance with the terms set forth above,
which certificate the Escrow Holder shall deliver to Employee, and (iii) cause a
new certificate to be issued representing the then remaining Unvested Shares,
which certificate shall be held in escrow by the Escrow Holder in accordance
with the provisions of this paragraph. Subject to the terms hereof, Employee
shall have all the rights of a stockholder with respect to the Shares while they
are held in escrow, including without limitation, the right to vote the Shares
and receive any cash dividends declared thereon. If, from time to time during
the term of Triton's repurchase right, there is (a) any stock dividend, stock
split or other change in the Shares, or (b) any merger or sale of all or
substantially all of the assets or other acquisition of Triton, any and all new,
substituted or additional securities to which Employee is entitled by reason of
his ownership of the Shares shall be immediately subject to this escrow,
deposited with the Escrow Holder and included thereafter as "Shares" for
purposes hereof and Triton's repurchase right.
The share certificates evidencing the Shares shall be endorsed with the
following legends (in addition to any legend required to be placed thereon by
applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
Notwithstanding anything to the contrary contained herein, Employee
expressly agrees that (i) Employee's employment with the Company is "at-will",
and either the Company or Employee may terminate such employment at any time for
any reason or for no reason, and (ii) the award of the Shares by Triton to
Employee shall not limit in any way the right of the Company to alter or
terminate Employee's employment with the Company at any time and from time to
time, or be evidence of any agreement or understanding, express or implied, that
the Company will employ an Employee in any particular position or at any
particular rate of remuneration or for any particular period of time.
-3-
<PAGE>
Intending to be legally bound, the parties have executed this letter
agreement as of the date first above written.
EMPLOYEE: COMPANY:
TRITON MANAGEMENT COMPANY, INC.
____________________________ By: ___________________________________
Michael Mears Steven R. Skinner, President
TRITON:
TRITON PCS HOLDINGS, INC.
By: ___________________________________
Steven R. Skinner, President
-4-
<PAGE>
EXHIBIT 10.35
TRITON MANAGEMENT COMPANY, INC.
101 Lindenwood Drive / Suite 125
Malvern, PA 19355
February _____, 1998
Ms. Patricia Gallagher
11 Wickford Avenue
Trenton, NJ 08618
Re: Issuance of Shares
Dear Pat:
In connection with your employment by Triton Management Company, Inc., a
Delaware corporation (hereinafter referred to as the "Company"), on the date
hereof you (hereinafter referred to as "Employee") have been issued 2943.56
shares (the "Shares") of the common stock, par value $0.01 per share (the
"Common Stock") of Triton PCS Holdings, Inc., a Delaware corporation ("Triton")
that indirectly owns all of the issued and outstanding capital stock of the
Company. As a condition to such issuance, Employee has joined in the
Stockholders' Agreement dated February _____, 1998 between Triton and its
stockholders, pursuant to which Employee (as a "Management Member" and a
"Stockholder" as referred to therein) has agreed to be bound by all of the
provisions contained therein.
The Shares shall vest over a five-year period, commencing with the first
anniversary of the date hereof, as follows:
First Anniversary 20%
Second Anniversary 20%
Third Anniversary 20%
Fourth Anniversary 20%
Fifth Anniversary 20%
---
Total 100%
provided, however, that in the event of any Change of Control (as hereinafter
defined) prior to the termination of Employee's employment with the Company for
any reason, in addition to any Shares that had theretofore vested in accordance
with the foregoing general schedule, all Unvested Shares (as hereinafter
defined) shall vest immediately upon such Change of Control. As used herein, the
term "Change of Control" shall mean any transaction or event, or series of
transactions or events, whether voluntary or involuntary, that results in, or as
a consequence of which, any of the following events shall occur: (A) any Person
(as defined in Triton's Stockholders' Agreement) that is not an owner of shares
of capital stock of Triton on the date of
<PAGE>
execution of the Stockholders' Agreement shall acquire, directly or indirectly,
Beneficial Ownership (as defined in Rule 13d-3 of the Securities Exchange Act of
1934, as amended) of more than 50% of the voting stock of Triton except in
connection with any initial public offering of Triton's equity securities, (B)
any sale of all or substantially all of the assets of Triton, or (C) a proxy
contest for the election of directors of Triton results in the persons
constituting the Board of Directors of Triton immediately prior to the
initiation of such proxy contest ceasing to constitute a majority of the Board
of Directors upon the conclusion of such proxy contest.
In order to induce Triton to issue the Shares to Employee, Employee hereby
agrees that as of any date, the Shares shall be subject to repurchase by Triton
in accordance with the terms of this letter agreement, except to the extent the
Shares shall have theretofore vested in accordance with the terms set forth
above.
As promptly as practicable following the termination of Employee's
employment with the Company for any reason, Employee shall sell to Triton, and
Triton shall purchase from Employee, all of the Shares that have not theretofore
vested in accordance with the terms set forth above (the "Unvested Shares") at a
price per Share equal to Employee's original per Share purchase price ($0.01).
The closing of any such purchase and sale shall take place at Triton's
offices on a date mutually agreed by Employee or his legal representative and
Triton, but not later than 30 days after the date of Employee's termination. At
such closing, Triton shall deliver to Employee or such legal representative a
check in the amount of the aggregate repurchase price and, upon delivery
thereof, Triton shall become the legal and beneficial owner of the Unvested
Shares being repurchased and all rights and interests therein or relating
thereto, and Triton shall have the right to retain and transfer to its own name
the shares of Common Stock being repurchased by Triton. Whenever Triton shall
have the right to repurchase Common Stock hereunder, Triton may designate and
assign one or more employees, officers, directors or stockholders of Triton or
other persons or organizations to exercise all or a part of Triton's repurchase
rights hereunder and purchase all or a part of such Common Stock.
Except for the escrow described herein or the transfer of the Shares to
Triton or its assignees contemplated hereby, none of the Unvested Shares or any
beneficial interest therein shall be transferred, encumbered or otherwise
disposed of in any way.
The Certificate(s) representing Unvested Shares shall be held by the
Secretary of Triton as escrow holder (the "Escrow Holder"), along with a stock
power executed by Employee in blank. The Escrow Holder is hereby directed to
permit transfer of the Shares only in accordance with this Agreement. In the
event further instructions are desired by the Escrow Holder, he shall be
entitled to rely upon directions executed by a majority of the authorized number
of Triton's Board of Directors. The Escrow Holder shall have no liability for
any act or omission hereunder while acting in good faith in the exercise of his
own judgment. If Triton or any assignee repurchases any of the Shares pursuant
hereto, the Escrow Holder, upon receipt of written notice
-2-
<PAGE>
of such repurchase from the proposed transferee, shall take all steps necessary
to accomplish such repurchase. From time to time, upon Employee's request, the
Escrow Holder shall: (i) cancel the certificate(s) held by the Escrow Holder and
Employee representing the Shares, (ii) cause a new certificate to be issued
representing all the Shares that have vested in accordance with the terms set
forth above, which certificate the Escrow Holder shall deliver to Employee, and
(iii) cause a new certificate to be issued representing the then remaining
Unvested Shares, which certificate shall be held in escrow by the Escrow Holder
in accordance with the provisions of this paragraph. Subject to the terms
hereof, Employee shall have all the rights of a stockholder with respect to the
Shares while they are held in escrow, including without limitation, the right to
vote the Shares and receive any cash dividends declared thereon. If, from time
to time during the term of Triton's repurchase right, there is (a) any stock
dividend, stock split or other change in the Shares, or (b) any merger or sale
of all or substantially all of the assets or other acquisition of Triton, any
and all new, substituted or additional securities to which Employee is entitled
by reason of his ownership of the Shares shall be immediately subject to this
escrow, deposited with the Escrow Holder and included thereafter as "Shares" for
purposes hereof and Triton's repurchase right.
The share certificates evidencing the Shares shall be endorsed with the
following legends (in addition to any legend required to be placed thereon by
applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
Notwithstanding anything to the contrary contained herein, Employee
expressly agrees that (i) Employee's employment with the Company is "at-will",
and either the Company or Employee may terminate such employment at any time for
any reason or for no reason, and (ii) the award of the Shares by Triton to
Employee shall not limit in any way the right of the Company to alter or
terminate Employee's employment with the Company at any time and from time to
time, or be evidence of any agreement or understanding, express or implied, that
the Company will employ an Employee in any particular position or at any
particular rate of remuneration or for any particular period of time.
-3-
<PAGE>
Intending to be legally bound, the parties have executed this letter
agreement as of the date first above written.
EMPLOYEE: COMPANY:
TRITON MANAGEMENT COMPANY, INC.
________________________________ By:___________________________________
Patricia Gallagher Steven R. Skinner, President
TRITON:
TRITON PCS HOLDINGS, INC.
By:___________________________________
Steven R. Skinner, President
-4-
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF TRITON PCS, INC.
Triton PCS Holdings Company L.L.C.
Triton Managment Company, Inc.
Triton PCS Property Company L.L.C.
Triton PCS Equipment Company L.L.C.
Triton PCS Operating Company L.L.C.
Triton PCS License Company L.L.C.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS'
The Board of Directors
Triton PCS, Inc.:
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
/s/ _________________________________
Philadelphia
June 24, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of this
Registration Statement.
Greensboro, North Carolina
June 19, 1998
