<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 25, 1998
REGISTRATION NO. 333-57715
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 2
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
<TABLE>
<S> <C> <C>
TRITON PCS, INC. DELAWARE 4812
TRITON MANAGEMENT COMPANY, INC. DELAWARE 4812
TRITON PCS HOLDINGS COMPANY L.L.C. DELAWARE 4812
TRITON PCS PROPERTY COMPANY L.L.C. DELAWARE 4812
TRITON PCS EQUIPMENT COMPANY L.L.C. DELAWARE 4812
TRITON PCS OPERATING COMPANY L.L.C. DELAWARE 4812
TRITON PCS LICENSE COMPANY L.L.C. DELAWARE 4812
EXACT NAME OF REGISTRANT STATE OR OTHER JURISDICITON OF PRIMARY STANDARD
AS SPECIFIED IN ITS CHARTER INCORPORAITON OR ORGANIZATION INDUSTRIAL CLASSIFICATION CODE
<S> <C>
TRITON PCS, INC. 23-2930873
TRITON MANAGEMENT COMPANY, INC. 23-2940271
TRITON PCS HOLDINGS COMPANY L.L.C. 23-2941874
TRITON PCS PROPERTY COMPANY L.L.C. 23-2941874
TRITON PCS EQUIPMENT COMPANY L.L.C. 23-2941874
TRITON PCS OPERATING COMPANY L.L.C. 23-2941874
TRITON PCS LICENSE COMPANY L.L.C. 23-2941874
EXACT NAME OF REGISTRANT IRS EMPLOYER
AS SPECIFIED IN ITS CHARTER IDENTIFICATION NUMBER
</TABLE>
375 TECHNOLOGY DRIVE
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.
375 TECHNOLOGY DRIVE
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. 375 TECHNOLOGY DRIVE
SUITE 1300 MALVERN, PA 19355
WASHINGTON, DC 20004 (610) 651-5900
(202) 637-2200
--------------
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
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<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. The net proceeds
from the Private Offering were approximately $290 million after deducting
the Initial Purchasers' discounts and estimated transaction fees payable
by the Company.
(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.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<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
Cover Page of Prospectus..... Outside Front Cover Page; Cross Reference
Sheet; Inside Front Cover Page
2.Inside Front and Outside Back
Cover Pages of Prospectus.... Inside Front Cover Page; Outside Back Cover
Page
3.Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information.................. Prospectus Summary; Risk Factors; Selected
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
Information.................. Prospectus Summary; Summary Unaudited Pro
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
S-2 Registrants.............. Prospectus Summary; Capitalization; 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
Companies.................... Not Applicable
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
an Exchange Offer............ Management; The Exchange Offer; Certain
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
Cover Pages of Prospectus.... Inside Front Cover Page; Outside Back Cover
Page
3.Summary Information Risk
Factors, and Ratio of
Earnings to Fixed Charges and
Other Information............ Prospectus Summary; Risk Factors; Selected
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
Registrant................... Prospectus Summary; Capitalization; 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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED SEPTEMBER , 1998
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
Company will not receive proceeds from the Exchange Offer. The net proceeds to
the Company from the Private Offering were approximately $290 million. 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 12 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). Triton has no independent assets and/or operations from that of its
operating subsidiaries. The Notes will be guaranteed on a full, unconditional,
and 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"). As of the date of this
registration statement, all of Triton's direct and indirect subsidiaries are
guarantors and wholly-owned by Triton. Separate financial statements of the
Guarantors have been omitted from the filing because Triton has no operations
or assets separate from its operating subsidiaries. Triton PCS Holdings, Inc.,
the direct parent and sole stockholder of Triton, is not a guarantor. 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 August 25, 1998
Triton and the Guarantors had $150 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. THE
SAFE HARBOR PROVISIONS OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF
THE SECURITIES EXCHANGE ACT DO NOT APPLY TO THE STATEMENTS MADE IN CONNECTION
WITH THIS OFFERING.
iii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 1
The Exchange Offer....................................................... 7
Risk Factors............................................................. 12
Use of Proceeds.......................................................... 29
Capitalization........................................................... 30
Selected Historical and Pro Forma Consolidated Financial Data............ 31
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 35
Business................................................................. 41
Management............................................................... 58
Security Ownership....................................................... 63
Certain Relationships and Related Transactions........................... 65
Description of Credit Facility........................................... 73
Description of Notes..................................................... 75
Description of Capital Stock............................................. 103
Certain United States Federal Income Tax Consequences.................... 105
Book-Entry; Delivery and Form............................................ 109
Plan of Distribution..................................................... 111
Legal Matters............................................................ 112
Experts.................................................................. 112
Available Information.................................................... 113
Glossary of Selected Terms............................................... 114
</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
"Certain Definitions," and "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 or
shortly thereafter 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. 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. On June 30, 1998 the Company
acquired 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 $162.5 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.
The Company has signed a purchase agreement to acquire from AT&T PCS, Inc.
(the "Norfolk Acquisition") (i) an FCC license to use 20MHz of authorized
frequencies to provide broadband PCS services throughout the entirety of the
Norfolk, Virginia BTA and (ii) certain assets of AT&T PCS used in the operation
of the PCS system in such BTA for an aggregate purchase price of $105 million,
including $13.5 million of Series D Preferred Stock to be issued to AT&T PCS.
The build-out of the network relating to the Norfolk Acquisition, including the
installation of a switch, has been substantially completed. The Norfolk
Acquisition is subject to closing conditions typical in acquisitions of this
nature. There can be no assurance that the Norfolk 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 contributions of $35
million ("Myrtle Contributions") from the Cash Equity Investors in connection
with the Myrtle Beach Acquisition. The Company has also received additional
non-binding cash equity commitments of approximately $16.5 million (the
"Norfolk Commitments", and together with the contribution of the PCS Licenses,
the Cash Equity, and the Myrtle Contributions, the "Equity Investments") from
certain of the Cash Equity Investors in connection with the Norfolk
Acquisition. 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 "--Network
Build-Out and Financing Plan."
RISK FACTORS
For a discussion of certain factors that should be considered in connection
with participating in the Exchange Offer, including, without limitation, risk
factors related to expected operating losses, substantial future capital
requirements, the Company's highly leveraged capital structure and the current
lack of commercial operations, see "Risk Factors."
2
<PAGE>
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."
POTENTIAL ACQUISITION
The Company has entered into a non-binding letter of intent with AT&T, dated
as of March 24, 1998, to acquire an additional 1.9 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 1.9 million Pops is approximately $32 million, all of which is
expected to be represented by additional non-cash equity interests in the
Company issued to AT&T. 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. This potential acquisition is 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 this acquisition will be consummated on the terms
described herein or at all. See "Risk Factors--Risks Related to Potential
Acquisition."
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 of the
first quarter of 1999 or shortly thereafter. 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 August 17, 1998,
the Company had signed leases or lease options for approximately 57% of the 500
sites required for commencement of operations in the Initial Configuration. See
"Risk Factors--Network Build-Out and System Implementation Risks."
3
<PAGE>
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 and
assuming the consummation of the Norfolk Acquisition, is approximately $1.05
billion. 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 and Norfolk, each of which has
been substantially built out), 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.
4
<PAGE>
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 consummation of the
Norfolk 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)................................................ $ 336.4
The Private Notes(2).............................................. 300.0
Cash Equity(3).................................................... 216.5
Non-Cash Equity(4)................................................ 164.1
Operating Cash Flow............................................... 32.9
--------
Total Sources................................................... $1,049.9
========
USES
Acquisition of PCS Licenses and Related Intangibles............... $ 118.6
Myrtle Beach Acquisition.......................................... 160.0
Norfolk Acquisition............................................... 105.0
Georgia/North Carolina Pops Acquisition and Related Build-Out
costs............................................................ 57.0
Capital Expenditures.............................................. 449.3
Cash Interest..................................................... 96.2
Working Capital/Operating Cash Flow............................... 43.8
Closing Costs(5).................................................. 20.0
--------
Total Uses...................................................... $1,049.9
========
</TABLE>
- --------
(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 or will issue preferred stock to the Cash Equity
Investors in exchange for (i) their initial cash investments plus their
commitments to provide the balance of the Cash Equity, (ii) the Myrtle
Contribution (iii) the Norfolk Commitments and (iv) the Georgia/North
Carolina Pops Acquisition. See "Certain Relationships and Related
Transactions--The Securities Purchase Agreement" and "--The Myrtle Equity
Contribution."
(4) The Non-Cash Equity represents the fair 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. In
addition, $13.5 million in preferred stock is expected to be issued to AT&T
by Holdings as part of the $105 million purchase price for the proposed
Norfolk Acquisition. Also, $32.0 million in preferred stock is expected to
be issued to AT&T by Holdings to acquire the Georgia/North Carolina Pops.
See "Certain Relationships and Related Transactions--The Securities
Purchase Agreement" and "--The Norfolk Commitment." On April 3, 1998, the
PCS Licenses and related agreements were valued at $118.6 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, the Norfolk Acquisition and the Private Offering.
5
<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 375
Technology Drive, Malvern, PA 19355. The telephone number at such offices is
(610) 651-5900.
6
<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"
7
<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
8
<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."
9
<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. As of the date of this
registration statement, all of Triton's direct and
indirect subsidiaries are guarantors on a full,
unconditional, and joint and several basis and are
wholly owned by Triton. Triton PCS Holdings, Inc.,
the direct parent and sole stockholder of Triton, is
not a guarantor. 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.
10
<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 August 25, 1998, Triton and the
Guarantors had $150 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."
11
<PAGE>
RISK FACTORS
This Prospectus includes "Forward-Looking Statements" within the meaning of
Section 27A of the Securities Act and Section 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. The safe harbor provisions of Section
27A of the Securities Act and Section 21E of the Exchange Act do not apply to
the statements made in connection with this Offering.
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, 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 (including the
territory covered by the Myrtle Beach Acquisition and 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 Norfolk Acquisition)
will total approximately $993 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 Acquisition."
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.
12
<PAGE>
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.
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 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 August 17, 1998,
the Company had signed leases or options for 292 sites, 142 of which were
pending zoning. As of August 17, 1998, there were 83 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.
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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 or shortly thereafter. 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 two need to be
relocated to launch commercial service in the Initial Configuration. As of
August 17, 1998, the two relocation agreements have been executed. 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 have a
material adverse effect on the Company. The Company's estimated capital
requirements of $167 million for the Licensed Area through 1998, 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.
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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." In June 1998, AT&T announced a
proposed merger between TeleCommunications, Inc. and AT&T. The Company does
not believe that this contemplated merger will have any adverse impact on its
affiliation with AT&T.
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 Securities Purchase
Agreement, AT&T owes no duty to the Company except to the extent expressly set
forth in the Securities 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 "--Dependence on AT&T Affiliation" and
"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 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, currently employed by Nextel
Communications, Inc. ("Nextel") in the Company's Licensed Area. 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.
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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. AT&T was initially granted the PCS Licenses on June
23, 1995. 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. The Company expects to comply with the coverage requirements within
the requisite time period. See "Business--Regulation."
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 key officers (Messrs. Kalogris, Skinner,
and Clark) are also officers of Triton Cellular Partners, L.P. ("Triton
Cellular"). Triton Cellular acquires, owns and operates cellular RSA's.
Through June 1998, a significant portion of the Company's officers' time had
been spent on this venture. With the appointment of a President and CEO for
Triton Cellular in July 1998, the portion of the Company's officers' time
spent on this venture was reduced. The Company's management is currently
attempting to hire the remaining key positions of the Triton Cellular
management team, which is expected to reduce 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 NORFOLK ACQUISITION
Consummation of the Norfolk Acquisition is subject to a number of regulatory
and closing conditions (including, without limitation, FCC approval), certain
of which are beyond the Company's control. Accordingly, there can be no
assurance as to when the Norfolk Acquisition will be consummated or that it
will be consummated on the terms described herein or at all. See "Prospectus
Summary--The Company."
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RISKS RELATED TO POTENTIAL ACQUISITION
The Company is currently a party to a non-binding letter of intent to
acquire the Georgia/North Carolina Pops. The Company has also received non-
binding commitments from the Cash Equity Investors for an additional $25
million equity contribution, such commitment being contingent on the
consummation of the Georgia/North Carolina Pops acquisition. The acquisition
of the Georgia/North Carolina Pops and the related equity contribution are
subject to the negotiation of definitive agreements. In addition, the
acquisition of the Georgia/North Carolina Pops is expected to be subject to
other conditions typical in acquisitions of this nature, and certain of such
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 Georgia/North Carolina Pops or, if entered into, that such
acquisition will be completed and the related equity contribution consummated.
See "Prospectus Summary--Potential Acquisition."
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 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 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. See "Business--TDMA
Technology."
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.
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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
August 25, 1998, Triton and the Guarantors had $150 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."
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,
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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.
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."
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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.
21
<PAGE>
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.
22
<PAGE>
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
23
<PAGE>
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
24
<PAGE>
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.
25
<PAGE>
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 reasonably determines in good faith 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 the Company fails to file and keep effective a registration
statement in connection with the Exchange Offer or the resale of the Notes, if
necessary, 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
26
<PAGE>
defined 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 Trust 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.
27
<PAGE>
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.
28
<PAGE>
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, of which $127.5 million
was used for the Myrtle Beach Acquisition. 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 Norfolk Acquisition, (iii) working capital,
(iv) operating losses, (v) general corporate purposes and (vi) potential
acquisitions.
In the event (i) the acquisition of the Norfolk Pops is not consummated by
December 31, 1998 or (ii) 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 amount equal to $75 million, in
each case. 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.
29
<PAGE>
CAPITALIZATION
The following table sets forth the combined capitalization of Triton and its
subsidiaries as of June 30, 1998, and as adjusted, to reflect the Norfolk
Acquisition and the pending acquisition of licenses covering the Georgia/North
Carolina Pops as if the transactions had been consummated as of June 30, 1998.
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 AS OF
JUNE 30, 1998 JUNE 30, 1998
ACTUAL AS ADJUSTED
------------- -------------
<S> <C> <C>
In thousands
Long-term debt:
Credit Facility(1)............................. $ 75,000 $ 75,000
Capital lease obligation....................... 108 108
11% Senior Subordinated Discount Notes......... 296,584 296,584
-------- --------
Total long-term debt......................... 371,692 371,692
-------- --------
Shareholder's equity:
Common stock................................... -- --
Additional paid-in-capital(2).................. 181,821 268,821
Accumulated deficit............................ (10,558) (10,558)
-------- --------
Total shareholder's equity................... 171,263 258,263
-------- --------
Total capitalization......................... $542,955 $629,955
======== ========
</TABLE>
- --------
(1) The Credit Facility provides for up to $425 million of term loan and
revolver financing. See "Description of Credit Facility." On August 5,
1998, the Company borrowed an additional $75 million under the Credit
Facility.
(2) Includes (1) non-binding equity commitments related to the Norfolk
Acquisition of $16.5 in cash equity and $13.5 in non-cash equity and (2)
non-binding equity committments of $32.0 million in non-cash equity and
$25.0 million in cash equity related to the pending acquisition of
licenses covering the Georgia/North Carolina Pops. Each of these
acquisitions is subject to closing conditions typical of acquisitions of
this nature. See "Risk Factors--Risks Related to Norfolk Acquisition" and
"--Risks Related to Potential Acquisition."
30
<PAGE>
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
On March 6, 1997, Triton Communications L.L.C. ("L.L.C.") was formed to
explore various business opportunities in the wireless telecommunications
industry, principally related to PCS and cellular activities. During the
period from 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. Triton PCS, Inc. (formerly Triton PCS License Company,
Inc., with its subsidiaries referred to as "Triton") was formed on October 2,
1997 as a wholly owned subsidiary of Triton PCS Holdings, Inc. (formerly
Triton PCS, Inc. referred to as "Holdings"). Subsequent to October 2, 1997,
the above activities continued but were conducted primarily through Triton.
Consequently, for purposes of the accompanying financial statements, L.L.C.
has been treated as a "predecessor" entity. The chief executive officer of
L.L.C. is also the chief executive officer of Holdings and Triton. 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 Triton are considered companies under common control.
The following tables present selected financial data derived from the
combined financial statements of Triton and its predecessor company as of and
for the six month period ended June 30, 1998, the period from March 6, 1997
through June 30, 1997, 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 the Myrtle Beach System as of and
for the six months period ended June 30, 1998 and 1997, and from the audited
financial statements of Vanguard 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 six month period ended June 30, 1998 and the
year ended December 31, 1997. 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, 1997. The pro forma summary balance sheet data have been
adjusted to give effect to: (i) certain Equity Investments and the
contribution of such Equity Investments from Holdings to Triton, and (ii) the
Norfolk Acquisition and (iii) the Georgia/North Carolina Pops, as if each of
such transactions had been consummated on June 30, 1998.
The unaudited pro forma financial data presented do not purport to represent
what 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.
31
<PAGE>
<TABLE>
<CAPTION>
HISTORICAL TRITON AND PREDECESSOR
FOR THE PERIOD
-----------------------------------------------
MARCH 6, 1997 MARCH 6, 1997 JANUARY 1, 1998
THROUGH THROUGH THROUGH
DECEMBER 31, 1997 JUNE 30, 1997 JUNE 30,1998
----------------- ------------- ---------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................... $ -- $ -- $ --
Cost and Expenses
Costs of services........... -- -- --
Operations and development.. 873 -- 1,444
Marketing and selling....... -- -- --
General and administrative.. 1,863 523 3,737
Depreciation and
amortization............... 5 -- 1,086
------- ------- --------
Total cost and expenses... 2,741 523 6,267
(Loss) from operations........ (2,741) (523) (6,267)
Interest expense.............. 1,228 -- 9,872
Interest income............... (8) -- (2,739)
------- ------- --------
Loss before taxes............. (3,961) (523) (13,400)
Income tax benefit............ -- -- 6,803
------- ------- --------
Net (loss).................... $(3,961) $ (523) $ (6,597)
======= ======= ========
OTHER DATA:
Deficiency of earnings to
fixed charges................ $(3,961) $(13,617)
======= ========
<CAPTION>
HISTORICAL VANGUARD
-----------------------------------------------
SIX MONTHS
JANUARY 1, 1997 ENDED JUNE 30
THROUGH -----------------------------
DECEMBER 31, 1997 1997 1998
----------------- ------------- ---------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................... $23,608 $11,059 $ 14,538
Cost and Expenses
Costs of services........... 5,306 2,164 2,755
Operations and development.. -- -- --
Marketing and selling....... 3,944 1,664 2,215
General and administrative.. 8,275 3,610 4,486
Depreciation and
amortization............... 5,162 2,023 3,080
------- ------- --------
Total cost and expenses... 22,687 9,461 12,536
Income from operations........ 921 1,598 2,002
Interest expense.............. 6,451 3,072 3,560
Other expense, net............ -- 334 6
------- ------- --------
Loss before taxes............. (5,530) (1,808) (1,564)
Income tax benefit............ 6,892 -- 598
------- ------- --------
Net income (loss)............. $ 1,362 $(1,808) $ (966)
======= ======= ========
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA DATA
------------------------------
JANUARY 1, 1997 SIX MONTHS
THROUGH ENDED
DECEMBER 31, 1997 JUNE 30,1998
----------------- ------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA (5):
Revenues........................................ $ 23,608 $ 14,538
Cost and Expenses
Costs of services............................. 5,306 2,755
Operations and development.................... 874 1,444
Marketing and selling......................... 3,944 2,215
General and administrative.................... 10,137 8,223
Depreciation and amortization(1).............. 9,938 6,055
-------- ---------
Total cost and expenses..................... 30,199 20,692
(Loss) from operations.......................... (6,591) (6,154)
Interest expense(2)............................. 40,745 19,060
Interest income................................. -- --
-------- ---------
Loss before taxes............................... (47,336) (25,214)
Income tax benefit.............................. -- 11,292
-------- ---------
Net (loss)...................................... $(47,336) $ (13,922)
======== =========
OTHER DATA:
Deficiency of earnings to fixed charges(3)...... $(47,336) $ (25,431)
======== =========
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL TRITON AND PREDECESSOR
AS OF
----------------------------------
DECEMBER 31 1997 JUNE 30, 1998
----------------- ----------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................... $11,362 $ 261,509
Working Capital.............................. (5,683) 257,736
Total assets................................. 13,253 566,445
Long-term debt............................... -- 371,692
Shareholder's Equity (deficit)............... $(3,961) $ 171,263
======= =========
<CAPTION>
HISTORICAL VANGUARD AS OF
----------------------------------
DECEMBER 31, 1997 JUNE 30, 1998(6)
----------------- ----------------
<S> <C> <C>
BALANCE SHEET DATA SHEET (4):
Cash and cash equivalents.................... $ 121 $ 46
Working Capital.............................. (51,709) 12,307
Total assets................................. 53,931 55,170
Long-term debt............................... -- --
Divisional equity............................ -- 51,480
Shareholder's deficit........................ (11,145) --
======= =========
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA
-------------
AS OF
-------------
JUNE 30, 1998
-------------
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................................... $210,509
Working Capital................................................... 206,736
Total assets...................................................... 653,445
Long-term debt.................................................... 371,692
Shareholders equity............................................... $258,263
========
</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 11.0% 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.
(4) In June 1998, Vanguard Cellular Systems, Inc., the parent company of
Vanguard, transferred certain assets to Vanguard from an affiliated
entity. Such assets were not acquired by Triton. Accordingly, all
historical information presented reflects the operations and financial
position of the Myrtle Beach System of Vanguard and does not include the
transferred assets or the results of operations related to the transferred
assets.
(5) The Norfolk Acquisition and the acquisition of licenses covering the
Georgia/North Carolina Pops relate to properties which are not currently
in operation and accordingly do not have historical revenues and expenses.
As such, there are no pro forma effects of these transactions on the
statement of operations. However, these acquisitions and related financing
commitments have been given pro forma effect in the June 30, 1998 balance
sheet data. Each such acquisition is also subject to closing conditions
typical of acquisitions of this nature. See "Risk Factors--Risks Related
to Norfolk Acquisition" and "--Risks Related to Potential Acquisition."
(6) Historical amount prior to acquisition by Triton and prior to application
of purchase accounting adjustments.
34
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
When used in this Form S-4 and in future filings by the Company with the
Securities and Exchange Commission ("SEC"), in the Company's press releases
and in oral statements made with the approval of an authorized executive
officer of the Company, the words or phrases "will likely result," "management
expects" or "the Company expects," "will continue," "is anticipated,"
"estimated" or similar expressions (including confirmations by an authorized
executive officer of the Company or any such expressions made by a third party
with respect to the Company) are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Readers are cautioned not to place undue reliance on any such
forward-looking statements, each of which speak only as of the date made. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical earnings and those
presently anticipated or projected. The Company has no obligation to release
publicly the result of any revisions, which may be made to any forward-looking
statements to reflect anticipated or unanticipated events or circumstances
occurring after the date of such statements.
GENERAL
The following discussion and analysis is based upon the combined financial
statements of the Company and its predecessor, Triton Communications L.L.C.
("L.L.C.") for the periods presented herein, and should be read in conjunction
with the combined financial statements and the notes thereto contained
elsewhere in this prospectus.
On March 6, 1997, L.L.C. was formed to explore various business
opportunities in the wireless telecommunications industry, principally related
to PCS and cellular activities. During the period from 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. Triton PCS,
Inc. (formerly Triton PCS License Company, Inc., with its subsidiaries
referred to as "Triton") was formed on October 2, 1997 as a wholly owned
subsidiary of Triton PCS Holdings, Inc. (formerly Triton PCS, Inc. referred to
as "Holdings"). Subsequent to October 2, 1997, the above activities continued
but were conducted primarily through Triton. Consequently, for purposes of the
accompanying financial statements, L.L.C. has been treated as a "predecessor"
entity. The chief executive officer of L.L.C. is also the chief executive
officer of Holdings and Triton. 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 Triton are considered
companies under common control.
OVERVIEW
The Company intends to become a leading provider of wireless broadband PCS
in the southeastern United States. The Company 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 (population
equivalents) in the southeastern United States. AT&T PCS contributed the PCS
Licenses to the Company covering the Licensed Area in exchange for an equity
interest in Holdings. 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 resort destination 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 or
shortly thereafter in the Initial Configuration.
35
<PAGE>
On June 30, 1998, the Company acquired 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. for a purchase price of approximately $162.5 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 Company has signed a purchase agreement to acquire from AT&T PCS, Inc.
(the "Norfolk Acquisition") (i) an FCC license to use 20MHz of authorized
frequencies to provide broadband PCS services throughout the entirety of the
Norfolk, Virginia BTA and (ii) certain assets of AT&T PCS used in the
operation of the PCS system in such BTA for an aggregate purchase price of
$105 million, including $13.5 million of Series D Preferred Stock to be issued
to AT&T PCS. The build-out of the network relating to the Norfolk Acquisition,
including the installation of a switch, has been substantially completed. The
Norfolk Acquisition is subject to closing conditions typical in acquisitions
of this nature. There can be no assurance that the Norfolk Acquisition will be
consummated on the terms described herein or at all.
The Company has entered into a non-binding letter of intent with AT&T, dated
as of March 24, 1998, to acquire an additional 1.9 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 1.9 million Pops is approximately $32
million, all of which is expected to be represented by additional non-cash
equity interests in the Company issued to AT&T. 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. This
potential acquisition is 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 this 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 its business, 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 by the end of the first quarter of
1999 or shortly thereafter. 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.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO THE PERIOD FROM MARCH 6,
1997 (INCEPTION) TO JUNE 30, 1997
Operations and Development
Operations and development costs for the period were $1.4 million. These
expenses represent costs associated with the operations of the Company's
regional offices, and consisting principally of salaries and employee-related
expenses and facility costs.
36
<PAGE>
General and Administrative Expenses
General and administrative costs for the period increased $3.2 million to
$3.7 million in the six months ended June 30, 1998 as compared to the period
from March 6, 1997 to June 30, 1997, primarily due to the increase in
personnel related to the establishment of the Company's organizational
structure. During the six months ended June 30, 1998, depreciation and
amortization expenses was $1.1 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 six months ended June 30, 1998, interest expense, including interest
related to the preferred return on the convertible notes of $0.4 million, was
$9.9 million, net of capitalized interest of $0.2 million. The Company had
borrowings of $371.7 million as of June 30, 1998, with a weighted average
interest rate of 10.54%.
Interest Income
For the six months ended June 30, 1998, interest income was $2.7 million
related to interest income on its cash and cash equivalents. Available cash
increased significantly in May 1998 upon receipt of the proceeds of the
Private Offering.
Tax Benefit
For the six months ended June 30, 1998, the Company recorded a tax benefit
of $6.8 million related to temporary deductible differences, primarily net
operating losses and capitalized start-up costs, arising during the current
and prior year. Management has concluded a valuation allowance is not
necessary for these items due to the scheduled reversal of existing taxable
temporary differences within the applicable carryforward period of these
deductible differences, which arose in connection with the AT&T transaction.
Accordingly, management believes it is more likely than not that all recorded
deferred tax assets will be realized.
Net Loss
Net loss increased $6.1 million to $6.6 million in the six months ended June
30, 1998 as compared to the prior period in 1997. The loss resulted primarily
from the items discussed above.
FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1997
Operations and Development
Operations and development costs for the period were $0.9 million. These
expenses represent costs associated with the operations in the Company's
regions and consist principally of salaries and employee-related expenses and
facility costs.
General and Administrative Expenses
General and Administrative costs 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 the period.
Financing Costs
Financing costs consist of interest related to the preferred return on the
convertible notes of $1.2 million.
Net loss
Net loss for the period was $4.0 million due primarily to the items
discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Net Cash Used in Operating Activities
Net cash used in operating activities for the six months ended June 30, 1998
was $0.2 million, a decrease of $0.2 million over the period from March 6,
1997 to June 30, 1997. The decrease is due primarily to changes in accrued
interest of $4.0 million and accounts payable and accrued expenses of $2.4
million offset with an adjustment to net income for a benefit from deferred
income taxes of $6.8 million.
37
<PAGE>
Net Cash Used in Investing Activities
Net cash used in investing activities for the six months ended June 30, 1998
was $172.2 million, an increase of $172.2 million over the period from March
6, 1997 to June 30, 1997. This increase was primarily due to capital
expenditures related to the initial network build-out, the establishment of
administrative operations and payment of approximately $162.5 million
attributable to the Myrtle Beach Acquisition completed on June 30, 1998.
Net Cash Provided By Financing Activities
Net cash provided by financing activities for the six months ended June 30,
1998 was $422.6 million, an increase of $422.0 million over the period from
March 6, 1997 to June 30, 1997. During the period, the Company had proceeds
from borrowings under the Bank Credit Facility of $75 million. The Company had
net proceeds from the Private Offering of $290 million, net of an initial
purchasers discount of $9 million and fees and expenses of $1 million. In
addition, the Company received capital contributions of $68 million from
Holdings related to funding of capital commitments by the initial cash equity
investors and receipt of additional capital commitments related to the Myrtle
Beach Acquisition.
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 (including the territory
covered by the Myrtle Beach Acquisition and assuming substantial completion of
the Company's network build-out to cover 85% of the Pops in the Licensed Area
by such time and consummation of the Norfolk Acquisition) will total
approximately $993 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 on the build-out of its initial coverage area in
1998. 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.
On March 7, 1997, each of Chase Venture Capital Associates, L.P., an
affiliate of Chase Capital Partners, and J.P. Morgan Investment Corporation
provided $550,000 in financing, and on July 3, 1997, each of Chase Venture
Capital Associates, L.P. and J.P. Morgan Investment Corporation provided an
additional $250,000 in financing, to L.L.C. in the form of convertible
promissory notes in order to fund L.L.C.'s start-up costs. The $1.6 million in
notes originally bore interest at 14% annually, payable at maturity. On
January 15, 1998, L.L.C. assigned the notes to the Company. Triton, in
conjunction with Holdings and the noteholders, subsequently negotiated a
revised arrangement under which no interest would be paid on the notes and, in
lieu of repaying the promissory notes in cash, the amount owed under such
notes would be convertible into approximately $3.2 million worth of Holdings'
Series C Preferred Stock. The conversion of the L.L.C. notes into 16,000
shares each of Series C Preferred Stock 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 outstanding. Accordingly, the
Company has accrued $1.2 million in financing costs on the notes as of
December 31, 1997. The remaining $0.4 million financing costs were recognized
in the first quarter of calendar 1998.
The Company currently has no sources of revenue to meet its capital
requirements other than through its operation of the Myrtle Beach System;
therefore the Company's revenues will remain insufficient to meet its capital
requirements. The Cash Equity Investors and the Management Stockholders have
severally made initial 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. To date, the Cash Equity Investors, along with the
Management Stockholders, have contributed an aggregate of $45 million of the
$140 million. The Cash Equity Investors, along with Management Stockholders,
will contribute an additional $35 million on each of the first
38
<PAGE>
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
contribution of $35 million for the Myrtle Beach Acquisition from the Cash
Equity Investors on terms substantially similar to those set forth in the
Securities Purchase Agreement.
Holdings has received additional non-binding equity commitments of $16.5
million from certain of the Cash Equity Investors in order to fund a portion
of the $105 million purchase price for the Norfolk Acquisition. In
consideration therefor, at the closing of such acquisition, Holdings expects
to issue to such Cash Equity Investors an additional $16.5 million of
Holdings' Series C Preferred Stock, which is intended to be contributed to the
Company. At such closing, Holdings is also expected to issue to AT&T PCS an
additional $13.5 million of Holdings' Series D Preferred Stock. The balance of
the purchase price is expected to be financed through use of $75 million from
the net proceeds of the Private Offering.
Holdings has also received non-binding commitments of $32.0 million in non-
cash equity and an additional $25 million in cash equity from the cash Equity
Investors relating to the potential acquisition of additional PCS licenses
covering sections of Georgia and North Carolina. The Company expects to use
the additional cash equity contributions in the build-out of the areas covered
by such additional PCS licenses. These commitments are contingent on the
execution of definitive documentation with respect to, and the consummation
of, such potential acquisition.
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, (ii) a $150 million, nine and
one-quarter year Tranche B Term Loan and (iii) a $100 million, eight and one-
half year Revolving Credit Facility. The commitment to make Revolving Credit
Loans is reduced automatically beginning on the date that is six years and six
months after the Credit Facility Effective Date and the Term Loans must be
repaid beginning on the date that is four years after the Credit Facility
Effective Date. In addition, 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 convenants. To
date, $150 million of the Tranche B Term Loans have been drawn by the Company,
which are expected to fund the Company's future operations. Borrowings under
the facilities are secured by a first priority pledge of all assets of the
Company, including the capital stock of the Company and its 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. Of these proceeds,
$127.5 million was used for the Myrtle Beach Acquisition, and it is
anticipated that $75 million will be used for the Norfolk Acquisition. 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.
NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Statement of Financial Accounting Standard No. 130,
"Reporting Comprehensive Income" (SFAS 130), which was effective for fiscal
year beginning after December 15, 1997. SFAS 130 established standards for
reporting and display of comprehensive income and its components in a full set
of general-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 accompanying statements of operations, comprehensive income equals the
amounts reported on the accompanying statement of operations.
In February 1997, the FASB issued Statement No. 129, "Disclosure of
Information about Capital Structure" ("SFAS 129"). This statement establishes
standards for disclosing information about an entity's capital structure and
is effective for periods ending after December 15, 1997. The Company has
adopted SFAS
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129. The effect of initial application of this statement did not have a
material effect on the Company's financial statements.
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. The Company has adopted SFAS 131. The effect of initial application of
the statement did not have a material effect on the Company's financial
statements.
In February 1998, the FASB issued Statement No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits" ("SFAS 132"). This statement
is effective for fiscal years beginning after December 15, 1997. It is not
expected that application of this statement will have a material effect on the
Company's financial statements.
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 effective for fiscal years beginning after December 31, 1998. The Company
has elected early adoption of this statement beginning in fiscal year ending
December 31, 1998. The effect of initial application of the statement did not
have a material effect on the Company's financial statements.
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). This statement is effective
for all fiscal quarters of all fiscal years beginning after June 15, 1999. The
Company has not yet fully analyzed the impact of this statement on its
financial statements.
YEAR 2000
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. This issue will
impact not only Information Technology ("IT"), but Non-IT systems as well,
given Non-IT systems typically include embedded technology such as
microcontrollers. If date sensitive software recognize the year "00" as the
year 1900 rather than the Year 2000, the potential exists for computer system
failure or miscalculations, which could cause disruption of operations.
Given that the Company is in the development stage, and is currently in the
process of selecting and implementing its operational and financial systems,
the Company believes that it has adequately considered Year 2000 compliance in
its selection of IT systems. In addition, given the nature of the Company's
operations, potential non-compliance of Non-IT systems are not expected to
have a significant impact on the Company. However, there can be no assurance
that non-compliance of Non-IT systems will not have a material adverse effect
on the Company or its operations.
The Company has initiated communications with all of its significant
software suppliers and service bureaus to determine their plans for
remediating the Year 2000 Issue in their software which the Company uses or
relies upon. The Company's estimate to complete the remediation plan includes
the estimated time associated with mitigating the Year 2000 Issue for third
party software. However, there can be no guarantee that the systems of other
companies on which the Company relies will be converted on a timely basis, or
that a failure to convert by another company would not have material adverse
effect on the Company.
A thorough assessment of the Year 2000 Issue relative to the Myrtle Beach
Acquisition will be performed. The Company intends to migrate the Myrtle Beach
operational and financial systems to the systems currently being implemented
for the Company and expects to complete this migration by December 31, 1998.
There can be no assurance that this migration will be successful. The failure
to successfully migrate the Myrtle Beach operational and financial systems
into the Company's systems could have a material adverse effect on the
Company.
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The costs and risks associated with the Year 2000 Issue are not expected to
have a significant impact on the Company.
INFLATION
The Company does not believe that inflation has had a material impact on the
Company's operations. However, there can be no assurance that a high rate of
inflation in the future will not have a material adverse effect on the
Company's operating results.
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 or
shortly thereafter 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."
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The Company has acquired the Myrtle Beach System, which serves Myrtle Beach,
SC and the surrounding area, from Vanguard for a purchase price of
approximately $162.5 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 Company has signed a purchase agreement to acquire from AT&T PCS, Inc.
(the "Norfolk Acquisition") (i) an FCC license to use 20 MHz of authorized
frequencies to provide broadband PCS services throughout the entirety of the
Norfolk, Virginia BTA and (ii) certain assets of AT&T PCS used in the
operation of the PCS system in such BTA for an aggregate purchase price of
$105 million. The build-out of the network relating to the Norfolk
Acquisition, including the installation of a switch, has been substantially
completed. The Norfolk Acquisition is subject to closing conditions typical in
acquisitions of this nature. There can be no assurance that the Norfolk
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. See
"Certain Relationships and Related Transactions--The Securities Purchase
Agreement." The Company has received additional equity contributions of $35
million from certain of the Cash Equity Investors in connection with the
Myrtle Beach Acquisition. Additionally, the Company has also received
additional non-binding equity commitments of approximately $16.5 million from
certain Cash Equity Investors in connection with the Norfolk Acquisition. 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 including those governing the 10 MHz of spectrum retained by
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.
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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
the Company's service to accounts that reside in the Licensed Area. See
"Certain Relationships and Related Transactions--The Stockholders'
Agreement--Exclusivity."
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
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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." The
deployment of this technology involves risk. See "Risk Factors--Technology
Risks."
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."
POTENTIAL ACQUISITION
The Company has entered into a non-binding letter of intent with AT&T, dated
as of March 24, 1998, to acquire an additional 1.9 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 1.9
million Pops is approximately $32 million, all of which is expected to be
represented by additional non-cash equity interests in the Company issued to
AT&T. 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. This potential acquisition is 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
this acquisition will be consummated on the terms described herein or at all.
See "Risk Factors--Risks Related to Potential Acquisition."
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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.
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(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, or shortly thereafter, 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.
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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.
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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,
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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),
in comparison to CDMA technology, 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
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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
or shortly thereafter. 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 August 17, 1998,
the Company had signed leases or options for 292 sites, 142 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 two need to be relocated to launch commercial service
in the Initial Configuration. As of August 17, 1998, the two relocation
agreements have been executed. The remaining 13 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.
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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."
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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:
LOGO
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.
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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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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
technologies employed by these competitors are CDMA, whose relative strengths
as compared to TDMA include good voice quality and longer battery life, and
GSM, whose relative strengths as compared to TDMA include larger system
capacity, a low cost infrastructure, and international roaming capabilities
due to worldwide deployment.
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, currently employed by Nextel
in the Company's Licensed Area. 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
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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.
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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
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down by the United States 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 30, 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.
57
<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
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.
58
<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.
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 has been a General
Partner of Chase Capital Partners since January 1992. 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.
59
<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 that may be awarded to them
pursuant to Triton's Independent Director Stock Award Plan adopted as of
February 4, 1998.
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
STOCK ALL OTHER
NAME PRINCIPAL POSITION YEAR SALARY BONUS AWARD COMPENSATION(1)
---- ------------------ ---- -------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Michael Kalogris........ Chairman of the 1997 $228,619 $350,000 -- --
Board of
Directors and
Chief Executive
Officer
Steven Skinner.......... President and 1997 148,712 225,000 -- --
Chief Operating
Officer
David Clark............. Senior Vice 1997 122,243 165,000 -- $83,188
President, Chief
Financial
Officer and
Secretary
Patricia Gallagher(2)... Vice President 1997 50,758 90,000 -- --
and Treasurer
</TABLE>
- --------
(1) "All Other Compensation" includes relocation and related expenses.
(2) Ms. Gallagher resigned from the Company on August 14, 1998 (effective
September 4, 1998).
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) if the
termination occurs prior to February 4, 2001, 50% of all shares of Common
Stock that are unvested under such employment agreement as of such date will
vest and, if the
60
<PAGE>
termination occurs between February 4, 2001 and February 3, 2002, 25% will
vest and, if the termination occurs after such period, none will vest and
(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) if the
termination occurs prior to February 4, 2001, 50% of all shares of Common
Stock that are unvested under such employment agreement as of such date will
vest and, if the termination occurs between February 4, 2001 and February 3,
2002, 25% will vest and, if the termination occurs after such period, none
will vest 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.
61
<PAGE>
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 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) vesting of certain of Mr. Smith's unvested shares as follows: (1) the
percentage of unvested shares that would have vested in the year following the
year of his termination and (2) a pro rata amount (based on the number of days
worked that year) of the shares that would have vested in the year of
Mr. Smith's termination. 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 3,762.01 shares of Common Stock, such
shares to vest according to the schedule set forth in a letter agreement dated
as of February 4, 1998, as amended June 29, 1998 between Management Company
and Mr. Smith.
62
<PAGE>
SECURITY OWNERSHIP
The following table sets forth, as of June 30, 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........ 142,672.94(9) 60.7% 5,000 *% 147,672.94 6.3%
Steven Skinner.......... 70,537.30(10) 30.0 2,500 * 73,037.70 3.1
Clyde Smith............. 3,762.01(11) 1.6 -- -- 3,762.01 *
David Clark............. 7,053.27(12) 3.0 -- -- 7,053.27 *
Patricia Gallagher...... 3,526.89(13) 1.5 -- -- 3,526.89 *
Scott Anderson.......... 847.11 * -- -- 847.11 *
John Beletic............ 847.11 * -- -- 847.11 *
Arnold Chavkin(2)....... -- -- -- -- -- --
William Hague........... -- -- -- -- -- --
John Watkins(3)......... -- -- -- -- -- --
CB Capital Investors,
L.P.(4)................ -- -- 507,143.68 24.0 507,143.68 21.6
J.P. Morgan Investment
Corporation(5)......... -- -- 504,715 (15) 23.8 504,715 (15) 21.5
Desai Capital Management
Incorporated(6)........ -- -- 487,094.22(16) 23.0 487,094.22(16) 20.7
Toronto Dominion Capital
(USA), Inc.(7)......... -- -- 121,774.18 5.8 121,774.18 5.2
AT&T Wireless PCS,
Inc.(8)................ -- -- 366,131 (17) 17.3 366,131 (17) 15.6
All directors and
executive officers as a
group.................. 235,125.68(14) 100.0 7,500 * 242,625.68 10.3
</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 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 disclaims beneficial ownership of any
such shares.
(4) The address of this person is 380 Madison Avenue, New York, NY 10017.
(5) The address of this person is 101 California Street, San Francisco, CA
94111.
(6) The address of this person is 540 Madison Avenue, New York, NY 10022.
(7) The address of this person is 31 West 52nd Street, New York, NY 10019.
(8) The address of this person is 5000 Carillon Point, Kirkland, WA 98033.
63
<PAGE>
(9) Includes 48,622.67 shares held by Mr. Kalogris as trustee under the
Amended and Restated Common Stock Trust Agreement for Management
Employees and Independent Directors, dated June 26, 1998 (the "Common
Stock Trust Agreement"), pursuant to which the Company will distribute
Common Stock to management employees and independent directors. 84,645.24
of the 94,050.27 shares of Common Stock directly held by Mr. Kalogris are
subject to forfeiture in accordance with the Kalogris Employment
Agreement over a five year period.
(10) 63,483.93 of the 70,537.70 shares of Common Stock are subject to
forfeiture in accordance with the Skinner Employment Agreement over a
five year period.
(11) All 3,762.01 shares of Common Stock are subject to forfeiture in
accordance with the Smith Employment Agreement over a five year period.
(12) All 7,053.77 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, as amended on June 29, 1998.
(13) All 3,526.89 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, as amended on June 29, 1998. Ms.
Gallagher resigned from the Company on August 14, 1998 (to be effective
September 4, 1998). In connection with the termination of her employment,
as of September 4, 1998 Ms. Gallagher's share ownership in Holdings will
be reduced to 1,410.76 shares, and such shares will vest 50% on February
4, 1999 and 50% on February 4, 2000. The remaining 2,116.13 shares will
be sold back to the Company and will be eligible for distribution to
management members and independent directors of Holding as pursuant to
the Amended and Restated Common Stock Trust Agreement Employees and
Independent Directors, dated June 26, 1998.
(14) See footnotes (9)-(13). Also includes 5,878.15 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, as amended on June 29, 1998.
(15) Includes 25,687 shares of Series C Preferred Stock held by Sixty Wall
Street SBIC Fund, L.P., an affiliate of J.P. Morgan Investment
Corporation.
(16) Consists of 243,547.11 shares of Series C Preferred Stock held by Private
Equity Investors III, L.P., and 243,547.11 shares of Series C Preferred
Stock held by Equity Linked Investors II, each an affiliate of Desai
Capital Management Incorporated.
(17) 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.
64
<PAGE>
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 entered into certain other agreements, in exchange for
732,371 shares of Series A Preferred Stock and 366,131 shares of Series D
Preferred Stock, such shares having an aggregate value of approximately $79.0
million and $39.5 million, respectively. AT&T has retained 10 MHz of spectrum
within the Licensed Areas for use as a non-mobility wireless provider.
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. have severally
made irrevocable commitments to contribute to Holdings approximately $39.8
million, $39.8 million, $39.8 million $9.9 million, $5.0 million and $5.0
million, respectively, in cash in exchange for approximately 398,000 shares,
398,000 shares, 398,000 shares, 99,000 shares, 50,000 shares and 50,000
shares, respectively, of Series C Preferred Stock, and Michael Kalogris and
Steven Skinner have severally made irrevocable commitments to contribute to
Holdings $500,000 and $250,000, respectively, in cash in exchange for 5,000
shares and 2,500 shares, respectively, 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
on the first, second, and third anniversary dates 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 CONTRIBUTION
Pursuant to a Preferred Stock Purchase Agreement, dated as of June 29, 1998,
Holdings has received additional equity contributions of approximately $10.2
million, $10.0 million, $9.8 million, $2.5 million, $1.2 million and $1.2
million, respectively, from 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. in exchange for approximately 102,000 shares, 100,000 shares,
98,000 shares, 25,000 shares, 12,000 shares and 12,000 shares, respectively,
of Series C Preferred Stock on terms substantially similar to those set forth
in the Securities Purchase Agreement. These contributions were concurrently
contributed to Triton.
65
<PAGE>
THE NORFOLK COMMITMENT
Holdings has received additional non-binding equity commitments of
$16.5 million from certain of the Cash Equity Investors in order to fund a
portion of the $105 million purchase price for the Norfolk Acquisition. These
commitments are contingent on the execution of definitive documentation with
respect to such equity financing, including, without limitation, negotiation
of the allocation of the $16.5 million commitment among the Cash Equity
Investors. In consideration therefor, at the closing of such acquisition,
Holdings expects to issue to such Cash Equity Investors an additional
$16.5 million of Holdings' Series C Preferred Stock which is intended to be
contributed to the Company. At such closing, Holdings is also expected to
issue to AT&T PCS an additional $13.5 million of Holdings' Series D Preferred
Stock. The balance of the purchase price is expected to be financed through
use of $75 million from the net proceeds of the Private Offering.
THE GEORGIA/NORTH CAROLINA COMMITMENT
Holdings has also received non-binding commitments from the Cash Equity
Investors for an additional $25 million equity contributions relating to the
potential acquisition of additional PCS licenses covering sections of Georgia
and North Carolina. The Company expects to use the additional equity
contributions in the build-out of the areas covered by such additional PCS
licenses. These commitments are contingent on the execution of definitive
documentation with respect to such potential acquisition, including, without
limitation, negotiation of the allocation of the $25 million commitment among
the Cash Equity Investors, and the consummation of such potential acquisition.
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, David Clark, Clyde Smith, Patricia
Gallagher, David Standig and Michael Mears (collectively the "Other Management
Stockholders" and, together with AT&T PCS, the Cash 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
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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 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
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(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)
assuming consummation of the Norfolk Acquisition, resell Company
Communications Services for another person in any area where the Company has
not yet placed a system into commercial service; provided that AT&T PCS has
provided the Company with prior written notice of AT&T PCS' intention to do so
and only dual band/dual mode phones are used in connection with such resale
activities. 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 (a) 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 (b) refrain
from inducing any of its customers to change such programming.
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
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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.
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.
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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
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 provided, however, that
with respect to the Norfolk BTA (assuming consummation of the Norfolk
Acquisition), the service rate is equal to the lesser of (a) $0.25 per minute
and (b) the applicable home rate of AT&T PCS, or such other rate as agreed to
by the parties. 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.
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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.
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.
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, L.L.C., 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 21% of the issued and outstanding capital stock of the Company,
and CB Capital Investors, a holder of approximately 21% 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 and will continue to receive customary fees and expenses in
connection with the execution of the Credit Facility. To date, affiliates of
J.P. Morgan Investment Corporation and CB Capital Investors, have received
approximately $98,000 and $106,000, respectively, in their capacity as agent
and lender under such 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.
Messrs. Clark, Standig, and Mears received 7,053.77, 3,526.89, and 2,351.26,
respectively, and Ms. Gallagher received 3,526.89. See "Security Ownership."
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On March 7, 1997, each of Chase Venture Capital Associates, L.P., an
affiliate of Chase Capital Partners, and J.P., Morgan Investment Corporation
provided $550,000 in financing, and on July 3, 1997, each of Chase Venture
Capital Associates, L.P. and J.P. Morgan Investment Corporation provided an
additional $250,000 in financing, to L.L.C. in the form of convertible
promissory notes in order to fund L.L.C.'s start-up costs. The $1.6 million in
notes originally bore interest at 14% annually, payable at maturity. On
January 15, 1998, L.L.C. assigned the notes to the Company. Triton, in
conjunction with Holdings and the noteholders, subsequently negotiated a
revised arrangement under which no interest would be paid on the notes and, in
lieu of repaying the promissory notes in cash, the amount owed under such
notes would be convertible into approximately $3.2 million worth of Holdings'
Series C Preferred Stock. The conversion of the L.L.C. notes into 16,000
shares each of Series C Preferred Stock 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 outstanding. Accordingly, the
Company has accrued $1.2 million in financing costs on the notes as of
December 31, 1997. The remaining $0.4 million financing costs were recognized
in the first quarter of calendar 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 47.8% 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"). At June 30, 1998, the rates under (i) and (ii) were 8.675% and 10.25%
respectively. 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.
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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 one or more interest rate hedging contracts
covering an amount equal to at least 60% of the total amount of the
outstanding indebtedness of Triton. To date, the Company has not been required
to purchase any interest rate hedges due to the percentage of fixed interest
rate borrowings in its debt portfolio.
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 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 acquisition of the Norfolk Pops is
not consummated by December 31, 1998 or (ii) 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 amount equal to $75 million, in each
case.
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; however the membership interests of License
LLC have 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 Indenture and the Registration Rights
Agreement are attached as exhibits to the Registration Statement of which this
Prospectus is a part. 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. In addition, certain defined terms used in the Indenture and
in the Prospectus appear in "Glossary of Selected Terms" and "--Certain
Definitions."
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),
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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 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 August 25, 1998, there was approximately $150 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. As of the date of this registration statement, all
of Triton's direct and indirect subsidiaries are guarantors on a full,
unconditional, and joint and several basis and are wholly owned by Triton.
Triton PCS Holdings Inc., the direct parent and sole stockholder of Triton, is
not a guarantor. 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 Indenture 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.
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 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
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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 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
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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 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"). As of the date hereof, 732,371 shares of Series A
Preferred Stock, 1,750,000 shares of Series C Preferred Stock, 366,131 shares
of Series D Preferred Stock and 235,125.68 shares of Common Stock are
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 2,848,502 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
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declared by the Board of Directors of Holdings. Upon any liquidation,
dissolution or winding up of Holdings, 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 (which relates to
the unlawful payment of dividend or unlawful stock purchase or redemption by a
corporation ) 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 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.
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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.
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.
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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.
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.
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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.
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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.
110
<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.
111
<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 herein and 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 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.
112
<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.
113
<PAGE>
GLOSSARY OF SELECTED TERMS
A-BLOCK: One of the two PCS 30 MHz licenses covering an MTA.
ANALOG: A method of transmission where the wave form of the outpost signal is
analogous to the wave form of the input.
BASE STATION: A fixed site with network equipment that is used for RF
communications with mobile stations, and is part of a cell, or a sector within
a cell, and is backhauled to an MTSO or other part of a cellular system.
B-BLOCK: One of two PCS 30 MHz covering an MTA.
BROADBAND PCS: High frequency, next generation of wireless services.
BTA: Basic Trading Area.
BUSINESS MARKETING DIVISION: The account executives charged with selling all
AT&T services, including wireless services, to business accounts.
CELL: The division of wireless communications system service areas.
CELL SITE For each PCS or cellular cell, the transmitter, receiver, and
signaling equipment.
CELLULAR SYSTEM: A telephone system based on grid "cells" deployed at 800 MHz.
Each cell contains transmitters, receivers and antennas, and is connected to
switching gear and control equipment.
CHANNEL: A single path, either RF or voice, for transmitting electrical
signals.
CHURN RATE: Expressed as a rate for a given measurement period, equal to the
number or subscriber units disconnected divided by the average number of units
of the entire installed base of customers.
CDMA: Code Division Multiple Access. A digital spread-spectrum wireless
technology which allows a large number of users to access a single frequency
band by assigning a code to all speech bits, sending a scrambled transmission
of the encoded speech over the air and reassembling the speech to its original
format.
CMRS: Commercial Mobile Radio Service.
CTIA: The Cellular Telecommunications Industry Association. An industry group
in North America representing the cellular telephone and PCS industries.
DIGITAL: A method of storing, processing and transmitting information through
the use of distinct electronic or optical pulses that represent the binary
digits 0 and 1. Digital transmission/switching technologies employ a sequence
of discrete, distinct pulses to represent information, as opposed to the
continuously variable analog signal.
DUAL-BAND/DUAL-MODE PHONE: A mobile or portable phone which is capable of
dual-band/dual-mode operation.
DUAL-BAND/DUAL-MODE OPERATION: A wireless system which is capable of
supporting either different digital protocols or both digital and analog
technologies, including at different frequencies.
EQUITY INVESTMENTS: The Myrtle Contribution, the PCS Licenses, and the Cash
Equity.
ESMR: Enhanced Specialized Mobile Radio. A radio communications system that
employs digital technology with multi-site configuration that permits
frequency reuse, offering enhanced dispatch and two-way switched voice
services.
114
<PAGE>
FCC: Federal Communications Commission.
FREQUENCY: The number of cycles per second, measured in hertz, of a periodic
oscillation or wave in radio propagation.
FREQUENCY REUSE: A measure of relative efficiency in the use of frequency.
GEORGIA/NORTH CAROLINA POPS: The 1.9 million incremental Pops located
primarily in Georgia and North Carolina.
GSM: Global System for Mobile Communications. The standard digital cellular
telephone service in Europe and Japan, guided by a set of standards specifying
the infrastructure for digital cellular service, including the radio
interface, switching, signaling, and intelligent network.
HAND-OFF: The act of transferring communication with a mobile unit from one
base station to another. A hand-off transfers a call from the current base
station to the new base station. A "soft" hand-off establishes communications
with a new cell before terminating communications with the old cell.
HOLDINGS: Triton PCS Holdings, Inc., the direct parent and sole stockholder of
Triton.
HORIZON: Horizon Cellular Group.
INITIAL CONFIGURATION: The initial area (40% of the Pops in the Licensed Area)
in which the Company expects to commence commercial operations by the end of
the first quarter of 1999 or shortly thereafter.
ISDN: Integrated Services Digital Network.
KAGAN: Paul Kagan Associates, Inc.
LANS: Local Area Network.
LEC: Local Exchange Carrier.
LICENSED AREA: The contiguous area covering approximately 11 million Pops in
the southeastern United States.
MSA: Metropolitan Statistical Area.
MTA: Major Trading Area.
MYRTLE CONTRIBUTIONS: The additional equity contributions of $35 million.
NEXTEL: Nextel Communications, Inc.
NOC: The control and monitoring location for a network, including switches and
base stations.
NORFOLK POPS: The 1.8 million Pops located in the Norfolk/Virginia Beach, VA
region.
NORFOLK ACQUISITION: The agreement between the Company and AT&T Wireless PCS
to acquire (i) an FCC license and (ii) certain assets.
PBX: Private branch exchange or switchboard.
PCIA: The Personal Communications Industry Association, a North American trade
association principally representing the PCS and paging industries.
PCS: Personal Communications Services.
115
<PAGE>
PCS LICENSES: The licenses contributed by AT&T to Triton covering the Licensed
Area in exchange for an equity interest in the Company.
PMRS: Private mobile radio service.
POPS: Population equivalents as determined by Paul Kagan Associates, Inc.
estimates of the 1997 population of a geographic area.
PRIVATE NOTES: The notes offered by Triton in the Private Offering on May 4,
1998.
PRIVATE OFFERING: The offering by Triton of the Private Notes on May 4, 1998.
QIB: Qualified institutional buyer as defined in Rule 144A under the
Securities Act.
QUALIFYING COMPANY: AT&T or another telecommunications company involved in a
merger or other business combination that meets certain criteria set forth in
the Stockholders' Agreement.
RF: Radio frequency. Frequencies of the electromagnetic spectrum that are
associated with radio wave propagation.
ROAMING: A service offered by mobile communications network operators which
allows a subscriber to use his/her handset while in the service area of
another carrier. Roaming requires an agreement between operators of different
individual markets to permit customers of either operator to access the
other's system.
RSA: Rural Service Area.
SMR: Specialized Mobile Radio. A two-way analog mobile radio telephone system
typically used for dispatch services such as truck and taxi fleets.
STOCKHOLDERS' AGREEMENT: The agreement by and among AT&T PCS, the Cash Equity
Investors, the Management Stockholders, David Clark, Clyde Smith, Patricia
Gallagher, David Standig and Michael Mears, and Holdings, dated as of
February 4, 1998.
TDMA: Time Division Multiple Access. A digital spread-spectrum technology
which allocates a discrete amount of frequency bandwidth to each user in order
to permit more than one simultaneous conversation on a single RF channel.
TDMA/5-136: The technology utilized by AT&T's nationwide wireless network that
allows the Company's Network to be compatible with AT&T's.
TRITON CELLULAR: Triton Cellular Partners, L.P.
TRITON LLC: Triton Communications L.L.C.
UNFUNDED COMMITMENT AMOUNT: The remaining portion of the $140 million
commitments of the Cash Equity Investors and the Management Stockholders.
VANGUARD: Vanguard Cellular Systems of South Carolina, Inc.
116
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
TRITON PCS, INC. AND PREDECESSOR COMPANY
Combined Financial Statements:
Report of KPMG Peat Marwick LLP F-2
Combined Balance Sheet as of December 31, 1997 F-3
Combined Statement of Operations for the period March 6, 1997
(inception) to December 31, 1997 F-4
Combined Statement of Shareholder's Deficit and Member's Capital for the
period March 6, 1997 (inception) to December 31, 1997 F-5
Combined Statement of Cash Flows for the period March 6, 1997
(inception) to December 31, 1997 F-6
Notes to Combined Financial Statements F-7
Combined Balance Sheet as of June 30, 1998 F-16
Combined Statements of Operations for the six months periods ended June
30, 1998, for the period from March 6, 1997 to June 30, 1997 F-17
Combined Statements of Shareholder's Equity (Deficit) and Members
Capital for the period from March 6, 1997 to June 30, 1998 F-18
Combined Statements of Cash Flows for six months ended June 30, 1998,
for the period from March 6, 1997 to June 30, 1997 F-19
Notes to the Combined Financial Statements--June 30, 1998 F-20
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
Financial Statements:
Report of Arthur Andersen LLP F-29
Balance Sheets as of December 31, 1997 and 1996 F-30
Statements of Operations for the three years ended December 31, 1997 F-31
Statements of Cash Flows for the three years ended December 31, 1997 F-32
Statements of Shareholder's Deficit for the three years ended
December 31, 1997 F-33
Notes to Financial Statements F-34
MYRTLE BEACH SYSTEM OF SOUTH CAROLINA
Financial Statements:
Balance Sheet as of June 30, 1998 F-38
Statement of Operations for the sixth months ended June 30, 1997 and
1998 F-39
Statement of Cash Flows for the sixth months ended June 30, 1997 and
1998 F-40
Notes to Financial Statements F-41
TRITON PCS, INC., MYRTLE BEACH SYSTEM AND NORFOLK
Pro forma Financial Statements:
Unaudited pro forma financial statements F-45
Combined Balance Sheet as of June 30, 1998 F-46
Combined Statement of Operations for year ended December 31, 1997 F-47
Combined Statement of Operations for the six months ended June 30, 1998 F-48
Notes to Combined Financial Statements F-49
</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>
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, plant 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 accompanying 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 (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)
-----------
Net cash used in investing activities (477,656)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on notes payable 13,343,500
Issuance of common stock 1
Deferred transaction costs (324,416)
Related-party advances, net (102,698)
-----------
Net cash provided by financing activities 12,916,387
-----------
NET INCREASE IN CASH 11,362,212
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD --
-----------
CASH AND CASH EQUIVALENTS END OF PERIOD $11,362,212
<CAPTION>
===========
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 Corp. (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, north-
ern Georgia, and surrounding areas. The Company is authorized to provide per-
sonal communications services ("PCS") 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 PCS and cellular activities. During the period
March 6, 1997 through October 1, 1997, L.L.C.'s activities consisted princi-
pally of hiring a management team, raising capital, and negotiating strategic
business relationships, primarily related to PCS business opportunities. Sub-
sequent to October 2, 1997, these activities continued but were conducted pri-
marily through the Company. Consequently, for purposes of the accompanying fi-
nancial 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 sim-
ilar nature of the business activities conducted by each respective legal en-
tity, 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 com-
puter equipment and software and office equipment. Depreciation is provided
based on the straight-line method over the estimated useful lives of the re-
spective assets, generally three years for computer equipment and software. In
connection with the construction of the PCS network, the Company will capital-
ize expenditures related to the design, construction, and microwave relocation.
In addition, the Company anticipates it will capitalize interest on expendi-
tures 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 negotia-
tion and documentation of the AT&T transaction, bank financing, and the
Company's planned issuance of senior subordinated discount notes. The costs re-
lated 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 ("SFAS 129"). This statement establishes standards for
disclosing information about an entity's capital structure and is effective for
periods ending after December 15, 1997. The Company has adopted SFAS 129. The
effect of initial application of this statement did not have a material effect
on the Company's financial statements.
In June 1997, the FASB issued Statement No. 130, Reporting Comprehensive Income
("SFAS 130"). This statement requires companies to classify items of other com-
prehensive income by their nature in a financial statement and display the ac-
cumulated balance of other comprehensive income separately from retained earn-
ings and additional paid-in capital in the equity section of a statement of fi-
nancial 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 be-
lieves 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 as-
sets 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 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 Holding's subsidiaries shall enter into certain agreements or con-
duct 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 oper-
ations 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 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.
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 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, $5.0 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 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 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 LI-
BOR 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 max-
imum reserve percentages (including any marginal, special, emergency, or sup-
plemental reserves) expressed as a decimal established by the Board of Gover-
nors 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 Ap-
plicable Rate (Loans bearing interest described in (ii), "ABR Loans"). Inter-
est on any overdue amounts will be at a rate per annum equal to 2% plus the
rate otherwise applicable to such amounts. The
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)
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 income taxes, depreciation, and amortization
(EBITDA) in the case of an ABR Loan, and a rate between 1.00% and 2.25% per an-
num (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 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). No such contracts have been entered into to date.
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 be-
come 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
incurrance of additional indebtedness.
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 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, L.L.C. incurred cer-
tain 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 reim-
bursed by Triton 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 conclud-
ing its business 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 and manage-
ment stockholders. The Securities Purchase Agreement requires the institu-
tional investors and management stockholders to fund their unconditional 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 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
COMBINED BALANCE SHEET
JUNE 30, 1998
<TABLE>
<CAPTION>
------------
JUNE 30,
1998
------------
(UNAUDITED)
<S> <C>
ASSETS:
Current assets:
Cash and cash equivalents $261,508,612
Accounts receivable, net of allowances 5,487,000
Due from related party 64,657
Prepaid expenses 928,188
------------
Total current assets 267,988,457
Property, plant and equipment:
Land 313,000
Cellular telephone systems 21,826,000
Office furniture and equipment 3,680,340
Construction in progress 9,212,186
------------
35,031,526
Less accumulated depreciation (108,067)
------------
Net property, plant and equipment 34,923,459
Intangible assets 263,165,305
Other assets 367,789
------------
$566,445,010
============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 6,611,179
Accrued interest 3,641,389
------------
Total current liabilities 10,252,568
Long-term debt 371,692,463
Deferred income taxes 13,236,630
Commitments and contingencies --
Shareholder's Equity and Members Capital:
Common stock, $.01 par value, 1,000 shares authorized, 100
shares
issued and outstanding 1
Additional paid-in capital 181,821,118
Accumulated deficit (10,557,770)
------------
Total shareholder's equity and Members Capital: 171,263,349
------------
$566,445,010
============
</TABLE>
See accompanying notes to combined financial statements.
F-16
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
------------------------------
PERIOD FROM SIX MONTHS
MARCH 6, 1997 ENDED
TO JUNE 30, 1997 JUNE 30, 1998
---------------- -------------
<S> <C> <C>
Expenses:
Operations and development $ -- $ 1,443,979
General and administrative 522,823 3,737,427
Depreciation and amortization -- 1,085,504
-------- -----------
Loss from operations 522,823 6,266,910
Interest expense -- 9,871,809
Interest (income) -- (2,739,163)
-------- -----------
Loss before taxes 522,823 13,399,556
Tax benefit -- 6,802,625
-------- -----------
Net loss $522,823 $ 6,596,931
======== ===========
</TABLE>
See accompanying notes to combined financial statements.
F-17
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
COMBINED STATEMENTS OF SHAREHOLDER'S EQUITY (DEFICIT) AND MEMBERS CAPITAL
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
-----------------------------------------------------
ADDITIONAL
COMMON STOCK PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------ ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
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 (1) -- -- 181,821,118 -- 181,821,118
Net loss -- -- -- (6,596,931) (6,596,931)
------ ------ ------------ ------------ ------------
Balance at June 30, 1998 100 $ 1 $181,821,118 $(10,557,770) $171,263,349
====== ====== ============ ============ ============
</TABLE>
(1) Includes the contribution of non-cash assets from AT&T PCS of $118.6 mil-
lion to Holdings, which were concurrently contributed to the Company.
See accompanying notes to combined financial statements.
F-18
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
COMBINED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
-------------------------------
PERIOD FROM SIX MONTHS
MARCH 6, 1997 ENDED
TO JUNE 30, 1997 JUNE 30, 1998
---------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(522,823) $ (6,596,931)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation and amortization -- 1,085,504
Deferred income taxes -- (6,802,625)
Accretion of interest -- 5,980,188
Change in operating assets and
liabilities:
Prepaid expenses (69) (296,228)
Accounts payable and accrued expenses 118,589 2,429,690
Accrued interest -- 4,013,360
--------- -------------
Net cash used in operating activities (404,303) (187,042)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (10,567) (9,753,582)
Myrtle Beach acquisition, net of cash
acquired (note 4) -- (162,475,478)
--------- -------------
Net cash used in investing activities (10,567) (172,229,060)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facility -- 75,000,000
Borrowings on notes payable 509,101 --
Borrowings on subordinated debt -- 291,000,000
Issuance of common stock -- --
Capital contributions from parent -- 68,346,606
Payment of deferred transaction costs -- (11,822,145)
Advances from related party, net 68,934 38,041
--------- -------------
Net cash provided by financing
activities 578,035 422,562,502
--------- -------------
NET INCREASE IN CASH 163,165 250,146,400
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD -- 11,362,212
--------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 163,165 $ 261,508,612
========= =============
</TABLE>
See accompanying notes to combined financial statements.
F-19
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
(1) DESCRIPTION OF BUSINESS
Triton PCS, Inc (formerly Triton PCS License Company, Inc. with its subsidi-
aries 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" or "Parent"). The Company will be the exclusive pro-
vider of wireless mobility services in the AT&T Corp. (together with affiliates
"AT&T") mid-Atlantic and Southeast regions. The Company intends to become the
leading provider of broadband personal communications services ("PCS") in Vir-
ginia, South Carolina, North Carolina, northern Georgia, and surrounding areas.
The Company is authorized to provide PCS Service in major population and busi-
ness centers such as Charleston, SC, Columbia, SC, Greenville/Spartansburg, SC,
Richmond, VA and Augusta, GA, as well as major resort destinations such as Myr-
tle 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 PCS and cellular activities. During the period
March 6, 1997 through October 1, 1997, L.L.C.'s activities consisted princi-
pally of hiring a management team, raising capital, and negotiating strategic
business relationships, primarily related to PCS business opportunities. Subse-
quent to October 2, 1997, these activities continued but were conducted primar-
ily through the Company. Consequently, for purposes of the accompanying finan-
cial 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 re-
sult of this relationship, certain financing relationships and the similar na-
ture 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 posi-
tion and the results of operations of the Company. The results of operations
for the six month period ended June 30, 1998 and the period from inception to
June 30, 1997, respectively are not indicative of the results that may be ex-
pected for the year ending December 31, 1998. The financial information pre-
sented herein should be read in conjunction with the combined financial state-
ments for the year ended December 31, 1997.
The combined financial statements incorporate the PCS-related business activ-
ities 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 Company
L.L.C.; Triton PCS Operating Company L.L.C.; and Triton PCS License Company
L.L.C. All significant intercompany accounts or balances have been eliminated
in consolidation.
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
amount of expenses during the reporting period. Actual results could differ
from those estimates.
Comprehensive Income
The Company adopted SFAS No. 130, "Reporting Comprehensive Income", effective
January 1, 1998. SFAS 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
F-20
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JUNE 30, 1998
(UNAUDITED)
financial statements. Comprehensive income is the change in equity of a busi-
ness enterprise during a period from transactions and the events and circum-
stances from non-owner sources. For the periods presented in the accompanying
statements of operations, comprehensive income equals the amounts reported on
the accompanying statements 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 cer-
tain of its construction in progress activities. As of June 30, 1998, interest
capitalized totaled $217,415. When the assets are placed in service, the Com-
pany will transfer the assets to the appropriate property and equipment cate-
gory and depreciate these assets over their respective estimated useful lives.
The Company expects to commence PCS service in the first quarter 1999 or
shortly thereafter.
Investment in PCS Licenses
Investments in PCS Licenses are recorded at their fair value as determined by
an independent appraisal. In transactions in which the acquisition of the li-
censes has been funded using debt, 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 or shortly
thereafter.
Intangible Assets
Intangible assets consist of amounts relating to FCC Licenses; License, Exclu-
sivity and Resale Agreements, Roaming Agreement, and deferred financing costs.
These amounts are being amortized on a straight-line basis over their useful
lives as follows:
<TABLE>
<CAPTION>
YEARS
-------
<S> <C>
FCC Licenses 40
Roaming Agreement 20
License, Exclusivity, and Resale Agreements 10
Deferred Financing Costs 8.75-10
Subscriber List 5
</TABLE>
At each balance sheet date, management evaluates the recoverability of intan-
gible assets using certain financial indicators, such as historical and future
ability to generate income from operations. The Company's policy is to record
an impairment loss against the net unamortized cost of the intangible asset in
the period when it is determined that the carrying amount of the asset may not
be recoverable. This determination is based on an evaluation of such factors
as the occurrence of a significant event, a significant change in the environ-
ment in which the business operates or if the expected future net cash flows
(undiscounted and without interest) would become less than the carrying amount
of the asset.
Development Stage Company
Prior to June 30, 1998 the Company was considered to be in the Development
Stage as defined under SFAS 7. As of June 30, 1998, in connection with the ac-
quisition of the Myrtle Beach System (see Note 4), the Company is no longer
considered development stage.
New Accounting Pronouncements
The Company adopted SFAS No. 130, "Reporting Comprehensive Income", which
was effective for fiscal year beginning after December 15, 1997. SFAS 130 es-
tablished standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. Comprehen-
sive 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 accompanying statements of operations, comprehen-
sive income equals the amounts reported on the accompanying statement of
operations.
F-21
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JUNE 30, 1998
(UNAUDITED)
In February 1997, the FASB issued Statement No. 129, "Disclosure of Informa-
tion about Capital Structure." ("SFAS 129") This statement establishes stan-
dards for disclosing information about an entity's capital structure. The Com-
pany has adopted SFAS 129 and is effective for periods ending after December
15, 1997. The effect of initial application of this Statement did not have a
material adverse effect on the Company financial statements.
In June 1997, the FASB issued Statement No. 131, "Disclosures About Segments
of an Enterprise and Related Information" ("SFAS 131"). This statement estab-
lishes additional standards for segment reporting in the financial statements
and is effective for fiscal years beginning after December 15, 1997. The Com-
pany has adopted SFAS 131. The effect of initial application of the statement
did not have a material effect on the Company's financial statements.
In February 1998, the FASB issued Statement No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits" ("SFAS 132"). This statement
is effective for fiscal years beginning after December 15, 1997. It is not ex-
pected that application of this statement will have a material effect on the
Company's financial statements.
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
effective for fiscal years beginning after December 31, 1998. The Company has
elected early adoption of this statement beginning in fiscal year ending
December 31, 1998. The effect of initial application of the statement did not
have a material effect on the Company's financial statements.
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). This statement is effective
for all fiscal quarters of all fiscal years beginning after June 15, 1999. The
Company has not yet fully analyzed the impact of this statement on its finan-
cial 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 enter into certain agreements or con-
duct 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 oper-
ations 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 aggregate fair value of all intangibles acquired was $118.6 mil-
lion, of which $92.8 million was allocated to the PCS licenses with an esti-
mated useful life of 40 years. AT&T PCS was issued Series D Preferred, which at
the time of the closing of the transaction was equal to an initial common eq-
uity ownership of Holdings on a fully diluted basis of 18.66%, along with
732,371 shares of non-voting Series A preferred stock.
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
F-22
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JUNE 30, 1998
(UNAUDITED)
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 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.
F-23
<PAGE>
TRITON PCS INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JUNE 30, 1998
(UNAUDITED)
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 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 transactions described in the Stockholders' Agreement.
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.
F-24
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JUNE 30, 1998
(UNAUDITED)
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.
(4) MYRTLE BEACH ACQUISITION
On June 30, 1998, the Company acquired an existing cellular system (the "Myrtle
Beach System") which serves the South Carolina 5--Georgetown Rural Service Area
(the "SC-5") for a purchase price of approximately $162.5 million from Vanguard
Cellular Systems. The Company intends to integrate the Myrtle Beach System into
its planned PCS Network. As a result of the acquisition, the Company will no
longer be considered a development stage enterprise under SFAS No. 7 (See
Note 2). The effects of the acquisition have been presented using the purchase
method and accordingly, the purchase price was allocated to the assets acquired
and liabilities assumed based upon management's best preliminary estimate of
their fair value.
The company expects to further refine the purchase price allocation which may
result in adjustments to recorded amounts. The Company does not believe that
the final allocation will result in material adjustments to the statement of
operations. The tentative purchase price has been allocated as follows, based
on the estimated fair values of the acquired assets and liabilities:
<TABLE>
<CAPTION>
AMOUNT LIFE
------------ --------
<S> <C> <C>
Net Current Assets..................................... $ 3,635,000 --
Net Property, Plant and Equipment...................... 24,692,000 8 years
Licenses............................................... 114,033,000 40 years
Subscriber List........................................ 20,000,000 5 years
Other Net Assets....................................... 140,000 --
------------
Total Purchase Price................................... $162,500,000
</TABLE>
(5) INTANGIBLE ASSETS
A summary of intangible assets and related accumulated amortization as of June
30, 1998 is as follows.
<TABLE>
<S> <C>
FCC Licenses.................................................... $209,302,399
License, Exclusivity and Resale Agreements...................... 20,478,195
Subscriber List................................................. 20,000,000
Roaming Agreement............................................... 5,548,279
Deferred Financing Costs........................................ 9,214,645
265,543,518
------------
Less: accumulated amortization.................................. 1,378,213
$263,165,305
============
</TABLE>
(6) 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.
(7) 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
F-25
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JUNE 30, 1998
(UNAUDITED)
and other financial institutions party thereto. The Credit Facility 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 Fa-
cility 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 re-
volving 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 LI-
BOR 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 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 the
Company to purchase an interest rate hedging contract covering an amount equal
to at least 60% (as amended in July 1998) of the total amount of the outstand-
ing indebtedness of the Company. 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
F-26
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JUNE 30, 1998
(UNAUDITED)
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 pur-
pose subsidiaries of the Company and will not be pledged to secure the obliga-
tions 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 en-
tered into by it in connection with the Credit Facility, and, in the case of
any single purpose subsidiary established to hold real estate, liabilities in-
curred 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 liabilities 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
Acquisition (note 11); (ii) permit up to a total of $450 million in subordi-
nated debt; and (iii) exclude the equity issuances associated with the Pending
Acquisitions from the mandatory prepayment requirement.
As of June 30, 1998, the Company has drawn $75 million of Tranche B Term Loans
under the facility. As of August 25, 1998 the Company had $150 million of Se-
nior Debt outstanding.
(8) SUBORDINATED DEBT
On May 4, 1998, the Company completed an offering (the "Private Offering") of
$511,989,000 of 11% Senior Subordinated Discount Notes ("the Notes"), pursuant
to Rule 144A of the Securities Act of 1933, as amended. The net proceeds of the
Private Offering (after deducting an Initial Purchaser's Discount of $9 million
and fees and expenses of the offering of $1 million) were approximately $290
million. The Company used approximately $127.5 million of the net proceeds of
the Private Offering for the acquisition of the Myrtle Beach System and intends
to use the net proceeds from the Private Offering, together with the Capital
Contributions (note 9) and borrowings under the Credit Facility, to fund:
(i) capital expenditures, including the build-out of its PCS network; (ii) the
Nor-folk Acquisition (note 11); (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 may 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 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>
F-27
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JUNE 30, 1998
(UNAUDITED)
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.
(9) CAPITAL CONTRIBUTIONS
On February 4, 1998, pursuant to the Securities Purchase Agreement, Holdings
issued $140,000,000 of equity to certain institutional investors and management
stockholders. The Securities Purchase Agreement requires the institutional in-
vestors and management stockholders to fund their unconditional 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 subse-
quent to the initial cash contribution be made directly to the Company.
As of June 30, 1998, Holdings received $35 million of additional equity contri-
butions related to the acquisition of the Myrtle Beach System (see note 4).
These funds were concurrently contributed to the Company.
Through May 8, 1998, Holdings received non-binding cash commitments of $16.5
million and $25 million, respectively, related to the pending acquisitions of
additional licenses covering the Norfolk/Virginia Beach, VA region and sections
of Georgia and North Carolina, respectively. The Company expects to use the ad-
ditional equity contributions for the Norfolk Acquisition and in the build-out
of the areas covered by additional PCS licenses in sections of Georgia and
North Carolina. These commitments are contingent on the completion of the pend-
ing acquisition.
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 to their 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 No. 109, which requires the use of the liability method in accounting for
deferred taxes.
F-28
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JUNE 30, 1998
(UNAUDITED)
In connection with the AT&T transaction discussed in Note 3, a gross de-
ferred tax liability (due to a difference in book and tax basis of intangi-
bles) of $20,040,000 was recorded.
During 1998, the Company recorded a tax benefit (gross deferred tax asset)
of $6,803,000 related to temporary deductible differences, primarily net oper-
ating losses and capitalized start-up costs, arising during the current and
prior year. No valuation allowance is necessary for these items due to the
scheduled reversal of existing taxable temporary differences arising from the
AT&T transaction, within the applicable carryforward period of these deduct-
ible differences. Accordingly, management believes it is more likely than not
that all recorded deferred tax assets will be realized.
Deferred taxes of $13,236,630 are shown net in the accompanying balance
sheet.
(11) PENDING ACQUISITION
The Company has signed a purchase agreement to acquire from AT&T PCS, Inc.
(the "Norfolk Acquisition") (i) an FCC license to use 20MHz of authorized fre-
quencies to provide broadband PCS services throughout the entirety of the Nor-
folk, Virginia BTA and (ii) certain assets of AT&T PCS used in the operation
of the PCS system in such BTA for an aggregate purchase price of $105 million,
including $13.5 million of Series D Preferred Stock to be issued to AT&T PCS.
The build-out of the network relating to the Norfolk Acquisition, including
the installation of a switch, has been substantially completed. The Norfolk
Acquisition is subject to closing conditions typical in acquisitions of this
nature. There can be no assurance that the Norfolk Acquisition will be consum-
mated on the terms described herein or at all.
F-29
<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 North 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 referred to below are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing 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.
Arthur Andersen LLP
Greensboro, North Carolina,
March 20, 1998.
F-30
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
BALANCE SHEETS
(Dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
------------------
DECEMBER 31
1996 1997
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 199 $ 121
Accounts receivable, net of allowances for doubtful
accounts of $200 and $475 1,485 3,199
Cellular telephone inventories 511 526
Prepaid expenses 10 33
Deferred income tax asset -- 8,190
-------- --------
Total current assets 2,205 12,069
-------- --------
Deferred Cellular License Acquisition costs, net of
accumulated amortization of $2,860 and $3,343 16,247 15,764
-------- --------
Property and Equipment, at cost:
Land 306 313
Cellular telephones held for rental 1,653 1,859
Cellular telephone systems 24,068 29,453
Office furniture and equipment 2,323 3,139
-------- --------
28,350 34,764
Less--Accumulated depreciation 5,864 9,252
-------- --------
22,486 25,512
Construction in progress 198 565
-------- --------
22,684 26,077
-------- --------
Other Assets 22 21
-------- --------
Total assets $ 41,158 $ 53,931
======== ========
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current Liabilities:
Accounts payable and accrued expenses $ 315 $ 686
Advances from Vanguard 53,350 63,092
-------- --------
Total current liabilities 53,665 63,778
-------- --------
Deferred Income Tax Liability -- 1,298
-------- --------
Commitments and Contingencies (Note 5)
Shareholder's Deficit:
Common stock--$1 par value, 1,000 shares issued and
outstanding 1 1
Accumulated deficit (12,508) (11,146)
-------- --------
Total shareholder's deficit (12,507) (11,145)
-------- --------
Total liabilities and shareholder's deficit $ 41,158 $ 53,931
======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
F-31
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
STATEMENTS OF OPERATIONS
(Amounts in thousands)
<TABLE>
<CAPTION>
-------------------------
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Revenues:
Service fees $16,428 $19,778 $22,508
Cellular telephone equipment revenues 1,077 673 1,100
------- ------- -------
17,505 20,451 23,608
Costs and Expenses:
Cost of service 1,796 3,014 2,811
Cost of cellular telephone equipment 1,853 1,478 2,495
General and administrative 2,260 2,948 4,793
Marketing and selling 2,564 2,731 3,944
Depreciation and amortization 1,765 2,907 5,162
Management fees 1,374 1,620 1,896
Corporate costs allocated from Vanguard 989 1,195 1,586
------- ------- -------
12,601 15,893 22,687
------- ------- -------
Income From Operations 4,904 4,558 921
Interest Expense (4,414) (5,214) (6,451)
Other, net (326) (186) --
------- ------- -------
Income (Loss) Before Income Taxes 164 (842) (5,530)
Income Tax Benefit -- -- 6,892
------- ------- -------
Net Income (Loss) $ 164 $ (842) $ 1,362
======= ======= =======
</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 CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
--------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
1995 1996 1997
---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ 164 $ (842) $ 1,362
Adjustments to reconcile net
income (loss) to net cash
provided by (used in) operating
activities:
Depreciation and amortization 1,765 2,907 5,162
Net losses on dispositions of
property and equipment 326 186 --
Deferred income tax benefit -- -- (6,892)
Changes in current items:
Accounts receivable, net (527) 404 (1,714)
Cellular telephone inventories (162) (104) (15)
Accounts payable and accrued
expenses (47) (97) 371
Other, net (20) 13 (23)
---------- ----------- ----------
Net cash provided by (used in)
operating activities 1,499 2,467 (1,749)
---------- ----------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and
equipment (8,948) (12,531) (8,072)
---------- ----------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net increase in advances from
Vanguard 7,603 10,050 9,742
Other, net (12) -- 1
---------- ----------- ----------
Net cash provided by financing
activities 7,591 10,050 9,743
---------- ----------- ----------
NET INCREASE (DECREASE) IN CASH 142 (14) (78)
CASH, BEGINNING OF YEAR 71 213 199
---------- ----------- ----------
CASH, END OF YEAR $ 213 $ 199 $ 121
========== =========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH
PAID
DURING THE YEAR FOR INTEREST, NET
OF AMOUNTS CAPITALIZED $ 4,414 $ 5,214 $ 6,451
========== =========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-33
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
STATEMENTS OF CHANGES IN SHAREHOLDER'S DEFICIT
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
-----------------------------------
COMMON STOCK ACCUMULATED
SHARES AMOUNT DEFICIT TOTAL
------ ------ ----------- --------
<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)
===== === ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-34
<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 North Caro-
lina corporation, is a provider of nonwireline cellular telephone service to
the SC-5 (Myrtle Beach) Rural Service Area (RSA). The Company acquired the Myr-
tle 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, the average interest rate charged to the Company by Vanguard was approxi-
mately 11%. Total interest charged, net of amounts capitalized, from Vanguard
to the Company was $4,414, $5,214, $6,451 for the years ended December 31,
1995, 1996 and 1997.
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
F-35
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(Dollar amounts in thousands)
Myrtle Beach RSA. The Company amortizes its investment over 40 years. Amortiza-
tion expense of $446, $483, $483 was recorded in 1995, 1996 and 1997.
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>
<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, construction in progress was composed primarily
of the cost of uncompleted additions to the Company's cellular telephone sys-
tems. The Company capitalized interest costs of $106, $125, $43 in 1995, 1996
and 1997, respectively.
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, the Company received $7,603, $10,050 and
$9,742, 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. Accordingly, 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 re-
quired for presentation on another basis have not been considered.
F-36
<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
were as follows:
<TABLE>
<CAPTION>
--------------------------
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Deferred income tax assets:
Net operating loss carryforward $ 5,802 $7,936
Other liabilities and reserves 216 254
Valuation allowance (4,776) --
------------ ------------
Total deferred income tax assets 1,242 8,190
------------ ------------
Deferred income tax liabilities:
Unamortized deferred cellular license
acquisition costs 594 705
Property and equipment 648 593
------------ ------------
Total deferred income tax liabilities 1,242 1,298
------------ ------------
Net deferred income taxes $ -- $6,892
============ ============
</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.
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 YEARS ENDED DECEMBER 31,
1995 1996 1997
---------- ---------- ------------
<S> <C> <C> <C>
Amount at statutory Federal rate $ 57 $ (295) $ (l,936)
Change in valuation allowance (63) 322 (4,776)
Other 6 (27) (180)
---------- ---------- ------------
Income tax benefit $ -- $ -- $ (6,892)
========== ========== ============
</TABLE>
F-37
<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 for the years ended Decem-
ber 31, 1995, 1996 and 1997.
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 for the years ended December 31, 1995, 1996 and 1997, respec-
tively.
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 sub-
scriber 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 have been allocated to the Company for the years ended December 31,
1995, 1996 and 1997, 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 func-
tions.
Other Transactions
During 1997, the Company added certain engineering and managerial functions and
incurred costs for such functions totaling $700 for the year ended December 31,
1997. These services benefited the Company and other Vanguard markets; however,
none of these costs has been allocated to other markets. These costs are in-
cluded in general and administrative expenses in the accompanying statements of
operations.
Employee benefits costs are incurred by Vanguard and are allocated to the Com-
pany based on an overall percentage of salaries expense. Such costs totaled
$267, $322, $557 for the years ended December 31, 1995, 1996 and 1997, respec-
tively, and are included in general and administrative expenses in the accompa-
nying 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.
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>
MYRTLE BEACH SYSTEM OF VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
BALANCE SHEET
(Dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
-----------
JUNE 30,
1998
-----------
(UNAUDITED)
<S> <C>
ASSETS
Current Assets:
Cash $ 46
Accounts receivable, net of allowances for doubtful accounts of
$461 5,487
Cellular telephone inventories 387
Prepaid expenses 225
Deferred income tax asset 8,671
-------
Total current assets 14,816
-------
Deferred Cellular License Acquisition costs, net of accumulated
amortization of $3,585 15,522
Property and Equipment, at cost:
Land 313
Cellular telephones held for rental 1,710
Cellular telephone systems 30,761
Office furniture and equipment 3,317
-------
36,101
Less--Accumulated depreciation 11,739
-------
24,362
Construction in progress 330
-------
24,692
-------
Other Assets 140
-------
Total assets $55,170
=======
LIABILITIES AND DIVISIONAL EQUITY
Current Liabilities: Accounts payable and accrued expenses $ 2,509
-------
Deferred Income Tax Liability 1,181
-------
Commitments and Contingencies (Note 5)
Divisional Equity-Investments and advances from Vanguard 51,480
-------
Total liabilities and divisional equity $55,170
=======
</TABLE>
The accompanying notes to financial statements are an integral part of this
balance sheet.
F-39
<PAGE>
MYRTLE BEACH SYSTEM OF VANGUARD CELLULAR SYSTEMS SOUTH CAROLINA, INC.
STATEMENT OF OPERATIONS
(Amounts in thousands)
<TABLE>
<CAPTION>
------------------------
SIX MONTHS ENDED
JUNE 30,
------------------------
1997 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Revenues:
Service fees $10,602 $13,424
Cellular telephone equipment revenues 457 1,114
----------- -----------
11,059 14,538
Costs and Expenses:
Cost of service 1,185 1,367
Cost of cellular telephone equipment 979 1,388
General and administrative 1,980 2,502
Marketing and selling 1,664 2,215
Depreciation and amortization 2,023 3,080
Management fees 890 1,106
Corporate costs allocated from Vanguard 740 878
----------- -----------
9,461 12,536
----------- -----------
Income From Operations 1,598 2,002
Interest Expense (3,072) (3,560)
Other, net (334) (6)
----------- -----------
Income (Loss) Before Income Taxes (1,808) (1,564)
Income Tax Benefit (Provision) -- 598
----------- -----------
Net Income (Loss) $(1,808) $ (966)
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-40
<PAGE>
MYRTLE BEACH SYSTEM OF VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
STATEMENT OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
------------------------------
SIX MONTHS ENDED JUNE 30,
1997 1998
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,808) $ (966)
Adjustments to reconcile net loss to net
cash cash used in operating activities:
Depreciation and amortization 2,023 3,080
Deferred income tax benefit -- (598)
Changes in current items:
Accounts receivable, net (1,560) (2,288)
Cellular telephone inventories (260) 139
Accounts payable and accrued expenses 907 1,823
Other, net (44) (192)
------------ ------------
Net cash provided by (used in) operating
activities (742) (998)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (4,143) (1,453)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in advances from Vanguard 4,945 499
Other, net -- (119)
------------ ------------
Net cash provided by financing
activities 4,945 380
------------ ------------
NET INCREASE (DECREASE) IN CASH 60 (75)
CASH, BEGINNING OF PERIOD 199 121
------------ ------------
CASH, END OF PERIOD $ 259 $ 46
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH PAID
DURING THE PERIOD FOR INTEREST, NET OF
AMOUNTS CAPITALIZED $ 3,072 $ 3,560
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-41
<PAGE>
MYRTLE BEACH SYSTEM OF VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS
(Dollar amounts in thousands)
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION:
The Myrtle Beach System (the System) of Vanguard Cellular Systems of South Car-
olina, Inc. (the Company), a North Carolina corporation, is a provider of
nonwireline cellular telephone service to the SC-5 (Myrtle Beach) Rural Service
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% controlled by Vanguard Cellular Systems, Inc.
(Vanguard) and operates the System under the trade name of CellularOne(R),
which is the trade name many nonwireline carriers have adopted to provide con-
formity throughout the industry. Prior to June 1998, the Company's only opera-
tions and net assets were related to the System. During June 1998, Vanguard
transferred certain assets to the Company. Such assets were not acquired by
Triton PCS, Inc. (See Note 7) and are, therefore, not a part of the System in
these financial statements. The accompanying financial statements and footnotes
reflect the historical basis financial position of the System as of June 30,
1998, immediately prior to its sale to Triton, and the results of operations
for the three and six months ended June 30, 1998 and 1997 and the cash flows of
the System for the six months ended June 30, 1997 and 1998.
The accompanying financial statements present the financial position, results
of operations and cash flows of the System 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 System 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 System's assets were pledged under Vanguard's long-
term credit facility prior to sale of the system to Triton PCS, Inc. Operating
and capital expansion funds have been advanced between Vanguard and the System
on an interest bearing basis, with the net amounts of these transfers reflected
in advances from Vanguard in the accompanying balance sheets. The debt of Van-
guard has not been specifically allocated to the System; however, advances from
Vanguard approximate the borrowings of Vanguard that are attributable to the
System. Interest has been charged by Vanguard to the System on funds advanced
to the System as an approximation of the System's share of Vanguard's consoli-
dated interest cost. Vanguard charges interest to its subsidiaries based on its
consolidated borrowing rates plus 200 basis points. For the six months ended
June 30, 1997 and 1998, the average interest rate charged to the System by Van-
guard was approximately 11%. Total interest charged, net of amounts capital-
ized, from Vanguard to the System was $1,568 (unaudited) and $1,791 (unaudited)
for the three months ended June 30, 1997 and 1998, respectively; and $3,072
(unaudited) and $3,560 (unaudited) for the six months ended June 30, 1997 and
1998, respectively.
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 System'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 System's investment in deferred cellular license acquisition costs consists
of amounts paid for the acquisition of the Federal Communications Commission
construction permit to build and subsequently provide cellular service in the
F-42
<PAGE>
MYRTLE BEACH SYSTEM OF VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(Dollar amounts in thousands)
Myrtle Beach RSA. The System amortizes its investment over 40 years. Amortiza-
tion expense of $121 (unaudited) and $121 (unaudited) was recorded for three
months ended June 30, 1997 and 1998 respectively; and $242 (unaudited) and $242
(unaudited) for the six months ended June 30, 1997 and 1998, respectively.
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>
<S> <C>
Cellular telephones held for rental............................ 3 years
Cellular telephone systems..................................... 7-20 years
Office furniture and equipment................................. 3-10 years
</TABLE>
At June 30, 1998, construction in progress was composed primarily of the cost
of uncompleted additions to the System's cellular telephone systems. The System
capitalized interest costs of $14 (unaudited) and $7 (unaudited) in the three-
months ended June 30, 1997 and 1998, respectively, and $21 (unaudited) and $17
(unaudited) for the six months ended June 30, 1997 and 1998, respectively, as
part of the cost of cellular telephone systems.
During the first quarter of 1998, the System revised its estimate of the useful
life of cellular telephones held for rental from 3 years to 18 months to more
closely approximate its historical experience. This change increased deprecia-
tion expense for the three-months ended June 30, 1998 by approximately $400
(unaudited) and $800 (unaudited) for the six months ended June 30, 1998.
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", management 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 management.
Income Taxes
The System accounts for income taxes in accordance with SFAS No. 109, "Account-
ing for Income Taxes", which requires the use of the "asset and liability meth-
od" of accounting for income taxes. Accordingly, deferred income tax liabili-
ties and assets are determined based on the differences between the financial
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 reverse.
The System is included in the consolidated Federal income tax return of Van-
guard and its subsidiaries. The System records its share of consolidated Fed-
eral income taxes as if the System filed a separate return.
NOTE 3. FUTURE CASH FLOW REQUIREMENTS:
The System'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 the six months ended June 30, 1997 and 1998, the System received
$4,945 (unaudited) and $499 (unaudited), respectively, of these advances.
F-43
<PAGE>
MYRTLE BEACH SYSTEM OF 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 System'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 System's assets and liabili-
ties. The components of net deferred taxes as of June 30, 1998 were as follows:
<TABLE>
<CAPTION>
-----------
JUNE 30,
1998
-----------
(UNAUDITED)
<S> <C>
Deferred income tax assets:
Net operating loss carryforward $8,424
Other liabilities and reserves 247
--------
Total deferred income tax assets 8,671
Deferred income tax liabilities:
Unamortized deferred cellular license acquisition costs 760
Property and equipment 421
--------
Total deferred income tax liabilities 1,181
--------
Net deferred income taxes $7,490
========
</TABLE>
Based on substantial capital gains expected to be realized during 1998 by Van-
guard, for the year ended December 31, 1997, the System recognized a net de-
ferred income tax benefit of $6,892 upon reversal of the previously provided
valuation allowance on its net deferred income tax assets. For the six months
ended June 30, 1998, the System recognized a net deferred income tax benefit of
$598 (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 FOR THE
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1998 1997 1998
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Amount at statutory Federal
rate $(211) $135 $(633) $(548)
Change in valuation allow-
ance 231 -- 692 --
Other (20) 13 (59) (50)
------- ------ ------- -------
Income tax benefit $ -- $148 $ -- $(598)
======= ====== ======= =======
</TABLE>
NOTE 5. OPERATING LEASES:
The System 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>
F-44
<PAGE>
MYRTLE BEACH SYSTEM OF VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
Rent expense under these leases was $127 (unaudited) and $170 (unaudited) for
the three-months ended June 30, 1997 and 1998, respectively; and $254 (unau-
dited) and $340 (unaudited) for the six months ended June 30, 1998, respective-
ly.
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 System as security for debt of Vanguard
totaling $569,000.
Operations Management Agreement
The System is charged a management fee by Vanguard based upon a percentage of
service fees. The management fee expense under this agreement was $612 (unau-
dited) and $648 (unaudited) for the three months ended June 30, 1997 and 1998,
respectively; and $890 (unaudited) and $1,106 (unaudited) for the six months
ended June 30, 1997 and 1998, respectively.
Services Provided by Vanguard
Vanguard performs certain services and incurs certain costs for the System.
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 System based upon the System's annual subscriber activations and subscriber
base as a percentage of Vanguard's total annual subscriber activations and to-
tal subscriber base. Corporate costs of Vanguard totaling $422 (unaudited) and
$438 (unaudited) have been allocated to the System for the three-months ended
June 30, 1997 and 1998, respectively; and $740 (unaudited) and $878 (unaudited)
have been allocated to the System for the six-months ended June 30, 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 System are not necessarily indicative of the costs that would
have been incurred if the System had performed these functions.
Other Transactions
During 1997, the System added certain engineering and managerial functions and
incurred costs for such functions totaling $45 (unaudited) and $96 (unaudited)
for the three months and six months ended June 30, 1997, respectively. These
services benefited the System and other Vanguard markets; however, none of
these costs has been allocated to other markets. For the three and six months
ended June 30, 1998, such costs totaled approximately $0 (unaudited) and $55
(unaudited), respectively. These costs are included in general and administra-
tive expenses in the accompanying statement of operations.
Employee benefits costs are incurred by Vanguard and are allocated to the Sys-
tem based on an overall percentage of salaries expense. Such costs totaled $131
(unaudited) and $115 (unaudited) for the three months ended June 30, 1997 and
1998, respectively, and $240 (unaudited) and $249 (unaudited) for the six
months ended June 30, 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 System.
NOTE 7. SALE OF SYSTEM ASSETS:
Effective at the close of the business on June 30, 1998, the Company sold sub-
stantially all of the assets of the System to Triton PCS, Inc. for a purchase
price of approximately $162.5 million.
F-45
<PAGE>
Unaudited pro forma financial statements
The following pro forma data is filed herewith: Unaudited condensed combined
pro forma balance sheet as of June 30, 1998 and unaudited condensed combined
pro forma statements of operations for the year ended December 31, 1997 and
six months ended June 30, 1998.
The unaudited condensed combined pro forma balance sheet reflects (i) certain
Equity Investments and the contribution of such Equity Investments from
Holdings to Triton, (ii) the Norfolk Acquisition and (iii) the Georgia/North
Carolina Pops Acquisition as of June 30, 1998. The unaudited condensed
combined pro forma statements of operations reflect the acquisition of the
Myrtle Beach System as if such acquisition occurred on January 1, 1997. Since
the pro forma financial statements which follow are based upon the financial
condition and operating results of the Myrtle Beach System during periods when
they were not under the control or management of Triton PCS, Inc., the
information presented may not be indicative of the results which would have
actually been obtained had the acquisition been completed as of January 1,
1997, nor are they indicative of future financial or operating results. The
unaudited pro forma financial information does not give effect to any
synergies that may occur due to the integration of Triton PCS, Inc. and the
Myrtle Beach System. The condensed combined pro forma financial statements
should be read in conjunction with the historical audited financial statements
of Triton PCS, Inc. and the notes thereto, as well as the audited historical
consolidated financial statements of Vanguard Cellular Systems of South
Carolina, Inc. and the notes thereto included elsewhere herein. The
acquisition has been accounted for by the purchase method.
F-46
<PAGE>
TRITON PCS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 1998
UNAUDITED
($ 000'S)
<TABLE>
<CAPTION>
-------------------------------------------
PRO FORMA
TRITON PCS, INC. ADJUSTMENTS COMBINED
---------------- ----------- ---------
<S> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $261,509 $ (51,000)(a) $210,509
Due from related party 65 -- 65
Accounts receivable, net of
allowances 5,487 -- 5,487
Cellular telephone inventories
and prepaids 928 -- 928
-------- --------- --------
Total current assets 267,989 (51,000) 216,989
Property, plant, and equipment:
Land 313 -- 313
Cellular telephone systems 21,826 53,500(b) 75,326
Office furniture and equipment 3,680 370(b) 4,050
Construction in progress 9,212 -- 9,212
-------- --------- --------
35,031 53,870(b) 88,901
Less accumulated depreciation (108) (108)
-------- --------- --------
Net property, plant and
equipment 34,923 53,870(b) 88,793
Intangible assets and deferred
cellular license acquisition
costs 263,165 84,130(c) 347,295
Other assets 368 -- 368
-------- --------- --------
Total assets $566,445 $ 87,000 $653,445
======== ========= ========
LIABILITIES AND SHAREHOLDER'S
EQUITY
Current liabilities:
Accounts payable and accrued
expenses $ 6,611 $ -- $ 6,611
Accrued interest 3,642 3,642
-------- --------- --------
Total current liabilities 10,253 -- 10,253
Long-term debt 371,692 371,692
Deferred income taxes 13,237 13,237
Shareholder's Equity
Common stock, $.01 par value,
1,000 shares authorized, 100
shares issued and outstanding -- --
Additional paid-in capital 181,821 87,000(d) 268,821
Accumulated deficit (10,558) (10,558)
-------- --------- --------
Total shareholder's equity 171,263 87,000 258,263
-------- --------- --------
Total liabilities and
shareholder's equity $566,445 $ 87,000 $653,445
======== ========= ========
</TABLE>
F-47
<PAGE>
TRITON PCS, INC.,
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
($ 000'S)
<TABLE>
<CAPTION>
---------------------------------------------------------
MYRTLE PRO FORMA PRO FORMA
TRITON PCS, INC. BEACH SYSTEM ADJUSTMENTS COMBINED
---------------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Revenues: $ -- $ 23,608 $ -- $ 23,608
Costs 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 5 5,162 4,771 (a) 9,938
---------- --------- --------- --------
Total Costs and
Expenses 2,741 22,687 4,771 30,199
---------- --------- --------- --------
Income (loss) from
operations (2,741) 921 (4,771) (6,591)
Interest expense, net 1,220 6,451 33,074 (b) 40,745
---------- --------- --------- --------
Loss before taxes (3,961) (5,530) (37,845) (47,336)
Tax benefit -- 6,892 (6,892)(c) --
---------- --------- --------- --------
Net income (loss) $ (3,961) $ 1,362 $ (44,737) $(47,336)
========== ========= ========= ========
</TABLE>
F-48
<PAGE>
TRITON PCS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
---------------------------------------------------------
MYRTLE BEACH PRO FORMA PRO FORMA
TRITON PCS, INC. SYSTEM ADJUSTMENTS COMBINED
---------------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Revenues: $ -- $ 14,538 $ -- $ 14,538
Costs and Expenses:
Costs of services -- 2,755 -- 2,755
Operations and
development 1,444 -- -- 1,444
Marketing and selling -- 2,215 -- 2,215
General and
administrative 3,737 4,486 -- 8,223
Depreciation and
amortization 1,086 3,080 1,889 (d) 6,055
----------- --------- -------- --------
Total Costs and Expenses 6,267 12,536 1,889 20,692
----------- --------- -------- --------
Income (loss) from
operations (6,267) 2,002 (1,889) (6,154)
Interest expense, net 7,133 3,566 8,361 (e) 19,060
----------- --------- -------- --------
Loss before taxes (13,400) (1,564) (10,250) (25,214)
Tax benefit 6,803 598 3,891 (f) 11,292
----------- --------- -------- --------
Net income (loss) $ (6,597) $ (966) $ (6,359) $(13,922)
=========== ========= ======== ========
</TABLE>
F-49
<PAGE>
TRITON PCS, INC.,
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited pro forma condensed combined balance sheet gives
effect to (i) certain Equity Investments and the contribution of such Eq-
uity Investments from Holdings to Triton, (ii) the Norfolk Acquisition and
(iii) the Georgia/North Carolina Pops Acquisition as if it had occurred on
June 30, 1998. The unaudited pro forma condensed combined statement of op-
erations for the six months ended June 30, 1998 and the year ended December
31, 1997 give effect to the Myrtle Beach Acquisition as if it had occurred
on January 1, 1997.
The effects of the acquisitions 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 as Triton PCS, Inc. ("Triton")
finalizes its allocation of its purchase price in accordance with generally
accepted accounting principles. The Company does not believe that the final
allocation will result in material adjustments to the statement of opera-
tions. The pro forma adjustments related to the purchase price allocation
of the acquisition represent management's best estimate of the effects of
the acquisition.
2. The pro forma balance sheet adjustments as of June 30, 1998 consist of:
(a) Cash and cash equivalent adjustments include cash required to effect the
Norfolk acquisition of $76.0 million net of additional cash equity invest-
ments of $25.0 million related to the Georgia/North Carolina pending acqui-
sition.
(b) Property, plant and equipment adjustments include the purchase of fixed as-
sets related to the Norfolk Acquisition. All Norfolk fixed assets were val-
ued at their net book value of $53.9 million at the date of acquisition,
which was deemed to approximate fair market value.
(c) Intangible assets and deferred license acquisition costs adjustments in-
clude the remaining unallocated purchase price related to the Norfolk Ac-
quisition of $52.1 million with an estimated useful life of 40 years. It
also includes the pending acquisition of licenses of $32.0 million covering
the Georgia/North Carolina Pops with an estimated useful life of 40 years.
(d) Additional paid-in capital adjustments include: (1) non-binding equity com-
mitments related to the Norfolk Acquisition of $16.5 million in cash equity
and $13.5 million in non-cash equity and (2) a non-cash equity contribution
of $32.0 million and non-binding cash equity commitments of $25.0 million
related to the pending acquisition of licenses covering the Georgia/North
Carolina Pops.
3. The pro forma statement of operations adjustments for the year ended Decem-
ber 31, 1997 consist of:
(a) Pro forma "Depreciation and Amortization Expense" has been adjusted to re-
flect the amortization of the intangibles recorded in the purchase of Myr-
tle Beach and the adjusted depreciation expense related to the fixed as-
sets purchased over an estimated useful life of 8 years.
(b) Pro forma interest expense includes (i) interest on the Subordinated Debt
at a rate of 11% per year and (ii) interest on the $75 million of initial
borrowings under the Credit Agreement at a rate of 8.7%, after giving ef-
fect to the Myrtle Beach System's historical interest expense. The impact
of a 1/8% change in the interest rate on the Credit Facility would in-
crease the pro forma net loss by $0.1 million.
(c) Pro forma tax provision has been calculated as if the transaction had been
consummated on January 1, 1997. The Myrtle Beach tax benefit is directly
related to the acquisition by Triton, and, as such, is eliminated for pro
forma presentation.
4. The pro forma statement of operations adjustments for the six months ended
June 30, 1998 consist of:
(d) Pro forma "Depreciation and Amortization Expense" has been adjusted to re-
flect the amortization of the intangibles recorded in the purchase of Myr-
tle Beach and the adjusted depreciation expense related to the fixed as-
sets purchased over an estimated useful life of 8 years.
(e) Pro forma interest expense includes (i) interest on the Subordinated Debt
at a rate of 11% per year and (ii) interest on the $75 million of initial
borrowings under the Credit Agreement at a rate of 8.5%. The impact of a
1/8% change in the interest rate on the Credit Facility would increase the
pro forma net loss by $0.04 million.
(f) Pro forma tax provision has been calculated as if the transaction had been
consummated on January 1, 1997. The components of the tax adjustment are
as follows: Tax effect pro forma adjustments at effective tax rate $3,895,
eliminate the historical Myrtle Beach tax benefit as it is directly re-
lated to the acquisition by Triton ($598) and tax effect Myrtle Beach loss
at the Triton effective tax rate $594.
F-50
<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 SEPTEMBER , 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 August 25, 1998,
Triton and the Guarantors had $150 million of Senior Debt outstanding.
The net proceeds to the Company from the initial issuance of the Notes were
approximately $290 million.
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............................................................. 12
Use of Proceeds.......................................................... 29
Capitalization........................................................... 30
Selected Historical and Pro Forma Consolidated Financial Data............ 31
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 35
Business................................................................. 41
Management............................................................... 58
Security Ownership....................................................... 63
Certain Relationships and Related Transactions........................... 65
Description of Credit Facility........................................... 73
Description of Notes..................................................... 75
Description of Capital Stock............................................. 103
Certain United States Federal Income Tax Consequences.................... 105
Book-Entry; Delivery and Form............................................ 109
Plan of Distribution..................................................... 111
Legal Matters............................................................ 112
Experts.................................................................. 112
Available Information.................................................... 113
Glossary of Selected Terms............................................... 114
</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
Discount............... Each Note has been offered at an original issue
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. As of the date of this
registration statement, all of Triton's direct and
indirect subsidiaries are guarantors on a full,
unconditional, and joint and several basis. Triton
PCS Holdings, Inc., the direct parent and sole
stockholder of Triton, is not a guarantor. 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
11
<PAGE>
Guarantors, including all of the Guarantors'
obligations under their guarantees of the Credit
Facility. As of August 25, 1998, Triton and the
Guarantors had $150 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 (which relates to
the unlawful payment of dividend or unlawful stock purchase or redemption by a
corporation) 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.
(NOTE: PORTIONS OF CERTAIN EXHIBITS HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT).
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
-------
<S> <C>
3.1 Certificate of Incorporation of Triton PCS, Inc.**
3.2 By-laws of Triton PCS, Inc.**
3.3 Articles of Incorporation of Triton Management Company, Inc.+
3.4 Bylaws of Triton Management Company, Inc.+
3.5 Certificate of Formation of Triton PCS Holdings Company L.L.C.+
3.6 Certificate of Formation of Triton PCS License Company L.L.C.+
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
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<S> <C>
3.7 L.L.C. Agreement of Triton PCS License Company L.L.C.+
3.8 L.L.C. Agreement of Triton PCS Holdings Company L.L.C.+
3.9 Certificate of Formation of Triton PCS Equipment Company L.L.C.+
3.10 L.L.C. Agreement of Triton PCS Equipment Company L.L.C.+
3.11 Certificate of Formation of Triton PCS Operating Company L.L.C.+
3.12 L.L.C. Agreement of Triton PCS Operating Company L.L.C.+
3.13 Certificate of Formation of Triton PCS Property Company L.L.C.+
3.14 L.L.C. Agreement of Triton PCS Property Company L.L.C.+
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).*
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.*
10.2.1 Second Amendment, dated as of July 29, 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 Preferred Stock Purchase Agreement by and among Cash Equity Investors,
Management Stockholders, Independent Directors, and Triton PCS
Holdings, Inc. dated as of June 29, 1998.**
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.*
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
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<C> <S>
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.*
10.16.1 Amendment No. 1 to Employment Agreement dated as of June 29, 1998
among Triton Management Company, Inc., Triton PCS Holdings, Inc., and
Michael E. Kalogris.**
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.*
10.18.1 Amendment No. 1 to Employment Agreement dated as of June 29, 1998
among Triton Management Company, Inc., Triton PCS Holdings, Inc., and
Steven R. Skinner.**
10.19 Amended and Restated Common Stock Trust Agreement for Management
Employees and Independent Directors dated as of June 26, 1998.**
10.20 Form of Pledge Agreement, dated as of February 4, 1998, between
certain shareholders and Triton PCS, Inc. Each of (a) Michael E.
Kalogris, (b) Steven R. Skinner, (c) Sixty Wall Street SBIC Fund,
L.P., (d) CB Capital Investors, L.P., (e) J.P. Morgan Investment
Corporation, (f) DAG-Triton PCS, L.P., (g) First Union Capital
Partners, Inc., (h) Toronto Dominion Capital (USA), Inc. and (i)
Private Equity Investors III, L.P., are party to separate Pledge
Agreements. The terms of each Pledge Agreement are identical other
than (1) the shareholder party thereto and (2) the number of shares of
stock held by such shareholder and, therefore, the number of shares
subject to the applicable Pledge Agreement.+
10.21 Master Tower Site Lease Agreement, dated as of February 13, 1998,
between Triton PCS Property Company L.L.C. and SCANA Communications,
Inc.**
10.22 Master License Agreement, dated as of March 15, 1998, between Triton
PCS Property Company L.L.C. and BellSouth Communications, Inc.**
10.23 Master Tower Site Lease Agreement, dated as of May 28, 1998, between
Triton PCS Property Company L.L.C. and AT&T Corp.**
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
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<C> <S>
10.24 Independent Director Stock Award Plan adopted as of February 4,
1998.**
10.25 Letter Agreement, dated as of June 26, 1998 between Triton PCS
Holdings, Inc. and Scott Anderson.**
10.26 Amendment No. 1 to Letter Agreement dated as of June 29, 1998 between
Triton Management Company, Inc. and Scott Anderson.**
10.27 Letter Agreement, dated as of June 26, 1998 between Triton PCS
Holdings, Inc. and John Beletic.**
10.28 Amendment No. 1 to Letter Agreement dated as of June 29, 1998 between
Triton Management Company, Inc. and John Beletic.**
10.29 Asset Purchase Agreement dated as of August 20, 1998 between Triton
PCS Holdings, Inc. and AT&T Wireless PCS, Inc.**
10.30 Construction and Operating Agreement dated as of July 31, 1998 by and
between Triton PCS Operating Company L.L.C. and AT&T Wireless PCS,
Inc.**
10.31 Letter Agreement, dated as of February 1998, between Clyde Smith and
Triton Management Company, Inc.*
10.31.1 Amendment No. 1 to Letter Agreement dated as of June 29, 1998 between
Triton Management Company, Inc. and Clyde Smith.**
10.32 Letter Agreement, dated as of February 1998, between David A. Clark
and Triton Management Company, Inc.*
10.32.1 Amendment No. 1 to Letter Agreement dated as of June 29, 1998 between
Triton Management Company, Inc. and David D. Clark.**
10.33 Letter Agreement, dated as of February 1998, between David Standig and
Triton Management Company, Inc.*
10.33.1 Amendment No. 1 to Letter Agreement dated as of June 29, 1998 between
Triton Management Company, Inc. and David Standig.**
10.34 Letter Agreement, dated as of February 1998, between Michael Mears and
Triton Management Company, Inc.*
10.34.1 Amendment No. 1 to Letter Agreement dated as of June 29, 1998 between
Triton Management Company, Inc. and Michael Mears.**
10.35 Letter Agreement, dated as of February 1998, between Patricia
Gallagher and Triton Management Company, Inc.*
10.35.1 Amendment No. 1 to Letter Agreement dated as of June 29, 1998 between
Triton Management Company, Inc. and Patricia Gallagher.**
10.36 Shared Communications Facilities Master Agreement, dated as of June 3,
1998, between Triton PCS Property Company L.L.C. and The Commonwealth
of Virginia Department of Transportation.**
10.37 Multiple Site Tower Attachment Lease Agreement, dated as of June 1,
1998, between Triton PCS Property Company L.L.C. and 360
Communications Company.**
10.38 Master Tower License Agreement, dated as of June 12, 1998, between
Triton PCS Property Company L.L.C. and Appalachian Power Company.**
10.39 Master Site Agreement, dated as of April 17, 1998, between Triton PCS
Property Company L.L.C. and Nextel Communications, Inc.**
10.40 Lease Agreement, dated as of April 9, 1998, between Triton PCS
Property Company L.L.C. and Virginia Electric and Power Company.**
12.1 Statement of Computation of Deficiency of Earnings to Fixed Charges.**
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
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<C> <S>
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>
- --------
* Filed with the original June 25, 1998 Registration Statement.
** Filed with the September 3, 1998 Amendment No. 1.
+ Filed with this Amendment No. 2.
II-5
<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-6
<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 SEPTEMBER 25, 1998.
Triton PCS, Inc.
/s/ Michael Kalogris
By: ______________________________________
Sole Director and Chief Executive
Officer
Triton Management Company, Inc.
/s/ Michael Kalogris
By: ______________________________________
Sole Director and Chief Executive
Officer
Triton PCS Holdings Company L.L.C.
By: Triton Management Company, Inc., its
manager
/s/ Michael Kalogris
By: ______________________________________
Sole Director and Chief Executive
Officer
Triton PCS Property Company L.L.C., Inc.
By: Triton Management Company, Inc., its
manager
/s/ Michael Kalogris
By: ______________________________________
Sole Director and Chief Executive
Officer
Triton PCS Equipment Company L.L.C.
By: Triton Management Company, Inc., its
manager
/s/ Michael Kalogris
By: ______________________________________
Sole Director and Chief Executive
Officer
Triton PCS Operating Company L.L.C.
By: Triton Management Company, Inc., its
manager
/s/ Michael Kalogris
By: ______________________________________
Sole Director and Chief Executive
Officer
Triton PCS License Company L.L.C.
By: Triton Management Company, Inc., its
manager
/s/ Michael Kalogris
By: ______________________________________
Sole Director and Chief Executive
Officer
II-7
<PAGE>
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Michael Kalogris
- ------------------------------- Sole Director and Chief September 25,
MICHAEL KALOGRIS Executive Officer of Triton 1998
PCS, Inc. and Triton
Management Company, Inc.
(Principal Executive
Officer), and principal
executive officer of each
of 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.
and Triton PCS License
Company L.L.C., by virtue
of being the Chief
Executive Officer of Triton
Management Company, the
manager of each such
entity.
/s/ David Clark
- ------------------------------- Senior Vice President, Chief September 25,
DAVID CLARK Financial Officer and 1998
Secretary of Triton PCS,
Inc. and Triton Management
Company, Inc. (Principal
Financial and Accounting
Officer) and principal
financial and accounting
officer of each of 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.
and Triton PCS License
Company L.L.C., by virtue
of being the Chief
Financial Officer of Triton
Management Company, the
manager of each such
entity.
</TABLE>
II-8
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF
TRITON MANAGEMENT COMPANY, INC.
ARTICLE I
The name of the Corporation shall be Triton Management Company, Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in, carry on and conduct
any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware (the "GCL").
---
ARTICLE IV
The total number of shares of stock that the Corporation shall have
authority to issue is 100 shares of common stock, par value $0.01 per share.
ARTICLE V
The incorporator of the Corporation is Ralph J. Mauro and his mailing
address is c/o Kleinbard, Bell & Brecker, 1900 Market Street, Suite 700,
Philadelphia, PA 19103.
ARTICLE VI
Election of Directors need not be by written ballot.
ARTICLE VII
7.1 Indemnification. Any person who was or is a party or is
---------------
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding (a "Proceeding"), whether civil, criminal, administrative,
----------
or investigative (whether or not by or in the right of the Corporation), by
reason of the fact that such person, or a person of whom such person
<PAGE>
is the legal representative, is or was a director, officer, incorporator,
employee, or agent of the Corporation, or is or was incorporator, employee,
partner, trustee, or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise (an "Other Entity"), shall be
------------
entitled to be indemnified by the Corporation to the full extent then permitted
by law against expenses (including counsel fees and disbursements), judgments,
fines (including excise taxes assessed on a person with respect to an employee
benefit plan), and amounts paid in settlement incurred by him in connection with
such Proceeding. Persons who are not Directors or officers of the Corporation
may be similarly indemnified in respect of service to the Corporation or to an
Other Entity at the request of the Corporation or to an Other Entity at the
request of the Corporation to the extent the Board of Directors at any time
specifies that such persons are entitled to the benefits of this Article VII.
7.2 Advancement of Expenses. The Corporation shall, from time to
-----------------------
time, reimburse or advance to any Director or officer or other person entitled
to indemnification hereunder the funds necessary for payment of expenses,
including attorneys' fees and disbursements, incurred in connection with any
Proceeding, in advance of the final disposition of such Proceeding; provided,
--------
however, that, if (and only if) required by the GCL, such expenses incurred by
- -------
or on behalf of any Director or officer or other person may be paid in advance
of the final disposition of a Proceeding only upon receipt by the Corporation of
an undertaking, by or on behalf of such Director or officer (or other person
indemnified hereunder), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right of appeal that such Director, officer or other person is not
entitled to be indemnified for such expenses.
7.3 Rights Not Exclusive. The rights to indemnification and
--------------------
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Article VII shall not be deemed exclusive of any other rights to which a
person seeking indemnification or reimbursement or advancement of expenses may
have or hereafter be entitled under any statute, this Certificate of
Incorporation, the Bylaws, any agreement, any vote of stockholders or
disinterested Directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office.
7.4 Continuing Rights.. The rights to indemnification and
------------------
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Article VII shall continue as to a person who has ceased to be a Director
or officer (or other person indemnified hereunder), shall inure to the benefit
of the executors, administrators, legatees and distributees of such person, and
in either case, shall inure whether or not the claim asserted is based on
matters which antedate the adoption of this Article VII.
7.5 Insurance. The Corporation shall have power to purchase and
---------
maintain insurance on behalf of any person who is or was a Director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation, as a director, officer, employee or agent of an Other Entity,
against any liability asserted against such person and incurred by such person's
status as such, whether or not the Corporation would have the power to indemnify
such person against such liability under the provisions of this Article VII, the
Bylaws or under Section 145 of the GCL or any other provision of law.
<PAGE>
7.6 Contract Rights; No Repeal. The provisions of this Article VII
--------------------------
shall be a contract between the Corporation, on the one hand, and each Director
and officer who services in such capacity at any time while this Article VII is
in effect and any other person indemnified hereunder, on the other hand,
pursuant to which the Corporation and each such Director, officer, or other
person intend to be legally bound. No repeal or modification of this Article
VII shall affect any rights or obligations with respect to any state of facts
then or, heretofore or thereafter brought or threatened based in whole or in
part upon any such state of facts.
7.7 Enforceability; Burden of Proof. The rights to indemnification
-------------------------------
and reimbursement or advancement of expenses provided by, or granted pursuant
to, this Article VII shall be enforceable by any person entitled to such
indemnification or reimbursement or advancement of expenses in any court of
competent jurisdiction. The burden of proving that such indemnification or
reimbursement or advancement of expenses is not appropriate shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel and its stockholders) to have made a
determination prior to the commencement of such action that such indemnification
or reimbursement or advancement of expenses is proper in the circumstances nor
an actual determination by the Corporation (including its Board of Directors,
its independent legal counsel and its stockholders) that such person is not
entitled to such indemnification or reimbursement or advancement of expenses
shall constitute a defense to the action or create a presumption that such
person is not so entitled. Such a person shall also be indemnified for any
expenses incurred in connection with successfully establishing his or her right
to such indemnification or reimbursement or advancement of expenses, in whole or
in part, in any such Proceeding.
7.8 Service at the Request of the Corporation. Any Director or
-----------------------------------------
officer of the Corporation serving any capacity in (a) another corporation of
which a majority of the shares entitled to vote in the election of its directors
is held, directly or indirectly, by the Corporation or (b) any employee benefit
plan of the Corporation or any corporation referred to in clause (a) shall be
deemed to be doing so at the request of the Corporation.
7.9 Right to be Covered by Applicable Law. Any person entitled to be
-------------------------------------
indemnified or to reimbursement or advancement of expenses as a matter of right
pursuant to this Article VII may elect to have the right to indemnification or
reimbursement or advancement of expenses interpreted on the basis of the
applicable law in effect at the time of the occurrence of the event or events
giving rise to the applicable Proceeding, to the extent permitted by law, or on
the basis of the applicable law in effect at the time such indemnification or
reimbursement or advancement of expenses is sought; provided, however, that if
-------- -------
no such notice is given, the right to indemnification or reimbursement or
advancement of expenses shall be determined by the law in effect at the time
indemnification or reimbursement or advancement of expenses is sought.
<PAGE>
ARTICLE VIII
No Director of the Corporation shall be liable to the Corporation or
any of its stockholders for monetary damages for breach of fiduciary duty as a
Director, provided that this provision does not eliminate the liability of the
Director (i) for any breach of the Director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the GCL or (iv) for any transaction from which the Director
derived an improper personal benefit. For purposes of the prior sentence, the
term "damages" shall, to the extent permitted by law, include without
limitation, any judgment, fine, amount paid in settlement, penalty, punitive
damages, excise or other tax assessed with respect to an employee benefit plan,
or expense of any nature (including, without limitation, counsel fees and
disbursements). Each person who serves as a Director of the Corporation while
this Article VIII is in effect shall be deemed to be doing so in reliance on the
provisions of this Article VIII, and neither the amendment or repeal of this
Article VIII, nor the adoption of any provision of this Certificate of
Incorporation inconsistent with this Article VIII, shall apply to or have any
effect on the liability or alleged liability or any Director of the Corporation
for, arising out of, based upon, or in connection with any acts or omissions of
such Director occurring prior to such amendment, repeal, or adoption of an
inconsistent provision. The provisions of this Article VIII are cumulative and
shall be in addition to and independent of any and all other limitations on or
eliminations of the liabilities of Directors of the Corporation, as such,
whether such limitations or eliminations arise under or are created by any law,
rule, regulation, bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Incorporation this _________ day of December, 1997.
Ralph J. Mauro, Incorporator
<PAGE>
EXHIBIT 3.4
================================================================================
TRITON MANAGEMENT COMPANY, INC.
BYLAWS
Adopted as of December 22, 1997
================================================================================
<PAGE>
BYLAWS
TRITON MANAGEMENT COMPANY, INC.
ARTICLE 1.
STOCKHOLDERS
1.1 Annual Meeting. The annual meeting of the stockholders of the
--------------
Corporation for the election of directors and for the transaction of such other
business as may properly come before such meeting shall be held at such place,
either within or without the State of Delaware, at 9:00 A.M. on the second
Wednesday of each April of each year (or, if such day is a legal holiday, then
on the next succeeding business day), or at such other date and hour, as may be
fixed from time to time by resolution of the Board of Directors and set forth in
the notice or waiver of notice of the meeting.
1.2 Special Meetings. Special meetings of the stockholders may be
----------------
called at any time by the Chairman of the Board (or, in the event of his absence
or disability, by the President), or by the Board of Directors. A special
meeting shall be called by the Chairman of the Board (or, in the event of his
absence or disability, by the President), or by the Secretary, immediately upon
receipt of a written request therefor by stockholders holding in the aggregate
not less than 10% of the outstanding shares of the Corporation at the time
entitled to vote at any meeting of the stockholders. If such officers or the
Board of Directors shall fail to call such meeting within 20 days after receipt
of such request, any stockholder executing such request may call such meeting.
Any such special meeting of the stockholders shall be held at such place, within
or without the State of Delaware, as shall be specified in the notice or waiver
of notice thereof.
1.3 Notice of Meetings; Waiver. The Secretary or any Assistant
--------------------------
Secretary shall cause written notice of the place, date and hour of each meeting
of the stockholders, and, in the case of a special meeting, the purpose or
purposes for which such meeting is called, to be given personally or by mail,
not less than ten nor more than 60 days before the date of the meeting, to each
stockholder of record entitled to vote at such meeting. If such notice is
mailed, it shall be deemed to have been given to a stockholder when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the record of stockholders of the Corporation, or, if
he shall have filed with the Secretary a written request that notices to him be
mailed to some other address, then directed to him at such other address. Such
further notice shall be given as may be required by law.
<PAGE>
Whenever notice is required to be given to stockholders hereunder, a
written waiver, signed by a stockholder, whether before or after the time stated
therein, shall be deemed equivalent to notice. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in a written waiver of notice. The attendance of
any stockholder at a meeting of stockholders shall constitute a waiver of notice
of such meeting, except when the stockholder attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
1.4 Quorum. Except as otherwise required by law or by the
------
Certificate of Incorporation, the presence in person or by proxy of the holders
of record of a majority of the shares entitled to vote at a meeting of
stockholders shall constitute a quorum for the transaction of business at such
meeting.
1.5 Voting. If, pursuant to Section 5.5 of these Bylaws, a record
------
date has been fixed, every holder of record of shares entitled to vote at a
meeting of stockholders shall be entitled to one vote for each share outstanding
in his name on the books of the Corporation at the close of business on such
record date. If no record date has been fixed, then every holder of record of
shares entitled to vote at a meeting of stockholders shall be entitled to one
vote for each share of stock standing in his name on the books of the
Corporation at the close of business on the day next preceding the day on which
notice of the meeting is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held. Except
as otherwise required by law or by the Certificate of Incorporation, the vote of
a majority of the shares represented in person or by proxy at any meeting at
which a quorum is present shall be sufficient for the transaction of any
business at such meeting.
1.6 Voting by Ballot. No vote of the stockholders need be taken by
----------------
written ballot or conducted by inspectors of election, unless otherwise required
by law. Any vote which need not be taken by ballot may be conducted in any
manner approved by the meeting.
1.7 Adjournment. If a quorum is not present at any meeting of the
-----------
stockholders, the stockholders present in person or by proxy shall have the
power to adjourn any such meeting from time to time until a quorum is present.
Notice of any adjourned meeting of the stockholders of the Corporation need not
be given if the place, date and hour thereof are announced at the meeting at
which the adjournment is taken, provided, however, that if the adjournment is
for more than 30 days, or if after the adjournment a new record date for the
adjourned meeting is fixed pursuant to Section 5.5 of these Bylaws, a notice of
the adjourned meeting, conforming to the requirements of Section 1.3 hereof,
shall be given to each stockholder of record entitled to vote at such meeting.
At any adjourned meeting at which a quorum is present, any business may be
transacted that might have been transacted on the original date of the meeting.
1.8 Proxies. Any stockholder entitled to vote at any meeting of the
-------
stockholders or to express consent to or dissent from corporate action without a
meeting may, by a written instrument signed by such stockholder or his attorney-
in-fact, authorize another person or
<PAGE>
persons to vote at any such meeting and express such consent or dissent for him
by proxy. No such proxy shall be voted or acted upon after the expiration of
three years from the date of such proxy, unless such proxy provides for a longer
period. Every proxy shall be revocable at the pleasure of the stockholder
executing it, except in those cases where applicable law provides that a proxy
shall be irrevocable. A stockholder may revoke any proxy which is not
irrevocable by attending the meeting and voting in person or by filing an
instrument in writing revoking the proxy or by filing another duly executed
proxy bearing a later date with the Secretary.
1.9 Organization; Procedure. At every meeting of stockholders the
-----------------------
presiding officer shall be the Chairman of the Board or, in the event of his
absence or disability, the President or, in the event of his absence or
disability, a presiding officer chosen by a majority of the stockholders present
in person or by proxy. The Secretary, or in the event of his absence or
disability, the Assistant Secretary, if any, or if there be no Assistant
Secretary, in the absence of the Secretary, an appointee of the presiding
officer, shall act as Secretary of the meeting. The order of business and all
other matters of procedure at every meeting of stockholders may be determined by
such presiding officer.
1.10 Consent of Stockholders in Lieu of Meeting. To the fullest
------------------------------------------
extent permitted by law, whenever the vote of the stockholders at a meeting
thereof is required or permitted to be taken for or in connection with any
corporate action, such action may be taken without a meeting, without prior
notice and without a vote of stockholders, if the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted shall consent in writing to such corporate action
being taken. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not so consented in writing.
ARTICLE 2.
BOARD OF DIRECTORS
2.1 General Powers. Except as may otherwise be provided by law, by
--------------
the Certificate of Incorporation or by these Bylaws, the property, affairs and
business of the Corporation shall be managed by or under the direction of the
Board of Directors and the Board of Directors may exercise all the powers of the
Corporation.
2.2 Number and Term of Office. The Board of Directors shall consist
-------------------------
of one to three members, as determined by and as may be modified from time to
time by resolution of the Board of Directors, but in no event shall the number
of Directors be less than one. Each Director (whenever elected) shall hold
office until his successor has been duly elected and qualified, or until his
earlier death, resignation or removal.
<PAGE>
2.3 Election of Directors. Except as otherwise provided in Sections
---------------------
2.12 and 2.13 of these Bylaws, the Directors shall be elected at each annual
meeting of the stockholders; provided, however, that unless otherwise named in
the Certificate of Incorporation, the initial Board of Directors shall be
elected by the incorporator(s) of the Corporation. If the annual meeting for
the election of Directors is not held on the date designated therefor, the
Directors shall cause the meeting to be held as soon thereafter as convenient.
At each meeting of the stockholders for the election of Directors, provided a
quorum is present, the Directors shall be elected by a plurality of the votes
validly cast in such election.
2.4 Annual and Regular Meetings. The annual meeting of the Board of
---------------------------
Directors for the purpose of electing officers and for the transaction of such
other business as may come before the meeting shall be held as soon as possible
following adjournment of the annual meeting of the stockholders at the place of
such annual meeting of the stockholders. Notice of such annual meeting of the
Board of Directors need not be given. The Board of Directors from time to time
may by resolution provide for the holding of regular meetings and fix the place
(which may be within or without the State of Delaware) and the date and hour of
such meetings. Notice of regular meetings need not be given, provided, however,
that if the Board of Directors shall fix or change the time or place of any
regular meeting, notice of such action shall be mailed promptly, or sent by
telegram, facsimile or cable, to each Director who shall not have been present
at the meeting at which such action was taken, addressed to him at his usual
place of business, or shall be delivered to him personally. Notice of such
action need not be given to any Director who attends the first regular meeting
after such action is taken without protesting the lack of notice to him, prior
to or at the commencement of such meeting, or to any Director who submits a
signed waiver of notice, whether before or after such meeting.
2.5 Special Meetings; Notice. Special meetings of the Board of
------------------------
Directors shall be held whenever called by the Chairman of the Board or, in the
event of his absence or disability, by the President, at such place (within or
without the State of Delaware), date and hour as may be specified in the
respective notices or waivers of notice of such meetings. Special meetings of
the Board of Directors may be called on 24 hours' notice, if notice is given to
each Director personally or by telephone or facsimile, or on five days' notice,
if notice is mailed to each Director, addressed to him at his usual place of
business. Notice of any special meeting need not be given to any Director who
attends such meeting without protesting the lack of notice to him, prior to or
at the commencement of such meeting, or to any Director who submits a signed
waiver of notice, whether before or after such meeting, and any business may be
transacted thereat.
2.6 Quorum; Voting. At all meetings of the Board of Directors, the
--------------
presence of a majority of the total authorized number of Directors shall
constitute a quorum for the transaction of business. Except as otherwise
required by law, the vote of a majority of the Directors present at any meeting
at which a quorum is present shall be the act of the Board of Directors.
<PAGE>
2.7 Adjournment. A majority of the Directors present, whether or not
-----------
a quorum is present, may adjourn any meeting of the Board of Directors to
another time or place. No notice need be given of any adjourned meeting unless
the time and place of the adjourned meeting are not announced at the time of
adjournment, in which case notice conforming to the requirements of Section 2.5
shall be given to each Director.
2.8 Action Without a Meeting. Any action required or permitted to be
------------------------
taken at any meeting of the Board of Directors may be taken without a meeting if
all members of the Board of Directors consent thereto in writing, and such
writing or writings are filed with the minutes of proceedings of the Board of
Directors.
2.9 Regulations; Manner of Acting. To the extent consistent with
-----------------------------
applicable law, the Certificate of Incorporation and these Bylaws, the Board of
Directors may adopt such rules and regulations for the conduct of meetings of
the Board of Directors and for the management of the property, affairs and
business of the Corporation as the Board of Directors may deem appropriate. The
Directors shall act only as a Board, and the individual Directors shall have no
power as such.
2.10 Action by Telephonic Communications. Members of the Board of
-----------------------------------
Directors may participate in a meeting of the Board of Directors by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting.
2.11 Resignation. Any Director may resign at any time by delivering a
-----------
written notice of resignation, signed by such Director, to the Chairman of the
Board, the President or the Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
2.12 Removal of Directors. Any Director may be removed at any time,
--------------------
either for or without cause, upon the affirmative vote of the holders of a
majority of the outstanding shares of stock of the Corporation entitled to vote
for the election of such Director, cast at a special meeting of stockholders
called for that purpose. Any vacancy in the Board of Directors caused by any
such removal may be filled at such meeting by the stockholders entitled to vote
for the election of the Director so removed. If such stockholders do not fill
such vacancy at such meeting (or in the written instrument effecting such
removal, if such removal was effected by consent without a meeting), such
vacancy may be filled in the manner provided in Section 2.13 of these Bylaws.
2.13 Vacancies and Newly Created Directorships. If any vacancies
-----------------------------------------
shall occur in the Board of Directors, by reason of death, resignation, removal
or otherwise, or if the authorized number of Directors shall be increased, the
Directors then in office shall continue to act, and such vacancies and newly
created directorships may be filled by a majority of the Directors then in
office, although less than a quorum. A Director elected to fill a vacancy or a
newly created directorship shall hold office until his successor has been
elected and qualified or until his earlier death, resignation or removal. Any
such vacancy or newly created directorship may also be filled at any time by
vote of the stockholders.
<PAGE>
2.14 Compensation. The amount, if any, which each Director shall be
------------
entitled to receive as compensation for his services as such shall be fixed from
time to time by resolution of the Board of Directors.
2.15 Reliance on Accounts and Reports, etc. A member of the Board of
--------------------------------------
Directors, or a member of any Committee designated by the Board of Directors,
shall, in the performance of his duties, be fully protected in relying in good
faith upon the records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of the Corporation's
officers or employees, or Committees of the Board of Directors, or by any other
person as to matters the member reasonably believes are within such other
person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation, including without limitation
independent certified public accountants and appraisers.
ARTICLE 3.
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
3.1 How Constituted. The Board of Directors may designate one or
---------------
more Committees, including an Executive Committee, each such Committee to
consist of such number of Directors as from time to time may be fixed by the
Board of Directors. The Board of Directors may designate one or more directors
as alternate members of any such Committee, who may replace any absent or
disqualified member or members at any meeting of such Committee. In addition,
unless the Board of Directors has so designated an alternate member of such
Committee, in the absence or disqualification of a member of such Committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Thereafter, members (and alternate
members, if any) of each such Committee may be designated at the annual meeting
of the Board of Directors. Any such Committee may be abolished or redesignated
from time to time by the Board of Directors. Each member (and each alternate
member) of any such Committee (whether designated at an annual meeting of the
Board of Directors or to fill a vacancy or otherwise) shall hold office until
his successor shall have been designated or until he shall cease to be a
Director, or until his earlier death, resignation or removal.
3.2 Powers. During the intervals between the meetings of the Board
------
of Directors, the Executive Committee, if created by the Board of Directors, and
except as otherwise provided in this section, shall have and may exercise all
the powers and authority of the Board of Directors in the management of the
property, affairs and business of the Corporation, including the power
<PAGE>
to declare dividends and to authorize the issuance of stock. Each such other
Committee shall have and may exercise such powers of the Board of Directors as
may be provided by resolution of the Board, provided, that neither the Executive
Committee nor any such other Committee shall have the power or authority to (i)
approve or adopt, or recommend to the stockholders, any action or matter
expressly required by the General Corporation Law to be submitted to
stockholders for approval or (ii) adopt, amend or repeal any of these Bylaws.
The Executive Committee shall have, and any such other Committee may be granted
by the Board of Directors, power to authorize the seal of the Corporation to be
affixed to any or all papers which may require it.
3.3 Quorum; Voting. Except as may be otherwise provided in the
--------------
resolution creating such Committee, at all meetings of any Committee the
presence of members (or alternate members) constituting a majority of the total
authorized membership of such Committee shall constitute a quorum for the
transaction of business. The act of a majority of the members present at any
meeting at which a quorum is present shall be the act of such Committee.
3.4 Action without a Meeting. Any action required or permitted to be
------------------------
taken at any meeting of any such Committee may be taken without a meeting, if
all members of such Committee shall consent to such action in writing and such
writing or writings are filed with the minutes of the proceedings of the
Committee.
3.5 Regulations; Manner of Acting. Each such Committee may fix its
-----------------------------
own rules of procedure and may meet at such place (within or without the State
of Delaware), at such time and upon such notice, if any, as it shall determine
from time to time. Each such Committee shall keep minutes of its proceedings
and shall report such proceedings to the Board of Directors at the meeting of
the Board of Directors next following any such proceeding. The members of any
such Committee shall act only as a Committee, and the individual members of such
Committee shall have no power as such.
3.6 Action by Telephonic Communications. Members of any Committee
-----------------------------------
designated by the Board of Directors may participate in a meeting of such
Committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this provision shall constitute
presence in person at such meeting.
3.7 Resignation. Any member (and any alternate member) of any
-----------
Committee may resign at any time by delivering a written notice of resignation,
signed by such member, to the Chairman of the Board or the President. Unless
otherwise specified therein, such resignation shall take effect upon delivery.
3.8 Removal. Any member (any alternate member) of any Committee may
-------
be removed at any time, with or without cause, by resolution adopted by a
majority of the whole Board of Directors.
<PAGE>
3.9 Vacancies. If any vacancy shall occur in any Committee, by
---------
reason of death, resignation, removal or otherwise, the remaining members (and
any alternate members) shall continue to act, and any such vacancy may be filled
by the Board of Directors or the remaining members of the Committee as provided
in Section 3.1 hereof.
ARTICLE 4.
OFFICERS
4.1 Titles. The officers of the Corporation shall be chosen by the
------
Board of Directors and shall be a Chairman of the Board, a President, one or
more Vice Presidents, a Secretary and a Treasurer. The Board of Directors also
may elect one or more Assistant Secretaries and Assistant Treasurers in such
numbers as the Board of Directors may determine, and shall also elect a Chairman
of the Board. Any number of offices may be held by the same person. No officer
need be a Director of the Corporation.
4.2 Election. Unless otherwise determined by the Board of Directors,
--------
the officers of the Corporation shall be elected by the Board of Directors at
the annual meeting of the Board of Directors, and shall be elected to hold
office until the next succeeding annual meeting of the Board of Directors. In
the event of the failure to elect officers at such annual meeting, officers may
be elected at any regular or special meeting of the Board of Directors. Each
officer shall hold office until his successor has been elected and qualified, or
until his earlier death, resignation or removal.
4.3 Salaries. The salaries of all officers of the Corporation shall
--------
be fixed by the Board of Directors.
4.4 Removal and Resignation; Vacancies. Any officer may be removed
----------------------------------
with or without cause at any time by the Board of Directors. Any officer may
resign at any time by delivering a written notice of resignation, signed by such
officer, to the Board of Directors or the Chairman of the Board. Unless
otherwise specified therein, such resignation shall take effect upon delivery.
Any vacancy occurring in any office of the Corporation by death, resignation,
removal or otherwise, shall be filled by the Board of Directors.
4.5 Authority and Duties. The officers of the Corporation shall have
--------------------
such authority and shall exercise such powers and perform such duties as may be
specified in these Bylaws, except that in any event each officer shall exercise
such powers and perform such duties as may be required by law.
4.6 The Chairman of the Board. The Chairman of the Board shall
-------------------------
preside at all meetings of the stockholders and directors, shall be the chief
executive officer of the Corporation and, together with the President and
<PAGE>
subject to the directions of the Board of Directors, shall have general control
and supervision of the business and operations of the Corporation and shall see
that all orders and resolutions of the Board of Directors are carried into
effect. He shall manage and administer the Corporation's business and affairs
and shall also perform all duties and exercise all powers usually pertaining to
the office of a Chairman of the Board of a corporation. He shall have the
authority to sign, in the name and on behalf of the Corporation, checks, orders,
contracts, leases, notes, drafts and other documents and instruments in
connection with the business of the Corporation and, together with the Secretary
or an Assistant Secretary, conveyances of real estate and other documents and
instruments to which the seal of the Corporation is affixed. He shall have the
authority to cause the employment or appointment of such employees and agents of
the Corporation as the conduct of the business of the Corporation may require,
to fix their compensation, and to remove or suspend any employee or agent
elected or appointed by the Chairman of the Board, the President or the Board of
Directors. The Chairman of the Board shall perform such other duties and have
such other powers as the Board of Directors may from time to time prescribe.
4.7 The President. The President shall be the chief operating
-------------
officer of the Corporation and, together with the Chairman of the Board and
subject to the directions of the Board of Directors, shall have general control
and supervision of the policies and operations of the Corporation and shall see
that all orders and resolutions of the Board of Directors are carried into
effect. In the absence of the Chairman of the Board, the President shall
preside at all meetings of the stockholders and directors. He shall manage and
administer the Corporation's business and affairs and shall also perform all
duties and exercise all powers usually pertaining to the office of a chief
operating officer of a corporation. He shall have the authority to sign, in the
name and on behalf of the Corporation, checks, orders, contracts, leases, notes,
drafts and other documents and instruments in connection with the business of
the Corporation and, together with the Secretary or an Assistant Secretary,
conveyances of real estate and other documents and instruments to which the seal
of the Corporation is affixed. He shall have the authority to cause the
employment or appointment of such employees and agents of the Corporation as the
conduct of the business of the Corporation may require, to fix their
compensation, and to remove or suspend any employee or agent elected or
appointed by the Chairman of the Board, the President or the Board of Directors.
The President shall perform such other duties and have such other powers as the
Chairman of the Board or the Board of Directors may from time to time prescribe.
4.8 The Vice Presidents. Each Vice President shall perform such
-------------------
duties and exercise such powers as may be assigned to him from time to time by
the President. In the absence of the President, the duties of the President
shall be performed and his powers may be exercised by such Vice President as
shall be designated by the President, or failing such designation, such duties
shall be performed and such powers may be exercised by each Vice President in
the order of their election to that office; subject in any case to review and
superseding action by the President.
<PAGE>
4.9 The Secretary. The Secretary shall have the following powers and
-------------
duties:
(a) He shall keep or cause to be kept a record of all the proceedings
of the meetings of the stockholders and of the Board of Directors in books
provided for that purpose.
(b) He shall cause all notices to be duly given in accordance with
the provisions of these Bylaws and as required by law.
(c) Whenever any Committee shall be appointed pursuant to a
resolution of the Board of Directors, he shall furnish a copy of such resolution
to the members of such Committee.
(d) He shall be the custodian of the records and of the seal of the
Corporation and cause such seal (or a facsimile thereof) to be affixed to all
certificates representing shares of the Corporation prior to the issuance
thereof and to all instruments the execution of which on behalf of the
Corporation under its seal shall have been duly authorized in accordance with
these Bylaws, and when so affixed he may attest to same.
(e) He shall properly maintain and file all books, reports,
statements, certificates and all other documents and records required by law,
the Certificate of Incorporation or these Bylaws.
(f) He shall have charge of the stock books and ledgers of the
Corporation and shall cause the stock and transfer books to be kept in such
manner as to show at any time the number of shares of stock of the Corporation
of each class issued and outstanding, the names (alphabetically arranged) and
the addresses of the holders of record of such shares, the number of shares held
by each holder and the date as of which each became such holder of record.
(g) He shall sign (unless the Treasurer, an Assistant Treasurer or
Assistant Secretary shall have signed) certificates representing shares of the
Corporation the issuance of which shall have been authorized by the Board of
Directors.
(h) He shall perform, in general, all duties incident to the office
of secretary and such other duties as may be specified in these Bylaws or as may
be assigned to him from time to time by the Board of Directors or the President.
4.1 The Treasurer. The Treasurer shall have the following powers and
-------------
duties:
(a) He shall have charge and supervision over and be responsible for
the moneys, securities, receipts and disbursements of the Corporation, and shall
keep or cause to be kept full and accurate records of all receipts of the
Corporation.
(b) He shall cause the moneys and other valuable effects of the
Corporation to be deposited in the name and to the credit of the Corporation in
such banks or trust companies or with such bankers or other depositaries as
shall be selected in accordance with Section 8.5 of these Bylaws.
<PAGE>
(c) He shall cause moneys of the Corporation to be disbursed by
checks or drafts (signed as provided in Section 8.6 of these Bylaws) upon the
authorized depositories of the Corporation and cause to be taken and preserved
proper vouchers for all moneys disbursed.
(d) He shall render to the Board of Directors or the President,
whenever requested, a statement of the financial condition of the Corporation
and of all his transactions as Treasurer, and render a full financial report at
the annual meeting of the stockholders, if called upon to do so.
(e) He shall be empowered from time to time to require from all
officers or agents of the Corporation reports or statements giving such
information as he may desire with respect to any and all financial transactions
of the Corporation.
(f) He may sign (unless an Assistant Treasurer or the Secretary or an
Assistant Secretary shall have signed) certificates representing stock of the
Corporation the issuance of which shall have been authorized by the Board of
Directors.
(g) He shall perform, in general, all duties incident to the office
of treasurer and such other duties as may be specified in these Bylaws or as may
be assigned to him from time to time by the Board of Directors, or the
President.
4.1 Additional Officers. The Board of Directors may appoint such
-------------------
other officers and agents as it my deem appropriate, and such other officers and
agents shall hold their offices for such terms and shall exercise such powers
and perform such duties as may be determined from time to time by the Board of
Directors. The Board of Directors from time to time may delegate to any officer
or agent the power to appoint subordinate officers or agents and to prescribe
their respective rights, terms of office, authorities and duties. Any such
officer or agent may remove any such subordinate officer or agent appointed by
him, with or without cause.
4.1 Security. The Board of Directors may direct that the Corporation
--------
secure the fidelity of any or all of its officers or agents by bond or
otherwise.
ARTICLE 5.
CAPITAL STOCK
5.1 Certificates of Stock, Uncertificated Shares. The shares of the
--------------------------------------------
Corporation shall be represented by certificates, provided that the Board of
Directors may provide by resolution that some or all of any or all classes or
series of the stock of the Corporation shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until each
<PAGE>
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock in the
Corporation represented by certificates and upon request every holder of
uncertificated shares shall be entitled to have a certificate signed by, or in
the name of the Corporation, by the Chairman of the Board, President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary, representing the number of shares registered in
certificate form. Such certificate shall be in such form as the Board of
Directors may determine, to the extent consistent with applicable law, the
Certificate of Incorporation and these Bylaws.
5.2 Signatures; Facsimile. All of such signatures on the certificate
---------------------
may be a facsimile, engraved or printed, to the extent permitted by law. In
case any officer, transfer agent or registrar who has signed, or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
5.3 Lost, Stolen or Destroyed Certificates. The Secretary of the
--------------------------------------
Corporation may cause a new certificate of stock or uncertificated shares in
place of any certificate therefor issued by the Corporation, alleged to have
been lost, stolen or destroyed, upon delivery to the Secretary of an affidavit
of the owner or owners of such certificate, or his or their legal representative
setting forth such allegation. The Secretary may require the owner or owners of
such lost, stolen or destroyed certificate, or his or their legal
representative, to give the Corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of any such new
certificate or uncertificated shares.
5.4 Transfer of Stock. Upon surrender to the Corporation or the
-----------------
transfer agent of the Corporation of a certificate for shares, duly endorsed or
accompanied by appropriate evidence of succession, assignment or authority to
transfer, the Corporation shall issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Within a reasonable time after the transfer of uncertificated stock, the
Corporation shall send to the registered owner thereof a written notice
containing the information required to be set forth or stated on certificates
pursuant to Section 151, 156, 202(a) or 218(a) of the General Corporation Law.
Subject to the provisions of the Certificate of Incorporation and these Bylaws,
the Board of Directors may prescribe such additional rules and regulations as it
may deem appropriate relating to the issue, transfer and registration of shares
of the Corporation.
5.5 Record Date. In order to determine the stockholders entitled to
-----------
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than 60 nor less than ten
<PAGE>
days before the date of such meeting, nor more than 60 days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting,
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
5.6 Registered Stockholders. Prior to due surrender of a certificate
-----------------------
for registration of transfer, the Corporation may treat the registered owner as
the person exclusively entitled to receive dividends and other distributions, to
vote, to receive notice and otherwise to exercise all the rights and powers of
the owner of the shares represented by such certificate, and the Corporation
shall not be bound to recognize any equitable or legal claim to or interest in
such shares on the part of any other person, whether or not the Corporation
shall have notice of such claim or interest. Whenever any transfer of shares
shall be made for collateral security, and not absolutely, it shall be so
expressed in the entry of the transfer if, when the certificates are presented
to the Corporation for transfer or uncertificated shares are requested to be
transferred, both the transferor and transferee request the Corporation to do
so.
5.7 Transfer Agent and Registrar. The Board of Directors may appoint
----------------------------
one or more transfer agents and registrars, and may require all certificates
representing shares to bear the signature of any such transfer agents or
registrars.
ARTICLE 6.
INDEMNIFICATION
6.1 Indemnification. The Corporation shall, to the fullest extent
---------------
permitted by applicable law from time to time in effect, indemnify any and all
persons who may serve or who have served at any time as Directors or officers of
the Corporation, or who at the request of the Corporation may serve or at any
time have served as Directors or officers of another corporation (including
subsidiaries of the Corporation) or of any partnership, joint venture, trust or
other enterprise, from and against any and all of the expenses, liabilities or
other matters referred to in or covered by said law. Such indemnification shall
continue as to a person who has ceased to be a Director or officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person. The Corporation may also indemnify any and all other persons whom it
shall have power to indemnify under any applicable law from time to time in
effect to the extent authorized by the Board of Directors and permitted by such
law. The indemnification provided by this Article shall not be deemed exclusive
of any other rights to which any person may be entitled under any provision of
the Certificate of Incorporation, other Bylaw, agreement, vote of stockholders
or disinterested Directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
6.2 Definition. For purposes of this Article, the term "Corporation"
----------
shall include constituent corporations referred to in Subsection (h) of Section
145 of the General Corporation Law (or any similar provision of applicable law
at the time in effect).
<PAGE>
ARTICLE 7.
OFFICES
7.1 Registered Office. The registered office of the Corporation in
-----------------
the State of Delaware shall be located at Corporation Trust Center, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801, and the Corporation's
registered agent shall be the Corporation Trust Company.
7.2 Other Offices. The Corporation may maintain offices or places of
-------------
business at such other locations within or without the State of Delaware as the
Board of Directors may from time to time determine or as the business of the
Corporation may require.
ARTICLE 8.
GENERAL PROVISIONS
8.1 Dividends. Subject to any applicable provisions of law and the
---------
Certificate of Incorporation, dividends upon the shares of the Corporation may
be declared by the Board of Directors at any regular or special meeting of the
Board of Directors and any such dividend may be paid in cash, property, or
shares of the Corporation.
8.2 Reserves. There may be set aside out of any funds of the
--------
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in its absolute discretion, thinks proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation or for such other purpose as the
Board of Directors shall think conducive to the interest of the Corporation, and
the Board of Directors may similarly modify or abolish any such reserve.
8.3 Execution of Instruments. The Chairman of the Board, the
------------------------
President, any Vice President, the Secretary or the Treasurer may enter into any
contract or execute and deliver any instrument in the name and on behalf of the
Corporation. The Board of Directors, the Chairman of the Board or the President
may authorize any other officer or agent to enter into any contract or execute
and deliver any instrument in the name and on behalf of the Corporation. Any
such authorization may be general or limited to specific contracts or
instruments.
8.4 Corporate Indebtedness. No loan shall be contracted on behalf of
----------------------
the Corporation, and no evidence of indebtedness shall be issued in its name,
unless authorized by the Board of Directors. Such authorization may be general
or confined to specific instances.
<PAGE>
Loans so authorized may be effected at any time for the Corporation from any
bank, trust company or other institution, or from any firm, corporation or
individual. All bonds, debentures, notes and other obligations or evidences of
indebtedness of the Corporation issued for such loans shall be made, executed
and delivered as the Board of Directors shall authorize. When so authorized by
the Board of Directors, any part of or all the properties, including contract
rights, assets, business or good will of the Corporation, whether then owned or
thereafter acquired, may be mortgaged, pledged, hypothecated or conveyed or
assigned in trust as security for the payment of such bonds, debentures, notes
and other obligations or evidences of indebtedness of the Corporation, and of
any interest thereon, by instruments executed and delivered in the name of the
Corporation.
8.5 Deposits. Any funds of the Corporation may be deposited from
--------
time to time in such banks, trust companies or other depositaries as may be
determined by the Board of Directors or the President, or by such officers or
agents as may be authorized by the Board of Directors, Chairman of the Board or
the President to make such determination.
8.6 Checks. All checks or demands for money and notes of the
------
Corporation shall be signed by such officer or officers or such agent or agents
of the Corporation, and in such manner, as the Board of Directors, Chairman of
the Board or the President from time to time may determine.
8.7 Sale, Transfer, etc. of Securities. To the extent authorized by
----------------------------------
the Board of Directors, Chairman of the Board or by the President, any Vice
President, the Secretary or the Treasurer or any other officers designated by
the Board of Directors, Chairman of the Board or the President may sell,
transfer, endorse, and assign any shares of stock, bonds or other securities
owned by or held in the name of the Corporation, and may make, execute and
deliver in the name of the Corporation, under its corporate seal, any
instruments that may be appropriate to effect any such sale, transfer,
endorsement or assignment.
8.8 Voting as Stockholder. Unless otherwise determined by resolution
---------------------
of the Board of Directors, Chairman of the Board, the President or any Vice
President shall have full power and authority on behalf of the Corporation to
attend any meeting of stockholders of any corporation in which the Corporation
may hold stock, and to act, vote (or execute proxies to vote) and exercise in
person or by proxy all other rights, powers and privileges incident to the
ownership of such stock. Such officers acting on behalf of the Corporation shall
have full power and authority to execute any instrument expressing consent to or
dissent from any action of any such corporation without a meeting. The Board of
Directors may by resolution from time to time confer such power and authority
upon any other person or persons.
8.9 Fiscal Year. The fiscal year of the Corporation shall commence
-----------
on the first day of January of each year (except for the Corporation's first
fiscal year which shall commence on the date of incorporation) and shall end in
each case on December 31.
<PAGE>
8.1 Seal. The seal of the Corporation shall be circular in form and
----
shall contain the name of the Corporation, the year of its incorporation and the
words "Corporate Seal" and "Delaware". The form of such seal shall be subject
to alteration by the Board of Directors. The seal may be used by causing it or
a facsimile thereof to be impressed, affixed or reproduced, or may be used in
any other lawful manner.
8.1 Books and Records. Except to the extent otherwise required by
-----------------
law, the books and records of the Corporation shall be kept at such place or
places within or without the State of Delaware as may be determined from time to
time by the Board of Directors.
ARTICLE 9.
AMENDMENT OF BYLAWS
9.1 Amendment. These Bylaws may be amended, altered or repealed:
---------
(a) by resolution adopted by a majority of the Board of Directors at
any special or regular meeting of the Board if, in the case of such special
meeting only, notice of such amendment, alteration or repeal is contained in the
notice or waiver of notice of such meeting; or
(b) at any regular or special meeting of the stockholders if, in the
case of such special meeting only, notice of such amendment, alteration or
repeal is contained in the notice or waiver of notice of such meeting.
ARTICLE 10.
CONSTRUCTION
10. Construction. In the event of any conflict between the
------------
provisions of these Bylaws as in effect from time to time and the provisions of
the Certificate of Incorporation as in effect from time to time, the provisions
of the Certificate of Incorporation shall be controlling.
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE 1.STOCKHOLDERS 1
1.1 Annual Meeting 1
1.2 Special Meetings 1
1.3 Notice of Meetings; Waiver 1
1.4 Quorum 2
1.5 Voting 2
1.6 Voting by Ballot 2
1.7 Adjournment 2
1.8 Proxies 3
1.9 Organization; Procedure 3
1.10 Consent of Stockholders in Lieu of Meeting 3
ARTICLE 2.BOARD OF DIRECTORS 3
2.1 General Powers 3
2.2 Number and Term of Office 4
2.3 Election of Directors 4
2.4 Annual and Regular Meetings 4
2.5 Special Meetings; Notice 4
2.6 Quorum; Voting 5
2.7 Adjournment 5
2.8 Action Without a Meeting 5
2.9 Regulations; Manner of Acting 5
2.10 Action by Telephonic Communications 5
2.11 Resignation 5
2.12 Removal of Directors 5
2.13 Vacancies and Newly Created Directorships 6
2.14 Compensation 6
2.15 Reliance on Accounts and Reports, etc 6
ARTICLE 3.EXECUTIVE COMMITTEE AND OTHER COMMITTEES 6
3.1 How Constituted 6
3.2 Powers 7
3.3 Quorum; Voting 7
3.4 Action without a Meeting. 7
3.5 Regulations; Manner of Acting 7
3.6 Action by Telephonic Communications 7
3.7 Resignation 8
3.8 Removal 8
3.9 Vacancies 8
<PAGE>
ARTICLE 4.OFFICERS 8
4.1 Titles 8
4.2 Election 8
4.3 Salaries 8
4.4 Removal and Resignation; Vacancies 8
4.5 Authority and Duties 9
4.6 The Chairman of the Board 9
4.7 The President 9
4.8 The Vice Presidents 10
4.9 The Secretary 10
4.10 The Treasurer 11
4.11 Additional Officers 11
4.12 Security 11
ARTICLE 5.CAPITAL STOCK 12
5.1 Certificates of Stock, Uncertificated Shares 12
5.2 Signatures; Facsimile 12
5.3 Lost, Stolen or Destroyed Certificates 12
5.4 Transfer of Stock 12
5.5 Record Date 13
5.6 Registered Stockholders 13
5.7 Transfer Agent and Registrar 13
ARTICLE 6.INDEMNIFICATION 13
6.1 Indemnification 13
6.2 Definition 14
ARTICLE 7.OFFICES 14
7.1 Registered Office 14
7.2 Other Offices 14
ARTICLE 8.GENERAL PROVISIONS 14
8.1 Dividends 14
8.2 Reserves 14
8.3 Execution of Instruments 15
8.4 Corporate Indebtedness 15
8.5 Deposits 15
8.6 Checks 15
8.7 Sale, Transfer, etc. of Securities 15
8.8 Voting as Stockholder 15
8.9 Fiscal Year 16
8.10 Seal 16
8.11 Books and Records 16
<PAGE>
ARTICLE 9.AMENDMENT OF BYLAWS 16
9.1 Amendment 16
ARTICLE 10.CONSTRUCTION 17
10.1 Construction 17
<PAGE>
EXHIBIT 3.5
CERTIFICATE OF FORMATION
OF
TRITON PCS HOLDINGS
COMPANY L.L.C.
ARTICLE I
---------
The name of the Limited Liability Company is Triton PCS Holdings
Company L.L.C.
ARTICLE II
----------
The address of the Limited Liability Company's registered office in
the State of Delaware is Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801. The name of its registered agent
at such address is The Corporation Trust Company.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation this ________ day of December, 1997.
MEMBER:
TRITON PCS, INC. (f/k/a Triton PCS
License Company, Inc.)
By:_________________________________________
David D. Clark, Senior Vice President
<PAGE>
EXHIBIT 3.6
CERTIFICATE OF FORMATION
OF
TRITON PCS LICENSE
COMPANY L.L.C.
ARTICLE I
---------
The name of the Limited Liability Company is Triton PCS License
Company L.L.C.
ARTICLE II
----------
The address of the Limited Liability Company's registered office in
the State of Delaware is Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801. The name of its registered agent
at such address is The Corporation Trust Company.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation this ________ day of December, 1997.
MEMBER:
TRITON PCS HOLDINGS COMPANY L.L.C.
By:
------------------------------------
David D. Clark, Senior Vice President
<PAGE>
EXHIBIT 3.7
LIMITED LIABILITY COMPANY AGREEMENT
OF
TRITON PCS LICENSE COMPANY L.L.C.
This Limited Liability Company Agreement (this "Agreement") is entered
into as of the 22nd day of December, 1997 by and between Triton PCS License
Company L.L.C., a Delaware limited liability company (the "Company"), and Triton
PCS Holdings Company L.L.C., a Delaware limited liability company (the "Initial
Member").
The Company has been formed as a limited liability company pursuant to
and in accordance with the Delaware Limited Liability Company Act (6 Del. C.
---- --
(S)(S) 18-101, et seq.) (the "Act"), and the Company and the Initial Member
-- ---
hereby agree as follows:
1. Name. The name of the limited liability company is Triton PCS
----
License Company L.L.C.
2. Purpose. The Company is organized to carry on any lawful
-------
business, purpose or activity permitted under the Act, and the Company shall
possess and may exercise all the powers and privileges granted by the Act or by
any other law or by this Agreement, together with any powers incidental thereto,
so far as such powers and privileges are necessary or convenient to the conduct,
promotion or attainment of the business, purposes or activities of the Company.
3. Registered Office. The registered office of the Company in the
-----------------
State of Delaware is c/o The Company Trust Company, Company Trust Center, 1209
Orange Street, Wilmington, Delaware 19801.
4. Registered Agent. The name of the registered agent of the
----------------
Company for service of process on the Company in the State of Delaware is The
Company Trust Company.
5. Addresses. The mailing addresses of the Company and the Initial
---------
Member are as follows:
COMPANY:
-------
Triton PCS License Company L.L.C.
c/o Triton Communications L.L.C.
101 Lindenwood Drive
Suite 125
Malvern, Pennsylvania 19355
<PAGE>
INITIAL MEMBER:
--------------
Triton PCS Holdings Company L.L.C.
c/o Triton Communications L.L.C.
101 Lindenwood Drive
Suite 125
Malvern, Pennsylvania 19355
6. Members; Power of Members. As used herein, the term "Members"
-------------------------
shall mean the Initial Member and any other person or entity admitted as a
member of the Company in accordance with the terms of the Act and this
Agreement. The power of the Members includes all powers, statutory and
otherwise, possessed by Members of a limited liability company under the laws of
the State of Delaware, including the Act. Unless a greater percentage shall be
otherwise expressly required by the Act or by this Agreement, any action or
determination that is required to be made by the Members shall require the
assent of a majority in interest of the Members at a meeting of the Members or
pursuant to a written consent of such Members.
7. Term. The Company shall dissolve, and its affairs shall be wound
----
up upon the earlier to occur of (i) at such time as all of the Members of the
Company approve unanimously in writing, or (ii) an entry of a decree of judicial
dissolution has occurred under (S) 18-802 of the Act.
8. Capital Contributions. The Initial Member shall contribute
---------------------
$1.00, in cash, and no other property, to the Company.
9. Additional Contributions. Each Member of the Company may, but is
------------------------
not required to, make additional capital contributions to the Company.
10. Allocation of Profit and Losses. The Company's profits and
-------------------------------
losses shall be allocated in proportion to the capital contributions of the
Members of the Company.
11. Distributions. At the time determined by the Members of the
-------------
Company, but at least once during each fiscal year of the Company, the Company
shall distribute any cash held by it that is not reasonably necessary for the
operation of the Company. Cash available for distribution shall be distributed
to the Members of the Company in the same proportion as their then capital
account balances.
12. Assignments. A Member may assign all or any part of his, her or
-----------
its membership interest in the Company only with the written consent of the
Members. A Member has no right to grant an assignee of its membership interest
in the Company the right to become a Member of the Company without the written
consent the Members.
13. Withdrawal. Except as provided in the following Section 14, no
---------- ----------
right is given to any Member of the Company to withdraw from the Company.
<PAGE>
14. Additional Members.
------------------
(a) The Company may admit additional Members to the Company upon
receiving the written consent of the Members. The Company may also admit an
assignee of a Member's membership interest in the Company as a Member of the
Company upon receiving the written consent of the Members.
(b) After the admission of any additional Members pursuant to this
Section 14, the Company shall continue as a limited liability company under the
- ----------
Act.
(c) The admission of additional Members to the Company pursuant to
this Section 14 shall be accomplished by the amendment of this Agreement and, if
----------
required by the Act, the filing of an appropriate amendment of the Company's
Certificate of Formation in the office of the Secretary of State of the State of
Delaware.
15. Certificates. The Company may, but is not required to, issue to
------------
the Members certificates representing their membership interests in the Company.
16. Management.
----------
(a) Except for those matters for which the approval of the Members is
required by this Agreement or by nonwaivable provisions of applicable law, and
subject to the provisions of subsection (b) below, (i) the Company shall be
managed by and under the authority and direction of, the Manager (as hereinafter
defined); (ii) the Manager, acting alone, shall have the right, power and the
authority to bind the Company; and (iii) the Manager may make all decisions and
take all actions for the Company not otherwise provided for in this Agreement.
The Manager shall have the right, power and authority to delegate to one or more
other persons or entities the Manager's rights and powers to manage and control
the business and affairs of the Company, including to delegate to agents,
officers and employees of a Member or the Manager, and to delegate by a
management agreement or another agreement with, or otherwise to, other pesons or
entities.
(b) Notwithstanding the provisions of subsection (a) above, the
Manager may not cause the Company to do any of the following without the consent
of the Members: (i) amend the Certificate of Formation (except for amendments
described in Section 18-202(b) of the Act); (ii) amend this Agreement; (iii)
admit additional Members to the Company; (iv) approve a merger or division in
which the Company is a party; (v) determine in kind distributions of the assets
of the Company; (vi) form any subsidiary of the Company or acquire any equity
interest in any other person or entity business; or (vii) take any other action
for which the consent of the Members is expressly provided by the provisions of
this Agreement.
<PAGE>
(c) The Manager of the Company (the "Manager") shall be Triton
Management Company, Inc., a Delaware corporation, or any other person or entity
that the Members shall appoint to act in such capacity. The Manager shall hold
office until its successor shall have been elected and qualified. The Manager
need not be a Member or a resident of the State of Delaware.
(d) Any vacancy in the Manager position may be filled by the Members.
A Manager elected to fill a vacancy shall be elected for the unexpired term of
his/her/its predecessor in office. The Manager may be removed at any time, with
or without cause, by the Members. Any Manager may resign at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein, or if no time be specified, at the time of its receipt by the Members.
The acceptance of a resignation shall not be necessary to make it effective,
unless expressly so provided in the resignation.
(e) The Managers in his/her/its discretion may submit any act or
contract for approval or ratification to the Members, and any act or contract
that shall be approved or be ratified by the Members shall be as valid and as
binding upon the Company and upon all the Members as if it shall have been
approved or ratified by every Member of the Company.
(f) The Manager shall receive such compensation, if any, for
his/her/its services as may be designated from time to time by the Members. In
addition, the Manager shall be entitled to be reimbursed for out-of-pocket costs
and expenses incurred in the course of his/her/its service hereunder.
(g) Subject to the other express provisions of this Agreement, each
Manager and Member of the Company at any time and from time to time may engage
in and possess interests in other business ventures of any and every type and
description, independently or with others, including ones in competition with
the Company, with no obligation to offer to the Company or any other Member or
the Manager the right to participate, therein. The Company may transact
business with the Manager or any Member or affiliate thereof, provided the terms
of those transactions are no less favorable than those of the Company could
obtain from unrelated third parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
16. Governing Law. This Agreement shall be governed by, and
-------------
construed under, the substantive laws of the State of Delaware, all rights and
remedies being governed by said laws.
IN WITNESS WHEREOF, the undersigned, intending to be bound hereby,
have duly executed this Agreement as of the date first above written.
COMPANY:
-------
TRITON PCS LICENSE COMPANY L.L.C.
By: Triton Management Company, Inc., its manager
By:
----------------------------------------------
David D. Clark, Senior Vice President
INITIAL MEMBER:
--------------
TRITON PCS HOLDINGS COMPANY L.L.C.
By: Triton Management Company, Inc., its manager
By:
---------------------------------------------
David D. Clark, Senior Vice President
JOINDER OF MANAGER
------------------
The undersigned, the within named Manager, hereby agrees to be bound
by the provisions of the foregoing Agreement that are applicable to Managers of
the Company.
IN WITNESS WHEREOF, the undersigned, intending to be bound hereby, has
duly executed this Agreement as of the date first above written.
MANAGER:
-------
TRITON MANAGEMENT COMPANY, INC.
By:
---------------------------------------------
David D. Clark, Senior Vice President
<PAGE>
EXHIBIT 3.8
LIMITED LIABILITY COMPANY AGREEMENT
OF
TRITON PCS HOLDINGS COMPANY L.L.C.
This Limited Liability Company Agreement (this "Agreement") is entered
into as of the 22nd day of December, 1997 by and between Triton PCS Holdings
Company L.L.C., a Delaware limited liability company (the "Company"), and Triton
PCS License Company, Inc., a Delaware corporation (the "Initial Member").
The Company has been formed as a limited liability company pursuant to
and in accordance with the Delaware Limited Liability Company Act (6 Del. C.
---- --
(S)(S) 18-101, et seq.) (the "Act"), and the Company and the Initial Member
-- ---
hereby agree as follows:
1. Name. The name of the limited liability company is Triton PCS
----
Holdings Company L.L.C.
2. Purpose. The Company is organized to carry on any lawful
-------
business, purpose or activity permitted under the Act, and the Company shall
possess and may exercise all the powers and privileges granted by the Act or by
any other law or by this Agreement, together with any powers incidental thereto,
so far as such powers and privileges are necessary or convenient to the conduct,
promotion or attainment of the business, purposes or activities of the Company.
3. Registered Office. The registered office of the Company in the
-----------------
State of Delaware is c/o The Company Trust Company, Company Trust Center, 1209
Orange Street, Wilmington, Delaware 19801.
4. Registered Agent. The name of the registered agent of the
----------------
Company for service of process on the Company in the State of Delaware is The
Company Trust Company.
5. Addresses. The mailing addresses of the Company and the Initial
---------
Member are as follows:
COMPANY:
-------
Triton PCS Holdings Company L.L.C.
c/o Triton Communications L.L.C.
101 Lindenwood Drive
Suite 125
Malvern, Pennsylvania 19355
<PAGE>
INITIAL MEMBER:
--------------
Triton PCS License Company, Inc.
c/o Triton Communications L.L.C.
101 Lindenwood Drive
Suite 125
Malvern, Pennsylvania 19355
6. Members; Power of Members. As used herein, the term "Members"
-------------------------
shall mean the Initial Member and any other person or entity admitted as a
member of the Company in accordance with the terms of the Act and this
Agreement. The power of the Members includes all powers, statutory and
otherwise, possessed by Members of a limited liability company under the laws of
the State of Delaware, including the Act. Unless a greater percentage shall be
otherwise expressly required by the Act or by this Agreement, any action or
determination that is required to be made by the Members shall require the
assent of a majority in interest of the Members at a meeting of the Members or
pursuant to a written consent of such Members.
7. Term. The Company shall dissolve, and its affairs shall be wound
----
up upon the earlier to occur of (i) at such time as all of the Members of the
Company approve unanimously in writing, or (ii) an entry of a decree of judicial
dissolution has occurred under (S) 18-802 of the Act.
8. Capital Contributions. The Initial Member shall contribute
---------------------
$1.00, in cash, and no other property, to the Company.
9. Additional Contributions. Each Member of the Company may, but is
------------------------
not required to, make additional capital contributions to the Company.
10. Allocation of Profit and Losses. The Company's profits and
-------------------------------
losses shall be allocated in proportion to the capital contributions of the
Members of the Company.
11. Distributions. At the time determined by the Members of the
-------------
Company, but at least once during each fiscal year of the Company, the Company
shall distribute any cash held by it that is not reasonably necessary for the
operation of the Company. Cash available for distribution shall be distributed
to the Members of the Company in the same proportion as their then capital
account balances.
12. Assignments. A Member may assign all or any part of his, her or
-----------
its membership interest in the Company only with the written consent of the
Members. A Member has no right to grant an assignee of its membership interest
in the Company the right to become a Member of the Company without the written
consent the Members.
13. Withdrawal. Except as provided in the following Section 14, no
---------- ----------
right is given to any Member of the Company to withdraw from the Company.
<PAGE>
14. Additional Members.
------------------
(a) The Company may admit additional Members to the Company upon
receiving the written consent of the Members. The Company may also admit an
assignee of a Member's membership interest in the Company as a Member of the
Company upon receiving the written consent of the Members.
(b) After the admission of any additional Members pursuant to this
Section 14, the Company shall continue as a limited liability company under the
- ----------
Act.
(c) The admission of additional Members to the Company pursuant to
this Section 14 shall be accomplished by the amendment of this Agreement and, if
----------
required by the Act, the filing of an appropriate amendment of the Company's
Certificate of Formation in the office of the Secretary of State of the State of
Delaware.
15. Certificates. The Company may, but is not required to, issue to
------------
the Members certificates representing their membership interests in the Company.
16. Management.
----------
(a) Except for those matters for which the approval of the Members is
required by this Agreement or by nonwaivable provisions of applicable law, and
subject to the provisions of subsection (b) below, (i) the Company shall be
managed by and under the authority and direction of, the Manager (as hereinafter
defined); (ii) the Manager, acting alone, shall have the right, power and the
authority to bind the Company; and (iii) the Manager may make all decisions and
take all actions for the Company not otherwise provided for in this Agreement.
The Manager shall have the right, power and authority to delegate to one or more
other persons or entities the Manager's rights and powers to manage and control
the business and affairs of the Company, including to delegate to agents,
officers and employees of a Member or the Manager, and to delegate by a
management agreement or another agreement with, or otherwise to, other pesons or
entities.
(b) Notwithstanding the provisions of subsection (a) above, the
Manager may not cause the Company to do any of the following without the consent
of the Members: (i) amend the Certificate of Formation (except for amendments
described in Section 18-202(b) of the Act); (ii) amend this Agreement; (iii)
admit additional Members to the Company; (iv) approve a merger or division in
which the Company is a party; (v) determine in kind distributions of the assets
of the Company; (vi) form any subsidiary of the Company or acquire any equity
interest in any other person or entity business; or (vii) take any other action
for which the consent of the Members is expressly provided by the provisions of
this Agreement.
<PAGE>
(c) The Manager of the Company (the "Manager") shall be Triton
Management Company, Inc., a Delaware corporation, or any other person or entity
that the Members shall appoint to act in such capacity. The Manager shall hold
office until its successor shall have been elected and qualified. The Manager
need not be a Member or a resident of the State of Delaware.
(d) Any vacancy in the Manager position may be filled by the Members.
A Manager elected to fill a vacancy shall be elected for the unexpired term of
his/her/its predecessor in office. The Manager may be removed at any time, with
or without cause, by the Members. Any Manager may resign at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein, or if no time be specified, at the time of its receipt by the Members.
The acceptance of a resignation shall not be necessary to make it effective,
unless expressly so provided in the resignation.
(e) The Managers in his/her/its discretion may submit any act or
contract for approval or ratification to the Members, and any act or contract
that shall be approved or be ratified by the Members shall be as valid and as
binding upon the Company and upon all the Members as if it shall have been
approved or ratified by every Member of the Company.
(f) The Manager shall receive such compensation, if any, for
his/her/its services as may be designated from time to time by the Members. In
addition, the Manager shall be entitled to be reimbursed for out-of-pocket costs
and expenses incurred in the course of his/her/its service hereunder.
(g) Subject to the other express provisions of this Agreement, each
Manager and Member of the Company at any time and from time to time may engage
in and possess interests in other business ventures of any and every type and
description, independently or with others, including ones in competition with
the Company, with no obligation to offer to the Company or any other Member or
the Manager the right to participate, therein. The Company may transact
business with the Manager or any Member or affiliate thereof, provided the terms
of those transactions are no less favorable than those of the Company could
obtain from unrelated third parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
16. Governing Law. This Agreement shall be governed by, and
-------------
construed under, the substantive laws of the State of Delaware, all rights and
remedies being governed by said laws.
IN WITNESS WHEREOF, the undersigned, intending to be bound hereby,
have duly executed this Agreement as of the date first above written.
COMPANY:
-------
TRITON PCS HOLDINGS COMPANY L.L.C.
By: Triton Management Company, Inc., its manager
By:_______________________________________________
David D. Clark, Senior Vice President
INITIAL MEMBER:
--------------
TRITON PCS LICENSE COMPANY, INC.
By:_______________________________________________
David D. Clark, Senior Vice President
JOINDER OF MANAGER
------------------
The undersigned, the within named Manager, hereby agrees to be bound
by the provisions of the foregoing Agreement that are applicable to Managers of
the Company.
IN WITNESS WHEREOF, the undersigned, intending to be bound hereby, has
duly executed this Agreement as of the date first above written.
MANAGER:
-------
TRITON MANAGEMENT COMPANY, INC.
By:_______________________________________________
David D. Clark, Senior Vice President
<PAGE>
EXHIBIT 3.9
CERTIFICATE OF FORMATION
OF
TRITON PCS EQUIPMENT
COMPANY L.L.C.
ARTICLE I
---------
The name of the Limited Liability Company is Triton PCS Equipment
Company L.L.C.
ARTICLE II
----------
The address of the Limited Liability Company's registered office in
the State of Delaware is Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801. The name of its registered agent
at such address is The Corporation Trust Company.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation this ________ day of December, 1997.
MEMBER:
TRITON PCS HOLDINGS COMPANY L.L.C.
By:_________________________________________
David D. Clark, Senior Vice President
<PAGE>
EXHIBIT 3.10
LIMITED LIABILITY COMPANY AGREEMENT
OF
TRITON PCS EQUIPMENT COMPANY L.L.C.
This Limited Liability Company Agreement (this "Agreement") is entered
into as of the 22nd day of December, 1997 by and between Triton PCS Equipment
Company L.L.C., a Delaware limited liability company (the "Company"), and Triton
PCS Holdings Company L.L.C., a Delaware limited liability company (the "Initial
Member").
The Company has been formed as a limited liability company pursuant to
and in accordance with the Delaware Limited Liability Company Act (6 Del. C.
---- --
(S)(S) 18-101, et seq.) (the "Act"), and the Company and the Initial Member
-- ---
hereby agree as follows:
1. Name. The name of the limited liability company is Triton PCS
----
Equipment Company L.L.C.
2. Purpose. The Company is organized to carry on any lawful
-------
business, purpose or activity permitted under the Act, and the Company shall
possess and may exercise all the powers and privileges granted by the Act or by
any other law or by this Agreement, together with any powers incidental thereto,
so far as such powers and privileges are necessary or convenient to the conduct,
promotion or attainment of the business, purposes or activities of the Company.
3. Registered Office. The registered office of the Company in the
-----------------
State of Delaware is c/o The Company Trust Company, Company Trust Center, 1209
Orange Street, Wilmington, Delaware 19801.
4. Registered Agent. The name of the registered agent of the
----------------
Company for service of process on the Company in the State of Delaware is The
Company Trust Company.
5. Addresses. The mailing addresses of the Company and the Initial
---------
Member are as follows:
COMPANY:
-------
Triton PCS Equipment Company L.L.C.
c/o Triton Communications L.L.C.
101 Lindenwood Drive
Suite 125
Malvern, Pennsylvania 19355
<PAGE>
INITIAL MEMBER:
--------------
Triton PCS Holdings Company L.L.C.
c/o Triton Communications L.L.C.
101 Lindenwood Drive
Suite 125
Malvern, Pennsylvania 19355
6. Members; Power of Members. As used herein, the term "Members"
-------------------------
shall mean the Initial Member and any other person or entity admitted as a
member of the Company in accordance with the terms of the Act and this
Agreement. The power of the Members includes all powers, statutory and
otherwise, possessed by Members of a limited liability company under the laws of
the State of Delaware, including the Act. Unless a greater percentage shall be
otherwise expressly required by the Act or by this Agreement, any action or
determination that is required to be made by the Members shall require the
assent of a majority in interest of the Members at a meeting of the Members or
pursuant to a written consent of such Members.
7. Term. The Company shall dissolve, and its affairs shall be wound
----
up upon the earlier to occur of (i) at such time as all of the Members of the
Company approve unanimously in writing, or (ii) an entry of a decree of judicial
dissolution has occurred under (S) 18-802 of the Act.
8. Capital Contributions. The Initial Member shall contribute
---------------------
$1.00, in cash, and no other property, to the Company.
9. Additional Contributions. Each Member of the Company may, but is
------------------------
not required to, make additional capital contributions to the Company.
10. Allocation of Profit and Losses. The Company's profits and
-------------------------------
losses shall be allocated in proportion to the capital contributions of the
Members of the Company.
11. Distributions. At the time determined by the Members of the
-------------
Company, but at least once during each fiscal year of the Company, the Company
shall distribute any cash held by it that is not reasonably necessary for the
operation of the Company. Cash available for distribution shall be distributed
to the Members of the Company in the same proportion as their then capital
account balances.
12. Assignments. A Member may assign all or any part of his, her or
-----------
its membership interest in the Company only with the written consent of the
Members. A Member has no right to grant an assignee of its membership interest
in the Company the right to become a Member of the Company without the written
consent the Members.
13. Withdrawal. Except as provided in the following Section 14, no
---------- ----------
right is given to any Member of the Company to withdraw from the Company.
<PAGE>
14. Additional Members.
------------------
(a) The Company may admit additional Members to the Company upon
receiving the written consent of the Members. The Company may also admit an
assignee of a Member's membership interest in the Company as a Member of the
Company upon receiving the written consent of the Members.
(b) After the admission of any additional Members pursuant to this
Section 14, the Company shall continue as a limited liability company under the
- ----------
Act.
(c) The admission of additional Members to the Company pursuant to
this Section 14 shall be accomplished by the amendment of this Agreement and, if
----------
required by the Act, the filing of an appropriate amendment of the Company's
Certificate of Formation in the office of the Secretary of State of the State of
Delaware.
15. Certificates. The Company may, but is not required to, issue to
------------
the Members certificates representing their membership interests in the Company.
16. Management.
----------
(a) Except for those matters for which the approval of the Members is
required by this Agreement or by nonwaivable provisions of applicable law, and
subject to the provisions of subsection (b) below, (i) the Company shall be
managed by and under the authority and direction of, the Manager (as hereinafter
defined); (ii) the Manager, acting alone, shall have the right, power and the
authority to bind the Company; and (iii) the Manager may make all decisions and
take all actions for the Company not otherwise provided for in this Agreement.
The Manager shall have the right, power and authority to delegate to one or more
other persons or entities the Manager's rights and powers to manage and control
the business and affairs of the Company, including to delegate to agents,
officers and employees of a Member or the Manager, and to delegate by a
management agreement or another agreement with, or otherwise to, other pesons or
entities.
(b) Notwithstanding the provisions of subsection (a) above, the
Manager may not cause the Company to do any of the following without the consent
of the Members: (i) amend the Certificate of Formation (except for amendments
described in Section 18-202(b) of the Act); (ii) amend this Agreement; (iii)
admit additional Members to the Company; (iv) approve a merger or division in
which the Company is a party; (v) determine in kind distributions of the assets
of the Company; (vi) form any subsidiary of the Company or acquire any equity
interest in any other person or entity business; or (vii) take any other action
for which the consent of the Members is expressly provided by the provisions of
this Agreement.
<PAGE>
(c) The Manager of the Company (the "Manager") shall be Triton
Management Company, Inc., a Delaware corporation, or any other person or entity
that the Members shall appoint to act in such capacity. The Manager shall hold
office until its successor shall have been elected and qualified. The Manager
need not be a Member or a resident of the State of Delaware.
(d) Any vacancy in the Manager position may be filled by the Members.
A Manager elected to fill a vacancy shall be elected for the unexpired term of
his/her/its predecessor in office. The Manager may be removed at any time, with
or without cause, by the Members. Any Manager may resign at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein, or if no time be specified, at the time of its receipt by the Members.
The acceptance of a resignation shall not be necessary to make it effective,
unless expressly so provided in the resignation.
(e) The Managers in his/her/its discretion may submit any act or
contract for approval or ratification to the Members, and any act or contract
that shall be approved or be ratified by the Members shall be as valid and as
binding upon the Company and upon all the Members as if it shall have been
approved or ratified by every Member of the Company.
(f) The Manager shall receive such compensation, if any, for
his/her/its services as may be designated from time to time by the Members. In
addition, the Manager shall be entitled to be reimbursed for out-of-pocket costs
and expenses incurred in the course of his/her/its service hereunder.
(g) Subject to the other express provisions of this Agreement, each
Manager and Member of the Company at any time and from time to time may engage
in and possess interests in other business ventures of any and every type and
description, independently or with others, including ones in competition with
the Company, with no obligation to offer to the Company or any other Member or
the Manager the right to participate, therein. The Company may transact
business with the Manager or any Member or affiliate thereof, provided the terms
of those transactions are no less favorable than those of the Company could
obtain from unrelated third parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
17. Governing Law. This Agreement shall be governed by, and
-------------
construed under, the substantive laws of the State of Delaware, all rights and
remedies being governed by said laws.
IN WITNESS WHEREOF, the undersigned, intending to be bound hereby,
have duly executed this Agreement as of the date first above written.
COMPANY:
-------
TRITON PCS EQUIPMENT COMPANY L.L.C.
By: Triton Management Company, Inc., its manager
By:
----------------------------------------------
David D. Clark, Senior Vice President
INITIAL MEMBER:
--------------
TRITON PCS HOLDINGS COMPANY L.L.C.
By: Triton Management Company, Inc., its manager
By:
----------------------------------------------
David D. Clark, Senior Vice President
JOINDER OF MANAGER
------------------
The undersigned, the within named Manager, hereby agrees to be bound
by the provisions of the foregoing Agreement that are applicable to Managers of
the Company.
IN WITNESS WHEREOF, the undersigned, intending to be bound hereby, has
duly executed this Agreement as of the date first above written.
MANAGER:
-------
TRITON MANAGEMENT COMPANY, INC.
By:
----------------------------------------------
David D. Clark, Senior Vice President
<PAGE>
EXHIBIT 3.11
CERTIFICATE OF FORMATION
OF
TRITON PCS OPERATING
COMPANY L.L.C.
ARTICLE I
---------
The name of the Limited Liability Company is Triton PCS Operating
Company L.L.C.
ARTICLE II
----------
The address of the Limited Liability Company's registered office in
the State of Delaware is Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801. The name of its registered agent
at such address is The Corporation Trust Company.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation this ________ day of December, 1997.
MEMBER:
TRITON PCS HOLDINGS COMPANY L.L.C.
By:
----------------------------------------
David D. Clark, Senior Vice President
<PAGE>
EXHIBIT 3.12
LIMITED LIABILITY COMPANY AGREEMENT
OF
TRITON PCS OPERATING COMPANY L.L.C.
This Limited Liability Company Agreement (this "Agreement") is entered
into as of the 22nd day of December, 1997 by and between Triton PCS Operating
Company L.L.C., a Delaware limited liability company (the "Company"), and Triton
PCS Holdings Company L.L.C., a Delaware limited liability company (the "Initial
Member").
The Company has been formed as a limited liability company pursuant to
and in accordance with the Delaware Limited Liability Company Act (6 Del. C.
---- --
(S)(S) 18-101, et seq.) (the "Act"), and the Company and the Initial Member
-- ---
hereby agree as follows:
1. Name. The name of the limited liability company is Triton PCS
----
Operating Company L.L.C.
2. Purpose. The Company is organized to carry on any lawful
-------
business, purpose or activity permitted under the Act, and the Company shall
possess and may exercise all the powers and privileges granted by the Act or by
any other law or by this Agreement, together with any powers incidental thereto,
so far as such powers and privileges are necessary or convenient to the conduct,
promotion or attainment of the business, purposes or activities of the Company.
3. Registered Office. The registered office of the Company in the
-----------------
State of Delaware is c/o The Company Trust Company, Company Trust Center, 1209
Orange Street, Wilmington, Delaware 19801.
4. Registered Agent. The name of the registered agent of the
----------------
Company for service of process on the Company in the State of Delaware is The
Company Trust Company.
5. Addresses. The mailing addresses of the Company and the Initial
---------
Member are as follows:
COMPANY:
-------
Triton PCS Operating Company L.L.C.
c/o Triton Communications L.L.C.
101 Lindenwood Drive
Suite 125
Malvern, Pennsylvania 19355
<PAGE>
INITIAL MEMBER:
--------------
Triton PCS Holdings Company L.L.C.
c/o Triton Communications L.L.C.
101 Lindenwood Drive
Suite 125
Malvern, Pennsylvania 19355
6. Members; Power of Members. As used herein, the term "Members"
-------------------------
shall mean the Initial Member and any other person or entity admitted as a
member of the Company in accordance with the terms of the Act and this
Agreement. The power of the Members includes all powers, statutory and
otherwise, possessed by Members of a limited liability company under the laws of
the State of Delaware, including the Act. Unless a greater percentage shall be
otherwise expressly required by the Act or by this Agreement, any action or
determination that is required to be made by the Members shall require the
assent of a majority in interest of the Members at a meeting of the Members or
pursuant to a written consent of such Members.
7. Term. The Company shall dissolve, and its affairs shall be wound
----
up upon the earlier to occur of (i) at such time as all of the Members of the
Company approve unanimously in writing, or (ii) an entry of a decree of judicial
dissolution has occurred under (S) 18-802 of the Act.
8. Capital Contributions. The Initial Member shall contribute
---------------------
$1.00, in cash, and no other property, to the Company.
9. Additional Contributions. Each Member of the Company may, but is
------------------------
not required to, make additional capital contributions to the Company.
10. Allocation of Profit and Losses. The Company's profits and
-------------------------------
losses shall be allocated in proportion to the capital contributions of the
Members of the Company.
11. Distributions. At the time determined by the Members of the
-------------
Company, but at least once during each fiscal year of the Company, the Company
shall distribute any cash held by it that is not reasonably necessary for the
operation of the Company. Cash available for distribution shall be distributed
to the Members of the Company in the same proportion as their then capital
account balances.
12. Assignments. A Member may assign all or any part of his, her or
-----------
its membership interest in the Company only with the written consent of the
Members. A Member has no right to grant an assignee of its membership interest
in the Company the right to become a Member of the Company without the written
consent the Members.
13. Withdrawal. Except as provided in the following Section 14, no
---------- ----------
right is given to any Member of the Company to withdraw from the Company.
<PAGE>
14. Additional Members.
------------------
(a) The Company may admit additional Members to the Company upon
receiving the written consent of the Members. The Company may also admit an
assignee of a Member's membership interest in the Company as a Member of the
Company upon receiving the written consent of the Members.
(b) After the admission of any additional Members pursuant to this
Section 14, the Company shall continue as a limited liability company under the
- ----------
Act.
(c) The admission of additional Members to the Company pursuant to
this Section 14 shall be accomplished by the amendment of this Agreement and, if
----------
required by the Act, the filing of an appropriate amendment of the Company's
Certificate of Formation in the office of the Secretary of State of the State of
Delaware.
15. Certificates. The Company may, but is not required to, issue to
------------
the Members certificates representing their membership interests in the Company.
16. Management.
----------
(a) Except for those matters for which the approval of the Members
is required by this Agreement or by nonwaivable provisions of applicable law,
and subject to the provisions of subsection (b) below, (i) the Company shall be
managed by and under the authority and direction of, the Manager (as hereinafter
defined); (ii) the Manager, acting alone, shall have the right, power and the
authority to bind the Company; and (iii) the Manager may make all decisions and
take all actions for the Company not otherwise provided for in this Agreement.
The Manager shall have the right, power and authority to delegate to one or more
other persons or entities the Manager's rights and powers to manage and control
the business and affairs of the Company, including to delegate to agents,
officers and employees of a Member or the Manager, and to delegate by a
management agreement or another agreement with, or otherwise to, other pesons or
entities.
(b) Notwithstanding the provisions of subsection (a) above, the
Manager may not cause the Company to do any of the following without the consent
of the Members: (i) amend the Certificate of Formation (except for amendments
described in Section 18-202(b) of the Act); (ii) amend this Agreement; (iii)
admit additional Members to the Company; (iv) approve a merger or division in
which the Company is a party; (v) determine in kind distributions of the assets
of the Company; (vi) form any subsidiary of the Company or acquire any equity
interest in any other person or entity business; or (vii) take any other action
for which the consent of the Members is expressly provided by the provisions of
this Agreement.
<PAGE>
(c) The Manager of the Company (the "Manager") shall be Triton
Management Company, Inc., a Delaware corporation, or any other person or entity
that the Members shall appoint to act in such capacity. The Manager shall hold
office until its successor shall have been elected and qualified. The Manager
need not be a Member or a resident of the State of Delaware.
(d) Any vacancy in the Manager position may be filled by the
Members. A Manager elected to fill a vacancy shall be elected for the unexpired
term of his/her/its predecessor in office. The Manager may be removed at any
time, with or without cause, by the Members. Any Manager may resign at any time.
Such resignation shall be made in writing and shall take effect at the time
specified therein, or if no time be specified, at the time of its receipt by the
Members. The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation.
(e) The Managers in his/her/its discretion may submit any act or
contract for approval or ratification to the Members, and any act or contract
that shall be approved or be ratified by the Members shall be as valid and as
binding upon the Company and upon all the Members as if it shall have been
approved or ratified by every Member of the Company.
(f) The Manager shall receive such compensation, if any, for
his/her/its services as may be designated from time to time by the Members. In
addition, the Manager shall be entitled to be reimbursed for out-of-pocket costs
and expenses incurred in the course of his/her/its service hereunder.
(g) Subject to the other express provisions of this Agreement,
each Manager and Member of the Company at any time and from time to time may
engage in and possess interests in other business ventures of any and every type
and description, independently or with others, including ones in competition
with the Company, with no obligation to offer to the Company or any other Member
or the Manager the right to participate, therein. The Company may transact
business with the Manager or any Member or affiliate thereof, provided the terms
of those transactions are no less favorable than those of the Company could
obtain from unrelated third parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
16. Governing Law. This Agreement shall be governed by, and
-------------
construed under, the substantive laws of the State of Delaware, all rights and
remedies being governed by said laws.
IN WITNESS WHEREOF, the undersigned, intending to be bound hereby,
have duly executed this Agreement as of the date first above written.
COMPANY:
-------
TRITON PCS OPERATING COMPANY L.L.C.
By: Triton Management Company, Inc., its manager
By:
----------------------------------------------
David D. Clark, Senior Vice President
INITIAL MEMBER:
--------------
TRITON PCS HOLDINGS COMPANY L.L.C.
By: Triton Management Company, Inc., its manager
By:
----------------------------------------------
David D. Clark, Senior Vice President
JOINDER OF MANAGER
------------------
The undersigned, the within named Manager, hereby agrees to be bound
by the provisions of the foregoing Agreement that are applicable to Managers of
the Company.
IN WITNESS WHEREOF, the undersigned, intending to be bound hereby, has
duly executed this Agreement as of the date first above written.
MANAGER:
-------
TRITON MANAGEMENT COMPANY, INC.
By:
----------------------------------------------
David D. Clark, Senior Vice President
<PAGE>
EXHIBIT 3.13
CERTIFICATE OF FORMATION
OF
TRITON PCS PROPERTY
COMPANY L.L.C.
ARTICLE I
---------
The name of the Limited Liability Company is Triton PCS Property
Company L.L.C.
ARTICLE II
----------
The address of the Limited Liability Company's registered office in
the State of Delaware is Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801. The name of its registered agent
at such address is The Corporation Trust Company.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation this _____ day of December, 1997.
MEMBER:
TRITON PCS HOLDINGS COMPANY L.L.C.
By:
--------------------------------------
David D. Clark, Senior Vice President
<PAGE>
EXHIBIT 3.14
LIMITED LIABILITY COMPANY AGREEMENT
OF
TRITON PCS PROPERTY COMPANY L.L.C.
This Limited Liability Company Agreement (this "Agreement") is entered
into as of the 22nd day of December, 1997 by and between Triton PCS Property
Company L.L.C., a Delaware limited liability company (the "Company"), and Triton
PCS Holdings Company L.L.C., a Delaware limited liability company (the "Initial
Member").
The Company has been formed as a limited liability company pursuant to
and in accordance with the Delaware Limited Liability Company Act (6 Del. C.
---- --
(S)(S) 18-101, et seq.) (the "Act"), and the Company and the Initial Member
-- ---
hereby agree as follows:
1. Name. The name of the limited liability company is Triton PCS
----
Property Company L.L.C.
2. Purpose. The Company is organized to carry on any lawful
-------
business, purpose or activity permitted under the Act, and the Company shall
possess and may exercise all the powers and privileges granted by the Act or by
any other law or by this Agreement, together with any powers incidental thereto,
so far as such powers and privileges are necessary or convenient to the conduct,
promotion or attainment of the business, purposes or activities of the Company.
3. Registered Office. The registered office of the Company in the
-----------------
State of Delaware is c/o The Company Trust Company, Company Trust Center, 1209
Orange Street, Wilmington, Delaware 19801.
4. Registered Agent. The name of the registered agent of the
----------------
Company for service of process on the Company in the State of Delaware is The
Company Trust Company.
5. Addresses. The mailing addresses of the Company and the Initial
---------
Member are as follows:
COMPANY:
-------
Triton PCS Property Company L.L.C.
c/o Triton Communications L.L.C.
101 Lindenwood Drive
Suite 125
Malvern, Pennsylvania 19355
<PAGE>
INITIAL MEMBER:
--------------
Triton PCS Holdings Company L.L.C.
c/o Triton Communications L.L.C.
101 Lindenwood Drive
Suite 125
Malvern, Pennsylvania 19355
6. Members; Power of Members. As used herein, the term "Members"
-------------------------
shall mean the Initial Member and any other person or entity admitted as a
member of the Company in accordance with the terms of the Act and this
Agreement. The power of the Members includes all powers, statutory and
otherwise, possessed by Members of a limited liability company under the laws of
the State of Delaware, including the Act. Unless a greater percentage shall be
otherwise expressly required by the Act or by this Agreement, any action or
determination that is required to be made by the Members shall require the
assent of a majority in interest of the Members at a meeting of the Members or
pursuant to a written consent of such Members.
7. Term. The Company shall dissolve, and its affairs shall be wound
----
up upon the earlier to occur of (i) at such time as all of the Members of the
Company approve unanimously in writing, or (ii) an entry of a decree of judicial
dissolution has occurred under (S) 18-802 of the Act.
8. Capital Contributions. The Initial Member shall contribute
---------------------
$1.00, in cash, and no other property, to the Company.
9. Additional Contributions. Each Member of the Company may, but is
------------------------
not required to, make additional capital contributions to the Company.
10. Allocation of Profit and Losses. The Company's profits and
-------------------------------
losses shall be allocated in proportion to the capital contributions of the
Members of the Company.
11. Distributions. At the time determined by the Members of the
-------------
Company, but at least once during each fiscal year of the Company, the Company
shall distribute any cash held by it that is not reasonably necessary for the
operation of the Company. Cash available for distribution shall be distributed
to the Members of the Company in the same proportion as their then capital
account balances.
12. Assignments. A Member may assign all or any part of his, her or
-----------
its membership interest in the Company only with the written consent of the
Members. A Member has no right to grant an assignee of its membership interest
in the Company the right to become a Member of the Company without the written
consent the Members.
13. Withdrawal. Except as provided in the following Section 14, no
---------- ----------
right is given to any Member of the Company to withdraw from the Company.
<PAGE>
14. Additional Members.
------------------
(a) The Company may admit additional Members to the Company upon
receiving the written consent of the Members. The Company may also admit an
assignee of a Member's membership interest in the Company as a Member of the
Company upon receiving the written consent of the Members.
(b) After the admission of any additional Members pursuant to
this Section 14, the Company shall continue as a limited liability company under
----------
the Act.
(c) The admission of additional Members to the Company pursuant
to this Section 14 shall be accomplished by the amendment of this Agreement
----------
and, if required by the Act, the filing of an appropriate amendment of the
Company's Certificate of Formation in the office of the Secretary of State of
the State of Delaware.
15. Certificates. The Company may, but is not required to, issue to
------------
the Members certificates representing their membership interests in the Company.
16. Management.
----------
(a) Except for those matters for which the approval of the
Members is required by this Agreement or by nonwaivable provisions of applicable
law, and subject to the provisions of subsection (b) below, (i) the Company
shall be managed by and under the authority and direction of, the Manager (as
hereinafter defined); (ii) the Manager, acting alone, shall have the right,
power and the authority to bind the Company; and (iii) the Manager may make all
decisions and take all actions for the Company not otherwise provided for in
this Agreement. The Manager shall have the right, power and authority to
delegate to one or more other persons or entities the Manager's rights and
powers to manage and control the business and affairs of the Company, including
to delegate to agents, officers and employees of a Member or the Manager, and to
delegate by a management agreement or another agreement with, or otherwise to,
other pesons or entities.
(b) Notwithstanding the provisions of subsection (a) above, the
Manager may not cause the Company to do any of the following without the consent
of the Members: (i) amend the Certificate of Formation (except for amendments
described in Section 18-202(b) of the Act); (ii) amend this Agreement; (iii)
admit additional Members to the Company; (iv) approve a merger or division in
which the Company is a party; (v) determine in kind distributions of the assets
of the Company; (vi) form any subsidiary of the Company or acquire any equity
interest in any other person or entity business; or (vii) take any other action
for which the consent of the Members is expressly provided by the provisions of
this Agreement.
<PAGE>
(c) The Manager of the Company (the "Manager") shall be Triton
Management Company, Inc., a Delaware corporation, or any other person or entity
that the Members shall appoint to act in such capacity. The Manager shall hold
office until its successor shall have been elected and qualified. The Manager
need not be a Member or a resident of the State of Delaware.
(d) Any vacancy in the Manager position may be filled by the
Members. A Manager elected to fill a vacancy shall be elected for the unexpired
term of his/her/its predecessor in office. The Manager may be removed at any
time, with or without cause, by the Members. Any Manager may resign at any time.
Such resignation shall be made in writing and shall take effect at the time
specified therein, or if no time be specified, at the time of its receipt by the
Members. The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation.
(e) The Managers in his/her/its discretion may submit any act or
contract for approval or ratification to the Members, and any act or contract
that shall be approved or be ratified by the Members shall be as valid and as
binding upon the Company and upon all the Members as if it shall have been
approved or ratified by every Member of the Company.
(f) The Manager shall receive such compensation, if any, for
his/her/its services as may be designated from time to time by the Members. In
addition, the Manager shall be entitled to be reimbursed for out-of-pocket costs
and expenses incurred in the course of his/her/its service hereunder.
(g) Subject to the other express provisions of this Agreement,
each Manager and Member of the Company at any time and from time to time may
engage in and possess interests in other business ventures of any and every type
and description, independently or with others, including ones in competition
with the Company, with no obligation to offer to the Company or any other Member
or the Manager the right to participate, therein. The Company may transact
business with the Manager or any Member or affiliate thereof, provided the terms
of those transactions are no less favorable than those of the Company could
obtain from unrelated third parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
16. Governing Law. This Agreement shall be governed by, and
-------------
construed under, the substantive laws of the State of Delaware, all rights and
remedies being governed by said laws.
IN WITNESS WHEREOF, the undersigned, intending to be bound hereby,
have duly executed this Agreement as of the date first above written.
COMPANY:
-------
TRITON PCS PROPERTY COMPANY L.L.C.
By: Triton Management Company, Inc., its manager
By:
---------------------------------------------
David D. Clark, Senior Vice President
INITIAL MEMBER:
--------------
TRITON PCS HOLDINGS COMPANY L.L.C.
By: Triton Management Company, Inc., its manager
By:
---------------------------------------------
David D. Clark, Senior Vice President
JOINDER OF MANAGER
------------------
The undersigned, the within named Manager, hereby agrees to be bound
by the provisions of the foregoing Agreement that are applicable to Managers of
the Company.
IN WITNESS WHEREOF, the undersigned, intending to be bound hereby, has
duly executed this Agreement as of the date first above written.
MANAGER:
-------
TRITON MANAGEMENT COMPANY, INC.
By:
---------------------------------------------
David D. Clark, Senior Vice President
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF LATHAM & WATKINS APPEARS HERE]
September 25, 1998
Triton PCS, Inc.
375 Technology Drive
Malvern, PA 19355
Re: Triton PCS, Inc.
Registration Statement on
Form S-4 (File No. 333-57715)
-----------------------------
Ladies and Gentlemen:
In connection with the registration of $511,989,000 aggregate
principal amount of 11% Senior Subordinated Discount Notes due 2008 (the
"Exchange Notes") under the Securities Act of 1933, as amended (the "Act"), by
Triton PCS, Inc., a Delaware corporation (the "Company"), and the related
guarantees (the "Guarantees") of the Exchange Notes issued by subsidiaries (the
"Guarantors") of the Company on Form S-4 filed with the Securities and Exchange
Commission (the "Commission") on June 25, 1998 (File No. 333-57715), as amended
by Amendment No. 1 filed with the Commission on September 3, 1998 and by
Amendment No. 2 filed with the Commission on September 25, 1998 (collectively,
the "Registration Statement"), you have requested our opinion with respect to
the matters set forth below. The Exchange Notes will be issued pursuant to an
indenture (the "Indenture"), dated as of May 4, 1998, among the Company, the
Guarantors and PNC Bank, National Association, as trustee (the "Trustee"). The
Exchange Notes will be issued in exchange for the Company's outstanding 11%
<PAGE>
Triton PCS, Inc.
September 25, 1998
Page 2
Senior Subordinated Discount Notes due 2008 (the "Old Notes") on the terms set
forth in the prospectus contained in the Registration Statement and the Letter
of Transmittal filed as an exhibit thereto.
In our capacity as counsel in connection with such registration, we
are familiar with the proceedings taken by the Company and the Guarantors in
connection with the authorization of the Exchange Notes and the Guarantees and
proceedings proposed to be taken in connection with the issuance of the Exchange
Notes and the Guarantees, respectively, and for the purposes of this opinion,
have assumed such proceedings will be timely completed in the manner presently
proposed. In addition, we have made such legal and factual examinations and
inquiries, including an examination of originals or copies, certified or
otherwise identified to our satisfaction of such documents, corporate records
and instruments, as we have deemed necessary or appropriate for purposes of this
opinion.
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity to authentic original documents of all documents submitted to us as
copies.
We are opining herein as to the effect on the subject transaction only
of the internal laws of the state of New York, and we express no opinion with
respect to the applicability thereto, or the effect thereon, of the laws of any
other jurisdiction or as to any matters of municipal law or the laws of any
other local agencies within the state.
Subject to the foregoing and the other matters set forth herein, it is
our opinion that upon issuance thereof in the manner described in the
Registration Statement:
1. The Exchange Notes have been duly authorized by all
necessary corporate action of the Company, and when
executed, authenticated and delivered by or on behalf of the
company in exchange for the Old Notes in accordance with the
terms of the Indenture, will constitute legally valid and
binding obligations of the Company, enforceable against the
Company in accordance with their terms.
2. Each of the Guarantees has been duly authorized by all
necessary corporate action of the respective Guarantors, and
when executed in accordance with the terms of the Indenture
and upon due execution, authentication and delivery of the
Exchange Notes by or on behalf of the Company, will be
legally valid and binding obligations of the respective
Guarantors, enforceable against the Guarantors in accordance
with their terms.
The opinions rendered in paragraphs 1 and 2 are subject to the
following exceptions, limitations and qualifications: (i) the effect of
<PAGE>
Triton PCS, Inc.
September 25, 1998
Page 3
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors; (ii) the effect of general principles of equity, whether enforcement
is considered in a proceeding in equity or at law, and the discretion of the
court before which any proceeding therefor may be brought; (iii) we express no
opinion concerning the enforceability of the waiver of rights or defenses
contained in Section 4.13 of the Indenture; and (iv) we express no opinion with
respect to whether acceleration of the Exchange Notes may affect the
collectibility of that portion of the stated principal amount thereof which
might be determined to constitute unearned interest thereon.
To the extent that the obligations of the Company and the Guarantors
under the Indenture, the Exchange Notes and the Guarantees, as applicable, may
be dependent upon such matters, we have assumed for purposes of this opinion
that (i) the Trustee (a) is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization; (b) has the
requisite organizational and legal power and authority to perform its
obligations under the Indenture; (c) is duly qualified to engage in the
activities contemplated by the Indenture; and (d) has duly authorized, executed
and delivered the Indenture; (ii) the Indenture is the legally valid and binding
agreement of the Trustee, enforceable against the Trustee in accordance with its
terms; and (iii) the Trustee is in compliance, generally and with respect to
acting as Trustee under the Indenture, with all applicable laws and regulations.
We have also assumed, with your consent, that the choice of law provisions in
the Indenture would be enforced by any court in which enforcement thereof might
be sought.
We have not been requested to express and, with your knowledge and
consent, do not render any opinion as to the applicability to the obligations of
the Company and the Guarantors under the Indenture, the Exchange Notes and the
Guarantees, as applicable, of Sections 547 and 548 of the Bankruptcy Code or
applicable state law (including, without limitation, Article 10 of the New York
Debtor & Creditor Law) relating to preferences and fraudulent transfers and
obligations.
We consent to your filing this opinion as an exhibit to the
Registration Statement and to the reference to our firm contained under the
heading "Legal Matters."
Very truly yours,
/s/ Latham & Watkins
<PAGE>
Exhibit 10.12
TRITON/WFI MASTER SERVICES AGREEMENT
THIS MASTER SERVICES AGREEMENT (this "Agreement") is entered into effective
as January 19, 1998 (the "Effective Date") by and between TRITON PCS OPERATING
COMPANY, L.L.C., a Delaware limited liability company (the "Company"), and
Wireless Facilities Inc., a New York corporation that is in the process of
reincorporating in Delaware ("Contractor") (collectively, the "Parties"). The
Company desires to engage Contractor to perform the "Services," as defined
below, and Contract desires to provide the Services. Therefore, the parties
agree as follows:
1. SERVICES. The Company hereby engages Contractor as an independent
--------
contractor to provide the services set forth in Exhibit A hereto (the
---------
"Services") .
2. INDEPENDENT CONTRACTOR RELATIONSHIP. Contractor shall act as an independent
-----------------------------------
contractor to the Company, and nothing in this Agreement shall be deemed to
create a relationship of employer-employee, principal-agent, partner, or joint
venture between Contractor and the Company. Neither party has any authority to
bind the other to any contract or agreement without the other's written
permission. The Company has no power to supervise, give directions or otherwise
regulate Contractor's operations, although the Company will be supervising the
Contractor's personnel that Contractor is supplying pursuant to this Agreement.
Notwithstanding the foregoing, the Company shall retain the right to request in
writing upon fifteen (15) days' notice therefor that any employee of Contractor
who does not have the requisite skills be removed from the job. No reasonable
request of the Company shall be refused concerning the dismissal or reassignment
of personnel in conformance with this section. Contractor shall be solely
responsible for payment of compensation to Contractor's employees and for all of
Contractor's federal, state and local payroll taxes, withholding, social
security, and unemployment insurance. Neither party is an agent of the other
party and neither has the authority to represent the other party as to any
matters.
3. TERM. The term of this Agreement shall begin on the Effective Date, and
----
shall expire on the second (2nd) anniversary of the Effective Date (the "Initial
Term"). The term shall automatically renew for eight (8) successive one (1) year
periods, unless either party provides the other with written notice of this
intent not to renew the term of this Agreement at least sixty (60) days prior to
the expiration of the Initial Term or any renewal term. During the Initial Term
and any renewal terms (collectively, the "Term"), in addition to the services
described in Exhibit A, Contractor shall be the Company's preferred radio The
term of this Agreement shall begin on the Effective Date, and shall expire on
the second (2nd) anniversary of the Effective Date (the "Initial Term"). The
term shall automatically renew for eight (8) successive one (1) year periods,
unless either party provides the other with written notice of this intent not to
renew the term of this Agreement at least sixty (60) days prior to the
expiration of the Initial Term or any renewal term. During the Initial Term and
any renewal terms (collectively, the "Term"), in addition to the services
described in Exhibit A, Contractor shall be the Company's preferred radio
---------
frequency engineering vendor/provider and shall have a right of first refusal on
all radio frequency engineering projects awarded by the Company or any affiliate
or joint venture of the Company. In any event, the termination or expiration of
the Term shall not reduce or terminate the Company's payment obligations for
services provided to the date of termination or the Parties' confidentiality
obligations under Section 9 of this Agreement. Upon termination of the Term,
all physical property of the parties shall be returned to the proper party,
including any cellular telephones or related equipment.
4. EARLY TERMINATION. The Term may be terminated early:
-----------------
4.1 TERMINATION FOR BREACH. By Company or Contractor, immediately upon
----------------------
written notice of termination, in the event of a material breach of this
Agreement by the Other party, if such breach continues uncured for a period of
fifteen (15) business days after receipt of written notice of such breach.
4.2 TERMINATION OF INSOLVENCY. By Company or Contractor, immediately upon
-------------------------
written notice of termination by the other Party, in the event the other Party
shall: (i) become insolvent; (ii) make an assignment for the benefit of
creditors; (iii) file a voluntary bankruptcy petition; (iv) acquiesce to any
involuntary bankruptcy petition; (v) be adjudicated bankrupt; or (vi) cease to
do business (other than as a result of an acquisition or merger).
<PAGE>
4.3 RETURN OF INFORMATION. Upon termination of this Agreement, the parties
---------------------
hereto shall, within thirty (30) days return all of the other party's
information in written, graphic or tangible from relating to this Agreement.
Notwithstanding the foregoing, upon the Company's payment for all Services
provided through the date of termination, the Company shall be entitled to
retain on a non-exclusive basis, any and all work product prepared or assembled
by Contractor through the day of termination.
5. PAYMENT. The Company shall pay Contractor for the Services performed
-------
pursuant to this Agreement as specified in Exhibit B. The prices ("Prices") set
---------
forth in Exhibit B shall be fixed for each Site during the Term of the Agreement
---------
unless a specific change is mutually agreed to by the Parties in writing.
Contractor shall submit invoices for each payment due on a Site as set forth in
Exhibit B. The Company agrees that the invoice amount is correct, conclusive and
- ---------
binding unless the Company notifies Contractor in writing no later than fourteen
(14) days following the invoice date that the Company disputes a particular item
in an invoice. The Company's obligations to pay the remaining portion of a
particular invoice. To mitigate for the expenses and costs the parties
reasonably anticipate will occur, any invoice that remains unpaid more than
thirty-five (35) days after the invoice date shall automatically incur a late
payment charge equal to five percent (5%) of the amount charged on the unpaid
invoice, and the overdue amount owing on the invoice shall thereafter be
assessed a finance charge equal to the lesser of: (i) one and one-half percent
(1.5%) per month, or (ii) the highest interest rate permitted by law. The
Company shall pay all invoices within thirty (30) days from the date of the
invoice without right of offset. Contractor shall not file any mechanics liens
with respect to the Services prior to adjudication of any disputes between the
parties.
6. INSURANCE. Contractor shall maintain comprehensive general liability
---------
insurance coverage in an amount not less than One Million Dollars ($1,000,000)
per occurrence for bodily injury or death, personal injury and property damage
liability. Contractor shall name the Company as an additional insured on all
applicable policies. Contractor shall promptly provide the Company with proof of
such insurance as reasonably requested by the Company.
7. INFORMATION REPORTING. In order to track the progress of each site, Company
---------------------
requires the Contract to adhere to the following reporting methods:
7.1 SITE DATA REPORTING. In addition to the Services in Exhibit A, there
------------------- ---------
are a number of data items that must be documented, communicated and stored by
Contractor on behalf of the Company. Contractor will provide such additional
information as reasonably required by the Company.
7.2 SCHEDULED AND MILESTONE DATA REPORTING. Contractor will maintain an
--------------------------------------
accurate and up to date schedule of it engineering activities in a format
reasonably acceptable to the Company.
8. INDEMNIFY. Each of Contractor and the Company agree to defend, indemnify and
---------
hold harmless the other and all of their affiliates or subsidiaries companies,
their officers, agents and employees from any all costs, damages, expenses,
losses, claims, actions, suits, causes of action, judgments, and charges of
every kind and nature whatsoever, including reasonable attorney's fees, which
may in any manner arise out of or relate to the performance or non-performance
of this Agreement, except as this obligation is limited by Section 11
(Remedies).
9. PROTECTION OF CONFIDENTIAL INFORMATION AND EMPLOYEES.
----------------------------------------------------
9.1 CONFIDENTIALITY. Each Party, including its affiliates, officers,
---------------
directors, representatives and agents, shall hold confidential information
representatives and agents, shall hold confidential information received from
the other party in confidence, shall use such information only for the purpose
2
<PAGE>
and in accordance with this Agreement, and shall not disclose such information
to any third party without the prior express written approval of the disclosing
party. All confidential information shall remain the property of the disclosing
party and shall be returned on written request or upon termination of this
Agreement. Confidential information shall not include information that: (i) is
or becomes publicly known for no wrongful act, fault or negligence of the non-
disclosing party; (ii) was known by the non-disclosing party prior to disclosure
and the non-disclosing party was not under a duty of non-disclosure; (iii) was
disclosed to the non-disclosing party by someone not a party to this agreement
who was free of obligations of confidentiality to the disclosing party; (iv) is
approved for release by written authorization of the disclosing party; (v) is
publicly disclosed pursuant to a requirement or request of a governmental agency
or where disclosure is required by operation of law; or (vi) is furnished to
someone not a party to this Agreement by the disclosing party without a similar
restriction on rights.
9.2 EMPLOYEE PROTECTION. During the Term and for a period lasting six (6)
-------------------
months beyond the Term, neither Party shall directly or indirectly solicit for
hire, contract with, retain, or employee anyone employed by the other Party
during the Term.
10. WARRANTIES.
----------
10.1 NO VIOLATION. The Company and Contractor warrant that the execution of
------------
this Agreement and their performance of their respective obligations hereunder
does not now and will not in the future violate any agreement with any third
party, or any obligation to any third party.
10.2 REGISTRATION REQUIREMENTS. Contractor warrants that Contractor has
-------------------------
complied with all applicable registration and licensing requirements to enable
Contractor to act as an independent contractor under the terms of this
Agreement.
11. REMEDIES. Upon the sending of written notice to the Company of completion
--------
of an item set forth in Exhibit A, the Company shall have fifteen (15) days (the
---------
"Warranty Period") to provide written notice to Contractor requiring Contractor
to repair or remedy all defects solely caused by Contractor in completing the
item. This shall be the Company's exclusive remedy. Failure of the Company to
give timely notice during the Warranty Period shall be deemed a waiver of any
right, claim, damages, injury or liability that the Company may have against
Contractor. Contractor shall have up to ninety (90) days at its election to
repair or remedy the defects or else return to the Company the amount actually
received by Contractor for that item.
11.1 INAPPLICABILITY. In no event shall Contractor's obligations arise for
---------------
any damage or defect to the extent it is caused or made worse by:
11.1.1 Negligence, improper maintenance or improper operation by
anyone other than WFI or WFI's employees, agents or subcontractors; or
11.1.2 Failure by the Company or by anyone other than Contractor or
Contractor's employees, agents or subcontractors to comply with the warranty
requirements of manufacturers of equipment or other components; or
11.1.3 Failure by the Company to give notice to Contractor of any
defects during the Warranty Period; or
11.1.4 Changes, alterations or additions or additions made to the
work by anyone other than Contractor; or
3
<PAGE>
11.1.5 The failure of anyone other than Contractor to maintain the
work property; or
11.1.6 Loss or damage that the Company has not taken reasonable and
timely action to minimize; or
11.1.7 Any defect in, caused by, or resulting from, materials or
work supplied by anyone other than Contractor, its employees, agents or
subcontractors; or
11.1.8 Normal wear and tear or normal deterioration; or
11.1.9 Loss or damage caused by, or resulting from, accidents, riot
and civil commotion, fire, explosion, smoke, water escape, falling objects,
aircraft, vehicles, Acts of God, lighting, windstorm, hail, flood, mudslide,
earthquake, volcanic eruption, wind-driven water, or changes in the underground
water table; or
11.1.10 Loss or damage caused by, or resulting from, seepage of
water; or
11.1.11 Bodily injury or damage to personal property.
11.2 DISCLAIMER OF WARRANTIES. Following the Warranty Period, Contractor
------------------------
shall have no further obligations to the Company for the particular item. Except
as specifically provided herein. CONTRACTOR DISCLAIMS ALL WARRANTIES OF EVERY
KIND, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTY OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
11.3 LIMITATION OF LIABILITY. EXCEPT AS SPECIFICALLY PROVIDED HEREIN,
-----------------------
CONTRACTOR SHALL NOT BE LIABLE FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF PROFITS) WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER LEGAL THEORY. Notwithstanding anything in this Agreement to
the contrary or elsewhere, in no event shall Contractor be liable in the
aggregate for more than Contractor actually received from the Company under this
Agreement.
12. PATENTS. Contractor represents and warrants that it is authorized to use,
-------
install, or disclose materials, techniques, devices, or information as may be
required to perform the Services required hereunder other than those supplied by
the Company or other parties not affiliated with Contractor, and that all
necessary royalties or license fees have been paid. Subject to this Agreement,
Contractor shall save, defend, hold harmless, and indemnify the Company from any
and all claims, suits and proceedings for the infringement of any patent,
copyright, trade secret or other intellectual property rights arising from the
performance of this Agreement.
13. PROTECTION OF PERSONS AND PROPERTY.
----------------------------------
13.1 PRECAUTIONS. Contractor shall at all times take reasonable
-----------
precautions to protect the persons and property of others which may be on or
adjacent to the site of performance of Contractor's obligations hereunder from
damage, loss or injury resulting from performance under this Agreement by
Contractor or any other party with whom Contractor may have subcontracted.
Contractor shall not disturb or displace any protection installed by others.
Subject to this Agreement, any property moved or damaged by Contractor during
the course of performance of the work hereunder shall be returned or repaired by
Contractor, at Contractor's expense, to the Company's reasonable satisfaction.
13.2 NOTIFICATION OF INJURY OR DISEASE. Contractor shall promptly notify
---------------------------------
the Company upon learning of any injury, death, loss or damage to any persons,
animals or property that is related to or
4
<PAGE>
occurs at the Services site during the performance of the Services, whether or
not caused by or involving in any way, Contractor, its employees or agents.
14. TAXES. Contractor shall pay all taxes, required by law in connection with
-----
this Agreement, including, without limitation, sales, use, storage, and similar
taxes, and shall secure, at Contractor's expense, all licenses and permits, pay
all charges and fees, and give all notices necessary for the Contractor's
performance of this Agreement and Contractor's furnishing of materials and shall
provide evidence of such upon demand.
15. ENTIRE AGREEMENT. This Agreement contains the entire understanding of the
----------------
parties with respect to the subject matter hereof, and supersedes all prior
agreements and understandings between the parties.
16. MODIFICATIONS. This Agreement may be modified only in writing executed by
-------------
both parties. Pre-printed terms and conditions that may be printed on either
side of a work order or similar communication shall not supersede the terms of
this Agreement.
17. ASSIGNMENT. This Assignment may not be assigned except upon the written
----------
consent of the non-assigning party, which consent may not be unreasonably
withheld; provided, however, that no consent shall be required for the Company
to assign any of its rights hereunder to any of its affiliates, including,
without limitation, AT&T and any of AT&T's affiliated entities, or to any
purchaser of substantially all of the Company's assets, if such affiliate or
purchaser has a net worth equal to or greater than the net worth of the Company
as of the date hereof and the Company remains liable. This Agreement shall be
binding upon the successors and assigns of the Parties.
18. NOTICES. All notices or other written communications required under this
-------
Agreement shall be given personally or by certified mail to the parties at the
following addresses:
To the Company: Triton PCS Operating Company, LLC
101 Lindenwood Drive, Suite 125
Malvern, PA 19355
Attn: The President
Copy To: Jay Goldstein, Esq.
Kleinebard, Bell & Brecker
1900 Market Street, Suite 700
Philadelphia, PA 19103
To Contractor: Wireless Facilities, Inc.
9725 Scranton Road, Suite 140
San Diego, CA 92121
Attn: Masood K. Tayebi, Ph.D., President
Copy To: William W. Eigner, Esq.
Procopio, Cory, Hargreaves & Savitch LLP
530 "B" Street, Suite 2100
San Diego, CA 92101
All notices shall be effective upon receipt if delivered personally, or
three (3) days following mailing.
5
<PAGE>
19. GOVERNING LAW. This Agreement shall be governed by and construed according
-------------
to the internal laws of the State of Delaware without regard to Delaware's
choice-of-law provisions. Venue in any action brought with respect to this
Agreement by the Company shall be in state or federal courts in Philadelphia,
Pennsylvania, and each party consents to the jurisdiction of those courts. Venue
in any action brought with respect to this Agreement by Contractor shall be in
federal or state court in Virginia, and each party consents to the jurisdiction
of those courts.
20. ATTORNEYS' FEES. In any legal action arising from or relating to this
---------------
Agreement, the substantially prevailing party (as determined by the court) shall
be entitled to recover reasonable attorneys' fees and other costs incurred in
that action or proceeding (including, without limitation, expert witness fees),
in addition to any other relief to which the prevailing party may be entitled.
21. INCORPORATION BY REFERENCE. The additional terms and conditions contained
--------------------------
in any exhibit or attachment are hereby incorporated into this Agreement.
22. FORCE MAJEURE. If the performance of any part of this Agreement, except for
-------------
payment obligations, by either party is delayed, rendered impossible by reason
of natural disaster, acts of God, actions or decrees of governmental bodies or
any other cause entirely beyond the control of the party whose performance is
affected (hereinafter referred to as "Force Majeure Event"), the party who has
been so affected shall immediately give written notice to the other party of the
nature of any such conditions and the extent of delay and shall do everything
possible to resume performance hereunder whenever such Force Majeure Event is
removed or ceases. Upon receipt of such notice, performance of this Agreement,
except for payment obligations, to the extent prevented by Force Majeure Event
shall immediately be suspended. If the period of nonperformance exceeds ninety
(90) days from the receipt of notice of the Force Majeure Event, the party whose
ability to perform has not been so affected may, by giving written notice,
terminate the term of this Agreement.
23. SEVERABILITY. If any provision in this Agreement is determined by any court
------------
of competent jurisdiction or arbitrator to be invalid or unenforceable for any
reasons, including without limitation by reason of such provision extending for
too long a period or over too large a subject, area, or by reason of its being
too extensive in any other respect, such provision to the specified extent that
it is unenforceable shall be interpreted to extend only over the maximum period
of time or subject area, and to the maximum extent in all other respects, as to
which it is valid and enforceable, thereby effectuating the parties' intent to
the greatest extent possible. The invalidity or unenforceability of any
particular provisions of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
24. ATTORNEY CONSULTATION. Each party has been informed of its right to consult
---------------------
with its own attorney prior to signing this Agreement and has either done so or
has considered the matter and has decided not to do so. As each party has had
opportunity to consult independent legal counsel, the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement.
25. 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.
26. EFFECTIVE DATE. Notwithstanding anything herein to the contrary, the
--------------
Company shall have the right to terminate the term of this Agreement upon
written notice to Contractor if the Company has not acquired the PCS
License for the Virginia and South Carolina trading areas from AT&T
provided, however, that if the Company fails to obtain such PCS Licenses
-------- -------
for the Service Area from AT&T, then the Company shall pay to Contractor
all professional fees and out-of-pocket expenses incurred by
6
<PAGE>
Contractor, in accordance with the payment terms under Section 5, prior to
Contractor's receipt of notification from the Company of the Company's failure
to obtain the PCS Licenses.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.
TRITON PCS OPERATING COMPANY, L.L.C. WIRELESS FACILITIES, INC.
a Delaware limited liability company a New York corporation (currently
reincorporating in Delaware)
By: Triton Management Company, Inc. By:
its Manager -------------------------------
Name:
-----------------------------
Title:
----------------------------
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
7
<PAGE>
EXHIBIT A
---------
SERVICES
RF Engineering Scope of Work
A. PRELIMINARY DESIGN
1. DEFINITION: Coverage will be defined by the Company, and agreed
upon by Contractor, including coverage objectives and environment (urban,
suburban, rural), in-building and in-car penetration criteria, link budget and
the overall launch area. Design criteria will also include grade of service
(blocking objective) as well as estimated subscriber usage levels.
2. CONTRACTOR SCOPE
PROCEDURE: Contractor will perform propagation model optimization
drive testing before issuing the Preliminary Design. The sites will
be identified in communication with the site acquisition contractor
to allow for simultaneous model optimization and site evaluation.
The following minimum number of sites will be drive tested for each
category:
<TABLE>
<S> <C>
Urban 5
Suburban 10
Rural
(w/foliage) 5
Rural (w/o
foliage) 5 (where applicable)
</TABLE>
Contractor will identify slope and intercept and determine standard
deviation on the error between measurement and preparation model
optimization. An effort will be made to keep this error in the 8dB
range for determination of optimal slope and intercept.
Search rings will be issued based on study of existing structures,
friendly sites, co-locations and zoning criteria in order to
minimize site acquisition cost and timeline. An initial study of
the existing structures and land will be performed with site
acquisition.
DELIVERABLE: Search rings will have a cover letter listing map
name, site ID, latitude, longitude, minimum and maximum radiation
center site name, target AGL (above ground level). Search ring
information may change according to acquisition request. Site
coverage objectives will accompany the search ring. A map will also
be issued identifying the surrounding site locations. Contractor
will create an optimized model with zero mean error, slope and
intercept for the four (4) site categories described above with
associated standard deviation on the prediction error. Contractor
will document results in the Preliminary Design report used for all
subsequent propagation analyses.
DELIVERABLE TIME LINE: The search ring package will be delivered
after the Company has reviewed the design and approved the release
of search rings.
B. SITE CANDIDATE EVALUATION AND APPROVAL
Contractor will evaluate the candidate sites per search ring identified by
the site acquisition contractor. The process is broken down as follows:
1. SITE SURVEY
A-1
<PAGE>
DEFINITION: Visit each identified candidate for RF suitability.
Determine antenna locations. Identify coverage limitations and
comparison with any other candidates. The site survey will be
performed with site acquisition and construction personnel.
DELIVERABLE: The survey will consist of determining the suitability
of the site, identification of desired antenna location, antenna
orientation and justification of the site.
DELIVERABLE TIME LINE: The engineers will survey each site within two
(2) working days of receiving the site candidate from site
acquisition. A survey site report (documented site survey results)
will be [documented] within twenty-four (24) hours of the site visit.
2. DRIVE TESTING
DEFINITION: Upon the Company's approval of the survey, Contractor
will initiate a drive test for the site. All necessary drive testing
equipment will be provided by Contractor. Site access will be
coordinated with site acquisition.
PROCEDURE: Based on the RF coverage objective set forth in the
Preliminary Design, Contractor may evaluate the site by drive testing
(at least fifty-five percent [55%] of primary site will be drive
tested and upon the Company's request, up to ten percent [10%] of that
55% will be drive tested using panel antennas). The drive testing
shall be limited to one primary candidate per search ring as agreed
upon by the Company and Contractor. The Company search ring as agreed
upon by the Company and Contractor. The Company will reserve the
right to require Contractor to conduct additional drive tests in a
search ring as necessary at additional charge according to
Contractor's normal published hourly rates then in effect. Contractor
will verify and record antenna type, gain, transmitter power output,
cable losses, EIRP and a picture of the antenna set up. The equipment
used will be calibrated with a dB of accuracy. Contractor will
coordinate the required test frequency with a contractor selected by
the Company. The frequencies will be approved by the Company.
DELIVERABLE TIME LINE: Drive test will be completed within two (2)
working days of determination of preliminary site by the Company. The
drive test report will be completed within twenty-four (24) hours of
drive test completion.
A final site evaluation (approval/rejection) will be issued based on site
visit, drive testing and site availability. If the primary site is rejected,
Contractor will select another candidate site at the Company's cost according to
Contractor's normal published hourly rates then in effect for drive testing and
evaluation. Any candidate finally approved by Contractor and the Company will
be referred to as an RF Approved Site.
3. DETAILED SITE DESIGN
Definition: Antenna type, frequency planning, downtilts, interference
reduction, orientation and location will be identified on the site
sketch provided by the A&E firm approved by the Company. Necessary
prediction/measurement data analyses will be performed by Contractor
to optimally configure the antenna placement on all the RF Approved
Sites.
A-2
<PAGE>
PROCEDURE: All zoning construction drawings prepared by the A&E firm
will be signed off by the Contractor for the purpose of verifying that
the EF coverage objectives are met. Contractor will verify the
antenna height, placement, orientation, downlift and type. Site
configuration will be determined (omni/sector, equipment type) based
on forecasted traffic usage. Contractor will not provide FAA analyses
but will be required to provide the Company with the information
reasonably necessary for such filings for FCC and FAA filings.
DELIVERABLE: Contractor will provide the Company with detailed site
design in accordance with procedure above subject to the Company's
approval ("Detailed Site Design").
DELIVERABLE TIME LINE: Detailed Site Design will be completed within
twenty-four (24) hours after site sketch is provided to Contractor.
4. DESIGN REVIEW
Definition: The objective of design review ("The Design Review") is
to verify that all the desired strategic coverage areas are covered in
the Detailed Site Design and to compare the predicted and actual
design cell count. The design cell count will be based on an
optimized propagation model determined by Contractor.
Procedure: An optimized propagation model will be used to develop a
system coverage analysis. The Preliminary Design will be compared
with the Detailed Site Design to determine any changes in the design
cell count. Measurement data from the drive test will be used
primarily to determine the design cell count, and the propagation
model will be used for all remaining sites. Contractor will perform a
analysis to ensure that all cells have adequate capacity to meet the
forecasted demand determined by the Company and Contractor after final
site approval and before frequency planning.
DELIVERABLE: A system wide coverage plot will be produced to
determine the coverage performance and design cell count. Prediction
plots will be used in place of measured date if a Detailed Site Design
has not been approved by the Company. Contractor will generate a
report documenting the coverage performance and the cell count
comparison between the Design Review and Preliminary Design.
DELIVERABLE TIME LINE: Four (4) design review reports will be
developed by Contractor after completion of 25%, 50%, 75% and 100% of
the Detailed Site Design has been approved by the Company for all
sites (each a "Design Review Report").
5. TRAFFIC ENGINEERING
DEFINITION: Contractor will develop a capacity forecast based on the
Company provided demand parameters. Contractor will identify
forecasted channel, capacity and site configuration requirements.
PROCEDURE: Based on the Company provided market segmentation (%
mobile, residential, business, etc.), penetration and subscriber usage
pattern (mou/sub.mE/sub) a ten (10) year capacity analysis forecast
will be developed to determine site configuration (omni/sector),
number of RF channels and carriers, and capacity cell addition. This
analysis will be performed on a per sector basis during the Detailed
Site Design
A-3
<PAGE>
procedure. Contractor is required to meet AT&T standards for the
percentage of blocking, which requirements will be provided by the
Company.
DELIVERABLE: This information will be provided in each Design Review
Report identifying the following: number of channels and erlangs per
sector, cell configuration, capacity cells.
6. BUILD VERIFICATION
DEFINITION: Verification of site build and antenna placement
determining whether site is built according to the Contractor's
specifications.
PROCEDURE: Contractor will verify that sites are built with correct
antenna placement and orientation. Installation accuracy will be
reviewed in relation to construction specifications based on antenna
and cable run sweeps.
DELIVERABLE: Build verification check sheet will be completed and
provided to the Company. The Company will authorize any modification
of the Work, which will be verified by Contractor.
DELIVERABLE TIME LINE: Check sheet completed within twenty-four (24)
hours of request for verification by the Company.
C. OPTIMIZATION
System optimization support will be provided by RF using Contractor
provided optimization tools (primarily using items from Ericcson). The
optimization is divided into the following sub-tasks:
1. SITE SPECIFIC OPTIMIZATION
Definition: Site specific parameters will be recommended by
Contractor and Contractor will put in specific format of Ericcson for
switchloading.
PROCEDURE: As the sites are integrated into the network, Contractor
will set the parameters, test the site for coverage and hand-offs, and
verify the link balance. Any software parameter changes will be
implemented by the Company and verified by Contractor and any RF
configuration changes will be recommended to the Company. Contractor
will test the features and originate and terminate a call per sector.
DELIVERABLES: All information regarding a particular site will be
recorded and presented to the Company.
DELIVERABLE TIME LINE: Within two (2) working days after the site is
in service and available for testing.
2. NETWORK VERIFICATION DRIVE
DEFINITION: Network-wide drive test to establish performance
benchmarks.
PROCEDURE: A network wide drive test will be performed by Contractor.
This will provide the data required to establish the network coverage
and quality statistics and to
A-4
<PAGE>
identify any marginal service areas. System performance benchmarks
will then be established as a result of the tests.
DELIVERABLES: A system wide performance report will be developed by
Contractor identifying areas of poor coverage, interference, incorrect
site parameters, and an action plan to correct these performance
deficiencies within three (3) working days after the network-wide
drive test is completed.
3. PRE-LAUNCH OPTIMIZATION PROCESS
Pre-Launch optimization will be carried out by Contractor to verify the
correct operation of the network, identifying the coverage area of each
site, validating parameters and neighbors, and documenting performance
benchmarks that meet the specified grade of service. It provides vital
data for the post-launch optimization engineers who may implement RF
configuration changes to improve the overall coverage of the network, and
who change software parameters to maintain the integrity of the system as
the traffic loan increases. The documentation produced in the process
shall accurately reflect the network performance statistics. The
percentage of dropped calls will meet AT&T standards.
4. FAA
The Contractor will provide all reasonably necessary information to the
Company approved airspace analysis contractor. Contractor will not be
responsible for filing FAA forms.
5. FCC
RF will furnish to the Company will reasonably necessary information
required for PCIA and FCC filings as requested in writing by the Company.
Contractor will not be responsible for filing FCC forms.
6. ZONING SUPPORT
Contractor will provide technical support, as reasonably necessary to
support land use planning, jurisdictional hearings and zoning functions.
This may consist of providing plots from drive testing, and the propagation
model or written justifications defending an application for a variance.
Contractor agrees to provide expert testimony as required for zoning
hearings at its published hourly rates.
A-5
<PAGE>
EXHIBIT B
---------
PRICES
B.1 PRICE PER SITE. This Agreement call for the Company to pay for each
--------------
cell site (each, a "Site") on a fixed price basis of ***** per Site. If
Contractor does not license hardware or software to the Company upon completion
of a Site, the price per Site shall be *****. Contractor is hiring and
relocating engineers and making commitment to them and to others based on these
representations.
B.2 SCHEDULE OF PAYMENTS. Subject to Section 5 of this Agreement, the
--------------------
Company shall pay the Prices to Contractor for each Site in four (4) equal
installments of *****, each due and payable upon the following events:
B.2.1. Release of search rings;
B.2.2. Detailed Site design approval;
B.2.3. Detailed frequency and traffic planning; and
B.2.4. Build verification and optimization.
B.3 INCOMPLETE SITES. If work is halted on a particular Site due to change
----------------
of plan or another reason not caused by Contractor, the Company shall pay
Contractor the Price on a pro-rata basis under which Contractor shall be paid in
full for completed benchmarks and in part for incomplete benchmarks.
B.4 ADDITIONAL SERVICES. If the Company requests Contractor to provide
-------------------
additional RF Engineering or other services not specifically delineated in this
Agreement during the Term, the Contractor shall pay for those services
consistent with Section 5 of this Agreement at Contractor's standard hourly
billing rates then in effect. For 1997, Contractor's standard hourly rates are
as follows:
- ---------------
*****Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
B-1
<PAGE>
***** per hour for Associate Engineers, ***** per hour for Design Engineers,
***** per hour for Senior Engineers, and ***** per hour for Project Managers.
B.5 EXPENSES. The Prices for a Site include compensation for the following
--------
expenses:
B.5.1 Travel, lodging and food;
B.5.2 Drive test vehicle rental;
B.5.3 Gas for drive test vehicles;
B.5.4 Field measurement hardware;
B.5.5 RF design software;
B.5.6 Map and terrain data;
B.5.7 Field office space other than for the Charleston and
Richmond Offices, which will be provided by the Company;
B.5.8 Telephone, cellular phone, and fax charges except for
telephone and fax charges incurred in the Charleston and Richmond
offices;
B.5.9 Computer and printers;
B.5.10 Office supplies and equipment;
B.5.11 Temporary office support;
B.5.12 Maps;
B.5.13 Film Processing;; and
B.5.14 Compass, GPS.
All other expenses not explicitly listed in Section B.5 shall be borne by
the Company, including but not limited to crane rental.
- ---------------
*****Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
B-2
<PAGE>
EXHIBIT 10.15
ACQUISITION AGREEMENT
---------------------
ERICSSON CMS 8800 CELLULAR MOBILE TELEPHONE SYSTEM
--------------------------------------------------
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS.................................................... 3
-----------
ARTICLE 2 SCOPE OF AGREEMENT............................................. 6
------------------
ARTICLE 3 TERM OF AGREEMENT.............................................. 7
-----------------
ARTICLE 4 PRICES......................................................... 7
------
ARTICLE 5 TERMS OF PAYMENT............................................... 8
----------------
ARTICLE 6 ORDERS AND SCHEDULING.......................................... 9
---------------------
ARTICLE 7 ORDER CANCELLATION............................................. 10
------------------
ARTICLE 8 INSTALLATION.................................................. 11
------------
ARTICLE 9 ACCEPTANCE TESTING AND ACCEPTANCE............................. 11
---------------------------------
ARTICLE 10 DELAY........................................................ 12
-----
ARTICLE 11 PURCHASER'S AND SELLER'S RESPONSIBILITIES.................... 14
-----------------------------------------
ARTICLE 12 LICENSES, PERMITS AND APPROVALS.............................. 15
-------------------------------
ARTICLE 13 WARRANTIES................................................... 15
----------
ARTICLE 14 CONFIDENTIAL INFORMATION..................................... 18
------------------------
ARTICLE 15 CONTINUITY OF EXPANSION FUNCTIONALITY........................ 19
-------------------------------------
ARTICLE 16 AMENDMENTS................................................... 19
----------
ARTICLE 17 TITLE; RISK OF LOSS........................................... 20
-------------------
ARTICLE 18 INSURANCE.................................................... 20
---------
ARTICLE 19 SOFTWARE;.................................................... 21
---------
ARTICLE 20 TAXES........................................................ 22
-----
ARTICLE 21 INDEMNIFICATION AND LIMITATION OF LIABILITY.................. 22
-------------------------------------------
1
<PAGE>
ARTICLE 22 INTELLECTUAL PROPERTY RIGHTS INFRINGEMENT.................... 23
-----------------------------------------
ARTICLE 23 DISPUTE RESOLUTION........................................... 24
------------------
ARTICLE 24 TERMINATION AND DEFAULT...................................... 25
-----------------------
ARTICLE 25 ADVERTISING.................................................. 27
-----------
ARTICLE 26 LATE PAYMENTS................................................ 27
-------------
ARTICLE 27 PERSONNEL.................................................... 27
---------
ARTICLE 28 ASSIGNMENT................................................... 27
----------
ARTICLE 29 NOTICES...................................................... 28
-------
ARTICLE 30 AUTHORITY AND COMPLIANCE WITH LAWS........................... 28
----------------------------------
ARTICLE 31 HEADINGS..................................................... 29
--------
ARTICLE 32 GOVERNING LAW; SEVERABILITY.................................. 29
--------------
ARTICLE 33 NO WAIVER.................................................... 29
---------
ARTICLE 34 ENTIRETY OF AGREEMENT; NO ORAL CHANGE........................ 29
-------------------------------------
ARTICLE 35 ATTACHMENTS AND INCORPORATIONS............................... 29
------------------------------
2
<PAGE>
#9133
Date: April 6, 1998
Rev.J
ACQUISITION AGREEMENT
---------------------
ERICSSON CMS 8800 CELLULAR MOBILE TELEPHONE SYSTEM
--------------------------------------------------
This Agreement (the "Agreement"), is made and effective as of March 11, 1998
(the "Effective Date") by and between TRITON PCS EQUIPMENT COMPANY L.L.C. a
Delaware limited liability company with its principal place of business in
Malvern, Pennsylvania ("PURCHASER") and ERICSSON INC., a Delaware Corporation
acting through its Wireless Communications Division with its principal place of
business in Richardson, Texas ("SELLER").
ARTICLE 1 DEFINITIONS
-----------
As used herein:
(a) Affiliate means any individual, corporation, partnership, joint venture,
---------
proprietorship, or other entity, excluding AT&T, directly or indirectly
owning, owned by or under common ownership with either party to the extent
of more than fifty percent (50%) of the voting shares or controlling
interests owned beneficially by such entity or party, as the case may be.
(b) Cell Site generally refers to a single physical location and enclosures
---------
thereof of one or more radio base stations (i.e., "cell(s)") in the System.
(c) Cell Site Configuration means the Equipment, Software and Installation at a
-----------------------
Cell Site required to operate and control a particular cell at a Cell Site.
(d) Cell Site Configuration Engineering means the engineering required, on a
-----------------------------------
site-specific basis, to establish the Cell Site Configuration Installation
specifications, including; preparing Equipment lists, Equipment layout
drawings, Equipment labels, cable ladder layout drawings, and "as-built"
drawings and documentation. Cell Site Configuration Engineering also
includes the design for DC power distribution for Cell Site Configurations.
(e) Cell Site Facilities Engineering means the engineering required to design a
--------------------------------
specific Cell Site, including; property survey, soil report, Cell Site
layout, drawings and specifications for the construction of the Cell Site,
shelters, towers, generators, grounding analysis, and all other items
required to make the Cell Site functional. Cell Site Facilities Engineering
does not include Cell Site Configuration Engineering.
(f) Civil Work means the labor and materials necessary in the performance of
----------
demolition, construction and renovation work (e.g., roads, grading,
fencing, structural improvements, etc.)
3
<PAGE>
at the MSC location and at each Cell Site to assure that each Cell Site and
MSC location is ready for Installation of the Equipment.
(g) Civil Work Supervision means the supervision of Civil Work.
----------------------
(h) Confidential Matters means all information about the business and financial
--------------------
matters (including costs, profits and plans for future development,
training materials, documentation, methods of operation and marketing
concepts) and any other proprietary information relating to a party hereto
or its Affiliates and their respective operations, businesses and financial
affairs, that is obtained by the other party hereto as a result of the
working relationship between the parties hereto with respect to the subject
matter hereof, whether obtained prior to or after the date hereof;
provided, however, that Confidential Matters shall not include information
-----------------
that (a) is or becomes generally available to the public other than as the
result of wrongful disclosure by the recipient hereunder, its Affiliates or
their respective representatives, or (b) was available to the recipient or
its Affiliates or their respective representatives on a nonconfidential
basis prior to disclosure hereunder, or (c) is independently developed by
the recipient hereunder, or (d) becomes rightfully available to the
recipient from a third party that is under no obligation to maintain such
information as confidential, or (e) is required to be disclosed through
government regulation or court order. Recipient shall have the burden of
proving by a preponderance of the evidence the applicability of any of the
foregoing exceptions.
(i) Consent means the prior written approval of a party to do the act or thing
-------
for which the consent or approval is solicited, or the act of granting such
consent or approval, as the context may require, which consent or approval
shall not be unreasonably withheld, conditioned or delayed.
(j) Documentation means the documentation for the System described in
-------------
Attachment E.
(k) Equipment means equipment specified in Attachment A to this Agreement, and
---------
such other cellular mobile telephone equipment as SELLER may hereafter make
available to PURCHASER and which PURCHASER hereafter orders from SELLER
under this Agreement. Equipment does not include subscriber equipment,
which shall mean mobile telephone handsets, mounting hardware, test
equipment, antennas and similar subscriber equipment.
(l) Facilities Preparation Services means Civil Work, Civil Work Supervision,
-------------------------------
Ground Plan Architectural Work, Structural Architectural Work, and
Utilities Work.
(m) Ground Plan Architectural Work means the preparation of architectural
------------------------------
drawings necessary to obtain zoning permits and conditional use permits.
(n) In Revenue Service means the commercial use of the System, or a portion
------------------
thereof, exclusive of operation for purposes of conducting Acceptance
Tests.
4
<PAGE>
(o) Initial Configuration means the portion of the System which is intended by
---------------------
the parties to be constructed, installed and operating as the primary phase
of the System. Initial Configuration does not include expansions thereto
(e.g., additional Cell Site Configurations or additional MSC
Configurations).
(p) Installation means the performance and supervision by SELLER of all
------------
installation purchased from and performed by SELLER of Equipment and
Software and as further described in Article 8 and Attachment B.
(q) MSC means Mobile Switching Center, which generally refers to the physical
---
location and enclosures thereof.
(r) MSC Configuration means the Equipment, Software and Installation at an MSC
-----------------
required to operate and control the MSC Configuration as the switching
function of the System.
(s) MSC Configuration Engineering means the engineering required to establish
-----------------------------
the MSC Configuration Installation specifications, including; preparing
Equipment lists, Equipment layout drawings, Equipment labels, cable tray
layout drawings, and "as-built" drawings and documentation. MSC
Configuration Engineering also includes the design for DC power
distribution for MSC Configurations.
(t) MSC Facilities Engineering means the engineering required to design a
--------------------------
specific MSC, including; property survey, soil report, building layout,
drawings and specifications for the construction of the building, towers,
generators, grounding analysis, and all other items required to make the
MSC functional. MSC Facilities Engineering does not include MSC
Configuration Engineering.
(u) Network Element means components or major nodes of the system, such as cell
---------------
sites or MSCs.
(v) Notice means a writing containing the information required by this
------
Agreement to be communicated to either party hereto, sent by (a) registered
or certified mail, postage prepaid, (b) personal delivery, (c) confirmed
air courier, or (d) by facsimile transmittal to such party at the address
provided in section 29.1, or to the persons contemplated by section 29.2 of
this Agreement.
(w) Operations Support System Services ("OSS") means a combination of hardware
----------------------------------
and software platforms which provide tools for operating, maintaining,
analyzing and provisioning the System, as further described in Attachment
I.
(x) Order means PURCHASER's purchase order generated as detailed in Article 6,
-----
which is accepted by Seller, or any document that the parties mutually
agree upon as the vehicle for procuring Equipment, Software and Services
pursuant to this Agreement.
(y) Professional Services means those services offered by SELLER relating to
----------------------
System design, enhancement and optimization as set forth in Attachment N.
5
<PAGE>
(z) Software means all software furnished hereunder including, but not limited
--------
to, computer programs contained on a magnetic or optical storage medium, in
a semiconductor device, or in another memory device or system memory
consisting of (i) hardwired logic instructions which manipulate data in
central processors, control input-output operations, and error diagnostic
and recovery routines, and (ii) instruction sequences in machine-readable
code that control call processing, radio infrastructure, peripheral
equipment and administration and maintenance functions.
(aa) Software Enhancements means modifications or improvements made to the
---------------------
Software which improve performance or capacity of the Software.
(bb) Software Features means distinct programs which constitute additional
-----------------
functions to the Software.
(cc) Software Updates means periodic updates to the Software issued by SELLER to
----------------
correct defects in the Software.
(dd) Specifications means the specifications and performance standards of the
--------------
System as set forth on SELLER's Product Marketing Reference Document
current at the time of the Order.
(ee) Structural Architectural Work means the preparation of all architectural
-----------------------------
drawings and blueprints relating to the structural specifications for the
MSC and/or Cell Sites.
(ff) System means the Initial Configuration and all expansions thereto purchased
------
by PURCHASER from SELLER pursuant to this Agreement, including all
Equipment, Software, Installation and other services purchased from SELLER
by PURCHASER hereunder relating to the System.
(gg) System Support Services means those services offered by SELLER for
-----------------------
maintenance of Equipment and Software pursuant to Attachment D.
(hh) Technical Education means the training courses offered by SELLER as set
-------------------
forth in Attachment C.
(ii) Utilities Work means the installation of electric and telephone utilities
--------------
at the MSC and Cell Sites.
(jj) Triton PCS Markets means those customer markets in which PURCHASER or its
------------------
Affiliates provide wireless communications services.
ARTICLE 2 SCOPE OF AGREEMENT
------------------
2.1 Upon the terms and conditions herein set forth, PURCHASER hereby agrees to
purchase from SELLER, and SELLER hereby agrees to sell, deliver, provide to
PURCHASER and install in
6
<PAGE>
the Triton PCS Markets, the Initial Configuration of the System, including
the Equipment and Software and Installation therefor, as well as
Documentation, Cell Site Configuration Engineering, MSC Configuration
Engineering, OSS, and the other services described herein which may be
ordered by PURCHASER as part of the Initial Configuration. SELLER shall
render such services provided that PURCHASER is in compliance in all
material respects with its obligations and requirements under this
Agreement.
2.2 The commitments of the Parties with respect to this Agreement or any Order
thereunder shall be expressly conditioned upon Purchaser having obtained
and maintaining in current, default-free condition an FCC license as
aforesaid and financing for the Triton PCS Markets referenced in said
Order.
2.3 SELLER shall, in accordance with the procedures set forth in Article 6,
make available to PURCHASER Cell Site Facilities Engineering, Facilities
Preparation Services, MSC Facilities Engineering, OSS, System Support
Services, Professional Services, and such other services as SELLER may from
time to time offer to its customers.
2.4 PURCHASER hereby engages SELLER to provide, and SELLER hereby agrees to
provide, Technical Education in accordance with Attachment C and
Installation for any MSC, OSS and IS-136 Technology Configurations
purchased under this Agreement.
2.5 SELLER will furnish PURCHASER, at no charge, one (1) set of Documentation
as set forth in Attachment E.
ARTICLE 3 TERM OF AGREEMENT
-----------------
This Agreement shall commence on the Effective Date hereof and continue for a
period of five (5) years (hereinafter, the "Term") unless terminated on an
earlier date as provided herein, except as to those provisions which by their
express terms survive such termination. Notwithstanding the foregoing,
PURCHASER is not obligated to purchase any Equipment, Software or Services from
SELLER other than the Initial Configuration.
ARTICLE 4 PRICES
------
4.1 The prices, fees and discount schedules, to the extent applicable, for
Equipment, Software, Documentation, OSS, and, except as otherwise herein
set forth, Services, are set forth on Attachment A hereto.
4.2 The prices for Equipment, Software and Services ordered by PURCHASER for
expansions to the Initial Configuration shall be those set forth in
Attachment A, subject to the price variation provisions contained in
Attachment O. Prices for Equipment, Software, Documentation and Services
not set forth in Attachments A, C, and D, if not otherwise set forth in
this Agreement, shall be no greater than SELLER's list prices in effect at
the time of ordering by PURCHASER.
7
<PAGE>
4.3 The unit prices of the Equipment are delivered prices, with the Equipment
delivered by common carrier to PURCHASER's job site. Notwithstanding the
foregoing, if the Equipment is delivered to SELLER's storage facility prior
to delivery to the job site, SELLER shall be responsible for any ordinary
common carrier charges to deliver the Equipment from the storage facility
to the job site. PURCHASER will be responsible for any additional abnormal
costs for delivery by private or contract carriers (e.g., permits to close
roads, helicopter, high-rise buildings requiring greater than a 60 ton
crane, unpaved roads, etc).
4.4 The prices of Technical Education shall be no greater than SELLER's list
prices in effect at the time of ordering by PURCHASER. SELLER's current
prices are specified in Attachment C.
4.5 The prices of System Support Services shall be no greater than SELLER's
list prices in effect at the time of ordering by PURCHASER. SELLER's
current prices are specified in Attachment A.
4.6 The prices of Cell Site Facilities Engineering, MSC Facilities Engineering,
and Cell Site Configuration Engineering (if Installation is not purchased
from SELLER) shall be determined by SELLER on a quote basis.
4.7 The price for Facilities Preparation Services shall be determined in
accordance with the procedure set forth in paragraph 6.4.
ARTICLE 5 TERMS OF PAYMENT
----------------
5.1 Except as set forth below in Article 10 below, PURCHASER shall pay for the
1998 Initial Configuration Equipment and Software, in cash or cash
equivalent acceptable to SELLER, as follows:
(a) ***** of the price due of delivered Initial Configuration Equipment
and Software (excluding Installation fees).
(b) An additional ***** of the price due of delivered Initial
Configuration Equipment and Software (excluding Installation fees)
*****;
(c) The balance of the price, *****, including charges for Installation,
will be due thirty (30) days after placement In Revenue Service of the
Initial Configuration as provided in paragraph 9.2.
(d) *****
(e) Beginning *****, PURCHASER shall pay for the Initial Configuration
Equipment and Software (e.g., individual BTAs installed after January
1, 1999), in cash or cash equivalent acceptable to SELLER, as follows:
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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(i) ***** of the Initial Configuration Equipment and Software
price upon delivery (excluding Installation fees).
(ii) An additional ***** of the delivered Initial
Configuration, Equipment and Software price due of
delivered equipment will be due thirty (30) days after
Acceptance as provided in paragraph 9.2.
(iii) The balance of the price, *****, including charges for
Installation, will be due thirty (30) days after the later
of In Revenue Service or Acceptance.
5.2 PURCHASER shall pay the price in full for any Equipment and Software
ordered for expansions to the Initial Configuration, in cash, within thirty
(30) days after delivery and invoice therefor.
5.3 PURCHASER shall pay the price in full of Installation ordered for
expansions to the Initial Configuration within thirty (30) days after
Acceptance of the Equipment and Software installed and invoice therefor.
5.4 PURCHASER shall pay the price in full of each Technical Education course
ordered within thirty (30) days after completion and invoice therefor.
5.5 PURCHASER shall pay for any ordered System Support Services monthly, in
advance, after invoice therefor. Any ordered Professional Services shall
be paid for within thirty (30) days after completion and invoice therefor,
or monthly if applicable.
5.6 PURCHASER shall pay for Cell Site Facilities Engineering, MSC Facilities
Engineering, and Cell Site Configuration Engineering (if Installation is
not purchased from SELLER) within thirty (30) days after completion and
invoice therefor.
5.7 If PURCHASER chooses Ericsson to do civil construction, the PURCHASER shall
pay for any ordered Facilities Preparation Services on a site-by-site basis
within thirty (30) days after completion and invoice therefor, or monthly
if applicable.
ARTICLE 6 ORDERS AND SCHEDULING
---------------------
6.1 Attachment H sets forth all final engineering and preparatory details, and
the time schedule therefor, necessary for delivery and Installation of the
Initial Configuration. PURCHASER and SELLER shall be responsible for the
successful completion of their respective responsibilities as set forth in
Attachment F.
6.2 When PURCHASER desires to place an Order with SELLER for Equipment or
Software for an expansion or improvement of the Initial Configuration,
PURCHASER shall submit to
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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SELLER the information necessary for the furnishing by SELLER of a
proposal. SELLER's proposals shall include documents corresponding to
separate Attachments A, F and H for each such request. Upon acceptance of
any such proposal by PURCHASER, PURCHASER and SELLER shall be responsible
for the successful completion of their respective items according to the
schedule therein set forth.
6.3 When PURCHASER desires to place an Order with SELLER for Professional
Services or System Support Services, PURCHASER shall submit to SELLER all
information in PURCHASER's possession or any information requested by
SELLER necessary for the furnishing by SELLER of a proposal. SELLER shall
generate a proposal including a scope of work, responsibility matrix, and
schedule for each such request. Upon acceptance of any such proposal by
PURCHASER, PURCHASER and SELLER shall be responsible for the successful
completion of their respective items according to the schedule therein set
forth.
6.4 (a) When PURCHASER desires to place an Order for any Facilities
Preparation Services, PURCHASER shall submit to SELLER all information
in PURCHASER's possession or any information requested by SELLER
necessary for the furnishing by SELLER of a proposal. SELLER shall
generate a proposal for each Facilities Preparation Service to include
a not to exceed (NTE) price, which bid shall include the complete
purchase price of such service, including, without limitation, all
costs of equipment, materials and supplies, labor, transportation and
other related costs, terms of payment, and completion dates for such
services. In the case of any Facilities Preparation Service performed
in accordance with this paragraph 6.4(a), SELLER shall be responsible
for the execution, delivery, and timely performance of such Facilities
Preparation Service.
(b) If PURCHASER rejects a proposal for Facilities Preparation
Services submitted by SELLER under paragraph 6.4(a) above, PURCHASER
may elect (i) to perform such services itself, (ii) to have such
services performed on its behalf by a direct subcontractor of
PURCHASER, or (iii) subject to SELLER's approval, which may be granted
or withheld in SELLER's absolute discretion, designate a third party
subcontractor as the subcontractor of SELLER.
(c) In the case of any Facilities Preparation Services performed
pursuant to clauses (i) and (ii) of paragraph 6.4(b) above, SELLER
shall have no responsibility whatsoever for such services,
notwithstanding that such services may have been performed in
accordance with suggestions from SELLER.
(d) In the case of any Facilities Preparation Services performed in
accordance with clause (iii) of paragraph 6.4(b) above, SELLER shall
be responsible for the execution, delivery, and performance of such
services, but shall accept no responsibility for any delays of the
third party subcontractor. SELLER shall invoice PURCHASER the amounts
charged by such subcontractor plus a fee of sixteen percent (16%) of
the subcontractor's price as compensation for SELLER's role as prime
contractor.
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6.5 Proposals submitted by SELLER pursuant to paragraph's 6.2 through 6.4, may
be accepted by PURCHASER by issuance of PURCHASER's Order referencing or
incorporating the proposal. Orders issued pursuant to this Agreement shall
be governed by and performed in accordance with the terms and conditions of
this Agreement, unless the parties mutually agree otherwise in accordance
with Article 16.
ARTICLE 7 ORDER CANCELLATION
------------------
PURCHASER may at any time prior to delivery of the applicable Equipment or
Software, cancel, in whole or in part, any Order other than (a) the Initial
Configuration, (b) any Order for an MSC Configuration, or (c) any Order after
Installation of ordered items has commenced, even if delivery of the entire
Order has not been completed. In the event of a cancellation permitted
hereunder, PURCHASER shall pay to SELLER order cancellation charges in
accordance with Attachment Q.
ARTICLE 8 INSTALLATION
------------
8.1 As provided in Attachment F, either PURCHASER or SELLER shall install
the Equipment at the sites to be selected by PURCHASER so as to be ready
for Acceptance Tests with regard to the Initial Configuration in
accordance with the procedures set forth in the applicable provisions of
SELLER's then current installation manual(s) and the time schedule set
forth in Attachment H.
8.2 As provided in Attachment F, either PURCHASER or SELLER shall install the
System so as to cause no unreasonable interference with or obstruction to
lands and thoroughfares or rights of way on or near which the Installation
work may be performed. The party installing the Equipment shall exercise
every reasonable safeguard to avoid damage to existing facilities, and if
repairs or new construction are required in order to replace facilities
damaged by the party installing the Equipment due to its carelessness or
negligence, such repairs or new construction shall be at the party
installing the Equipment's own expense.
ARTICLE 9 ACCEPTANCE TESTING AND ACCEPTANCE
---------------------------------
9.1 Attached as Attachment J are descriptions of acceptance testing
("Acceptance Tests") to be conducted, and deliverables related thereto
(e.g., test results, inventory reports, Acceptance Certificates), regarding
Installation of the Initial Configuration Equipment and Software (and, as
applicable, regarding Installation of Equipment and Software added to the
Initial Configuration) to demonstrate that the Equipment and Software
installed by SELLER will operate materially in accordance with the
Specifications. Such Acceptance Tests shall include separate procedures
for testing (i) Cell Site Configuration Installation and integration, (ii)
MSC Configuration Installation and integration, and (iii) System radio
frequency coverage and handoff parameters.
9.2 (a) SELLER shall notify PURCHASER as soon as it knows, but at least
ten (10) days before, the date on which Acceptance Tests shall be
conducted, provided that the Acceptance Tests shall be conducted on
dates and times reasonably acceptable to
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PURCHASER. At the first practicable date thereafter, SELLER and
PURCHASER shall each sign off on any pretest forms provided as part of
the particular Acceptance Test being conducted. If PURCHASER or its
nominee does not attend the Acceptance Tests, SELLER shall proceed
with the tests and immediately forward the test results to PURCHASER.
(b) If the Equipment, Software or the System, as a whole, comprising
the Initial Configuration does not fulfill the requirements of the
Acceptance Tests, SELLER shall, at its expense, correct the defects as
soon as practicable. The Acceptance Tests (or so much of them as
necessary) shall be recommenced immediately after such correction in
accordance with this Article 9.
(c) Upon the successful completion of any Acceptance Tests conducted
by SELLER, SELLER shall submit to PURCHASER an Acceptance Certificate
certifying (i) successful completion of the Acceptance Tests, (ii) the
Equipment and Software, to that stage completed, have been installed
in accordance with the requirements of this Agreement, subject to
resolution of punch list items, and the RF services described in
document W980025 dated January 30, 1998 in Attachment A, and (iii)
that the Triton PCS Market is ready to be placed In Revenue Service.
PURCHASER shall acknowledge same by signing the Acceptance Certificate
prior to the System (or System segment) being placed In Revenue
Service. At such time, punch list items will be identified and the
Equipment, Software or Installation covered by such certificate shall
be deemed "Accepted" (i.e., "Acceptance" shall have occurred). Items
may be added to the punch list by PURCHASER up to fifteen (15) days
after Acceptance. Defects in components arising after Acceptance that
are covered by paragraph 13.1 (c) shall not be considered punch list
items. Upon resolution of punch list items by SELLER, SELLER shall
submit to PURCHASER, and PURCHASER shall sign, a certificate verifying
that no further punch list items remain unresolved. PURCHASER may
conduct a trial test of the system prior to the Acceptance Tests,
provided that no revenue is collected during the test period.. In the
event of any dispute as to the results of any Acceptance Tests, such
dispute shall be resolved by a Third Party Engineer selected pursuant
to paragraph 23.1.
(d) Only service affecting deficiencies identified in Attachment J,
in conjunction with this Article 9, shall be grounds for delay of
Acceptance of the System.
(e) PURCHASER's use of any part of the Initial Configuration
Equipment In Revenue Service prior to the Acceptance Date determined
in accordance with subparagraph (c) of this paragraph 9.2, shall
constitute Acceptance of such part of the Equipment, and the date
PURCHASER first uses any item of Equipment In Revenue Service shall be
the Acceptance Date for such item of Equipment. Equipment ordered for
expansions to the Initial Configuration shall, for purposes of Article
13, be deemed to be Accepted by PURCHASER at time of delivery.
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9.3 Any required Acceptance Test for Professional Services or any other
services purchased from SELLER shall be determined by mutual agreement of
the parties hereto.
ARTICLE 10 DELAY
-----
10.1. (a) If, and to the extent, due solely to the fault or negligence of
SELLER, Installation and Acceptance of any Initial Configuration does
not occur upon the schedule set forth in Attachment H, (as such period
may be extended pursuant to Section 10.3 (a) and Article 16 of this
Agreement), PURCHASER shall be entitled to, and SELLER shall pay to
PURCHASER, damages in accordance with this Section 10.1.
(b) The parties agree that damages for delay are difficult to
calculate accurately and, therefore, agree to fix as liquidated
damages, and not as a penalty, an amount determined according to the
table below.
<TABLE>
<CAPTION>
LIQUIDATED DAMAGES
WEEKS LATE PERCENTAGE
- ------------------------------------------------
<S> <C>
1 *****
- ------------------------------------------------
2 through 7 *****% per week
- ------------------------------------------------
8 through 13 *****% per week
- ------------------------------------------------
14 and beyond *****% per week
- ------------------------------------------------
</TABLE>
For example, if SELLER is eleven (11) weeks late in performance,
SELLER will owe damages of (i) *****% per week for weeks 2 through 7
(total of *****%) and (ii) 1.0% for each of weeks 8 through 11 (an
additional *****%) for aggregate liquidated damages of *****%.
The amount of liquidated damages due and payable hereunder shall be
calculated by multiplying the applicable liquidated damages
percentage, for each week of delay or fraction of a week, determined
in accordance with the table above, by the aggregate of the total
price, on a Network Element by Network Element basis and calculated in
accordance with Attachment A, of the Equipment and Software, which
------------
comprise or are to comprise an Initial Configuration and which has not
completed Acceptance Testing upon the date scheduled as set forth on
Attachment H as a result of such delay. Except as otherwise set forth
------------
in Section 24.1, liquidated damages under this Section 10.1 shall be
PURCHASER's exclusive remedy for any delay by SELLER in delivering and
installing the Initial Configuration. Liquidated Damages shall accrue
under this Agreement until such time as the delay period has ended,
and the Liquidated Damages that may accrue hereunder shall be limited
in amount to ***** of cost of the aggregate Network Element associated
with, and resulting in, such delay. PURCHASER agrees that SELLER may,
at its option, pay all liquidated damages owed pursuant to this
Section 10.1 in the following manner: (i) ***** of all amounts
owed may be made in cash and (ii) ***** of all amounts owed may be
made by delivering additional new Equipment to
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PURCHASER with an aggregate purchase price equal to such *****.
10.2 Any delay caused by PURCHASER shall entitle SELLER to:
(a) A day-to-day delay in performance of SELLER's obligations, or a
longer adjustment if SELLER has reassigned Installation personnel or
suspended deliveries of Equipment as a result of PURCHASER's delay;
and
(b) Payment of ***** of the price of Equipment delivered to the
central storage site but which is unable to be installed due to such
delay, as well as reimbursement of (i) any reasonable out-of-pocket
expenses incurred by SELLER (e.g., subcontractor labor charges, extra
storage or delivery charges, etc.), (ii) salaries of SELLER's
Installation personnel, and (iii), if applicable, capital costs on
delayed Equipment resulting solely from PURCHASER's delay or the
resumption of work following such delay; provided, however, that
SELLER shall use reasonable efforts to minimize such expenses by
working around delays caused by PURCHASER.
10.3 (a) Neither SELLER nor PURCHASER will be liable for nonperformance
or defective or late performance of any of their obligations hereunder
to the extent and for such periods of time as such nonperformance,
defective performance or late performance is due to acts of God, war
(declared or undeclared), unforeseeable acts (including failure to
act) of any governmental authority (de jure or de facto) with the
exception of zoning or permitting authorities, riots, revolutions,
fire, floods, explosions, sabotage, nuclear incidents, earthquakes,
storms, sinkholes, epidemics, strikes, or delays of suppliers or
subcontractors if no equivalent source for such supplies or services
can reasonably be obtained for the same causes.
(b) The party claiming the benefit of excusable delay hereunder
shall give Notice to the other of the circumstances creating the delay
and provide a statement of the impact.
ARTICLE 11 PURCHASER'S AND SELLER'S RESPONSIBILITIES
-----------------------------------------
11.1 Attachment F is the responsibility matrix which details those obligations
for which SELLER and PURCHASER are respectively responsible. In addition,
in the event of a conflict between Attachment F and this Agreement,
precedence shall be given to Attachment F.
11.2 The obligations as set forth in Attachment F shall be performed in a
timely fashion in accordance with the schedule set forth in Attachment H,
or with respect to items inadvertently omitted from Attachment F, in a
timely fashion on reasonable Notice. Any delay by either party shall be
subject to Article 10 of this Agreement.
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11.3 PURCHASER shall provide SELLER complete access to the System and agrees
that SELLER may, upon reasonable advance Notice to PURCHASER at reasonable
times and when necessary, interrupt operation of the System while
conducting testing or correcting deficiencies.
11.4 Each party shall provide all information in its possession which is
necessary to properly install the System or as otherwise required by
either party to perform its obligations under this Agreement.
11.5 PURCHASER shall be responsible for all site acquisition, zoning and
permitting.
11.6 PURCHASER shall be responsible for and shall provide security for
safeguarding the Cell Sites and MSC(s), and storage areas for Equipment.
This security shall be provided prior to the commencement of any SELLER
activities at such locations.
11.7 SELLER shall be responsible for and shall provide, at its expense, storage
facilities for Equipment delivered by SELLER under this Agreement until
the earlier of (i) completion of SELLER's Installation activities
relating to the Initial Configuration(s), or (ii) such time as PURCHASER
provides storage facilities.
ARTICLE 12 LICENSES, PERMITS AND APPROVALS
-------------------------------
12.1 Any licenses, permits or approvals required by any Federal, state, or
other governing authority relating to the manufacture, importation, safety
or use of the Equipment throughout the United States or any state shall be
the sole responsibility of SELLER. Any licenses, permits or approvals
required by any Federal, state or local governing authority relating to
use of the Equipment or System in a specific locality shall be the sole
responsibility of PURCHASER. Upon request, the responsible party shall
furnish evidence that such licenses or permits have been obtained and are
in force.
12.2 Each party shall be responsible for ensuring that it and its
subcontractors are and remain eligible under local laws to perform the
work under this Agreement in the various jurisdictions involved.
12.3 PURCHASER agrees to reasonably assist SELLER to obtain and maintain (i)
licenses, permits or approvals for importation, re-exportation of the
Equipment and Software on a duty and customs free basis and (ii) entry or
work permits or visa required for personnel engaged by SELLER to perform
work under this Agreement.
ARTICLE 13 WARRANTIES
----------
13.1 (a) SELLER extends ***** warranty, for a period of ***** months from the
date of Acceptance (the "Warranty Period"). Equipment and the
Installation thereof shall materially conform with and perform the
functions set forth in the Specifications and shall be free from
defects in material or workmanship which
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the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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impair service to subscribers, System performance, billing,
administration or maintenance. If notified by PURCHASER of any such
defects in material or workmanship or nonconformity with
Specifications within the Warranty Period, SELLER shall, at its
election and expense, repair or replace any such defective Equipment
or Installation. Such repair or replacement includes material, labor
and services, and shall be PURCHASER's sole remedy and SELLER's sole
obligation in the event this warranty is breached. Any Equipment
repaired or replaced under this Article 13.1 shall be subject to the
original Warranty Period.
(b) If PURCHASER claims a breach of warranty under this paragraph
13.1, it shall notify SELLER promptly of the claimed breach in
accordance with the procedures set forth in Attachment D.
(c) During the Warranty Period, electronic circuit board components
will be repaired or replaced, with PURCHASER responsible for fault
isolation (except to the extent that PURCHASER could not have
reasonably been expected to isolate such fault without the assistance
of SELLER), removal of defective boards and replacement from spare
stock (except to the extent that such removal and replacement requires
the specialized expertise of SELLER), and packing and shipping to
SELLER's U.S. repair facility. PURCHASER will maintain a stock of
spare board assemblies as recommended by SELLER for this purpose. In
the event that PURCHASER experiences board assembly failures that
materially exceed the number and frequency of such failures
contemplated by the spare board assembly stock recommended by SELLER,
at the request of PURCHASER, SELLER shall supply to PURCHASER
additional spare board assemblies of each type so depleted, as
necessary to maintain an adequate emergency replacement stock, without
charge to PURCHASER, until implementation of a permanent remedy. Upon
implementation of such remedy, all excess boards supplied under this
paragraph shall be returned to SELLER.
(d) Freight charges incurred in connection with SELLER's obligations
under this paragraph 13.1 shall be borne by SELLER, unless the
Equipment returned is not defective or otherwise not covered by
SELLER's limited warranty, in which case PURCHASER shall pay for all
freight charges between PURCHASER's point of origin and SELLER's U.S.
repair facility.
13.2 SELLER warrants that for a period of ***** months following Acceptance (the
"Software Warranty Period"), the Software, Software Updates, Software
Enhancements and Software Features for all systems, including but not
limited to MSC, HLR, SCP, OSS, etc. shall materially conform with and
perform the functions set forth in the Specifications, and shall be free
from defects in material and workmanship which impair service to
subscribers. If during the Software Warranty Period, SELLER is notified
that the Software is defective or fails to so perform, SELLER shall correct
such defects or failure and ensure that the Software, Software Updates,
Software Enhancements and Software Features conform with, and perform the
functions set forth in, the Specifications. SELLER's obligation under this
warranty is limited to correction of any Software, Software Update,
Software Enhancement or Software Feature failures and SELLER's
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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performance thereof shall be PURCHASER's sole remedy in the event this
warranty is breached. For additional Software purchased in accordance with
Article 6, the same Software warranty shall apply as described above except
that the warranty shall only apply with respect to new functions (as
specified in the additional Specifications) and the Software Warranty
Period shall begin on the date of delivery.
13.3 The following System Support Services are provided to Customer at no
additional charge during the applicable warranty period: Trouble Report
Handling, Repair and Return, and Emergency Support, as more fully described
in Attachment D. System Support Services can be purchased at any time from
SELLER on an extended basis, as detailed in Attachment D.
13.4 SELLER's limited warranty under this Article 13 shall not apply to:
(a) damage or defects caused by PURCHASER's negligence, including,
but not limited to:
(i) Exposure of Equipment or Software by PURCHASER to
environmental conditions other than those specified in Attachment G,
or use by PURCHASER other than in accordance in all material
respects with written instructions furnished by SELLER;
(ii) Material modification by PURCHASER of Equipment or Software
without SELLER's written consent;
(iii) Use of the System or any part thereof in conjunction with
equipment or software not purchased under this Agreement unless such
equipment or software is operating properly and SELLER has
represented that such equipment or software is compatible with the
System;
(iv) Operation or servicing of the System by PURCHASER's personnel
or contractors who have not received Technical Education from SELLER
commensurate with the operational or servicing tasks performed by
such personnel;
(v) PURCHASER has not given SELLER Notice of defects, non-
conformities or deviations before the expiration of the
applicable warranty period;
(vi) PURCHASER has not provided a repair and replacement request
or a trouble report in accordance with the procedure set forth in
Attachment D; or
(vii) PURCHASER has not implemented (but only to the extent
caused by PURCHASER not having implemented), within one (1) month
from receipt for fault preventive purposes, the Software Updates in
the System that SELLER
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supplies PURCHASER with from time to time during the Software
Warranty Period.
(b) Any Equipment or Software damaged by accident or disaster, including
without limitation, fire, flood, wind, water, lightning (unless Ericsson
performed the civil construction services at the damaged site and did not
provide proper grounding)or power failure; or
(c) Incidental hardware normally consumed in operation or which has a
normal life inherently shorter than the term of this Agreement (e.g.,
fuses, lamps, magnetic tape).
13.5 PURCHASER shall reimburse SELLER for SELLER's reasonable out-of-pocket
expenses incurred, at PURCHASER's request, in responding to and/or
remedying Equipment, Software, or service deficiencies not covered by the
warranties set forth herein or under a System Support Agreement between
SELLER and PURCHASER.
13.6 If SELLER purchases or subcontracts for the manufacture of any part of the
System or the performance of any of the services to be provided hereunder
from a third party, the warranties given to SELLER by such third party
shall inure, to the extent applicable or permitted, to the benefit of
PURCHASER, and PURCHASER shall have the right (but shall not be obligated)
to enforce such warranties directly or through SELLER.
13.7 If PURCHASER purchases any third-party equipment or software to be used
with or as part of the System, PURCHASER agrees to obtain warranty or
maintenance service solely from such third-party providers of equipment
and/or software, and PURCHASER will provide SELLER with proof of such
maintenance support, where applicable. NO WARRANTIES ARE MADE BY SELLER ON
BEHALF OF ANY OTHER PARTY WHICH MAY HAVE INDEPENDENTLY SUPPLIED ANY PART
OF THE SYSTEM TO PURCHASER.
13.8 SELLER warrants the workmanship for any Facilities Preparation Services
for a period of ***** months from the date of Acceptance.
13.9 Any warranty for Professional Services or other Services purchased under
this Agreement shall be agreed to by the parties hereto at the time such
Order is placed.
13.10 THE LIMITED WARRANTIES IN THIS ARTICLE 13 CONSTITUTE THE ONLY WARRANTIES
OF SELLER WITH RESPECT TO THE EQUIPMENT OR SOFTWARE, AND ARE IN LIEU OF
ALL OTHER WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE. SELLER's warranty obligations under this Article
13 shall not be enlarged, diminished or affected by, and no additional
warranty obligation or liability shall arise from SELLER's performance of
System Support or Professional Services or other advice or service made in
connection with the System.
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the Securities and Exchange Commission. Confidential treatment has been
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ARTICLE 14 CONFIDENTIAL INFORMATION
------------------------
14.1 (a) The parties hereto agree, except as may be required to comply with
any applicable law (including SEC and FCC), regulation or order of
any governmental or other authority, including the trier of fact
under Article 23, to:
(i) maintain, or cause to be maintained, the confidentiality of
Confidential Matters of the other party and not disclose, or
permit to be disclosed, any such Confidential Matters, unless
authorized in writing by such other party or is otherwise a
matter of public knowledge or independently developed by the
disclosing party;
(ii) not use, or permit to be used, any such Confidential Matters,
except in accordance with the scope of this Agreement;
(iii) restrict, or cause to be restricted, disclosure of such
Confidential Matters to its respective officers, employees,
and agents and those Affiliates and their respective officers,
employees and agents who need to know such Confidential
Matters in the performance of work relating to the subject
matter of this Agreement (it being understood that such
Affiliates and their respective officers, employees and agents
shall be informed of the confidential nature of such
Confidential Matters and shall be directed to treat such
Confidential Matters confidentially and not use such
Confidential Matters other than for the purpose described
above); and
(iv) take precautions necessary or appropriate to guard the
confidentiality of such Confidential Matters.
(b) In the event that any party hereto becomes obligated to disclose
Confidential Matters pursuant to an order of any governmental or
other authority, such party shall seek a protective order or other
appropriate remedy that will permit such party to avoid such
disclosure. In the event that such protective order or other remedy
is not obtained, such party will disclose only that portion of the
Confidential Matters as it is obligated to disclose pursuant to such
order, and will use all reasonable efforts to obtain assurances that
confidential treatment will be accorded to any Confidential Matters
so disclosed.
14.2 Notwithstanding the provisions of Article 23 of this Agreement, the
parties agree that SELLER may enforce provisions of Article 19 and this
Article 14 regarding restrictions on use and transfer and obligations of
confidentiality with respect to the Software by an action for injunctive
relief or other equitable remedies.
14.3 Except as expressly provided herein, nothing contained in this Agreement
shall be construed or deemed to grant, either directly or indirectly or by
implication, any license under any existing or future intellectual
property rights of SELLER.
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ARTICLE 15 CONTINUITY OF EXPANSION FUNCTIONALITY
-------------------------------------
During the Term of this Agreement and for a period of four (4) years following
the expiration of this Agreement, SELLER shall make available for sale to
PURCHASER, at SELLER's then current prices, Equipment and Software to enable
PURCHASER to expand the System, which Equipment and Software will provide
equivalent functionality for and shall be compatible with the System or any
other system supplied by SELLER to AT&T Wireless or its affiliates..
ARTICLE 16 AMENDMENTS
----------
The terms and conditions of this Agreement, including the provisions of the
Attachments, may be amended by mutually agreed contract amendments. Each
amendment shall be in writing and shall identify the provisions to be changed
and the changes to be made. Contract amendments shall be signed by duly
authorized representatives of SELLER and PURCHASER. Any acknowledgment form or
other document of SELLER or PURCHASER containing terms and conditions of sale or
purchase shall not have the effect of modifying the terms and conditions of this
Agreement, and all deliveries and Installation of goods and performance of
services by SELLER shall be deemed to be only upon the terms and conditions of
this Agreement unless both parties provide Consent to such modified terms.
ARTICLE 17 TITLE; RISK OF LOSS
-------------------
17.1 Title to each item of Equipment shall pass to PURCHASER upon delivery;
provided, however, until any item of Equipment is paid in full, SELLER
-----------------
shall have a pro-rated security interest in such Equipment in accordance
with the terms of an intercreditor agreement or joint security agreement to
be entered into by SELLER and PURCHASER's lenders on terms reasonably
satisfactory to SELLER and PURCHASER's lenders.
17.2 Risk of loss to each item of Equipment shall pass to PURCHASER upon
delivery.
ARTICLE 18 INSURANCE
---------
18.1 SELLER shall maintain and keep in force all risk insurance, in form and
substance and with insurers reasonably satisfactory to PURCHASER, covering
all Equipment delivered to PURCHASER the risk of loss to which has not
passed to PURCHASER, and shall furnish PURCHASER with proof that such
insurance has been obtained and is in force.
18.2 Upon risk of loss passing to PURCHASER, PURCHASER shall maintain and keep
in force all risk insurance, in form and substance and with insurers
reasonably satisfactory to SELLER, covering all Equipment delivered to
PURCHASER the title to which has not passed to PURCHASER, and shall furnish
SELLER with proof that such insurance has been obtained and is in force.
20
<PAGE>
18.3 SELLER shall at all times while performing services on PURCHASER's premises
carry insurance with limits not less than the limits described as follows:
(a) Employer's General Liability - Limits $2,000,000.
(b) Comprehensive General Public Liability: $2,000,000 single limit
bodily injury and property damage combined; such coverage shall
include a broad form liability rider, completed operations coverage
rider and contractual liability rider.
(c) An umbrella policy with $1,000,000 single limit bodily injury and
property damage combined.
(d) Workmen's Compensation (Statutory limits in state or states in which
this Agreement is to be performed).
18.4 Each party shall, upon request of the other party, provide the other with
certificates of insurance (i) evidencing the insurance to be carried under
this Article 18, naming the other party as an additional insured and (ii)
including provisions that such insurance policy(ies) shall not be subject
to cancellation, expiration or reduction without thirty (30) days Notice to
the other party.
18.5 Notwithstanding the requirements as to insurance to be carried, the
insolvency, bankruptcy or failure of any insurance company carrying
insurance for either party, or failure of any such insurance company to pay
claims accruing, shall not be held to waive any of the provisions of this
Agreement or relieve either party from any obligations under this
Agreement.
ARTICLE 19 SOFTWARE;
---------
19.1 Subject to the limitations of this Agreement and payment in full of the
applicable license fee(s), SELLER grants PURCHASER a non-exclusive,
nontransferable license to use the Software (including Software Updates,
Software Enhancements and Software Features) delivered to PURCHASER under
this Agreement solely in conjunction with the operation of the System. Any
other intended use of the Software not specifically authorized herein shall
be subject to a separate licensing arrangement between SELLER and
PURCHASER. Attachment I sets forth the terms of the OSS Support Agreement.
Unless otherwise designated in Attachment A, Software required for
operation of Equipment is on a "pay-as-you-grow basis" or on an added
functionality basis and fees will be calculated on an annual basis based on
the same pricing criteria as was used in determining the initial license
fee (e.g., number of sectors, switch reports, features, servers, or
subscribers). PURCHASER agrees to provide SELLER with information
necessary and appropriate for calculation of such fees or otherwise agree
to SELLER's right to obtain such information during the regular course of
its business, and SELLER agrees to limit the use of such information to the
calculation and invoicing of such fees. PURCHASER's right to continued use
of Software licensed on a pay-as-you-grow basis or otherwise used In
Revenue Service will be contingent upon the payment of appropriate fee
adjustments within thirty (30) days of invoice therefor. The term of the
license granted for
21
<PAGE>
each module of Software delivered under this Agreement shall be specified
in the Order for the Software.
19.2 PURCHASER acknowledges that the Software is the property and confidential
proprietary information of SELLER or third-party licensers. Title and
ownership rights to Software, including any reproductions, modifications or
derivatives thereof, shall remain at all times with SELLER or third party
licensors. PURCHASER may not sell, assign, transfer, license, or otherwise
make available the Software to any third party (except as provided herein)
nor shall PURCHASER adapt or create any derivative work using the Software
or decompile or reverse engineer the Software without the prior written
consent of SELLER. PURCHASER may not copy or duplicate the Software,
except that PURCHASER may make one (1) copy of the Software solely for
back-up or archival purposes, provided that such copy bears all copyright
or other proprietary legends as are contained on the original copy (or as
SELLER may reasonably require from time to time). PURCHASER shall not
alter or remove any copyright or other proprietary legends on or in copies
of the Software. Except as expressly permitted in this Article 19 and in
Article 28, PURCHASER agrees not to disclose or cause to be disclosed the
Software to any person other than employees or contractors of PURCHASER
duly authorized to use the Software on PURCHASER's behalf and who have been
informed by PURCHASER of the use and disclosure restrictions set forth
herein.
19.3 The Software supplied under this Agreement shall not, without SELLER's
prior written consent, be implemented on or used to directly control
hardware other than that purchased under this Agreement, except for
hardware which is capable of interfacing with the System at a point of open
interface.
19.4 PURCHASER may transfer this RTU Software license to any subsequent
purchasers of the System from PURCHASER without further approval of SELLER
provided the subsequent purchasers are not direct competitors of SELLER and
further provided the subsequent purchasers agree in a writing delivered to
SELLER to assume PURCHASER's obligations set forth in this Agreement
relating to the Software.
19.5 Modifications of the Software made by SELLER which constitute Software
Enhancements or Software Features will be made available to PURCHASER on an
RTU license basis at the prices set forth in Attachment A, and if not
therein set forth, at SELLER's then current price therefor. Software
Updates shall be provided to PURCHASER without charge during the Software
Warranty Period. Thereafter, Software Updates shall be made available to
PURCHASER pursuant to agreements for System Support Services.
19.6 Notwithstanding the provisions of Article 23 of this Agreement, the parties
agree that SELLER may enforce provisions of this Article 19 regarding
restrictions on transfer and confidentiality of the Software by an action
for injunctive relief or other equitable remedies.
ARTICLE 20 TAXES
------
22
<PAGE>
The prices set forth in this Agreement do not include any state or local sales
and use taxes, however designated, which may be levied or assessed on the System
or any component thereof, including, but not limited to, services. With respect
to such taxes, PURCHASER shall either furnish SELLER with an appropriate
exemption certificate applicable thereto or pay to SELLER, upon presentation of
invoices therefor, such amounts thereof as SELLER reasonably determines it is
required to collect or pay. In addition, PURCHASER shall reimburse SELLER for
any property taxes incurred by SELLER with respect to the Equipment and Software
following Installation of such Equipment or Software but prior to the passage of
title thereof to PURCHASER. PURCHASER shall have no obligation to SELLER with
respect to other taxes, including, but not limited to, those relating to
franchise, net or gross income or revenue, license, occupation, other real or
personal property, and fees relating to importation of the Equipment and
Software.
ARTICLE 21 INDEMNIFICATION AND LIMITATION OF LIABILITY
-------------------------------------------
21.1 SELLER and PURCHASER agree to indemnify and hold the other harmless from
and against all losses, claims, demands, damages (to person or property),
and causes of action (including reasonable legal fees) resulting from the
intentional or negligent acts or omissions, or strict liability, of such
party, its officers, agents, employees, or subcontractors. If SELLER and
PURCHASER jointly cause such losses, claims, demands, damages, or causes of
action, the parties shall share the liability in proportion to their
respective degree of causal responsibility.
21.2 SUBJECT TO 21.1 ABOVE, BUT NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT, IN NO EVENT, WHETHER AS A RESULT OF BREACH OF
CONTRACT, WARRANTY, TORT (INCLUDING BUT NOT LIMITED TO NEGLIGENCE OR
INFRINGEMENT), SHALL SELLER OR PURCHASER BE LIABLE UNDER THIS AGREEMENT FOR
ANY CONSEQUENTIAL OR INCIDENTAL DAMAGES OF ANY NATURE WHATSOEVER, INCLUDING
LOST PROFITS OF THE OTHER PARTY, BEFORE OR AFTER ACCEPTANCE.
ARTICLE 22 INTELLECTUAL PROPERTY RIGHTS INFRINGEMENT
-----------------------------------------
22.1 SELLER agrees that it will defend, at its own expense, all suits and
claims against PURCHASER for infringement or violation of any patent,
trademark, copyright, trade secret, or other tangible or intangible
property rights of any kind whatsoever, whether United States or foreign
(collectively, "Property Rights"), covering, or alleged to cover, the
Equipment, Software, or the System or any component thereof, in the form
furnished or as subsequently modified by SELLER, and SELLER agrees that it
will pay all sums, including, without limitation, attorneys' fees and other
costs, which, by final judgment or decree, or in settlement of any suit or
claim, may be assessed against PURCHASER on account of such infringement or
violation, provided (a) SELLER shall be given prompt written Notice of all
claims of any such infringement or violation and of any suits or claims
brought or threatened against PURCHASER or SELLER of which PURCHASER has
express knowledge, and SELLER shall be given full authority to assume
control of the defense thereof through its own counsel at its expense and
to compromise or settle any suits or claims so far as this may be done
without prejudice to the right of the PURCHASER to continue the use, as
contemplated, of the
23
<PAGE>
Equipment, the Software or the System or any component thereof so
furnished; and (b) PURCHASER shall cooperate fully with SELLER in the
defense of such suit or claims and provide SELLER such assistance as SELLER
may reasonably require in connection therewith, provided that PURCHASER
incurs no expense.
22.2 If in any such suit so defended, all or any part of the Equipment,
Software, or the System, or any component thereof is held to constitute an
infringement or violation of any other person's Property Rights and its use
is enjoined, or if in respect of any claim of infringement or violation
SELLER deems it advisable to do so, SELLER shall at its sole option take
one or more of the following actions at no additional cost to PURCHASER:
(a) procure the right to continue the use of the same without interruption
for PURCHASER; (b) replace the same with non-infringing Equipment or
Software that meets the Specifications; or (c) modify said Equipment or
Software so as to be non-infringing, provided that the Equipment or
Software as modified meets all of the Specifications.
22.3 SELLER's indemnity under this Article 22 shall not apply to any
infringement caused by PURCHASER's modification of the Equipment and any
infringement caused solely by PURCHASER's use of the Equipment other than
in accordance with the Specifications and the purposes contemplated by this
Agreement, except as expressly authorized or permitted by SELLER.
PURCHASER shall indemnify SELLER against all liability and cost of defense,
including reasonable attorney's fees, for any and all claims against SELLER
for infringement based upon the foregoing.
22.4 The remedies stated in this Article 22 shall be the parties' exclusive
remedies for infringement or violation of any property rights. In no event
shall either party be liable to the other for money damages for
infringement.
ARTICLE 23 DISPUTE RESOLUTION
------------------
23.1 If there is a disagreement relating to Installation and Acceptance, the
parties will attempt to negotiate a solution within fourteen (14) days of
notification of such disagreement. If no solution can be reached, the
parties shall select a third party engineer ("Third Party Engineer") (whose
fees and expenses shall be paid by the non-prevailing party) who will,
after conducting such examination or testing as he/she deems necessary,
render a decision in the matter by stating whether the Equipment, Software
or Installation in question shall be Accepted. If the parties are unable to
agree on the selection of the Third Party Engineer, the Third Party
Engineer will be selected by the then President of the Institute of
Electrical & Electronics Engineers. The Third Party Engineer's decision
shall be final and binding and neither party shall appeal or otherwise
contest it. Once a Third Party Engineer is selected for resolving a dispute
relating to Installation or Acceptance, he/she shall be selected for the
resolution of any further disputes hereunder relating to Installation and
Acceptance unless otherwise agreed to by both parties or unless The Third
Party Engineer refuses to continue to serve in that function.
24
<PAGE>
23.2 (a) Any controversy or claim arising out of or relating to this
Agreement for the breach hereof which cannot be settled by the parties
except for (i) disputes to be settled by a Third Party Engineer under
paragraph 23.1, or (ii) action for equitable relief under Articles 19
or 28 which shall be resolved as provided therein, shall be settled by
arbitration in accordance with the commercial arbitration rules of the
American Arbitration Association as set forth herein.
(b) Each party may select one arbitrator. Selection shall be
completed within ten (10) days of the receipt of a demand for
arbitration. If either party fails to select an arbitrator within such
ten (10) day period, the one selected shall act as sole arbitrator. If
two arbitrators have been selected, the two arbitrators selected shall
select a third within fifteen (15) days after their selection. If they
fail to do so, the third arbitrator shall be selected by the American
Arbitration Association. The arbitrators shall set a date of hearing
no later than sixty (60) days from the date all arbitrators have been
selected.
(d) All proceedings shall be conducted in the English language.
(e) The arbitration shall take place at a location to be agreed upon
by the parties. If the parties are unable to agree, the arbitrators
shall select a location in New York, New York for the arbitration.
(f) In any such arbitration proceeding the arbitrators shall adopt
and apply the provisions of the Federal Rules of Civil Procedure
relating to discovery so that each party shall allow and may obtain
discovery of any matter not privileged which is relevant to the
subject matter involved in the arbitration to the same extent as if
such arbitration were a civil action pending in a United States
District Court; provided, however, that each party shall be entitled
to no more than four (4) depositions upon oral examination of no more
than one (1) day in length each.
(g) The award of any arbitration shall be final, conclusive and
binding on the parties hereto.
(h) The arbitrators may award any legal or equitable remedy. The
arbitration award shall include an award of arbitrator and attorney's
fees, in the amount of such fees, to the prevailing party. Judgment
upon any arbitration award may be entered and enforced in any court of
competent jurisdiction.
(i) Either party to an arbitration hereunder may bring an action for
injunctive relief against the other party if such action is necessary
to preserve jurisdiction of the arbitrators or to maintain status quo
pending the arbitrators decision. Any such action called pursuant to
this paragraph shall be discontinued upon assumption of jurisdiction
by the arbitrators and their opportunity to consider the request for
equitable relief pending final decision in the arbitration.
25
<PAGE>
ARTICLE 24 TERMINATION AND DEFAULT
-----------------------
24.1 (a) PURCHASER may, upon Notice to SELLER, terminate this Agreement in
whole or in part, at its option, without penalty: (i) if any Initial
Configuration in general, as opposed to Cell Site Configuration
Equipment at a specific site, (other than by the fault of PURCHASER or
due to an event specified in paragraph 10.3) has been rightfully
rejected by PURCHASER and has not thereafter been Accepted within one
hundred twenty (120) days after such rejection; provided, however,
-----------------
that in the event of such rightful rejection, SELLER shall immediately
commence its efforts the cure the reason for the rejection, and shall
use its commercial best efforts to cure the reason for the rejection
as soon as possible; (ii) if any portion of an Initial Configuration
is delayed more than one hundred twenty (120) days (other than as a
result of a delay caused by PURCHASER or as set forth in Section 10.3
(a)) and the Equipment that is delayed is material to the operation of
the System, (iii) if, with regard to any Initial Configuration, no
Equipment has been delivered to PURCHASER for such Initial
Configuration (other than as a result of a delay caused by PURCHASER
or as set forth in Section 10.3 (a)) within one hundred twenty (120)
days from the scheduled delivery date, or (iv) if SELLER fails to
perform its obligations under paragraph 22.2 and such failure results
in a judicial imposition of legal damages or injunctive relief upon
PURCHASER.
(b) In the event PURCHASER terminates this Agreement in accordance with
this paragraph 24.1, PURCHASER may at its option: (i) return to
SELLER, freight collect, all Equipment delivered with regard to the
Initial Configuration delayed under Section 24.1 (a) (i) above or not
delivered under Sections 24.1 (a) (ii) & (iii) above, in which event
SELLER shall refund to PURCHASER all amounts paid to SELLER under this
Agreement with regard to such Initial Configuration; or (ii) retain so
much of such Initial Configuration Equipment as it elects and return
to SELLER, freight collect, the rest of such Initial Configuration
Equipment, in which event SELLER shall refund to PURCHASER all amounts
paid in respect to Equipment and the Installation thereof returned by
PURCHASER.
24.2 (a) PURCHASER may, at its option and upon Notice to SELLER, terminate
this Agreement in whole or in part, if SELLER is in default under any
material terms of this Agreement, other than those specified in
paragraph 24.1 (a) (i) and (ii) above, and action to correct such
default is not commenced within thirty (30) days after receipt of
Notice from PURCHASER and such default is not thereafter made
satisfactory progress towards a cure within thirty (30) days after
commencement of correction, unless SELLER cannot complete such cure
within such period for reasons beyond its control and SELLER is
continuing to diligently pursue the cure, in which case such default
shall be cured no later than one hundred eighty (180) days after
SELLER's original receipt of Notice under this paragraph 24.2 (a).
(b) In the event PURCHASER terminates this Agreement in accordance
with paragraph 24.2 (a), PURCHASER may at its option return to SELLER,
freight collect,
26
<PAGE>
any specific items of Equipment delivered or Software installed which
is the subject of the default above, in which event SELLER shall
refund to PURCHASER all amounts paid to SELLER under this Agreement
with regard to such Equipment, Software and the Installation thereof.
(c) Except as expressly provided in this Agreement, the remedies
provided in paragraphs 24.1 and 24.2 shall be PURCHASER's exclusive
remedies in case of termination for default.
24.3 SELLER may terminate this Agreement (or any Order issued pursuant to this
Agreement) in whole or in part, without any obligation to deliver Equipment
not yet delivered, or, at its option, temporarily suspend its performance,
without liability, under this Agreement or the System Support Agreement, or
the Order, in the event that: (a) PURCHASER is in default under this
Agreement, except as provided for in Article 24.3(b), and correction is not
commenced within thirty (30) days after receipt of Notice from SELLER and
such default is not thereafter cured within sixty (60) days after
commencement of correction, unless PURCHASER cannot complete such cure
within such period for reasons beyond its control and PURCHASER is
continuing to diligently pursue the cure, in which case such default shall
be cured no later than one hundred eighty (180) days after SELLER's
original receipt of Notice under this paragraph 24.3 or (b) PURCHASER
breaches any confidentiality agreement with SELLER, including the
provisions of Article 14 and 19 or otherwise fails to meet the provisions
of Article 2.2, and SELLER, while reserving all other remedies available
under this Agreement for such a breach, has provided PURCHASER with Notice
of such breach or (c) PURCHASER (i) applies for or consents to the
appointment of, or the taking of possession by a receiver, custodian,
trustee, or liquidator of itself or of all or a substantial part of its
property, (ii) makes a general assignment for the benefit of its creditors,
(iii) commences a voluntary proceeding under the Federal Bankruptcy Code or
under any other law relating to relief from creditors generally, or (iv)
fails to contest in a timely or appropriate manner, or acquiesces in
writing to, any petition filed against it in an involuntary proceeding
under the Bankruptcy Code or under any other law relating to relief from
creditors generally, or any application for the appointment of a receiver,
custodian, trustee, or liquidator of itself or of all or a substantial part
of its property, or its liquidation, reorganization, dissolution, or
winding-up.
24.4 Except as provided above, if either party terminates this Agreement,
SELLER's obligations hereunder with respect to Equipment already delivered,
installed and not returned, and PURCHASER's obligations with respect to
payments for Accepted Equipment not returned, shall continue in full force
and effect.
24.5 PURCHASER agrees that it will not take any action to enter into an
agreement with a cellular system supplier other than SELLER for replacement
of a PURCHASER's System prior to the foregoing expiration of the Term of
this Agreement; provided, however, that the foregoing shall not apply if
this Agreement is terminated in whole by PURCHASER.
ARTICLE 25 ADVERTISING
-----------
27
<PAGE>
Neither SELLER nor PURCHASER shall publicly advertise or, except as required by
law, publish information concerning the entry into, execution or delivery of
this Agreement, its nature, or the terms and conditions hereof, without the
other party's prior written consent; provided, however, that SELLER or its
parent company may refer generally to SELLER's performance of this Agreement in
its annual report to shareholders. The PURCHASER shall have the right to
disclose information to its representatives and agents with respect to its debt
and equity financing and make any other public disclosures required by law
(including the SEC and FCC).
ARTICLE 26 LATE PAYMENTS
-------------
All amounts payable under this Agreement which are past due shall accrue
interest from their due date at the rate of one and one half percent (1 1/2%)
per month (or such lesser rate as may be the maximum permissible rate under
applicable law).
ARTICLE 27 PERSONNEL
---------
Neither party shall actively solicit any employees of the other party or any of
its Affiliates who are assigned to perform work hereunder during the period of
such assignment and for one (1) year thereafter, without the Consent of the
party whose employee is so solicited. Such Consent is not required for
responses to advertisements placed or posted in periodicals electronic bulletin
boards, or other media of general circulation.
ARTICLE 28 ASSIGNMENT
----------
28.1 The parties may assign or transfer this Agreement to their respective
Affiliates, including without limitations, AT&T. Neither party may
otherwise assign this Agreement, or any part of its rights or obligations
hereunder, without the other party's Consent.
28.2 PURCHASER shall have the right to lease or license the use of the System or
any component thereof to any other cellular mobile telephone service
provider on a time-sharing or other basis. Such lease or license shall not
serve to expand or otherwise alter SELLER's warranty obligations under this
Agreement.
28.3 Notwithstanding the provisions of Article 23 of this Agreement, the parties
agree that SELLER may enforce provisions of this Article 28 regarding
assignment by an action for injunction or other equitable remedies.
ARTICLE 29 NOTICES
-------
29.1 Any Notice required under sections 10.3 (b), 11.2, 18.4, 22.1 and Article
24 under this Agreement shall be given to the appropriate party at the
following addresses:
If to PURCHASER:
Triton PCS Equipment Company L.L.C.
28
<PAGE>
101 Lindenwood Drive, Suite 125
Malvern, Pennsylvania 19355
Attention: Chief Operating Officer
and to those persons listed on Attachment P, if any.
If to SELLER:
ERICSSON INC., Wireless Communications
740 E. Campbell Road
Richardson, Texas 75081
Attention: General Counsel
29.2 Notices required or permitted to be given under sections 11.3 and 13.4
(a)(v) of this Agreement may be given to persons in project or account
management supervisory positions of the party to be notified, but shall be
in writing and dispatched in accordance with section 1 (v) of this
Agreement.
29.3 Either party may change the address to which Notice to it shall be sent by
notifying the other party of the change and the new address on thirty (30)
days Notice given in accordance with this Article.
29.4 Notice given under this Article 29 shall be deemed to have been given upon
receipt by the other party.
ARTICLE 30 AUTHORITY AND COMPLIANCE WITH LAWS
----------------------------------
30.1 PURCHASER and SELLER represent and warrant that (a) all necessary
approvals and authority to enter into this Agreement and bind the parties
have been obtained, (b) the person executing this Agreement on behalf of
PURCHASER or SELLER has express authority to do so and, in so doing, to
bind PURCHASER or SELLER hereto, and (c) the execution of this Agreement
by PURCHASER or SELLER does not violate any provision of any by-law,
charter, regulation or any other governing authority of such party. Each
party agrees to furnish the other with such documents as either party may
reasonably request showing proof of authority in accordance with this
Article.
30.2 PURCHASER and SELLER shall comply with all applicable laws in the
performance of this Agreement, including the laws and regulations of the
United States Department of Commerce and State Department and any other
applicable agency or department of the United States regarding the export
or re-export of products or technology; and (b) indemnify each other for
any loss, liability or expense incurred as the result of breach of this
paragraph 30.2.
ARTICLE 31 HEADINGS
--------
29
<PAGE>
The headings given to the Articles herein are inserted only for convenience and
are in no way to be construed as part of this Agreement or as a limitation of
the scope of the particular Article to which the title refers.
ARTICLE 32 GOVERNING LAW; SEVERABILITY
---------------------------
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW THEREOF. Whenever possible, each provision of
this Agreement shall be interpreted in such a manner as to be effective and
valid under such applicable law, but, if any provision of this Agreement shall
be held to be prohibited or invalid in any jurisdiction, the remaining
provisions of this Agreement shall remain in full force and effect and such
prohibited or invalid provisions shall remain in effect in any jurisdiction in
which it is not prohibited or invalid.
ARTICLE 33 NO WAIVER
---------
The failure of either party to insist, in any one or more instances, upon the
performance of any of the terms, covenants or conditions of this Agreement, or
to exercise any right hereunder, shall not be construed as a waiver or
relinquishment of the future performance of any such terms, covenants, or
conditions or the future exercise of such right, and the obligation of the other
party with respect to such future performance shall continue in full force and
effect.
ARTICLE 34 ENTIRETY OF AGREEMENT; NO ORAL CHANGE
-------------------------------------
This Agreement and the Attachments referenced herein constitute the entire
Agreement between the parties with respect to the subject matter hereof, and
supersedes all proposals or agreements, oral or written, all previous
negotiations, and all other communications between the parties with respect to
the subject matter hereof. No modifications, alterations or waivers of any
provisions herein contained shall be binding on the parties hereto unless
evidenced in writing signed by duly authorized representatives of both parties
as set forth in Article 16.
ARTICLE 35 ATTACHMENTS AND INCORPORATIONS
------------------------------
35.1 The following documents attached hereto, are hereby incorporated by
reference herein, and made a part of this Agreement with the same force and
effect as though set forth in their entirety herein (such documents
together with this Agreement are herein referred to as the "Agreement").
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
ATTACHMENT TITLE/DESCRIPTION DATE/REVISION LEVEL
- -------------------------------------------------------------------------------
<S> <C> <C>
A Pricing Rev. D
- -------------------------------------------------------------------------------
B Installation Rev. 1995
- -------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
<S> <C> <C>
C Technical Education 4-18-97
- -------------------------------------------------------------------------------
D System Support Services 5-27-97
- -------------------------------------------------------------------------------
E Documentation Rev 1995
- -------------------------------------------------------------------------------
F Responsibility Matrix 3-11-98
- -------------------------------------------------------------------------------
G Environmental Conditions Rev. 1995
- -------------------------------------------------------------------------------
H Time Schedule Rev. B
- -------------------------------------------------------------------------------
I OSS 7-19-96
- -------------------------------------------------------------------------------
J Acceptance Tests/Certificate Rev. 1995
- -------------------------------------------------------------------------------
K (Reserved) (Reserved)
- -------------------------------------------------------------------------------
L AXE 10 Functions for CMS 8800 8-14-97
- -------------------------------------------------------------------------------
M (Reserved) (Reserved)
- -------------------------------------------------------------------------------
N Professional Services 11-22-96
- -------------------------------------------------------------------------------
O Price Variation 8-1-95
- -------------------------------------------------------------------------------
P Recipients of Notices to PURCHASER 3-11-98
- -------------------------------------------------------------------------------
Q Order Cancellation Policy 7-92
- -------------------------------------------------------------------------------
</TABLE>
35.2 Except where otherwise noted, in the event of any conflict or
inconsistency among the provisions of this Agreement and the documents
attached and incorporated herein, such conflict or inconsistency shall be
resolved, by giving precedence to this Agreement and thereafter to the
Attachments.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ERICSSON INC. TRITON PCS EQUIPMENT COMPANY L.L.C.
Wireless Communications By Triton Management Company, Inc.,
its manager
By: /s/ [illegible] By: /s/ [illegible]
------------------------------ -----------------------------
Title: VP-Bus Ops EML Title: SUP & CFO
------------------------------ -----------------------------
Date: 04/06/98 Date: 04/13/98
------------------------------ -----------------------------
31
<PAGE>
ATTACHMENT A HAS BEEN OMITTED
FROM THIS FILING AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THIS ATTACHMENT
32
<PAGE>
ATTACHMENT B
ACQUISITION AGREEMENT #9133
TRITON PCS, INC
INSTALLATION
------------
AXE SWITCH
- ----------
1. Installation
------------
1.1 Unpacking of and Inventorying of Mechanical Parts and Cables
(Package A)
1.2 Assembly and Installation of Exchange Framework (BYB 102/202) and
Power Plant; Check for fit and finish
1.3 Designation of Suites, Cabinets, Cableways, and Shelves
1.4 Assembly and Installation of Ancillary Equipment (as needed)
1.5 Assembly and Connectorizing of External Cabling
1.6 Installation of Internal Cabling
1.7 Connection of Commercial Power to Power Plant; Functional Test Power
Plant
1.8 Installation of Equipped Magazines (Package B)
1.9 Install Cover Plates/Doors
2. Testing
-------
2.1 Hardware/Functional Test of APZ
2.2 Test of Switching Network
2.3 Functional Test of Operation and Maintenance Functions
2.4 Test of Trunk Circuits
2.5 Test of Traffic Routing/Generation of Test Traffic
2.6 Test of Individual Multiple Positions
2.7 Test of Individual Trunks
2.8 Combined Operational Testing of APZ & APT with Traffic
2.9 Acceptance Testing
3. Functional Test of Traffic Handling Functions in APT
----------------------------------------------------
3.1 Test of Traffic Routes
3.2 Test of Individual Multiple Positions
3.3 Test of Individual Trunks
3.4 Generation of Test Traffic
1
<PAGE>
3.5 Combined Test
3.6 Operation Test
BASE STATIONS
- -------------
1. Activities Before Shipping
--------------------------
1.1 Assembly of Base Station Configurations
1.2 Test of Base Stations and Preparation of Test Protocols
1.3 Preparation of Transport and Packing
1.4 Transport by Common Carrier to Cell Site
2. Activities at Cell Site
-----------------------
2.1 Unpacking and Checking Equipment for Correct Specifications and
Possible Damage
2.2 Assembly of Equipment
2.3 Cabling and Wiring
2.4 Connection to the DC Power Supply
2.5 Connection to Antenna Feeders
2.6 Connection to 4W Circuits to Switch
2.7 Test of Base Station Equipment Preparation of Base Station Final Test
Protocols
2.8 Connection of Base Station Equipment to Commercial Power within Room
2.9 Install Antennas on Tower
3. SYSTEM TEST
-----------
Overall test carried out from MTSO with Initial Configurations of Cell Site
Configurations, as well as telco lines connected and mobile stations
operating. SELLER will interconnect and/or cross connect the equipment at
the POP to the circuits of the PSTN provided by PURCHASER within the same
building and the interconnection and/or cross connect at the POP of the
facilities between the MTSO Equipment, and each Cell Site Configuration.
In the event analog circuits are used between the MTSO and the Cell Sites,
the required circuits will be supplied by PURCHASER.
Rev. 1995
2
<PAGE>
Attachment C
Acquisition Agreement #9133
TRITON PCS, INC.
TECHNICAL EDUCATION
-------------------
TECHNICAL EDUCATION CENTER STUDENT CERTIFICATE PROGRAM
The program is a competency development program with basic core courses and
several areas of concentration. At the present time, three areas for the CMS
8800 are available:
MSC, RBS, and RF Engineering. These areas are available in both the 850Mhz
systems and the 1900 Mhz systems. Within each area of concentration, multiple
levels of technical competence are possible. The MSC area has four levels and
the RBS and RF areas have three levels each. One important note about this
program is that it is not intended to certify the competence of anyone. This
program is a method of providing a customized training path for technicians and
RF Engineers for the companies that utilize Ericsson CMS 8800 systems. This
program is NOT a substitute for and should not be confused with the official
Ericsson Standardized On-The-Job Training Program or the Certification programs
that Ericsson designs for it's customers. An expanded list of CMS 8800 courses
appears at the end of this Attachment C.
. LEVEL 1 Provides training required to perform basic routines and
administration under the guidance of a technician that has achieved
certificate level 3 through this certificate program.
. LEVEL 2 For the technician required to perform normal operation and
maintenance activities using standard Ericsson exchange documentation.
. LEVEL 3 For the technician who will diagnose and repair both hardware and
some software faults as well as perform extended operations and maintenance
functions.
. LEVEL 4 For the technician/engineer who is trained to be a troubleshooter on
both hardware and software as well as have a strong command of advanced
functions, features an system capabilities.
STEPS: To participate in the Certificate program the three steps listed below
must be followed;
1. Successfully complete at the courses identified (80% or better score in
each course). These required courses are listed in the Ericsson course
catalog specific to the CMS 8800 system.
2. Have the specified amount of work field experience verified by the
applicants supervisor on the certificate request form.
1
<PAGE>
3. Submit an application for certificate at which time Ericsson will
notify the employee's supervisor or team leader of student competency
development certificate eligibility. If the employee has met all
requirements for the level requested, Ericsson will send to the
employee's supervisor.
NOTES:
1. Credit for passing courses will not be automatic. Students will be
evaluated via written quizzes, performance of lab exercises, and
observation of the student's ability to perform.
2. All instructors teaching concentration courses are required to be
certified to instruct the class. Instructor certification includes two
elements: Professional Certification and Technical Certification.
3. All courseware has been revised to include the new evaluation criteria,
as well as recent CNA improvements. Also, additional lab exercises are
added as needed.
4. In the event that a student wishes to waive a course that is required
for this program, his/her supervisor must submit a course description or
outline of an equivalent course plus a certificate of completion for the
substituted course. The Certificate office will determine the eligibility
of the substituted course descriptions or outlines.
PRICING:
All Ericsson Technical Education Center (E-TEC) courses are priced based on
Credit Units. The value of each Credit Unit is $43.50 USD each. The price for
the Credit Unit remains the same whether the course is conducted at the E-TEC
facility in Richardson Texas or at the customer's location. The number of Credit
Units for each course is based on the extent of technical knowledge imparted
during the training. The majority of the courses are 10 Credit Units per day.
This may vary at customer request if the customer has asked specifically for a
course that is shorter in duration but contains the same information. It may
also vary if the course is of such a high technical level that it warrants
special skills by the instructor. All courses conducted at other then the E-TEC
facility must be prefaced by a quote of costs originated by the Ericsson manager
setting up the class and signed by the customer manager coordinating the course.
In addition, the customer must pay for all of the instructor's expenses to
include: airfare, rental car, hotel, meals and incidentals. No courses will be
scheduled until the Ericsson training manager responsible for the course
receives the customer signed quote from the customer along with a purchase order
number covering all of the expected costs for the class.
CMS 8800, 1997 COURSE OFFERINGS:
INTRODUCTION: The course offerings for CMS 8800 include curriculum designed
specifically for the CMS 8800 product line. Additional courses will be included
from the Ericsson product line as applicable.
2
<PAGE>
CMS 8800, 1997 Course/Price List
<TABLE>
<CAPTION>
COURSE NAME # OF CREDIT END CUSTOMER
- ---------------------------------------------------------------------------------------------------
DAYS UNITS PRICE/$
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CMS 8800 Ericsson Cellular 1 10 435
Overview
- ---------------------------------------------------------------------------------------------------
RBS 882M/DM Overview 1 10 435
- ---------------------------------------------------------------------------------------------------
CMS 8800 Digital Overview 1 10 435
- ---------------------------------------------------------------------------------------------------
CMS 8800 Digital Operation & 3 30 1,305
Maintenance
- ---------------------------------------------------------------------------------------------------
CMS 8800 MSC Advanced 10 100 4,350
Operation & Maintenance
- ---------------------------------------------------------------------------------------------------
AS 45/46 Features 3 30 1,305
- ---------------------------------------------------------------------------------------------------
Introduction To Cellular 1 10 435
Digital Packet Data (CDPD)
- ---------------------------------------------------------------------------------------------------
CMS 8800 System Introduction 4 40 1,740
- ---------------------------------------------------------------------------------------------------
AS 94/34 Features 1 10 435
- ---------------------------------------------------------------------------------------------------
RBS 884 Overview 1 10 435
- ---------------------------------------------------------------------------------------------------
RBS 884 Macro Operations & 5 50 2,175
Maintenance
- ---------------------------------------------------------------------------------------------------
CMS 8800 System Survey 5 50 2,175
- ---------------------------------------------------------------------------------------------------
RF Engineering 1 10 100 4,350
- ---------------------------------------------------------------------------------------------------
AS 100/101 Features 2 20 870
- ---------------------------------------------------------------------------------------------------
RF Engineering 2 10 100 4,350
- ---------------------------------------------------------------------------------------------------
CMS 8800 Measurement and 4 40 1,740
Statistical Analysis for the
Trunk and Switch Environment
- ---------------------------------------------------------------------------------------------------
CMS 8800 Measurement and 5 50 2,175
Statistical Analysis for the
RF and RBS Environment
- ---------------------------------------------------------------------------------------------------
RF Engineering 3 10 100 4,350
- ---------------------------------------------------------------------------------------------------
Multi-Line Fixed 5 50 2,175
- ---------------------------------------------------------------------------------------------------
Air Interface 5 50 2,175
- ---------------------------------------------------------------------------------------------------
CMS 8800 MSC Operations 10 100 4,350
- ---------------------------------------------------------------------------------------------------
RF Engineering 1, Accelerated 4 40 1,740
- ---------------------------------------------------------------------------------------------------
RF Engineering 2, Accelerated 5 50 2,175
- ---------------------------------------------------------------------------------------------------
RF Engineering 3, Accelerated 5 50 2,175
- ---------------------------------------------------------------------------------------------------
AS 100/101 O & M 2 20 870
- ---------------------------------------------------------------------------------------------------
CMS 8800 MSC Maintenance 10 100 4,350
- ---------------------------------------------------------------------------------------------------
MSC Operations (CBT) 10 100 4,350
- ---------------------------------------------------------------------------------------------------
RBS 882 Operation & 5 50 2,175
Maintenance
- ---------------------------------------------------------------------------------------------------
RBS 882 Microcell 5 50 2,175
Installation, Operation &
Maintenance
- ---------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
CMS 8800, 1997 Course/Price List
<TABLE>
<CAPTION>
COURSE NAME # OF CREDIT END CUSTOMER
- ---------------------------------------------------------------------------------------------------
DAYS UNITS PRICE/$
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
RBS 884 Micro/Compact 5 50 2,175
Installation, Operation and
Maintenance
- ---------------------------------------------------------------------------------------------------
CMS 8800 RBS Basics 5 50 2,175
- ---------------------------------------------------------------------------------------------------
884 1900 Macro IO&M 5 50 2,175
- ---------------------------------------------------------------------------------------------------
AS 100/101 DCCH Seminar 3 30 1,305
- ---------------------------------------------------------------------------------------------------
884 DBC Macro IO&M TBD
- ---------------------------------------------------------------------------------------------------
AS 123/124 Tech. Overview TBD
- ---------------------------------------------------------------------------------------------------
</TABLE>
For a complete listing of all E-TEC CMS 8800 courses and a detailed description
of the Student Certificate programs, see the E-TEC Homepage on the Internet.
Revised 4/18/97
4
<PAGE>
ATTACHMENT D
ACQUISITION AGREEMENT #9133
TRITON PCS, INC
SYSTEM SUPPORT SERVICES
-----------------------
In addition to the provisions of this Acquisition Agreement, including without
limitation, Article 13 - Warranties, which provisions shall supersede these
provisions in the event of any inconsistency, SELLER agrees to render System
Support Services to PURCHASER on the following terms and conditions:
1. CORE SERVICES
-------------
(a) After the Warranty Period, PURCHASER has the option to purchase System
Support CORE SERVICES on an annual basis.
(b) CORE SERVICES shall include Consultation Service, Emergency Support
Service, Software Maintenance Service and Hardware Maintenance Return
and Repair Service.
(c) Consultation Service includes telephone assistance during normal
business hours for assistance with (i) operation and maintenance
questions, (ii) problem resolution and (iii) Trouble Report handling
and tracking.
(d) Emergency Support includes 24 hour access to an emergency toll-free
number and on-site assistance, if necessary, to recover the system in
the event of a total outage or severe impairment of service.
(e) Software Maintenance includes (i) the supply of all Software Updates
and Software Enhancements issued by the SELLER, to be installed by the
PURCHASER and (ii) the supply of emergency Software Patches to correct
software faults that are deemed to be of an urgent nature, also to be
installed by the PURCHASER, and (iii) the supply or Bulletins, by fax,
to notify PURCHASER of software faults that have been discovered and
the action to be taken.
1
<PAGE>
(f) Hardware Maintenance Return and Repair service provides return and
repair of all SELLER-manufactured Base Station and Network Element
Equipment, excluding batteries. In accordance with the terms of
Article 13 of this Acquisition Agreement, PURCHASER shall dismantle
and ship, at its expense, faulty components to SELLER's Richardson,
Texas, location where SELLER will repair or replace the components and
reship, at SELLER's expense, to PURCHASER within thirty (30) working
days of receipt.
2. ENHANCED SERVICES
-----------------
2.1 After the Warranty Period, PURCHASER has the option to purchase
Enhanced Services on an annual basis. Enhanced Services shall include
Software Configuration Management Service, and Enhanced Hardware
Maintenance Services.
2.2 Software Configuration Management Service shall include all Software
Updates and Software Enhancements as outlined in the Software
Maintenance Service above and the installation by SELLER of these
Updates and Enhancements in all Network Elements.
2.3 Enhanced Hardware Maintenance Services shall include Emergency Repair,
Advance Swap and Repair, and Swap and Repair.
(a) Emergency Repair provides PURCHASER with replacement Equipment within
one day of notification by SELLER. SELLER will utilize overnight air
shipment to send replacement Equipment to PURCHASER's location.
(b) Advance Swap and Repair provides PURCHASER with replacement Equipment
within 48 hours of SELLER being notified, in advance of the faulty
Equipment being returned to SELLER.
(c) Swap and Repair provides PURCHASER with replacement Equipment within
five (5) working days upon receipt of faulty Equipment.
3. SERVICE LIMITATIONS
-------------------
(a) System Support Services as described in 1 and 2 above covers
malfunctions in Equipment and Software that impair service to
subscribers, System performance, billing, administration or
maintenance, except for malfunctions that are: (i) caused by
deliberate or negligent acts of persons other than SELLER (including
but not limited to those acts or causes listed in paragraph 13.4 of
the Acquisition Agreement) or (ii) any
2
<PAGE>
other causes external to the System. PURCHASER shall pay SELLER's then
current rate for any technical assistance rendered and the actual cost
of labor, freight and materials for the repair or replacement, at
PURCHASER's request, of any Equipment and Software faults not covered
by System Support.
(b) System Support Services will be provided for an Application System for
a period of two (2) years after the General Availability date (GA) of
the Application System. If PURCHASER elects not to upgrade the
Software to the current release level, and the two year period for
support of the Application System has expired, SELLER may, at its
option, require PURCHASER to pay an increased fee for support of such
Software, or, require PURCHASER to bring the installed Software up to
a supported version. Any loss of System functionality due to the
inability or unwillingness of PURCHASER to keep the Software current
shall be the sole responsibility of and liability of PURCHASER.
(c) SELLER's performance of its obligations hereunder is dependent upon
PURCHASER providing access to the System and to such information and
facilities as SELLER may reasonably require in order to provide the
System Support Service.
(d) PURCHASER may request the SELLER provide on-site technical assistance
or expert services on matters not covered by System Support in
accordance with Article6 of the Acquisition Agreement. Such services
will be provided at SELLER's then current rate for such services or on
a time and materials basis, as appropriate.
4. DISCONTINUATION OF SERVICES BY SELLER
-------------------------------------
In the event that the SELLER intends to discontinue its System Support
Services, SELLER shall provide PURCHASER with sufficient advance notice of
such intention, together with all reasonably necessary information, so as
to enable PURCHASER to perform such services itself or arrange for them to
be performed by a third party.
5. TERMINATION OF SERVICE
----------------------
(a) PURCHASER may terminate System Support Services by giving SELLER 180
days written notice.
(b) In the event of such termination of System Support Services, neither
party shall have any further obligation to the other with respect to
System Support Services, except that (i) SELLER shall refund to
PURCHASER any portion of the charge paid by PURCHASER for System
3
<PAGE>
Support Services for the period subsequent to the effective date of
termination, less any amounts then due SELLER; and (ii) PURCHASER
shall pay SELLER for the System Support Services performed prior to
the effective date of termination.
Revised 5/27/97
4
<PAGE>
ATTACHMENT E
ACQUISITION AGREEMENT #9133
DOCUMENTATION
CMS 8800 PRODUCT INFORMATION DEFINITION
INTRODUCTION
The CMS 8800 library is designed to be user-friendly so that relevant documents
will be at hand when and where they are needed. The library provides the
information needed to operate, maintain, check and repair the system and its
equipment in a proper and effective manner.
The contents and arrangement of the library are intended to show the correct
servicing of the system. The documentation is divided into modules covering
areas such as software, hardware etc. The documents are written for operators,
technicians and engineers who are experienced with similar equipment. The
documentation should be combined with Ericsson training courses that incorporate
the appropriate theoretical and practical applications.
This library description gives a summary of the customer library covering the
information needs for Ericsson's Cellular Mobile System CMS 8800.
Please note that the library is under development and changes in library
structure, contents and distribution media may take place in order to include
new functions and to make the library easier to use.
LIBRARY STRUCTURE
The CMS 8800 system library is divided into five parts,
Mobile Services Switching Center (MSC) Library, Home
Location Register (HLR) Library, Radio Base Station
(RBS) Library, Operation and Support (OSS) Library, and
External Vendor Libraries. Each library contains
different kinds of documents with varied information.
The grouping of documents into libraries, each forming
an information package, makes the library adaptable to
the information requirements of different users in an
operating company.
1
<PAGE>
To facilitate searching for information in paper-bound
libraries, it is more efficient to have the documents
divided and grouped into modules and submodules, which
are electronically stored libraries. In this
description, however, it is used as an easier way to
explain the ideas behind the structure of the libraries.
All types of modules are not normally included in each
one of the libraries. Below is a list of modules
existing today:
<TABLE>
<CAPTION>
Module Designation
------ -----------
<S> <C>
B Operation and Maintenance
C Office/Site Documents
D Descriptions for Functional Products
F Hardware Documents
K Power Supply Documents (Radio Base Station)
</TABLE>
Modules and Submodules
In paper-bound libraries, each module can be composed of
one or more binders, depending on the amount and type of
material covered by the particular module.
Modules are composed of separate submodules related to
specific topics. These submodules are listed numerically
beginning with the module letter and 01.
At the beginning of each of the submodules, there is an
index or list detailing the subject matter covered. This
index breaks down the submodule into particular units of
information.
The units of information contained in the submodules are
in the form of numbered documents.
Each module and the associated submodules deal with a
specific type of information, such as Maintenance,
Operations, and Engineering.
DISTRIBUTION MEDIA
MSC and HLR AXE libraries
AXE libraries are distributed electronically on two
different platforms:
2
<PAGE>
DOCVIEW is the document-viewing program, which compacts
the data sufficiently for use on a PC hard disk. The
entire AXE Operations and Maintenance Library can be
stored in 16 MB. The DocView program works as a
companion to FIOL, the interface with the AXE. DocView
and FIOL are used simultaneously with a split screen.
DocView is easy to learn and fast to use. It is
generally delivered on a CD ROM, but is not used as a CD
ROM product. DocView is intended to be a tool for the
experienced, or trained, user.
KRSWIN CD ROM is the document viewing program with a
powerful searching engine. Using Boolean operands (and,
or, not), the user may search for terms while combining
terms. For example, "ETC and STR" will locate all
documents where both these terms are found. KRSWin is a
windows product and is intended for use by the novice
operator, or a switch engineer who needs to perform
research in great detail.
RBS library
The 884 Users Guide are available on KRSWin CD ROM. The
balance of the RBS information is distributed on paper.
OSS library
The distribution media is paper.
External Vendors library
The distribution media is paper.
AXE (MSC AND HLR) OPERATION AND MAINTENANCE MANUAL
The Operation & Maintenance Manuals are sometimes called
the Job Procedures Library. The AXE operators may be
asked to perform tasks on the AXE prior to training
courses, or in an alarm/emergency situation. The job
procedure is a special document type, which is an easy-
to-use, step-by-step, task-oriented, detailed
explanation of how to carry out a particular task. This
information can be used in a way, which enhances in-
service-performance goals for the end-user. Fewer
mistakes are made and tasks are completed efficiently
the first time.
The Operation and Maintenance Manual is available on
KRSWin CD ROM. Thus, the reader can search for familiar
terms to learn the tasks on his own.
The job procedure is written on two competence levels.
For the experienced technician who knows the command and
is familiar with the procedure, a detailed flow chart is
given. This flow chart gives guidance and serves as a
memory-aid for the experienced worker. For the novice
technician, the flow chart is a detailed description of
what actions should be taken and how the AXE will react
to the activity. Complete examples of syntax are
provided.
3
<PAGE>
Warnings are also noted. This level of detail provides
the inexperienced technician with the information to do
any task as well or better than an experienced
colleague.
The information given is related to a specific AXE
application system; i.e., the contents are adapted to
the equipment included and functions for the system
involved.
RADIO BASE STATION LIBRARY
These instructions are intended for use by customers who
will install and/or commission the base station.
Included in this information is the Ericsson know-how
regarding methods and procedures for installation and
testing.
884 Users Guide
This modern work guide is intended for use by end-user
customers of all competence levels. The typical radio
technician would need this information only when the new
product is delivered. It can be used to learn the new
functions of the product and the new routines associated
with it.
The 884 Users Guide includes these sections:
. INTRODUCTION: This section describes the scope of the
contents of the information within.
. SYSTEM DESCRIPTION: This section contains
descriptions of the functional structure, the
hardware architecture, and the hardware and software
interfaces for the base station. The manual also
contains a basic description of the CMS 8800.
. INSTALLATION: This section details activities
required to install and commission the radio. It is
written in job procedure format.
. TEST AND VERIFICATION: This section contains
information describing the procedures for making an
installation test and how to perform a start of
operation of the base station. It contains lists of
recommended test instruments, and test instructions
for hardware and function testing. The manual is a
tool for the commissioning staff.
. OPERATION & MAINTENANCE: This section describes the
procedures required for normal operation and
maintenance of the base station. The manual contains
information for the administrative routines, shipping
and storage, repair orders, handling of spare parts,
inspection, and operation. The manual also contains
information covering checking or "fault-finding" and
repair. The manual is job-oriented in the same manner
as the work-flow.
. TROUBLESHOOTING: This section is an aid in
controlling and troubleshooting equipment on site
using a Personal
4
<PAGE>
Computer or data terminal connected to the
Input/Output Interface Magazine.
. GLOSSARY OF TERMS
. ACRONYMS AND ABBREVIATIONS
. SUPPORT INFORMATION
. APPENDIX: This section includes hard-to-remember
charts and tables, such as Fault Code Lists and
Frequency Lists.
OSS - OPERATION AND SUPPORT SYSTEM - LIBRARY
The documentation for the OSS system is delivered in a
customer library. The library contains information
describing the functions, administrative routines, error
handling, operational instructions, installation
instructions, software customization, acronyms, valid
range of value, etc. The presentation media is both
paper modules consisting of one or more binders, and on-
line presentation. The on-line information may be cross-
reference-linked to other product information such as
AXE or TMOS information. On-line OSS information will be
accessible using the Help function.
Introduction
The main principle for compiling a customer library is
simply that each library should contain the information
needed to run the Operation and Support System at the
site where it is to be placed.
Module A: Introduction Manual
The Introduction Manual contains a general description
of the functions and the interfaces from the OSS to
other systems. It also describes the other modules in
the set and the procedure for trouble reporting.
Module B: System Administration Manual
The System Administration Manual contains information
for system administration. It also contains instructions
for software maintenance such as administrative
routines, corrective maintenance procedure, error
handling, advanced diagnostics, software
reconfiguration, user interface customization, security
and authority management, and license keys management.
It describes recovery procedures for cases in which a
link goes down, the OSS server fails, or the AXE begins
a restart. The B module also describes the procedure to
modify the system configuration, and to identify,
correct and report failures and defects within the
system.
5
<PAGE>
Module D: Reference Manual
The Reference Manual provides an overview of the
product, which includes general system capacity and
limitations.
Module G: Installation Manual
The Installation Manual contains all instructions
required to install the OSS. It also describes the
installation parameters, valid range of value, etc.
Module H: Function Verification Manual (where applicable)
The Function Verification Manual contains instructions
to be used by novice operators.
Module M: Programming Manual (where applicable)
The Programming Manual contains information on the
application interfaces needed for development or
alteration of functions.
Module N: Market Adaptations Manual (where applicable)
The Market Adaptations Manual provides unique (site-
specific) information specific to each customer's
application systems.
Module O: Operations Manual
The Operations Manual contains illustrations of the
windows and examples of OSS reports and how to analyze
them.
PRODUCT INFORMATION THEORY AND PROCESSES
General Information
This information mainly describes the AXE (MSC and HLR)
documentation to show the principles, but the
documentation for most of the other units included in
CMS 8800 is structured and designed for use in a similar
way.
Architecture
The system has modular architecture with top down design
and function modules on five levels. (See figure below.)
Therefore, each function block as well as each function
unit has its own product identity. Each is handled
individually throughout the life cycle of the product.
That is, not only are the function blocks and function
units designed, engineered, documented, and installed
separately, they can also be operated, maintained, and
updated individually.
Modularity
Modularity regulates system organization, hardware
design, software design, and applications.
6
<PAGE>
The entire system is a set of specified functions,
realized at the lowest level as function units to the
highest level, the total system.
The figure below shows the AXE modular architecture.
[PYRAMID CHART APPEARS HERE]
- --------------------------------------------------------------------------------
-----------------
System
Product
Level 1
-------------------------------
System Products
Level 2
------------------------------------------
Sub system
Level
------------------------------------------------------
Function Block
Level
-------------------------------------------------------------------
Function Unit
Level
Software Hardware
------------------------------------------------------------------------
________________________________________________________________________________
AXE Modular Architecture
System
A system is an organized collection of parts for a
completely functioning product, such as a telephone
system, a signaling system, or a cooling system.
The AXE System Level refers to the entire AXE system and
encompasses all subordinate modular levels. The APZ
subsystem is responsible for controlling the telephony
applications switch equipment. The APT subsystem is
responsible for switching telephone calls in the AXE.
EXAMPLE:
AXE Telephone Exchange System (System Product Level 1)
APZ Control System for AXE (System Product Level 2)
APT Switching System for AXE (System Product Level 2)
Subsystem
A subsystem is a logically limited part of a system. The
subsystem represents characteristics and well-defined
main functions within the system.
Both APZ and APT systems are divided into a number of
subsystems. ANZ consists of subsystems supporting the
control system; the ANT contains subsystems in support
of telephony applications. Some subsystems contain only
software, others contain both software and hardware.
7
<PAGE>
EXAMPLE:
ANZ Central processing unit
ANT Subscriber switching stage
Function Block
A function block is a logically limited part of a
subsystem. It can be an independent product or a
combination of hardware or software product(s) and
functional unit(s).
Each subsystem consists of individual Function Blocks.
Each function block has an interface to all other
function blocks, which is defined by discrete signals.
Each function block is made up of software or hardware
function units that define specific functions within
individual function blocks.
EXAMPLE:
Data store
Fault handling
Input/Output device
Function Unit
A function unit is the smallest building block in the
functional structure. Function units can be either
hardware or software. The function units are used when a
product in hardware or software must be divided into
smaller functionally related parts.
Magazines
The hardware function unit of a function block usually
contains several identical devices or circuits and some
common equipment. These hardware devices are implemented
on printed circuit boards. The boards are grouped
together in board cages called magazines.
Product code/Product identity
A unique product code and its designation identify a
product. The product code indicates the system's
association with the product, its location in the
product hierarchy, its function, and its relationship
with other products. The figure below shows a simplified
product code in AXE.
8
<PAGE>
[PYRAMID CHART APPEARS HERE]
- --------------------------------------------------------------------------------
AXE
Level 1
-----------
APZ APT
Level 2
-------------
ANZ ANT
Sub System
---------------------------
CNZ CNT
Function Block
-------------------------------------------------
CAA COA ROF BFD
Function Unit
---------------------------------------------------------------
- --------------------------------------------------------------------------------
Simplified Product Code in AXE
System level 1 has the product code AXE. System level 2
has product codes APZ for the control and APT for the
switching system. All subsystems in APZ have a product
code ANZ (ANT is used for APT). All function blocks in
ANZ have a product code CNZ (CNT is used for ANT).
Software units and function units have product codes CAA
and COA, respectively.
Magazines and printed boards have the product codes BFD
and ROF, respectively.
Documentation Principles
The Ericsson document numbering system is built on a
close relationship between the products and their
associated documents. The system's hierarchy defines the
products at different levels. From a documentation point
of view, all products, from the top level (AXE, APT,
APZ) to the bottom level (individual circuit board) are
treated equally.
The numbering system classifies and groups the products
and documents according to their use, system
association, and content. Predefined basic numbers and
classes are registered in a database, and new items can
be registered as required. An individual identity number
consists of letters and digits combined according to the
rules of the numbering system.
9
<PAGE>
An individual document number consists of two parts: a
decimal class and a product number. These parts are made
up of letters and digits, combined according to the
rules of the document numbering system.
The decimal class indicates the information content of
the document. A decimal class consists of four or five
numbers. A prefix can be attached to decimal class to
indicate a difference between individual documents,
without changing the meaning of the decimal class.
A product number indicates the system level for which
the document is written. A product number is made up of
a combination of letters and numbers. The letters
designate the system level, while the numbers identify
the product.
A unique product number and its designation identify a
product. The product number indicates the system
association of the product, its location in the product
hierarchy, its implementation (for example, software and
hardware), and its relationship with other products.
Note that this is a description of Ericsson's document
numbering system. That the document type is mentioned or
described in this part of the library description does
not imply that the document type is included in the
CMS 8800 library.
Document Structure
The system hierarchy defines the products at different
levels. All products from top level (AXE, APT, APZ) to
the bottom (individual circuit board) are treated
equally from a documentation identification point of
view.
For each product category, a document structure shows
the documentation required for the different phases the
product goes through, such as design and production. The
below figure shows the document structure for one
function block.
10
<PAGE>
[STRUCTURAL CHART APPEARS HERE]
- --------------------------------------------------------------------------------
1095-
___ Document _________________________
| Survey |
| |
| 155 14- n/155 14-
| Signal ____________ Signal
| Survey Description
|
| 131 61-
| Structure
|__ Specification
|
|_________________________________________________________
| | | |
| |
| n/190 82- n/190 83- | 2/155 18-
| 1551- Command Printout |
|______ Description Description Description | 1/155 18-
| |
| 155 18-
| Application
| Information
| 109 21-
|_________ Product
Revision
Information
- --------------------------------------------------------------------------------
Document Structure for a Function block
The document survey is an important document. All other
documents belonging to a particular product are listed
on the survey. (See next figure.)
Note: Only those documents required for normal everyday
activities are supplied to the customer. The remainders
are internal proprietary documents.
The volume of documentation is considerable for complex
products. The amount of documentation that exists for a
particular product is not apparent from the product code
alone. The next figure shows all the information needed
for the APT system products level.
Rev. 1995
11
<PAGE>
[CHART APPEARS HERE]
________________________________________________________________________________
APT
Document
Survey
| |
| System Product
| |
|_______________________________________ _ _ _ _ _ _ _ _ _ _
| | | |
| 1551- Interwork Operational
Description Description Instruction
|
|
ANT
Document
Survey
| |
| Sub system
| |
|_______________________________________ _ _ _ _ _ _ _ _ _ _
| | | |
| 1551- Interwork Operational
Description Description Instruction
|
| CNT
Document
|Survey
| | Function Block
| |
| |_______________________________________ _ _ _ _ _ _ _ _ _ _
| | | | |
|
| 1551- Interwork Command Printout
| Description Description Description Description
|
|_________________ _ _ _ _ _ _ _ _ _
|
BFD
Document
Survey
|
| Magazine
|__________________ _ _ _ _ _
| |
Allocation Wiring
Table Information
________________________________________________________________________________
12
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
TRITON/ERICSSON RESPONSIBILITY MATRIX
-------------------------------------
TABLE OF CONTENTS
PLANNING
200 Initial Planning & Design
210 Radio Network Design
IMPLEMENTATION & TESTING OF RBS
300 Base Station Site Search (site acquisition)
310 Base Station Site Lease (site acquisition)
320 RBS Engineering
330 Base Station Site Acquisition and Civil Construction
340 Installation of Outdoor RBS Equipment
350 RBS Network Element Test
360 Engineering Antenna System
IMPLEMENTATION & TESTING OF SWITCH (MSC)
400 Switch Engineering
410 Data Transcript
420 Switch Site Acquisition and Civil Construction
430 Switch Installation
440 Switch Network Element Testing
IMPLEMENTATION & TESTING OF OSS
500 Engineering of Ericsson's OSS
510 Pre-Testing of Ericsson's OSS
520 Installation of Ericsson's OSS
1
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
TRITON/ERICSSON RESPONSIBILITY MATRIX
-------------------------------------
TABLE OF CONTENTS (continued)
IMPLEMENTATION & TESTING OF TRANSMISSION
600 Lease of Transmission & Data Communications Network
610 Transmission Engineering
620 Transmission Installation
630 Transmission Testing
640 Testing Data Communications Network
INTEGRATION & ACCEPTANCE
700 Integration of Ericsson's MSC, Network Elements & PSTN
710 Integration of Ericsson's OSS Network Elements
720 Integration of Ericsson's RBS Network Elements
730 System Demonstration (for Network Elements delivered by Ericsson)
740 OSS Demonstration (for Network Elements delivered by Ericsson)
750 Radio Network Implementation Support
760 Commercial Acceptance
770 Initial Configuration Acceptance
2
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
The Responsibility Matrix documents the major project tasks and clarifies the
division of responsibility between Triton and Ericsson for each task.
An `X' in Triton column indicates Triton responsibility to complete the
specified task.
An `X' in Ericsson column indicates Ericsson responsibility to complete the
specified task.
An `X' in both columns indicates shared responsibility.
An `O' in Ericsson column indicates that an option has been proposed to Triton
for Ericsson to provide this service at an additional charge.
<TABLE>
<CAPTION>
TASK TRITON ERICSSON
- --------------------------------------------------------------------------------------------- ------- --------
PLANNING
200. INITIAL PLANNING & DESIGN
- --------------------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
1. Provide "Market Requirement Questionnaire to Triton requesting, at a minimum, the X
following data:
- Plan and estimate of overall number of base stations
- Grade of service
- Transmission routing, signaling, numbering, and charging
- Services, operations, and maintenance plans
- External interfaces definition
- Radio network requirements document (only if Ericsson is providing RF
Network plan)
- CDD/CAD requirements (only if Ericsson is providing CDD)
- Develop reports from requirements document
- obtain tools (software/hardware to create reports)
- --------------------------------------------------------------------------------------------- ------- --------
2. Return completed Market Requirement Questionnaire to Ericsson. X
- --------------------------------------------------------------------------------------------- ------- --------
3. Provide Ericsson with any dependency or compatibility requirements with other X
networks.
- --------------------------------------------------------------------------------------------- ------- --------
4. Review responses from Market Requirement Questionnaire. X
- --------------------------------------------------------------------------------------------- ------- --------
5. Provide "Data Transcript (DT) Exchange Requirements" data forms to Triton. X
- --------------------------------------------------------------------------------------------- ------- --------
6. Return completed DT Exchange Requirements data forms to Ericsson X
- --------------------------------------------------------------------------------------------- ------- --------
7. Review responses from DT Exchange Requirements data forms. X
- --------------------------------------------------------------------------------------------- ------- --------
8. Plan and estimate the Network Element(s) required to meet market and DT exchange X X
data criteria.
- --------------------------------------------------------------------------------------------- ------- --------
9. Determine number of hours of reserve desired for emergency power (battery backup) X
for MSC.
- --------------------------------------------------------------------------------------------- ------- --------
10. Recommend specific MSC battery backup configuration to Triton. X
- --------------------------------------------------------------------------------------------- ------- --------
</TABLE>
3
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
<TABLE>
<CAPTION>
TASK TRITON ERICSSON
- --------------------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
11. Define the elements of the initial configuration which will be evaluated for System X X
Acceptance.
- --------------------------------------------------------------------------------------------- ------- --------
210. RADIO NETWORK DESIGN
- --------------------------------------------------------------------------------------------- ------- --------
1. Provide outline of desired coverage area. X
- --------------------------------------------------------------------------------------------- ------- --------
2. Provide demographic information of coverage area. X
- --------------------------------------------------------------------------------------------- ------- --------
3. Select coverage areas to be designated as "urban," "suburban," or "rural." X O
- --------------------------------------------------------------------------------------------- ------- --------
4. Estimate subscriber growth for coverage areas X O
- --------------------------------------------------------------------------------------------- ------- --------
5. Develop RF cell plan. X O
- --------------------------------------------------------------------------------------------- ------- --------
6. Determine coverage penetration requirements for "urban," "suburban," or "rural." X O
- --------------------------------------------------------------------------------------------- ------- --------
7. Provide time constraints for coverage of above areas and outline yearly marketing X
requirements through year 10.
- --------------------------------------------------------------------------------------------- ------- --------
8. Prepare nominal cell plan. X O
- --------------------------------------------------------------------------------------------- ------- --------
9. Review cell plan (if prepared by Triton). Issue acceptance letter after review. O
- --------------------------------------------------------------------------------------------- ------- --------
10. Provide search areas for cell sites as proposed by RF Engineering to site X O
acquisition team.
- --------------------------------------------------------------------------------------------- ------- --------
11. Perform feasibility study for the ranking of possible sites, to include: X O
- Preliminary zoning review
- Preliminary site survey of RF Engineering
- Preliminary site survey by construction company(s)
- --------------------------------------------------------------------------------------------- ------- --------
12. Select best sites. Notify acquisition team. X O
- --------------------------------------------------------------------------------------------- ------- --------
13. Identify, qualify, and secure real estate for MSC and RBS sites X O
- --------------------------------------------------------------------------------------------- ------- --------
14. Perform radio microwave analysis. If necessary, clear frequency band. Inform X O
Ericsson of available frequencies in relation to time schedule.
- --------------------------------------------------------------------------------------------- ------- --------
15. Prepare frequency plan. X O
- --------------------------------------------------------------------------------------------- ------- --------
16. Review frequency plan (if prepared by Triton). O
- --------------------------------------------------------------------------------------------- ------- --------
17. Document and distribute RBS dependent data. Identify the following cell site X O
information:
- Number of voice channels
- Effective radiated power (ERP)
- Antenna radiation center above ground level (AGL)
- Sector/omni antenna and orientations
- Down-tilt angle (if used)
- Frequency plan
- Frequency hoping sequence (if used)
- Site name, site code and number
- Provide map coordinates of base stations
- Cell Design Data (CDD) for each site
- --------------------------------------------------------------------------------------------- ------- --------
18. Review RBS dependent data related to CDD syntax (if provided by Triton). O
- --------------------------------------------------------------------------------------------- ------- --------
19. Prepare FCC application for approval of frequency use and adjacent channel use. X
Obtain coordination approval.
- --------------------------------------------------------------------------------------------- ------- --------
20. Design and conduct cell planning site survey, to include: X O
- Position relative normal grid
- Space for antenna system including antenna separation
- Nearby obstacles
- Service area
- Measurements of path loss and time dispersion
- --------------------------------------------------------------------------------------------- ------- --------
</TABLE>
4
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
<TABLE>
<CAPTION>
TASK TRITON ERICSSON
- --------------------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
IMPLEMENTATION & TESTING OF RBS
- --------------------------------------------------------------------------------------------- ------- --------
300. BASE STATION SITE SEARCH (SITE ACQUISITION)
- --------------------------------------------------------------------------------------------- ------- --------
1. Provide site prerequisites specifications (size, floor loading, ceiling height, X
etc.) to Triton.
- --------------------------------------------------------------------------------------------- ------- --------
2. Submit required application to FCC and local authorities. X
- --------------------------------------------------------------------------------------------- ------- --------
3. Perform title search for selected sites and verify the site is available for lease. X
- --------------------------------------------------------------------------------------------- ------- --------
4. Identify microwave circuit(s) and other interfering objects that must be relocated. X
- --------------------------------------------------------------------------------------------- ------- --------
5. Provide information to Ericsson that a potential site has been identified. X
- --------------------------------------------------------------------------------------------- ------- --------
310. BASE STATION SITE LEASE (SITE ACQUISITION)
- --------------------------------------------------------------------------------------------- ------- --------
1. Perform negotiation with site owners. X
- --------------------------------------------------------------------------------------------- ------- --------
2. Approve and conclude lease contract. X
- --------------------------------------------------------------------------------------------- ------- --------
3. Complete and provide site data file to civil construction contractor: X
- Preliminary site plan
- Final title search results
- Lease/purchase documents
- FCC permits submitted and received
- Building permits
- An engineering firm soil test if required
- --------------------------------------------------------------------------------------------- ------- --------
4. Complete and provide site data file to civil construction contractor: X O
- F Engineering data
- --------------------------------------------------------------------------------------------- ------- --------
320. RBS ENGINEERING
- --------------------------------------------------------------------------------------------- ------- --------
1. Perform site survey to determine layout for site, including antenna system. X
- --------------------------------------------------------------------------------------------- ------- --------
2. Prepare site prerequisites specifications for site search and for civil construction. X O
- --------------------------------------------------------------------------------------------- ------- --------
3. Prepare detailed installation design. X
- --------------------------------------------------------------------------------------------- ------- --------
4. Approve detailed installation design. X
- --------------------------------------------------------------------------------------------- ------- --------
5. Prepare as built drawings after installation. X
- --------------------------------------------------------------------------------------------- ------- --------
330. BASE STATION SITE ACQUISITION AND CIVIL CONSTRUCTION
- --------------------------------------------------------------------------------------------- ------- --------
1. Hire Architecture & Engineering (A&E) firm. X
- --------------------------------------------------------------------------------------------- ------- --------
2. provide physical requirements (obtain data from Ericsson as applicable) to A&E firm, X X
to include:
- Equipment size and weight
- Environmental requirements
- Demarcation points
- Grounding requirements
- VSWR/TDR requirements
- --------------------------------------------------------------------------------------------- ------- --------
3. Obtain topographic survey of property (if tower/monopole is to be constructed). X
- --------------------------------------------------------------------------------------------- ------- --------
</TABLE>
5
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
<TABLE>
<CAPTION>
TASK TRITON ERICSSON
- --------------------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
- --------------------------------------------------------------------------------------------- ------- --------
4. Prepare (A&E firm) complete architectural and engineering site drawings, to include X
at a minimum:
- Equipment locations and details
- Electrical panel location and details
- Telco demarcation point and details
- Antenna descriptions, locations, and details
- Coax locations and details
- Concrete support pads/steel platform structures and details
- Mounting devices (e.g.; threaded studs) if required for Ericsson's equipment
- Reinforcement of existing structures
- External alarms and details
- Grounding system and details
- Lightning protection system and details
- Warning lights on tower
- Special color on tower
- Tower/monopole/coax bridge details (for tower/monopole sites, only)
- Fences and details (for tower/monopole sites, only)
- Access road and details (for tower/monopole sites, only)
- Core drilling
- Fire protection system
- Heating, ventilating, air conditioning systems
- Lighting systems
- --------------------------------------------------------------------------------------------- ------- --------
6. Provide copy of A&E drawings to Ericsson. X
- --------------------------------------------------------------------------------------------- ------- --------
7. Acknowledge receipt of A&E Drawings. X
- --------------------------------------------------------------------------------------------- ------- --------
8. Prepare and issue request for quotation for new tower or monopole (if tower/monopole X
is to be constructed).
- --------------------------------------------------------------------------------------------- ------- --------
9. Select vendor for new tower or monopole and place order (if tower/monopole is to be X
constructed).
- --------------------------------------------------------------------------------------------- ------- --------
10. Obtain soils report (if tower/monopole is to be constructed) X
- --------------------------------------------------------------------------------------------- ------- --------
11. Design foundation for tower or monopole (if tower/monopole is to be constructed). X
- --------------------------------------------------------------------------------------------- ------- --------
12. Obtain structural analysis of existing tower or monopole with new equipment added X
(for existing tower/monopole sites only)
- --------------------------------------------------------------------------------------------- ------- --------
13. Order antenna support structure. X
- --------------------------------------------------------------------------------------------- ------- --------
14. Issue A&E drawings to contractors for quotes. X
- --------------------------------------------------------------------------------------------- ------- --------
15. Select contractor(s) X
- --------------------------------------------------------------------------------------------- ------- --------
16. Furnish antennas, feeders and jumpers. X
- --------------------------------------------------------------------------------------------- ------- --------
17. Provide warehouse for civil construction items. X
- --------------------------------------------------------------------------------------------- ------- --------
18. Obtain building permit. X
- --------------------------------------------------------------------------------------------- ------- --------
19. Obtain zoning approval. X
- --------------------------------------------------------------------------------------------- ------- --------
20. Order commercial power. X
- --------------------------------------------------------------------------------------------- ------- --------
21. Order Telco. X
- --------------------------------------------------------------------------------------------- ------- --------
22. Provide site availability schedule to Ericsson to include milestones such as "site X
ready for installation" date.
- --------------------------------------------------------------------------------------------- ------- --------
23. Provide RBS site implementation "Installation and Testing" schedule to Triton. X
- --------------------------------------------------------------------------------------------- ------- --------
24. Construct site in accordance with approved A&E drawings. X
- --------------------------------------------------------------------------------------------- ------- --------
25. Provide security during construction. X
- --------------------------------------------------------------------------------------------- ------- --------
26. Provide Ericsson access to site during construction. X
- --------------------------------------------------------------------------------------------- ------- --------
27. Supervise site construction. X
- --------------------------------------------------------------------------------------------- ------- --------
</TABLE>
6
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
<TABLE>
<CAPTION>
TASK TRITON ERICSSON
- --------------------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
28. For antenna systems: X
- Perform Voltage Standing Wave Radio (VSWR) and Time Domain Reflectometer (TDR)
test for all lines and antennas
- Verify feeders are connected to appropriate antennas.
- --------------------------------------------------------------------------------------------- ------- --------
29. Clean up site. X
- --------------------------------------------------------------------------------------------- ------- --------
30. Turn site over to Ericsson's RBS installation team when site is civil accepted. X
340. INSTALLATION OF OUTDOOR RBS EQUIPMENT
- --------------------------------------------------------------------------------------------- ------- --------
1. Provide security during the installation phase, as needed. X
- --------------------------------------------------------------------------------------------- ------- --------
2. Provide equipment transportation from Ericsson RBS factory to site. X
- --------------------------------------------------------------------------------------------- ------- --------
3. Provide for storage of RBS equipment if specified site is not available. X
- --------------------------------------------------------------------------------------------- ------- --------
4. Provide crane or other necessary lifting equipment at site, when required. Unless X
otherwise specified in contract.
- --------------------------------------------------------------------------------------------- ------- --------
5. Provide police escort and permits required to use crane and possible block traffic, X
when required.
- --------------------------------------------------------------------------------------------- ------- --------
6. During the implementation phase, provide and pay for repair to roads, lawns, roofs, X
etc., caused by possible damage or wear by crane and/or other lifting equipment and
trucks managed by Ericsson.
- --------------------------------------------------------------------------------------------- ------- --------
7. Install the RBS equipment and connect power/TI. X
- --------------------------------------------------------------------------------------------- ------- --------
8. Provide report showing sites where installation is complete. X
350. RBS NETWORK ELEMENT TEST
- --------------------------------------------------------------------------------------------- ------- --------
1. Perform test setup. X
- --------------------------------------------------------------------------------------------- ------- --------
2. Perform main power test. X
- --------------------------------------------------------------------------------------------- ------- --------
3. Perform alarm tests. X
- --------------------------------------------------------------------------------------------- ------- --------
4. Perform battery backup test. X
- --------------------------------------------------------------------------------------------- ------- --------
5. Load RBS software. X
- --------------------------------------------------------------------------------------------- ------- --------
6. Perform site specific inventory and status report of inventory results. X
- --------------------------------------------------------------------------------------------- ------- --------
7. Perform test calls, 1 call per time slot. X
- --------------------------------------------------------------------------------------------- ------- --------
8. After tests are completed, inform Triton that the network element is ready for X
acceptance.
- --------------------------------------------------------------------------------------------- ------- --------
9. Sign "Network Element Acceptance Certificate" if site accepted, else issue site X
"Exceptions Punch List."
- --------------------------------------------------------------------------------------------- ------- --------
10. Resolve items on site "Exceptions Punch List" if applicable. X
- --------------------------------------------------------------------------------------------- ------- --------
11. Provide report showing which sites are ready for RBS optimization. X
- --------------------------------------------------------------------------------------------- ------- --------
360. ENGINEERING ANTENNA SYSTEM
- --------------------------------------------------------------------------------------------- ------- --------
1. Specify number of voice channels required at site over a specified planning period. X
- --------------------------------------------------------------------------------------------- ------- --------
2. Specify the following and provide to Ericsson and/or A&E vendor as applicable: X
- Omni/sector and angle
- Effective radiated power (ERP)
- Required height above ground
- Maximum acceptable transmission line loss
- Down-tilt angle
- Minimum vertical angle
- Building drawing to Vendor.
- --------------------------------------------------------------------------------------------- ------- --------
</TABLE>
7
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
<TABLE>
<CAPTION>
TASK TRITON ERICSSON
- --------------------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
3. Define antenna isolation requirements, to include: X
- Minimum separation
- Vertical/horizontal separation
- --------------------------------------------------------------------------------------------- ------- --------
4. Provide VSWR/TDR RBS specifications to Triton X
- --------------------------------------------------------------------------------------------- ------- --------
5. Specify location of equipment, or RBS location in relation to antenna location. X
- --------------------------------------------------------------------------------------------- ------- --------
6. Calculate number of TRX units required over planning period. Consider signaling and X
control requirements.
- --------------------------------------------------------------------------------------------- ------- --------
7. Specify number and type of antennas required and general transmission line X
requirements.
- --------------------------------------------------------------------------------------------- ------- --------
8. Review job for special requirements, e.g., fireproof cables in elevator shafts, etc. X
- --------------------------------------------------------------------------------------------- ------- --------
9. Visit site and prepare final specifications for antennas and transmission lines. X
Select vendor(s).
- --------------------------------------------------------------------------------------------- ------- --------
10. Prepare drawings and instructions to riggers or installers. (Civil contractor will X
install antenna system.)
- --------------------------------------------------------------------------------------------- ------- --------
IMPLEMENTATION & TESTING OF SWITCH (MSC)
- ----------------------------------------------------------------------------------------------------------------
400. SWITCH ENGINEERING
- --------------------------------------------------------------------------------------------- ------- --------
1. Diminsion switchi system. X
- --------------------------------------------------------------------------------------------- ------- --------
2. Site visit by Plant Engineer. X
- --------------------------------------------------------------------------------------------- ------- --------
3. Select building for switch location. X
- --------------------------------------------------------------------------------------------- ------- --------
4. When building is selected, provide input for determining floor plan layout. X
- --------------------------------------------------------------------------------------------- ------- --------
5. Provide floor plan layout. X
- --------------------------------------------------------------------------------------------- ------- --------
6. Determine site specific issues that will impact Plant Engineering effort, per site X
survey check list.
- --------------------------------------------------------------------------------------------- ------- --------
7. Approve floor plan. X
- --------------------------------------------------------------------------------------------- ------- --------
8. Specify engineering package for mechanics (such as floor dependent items (FDI)). X
- --------------------------------------------------------------------------------------------- ------- --------
9. Develop C modules C01 and C02 documents, which contain allocation documentation, x
cabling tables, and address and strapping information.
- --------------------------------------------------------------------------------------------- ------- --------
10. Deliver C modules to the installation crews. X
- --------------------------------------------------------------------------------------------- ------- --------
11. Return "AS built" drawings to Plant Engineering for updating customer documentation. X
- --------------------------------------------------------------------------------------------- ------- --------
12. Provide finalized C modules to Triton as part of the documentation package. X
- --------------------------------------------------------------------------------------------- ------- --------
410. DATA TRANSCRIPT
- --------------------------------------------------------------------------------------------- ------- --------
1. Complete the DT exchange requirement forms and return them to Ericsson for review. X
- --------------------------------------------------------------------------------------------- ------- --------
2. Review DT exchange requirement forms. A site visit may be required to work out X
details in clarifying the DT exchange requirements.
- --------------------------------------------------------------------------------------------- ------- --------
3. Provide cassette tape with professionally recorded messages and script. (If not X
using Ericsson standard message.)
- --------------------------------------------------------------------------------------------- ------- --------
4. Allocate hardware switch network elements. X
- --------------------------------------------------------------------------------------------- ------- --------
</TABLE>
8
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
<TABLE>
<CAPTION>
TASK TRITON ERICSSON
- --------------------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
5. Develop I Module as part of documentation, to include call routing, end of X
selection, call treatments, size alterations, etc.
- --------------------------------------------------------------------------------------------- ------- --------
6. Deliver DT to network element testing department for incorporation into the switch X
load.
- --------------------------------------------------------------------------------------------- ------- --------
420. SWITCH SITE ACQUISITION AND CIVIL CONSTRUCTION
- --------------------------------------------------------------------------------------------- ------- --------
1. Hire Architecture & Engineering (A&E) firm. X
- --------------------------------------------------------------------------------------------- -----------------
2. Provide physical requirements (obtain data from Ericsson as applicable) to A&E firm, X
to include:
- Switch floor plan layout and dimensions including power and battery backup
- Switch power consumption
- Data to determine overhead or under floor cabling preference
- Equipment weight to determine floor loading of potential buildings
- Air conditioning requirements
- Demarcation points
- --------------------------------------------------------------------------------------------- -----------------
3. Select building for switch. X
- --------------------------------------------------------------------------------------------- -----------------
4. Negotiate with building owners and sign finalized lease agreement. X
- --------------------------------------------------------------------------------------------- -----------------
5. Prepare (A&E firm) complete architectural and engineering site drawings, to include X
at a minimum:
- Equipment locations and details
- Telco demarcation point and details
- Coax locations and detail
- Concrete support pads/steel platform structures and details
- Required mounting devices
- Reinforcement of existing structures
- External alarms and details
- Grounding system and details
- Lightning protection system and details
- Core drilling
- Fire protection system
- Heating, ventilating, air conditioning systems
- Lighting systems
- --------------------------------------------------------------------------------------------- -----------------
6. Approve site drawings and A&E package before civil construction can begin. X X
- --------------------------------------------------------------------------------------------- -----------------
7. Provide copy of A&E drawings to Ericsson X
- --------------------------------------------------------------------------------------------- -----------------
8. Acknowledge receipt of approved A&E drawings X
- --------------------------------------------------------------------------------------------- -----------------
9. Issue A&E drawings to contractors for quotes. X
- --------------------------------------------------------------------------------------------- -----------------
10. Select contractor(s). X
- --------------------------------------------------------------------------------------------- -----------------
11. Provide warehouse for civil construction items X
- --------------------------------------------------------------------------------------------- -----------------
12. Obtain building permit. X
- --------------------------------------------------------------------------------------------- -----------------
13. Obtain zoning approval. X
- --------------------------------------------------------------------------------------------- -----------------
14. Order commercial power. X
- --------------------------------------------------------------------------------------------- -----------------
15. Order Telco. X
- --------------------------------------------------------------------------------------------- -----------------
16. Prepare site availability schedule to Ericsson to include construction milestones X
such as "joint site inspection" date and "site ready for installation" date.
- --------------------------------------------------------------------------------------------- -----------------
17. Provide implementation schedule to Triton for "installation and testing." X
- --------------------------------------------------------------------------------------------- -----------------
18. Construct site in accordance with approved A&E drawings. X
- --------------------------------------------------------------------------------------------- -----------------
19. Provide security during construction. X
- --------------------------------------------------------------------------------------------- -----------------
20. Provide Ericsson access to site during construction. X
- --------------------------------------------------------------------------------------------- -----------------
21. Supervise site construction. X
- --------------------------------------------------------------------------------------------- -----------------
22. Test systems. X
- --------------------------------------------------------------------------------------------- -----------------
</TABLE>
9
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
<TABLE>
<CAPTION>
TASK TRITON ERICSSON
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
23. Clean up site. It is essential that site is dust free. X
- ----------------------------------------------------------------------------------------------------------------
24. Perform joint site inspection of civil construction. X X
- ----------------------------------------------------------------------------------------------------------------
25. Issue "Civil Switch Site Acceptance Certificate" to Triton if site is complete, X
else issue "Site Civil Exceptions Punch List." Switch Installation will not begin
until site is accepted for civil construction.
- ----------------------------------------------------------------------------------------------------------------
26. Resolve items on "Switch Site Civil Exceptions List," if applicable. X
- ----------------------------------------------------------------------------------------------------------------
27. Perform additional joint site inspections of civil construction, if first X
inspection was not approved, until accepted. Invoice Triton for return visits to site
until site is civil accepted.
- ----------------------------------------------------------------------------------------------------------------
28. Issue "Civil Site Civil Exception List Certificate of Completion," if applicable. X
- ----------------------------------------------------------------------------------------------------------------
29. Turn site over to Ericsson's switch installation team when site is civil accepted. X
- ----------------------------------------------------------------------------------------------------------------
30. Provide civil construction "As Built" drawings after site is accepted. X
- ----------------------------------------------------------------------------------------------------------------
430. SWITCH INSTALLATION
- ----------------------------------------------------------------------------------------------------------------
1. Provide security during the installation phase, as needed. X
- ----------------------------------------------------------------------------------------------------------------
2. Provide equipment transportation from Ericsson factor to site. X
- ----------------------------------------------------------------------------------------------------------------
3. Provide crane or other necessary lifting equipment at site, when required. Unless X
otherwise specified in contract.
- ----------------------------------------------------------------------------------------------------------------
4. Provide police escort and permits required to use crane and possible block traffic, X
when required.
- ----------------------------------------------------------------------------------------------------------------
5. During the implementation phase, provide and pay for repair to roads, lawns, roofs, X
etc., caused by possible damage or wear by crane and/or other lifting equipment and
trucks managed by Ericsson.
- ----------------------------------------------------------------------------------------------------------------
6. Install switch according to C-module. X
- ----------------------------------------------------------------------------------------------------------------
7. Install DC power plant including batteries per K-module. X
- ----------------------------------------------------------------------------------------------------------------
8. Connect AC power system, cabling to Demarc, and ground system. X
- ----------------------------------------------------------------------------------------------------------------
440. SWITCH NETWORK ELEMENT TESTING
- ----------------------------------------------------------------------------------------------------------------
1. Provide access to building and worksites for Ericsson's designated testing staff. X
- ----------------------------------------------------------------------------------------------------------------
2. Prepare a checklist of what has been installed and what is left to be installed. X
("C module" Check List, and Material Status Report).
- ----------------------------------------------------------------------------------------------------------------
3. Deliver, load, and test software according to H-module. X
- ----------------------------------------------------------------------------------------------------------------
4. Hand over access to accepted transmission system(s). X
- ----------------------------------------------------------------------------------------------------------------
5. Inform Triton "Network Element Ready for Acceptance" after above tests are X
satisfactorily completed.
- ----------------------------------------------------------------------------------------------------------------
6. Sign "Network Element Acceptance Certificate," issue site "Exceptions Punch List," X
if needed.
- ----------------------------------------------------------------------------------------------------------------
7. Resolve items on site "Exception Punch List" if applicable. X
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
<TABLE>
<CAPTION>
TASK TRITON ERICSSON
- --------------------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
IMPLEMENTATION & TESTING OF OSS
- --------------------------------------------------------------------------------------------- ------- --------
500. ENGINEERING OF ERICSSON'S OSS
- --------------------------------------------------------------------------------------------- ------- --------
1. Design and order OSS. O
- --------------------------------------------------------------------------------------------- ------- --------
501. PRE-TESTING OF ERICSSON'S OSS
- --------------------------------------------------------------------------------------------- ------- --------
1. Supply hardware (OSS server). X
- --------------------------------------------------------------------------------------------- ------- --------
2. Supply workstations to the respective sites. X O
- --------------------------------------------------------------------------------------------- ------- --------
3. Configure OSS server hardware. X
- --------------------------------------------------------------------------------------------- ------- --------
4. Install OSS platform on server driver. X
- --------------------------------------------------------------------------------------------- ------- --------
5. Install OSS application on server hardware. X
- --------------------------------------------------------------------------------------------- ------- --------
6. Pretest OSS system at Ericsson's location. X
- --------------------------------------------------------------------------------------------- ------- --------
7. Configure workstations. X O
- --------------------------------------------------------------------------------------------- ------- --------
8. Inform Triton "Network Element Ready for Acceptance" after above tests are X
satisfactory completed.
- --------------------------------------------------------------------------------------------- ------- --------
9. Issue "Network Element Acceptance certificate". X
- --------------------------------------------------------------------------------------------- ------- --------
10. Issue "Exceptions List Report" (ELR). X
- --------------------------------------------------------------------------------------------- ------- --------
11. Resolve items on ELR. X
- --------------------------------------------------------------------------------------------- ------- --------
12. Issue "Exceptions List Resolution Certificate". X
- --------------------------------------------------------------------------------------------- ------- --------
520. INSTALLATION OF ERICSSON'S OSS
- --------------------------------------------------------------------------------------------- ------- --------
1. Provide transportation from Ericcson's storage location in Dallas to site. X
- --------------------------------------------------------------------------------------------- ------- --------
2. Provide access to building and worksite for Ericsson's designated installation staff. X
- --------------------------------------------------------------------------------------------- ------- --------
3. Install systems on sites. X
- --------------------------------------------------------------------------------------------- ------- --------
IMPLEMENTATION & TESTING OF TRANSMISSION
600. LEASE OF TRANSMISSION & DATA COMMUNICATIONS NETWORK
- --------------------------------------------------------------------------------------------- ------- --------
1. Supply appropriate transmission leased lines facilities. X
- --------------------------------------------------------------------------------------------- ------- --------
2. Provide data communication network between applicable Network Elements e.g., AXE, X
OSS, and other "Switching" elements.
- --------------------------------------------------------------------------------------------- ------- --------
3. Provide local/wide area network for communication between workstations and X
applicable Network Elements.
- --------------------------------------------------------------------------------------------- ------- --------
601. TRANSMISSION ENGINEERING
- --------------------------------------------------------------------------------------------- ------- --------
1. Perform transmission system analysis. X O
- --------------------------------------------------------------------------------------------- ------- --------
2. Specification of transmission module for RBS grooming. X O
- --------------------------------------------------------------------------------------------- ------- --------
3. Supply transmission interface requirements for network elements supplied by Ericsson X
(i.e. DS3, DS1, fiber and others).
- --------------------------------------------------------------------------------------------- ------- --------
4. Specify requirements for all transmission equipment indicating suggested vendors X O
(i.e. Tellab MUX, ATT channel banks, ADC, CSU).
- --------------------------------------------------------------------------------------------- ------- --------
5. Order appropriate transmission circuits and equipment. X O
- --------------------------------------------------------------------------------------------- ------- --------
</TABLE>
11
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
<TABLE>
<CAPTION>
TASK TRITON ERICSSON
- ---------------------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
6. Engineer installation specifications for the following:
DXU
---
- ---------------------------------------------------------------------------------------------- ------- --------
- From DXU to DSX-1 panel, or point of interface - Ericsson will supply cable. X O
T1:
--
- ---------------------------------------------------------------------------------------------- ------- --------
- From DSX to the NIU (Network Interface Unit) - Triton will provide cable.
- All X O
SS7:
---
- ---------------------------------------------------------------------------------------------- ------- --------
- From AXE S7ST position to NIU - Ericsson will provide cable. X O
Timing:
------
- ---------------------------------------------------------------------------------------------- ------- --------
- From AXE position to clock distribution panel - Ericsson will provide cable. X O
MBLT, BT-4, S7BTC:
-----------------
- ---------------------------------------------------------------------------------------------- ------- --------
- From switch to DSX-1 is done by Ericsson. Ericsson will provide termination X O
assignments to Triton.
- All transmission equipment and guidelines on how to install the equipment.
X O
X O
- ---------------------------------------------------------------------------------------------- ------- --------
7. Supply report to Ericsson with connectivity details of any equipment to be connected X
to Ericsson's equipment.
- ---------------------------------------------------------------------------------------------- ------- --------
8. Supply report to Ericsson with trunk and slot assignments. X
- ---------------------------------------------------------------------------------------------- ------- --------
9. Obtain telecom requirements for circuit termination. Copy same to Ericsson X
including need for hardware mounting space and/or circuit wiring requirements.
- ---------------------------------------------------------------------------------------------- ------- --------
10. Identify all demarcation points between transmission sub-systems including those by X O
carrier provider(s).
- ---------------------------------------------------------------------------------------------- ------- --------
11. Furnish transmission rack(s) at demarcation points in item 610.10 X O
- ---------------------------------------------------------------------------------------------- ------- --------
12. Furnish equipment room/space for transmission including carrier-provider line X
connections. Copy layout to Ericsson.
- ---------------------------------------------------------------------------------------------- ------- --------
13. Design floor and equipment layout for carrier-provider line connections. X O
- ---------------------------------------------------------------------------------------------- ------- --------
14. Perform network studies including: X
- Border analysis. O
- ---------------------------------------------------------------------------------------------- ------- --------
15. Perform transport access engineering. X O
- ---------------------------------------------------------------------------------------------- ------- --------
620. TRANSMISSION INSTALLATION
- ---------------------------------------------------------------------------------------------- ------- --------
1. Install transmission equipment specified in section 610. X O
- ---------------------------------------------------------------------------------------------- ------- --------
2. Furnish power to incorporate battery and A/C DC power connection to equipment X O
requirements for leased line. Triton will provide a main integrated ground bar for all
transmission equipment. In addition, Triton (or Ericsson if contracted for
transmission) will provide cables and hardware to connect power and ground from
demarcation points (see article 610.10).
- ---------------------------------------------------------------------------------------------- ------- --------
3. As part of transmission design, furnish and install cables, connectors, blocks and X O
protectors (if required) from network equipment to carrier-provider demarcation points.
- ---------------------------------------------------------------------------------------------- ------- --------
</TABLE>
12
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
<TABLE>
<CAPTION>
TASK TRITON ERICSSON
- --------------------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
630. TRANSMISSION TESTING
- --------------------------------------------------------------------------------------------- ------- --------
1. Perform transmission testing of each subsystems installed in section 620. Testing
shall include:
- Error bit rate X O
- Jitter & wander X O
- Synchronization X O
- Compliance to manufactures specifications X O
- --------------------------------------------------------------------------------------------- ------- --------
2. Perform transmission testing of the total combination of transmission
subsystems/leased lines per each connection between network elements and/or PSTN.
Testing shall include:
- Error bit rate X O
- Jitter & wander X O
- Synchronization X O
- Compliance to manufacturers specifications X O
- --------------------------------------------------------------------------------------------- ------- --------
3. Perform testing of:
- Echo cancellers X O
- SS7 equipment X O
- --------------------------------------------------------------------------------------------- ------- --------
640. TESTING DATA COMMUNICATIONS NETWORK
- --------------------------------------------------------------------------------------------- ------- --------
1. Perform transmission testing of each leased subsystem. Testing shall include:
- Error bit rate
- Jitter & wander X
- Synchronization X
X
- --------------------------------------------------------------------------------------------- ------- --------
2. Perform transmission testing of the total combination of all leased subsystems per
each connection between Network Elements. Testing shall include:
- Error bit rate
- Jitter & Wander X
- Synchronization X
X
- --------------------------------------------------------------------------------------------- ------- --------
INTEGRATION & ACCETANCE
- --------------------------------------------------------------------------------------------- ------- --------
700. INTEGRATION OF ERICSSON'S MSC, NETWORK ELEMENTS & PSTN
- --------------------------------------------------------------------------------------------- ------- --------
1. Integration/testing to be performed according to the "H" module for switch. Other X
Network Elements provided by Ericsson (e.g.; MXE) to be integrated/tested and
functionality demonstrated according to manuals for these products.
- --------------------------------------------------------------------------------------------- ------- --------
2. Inform Triton: "Network Element Integration Ready for Acceptance" after above tests X
are satisfactory completed.
- --------------------------------------------------------------------------------------------- ------- --------
3. Issue Certificate for Network Element Integration Acceptance X
- --------------------------------------------------------------------------------------------- ------- --------
4. Issue: "Exceptions List Report" (ELR) X
- --------------------------------------------------------------------------------------------- ------- --------
5. Resolve items on ELR. X
- --------------------------------------------------------------------------------------------- ------- --------
6. Issue "Exceptions List Resolution Certificate". X
- --------------------------------------------------------------------------------------------- ------- --------
</TABLE>
13
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
<TABLE>
<CAPTION>
TASK TRITON ERICSSON
- --------------------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
710. INTEGRATION OF ERICSSON'S OSS NETWORK ELEMENTS
- --------------------------------------------------------------------------------------------- ------- --------
1. Establish communication between OSS and applicable Network Elements after successful X
completion of tests in section 640.
- --------------------------------------------------------------------------------------------- ------- --------
2. Configure Network Elements for file transfer to OSS Network Elements. X
- --------------------------------------------------------------------------------------------- ------- --------
3. Configure Network Elements for alarm routing. X
- --------------------------------------------------------------------------------------------- ------- --------
4. Provide maps for OSS applications. X O
- --------------------------------------------------------------------------------------------- ------- --------
5. Establish communications between OSS server and workstations. X
- --------------------------------------------------------------------------------------------- ------- --------
6. Inform Triton: "Network Element Integration Ready for Acceptance" after above tests X
are satisfactory completed.
- --------------------------------------------------------------------------------------------- ------- --------
7. Issue Certificate for Network Element Integration Acceptance X
- --------------------------------------------------------------------------------------------- ------- --------
8. Issue: "Exceptions List Report" (ELR) X
- --------------------------------------------------------------------------------------------- ------- --------
9. Resolve items on ELR X
- --------------------------------------------------------------------------------------------- ------- --------
10. Issue "Exceptions List Resolution Certificate." X
- --------------------------------------------------------------------------------------------- ------- --------
720. INTEGRATION OF ERICSSON'S RBS NETWORK ELEMENTS
- --------------------------------------------------------------------------------------------- ------- --------
1. Connect the RBS to the MSC. X
- --------------------------------------------------------------------------------------------- ------- --------
2. Load frequency and other parameters into MSC prior to Network Element acceptance. X
- --------------------------------------------------------------------------------------------- ------- --------
3. Load frequency and other parameters into MSC after Network Element acceptance. X
- --------------------------------------------------------------------------------------------- ------- --------
4. Perform and document that the following steps are completed
- Visual installation check of cabinet, AC mains, and antennas X
- Power test including: AC mains, each PSU, battery backup, power com loop
- Cabinet fans are operational X
- External alarms are programmed and functional X
- Cell configuration matches channel allocation document X
- Channel number of TRM, DTRM, and/or TRX matches channel allocation document X
- MS call can be made on each time slots of each TRM, DTRM, and/or TRX, and note call voice
quality X
- MS call on each sector and with each neighbor with the following pertinent combinations:
A-B, B-C, C-A X
X
- --------------------------------------------------------------------------------------------- ------- --------
5. Perform full integration test of Non-Ericsson provided equipment. X
- --------------------------------------------------------------------------------------------- ------- --------
6. Identify any RF or other cell site problems that will affect subscriber quality, or X
ability for site to achieve acceptance.
- --------------------------------------------------------------------------------------------- ------- --------
7. Provide report identifying all sites that have been integrated and have passed all X
MS call test.
- --------------------------------------------------------------------------------------------- ------- --------
8. Review test plans, agree to changes, and approve (see section 730). X X
- --------------------------------------------------------------------------------------------- ------- --------
9. Perform all test. X
- --------------------------------------------------------------------------------------------- ------- --------
10. Inform Triton per base station: "Integration Ready for Acceptance" after above X
tests are statisfactory completed.
- --------------------------------------------------------------------------------------------- ------- --------
11. Issue Certificate for Integration per base station. X
- --------------------------------------------------------------------------------------------- ------- --------
12. Issue: "Exceptions List Report" (ELR). X
- --------------------------------------------------------------------------------------------- ------- --------
13. Resolve items on ELR. X
- --------------------------------------------------------------------------------------------- ------- --------
14. Issue "Exceptions List Resolution Certificate." X
- --------------------------------------------------------------------------------------------- ------- --------
a</TABLE>
14
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
<TABLE>
<CAPTION>
TASK TRITON ERICSSON
- --------------------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
730. SYSTEM DEMONSTRATION (FOR NETWORK ELEMENTS DELIVERED BY ERICSSON)
- --------------------------------------------------------------------------------------------- ------- --------
1. The rules for system demonstration are described in the contractual agreement. X
- --------------------------------------------------------------------------------------------- ------- --------
2. Review test object list. X
- --------------------------------------------------------------------------------------------- ------- --------
3. Issue test instructions. X
- --------------------------------------------------------------------------------------------- ------- --------
4. Review test instructions. X
- --------------------------------------------------------------------------------------------- ------- --------
5. Perform system acceptance test in "H" module for AXE Network Elements. X
- --------------------------------------------------------------------------------------------- ------- --------
6. Inform Triton: "System Ready for Acceptance" after above tests are satisfactory X
completed.
- --------------------------------------------------------------------------------------------- ------- --------
7. Issue System Acceptance Certificate. X
- --------------------------------------------------------------------------------------------- ------- --------
8. Issue: "Exceptions List Report" (ELR) X
- --------------------------------------------------------------------------------------------- ------- --------
9. Resolve items on ELR. X
- --------------------------------------------------------------------------------------------- ------- --------
10. Issue "Exceptions List Resolution Certificate". X
- --------------------------------------------------------------------------------------------- ------- --------
740. OSS DEMONSTRATION (FOR NETWORK ELEMENTS DELIVERED BY ERICSSON)
- --------------------------------------------------------------------------------------------- ------- --------
1. The rules for Demonstration are described in the contractual agreement. X
- --------------------------------------------------------------------------------------------- ------- --------
2. Review test object list. X
- --------------------------------------------------------------------------------------------- ------- --------
3. Issue test instructions. X
- --------------------------------------------------------------------------------------------- ------- --------
4. Review test instructions. X
- --------------------------------------------------------------------------------------------- ------- --------
5. Perform functionality testing of OSS Network Elements according to test manuals. X
- --------------------------------------------------------------------------------------------- ------- --------
6. Inform Triton: "System Ready for Acceptance" after above tests are satisfactory X
completed.
- --------------------------------------------------------------------------------------------- ------- --------
7. Issue System Acceptance Certificate X
- --------------------------------------------------------------------------------------------- ------- --------
8. Issue: "Exceptions List Report" (ELR). X
- --------------------------------------------------------------------------------------------- ------- --------
9. Resolve items on ELR. X
- --------------------------------------------------------------------------------------------- ------- --------
10. Issue "Exceptions List Resolution Certificate". X
- --------------------------------------------------------------------------------------------- ------- --------
750. RADIO NETWORK IMPLEMENTATION SUPPORT
- --------------------------------------------------------------------------------------------- ------- --------
1. Provide preliminary design and deployment information to Radio Network
Implementation Support (RNIS) Responsible party in agreed to data format:
(as in 240.6)
- Rollout and construction schedule on regularly updated schedule. X
- Regularly updated Design Database: X
(a) Site locations/coordinates/names X
(b) Antenna Types X
(c) Antenna heights X
(d) Antenna gain X
(e) Antenna gain X
(f) Reqired outpower power X
(g) Feeder & coax types. X
(h) Feeder and coax loses (estimated) X
(i) Link Budget X
- Installation and commissioning results.
(a) Grounding reports and Power Stablility Reports. X
(b) Span test results (if applicable). X
(c) Antenna sweep results X
(d) RBS acceptance certificate X
- --------------------------------------------------------------------------------------------- ------- --------
</TABLE>
15
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
<TABLE>
<CAPTION>
TASK TRITON ERICSSON
- --------------------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
2. Secure and configure test equipment including:
- FIOL/OSS Switch Connection X X
- POTS lines for call testing X
- Cellular test phones X X
- Sun SPARC Stations X
- Printers, plotters, and supplies X
- Drive testing equipment X O
- Laptops, PCs, and peripherals X O
- Drive Test Vehicles and Drivers X O
- --------------------------------------------------------------------------------------------- ------- --------
3. Determine clusters and develop drive test routes, based upon projected site X O
availability to demonstrate site functionality and Data Analysis. Review routes with
Design party.
- --------------------------------------------------------------------------------------------- ------- --------
4. Update engineering tracking database with design, deployment, and cluster X O
information.
- --------------------------------------------------------------------------------------------- ------- -------- --------------
5. System Designer to Provide coverage and interference plots to RNIS responsible party:
- Coverage threshold levels in accordance with Design Criteria. X O
- Interference Rnage to 15 Mi., levels in accordance with Design Criteria X O
- --------------------------------------------------------------------------------------------- ------- -------- --------------
6. Review CDD information for accuracy:
(a) Frequency Assignments O(X) *Credit
(b) Power Levels O(X) *Credit
(c) Ncell Assignments O(X) *Credit
(d) Verify Parameter Information O(X) *Credit
- --------------------------------------------------------------------------------------------- ------- -------- --------------
7. Provide test frequencies for site integration (if required). X
- --------------------------------------------------------------------------------------------- ------- -------- --------------
8. Provide design/engineering support for integration meetings. X X
- --------------------------------------------------------------------------------------------- ------- -------- --------------
9. Acceptance and Lock-down of RBSs For Cluster Testing. X
- --------------------------------------------------------------------------------------------- ------- -------- --------------
10. Monitor site integration process:
- Monitor Site Availability/RF Related Punch Lists O(X) *Credit
- Monitor Site Fault Codes and Clearance O(X) *Credit
- Monitor Switch Testing Schedules O(X) *Credit
- Update Implementation database O(X) *Credit
- --------------------------------------------------------------------------------------------- ------- -------- --------------
11. Notify Implementation Support Team Lead of accepted and locked-down sites. X
- --------------------------------------------------------------------------------------------- ------- -------- --------------
12. Initiate Switch based measurement programs. X O(X) *Credit
- --------------------------------------------------------------------------------------------- ------- -------- --------------
13. Perform Initial Drive Test/MSC Data Collection on Populated Clusters. X O
- --------------------------------------------------------------------------------------------- ------- -------- --------------
14. Perform Functionality, Coverage and Quality Analysis Based on Test Data. X O
- --------------------------------------------------------------------------------------------- ------- -------- --------------
15. Evaluate Cluster Tests and Produce Cluster Test Reports/Identify, Resolve, or Track X O
Resolution
Through Responsible Party:
(a) Design - Issuance of Design Exceptions Notice.
(b) Equipment - Issuance of Equipment Work Orders.
(c) Parameter - Update Parameter Change Notification
(d) Other Technical
- --------------------------------------------------------------------------------------------- ------- -------- --------------
</TABLE>
16
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT #9133
<TABLE>
<CAPTION>
TASK TRITON ERICSSON
- --------------------------------------------------------------------------------------------- ------- --------
<S> <C> <C>
16. Update Tracking Database, Review and Close Issues Identified in Section 750.1: X X
- Design Changes (System Designer)
- Antenna Systems (Civil Construction), including but not limited to:
- Parameter Issues (RF Implementation Support).
- Equipment (Customer or Vendor)
- Other Technical (Customer or Vendor).
- --------------------------------------------------------------------------------------------- ------- --------
17. Upon Completion of outstanding issues by responsible Party Repeat Section X X
750.12-750.13 (limit 2 to 3 drives).
- --------------------------------------------------------------------------------------------- ------- --------
18. If RF Engineering Assistance is Still Required, Repeat Activities in Section 750 as X X
Required During A Negotiated Time Period for the areas of Continued integration and
testing for "late" and System performance and Monitoring.
- --------------------------------------------------------------------------------------------- ------- --------
760. COMMERCIAL ACCEPTANCE
- ----------------------------------------------------------------------------------------------------------------
1. Network Elements will be added to the system until a Minimum Portion of the Initial X
Configuration has been reached as agreed upon in the contractual agreement. Each new
Network Element added after Commercial Acceptance will follow Network Element
Acceptance procedure.
- --------------------------------------------------------------------------------------------- ------- --------
2. Inform Triton: Commercial Acceptance stage is reached. X
- --------------------------------------------------------------------------------------------- ------- --------
3. Issue Commercial Acceptance Certificate. X
- --------------------------------------------------------------------------------------------- ------- --------
4. Issue Exceptions List Report (ELR) X
- --------------------------------------------------------------------------------------------- ------- --------
5. Resolve items on ELR. X
- --------------------------------------------------------------------------------------------- ------- --------
6. Issues Exceptions List Resolution Certificate. X
- --------------------------------------------------------------------------------------------- ------- --------
760. INITIAL CONFIGURATION ACCEPTANCE
- --------------------------------------------------------------------------------------------- ------- --------
1. Inform Trition, initial configuration acceptance stage is reached. This stage X
implies that all Acceptance Certificates are issued including Exceptions List
Resolution Certificates.
- --------------------------------------------------------------------------------------------- ------- --------
2. Issue Initial Configuration Acceptance Certificate. X
- --------------------------------------------------------------------------------------------- ------- --------
</TABLE>
17
<PAGE>
ATTACHMENT G
ACQUISITION AGREEMENT #9133
TRITON PCS, INC
---------------
PART I - AXE ENVIRONMENTAL CONDITIONS
-------------------------------------
CONTENTS
- --------
1. General
2. Climatic State
3. Dust Filtering
4. Relative Humidity of Air
5. Corrosion
6. Air-Cooling
7. Floor Covering
8. Earthing
9. Sound Level
10. Vibrations
11. Radio Electric Disturbance
12. Over-Voltage Resistibility
13. Floor Load and Ceiling Height
1
<PAGE>
1. GENERAL
-------
For all kinds of telephone exchange equipment, the environment of the
equipment is important for its reliability and performance. This
environment specification covers some of the most important requirements
for rooms used for operation of Ericsson telephone exchange equipment. The
aim of this specification is to ensure a good operating result and long
service life for the equipment.
2. CLIMATIC STATE
--------------
[GRAPH APPEARS HERE]
The climatic requirements for operation of telephone exchange equipment are
specified in Figure 1. The temperature and humidity are to be measured 5.0
ft. (1.5 m) above the floor, and 1.3 ft. (0.4 m) from any heat-radiating
surface and when the equipment dissipates normal operating power.
Figure 1
TEMPERATURE AND HUMIDITY
CURVE 1 Covers the requirments during normal service conditions.
CURVE 2 Covers the limit for safe function.
CURVE 3 Covers the limit for non-destruction.
Environmental endurance requirements outside curve 1 are valid for 5% of
the working life of the exchange and for 0.5% outside curve 2.
2
<PAGE>
CLIMATE RANGES FOR I/O AVAILABLE IN AXE
<TABLE>
<CAPTION>
RECOMMENDED RANGE1 PERMITTED RANGE2
- -------------------------------------------------------------
I/O UNIT t(F) RH(%) t( F) RH(%) t(F/h)
- ---------------- -------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Siemens/PT80 68-86 20-80 32-113 10-90 -
Olivetti/ 68-86 20-80 41-104 20-95 -
TC 485
Display HP/ 68-86 20-80 32-122 5-95 -
2640 B
Magnetic Tape 68-86 40-65 Drive: 20-80 50
HP/7970 E-151 32-131
Tape:
normal
41-113
Cartridge Tape 68-86 40-65 Drive: 20-80 50
Drive DRI/5000 50-104
Crtg:
41-113
Magnetic Tape 68-86 40-65 Drive: 20-80 50
Teac/MT 1000 50-104
Crtg:
41-114
</TABLE>
- ---------------
1 Range recommended by Ericsson.
2 Range according to I/O unit or tape equipment supplier.
- --------------------------------------------------------------------------------
3. DUST FILTERING
--------------
3.1 Rooms for Telephone Exchange Equipment (Except Magnetic Tape Units)
-------------------------------------------------------------------
The dust and powder content should normally not exceed 50 ug/m3. If the
ventilation air contains dust or powder, it should be filtered so that
this value will not be exceeded. The maximum permitted particle size
in ventilated air is 10 microns.
3.2 Rooms for Magnetic Tape Units
-----------------------------
3
<PAGE>
The dust and powder content should not exceed 50 ug/m3. The air must be
filtered so that the particle size in the ventilated air does not exceed 4
microns for 90% of the dust and powder content.
4. RELATIVE HUMIDITY OF AIR
------------------------
Advantages of high humidity:
. reduction of static charge of dust particles, resulting in reduced
adhesion to contact surfaces.
. reduced electrical resistance in contacts yielding better conductivity in
the oxidized outer layers of contacts.
Disadvantages of high humidity:
. corrosion of metal surfaces.
. impairment of insulation resistance of cables.
Taking these various factors into account, the air humidity should be as
high as possible, but not so high as to cause corrosion or impaired
insulation.
Experience and tests have shown that the best results are obtained at a
relative humidity of 50-60% but may vary between 10-90%.
5. CORROSION
---------
Humidity and temperature within the specified requirements will not cause
corrosion. Sulphur dioxide (SO2) with concentration as high as 5 ppm at 68oF
1013 mBar may cause corrosion on metal parts only in combination with a
relative humidity exceeding 60%.
6. AIR-COOLING
-----------
The components integrated in AXE exchanges are placed very close to each
other. This results in fairly concentrated heat. An air-conditioning plant
is normally required for removal of this heat.
Provided that the relative humidity requirement is met, exchange equipments
work without being specially affected by temperatures between 32-79oF.
Since regard must be paid to personnel requirements in general, the air
temperature should be kept between 64o - 79oF.
For calculation of the necessary capacity of an air-cooling plant, attention
should be paid not only to the outside temperature conditions, but also to
the sun through windows and walls and to the heat generated by the
equipment.
Rooms containing exchange equipment should be pressurized to prevent the
entry of dust.
The air-conditioning plant should provide all secure, continuous service to
the telephone exchange, (e.g., by means of adequate redundancy).
4
<PAGE>
7. FLOOR COVERING
--------------
When selecting the floor covering, consideration shall be given to factors
such as the frequency with which the units are moved across the floor,
loading, appearance, cost, etc.
Years of experience have shown that floor coverings such as vinyl are most
suitable because of their elasticity and resistance to wear under high
pressure. There are, however, many other materials that can be used to cover
the floor or the top surfaces of the raised floor panels such as linoleum,
or other laminated plastics.
Polyvinylchloride (PVC) is not suitable since it is not anti-static and will
emit corrosive gases in the event of fire.
Carpet-covered panels should also be avoided because they are normally not
anti-static.
Modern types of semiconducting floor are, however, recommended but it is not
a requirement for AXE.
8. EARTHING
--------
The building shall be provided with an earth (earth electrode); the
resistance to earth should be 10 ohms or lower. The earthing shall be
connected to an earth collector bar, located in close proximity to Mains
Termination.
The earthing can consist of:
a. Earth plates buried close to Mains Termination to minimize the
path to the earth collector bar.
b. A wire buried around the building; the wire ends shall be
terminated in the earth collector bar.
c. Earthing in the foundation, in which case the contact between
the concrete and the earth provides the earthing. Connection to the
earth collector bar is effected over reinforcement bars of special irons
in the concrete. This earthing is comparatively stable, and since the
concrete is somewhat moist in the contact with the earth, it will give
satisfactory conductance. Foundation earthings would be preferable in
the AXE building concerned.
9. SOUND LEVEL
-----------
The sound level in the switch room depends on the background noise caused by
the air-conditioning system (optional) and the fans in the CP shelf
sections, approximately 55 dB (A).
The noise in the control room is mainly emanating from the typewriters,
approximately 55-65 dB (A).
10. VIBRATIONS
----------
5
<PAGE>
The AXE system is designed to operate safely at accelerations of 1 m/s2
within the frequency range 10 - 100 Hz.
During transport the equipment will withstand vibrations of 5 m/s2 in the
range of 5 - 70 Hz during 500 h. Further within 1 - 5 Hz vibrations with an
amplitude of + 10 mm and 10 shocks of 300 m/s2 each with a duration of 18
-
ms.
An unpacked unit (e.g., during repair) will withstand three shocks at right
angle towards a table surface in each of the most probable directions of
fall during normal handling.
Height of fall is 100 mm for units weighing less than 2 kg and 50 mm for
units exceeding 2 kg.
11. RADIO ELECTRIC DISTURBANCE
--------------------------
Disturbances produced by the exchange follow the recommendation of CISPR,
i.e.,
. Within 150 - 500 kHz Max 10 mV
. Within 0.5 - 30 MHz Max 5 mV
Sensitivity of the exchange for received electromagnetic and magnetic
fields:
. The electric field must not exceed 1 V/m for the frequencies 0 - 1 GHz
and 10 V/m for frequencies above 1 GHz.
. The magnetic field must not exceed 10,000 A/m for frequencies below 1
kHz.
12. OVER-VOLTAGE RESISTIBILITY
--------------------------
Equipment exposed to an over-voltage may be damaged due to the presence of
too high voltage, current or power. The destruction limits are generally
strongly dependent on the duration of the over-voltage. When specifying the
over-voltage resistibility of an exchange, the different types of lines that
may be connected must be considered. In some cases, these lines are equipped
with over-voltage protectors (e.g., in the MDF). The over-voltage
resistibility against lightning surges must be high enough to cover all
surges below the upper static striking level for the protector used. For
surges having a short rise time, this static limit may very well be exceeded
before the protector strikes. In this case, the surge passing to the
exchange equipment will be cut off after a few milliseconds, when the
protector strikes. The peak voltage may, however, reach considerably higher
values than in the first case. The exchange equipment is adequately
provisioned for this situation.
If no protectors are provided, the lines concerned are assumed to be of such
a nature that the probability of encountering high over-voltages is
sufficiently small. The exact probability level depends to a large extent on
economic factors (e.g., maintenance costs, etc.) and must be considered by
the operator concerned in order to determine whether over-voltage protectors
should be provided or not.
The exchange equipment must have the capability to withstand longitudinal as
well as transverse over-voltages. Some components are exposed to both types
while others are only exposed to transverse over-voltages. Transverse
voltages arise if an over-voltage protector at one of the wires in a speech
path strikes and the protector at the other wire does not strike.
6
<PAGE>
As the destruction limits for different devices with regard to over-voltages
and currents may vary considerably, the actual limits for the complete
exchange can be expected to be dependent on the actaul traffic case. The
specification given must be interpreted as valid for the worst case.
12.1 Lightning Discharges
--------------------
The switching equipment is designed to withstand both the over-
voltages, A and B, given below:
A. Peak voltage 1,000 V
Front time 10 us
Time to half value 1,000 us
The voltage may be of longitudinal or transverse type, positive or
negative with respect to earth. The voltage is defined as an e.m.f. of
double exponential shape and having a source impedance of 100 ohms,
resistive, or higher.
B. Peak voltage 1,500 V
Duration 2 us
The voltage may have any shape, longitudinal or transverse,
positive or negative with respect to earth. The voltage is defined as an
e.m.f. having an impedance of at least 100 ohms resistive during the
course of the pulse and may be zero ohms at the rear edge of the pulse.
13. FLOOR LOAD AND CEILING HEIGHT
-----------------------------
13.1 Exchange Room
-------------
. The exchange is built with a section height of 2,250 mm (~7 ft.).
Required free ceiling height = 2,750 mm (~9 ft.).
. Floor load 4.25 kPa (0.6 lb/sq.in.) (low structure)
13.2 Control Room
------------
. Required free ceiling height 2,400 mm (~8 ft.).
. Floor load 3 kPa (0.5 lb/sq.in.).
. Raised floor installation is not necessary.
NOTE: In case of centralized operation, the control room may be
excluded and the remaining I/O devices placed in the exchange hall.
13.3 DC-Power Supply Room
--------------------
7
<PAGE>
. The power rack dimensions are width 2.952 ft. (900 mm), depth 1.968
ft. (600 mm) and height 7.216 ft. (2,200 mm).
. The free height over the racks should be at least 3.28 ft. (1,000 mm)
to provide space for the cable chute.
. Floor load .9 lbs./sq. in. (7.5 kPa.)
13.4 Battery Room
------------
. Free ceiling height 8.856 ft. (2,700 mm.)
. Floor load 1.45 lbs./sq. in. (10 kPa.)
PART II - RBS ENVIRONMENTAL CONDITIONS
--------------------------------------
CONTENTS
- --------
1. General
2. Climatic State
3. Relative Humidity of Air
4. Corrosion
5. Air-Cooling
6. Floor Covering
7. Earthing
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1. GENERAL
-------
This specification covers some of the most important requirements for rooms
used for operation of Ericsson radio base station equipment.
2. CLIMATIC STATE
--------------
The climatic requirements for operation of radio base station equipment are
specified in Figure 1. The temperature and humidity are to be measured 5.0
ft. above the floor, and 1.0 ft. from any heat-radiating surface and when
the equipment dissipates normal operating power.
3. RELATIVE HUMIDITY OF AIR
------------------------
Advantages of high humidity:
. reduction of static charge of dust particles, resulting in reduced
adhesion to contact surfaces.
. reduced electrical resistance in contacts yielding better conductivity
in the oxidized outer layers of contacts.
Disadvantages of high humidity:
. corrosion of metal surfaces.
8
<PAGE>
. impairment of insulation resistance of cables.
Taking these various factors into account, the air humidity should be as
high as possible, but not so high as to cause corrosion or impaired
insulation.
Experience and tests have shown that the best results are obtained at a
relative humidity of 50-60% but may vary between 10-90%.
4. CORROSION
---------
Humidity and temperature within the specified requirements will not cause
corrosion. Sulphur dioxide (SO2) with concentration as high as 5 ppm at
68oF 1013 mBar may cause corrosion on metal parts only in combination with
a relative humidity exceeding 60%.
5. AIR-COOLING
-----------
Under special climate conditions, air conditioning is recommended. The
power supply must be then dimensioned accordingly.
6. FLOOR COVERING
--------------
When selecting the floor covering, consideration shall be given to factors
such as the frequency with which the units are moved across the floor,
loading, appearance, cost, etc.
Years of experience have shown that floor coverings such as vinyl are most
suitable because of their elasticity and resistance to wear under high
pressure. There are, however, many other materials that can be used to
cover the floor or the top surfaces of the raised floor panels such as
linoleum, or other laminated plastics.
Polyvinylchloride (PVC) is not suitable since it is not anti-static and
will emit corrosive gases in the event of fire.
Carpet-covered panels should also be avoided because they are normally not
anti-static.
Modern types of semiconducting floor are, however, recommended but it is
not a requirement for AXE.
7. EARTHING
--------
The building shall be provided with an earth (earth electrode); the
resistance to earth should be 10 ohms or lower. The earthing shall be
connected to an earth collector bar, located in close proximity to Mains
Termination.
The earthing can consist of:
a. Earth plates buried close to Mains Termination to minimize the path
to the earth collector bar.
9
<PAGE>
b. A wire buried around the building; the wire ends shall be
terminated in the earth collector bar.
c. Earthing in the foundation, in which case the contact between the
concrete and the earth provides the earthing. Connection to the earth
collector bar is effected over reinforcement bars of special irons in
the concrete. This earthing is comparatively stable, and since the
concrete is somewhat moist in the contact with the earth, it will give
satisfactory conductance.
Rev. 1995
FIGURE 1
--------
ENVIRONMENTAL SPECIFICATION FOR CELL SITE EQUIPMENT
[GRAPH APPEARS HERE]
Curve 1 Normal operation. 95% of operating time.
Curve 2 Requirem ents for safe operation.
Curve 3 Requirements for non-destruction. (No operation)
10
<PAGE>
ATTACHMENT I
ACQUISITION AGREEMENT #9133
TRITON PCS, INC.
OSS SUPPORT AGREEMENT
1. Hardware Support
----------------
1.1 During the Warranty Period, any third-party hardware equipment
purchased through SELLER for use in PURCHASER's OSS application shall
be warranted free of charge.
1.2 At the completion of the Warranty Period, PURCHASER shall either
purchase (i) an Extended Hardware Maintenance Agreement from SELLER,
or (ii) post-warranty support from the third party providing the OSS
hardware, and provide SELLER with proof of such post-warranty support.
1.3 The prices SELLER charges for Extended Hardware Maintenance support
are set forth in Attachment A of the Acquisition Agreement. These
prices are subject to change on an annual basis.
1.4 Should additional third-party hardware purchased through SELLER be
added to the OSS system subsequent to the initial installation, the
Extended Hardware Maintenance Agreement will be amended to include the
new equipment.
2. Software Support
----------------
2.1 PURCHASER shall receive and be licensed to use all OSS Software
Enhancements during the Warranty Period. "Software Enhancements" means
modifications or improvements made to the System software, not
including new software features, which improve performance or capacity
of the software but which are not necessary to ensure that the
software operates according to the original specification.
2.2 During the Warranty Period, SELLER will provide 24 hour telephone
assistance, fault tracking reporting and resolution, and emergency
software patches when required.
2.3 After expiration of the Warranty Period, PURCHASER may purchase the
support services set forth in 2.1 and 2.2 at the prices set forth in
1
<PAGE>
Attachment A of the Acquisition Agreement. These prices are subject
to change on an annual basis.
2.4 Upon request by PURCHASER, SELLER shall make available on-site
technical assistance at SELLER's standard rate then in effect.
3. Limits on Support Services
--------------------------
The parties agree that the limitations set forth in Article 13.4 of the
Acquisition Agreement shall apply to the warranty and post-warranty support
obligations of SELLER. In addition, SELLER may, without liability to
PURCHASER, terminate, or suspend performance of provisions of the support
services affected if in SELLER's reasonable judgment: (i) the System is not
maintained to two revisions prior to the latest OSS Software Release level;
or (ii) SELLER is not provided access to the System and to such information
and facilities as SELLER may reasonably require in order to provide the
Support Services.
4. Support Responsibilities of SELLER
----------------------------------
4.1 SELLER may access OSS equipment and software for the purposes of
providing support services under the following conditions:
(i) SELLER shall notify PURCHASER in advance with a Work Order stating the
purpose of the work.
(ii) SELLER shall notify PURCHASER at least 48 hours in advance and in
writing of changes to distributed network naming services
configuration files (e.g. tables) and X.25 addresses.
(iii) SELLER shall notify PURCHASER in writing with a Work Report within
48 hours after completing any modifications made to PURCHASER's files
that involve the following:
. changes to .cshrc,.login, network configuration tables and any file
in the /etc directory
. changes to root directory structure
. changes to disk mounts
. changes to the OSS Authority database
. changes to the OSS X.25 control tables
. changes to installed software provided by SELLER
. addition and removal of OSS userids
. changes to IOG11 or adjunct processor parameters
. changes to Unix partitions
2
<PAGE>
. changes to Unix kernel
(iv) SELLER shall notify the PURCHASER at least 24 hours in advance of any
network operations PURCHASER needs to perform to fulfill the Work
Order. Network operations include but are not limited to: scheduling
of network measurements and recordings, modifications to network
configurations, and collection of network configuration printouts.
4.2 SELLER shall always use the same maintenance user identification with
root privileges provided by the PURCHASER to perform the operations
listed in 4.1(iii) above.
5. Support Responsibilities of PURCHASER
-------------------------------------
5.1 PURCHASER shall perform system management operations on systems
provided by SELLER according to practices outlined in the
documentation provided by SELLER or communicated in writing by SELLER
from time-to-time.
5.2 PURCHASER shall notify SELLER of any of the following changes
performed on systems provided by SELLER:
. changes made to NIS tables (includes host names and TCP/IP
addresses falling under files provided by SELLER)
. changes made to files in /etc directory
. changes to .cshrc, login of default userids provided by SELLER
. changes to root directory structure
. changes to disk mounts
. changes to the OSS Authority Database for default userids
. changes to the OSS Authority Database structure of authority
. changes to the OSS X.25 control tables
. changes to installed software provided by SELLER
. removal of default userids provided by SELLER
. changes to IOG11 or adjunct processor parameters
. changes to Unix partitions on machines running systems provided by
SELLER
. changes to Unix kernel on machines running systems provided by
SELLER
. installation of additional software on Assets provided by SELLER
. changes to passwords
5.3 PURCHASER shall provide to SELLER 24 hour access to the maintenance
user identification.
3
<PAGE>
5.4 PURCHASER shall enable remote modem access to SELLER on a 7 day/24
hour availability basis.
5.5 PURCHASER shall perform routine hardware preventative maintenance and
cleaning; and, prior to requesting support from SELLER, PURCHASER
shall comply with all published operating and troubleshooting
procedures. If such efforts are unsuccessful in eliminating the
malfunction, PURCHASER shall promptly notify SELLER of the
malfunction.
5.6 PURCHASER shall regularly back up data to the extent the OSS hardware
and software permits.
5.7 PURCHASER shall provide SELLER with (i)reasonable and safe access to
OSS systems; (ii)adequate working space and facilities at the
Installation Address; (iii)access to and use of all facilities of
PURCHASER necessary for SELLER or its representatives to provide
support services; and (iv)cooperation in maintaining a site
activitylog.
5.8 PURCHASER will provide SELLER with updated system configuration
documentation as requested by SELLER showing the location of all IOG-
11, OSS server, OSS workstations, OSS printers, X.25 Data
Communications Network (DCN) hardware, and other related equipment
(both existing and future, where appropriate). This documentation
should also include configuration and capacity of the LAN system as
well as any appropriate non-OSS software operating on the LAN.
5.9 PURCHASER will ensure the continued availability of an operational
LAN/WAN system that provides sufficient connections and capacity to
support the proposed OSS configuration. PURCHASER will provide
sufficient number of LIU-2 (or LIU-4) card connections for each X.25
link which is to be connected to the OSS network.
5.10 The examination, replacement, and handling of hardware components can
be hazardous. All related support tasks are to be performed by
qualified service personnel with the appropriate technical training
and experience to recognize these hazards (e.g.,electrostatic
discharge) and observe all protection procedures and precautions.
PURCHASER agrees to use qualified service personnel and to employ
adequate safety precautions in the performance of its obligations
hereunder.
5.11 PURCHASER is responsible for providing a sufficient number of
professional system support staff for the purpose of furnishing system
and user support. All related software support and system
administration tasks
4
<PAGE>
are to be performed by qualified service personnel with the
appropriate technical training and experience.
Rev. 7/19/96
5
<PAGE>
ATTACHMENT J
ACQUISITION AGREEMENT #9133
TRITON PCS, INC.
----------------
ACCEPTANCE TESTS
----------------
SCOPE
- -----
SELLER will perform Acceptance Tests to demonstrate that Equipment and Software
installed by SELLER is ready for commercial service.
Acceptance Tests are performed in the three areas below when Installation and
other related services for Equipment and Software are purchased from SELLER:
. RBS Tests
. Switch Tests
. RF Tests
1. RBS TESTS
---------
Cell Site Configurations will be installed and tested in accordance with
applicable provisions of the most current version of SELLER's C-05 RBS
Installation Manual, and the RBS Commissioning Guide. Acceptance will be
performed in accordance with Section 3.2 of SELLER's Operations Policies &
Procedures Manual. The following documentation will be provided for each
Cell Site:
. Inventory Statement
. Test Data Forms
. Cell Site Acceptance Certificate
. Punch List Report (if needed)
. Punch List Resolution Certificate (if needed)
All sites are to be accepted prior to being placed into service. Punch list
items are to be cleared within sixty (60) days after commercial service if
possible.
2. SWITCH TESTS
------------
All Switch Test Procedures are performed in accordance with the instructions
in the latest revision of AXE H-Modules.
. H-INST1 - General Pre-Test Documents & Procedures
. H-INST2 - Test of APZ Hardware
1
<PAGE>
. H-INST3 - Test of APT Hardware
. H-INST4 - Test of Exchange
. H-DEMO1 - Final Demonstration Procedures
The INST2, INST3 and INST4 Modules will be used to test and verify that the
hardware and data translations are installed and working properly. Each
Module contains a Test Result Report (check list) that will be reviewed by
PURCHASER during the Demonstration phase.
The DEMO1 Module contains all specific procedures that will be utilized to
demonstrate and certify that the switch will work under operative conditions
and is ready for commercial service. This Switch Acceptance Process will
examine the following areas for all new switch installations, while some of
these areas will be excluded for expansions. This will depend upon the scope
of each expansion project.
. APZ Demonstration Tests
. Call Demonstration Tests
. AXE Feature Profile Verification
. Material Inventory Verification
. Installation and Test Report Verification
. IS-136 Network and Customer Features Test
This process will then be followed by the signing of the following documents
before the equipment is placed in commercial service. Non-revenue affecting
items will be placed on the Punch List Report and scheduled for resolution
after acceptance.
. Switch Acceptance Certificate
. Punch List Report (if applicable)
. Punch List Resolution Certificate (if applicable)
3. RF TESTS AND POST-CUTOVER VERIFICATION
--------------------------------------
3.1 RF tests are conducted to verify that the system RF coverage is
consistent with the established design of the system; that calls can be
executed from a cellular telephone within areas where coverage has been
predicted to be reliable; and that handoff occurs in accordance with system
parameters in the areas of handoff boundaries.
RF tests will be conducted in accordance with the latest revision of the
RF Engineering Procedures:
. ERU/E910861 for RF Call Tests
2
<PAGE>
. ERU/E910862 for Handoff Tests
. ERU/E921196 for Border Tests (if applicable)
Results consisting of data forms and handoff locations are forwarded to
the customer as the tests are conducted, during the RF testing phase. The RF
Acceptance Certificate will be presented to PURCHASER for signature prior to
cutover to certify that RF testing has been completed and the System (or
System segment which is the subject of the testing) is ready to be placed in
commercial service.
3.2 The combined coverage, call and handoff verification is conducted in a
post-cutover environment to verify the conclusions of the pre-cutover RF
Tests (i.e. that the system RF coverage is consistent with the established
design of the system; that calls can still be executed from a cellular
telephone within areas where coverage has been predicted to be reliable; and
that handoff occurs in accordance with system parameters in the areas of
handoff boundaries).
SELLER will propose to PURCHASER, and the parties shall mutually agree
on, the test routes to be driven prior to the test.
The Combined Coverage, Call and Handoff verification is performed in
accordance with the then current revision of Ericsson Engineering Practice,
document ERU/E921179.
Results will be forwarded to PURCHASER in the form of a standard report.
This report will contain pertinent switch data, test procedure summary
information and a map overlay showing specific problem areas along the
agreed to test route.
3.3 As part of the acceptance testing immediately following Installation of
a new MTSO Configuration in an existing System, SELLER will perform a drive
test to verify that the newly defined border cells are operating properly
and that the intersystem handoff function is working. SELLER and PURCHASER
will mutually agree to a test route and mutually agree upon handoff
combinations across the border The Interswitch Handoff Test will verify
system performance by initiating calls on each border cell and tracing calls
across interswitch handoff boundaries.
Rev. 1995
3
<PAGE>
ATTACHMENT L
ACQUISITION AGREEMENT #9133
TRITON PCS, INC.
ATTACHMENT L
------------
I ... APT FUNCTION LIST
-------------------------
II ... APZ FUNCTION LIST APPLICATION SYSTEM 123/124 CN-A1
----------------------------------------------------------
APT FUNCTION LIST
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. SUBSCRIBER SERVICES 2
2. ACOUSTIC INFORMATION 2
3. TRAFFIC CONTROL FUNCTIONS 2
4. CHARGING 2
5. TRANSMISSION 3
6. SUBSCRIBER LINE SIGNALING FUNCTIONS 3
7. TRUNK LINE SIGNALING 3
8. NETWORK FUNCTIONS 3
9. NETWORK SYNCHRONIZATION 4
10. MOBILE TELEPHONE FUNCTIONS 4
11. SUPERVISION 6
12. TEST AND FAULT LOCALIZATION 7
13. ADMINISTRATION 8
14. TRAFFIC MEASUREMENTS 9
15. STATISTICS 9
16. NETWORK MANAGEMENT 10
17. HOME LOCATION REGISTER/SERVICE CONTROL
POINT (HLR/SCP) 10
18. FRAUD CONTROL 11
</TABLE>
1
<PAGE>
THE CONTENTS OF THIS DOCUMENT ARE SUBJECT TO REVISION WITHOUT NOTICE DUE TO
CONTINUED PROGRESS IN METHODOLOGY, DESIGN, AND MANUFACTURING. ERICSSON SHALL
HAVE NO LIABILITY FOR ANY ERROR OR DAMAGES OF ANY KIND RESULTING FROM THE USE OF
THIS DOCUMENT.
INTEGRITY is a trademark of Tandem Computers Incorporated.
1. SUBSCRIBER SERVICES
Call Waiting Call to a Mobile Subscriber
Equal Access for Mobile Subscriber
Fixed Call Barring
Interception Service
Message Waiting Indication
Mobile Telephone Calling Number Identification
Origination Call Access to IN Services
Priority
Subscriber Code Control Service Calls
2. ACOUSTIC INFORMATION
Acoustic Signals
Acoustic Signals USA-L(BT4)
Digital Announcement Services with Extended Features (AST-DR)
Digital Announcements Services, with Extended Features (ASTV2)
Digital Loss Pads
Recorded Announcement Digital Speech Storage (AST-DP)
Recorded Announcements Digital Speech Storage (AST-D4/D8)
3. TRAFFIC CONTROL FUNCTIONS
Analysis of A-Subscriber Number
Analysis of B-Subscriber Number
Basic Call Setup
Call Supervision and Release
Connection of Echo Cancellers in PLMN
End of Selection Analysis
Handling of A-subscriber Number
Multipurpose Destination Codes
Own Area Code
Routing Analysis
Subscriber Categories
Supervision of the Register Holding Time
4. CHARGING
Call Record Formatter
Call Record Fields for Cellular Mobile System
Charging Analysis
Charging Data Output to Adjunct Processor
Charging Data Output to IOG
Charging for Abnormal Call Release
Event Charging
Immediate Call Itemization
2
<PAGE>
Invocation of Immediate Call Itemization to CMS 8800
Mobile Charging in CMS 8800
Source Filtering
Toll Ticketing
5. TRANSMISSION
Basic Functions in a Digital Group Switch with a Maximum of 64K
Multiple Positions
Basic Functions in the Digital Group Switch with a Maximum of 64K
Multiple
Positions, Figures
Group Switch Manager
Looping of a 64-Kbps Channel
Maintenance Functions for the 1544-Kbps Digital Path Termination
Semi-permanent Connections, Administration
Transmission Characteristics for a 1544 Kbps Digital Path Termination
Transmission Characteristics for a 2048 Kbps Digital Path
Transmission Fault Control Function for 24-Channel PCM
6. SUBSCRIBER LINE SIGNALING FUNCTIONS
Functions at Interwork with PABX
Keyset Code Reception
Line Lockout Supervision of Analog Subscriber Lines
Subscriber Dialing Supervision
7. TRUNK LINE SIGNALING
Basic Register Signaling - USA
Function Block FAUS Signaling Fault Supervision on Trunk Circuits and
CS/CR
Signaling System Dependent Conversion (SSC)
Supplementary Service Interworking - Different Signaling Systems
Supplementary Service Interworking - Restriction on Destination Basis
Terminating Traffic from Interexchange Carriers
Traditional Signaling (3/1914-ANS 331 20) (1914-ANS 535 06)
Trunk Line Signaling, 1Bit, 24 Channel PCM - USA
Trunk Side PBX Access (DID)
8. NETWORK FUNCTIONS
Access to Voice Mail Services in VMSC/PEG
Automatic Administration of HTR Destination List
Automatic Congestion Control
Automatic Number Identification Transfer Between Exchanges
Automatic Number Identification Transfer to Automatic
Call Distributor/PABX
Automatic Roaming Using Global Title Addressing
CCD Hardware
Circuit Reservation
Circuit Selection Methods
Emergency Call Service
3
<PAGE>
Equal Access Carrier Analysis
Feature Group B and Feature Group D Access
Handling of Abnormal Conditions
IS-41 Intersystem Call Delivery Data Signaling
IS-41 Private Information Handling
Local Access to Automatic Visitors
Location Areas
MFJ Suppression of Busy Information
MFJ-NACN: Inhibition of Redirection Request
MTP Route Verification Test
Multi-Exchange Paging
Multi-Junctor User Functions
SCCP Route Verification Test
Signaling Protocols for 911 Services for PLMN Application
Subscription Areas
Unique Cell Location Information for Emergency Call, MRS
Virtual System Area Configuration
Voice Mail Retrieval for Mobile Subscribers
9. NETWORK SYNCHRONIZATION
Network Synchronization
Synchronization and Carrier Frequency Stabilization
Timing of a Digital Exchange
10. MOBILE TELEPHONE FUNCTIONS
Analog Control Channel Functions
Analog Voice Channel Functions
Autotuned Combiner, AMPS
Avoid Disturbed Digital Traffic Channels
Backup Channel Devices
Base Station Related Blocking Control
Best Server Selection
Call from a Mobile Subscriber
Call from, Call Access
Call Record Fields for Cellular Mobile System
Call to a Mobile Subscriber
Call Tracing at Small Restart in MRS
Call Tracing at Small Restarts
Channel Supervision, Digital
Clearing House Roamer Validation
Digital Control Channel Functions
Digital MS Power Regulation
Digital Traffic Channel Control
Directed Retry
DTMF Handling
Dynamic Allocation of Roamer Routing Number
Exchange-Base Station Interface (Describing MSC-BS Interface Options,
4
<PAGE>
Controlled by ERI)
Frequency Stabilization for Analog Equipment
Handoff
Handoff Data Signaling
Handoff Queues
Hierarchical Cell Structure
Idle Channel Supervision, Analog VC
Incoming Two-Stage Selection to Visitor
Interexchange Handoff
Locating
Locating of Digital Calls
Mobile Management Information Coordination
Mobile Station Presence Verification
Mobile Telephone Activity Supervision
Mobile Telephone Multiparty Services
Mobile Telephone Overload Control
Mobile Telephone Reverse Control Channel Separation
Mobile Telephone Subscriber Activity Report
Mobile Telephone Subscriber Class Translation
Mobile Telephone Subscriber Service Handling
Mobile Telephone Supervision of the Connection to the MS
Mobile Telephone Time Supervision
Mobile Telephone Charging Areas
Mobile Telephony Co-Locatable HLR/MSC
Mobile Telephony Parallel Announcement During Routing
Mobile Telephony Per Call Activation/Deactivation of Calling Number
Identification Restriction
Mobile Telephony Serial Announcement Before Routing
Mobile Terminated Point-to-Point SMS
Mobile Terminated Short Message Services Delivery
MS Presence Verification - Digital
MSS Call Path Tracing for Mobile Subscribers
Multiple Access Handling: Store and Compare
Multiple Access Handling: Wait and Compare
Operator-Controlled Paging
Overlaid Cells
Paging
Paging Area Paging
Peripheral Equipment Gateway and Voice Mail Signaling
Program Loading of Base Station Device Processors
Radio Performance RBS 884-1900
Radio Performance RBS 884 High Power Base Station
Receiver Functions and Performance, AMPS
Receiver Performance, Digital
Receiver Performance, RBS 882M
5
<PAGE>
Receiver Performance, RBS 884
Receiver Performance, RBS 884C
Receiver Performance, RBS 884M
Redirection of Call to Mobile Subscriber
Registration
Registration Updating
Restricted Subscriber Handling
Roamer Port Misuse Protection
Routing of Call to Mobile Subscribers
Second Phone Same Number
Sequential Paging for Manual Roamers
SW and HW Information
System Access Handling
System Access Threshold
System Identification Data for Registration
System Ordered Rescan
Time Alignment
Transmitter Performance, Digital
Transmitter Performance, RBS 882M
Transmitter Performance, RBS 884
Transmitter Performance, RBS 884C
Transmitter Performance, RBS 884M
Transmission Radio Interface, TRI. A BS Functional Specification
Transmitter Functions and Performance, AMPS
Visited Mobile Switching Center Routing Data Provision Automatic
Roaming
Visitor Register Handling
Vocoder Selection
Voice Channel Handling
11. SUPERVISION
All Circuits Busy on Routes
Blocking Supervision on Devices
Destination %OFL Supervision and Observation
Destination ASR Supervision and Observation
Destination Blocking
Digital Random Access Load Supervision
Disturbance Supervision of Trunk Circuits Analog Code Senders and
Analog Code Receivers
Disturbance Supervision on Routes
Logging Breaks in Semipermanent Connections
Measurement of Network Performance Data on Destinations
Measurement of Network Performance Data on Routes
Mobile Telephone Control Channel Disturbance Supervision
NM Counter Data Output
Preference Service
6
<PAGE>
Processor Load Control
Reading of Network Performance Data
Restriction of Accessible Outgoing Circuits
Restriction on Direct and Alternative Routing
Route %OFL Supervision and Observation
Route ASR Supervision and Observation
Seizure Quality Supervision
Seizure Supervision of Trunk Circuits and IWU Devices
Software File Congestion Supervision
Supervision
Temporary Alternate Routing
Time Supervision and Disconnection of Long Held Calls
12. TEST AND FAULT LOCALIZATION
Analysis Data Fault Handling
Audit Function, Registration of Software Irregularities (ROSI)
Call Path Tracing
Code Answer According to Code 102
Code Answer According to Code 103
Command Controlled Operation of Echo Suppresser and Attenuation Pads
Command-Controlled Access to Devices
Command-Controlled Test Calls
Connection Performance Test of Group Switch
Connection to Test Telephone
Continuous Monitoring
Disconnection of Time Supervision
Forlopp Handling in CMS 8800
Long Term Monitoring
Maintenance of Digital Group Switch a Maximum of 64K Multiple
Positions
Maintenance of MJ Hardware
Maintenance of Switching Network Terminal
Manual Blocking and Deblocking of Devices and Subscriber Lines
Manual Continuity Check for Common Channel Signaling
Mobile Telephone Radio Disturbance Recording
Monitoring of Subscriber Lines and Trunk Lines
Operation of Relays in Devices
Predetermining of Switching Path
Progression Testing
Reading of Device State Information
Recording of Telephony Signals
Remote Measurements, ATME Measurements
Remote Measurements, ATME Recording Result Administration
Remote Measurements, ATME Restest Administration
Remote Measurements, ATME Responding
Remote Measurements, Bit Error Ratio and Transmission of Bit Patterns
7
<PAGE>
Remote Measurements, B-Number Translation
Remote Measurements, Delayed Measurement
Remote Measurements, Echo Return Loss Measurement
Remote Measurements, Immediate Measurement
Remote Measurements, Instrument Administration
Remote Measurements, Level Measurement
Remote Measurements, Noise Measurement
Remote Measurements, Programmed Interwork with Test Lines
Remote Measurements on Telephone Circuits
Remote Measurements, Singing Return Loss Measurement
Remote Measurements, Standard Adjustments of Instrument Data
Remote Measurements, Timeable Controlled Measurement
Remote Measurements, Transmission of Tones
Signaling Course Recorder
Supervision and Fault Handling
Terminating Test Calls
Test Functions for Base Station Related Equipment
Test of Channel Devices
Test Tone
13. ADMINISTRATION
Administration of B-Number Analysis Data
Administration of Call Path Tracing
Administration of Digital Group Switch with up to 64K Multiple
Positions
Administration of End of Selection Analysis Data
Administration of Exchange Data
Administration of Exchange Data for Internal Number Series
Administration of Meter Pulse Data
Administration of Mobile Telephone Cells
Administration of Mobile Telephone Channel Devices
Administration of Mobile Telephone Cooperating Exchanges
Administration of Mobile Telephone Service Area
Administration of Response Programs
Administration of Roamer Routing Interrogation Code Translations
Administration of Routing Analysis Data
Administration of Routing Switch
Administration of Switching Network Terminal Data
Administration of Time Supervision Analysis Data
Administration of Visitor Register
Channel Equipment Coordination and Administration
Code Answer
Equal Access Carrier Analysis Administration
Equipment Position
Manual Administration of HTR Destination List
Mobile Telephone Digit Analysis
Route Data Administration
8
<PAGE>
Route Status Survey
Subscriber Data, Administration
Test Blocking Administration
Test Position Administration
Voice Path and Transmission Line Coordination and Administration
14. TRAFFIC MEASUREMENTS
Counters in the Measurement Data Base for Charging
Counters in the Measurement Data Base for GSS Set of Parts GS64K
Counters in the Measurement Data Base for GSS Set of Parts NS
Counters in the Measurement Data Base for GSS Set of Part SNT
Counters in the Measurement Data Base for Mobile Subscribers
Counters in the Measurement Data Base for the Announcement Service
Terminal
Counters in the Measurement Data Base for the Traffic and Event
Measurement
Counters in the Measurement Data Base for Traffic and Event
Measurements
in the CCS Subsystem
Counters in the Measurement Data Base for Traffic Control
Counters in the Measurement Data Base for APT General Operation and
Maintenance
Counters in the Measurement Data Base in Multi-Junctor
Counters in the Measurement Data Base, General Concepts
Data Recording per Call
Measurement Data Base
Measurement Object Group Handler
Measurement Report File Output, Standard Format
Measurement Report Generator
Measurement Report Time Table
Mobile Telephone Cell Traffic Recording
Modified Measurement Report Generator
Recording of Voice Channel Handling
Statistics and Traffic Measurement
STS
Time Congestion Measurements on Routes
Traffic Character Measurement on Routes
Traffic Dispersion Measurements
Traffic Measurements on Routes
Traffic Measurements on Traffic Types
15. STATISTICS
ADC Authentication Statistics
Disturbance Statistics
IS-41 Signaling Protocol Statistics
Mobile Telephone Cell Traffic Statistics
MT Signaling Protocol Statistics
9
<PAGE>
Page Response Statistics
Paging Parameter Statistics
Radio-Related Call Release Information
Radio Environment Statistics
Service Quality Statistics
Traffic Observation
16. NETWORK MANAGEMENT
ANSI CCS Suppport for HLR Redundancy for CMS88
Control of Echo Canceller Loop for Mobile Subscribers
Exchange Input Load Observation
Exchange Input Load Supervision
NM Actions Sequence Control
Processor and Exchange Input Load Measurements
Processor Load Observation
Reading of Processor and Exchange Input Load
Remote Subsystem Inaccessible Alarm
Route Load Supervision and Observation
SCCP Overhead Converter
SS7 ISDN User Part Inter LATA
SS7 ISDN User Part Intra LATA
SS7 Message Transfer Part
SS7 Signaling Connection Control Part (SCCP)
SS7 Signaling Network Monitor
SS7 Signaling Network Trouble Notification
Traffic Restrictions on Route
17. HOME LOCATION REGISTER/SERVICE CONTROL POINT (HLR/SCP)
HLR/SCP SS7 Functionality
-------------------------
ANSI SS7 TCAP Platform
SS7 TCAP Interface to HLR
SS7 TCAP Load Management
HLR/SCP HLR Subscriber Functionality
------------------------------------
HLR Administration of Peripheral Equipment
HLR Alternative Location Coordination
HLR Area Code Change Support
HLR Authentication
HLR Automatic Call Barring
HLR C-Number Analysis
HLR C-Number Provision
HLR Call Barring Upon Fraudulent Activity Detection
HLR Equal Access Pre-subscription
HLR Fraud Activity Detection
10
<PAGE>
HLR Location Analysis and Call Delivery
HLR Location Updating
HLR Message Waiting Indicator
HLR Restoration Procedures
HLR Routing Determination
HLR Screening of Serial Number
HLR Short Message Service
HLR Subscriber Activity Handling
HLR Subscriber Activity Report
HLR Subscriber Class Characteristics
HLR Subscriber Class Groups
HLR Subscriber Data Administration
HLR Subscriber Default Profile Administration
HLR Subscriber Number Administration
HLR Subscriber Services Calls
HLR Support for Manual Roamers
HLR Support for Mobile Autonomous Registration Subscribers
HLR/SCP SCP Functionality
-------------------------
HLR Intelligent Network (IN) Services for PCS
Subscribers
HLR triggers in HLR
Service Script Interpreter (SSI)
Service Script Virtual Directory Number
SSI Basic Control Types
SSI Basic Control Types 1
SSI Basic Control Types 2
SSI Extended Number Analysis
SSI IS-41
SSI List Handling
SSI Number Analysis
SSI Reports
SSI Statistics Counters
SSI Traffic Simulation
SSI Voice Prompting
18. FRAUD CONTROL
ADC Authentication Procedure for Visiting Subscriber
All Teardown Administration
Fraudulent Activity Detection
Fraudulent Call Prevention
Screening of Serial Number
Serial Number Barring
Tumbling ESN Barring
11
<PAGE>
APPLICATION SYSTEM 123/124 CN-A1
--------------------------------
APZ FUNCTION LIST
-----------------
<TABLE>
<CAPTION>
PAGE
- -----------------------------------------------------------------------------
<S> <C> <C>
19. CONTROL SYSTEM FUNCTIONS 12
20. DATA COMMUNICATIONS FUNCTIONS 14
21. FILE FUNCTIONS 15
22. ALPHANUMERIC FUNCTIONS 15
23. ALARM FUNCTIONS 16
</TABLE>
19. CONTROL SYSTEM FUNCTIONS
Adjunct Computer Subsystem APZ 212 20/2-42
Adjunct Processor Large Building Block - Tandem Integrity(TM) FT
APZ 212 20/2-42
Administration of Central Processor Stores
Administration of Function Codes
Administration of Interference Protection
Administration of Symbols for Central Software Units
Administration of System Information
Audit Functions Controller
Cache Memory Handling
Central Processor Test Functions, CPT
Command Interface for the Database APZ 212 20/2-20
Control Signaling Link
Counters in the Measurement Database for the Control System
Counters in the Measurement Database for the Support Processor
CP Repair Functions
Database General
Data Dictionary for Database APZ 212 20/2-20
Database Transaction Handling
Debugger for RPD/EMRPD
EMG Administration Functions
EMG Diagnostics
EMG EM Restart Dump Function
EMG Fault Detection Functions
EMG Recovery Functions
EMG Repair Functions
EMG Start Functions
EMRPD Hardware Functions
Executive System EMRP
Executive System STC
Executive System STR
Forlopp Management
12
<PAGE>
Function Change and Software Handling in SP
Function Change in Central Processor
Function Change, Change of EM in EMG and Loadable RP
Handling of Hardware Faults
Handling of Software Faults
Initial Loading
Job Transfer Protocol
Load Protection in RP2
Loadable Microprogram
Loading Administration, Dynamic Store Allocation
Loading and Removal of Central Software Units
Loading of EMRP, RP, and DP
Logging of Exchange Build Level Changes
MAS Support to Other Subsystems
Metering Maintenance Statistic, APZ
Operating System Functions for EMRPD
Operation and Maintenance in SPS
Output of Central Software Units
Output of Regional Programs
Output of Regional Programs, Backup Copy Function
Overload Protection (OLP), EMRPD
Processor Measurement
Product Administration, System Check at Insertion of Program
Program Change for Central Software Unit
Program Correction in EMRP
Program Correction in CP
Program Store Consistency Check
Program Test in EMRP
Program Test in EMRP with Simulated Link Interrupt
Protocol Signaling Link
Protocol Signaling Link, Flowchart
RP Administration Function
RP Alarm Function
RP Diagnostic Function
RP Error Detecting Function
RP Program Correction
RP Recovery Function
RP Repair Function
RP Restart Dump Function
RP Start Function
RPD Hardware Function
Size Alteration of Data Files
Size Alteration of Store
SP Exchange Data Administration
SP Gateway Communication
13
<PAGE>
SP Restart Logging
SP System Parameter Handling
SP Trace System
Stand Alone Function APZ 212
Supervision of Utilization in Files and Memories
Support for Production and Installation
System Backup Copy and Restart Log
System Backup Copy in Main Store
System Calendar
System Limits
System States and System Events
Test
Variable Output Support
Variable Output Service Function
20. DATA COMMUNICATIONS FUNCTIONS
AXE I/O Address and Routing Analysis
AXE I/O Closed User Group
AXE I/O Data Communication Priority
AXE I/O Data Communication Statistics
AXE I/O Direct Call Facility
AXE I/O HDLC (LAPB) Single Link Procedures
AXE I/O Interface for Modems
AXE I/O Interface for Packet Mode Terminal Access
Through a Switched Telephone Network
AXE I/O Interface for Terminals
AXE I/O Network User Services and Facilities
AXE I/O Permanent Virtual Circuit Facility
AXE I/O Selection by Name Facility
AXE I/O Subaddressing
AXE I/O Transport Protocol
AXE I/O V.25 BIS. Automatic Calling Facility
AXE I/O X.25 Interface
AXE I/O X.3 Pad
Direct File Output
Internet Transport Service APZ 211 11-318
Message Transfer Protocol, MTP
Modem for 2400 BPS. Synchronous on Leased Lines
Modem for 9600 BPS. Synchronous on Leased Lines
V-Series Synchronous Data Transmission through a General
Telephone Network Physical Layer
X-Series Synchronous Data Transmission through a Public
Data Network Physical Layer
14
<PAGE>
21. FILE FUNCTIONS
3 1/2 inch Disk Storage Unit, Winchester, Micropolis, 2112s 1.05 GB
SCSI-2
5 1/4 inch Disk Store Winchester, Micropolis 1558-15
5 1/4 inch Disk Storage Unit Winchester, Hitachi DK 511-8
5 1/4 inch Disk Storage Unit Winchester NEC D5652
5 1/4 inch Flexible Disk Unit TEAC FD-55GFV
5 1/4 inch Rewritable Optical Disk Drive RICOH R0-5060E
Command Log in AXE
Data Interchange Format on Flexible Disks
File Control APZ 211 11-285
File Copying in FMS
File Names in AXE
File Process Utility in FMS APZ 211 11-234
File Recovery Function in FMS
File Service Functions APZ 211 11-286
Hard Disk Function APZ 211 11-284
IBM Formatted Tape Labels in FMS
Infinite Sequential Files
Magnetic Tape Functions in FMS
Magnetic Tape Unit Start/Stop TEAC MT-1000
MT Labels for FMS
Search Function in FMS
22. ALPHANUMERIC FUNCTIONS
Asynchronous Terminal Interface for IOG11 APZ 211 11-282
Authority Check of Operators at Logon and Execution
AXE User Environment
Command Input
Hourly Status Report
Load Regulation of Man Machine Communication
Man-Machine Language AX
Modem for 2400 BPS Synchronous and Asynchronous, Switched or Leased
Lines
Output of Alphanumerical Information on File
PC in AXE
Printer in AXE, Facit B3100 Special Version
Printer in AXE Facit 4511
Printer in AXE Siemens PT88S
Remote Operator Alarm
Repeat Notifications for Single Troubles
Routing of Printouts
Search in Transaction Log
Secure Dialback for Connection of Terminals
Standby Utilities for Alphanumerical Output
15
<PAGE>
Transaction Log
TW in AXE, Texas Silent 703
TW in AXE, Facit 4511
TW in AXE, Facit 4440
VDU in AXE, Facit 4440
VDU in AXE, Tandberg 2230S
23. ALARM FUNCTIONS
Alarm and Attendance Signaling Towards OMC
External Alarms
Operator Alarm
Revised 8/14/97
16
<PAGE>
ATTACHMENT N
ACQUISITION AGREEMENT #9133
TRITON PCS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
1. NETWORK PLANNING AND EXPANSION 2
2. NETWORK PERFORMANCE EVALUATION 2
3. NETWORK OPERATION CONSULTING 2
4. NETWORK MANAGEMENT SYSTEM CONSULTING 3
5. BUSINESS OPERATION CONSULTING 3
6. CIVIL CONSTRUCTION 3
7. SITE ENGINEERING 4
8. EQUIPMENT INSTALLATION AND COMMISSIONING 4
9. NETWORK OPTIMIZATION 4
10. OPERATION AND MAINTENANCE MANAGEMENT 5
11. NETWORK MANAGEMENT SYSTEM ADMINISTRATION 5
12. REMOTE NETWORK MONITORING 5
13. SYSTEM SUPPORT 6
14. OPERATION AND MAINTENANCE ASSISTANCE 6
15. COMPETENCE DEVELOPMENT PROGRAM 6
</TABLE>
1
<PAGE>
1. NETWORK PLANNING AND EXPANSION
Ericsson's Network Planning and Expansion Service provides initial radio
frequency (RF) design, network dimensioning, and expansion planning for wireless
systems. This service can be provided with customer defined levels of Ericsson
support.
Ericsson provides personnel with an in-depth knowledge of cell, frequency,
transmission, and network planning principles. Ericsson team members also have
the expertise for performing border, trunk, and signaling network analysis as
well as system capacity analysis.
In an effort to better meet current and future customer demands, Ericsson
engineers provide a plan which shows how, when, and where to configure the
wireless network for optimal performance.
2. NETWORK PERFORMANCE EVALUATION
Ericsson's Network Performance Evaluation (NPE) service provides an in-depth
analysis of coverage, capacity, efficiency, reliability, and quality of the
wireless network. In addition, NPE makes recommendations for improving the
performance of the system.
Ericsson's Network Performance Evaluation service evaluates the wireless system
at various levels of network configurations and traffic patterns. This service
is divided into several sections: An overall system performance analysis is
performed regularly on the entire network and is intended to focus on subscriber
issues related to service quality. The overall performance evaluation
highlights any problems found and provides a list of the most problematic cells
in each performance area. If required, a more detailed investigation can be
performed for the most problematic cells using the detailed problem analysis.
A performance evaluation can also be applied to specific nodes within the system
to ensure that areas such as power, grounding, or data transcripts are in
appropriate conditions. This evaluation becomes essential when planning
extensive expansions, updates, and/or enhancements to the wireless system.
3. NETWORK OPERATION CONSULTING
Ericsson's Network Operation Consulting service provides improvement
recommendations for Operations and Maintenance processes and procedures
The consulting service addresses the following areas:
. Documentation of current AXE operations and maintenance processes, practices,
and procedures
. Alarm management, shift hand-over and escalation procedures
2
<PAGE>
. Power and synchronization areas
. OMC establishment, staffing and security issues
. Necessary methods and tools provisioning
. O&M Organization Planning and emergency support handling
. Subscriber feature related O&M training
4. NETWORK MANAGEMENT SYSTEM CONSULTING
Ericsson's Network Management System Consulting service provides recommendations
for the effective design and implementation of Network Management Systems (NMS).
. Analyzes requirements for the Network Management System, based on expected
network usage.
. Ericsson Network Management System Consultants focus on attaining high system
performance standards and efficient cost control.
5. BUSINESS OPERATION CONSULTING
Ericsson provides a consulting service which reviews business processes and
procedures and provides ideas for improvement. Business Operation Consulting
addresses areas such as subscriber administration, customer care, and billing
administration. Additionally, this service identifies new business
possibilities and opportunities.
Ericsson's Business Operations Consulting service provides information on areas
of business operation that are critical for revenue enhancing opportunities.
Some of these areas include:
. Customer care and subscriber administration procedures
. Fraud prevention activities in the network
. Issues related to churn --subscriber or employee
6. CIVIL CONSTRUCTION
Ericsson's Civil Construction Service provides general contracting and
management services for the construction and preparation of base station,
switching center, Network Management Center and other construction needs.
Ericsson coordinates all activities related to the civil construction of cell
sites, switch rooms, and network management centers serving as the general
contractor. The range of commitment encompasses areas such as:
. Customer approved site plans
. Site preparation and construction
. Construction/project management
3
<PAGE>
. Provisioning and/or installation of equipment shelters
. Tower and monopole erection
. Electrical and telco installation
. Antenna and feeder installation
. Generator, environmental, and security installation
7. SITE ENGINEERING
Erisccon's Site Engineering service provides site surveys, preparation, and
specifications for the physical layout and dimensioning of switch, radio, OSS,
and transmission equipment. This service is performed for new installations,
expansion of existing equipment, as well as for multi-vendor equipment.
Ericsson provides the customer with the requirements for site preparation,
space, building structures, environmental controls, and efficient equipment
layout. Ericsson also recommends optimal ways to implement an extension to an
existing installation -- taking into account factors such as spare positions in
existing cabinets, main distribution frames, digital distribution frames, and
power frames.
8. EQUIPMENT INSTALLATION AND COMMISSIONING
Erisccon provides a full range of installation services for Ericsson, as well as
third party equipment. This service ensures fast, professional installation and
commissioning work of switch, network, radio, OSS, transmission and other
Ericsson modules.
Ericsson manages the installation and commissioning of new equipment, re-
allocation and re-installation of existing equipment, and the dismantling of
obsolete equipment. There are three levels of service:
. INSTALLATION AND COMMISSIONING
. QUALITY ASSURANCE SUPERVISION
. INSTALLATION AUDITS
9. NETWORK OPTIMIZATION
Erisccon's Network Optimization Service implements improvements recommended by
Ericsson's Network Performance Evaluation, RF engineering, and other performance
improvement services. This service is designed to improve the performance and
quality of the operators wireless network.
4
<PAGE>
Ericsson engineers translate optimization recommendations into system data
inputs for implementation into the wireless network. The activities that are
covered include:
. Baseline drive testing, data acquisition, and modification prior to
implementation of data changes
. Translation of planning and evaluation information to system data MML formats
and commands
. Preparation, distribution and implementation of customized cell design data
information and switch files
10. OPERATION AND MAINTENANCE MANAGEMENT
Erisccon's Operation and Maintenance Management Service provides experienced
Ericsson personnel for the day-to-day handling of O&M activities. This service
provides a total turn-key solution to Ericsson wireless systems network O&M.
Ericsson's Operation and Maintenance Management Service is a long-term
commitment to the operator to manage their system operations. Ericsson places
personnel on-site and worldwide to access the various tools and expertise
available to ensure efficient O&M management.
The Operation and Maintenance Management responsibilities range from the
handling of field hardware to O&M of system processes.
11. NETWORK MANAGEMENT SYSTEM ADMINISTRATION
Erisccon's Network Management System Administration Service provides the
operator with an efficient solution for the operation and administration of
their Network Management System.
The Network Management System Administration service provides Ericsson system
administration based on proven UNIX, database, and NMS application operations
and maintenance procedures.
System administration support is offered either locally or remotely. Remote
administration is available either by way of a dedicated high-speed link to the
Ericsson Network Management Center or through a modem connection. System
administration duties requiring physical activities such as connecting printers
and workstations or removing tapes from backup devices are provided via on-site
support.
12. REMOTE NETWORK MONITORING
Erisccon's Remote Network Monitoring Service provides Ericsson's expertise in
site monitoring and alarm handling for base stations, switching centers, and
other network modes.
5
<PAGE>
Utilizing Ericsson's Network Management System applications, engineers provide
proven NMS solutions for network monitoring. Remote Network Monitoring is
available via a dedicated high-speed link to the Ericsson Network Management
Center.
13. SYSTEM SUPPORT
Erisccon's System Support service includes consultation and 24 - hour emergency
service, software maintenance and hardware maintenance. This service provides:
. Provides assistance in resolution of operations and maintenance issues and
trouble report handling.
. 24-hour access to Emergency Support Team for rapid recovery of Network
Elements.
. Software Maintenance ensures Network Elements are kept current with all
software updates.
. Hardware Maintenance provides Return and Repair of Ericsson equipment.
14. OPERATION AND MAINTENANCE ASSISTANCE
Erisccon's Operation and Maintenance Assistance service provides experienced
Ericsson personnel to assist with the operations & maintenance of the network.
Operation & Maintenance Assistance provides hands-on assistance or supervision
by experienced O&M personnel. These personnel are placed at the switches, radio
sites or Network Management Center's on a short or long term basis. Ericsson
resources are available to assist with support and O&M issues as well as:
. OSS administration
. Preventive maintenance
. Back-up procedures
. Alarm handling
. Trouble reporting
15. COMPETENCE DEVELOPMENT PROGRAM
Erisccon's Competence Development program provides courses to develop in-house
competence in operation and maintenance of wireless networks including:
. Career related training paths and courses for O&M professionals.
. Courses at Ericsson's international training centers, or on-site training
available.
. Provides an introduction to new features and network technologies.
. Hands-on review and job task competency verification.
Revised 10/22/96
6
<PAGE>
ATTACHMENT O
ACQUISITION AGREEMENT #9133
TRITON PCS, INC.
Price Adjustment for Equipment and Software
-------------------------------------------
Other than Initial Configuration
--------------------------------
Prices shall be adjusted at the beginning of each calendar year, and the prices
will be valid for orders received during the ensuing calendar year, pursuant to
the following formulas:
Equipment and Software ordered other than that covered by the Initial
---------------------------------------------------------------------
Configuration is subject to this price adjustment according to the
-------------
following formula:
P = PO x (0.15 + 0.85 x M/MO)
Where
- -----
P = The adjusted price.
PO = Base price as stated.
M = The Producer Price Index for all commodities published monthly by
the Federal Bureau of Labor Statistics ("Index") valid for the month
of September in the current year.
MO = Same as M, but valid in September of the previous year.
8/1/95
<PAGE>
ATTACHMENT P
ACQUISITION AGREEMENT #9133
TRITON PCS, INC.
Recipients of Purchaser's Notices
---------------------------------
<PAGE>
ATTACHMENT Q
ACQUISITION AGREEMENT #9133
TRITON PCS, INC.
ORDER CANCELLATION POLICY
-------------------------
Listed below are specific charges to PURCHASER which represent reasonable non-
recoverable costs actually incurred by Ericsson prior to or in connection with
the cancellation of such an order, including if applicable, labor charges of
Ericsson personnel, reasonable restocking charges, and shipping charges.
RBS EQUIPMENT (SUPPLIER - ERICSSON)
SITUATION CANCELLATION POLICY
- --------------------------------------------------------------------------------
. Order is cancelled before shipment
to requested customer site. 5 percent of order value
. Order is cancelled after shipment
to requested customer site but before
shipment is installed. 15 percent of order value
. Custom Orders (i.e., cable construction)
cancelled before manufacturing has
commenced on that portion of the order.* 5 percent of order value
. Custom Order (i.e., cable construction)
cancelled after manufacturing has
commenced on that portion of the order. 100 percent of order value
NOTE: On custom orders, for example, if 10 custom cables were ordered but
manufacturing has commenced on only 3 cables, a 100% charge will be levied
against 3 cables and a 5% charge will be levied against the remainder (7)
of the order.
1
<PAGE>
SWITCH EQUIPMENT (SUPPLIER - ERICSSON)
Switch equipment refers to any AXE switching equipment order with the exception
of the ordering of an entire switch (i.e., Mini, 211, 212).
SITUATION CANCELLATION POLICY
- --------------------------------------------------------------------------------
. Order is cancelled before shipment
to requested customer site. 5 percent of order value
. Order is cancelled after shipment
to requested customer site but
before shipment is installed. 15 percent of order value
SOFTWARE FEATURES
SITUATION CANCELLATION POLICY
- --------------------------------------------------------------------------------
. Order is cancelled before application
engineering (i.e., station parameters
or data transcripting) has commenced. 5 percent of software order value
. Order is cancelled after application
engineering (i.e., station parameters
or data transcripting) has commenced. 10 percent of software order value
NOTE: All switch hardware associated with the software features is subject to
the cancellation charge listed for Switch Equipment.
DOMESTIC SUPPLIERS OTHER THAN ERICSSON
SITUATION CANCELLATION POLICY
- --------------------------------------------------------------------------------
. Ericsson orders materials from a domestic
supplier and the material CAN be resold
by the domestic supplier to Ericsson or
another vendor. 25 percent of order value
. Ericsson orders materials from a domestic
supplier and the material
2
<PAGE>
CANNOT be resold by the domestic supplier
to Ericsson or another vendor (i.e.,
specifically measured coax cable for an
antenna run). 100 percent of order value
Rev. 07/92
3
<PAGE>
Exhibit 10.20
PLEDGE AGREEMENT
----------------
PLEDGE AGREEMENT, dated February 4, 1998, made by Steven R. Skinner
("Pledgor"), to Triton PCS, Inc., a Delaware corporation ("Pledgee").
------- -------
WHEREAS, Pledgor has entered into a Securities Purchase Agreement, dated as
of October 8, 1997 (the "Purchase Agreement"; capitalized terms defined therein
------------------
and not otherwise defined herein being used herein as therein defined), with the
Company, the other Cash Equity Investors, and the other parties named therein,
pursuant to which Pledgor has agreed, among other things, to make Cash Equity
Investor Contributions to the Company on the terms and subject to the conditions
thereof;
WHEREAS, Pledgor is the owner of 2,500 shares (the "Pledged Shares") of
--------------
Series C Preferred Stock, par value $0.01 per share, of the Company;
WHEREAS, the other parties to the Purchase Agreement have required, as a
condition to their execution and delivery of the Purchase Agreement and their
consum mation of the transactions contemplated thereby, that Pledgor make the
pledge contemplated by this Agreement in order to secure Pledgor's obligation to
make capital contributions to the Company in respect of its Unfunded Commitment
in accordance with the terms of Section 2.2 of the Securities Purchase Agreement
and Section 3.10 of the Stockholders Agreement (the "Unfunded Commitment
-------------------
Obligations");
- -----------
NOW, THEREFORE, in consideration of the premises and in order to induce the
other Purchasers to make their respective Contributions to the Company, Pledgor
hereby agrees with Pledgee as follows:
SECTION 1. Pledge. Pledgor hereby pledges to Pledgee, and grants to
------
Pledgee a security interest in the following, whether now owned or hereafter
acquired (the "Collateral"):
----------
(a) the Pledged Shares and the certificates representing the Pledged
Shares, and all dividends, cash, instruments, securities and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares; and
(b) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the types
described above).
SECTION 2. Security for Obligations. This Agreement secures the
------------------------
Unfunded Commitment Obligations and all Pledgor's obligations under, in respect
of or in connection with this Agreement (all such obligations being referred to
hereinafter, together with the Unfunded Commitment Obligations, as the
"Obligations"). Without limiting the generality of the foregoing, this
- ------------
Agreement secures the payment of all
<PAGE>
amounts that constitute part of the Obligations and would be owed by Pledgor to
Pledgee under the Purchase Agreement or Stockholders Agreement but for the fact
that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving Pledgor.
SECTION 3. Delivery of Collateral. All certificates or instruments
----------------------
representing or evidencing the Collateral shall be delivered to and held by or
on behalf of Pledgee pursuant hereto and shall be in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Pledgee. Pledgee
shall have the right, at any time in its discretion and without notice to
Pledgor, to transfer to or to register in the name of Pledgee or any of its
nominees any or all of the Collateral, subject only to the rights specified in
Section 6(a); provided, that notwithstanding the foregoing, until any transfer
--------
of beneficial ownership with respect to the Collateral pursuant to any exercise
of remedies under Section 11, Pledgor shall continue to be the beneficial owner
of the Collateral. In addition, Pledgee shall have the right at any time to
exchange certificates or instruments representing or evidencing Collateral for
certificates or instruments of smaller or larger denominations.
SECTION 4. Representations and Warranties. Pledgor represents and
------------------------------
warrants as follows:
(a) Pledgor is the legal and beneficial owner of the presently
existing Collateral free and clear of any Lien except for the security interest
created by this Agreement and Liens created by the Stockholders Agreement.
(b) The pledge of the Pledged Shares pursuant to this Agreement,
together with the delivery of the Pledged Shares pursuant to Section 3, creates
a valid and perfected first priority security interest in the presently existing
Collateral, securing the payment of the Obligations.
(c) No consent of any other Person and no authorization, approval, or
other action by, and no notice to or filing with, any Governmental Authority is
required (i) for the pledge by Pledgor of the Collateral pursuant to this
Agreement or for the execution, delivery or performance of this Agreement by
Pledgor, (ii) for the perfection or maintenance of the security interest created
hereby (including the first priority nature of such security interest) or (iii)
for the exercise by Pledgee of the voting or other rights provided for in this
Agreement or the remedies in respect of the Collateral pursuant to this
Agreement (except (x) as may be required in connection with any disposition of
any portion of the Pledged Shares by laws affecting the offering and sale of
securities generally, (y) that the consent, authorization or approval of the FCC
may be required if the exercise of rights or remedies by Pledgee hereunder would
result in a voluntary or involuntary assignment of or transfer of control of a
License and (z) for the filing of financing statements pursuant to the Code (as
defined below) with respect to Collateral).
2
<PAGE>
SECTION 5. Further Assurances. Pledgor agrees that at any time and
------------------
from time to time, at the expense of Pledgor, Pledgor will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary, or that Pledgee may reasonably request, in order to perfect
and protect any security interest granted or purported to be granted hereby or
to enable Pledgee to exercise and enforce its rights and remedies hereunder with
respect to any Collateral, including, without limitation, all action specified
in Section 13.
SECTION 6. Voting Rights; Dividends; Etc. (a) Unless and until
-----------------------------
Pledgor shall fail to pay in full within 35 days of the due date any of the
Unfunded Commitment Obligations:
(i) Pledgor shall be entitled to exercise or refrain from exercising
any and all voting and other consensual rights pertaining to the Collateral
or any part thereof for any purpose not inconsistent with the terms of this
Agreement or the Stockholders Agreement.
(ii) Pledgor shall be entitled to receive and retain any and all
dividends and interest, cash, instruments and other property paid in
respect of the Collateral, provided that any and all
--------
(A) dividends and interest paid or payable other than in cash
in respect of, and instruments and other property received, receivable
or otherwise distributed in respect of, or in exchange for, any
Collateral,
(B) dividends and other distributions paid or payable in cash
in respect of any Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Collateral,
shall be, and shall be forthwith delivered to Pledgee to hold as,
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of Pledgee, be segregated from the other property or funds of
Pledgor, and be forthwith delivered to Pledgee as Collateral in the same
form as so received (with any necessary endorsement or assignment).
(b) In the event that Pledgor shall fail to pay in full within 35
days of the due date any of the Unfunded Commitment Obligations:
(i) All rights of Pledgor to exercise or refrain from exercising the
voting and other consensual rights which it would otherwise be entitled to
exercise pursuant to Section 6(a)(i), and to receive the dividends,
interest, cash,
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instruments and other property which it would otherwise be
authorized to receive and retain pursuant to Section 6(a)(ii), shall cease,
and all such rights shall thereupon become vested in Pledgee who shall
thereupon have the sole right to exercise or refrain from exercising such
voting and other consensual rights and to receive and hold as Collateral
such dividends and interest payments.
(ii) All dividends and interest payments that are received by Pledgor
contrary to Section 6(b)(i) shall be received in trust for the benefit of
Pledgee, shall be segregated from other funds of Pledgor and shall be
forthwith paid over to Pledgee as Collateral in the same form as so
received (with any necessary endorsement or assignment).
(c) Pledgee shall execute and deliver (or cause to be executed and
delivered) to Pledgor all such proxies and other instruments as Pledgor may
reasonably request for the purpose of enabling Pledgor to exercise the voting
and other rights which it is entitled to exercise pursuant to Section 5(b)(i)
above and to receive the dividends or interest payments that it is authorized to
receive and retain pursuant to Sections 6(a)(ii) and 6(b)(ii).
SECTION 7. Transfer Restriction. Pledgor shall not Transfer (as such
--------------------
term is defined in the Stockholders' Agreement) any Pledged Shares or other
Collateral to any Person, unless this Pledge Agreement remains in effect with
respect to all of the Collateral (if any) other than the Collateral being
Transferred and concurrently with such Transfer the transferee pledges all of
the transferred Collateral in favor of the Company pursuant to a pledge
agreement in the form of this Pledge Agreement. The Pledgee shall release the
security interest created by this Agreement to the extent necessary in order to
facilitate any Transfer complying with the terms of this Section 7.
SECTION 8. Pledgee Appointed Attorney-in-Fact. If at any time the
----------------------------------
Pledgor shall fail to pay in full within 35 days of the due date any of its
Unfunded Commitment Obligations, Pledgee shall automatically and without further
action become Pledgor's attorney-in-fact, with full authority in the place and
stead of Pledgor and in the name of Pledgor or otherwise, from time to time in
Pledgee's discretion to take any action and to execute any instrument which
Pledgee may deem necessary or advisable to accomplish the purposes of this
Agreement (subject to the rights of Pledgor under Section 6), including, without
limitation, to receive, endorse and collect all instruments made payable to
Pledgor representing any dividend, interest payment or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same.
SECTION 9. Pledgee May Perform. If Pledgor fails to perform any
-------------------
agreement contained herein, Pledgee may itself perform, or cause performance of,
such agreement, and the expenses of Pledgee incurred in connection therewith
shall be payable by Pledgor under Section 12.
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SECTION 10. Pledgee's Duties. The powers conferred on Pledgee
----------------
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the reasonable
care in the custody and preservation of any Collateral in its possession and the
accounting for monies and other instruments and property actually received by it
hereunder, Pledgee shall have no duty as to any Collateral, as to ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Collateral, whether or not Pledgee has
or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. Pledgee shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which Pledgee accords its own property.
SECTION 11. Remedies Upon Default. In the event that Pledgor shall
---------------------
fail to pay in full within 35 days of the due date any of its Obligations:
(a) Pledgee may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code in effect in the State of New York at that time (the "Code")
----
(whether or not the Code applies to the affected Collateral), and may also,
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange,
broker's board or at any of Pledgee's offices or elsewhere, for cash, on credit
or for future delivery, and upon such other terms as Pledgee may deem
commercially reason able. Pledgor agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to Pledgor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. Pledgee shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
Pledgee may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) Any cash held by Pledgee as Collateral and all cash proceeds
received by Pledgee in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of
Pledgee, be held by Pledgee as collateral for, and/or then or at any time
thereafter be applied (after payment of any amounts payable to Pledgee pursuant
to Section 12) in whole or in part by Pledgee against, all or any part of the
Obligations then due. Any surplus of such cash or cash proceeds held by Pledgee
and remaining after payment in full of all the Obligations shall be paid over to
Pledgor.
SECTION 12. Interest and Expenses. In the event that Pledgor shall
---------------------
fail to pay in full within 35 days of the due date any of the Unfunded
Commitment Obligations, it will upon demand pay to Pledgee (a) in respect of the
period commencing on the date of such payment default and ending on the date its
Unfunded Commitment
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equals zero, interest (computed on the basis of a 360-day year of twelve 30-day
months) on the aggregate amount of its Unfunded Commitment at a fluctuating rate
per annum equal to the Company's borrowing rate under the Credit Agreement, plus
four percent (4%), provided that in no event shall the--------Pledgor be
obligated to pay interest in excess of the maximum interest rate permitted under
applicable law, and (b) the amount of all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, that
Pledgee 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 Pledgee hereunder or (iv) the failure by Pledgor to perform
or observe any of the provisions hereof.
SECTION 13. Amendments, Etc. No amendment or waiver of any provision
---------------
of this Agreement, and no consent to any departure by Pledgor here from, shall
in any event be effective unless the same shall be in writing and signed by
Pledgee and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 14. Notices. All notices and other communications provided
-------
for hereunder shall be in writing and shall be delivered by hand, by nationally
recognized overnight courier or by facsimile transmission, in each case to the
address for the recipient specified in the Purchase Agreement. All such notices
and other communications shall be effective upon delivery or upon facsimile
transmission, when confirmed by return facsimile transmission.
SECTION 15. Continuing Security Interest.
----------------------------
(a) This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the date
Pledgor's Unfunded Commitment equals zero, or, if Pledgor shall have failed to
pay in full when due any of the Unfunded Commitment Obligations, the later of
such date and the date it has paid in full in cash all of the Obligations, (b)
be binding upon Pledgor, its successors and assigns, and (c) inure, together
with the rights and remedies of Pledgee hereunder, to the benefit of, and be
enforceable by, Pledgee and its successors.
(b) Pledgee agrees to release the Collateral upon deposit by Pledgor
into a cash collateral account in favor of Pledgee, the terms of which cash
collateral account shall be acceptable to Pledgee in its sole discretion, the
aggregate amount of the cash equal to Pledgor's remaining Unfunded Commitment
Obligations.
SECTION 16. Release and Termination. Upon the date Pledgor's
-----------------------
Unfunded Commitment equals zero, or, if Pledgor shall have failed to pay in full
when due any of the Unfunded Commitment Obligations, the later of such date and
the date it has paid in full in cash all of the Obligations, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to Pledgor. Upon any such
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termination, Pledgee will, at Pledgor's expense, release to Pledgor all
Collateral then held by it and execute and deliver to Pledgor such documents as
Pledgor shall reasonably request to evidence such termination.
SECTION 17. Governing Law; Terms. This Agreement shall be governed
--------------------
by, and construed in accordance with, the laws of the State of New York, except
as required by mandatory provisions of law and except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of New York. Unless other wise defined herein
or in the Purchase Agreement, terms defined in Article 9 of the Code are used
herein as therein defined.
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IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
STEVEN R. SKINNER
---------------------------
Agreed and Accepted:
TRITON PCS HOLDINGS, INC.
By_______________________
Name:
Title:
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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.
KPMG Peat Marwick LLP
/s/ _________________________________
Philadelphia
September 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.
Arthur Andersen LLP
/s/ _________________________________
Greensboro, North Carolina
September 24, 1998
