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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Fiscal Year Ended December 31, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
COMMISSION FILE NUMBER:
TRITON PCS, INC. - 333-57715
TRITON PCS OPERATING COMPANY L.L.C.* - 333-57715-02
TRITON PCS LICENSE COMPANY L.L.C.* - 333-57715-02
TRITON PCS EQUIPMENT COMPANY L.L.C.* - 333-57715-03
TRITON PCS PROPERTY COMPANY L.L.C.* - 333-57715-04
TRITON PCS HOLDINGS COMPANY L.L.C.* - 333-57715-05
TRITON MANAGEMENT COMPANY, INC. * - 333-57715-06
(Exact names of Registrants as specified in their charters)
Delaware 23-2930873
Delaware 23-2941874
Delaware 23-2941874
Delaware 23-2941874
Delaware 23-2941874
Delaware 23-2941874
Delaware 23-2940271
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
375 Technology Drive
Malvern, Pennsylvania 19355
(Address and Zip Code of principal executive offices)
(610) 651-5900
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ___
-----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrants' knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
State the aggregate market value of the voting equity securities held by non-
affiliates of the Registrants: There is no public trading market for the equity
securities of the Registrants and, accordingly, the Registrants are not
presently able to determine the market value of equity securities held by non-
affiliates.
*Triton PCS Operating Company L.L.C., Triton PCS License Company L.L.C., Triton
PCS Equipment Company L.L.C., Triton PCS Property Company L.L.C., Triton PCS
Holdings Company L.L.C. and Triton Management Company, Inc. meet the conditions
set forth in General Instruction I.
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TRITON PCS INC
FORM 10-K
TABLE OF CONTENTS
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PAGE
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PART I
Item 1 Business..................................................... 1
Item 2 Properties................................................... 11
Item 3 Legal Proceedings............................................ 11
Item 4 Submission of Matters to a Vote.............................. 11
PART II
Item 5 Market for Registrant's Stock................................ 11
Item 6 Selected Financial Data...................................... 11
Item 7 Managements Discussion and Analysis of Financial
Condition and Results of Operations....................... 12
Item 7A Quantitative and Qualitative Disclosure
about Market Risk.........................................
Item 8 Financial Statements & Supplementary Data.................... F-1
Report of KPMG LLP........................................... F-2
Combined Balance Sheet....................................... F-3
Combined Statement of Operations............................. F-4
Combined Statements of Stockholders Equity................... F-5
Combined Statement of Cash Flows............................. F-6
Description of Business...................................... 21
Summary of Significant Accounting Policies................... 21
Item 9 Changes in and Disagreements with Accountants................ 38
PART III
Item 10 Executive Officers and Directors............................. 38
Item 11 Executive Compensation....................................... 41
Item 12 Security Ownership........................................... 44
Item 13 Certain Relationship......................................... 45
PART IV
Item 14 Exhibits, Financial Statement Schedules, & Form 8-K..........
Signatures...................................................
Exhibit Index................................................
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ITEM 1. BUSINESS
THE COMPANY
The Company intends to become a leading provider of wireless broadband
personal communications services (commonly referred to as 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 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.
(together with affiliates "AT&T"), whereby the Company will be the exclusive pr
ovider of wireless mobility services under the AT&T consumer brand name in a
contiguous area covering approximately 11 million Pops (each person in a defined
market area) in the southeastern United States the ("Licensed Area"). AT&T PCS
contributed certain PCS licenses to the Company 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 commenced
commercial operations in the first quarter of 1999 in an initial area covering
approximately 40% of the Pops in the Licensed Area (the "Initial
Configuration").
The Company believes the Licensed Area has outstanding demographic
characteristics, including strong population growth and favorable population
density and traffic patterns. According to Paul Kagan Associates, Inc., 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, DC, 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 Time Division Multiple
Access ("TDMA") technology based upon the IS-136 standard ("TDMA/IS-136") which
is the technology utilized by AT&T's nationwide wireless network, thus allowing
the Company's network to be compatible with AT&T's and other TDMA/IS-136
networks immediately upon launch of operations. TDMA/IS-136, among other things,
allows service providers to offer enhanced integrated services not currently
offered by traditional analog cellular providers, including integrated
voicemail, custom-calling and short-messaging. Currently three of the top four
wireless telecommunications companies in the U.S., based on current customers,
utilize TDMA/IS-136 technology.
On June 30, 1998, the Company acquired an existing cellular system which
serves Myrtle Beach, SC and the surrounding area, from Vanguard Cellular System
of South Carolina, Inc. for a purchase price of approximately $164.5 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 operates under the AT&T agreements. The Company believes that
the Myrtle Beach acquisition has (i) provided the Company with a system that
currently generates positive cash flow, (ii) accelerated the ability of the
Company to capture roaming traffic generated by Myrtle Beach's highly transitory
population, (iii) accelerated the Company's time-to-market in South Carolina and
(iv) rendered a PCS build-out in the Myrtle Beach region unnecessary.
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On December 31, 1998, the Company acquired from AT&T (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 $111 million. The build-out of the network relating to the Norfolk
Acquisition, including the installation of a switch, has been substantially
completed and the Norfolk BTA commenced commercial operations in the first
quarter of 1999. With the Norfolk Acquisition, coverage within the Company's
contiguous footprint totals approximately 13 million Pops.
In addition to the contribution by AT&T of the PCS Licenses, the Company has
raised $140 million of irrevocable equity commitments payable over a three-year
period, $80 million of which has been received by the Company as of, March 26,
1999, 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. See "Certain Relationships and Related Transactions--The
Securities Purchase Agreement." The Company has also received from the cash
equity investors (i) an additional $35 million in connection with the Myrtle
Beach Acquisition and (ii) approximately $16.5 million in connection with the
Norfolk Acquisition.
STRATEGIC ALLIANCE WITH AT&T
AT&T holds FCC licenses to provide wireless telecommunications service in
areas covering 96% 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 Network" and will use the globally recognized AT&T logo.
COMPANY EXCLUSIVITY. The Company will be AT&T's exclusive provider of
wireless mobility services for people residing within the Licensed Area.
AT&T EXCLUSIVITY. The Company will use AT&T as its provider of
telecommunications services, other than wireless mobility, for its ancillary
or bundled services, including long distance and, where applicable, local
service to the Company.
ROAMING. AT&T's and the Company's customers who own dual-band/dual-mode
phones will roam on each other's mobile wireless systems.
PRODUCTS AND SERVICES. The Company 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 Nokia 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."
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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: (a) favorable vendor contracts, (b) long-term
roaming arrangements with prescribed pricing, including preferred carrier
status for AT&T-affiliated roaming traffic, and (c) availability of AT&T's
Network Operating Centers 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 has designed its network to minimize its interconnect expenses and
reduce infrastructure costs. In addition, the Company operates 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 the impact on the customer. In support of this strategy, the Company
has developed a compensation plan tied to the attainment of customer quotas
and customer retention rates. Furthermore, the Company intends to effectively
manage its customer relationships through the use of sophisticated information
systems that best meet the evolving needs of individual customers.
DEPLOY STATE-OF-THE-ART TECHNOLOGY. The Company's choice of TDMA
technology utilizing the IS-136 platform provides the Company with the
opportunity to capitalize on certain advantages, such as higher voice quality,
greater security and enhanced features, relative to analog cellular service
providers. This technology also provides for more powerful error correction,
less susceptibility to fading and reduced interference (which results in fewer
dropped calls) and increased customer capacity relative to a typical analog
system. In addition, the TDMA dual-band/dual-mode handsets provide operating
capability in both digital mode at 1900 MHz and 800 MHz and analog mode at 800
MHz, thereby increasing the customer's roaming capabilities. Furthermore, TDMA
utilizes a hierarchical cell structure that allows for cost-effective capacity
enhancement and greater customization of calling plans.
EXECUTE HIGH QUALITY BUILD-OUT PLAN. The Company plans to construct a
state-of-the-art, high quality network. The Company's radio frequency 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.
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POTENTIAL EXCHANGE
On March 24, 1998, the Company entered into a non-binding letter of intent
related to certain transactions, including the potential acquisition of 1.9
million additional net incremental Pops, and the exchange of the Hagarstown, MD
and Cumberland, MD BTAs. The agreement has been modified to only include the
exchange of 512,000 Pops located in the Hagerstown, MD and Cumberland, MD BTAs
for 517,000 Pops located in certian countries in Savannah, GA and Athens, GA
BTAs, all of which are contiguous to the Company's existing service area. Due to
the difference in value per Pop of the BTAs exchanged, consideration of
approximately $9.7 million, all of which is expected to be represented by non-
cash equity interests in Triton PCS Holdings Company, Inc. (Holdings) will be
issued to AT&T. The transaction is subject to execution of a definitive exchange
agreement and closing conditions typical in transactions of this nature. If the
transaction is consummated, Holdings intends to contribute the Savannah, GA and
Athens, GA licenses to the Company. The Savannah and Athens Pops have not been
built, however, the Company expects that the Pops will be included in the
current build-out plan developed for the Company's existing footprint.
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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>
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% Growth Population Local Interstate
LICENSED AREAS(1) POPS(2) 1995-2000(3) DENSITY(4) TRAFFIC DENSITY(5)
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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) 143.3 33,570(9)
U.S. AVERAGE.................................... n.a. 0.83(10) 77(11) 31,521(12)
Does not include Norfolk/Virginia Beach which represents 1,772.0 Pops.
</TABLE>
- --------------
All figures based on estimates for 1997 by Paul Kagan Associates, Inc.
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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
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, DC, 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.
MULTIMODE HANDSETS. Through multimode 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
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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 "PINs or Personal Identification
Numbers." 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 "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, region wide 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.
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 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
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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, 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 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.
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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, acquisition and
engineering team, composed of approximately 200 engineering employees,
independent contractors and consultants, is designing and constructing the
Company's 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 has commenced commercial
operations in the Initial Configuration and expects to cover 60% of the Pops in
the Licensed Area by the end of 1999. The Company expects to extend its coverage
to approximately 80% of the Pops in the Licensed Area by the end of the fourth
quarter of 2002.
RF DESIGN. The Company, along with Wireless Facilities Inc., a radio frequency
engineering firm, developed the RF design for the initial build-out of its
digital PCS network in the Initial Configuration and will continue this
development for the 1999 build out plan. This process includes cell site design,
frequency planning and network optimization for each such market. Radio
frequency engineering also allocates voice channels and assigns frequencies to
cell sites taking into consideration both PCS and microwave interference issues.
PROPERTY ACQUISITION. Four experienced vendors, Entel, Whalen, Crown
Communications, Inc. and American Tower Corporation 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, an additional 500 sites in
the Company's 1999 build out plan and approximately 1,600 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 February 28, 1999, the Company had signed leases or options
for 431 sites, 19 of which were awaiting required zoning approvals.
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CONSTRUCTION AND INSTALLATION. The Company, along with Pacific 17, Inc.,
American Tower and Midwest Wireless Inc, will oversee the deployment of its
digital PCS network. These companies will act as construction management
contractors and employ local construction firms to build the cell sites.
BUILD-TO-SUIT AGREEMENTS. The Company has entered into agreements with Crown
Communications, Inc. ("Crown") and American Tower Corporation ("American"),
whereby the Company will lease from Crown and American a portion of property and
communications facilities specific to areas to be built-out in the Company's
Licensed Area.
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."
Analysis of the markets included in the 1999 build out plan has been completed
for all but 5 markets with no relocation required. The remaining markets are
currently being analyzed which is expected to be completed by 1999.
INTERCONNECTION. The Company's digital PCS network will connect to local
exchange carriers. The Company has negotiated 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 our 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.
In areas where TDMA-based PCS service is not available, the Company offers a
roaming option on the traditional analog cellular and digital cellular systems
via dual-band/multi-mode handsets capable of transmitting over either cellular
or PCS frequencies. Access to cellular coverage is provided through the use of
dual-band/multi-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/multi-mode handsets roam on AT&T's wireless network. In addition, pursuant
to the stockholders' agreement, AT&T has used 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 has developed 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, has also introduced
sophisticated network management and operations support systems which 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.
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.
Except in Myrtle Beach, 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.
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. Several years ago the FCC initiated an administrative proceeding
seeking comment on whether resellers should be permitted to install separate
switching facilities in cellular systems, although it tentatively concluded not
to require such interconnections; this issue remains pending at the FCC.
Presently the FCC does not require CMRS providers to offer interconnection to
all other CMRS providers, but it has stated that it will consider
interconnection complaints on a case-by-case basis and that it may consider in
the future whether to impose more general interconnection obligations on CMRS
providers. The FCC is also considering whether resellers should receive direct
assignments of telephone numbers from the North American Numbering Plan
Administrator. 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.
It is likely that the FCC will offer additional spectrum for wireless mobile
licenses in the future. Applicants also have received and others are seeking FCC
authorization to construct and operate global satellite networks to provide
domestic and international mobile communications services from geostationary and
low earth orbit satellites. One such system, the Iridium system, began
commercial operations in 1998.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 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 initial PCS licenses by auction. Auctions began with the 30
MHz, MTA-wide licenses, and concluded last year with the last of the BTA
licenses. In March, 1998, the FCC adopted an order that allows financially
troubled entities that won C-Block licenses at auction to obtain financial
relief from their payment obligations and to return some or all of their C-Block
licenses to the FCC for reauctioning. The FCC began the reauction of the
returned licenses in March, 1999. This action will place additional spectrum in
the hands of potential competitors of the Company. The FCC may reauction other
licenses that are returned by bidders or that are subject to default.
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 Licensed 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.
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 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.
In its implementation of 1996 Act, the FCC established federal universal
service requirements that affect CMRS operators. Under the FCC's rules,
wireless service providers potentially are eligible to receive universal service
subsidies for the first time; however, they also are required to contribute to
both federal and state universal service funds. Many states are also moving
forward to develop state universal service fund programs. A number of these
state funds require contributions, varying greatly from state to state, from
CMRS carriers. Multiple parties have challenged various aspects the FCC's
universal service order and the cases have been consolidated in the United
States Court of Appeals for the Fifth Circuit in New Orleans. A judicial
determination adverse to the FCC, as well as any further modification to the
FCC's universal service rules, could affect the CMRS carrier support payments
required for federal and state universal service programs.
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
sets of rules.
The FCC has determined that the interstate, interexchange (commonly
referred to as long distance) offerings of CMRS providers are subject to the
interstate, interexchange rate averaging and integration provisions of the
Communications Act. Rate averaging requires the Company to average its
interstate long distance CMRS rates between high cost and urban areas. The FCC
has delayed implementation of the rate integration requirements with respect to
"wide area" rate plans offered by the Company pending further reconsideration of
its rules. The FCC also delayed the requirement that there be CMRS long
distance rate integration among the Company's CMRS affiliates. On December 31,
1998, the FCC reaffirmed on reconsideration that its interexchange rate
integration rules apply to interexchange CMRS services. The FCC announced it
would initiate a further proceeding to determine how integration requirements
apply to typical CMRS offerings, including "One-Rate" plans. Until this further
proceeding is concluded, the FCC will enforce only CMRS long distance rate
integration on the Company's services where an interstate toll charge is
separately stated and billed to CMRS customers. To the extent that the Company
offers services subject to the FCC's rate integration and averaging
requirements, these requirements generally reduce the Company's pricing
flexibility for its services. There can be no assurance that the FCC will
decline to impose rate integration or averaging requirements on the Company or
decline to require the Company to integrate its CMRS long distance rates across
its CMRS affiliates.
The FCC recently adopted new rules limiting the use of customer proprietary
network information ("CPNI") by telecommunications carriers, including the
Company, in marketing a broad range of telecommunications and other services to
their customers, and the customers of affiliated companies. The FCC has
received numerous petitions for reconsideration of its CPNI rules, the majority
of them from CMRS carriers. The FCC has stayed portions of its rules that
relate to how carriers identify CPNI that a customer has restricted,
particularly the portion of the rules that requires all carriers to develop an
electronic auditing and compliance system. This stay will extend for six months
after the date that the CPNI rules are reconsidered. The Company does not
anticipate that the rules will result in a significant adverse impact on its
financial position, results of operation or liquidity.
In addition, state commissions have become increasingly aggressive in their
efforts to conserve numbering resources. These efforts may disproportionately
impact wireless service providers by imposing additional costs or limiting
access to numbering resources. Examples of state conservation methods include
number pooling, number rationing and transparent overlays. Number pooling is
especially problematic for wireless providers because it is dependent on number
portability technology. In addition, transparent overlays have been rejected by
the FCC, although that decision is currently being reconsidered by the FCC.
Recently, the FCC released a public notice soliciting comment on proposed number
optimization methods discussed in a report prepared by the Resource Optimization
Working Group of the North American North American Numbering Council. Adoption
of some of the methods discussed in the report could have a disproportionate
impact on CMRS operators.
The FCC is also considering adopting rules to govern customer billing by
telecommunications services providers such as the Company. The FCC proposed
that more billing detail be provided to consumers, which could add to the
expense of the billing process as systems are modified to conform to any new
requirements. Additionally, the FCC is also considering whether carriers, such
as the Company, that decide to pass through their mandatory universal service
contributions to their customers, should be required to provide a full
explanation of the program and ensure that the carriers that pass through their
contribution do not over recover their mandatory contributions from their
customers. Adoption of some of the FCC's proposals could increase the
complexity of the Company's billing processes and restrict the Company's ability
to bill customers for services in the most commercially advantageous way.
In April, 1998, the FCC initiated an administrative rulemaking proceeding
to determine the obligations of telecommunications carriers to make their
services accessible to individuals with disabilities. The FCC has proposed
regulations implementing statutory requirements governing accessibility of
telecommunications services like those offered by the Company to persons with
disabilities, and could adopt proposals requiring modifications to existing
customer equipment as well as requirements governing new equipment and carrier
networks.
STATE REGULATION AND LOCAL APPROVALS
The states in which the Company presently operates currently do not
regulate wireless service. In the 1993 Budget Act, Congress gave the FCC the
authority to preempt states from regulating rates or entry into CMRS, including
PCS and cellular. The FCC, to date, has denied all state petitions to regulate
the rates charged by CMRS providers. States may, however, regulate the "other
terms and conditions" of CMRS service. The siting of cells also remains subject
to state and local jurisdiction, although petitions seeking clarification of
states' siting authority are currently pending at the FCC.
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.
EMPLOYEES
As of February 28, 1998, the Company had approximately 493 employees. The
Company anticipates that the continued development of its Licensed Area will
require the hiring of a substantial number of new employees. The Company's
management considers its employee relations to be good.
ITEM 2. PROPERTIES
The Company maintains its corporate headquarters in Malvern, PA. The Company
leases this space. The Company maintains two regional headquarters, in Richmond,
VA and Charleston, SC, also leasing theses spaces. In addition to its corporate
and regional headquarters, the Company leases sales and administrative offices,
and leases and owns locations for cell sites and switching equipment. The
Company reviews these leases from time to time and may, in the future, lease or
acquire new facilities as needed. The Company does not anticipate that it will
encounter any material difficulties in meeting needs for any leased space.
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ITEM 3. LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position, results of operations or liquidity of the Company
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
NONE
ITEM 5. MARKET FOR REGISTRANT'S STOCK
NONE
ITEM 6. SELECTED FINANCIAL DATA
The following tables present selected financial data derived from the combined
financial statements of Triton and its predecessor company for the year end
December 31, 1998 and the period from March 6, 1997 through December 31, 1997.
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.
<TABLE>
<CAPTION>
TRITON AND PREDECESSOR
MARCH 6, 1997
THROUGH YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- -----------------
($000's)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues $ - $ 16,578
Cost and Expenses
Cost of services and equipment 5,997
Operations - 13,045
Sales and marketing - 1,703
General and administrative 2,736 8,570
Depreciation and amortization 5 6,663
------- --------
Total cost and expenses 2,741 35,978
Loss from operations 2,741 19,400
Interest expense 1,228 30,391
Interest and other (income) (8) (10,635)
------- --------
Loss before income taxes 3,961 39,156
Income tax benefit 0 (7,536)
------- --------
Net loss $ 3,961 $ 31,620
======= ========
<CAPTION>
TRITON AND PREDECESSOR AS
OF
DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents $ 11,362 $ 146,172
Working capital (5,683) 146,192
Total assets 13,253 686,859
Long-term debt - 465,689
Shareholder's equity (deficit) (3,961) 175,979
</TABLE>
11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
When used in this Form 10-K and in future filings by the Company with the
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 speaks 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 L.L.C. for the periods
presented herein, and should be read in conjunction with the combined financial
statements.
On March 6, 1997, Triton 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 March 6, 1997 through October
1, 1997, Triton L.L.C.'s activities consisted principally of hiring a management
team, raising capital, and negotiating strategic business relationships,
primarily related to PCS business opportunities. Subsequent to October 2, 1997,
these activities continued but were conducted primarily through the Company.
Consequently, for purposes of the accompanying financial statements, L.L.C. has
been treated as a "predecessor" entity. As a result of certain financing
relationships and the similar nature of the business activities conducted by
each respective legal entity, Triton L.L.C. and the Company 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, 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, 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
contributed the PCS Licenses to Triton 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. 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 resort destinations such as Myrtle Beach, SC,
Hilton Head, SC and Kiawah Island, SC. The Company commenced commercial
operations in the first quarter of 1999.
On June 30, 1998, the Company acquired an existing cellular system which
serves Myrtle Beach, SC and the surrounding area, from Vanguard Cellular System
of South Carolina, Inc. for a purchase price of approximately $164.5 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 operates under the AT&T agreements. The Company believes that
the Myrtle Beach acquisition has (i) provided the Company with a system that
currently generates positive cash flow, (ii) accelerated the ability of the
Company to capture roaming traffic generated by Myrtle Beach's highly transitory
population, (iii) accelerated the Company's time-to-market in South Carolina and
(iv) rendered a PCS build-out in the Myrtle Beach region unnecessary.
12
<PAGE>
On December 31, 1998, the Company acquired from AT&T (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 used in the operation of the PCS system in such BTA for an aggregate
purchase price of approximately $111 million. The build-out of the network
relating to the Norfolk Acquisition, including the installation of a switch, has
been substantially completed and the Norfolk BTA commenced commercial operations
in the first quarter of 1999. With the Norfolk Acquisition, the Company's
contiguous footprint totals approximately 13 million Pops.
POTENTIAL EXCHANGE
On March 24, 1998, the Company entered in a non-binding letter of intent
related to certain transactions, including the potential acquisition of 1.9
million additional net incremental Pops, and the exchange of the Hagarstown, MD
and Cumberland, MD BTAs. The agreement has been modified to only include the
exchange of 512,000 Pops located in the hagerstown, MD and Cumberland, MD BTAs
for 517,000 Pops located in certain countries in Savannah, GA and Athens, GA
BTAs, all of which are contiguous to the Company's existing service area. Due to
the difference in value per Pop of the BTAs exchanged, consideration of
approximately $9.7 million, all of which is expected to be represented by non-
cash equity interests in Triton PCS Holdings Company, Inc. (Holdings) will be
issued to AT&T. The transaction is subject to execution of a definitive exchange
agreement and closing conditions typical in transactions of the nature. If the
agreement and closing condition typical in transactions of this nature. If the
transaction is consummated, Holdings intends to contribute to the Savannah, GA
and Athens, GA licenses to the Company. The Savannah and Athens Pops have not
been built, however, the Company expects that the Pops will be included in the
current build-out plan developed for the Company's existing footprint.
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 has commenced commercial operations
in the Initial Configuration during the first quarter of 1999. Upon completion
of the Initial Configuration, the Company intends to target the remaining
cities, connecting highway corridors and counties along the interstates with
population densities of 50 or more per square mile. The Company expects to
extend its coverage to approximately 80% of the Pops in the Licensed Area by the
end of the fourth quarter of 2002, 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
YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE PERIOD FROM MARCH 6, 1997 TO
DECEMBER 31, 1997
Revenues for year ended December 31, 1998 were $16.6 million related
primarily to services provided in the Myrtle Beach area. Service revenues were
$15.8 million for the year and equipment revenues were $0.8 million.
Total operating expenses were $36.0 million for the year ended December 31,
1998 as compared to $2.7 million for the period from March 6, 1997 to December
31, 1997. Cost of service revenues and equipment revenues were $4.3 million and
$1.7 million, respectively, and relate primarily to services provided in the
Myrtle Beach area. Cost of operations were $13.0 million and relate primarily
to the operation and maintenance of the Myrtle Beach network as well as the
initial operating costs in the Company's remaining Licensed Area.
Sales and marketing expenses were $1.7 million for the year ended December
31, 1998, and relate primarily to advertising, marketing and promotional
activities associated with the Myrtle Beach area.
General and administrative expenses increased $5.9 million to $8.6 million
for the year ended December 31, 1998 as compared to the period from March 6,
1997 to December 31, 1997. The increase was due primarily to administrative
costs associated with Myrtle Beach and the establishment of the Company's
corporate and regional operational infrastructure.
For the year ended December 31, 1998, depreciation and amortization expense
was $6.7 million. This amount relates primarily to the depreciation of the
tangible and intangible assets acquired in the Myrtle Beach transaction and
amortization attributable to certain agreements acquired in the AT&T
transaction.
For the year ended December 31, 1998, interest expense was $30.4 million,
net of capitalized interest of $3.5 million as compared to $1.2 million during
the period from March 6, 1997 to December 31, 1997. The Company had borrowings
of $463.6 million as of December 31, 1998, with a weighted average interest rate
of 10.33%.
13
<PAGE>
For the year ended December 31, 1998, interest and other income was $10.6
million. This amount relates primarily to interest income on the Company's cash
and cash equivalents. Available cash increased significantly during 1998 due
primarily to net proceeds of $291 million from the issuance of subordinated
debt, borrowings of $150 million under the Company's bank credit facility, and
$82.7 million of capital contributions.
For the year ended December 31, 1998, the Company recorded a tax benefit of
$ 7.5 million related to temporary deductible differences, primarily net
operating losses, arising during the current and prior year.
For the year ended December 31, 1998, the net loss was $31.6 million as
compared to $4.0 million during the period from March 6, 1997 to December 31,
1997. The net loss increased $27.6 million, resulting primarily from the items
discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Net Cash Used In Operating Activities
For the year ended December 31, 1998, net cash used in operating activities
increased $3.0 million to $4.1 million as compared to the period from March 6,
1997 to December 31, 1997. The increase is due primarily to an increase in the
Company's net loss, as adjusted to cash used in operating activities before
changes in working capital, of $9.8 million, offset by a positive change in
working capital of $5.7 million due to increases in accounts payable and accrued
expenses related to the operations in the Myrtle Beach area and the ongoing
establishment of the Company's corporate and regional operational
infrastructures.
Net Cash Used in Investing Activities
For the year ended December 31, 1998, net cash used in investing activities
increased $371.9 million to $372.3 million as compared to the period from March
6, 1997 to December 31, 1997. The increase is due primarily to capital
expenditures related to the initial network build-out and establishment of
administrative operations, payments of $164.5 million attributable to the Myrtle
Beach Acquisition completed on June 30, 1998, and payments of $96.6 million
related to the Norfolk Acquisition completed on December 31, 1998. The Company
also made investments in marketable securities of $23.6 million during the year.
Net Cash Provided By Financing Activities
For the year ended December 31, 1998, net cash provided by financing
activities increased $498.4 million to $511.3 million as compared to the period
from March 6, 1997 to December 31, 1997. The increase was due primarily to
proceeds from borrowings under our bank credit facility of $150 million;
proceeds from the issuance of subordinated debt of $291 million, net of an
initial purchasers discount of $9.0 million; and capital contributions of $82.7
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 and Norfolk acquisitions.
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 2002 (assuming substantial completion of the
Company's network build-out to cover 80% of the Pops in the Licensed Area by
such time) will total approximately $715.1 million. Actual amounts of the funds
required may vary materially from these estimates.
As part of the Company's network build-out, the Company expects to spend
$272.0 million in 1999 related to the completion of the build-out of its initial
coverage area and its continued build out of the Company's Licensed Area toward
coverage of 80% which is expected in 2002. The build-out of the initial coverage
area included the installation of two switches and the lease or acquisition of
approximately 500 cell sites, as well as spectrum clearing costs, retail store
fitout, and administrative systems. The continuation of the build out of the
Company Licensed Area in 1999 includes completion of an additional 513 cell
sites. 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.
14
<PAGE>
The Cash Equity Investors have severally made irrevocable commitments to
contribute $140 million in cash to the Company through January 2001 in exchange
for 1.4 million shares of Series C preferred stock. The Cash Equity Investors,
have contributed $80 million of these commitments and are obligated to
contribute the balance as follows: $35 million on February 4, 2000 and $25
million on February 4, 2001. In addition, the Company has received additional
equity contributions of $35.0 million and $16.5 million from Holdings related to
the Myrtle Beach and Norfolk acquisitions, respectively.
On February 3, 1998, the Company entered into a bank credit facility. This
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
August 3, 2004 and the term loans must be repaid beginning on February 3, 2002.
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 covenants. 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.
On May 7, 1998, the Company completed an offering of $512 million aggregate
principal amount at maturity of 11% senior subordinated discount notes due 2008,
pursuant to Rule 144A of the Securities Act of 1933, as amended. The proceeds of
the offering (after deducting an initial purchaser's discount of $9 million) was
$291 million. The Company has used or intends to use the net proceeds from the
offering, together with the capital contributions and borrowings under the
credit facility, to fund: (i) capital expenditures, including the build-out of
its PCS network; (ii) the acquisition of the Myrtle Beach system; (iii) the
Norfolk acquisition; (iv) working capital as required; (v) operating losses;
(vi) general corporate purposes; and (vii) potential acquisitions.
The Company believes that the proceeds from the notes, 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.
NEW ACCOUNTING PRONOUNCEMENTS
In April 1998, the Accounting Standards Executive Committee of the AICPA
issued Statement of Position 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 as of January 1, 1998. The initial
application of the statement did 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.
The Company adopted SFAS 131 and determined that there are no separate segments,
as defined by the standards.
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133") which establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments imbedded in other contracts and for hedging activities. SFAS 133 is
effective for fiscal years beginning after June 15, 1999. The application of
this statement is not expected to have a material effect on the Company's
financial statements.
INTEREST RATE RISK MANAGEMENT POLICIES
The Company's interest rate risk management program focuses on minimizing
exposure to interest rate movements, setting an optimal mixture of floating and
fixed rate debt, and minimizing liquidity risk. To the extent possible, the
Company manages interest rate exposure and the floating and fixed ratio through
its borrowings, but sometimes uses interest rate swaps to adjust its risk
profile. The Company selectively enters into interest rate swaps to manage
interest rate exposure only.
YEAR 2000 DISCLOSURE
The Year 2000 issue is the result of computer programs being written using
two digits rather than four digits to define the applicable year. Computer
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculations causing disruptions of operations, a temporary inability to
process transactions, send invoices, or engage in normal business activities.
15
<PAGE>
Currently, the Company is actively taking measures to eliminate or mitigate
the impact of any issues associated with the Year 2000. To that end, a project
team with senior management sponsorship has been established to provide
centralized coordination for the Company's Year 2000 related activities.
This team is currently conducting the inventory and assessment phase of the
program. Although the majority of the software, hardware and firmware deployed
as part of our start-up operation was procured to the latest revision levels and
believed to be year 2000 capable, our process requires a re-verification of the
Year 2000 readiness capabilities with the vendors, suppliers and third party
providers. All suppliers and third-party vendors deemed critical to the
function of the Company are being surveyed to ensure readiness and non-
disruption to the Company's operations. Through this assessment and surveying
process, we are identifying those remediation efforts necessary to ensure our
systems and applications will continue to operate without interruption prior to,
during and after the Year 2000. However, we can provide no assurance that the
information provided by the vendors, suppliers and third party providers, upon
whom we rely for our services, is accurate. As such, we can make no guarantee
that inaccurate information provided to us could not have a material effect upon
our Company.
To date, our assessments have shown that the Company's main switching and
transmission equipment, with the exception of the Myrtle Beach operational
systems, is capable of correctly recognizing and processing date sensitive
information. This capability was further demonstrated through inter-operability
testing conducted by the Cellular Telecommunications Industry Association. In
addition to the wireless operational infrastructure, initial assessments of
support system providers have revealed some products and applications that are
not currently in a conforming status. In all identified instances to date, the
supplier(s) of those products or applications have identified that their
product(s) will be compliant by the end of the second quarter of 1999. However,
there can be no guarantee that the systems of other companies which the Company
relies on will be converted on a timely basis, or that a failure to convert by
another company would not have a material adverse effect on the Company.
As part of the Myrtle Beach acquisition, the operational and financial
systems were to be migrated to the systems being deployed as part of the
Company's PCS start-up plan. The Myrtle Beach financial systems were
successfully migrated to those systems in the first quarter of 1999.
Additionally, the Company is developing plans to upgrade or replace the existing
operational systems with compliant versions. This remediation effort is expected
to be completed by the end of the third quarter of 1999. The failure to upgrade
the Myrtle Beach operational systems to a compliant version could have a
material adverse effect on the Company.
Initial assessments of our Information Technology have shown that our network
hardware, software and firmware was procured and deployed at a compliant version
level. Some previously deployed Information Technology hardware in the Myrtle
Beach markets is non-compliant. However, these non-compliant applications are
planned for upgrade, and given the nature of the Company's operations, potential
failures of these applications are not expected to have a material adverse
effect on the Company.
The Company has not yet fully developed a comprehensive contingency plan to
address situations that may result if the Company is unable to achieve Year 2000
readiness of its critical operations. There can be no assurance that the
Company will be able to develop a contingency plan that will adequately address
issues that may arise in the year 2000. The failure of the Company to
successfully resolve such issues could result in a disruption of the Company's
service and operations, which would have a material adverse effect on the
Company.
The costs associated with the Year 2000 issues are estimated to be
approximately $200,000, of which $48,000 has been spent to date. These costs are
not material to the Company's business operations or financial position. The
costs of the plan and the date on which the Company believes it will complete
the Year 2000 modification are based on management's best estimates, which were
derived utilizing numerous assumptions regarding future events, including the
continued availability of certain resources, third-party modification plans and
other factors. There can be no assurance that these estimates will be achieved
and actual results could differ materially from those anticipated.
INFLATION
The Company does not believe that inflation has had a material impact on
operations.
ITEM 7A Quantitative and Qualitative Disclosure about Market Risk
The Company's debt structure is leveraged and, as a result, its cash flows
and earnings are exposed to fluctuations in interest rates. The Company's debt
obligations are U.S. dollar denominated. The Company's market risk therefore is
the potential loss arising from adverse changes in interest rates. The debt can
be categorized as follows:
Fixed interest rates:
Senior subordinated debt $313,648
Subject to interest rate fluctuations:
Bank credit facility $150,000
The Company's interest rate risk management program focuses on minimizing
exposure to interest rate movements, setting an optional mixture of floating and
fixed rate debt, and minimizing liquidity risk. (see Note 12 to Notes to the
Combined Financial Statements).
16
<PAGE>
TRITON PCS INC. AND PREDECESSOR COMPANY
Item 8.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Combined Financial Statements
Report of KPMG LLP F-2
Combined Balance Sheets as of December 31, 1997 and 1998 F-3
Combined Statements of Operations for the period March 6, 1997 (inception) to December 31, 1997
and the year ended December 31, 1998 F-4
Combined Statements of Shareholder's Equity (Deficit) and Member's Capital for the period
March 6, 1997 (inception) to December 31, 1997 and the year ended December 31, 1998 F-5
Combined Statements of Cash Flows for the period March 6, 1997 (inception) to December 31, 1997
and the year ended December 31, 1998 F-6
Notes to Combined Financial Statements F-7
Schedule II Valuation and Qualifying Accounts
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Triton PCS, Inc.:
We have audited the accompanying combined balance sheets of Triton PCS, Inc. and
predecessor company as defined in note 2, as of December 31, 1998 and 1997, and
the related combined statements of operations, shareholder's equity (deficit)
and member's capital, and cash flows for the year ended December 31, 1998 and
the period from March 6, 1997 (inception) to December 31, 1997. In connection
with our audits of the combined financial statements, we have also audited the
combined financial statement schedule as listed in the accompanying index.
These combined financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these combined financial statements and financial statement schedule
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the 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, 1998 and 1997, and the results of their
operations and their cash flows for the year ended December 31, 1998 and the
period from March 6, 1997 (inception) to December 31, 1997, in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic combined
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
Philadelphia, Pennsylvania
March 8, 1999
F-2
<PAGE>
TRITON PCS INC. AND PREDECESSOR COMPANY
COMBINED BALANCE SHEETS
($000'S)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1998
------------- -------------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 11,362 $ 146,172
Marketable securities - 23,612
Due from related party 148 951
Accounts receivable, net of allowance for
doubtful accounts of $1,071 in 1998 - 3,102
Inventory - 1,433
Prepaid expenses and other current assets 21 4,288
Deferred income taxes - 81
-------- ---------
Total current assets 11,531 179,639
Property, plant, and equipment, net: 473 198,953
Intangible assets, net 1,249 308,267
-------- ---------
Total assets $ 13,253 $ 686,859
======== =========
LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
AND MEMBERS CAPITAL:
Current liabilities:
Accounts payable $ 1,581 $ 25,256
Accrued payroll and related expenses 970 3,719
Accrued expenses 46 3,646
Accrued interest 1,228 545
Capital lease obligations - 281
Due to related party 45 -
Notes payable 13,344 -
-------- ---------
Total current liabilities 17,214 33,447
Long-term debt - 463,648
Capital lease obligations - 2,041
Deferred income taxes - 11,744
Commitments and contingencies - -
Shareholder's equity (deficit) and members capital:
Common stock, $.01 par value, 1,000 shares
authorized, 100 shares issued and outstanding - -
Additional paid-in capital - 211,560
Accumulated deficit (3,961) (35,581)
-------- ---------
Total shareholder's equity (deficit) and members capital (3,961) 175,979
-------- ---------
Total liabilities and shareholder's equity (deficit) $ 13,253 $ 686,859
and members capital. ======== =========
</TABLE>
See accompanying notes to combined financial statements.
F-3
<PAGE>
TRITON PCS INC. AND PREDECESSOR COMPANY
COMBINED STATEMENTS OF OPERATIONS
($000'S)
<TABLE>
<CAPTION>
PERIOD FROM MARCH 6, 1997 (INCEPTION) FOR THE YEAR ENDED
to December 31, December 31,
1997 1998
------------------------------------- ------------------
<S> <C> <C>
Revenues:
Service revenues $ - $ 15,823
Equipment revenues - 755
------------ ---------
Total revenues - 16,578
Expenses:
Cost of service revenues - 4,298
Cost of equipment revenues - 1,699
Operations - 13,045
Sales and marketing - 1,703
General and administrative 2,736 8,570
Depreciation and amortization 5 6,663
------------ ---------
Total operating expenses 2,741 35,978
Loss from operations 2,741 19,400
Interest expense 1,228 30,391
Interest and other (income) (8) (10,635)
------------ ---------
Loss before income taxes 3,961 39,156
Income taxes (benefit) - (7,536)
------------ ---------
Net loss $ 3,961 $ 31,620
============ =========
</TABLE>
See accompanying notes to combined financial statements.
F-4
<PAGE>
TRITON PCS INC. AND PREDECESSOR COMPANY
COMBINED STATEMENTS OF SHAREHOLDER'S EQUITY (DEFICIT) AND MEMBERS CAPITAL
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1997 AND THE YEAR
ENDED DECEMBER 31, 1998
($000'S)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------------ ------ ---------- ----------- -----
<S> <C> <C> <C> <C> <C>
Issuance of common stock 100 $ - $ - $ - $ -
Net loss - - - (3,961) (3,961)
---- ------ --------- --------- --------
Balance at December 31, 1997 100 - - (3,961) (3,961)
Capital contributions from Parent - - 211,560 - 211,560
Net loss - - - (31,620) (31,620)
---- ------ --------- --------- --------
Balance at December 31, 1998 100 $ - $ 211,560 $ (35,581) $175,979
==== ====== ========= ========= ========
</TABLE>
See accompanying notes to combined financial statements.
F-5
<PAGE>
Triton PCS, Inc. and Predecessor Company
COMBINED STATEMENTS OF CASH FLOWS
($000'S)
<TABLE>
<CAPTION>
PERIOD FROM FOR THE YEAR
MARCH 6, 1997 (INCEPTION) ENDED
TO DECEMBER 31, 1997 DECEMBER 31, 1998
------------------------- ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,961) $ (31,620)
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation and amortization 5 6,663
Deferred income taxes - (7,536)
Accretion of interest on subordinated debt - 22,648
Change in operating assets and liabilities,
net of effects of acquisitions:
Accounts receivable - 37
Inventory - (1,046)
Prepaid expenses and other current assets (21) (468)
Accounts payable 656 2,647
Accrued payroll and related expenses 970 2,749
Accrued expenses 46 3,456
Accrued interest 1,228 (1,660)
--------- ---------
Net cash used in operating activities (1,077) (4,130)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (478) (87,715)
Myrtle Beach acquisition, net of cash acquired - (164,488)
Norfolk acquisition - (96,557)
Purchase of marketable securities - (23,612)
--------- ---------
Net cash used in investing activities (478) (372,372)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facility - 150,000
Borrowings on notes payable 13,344 -
Proceeds from issuance of subordinated debt, net of discount - 291,000
Issuance of common stock - -
Capital contributions from Parent - 82,696
Payment of deferred transaction costs (324) (11,329)
Advances to related party, net (103) (848)
Principal payments under capital lease obligations - (207)
--------- ---------
Net cash provided by financing activities 12,917 511,312
--------- ---------
NET INCREASE IN CASH 11,362 134,810
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 11,362
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 11,362 $ 146,172
========= =========
</TABLE>
See accompanying notes to combined financial statements.
F-6
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
(1) DESCRIPTION OF BUSINESS
Triton PCS, Inc. (formerly Triton PCS License Company, Inc. with its
subsidiaries 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. referred to as "Holdings" or "Parent"). The Company is the
exclusive provider of wireless mobility services in the AT&T Corporation
(together with affiliates "AT&T") mid-Atlantic and southeast regions. The
Company intends to become the leading provider of broadband PCS in
Virginia, South Carolina, North Carolina, northern Georgia, and surrounding
areas. The Company is authorized to provide PCS Service in major
population and business centers such as Charleston, SC, Columbia, SC,
Greenville / Spartansburg, SC, Richmond, VA and Augusta, GA, as well as
major resort destinations such as Myrtle Beach, SC, Hilton Head, SC, and
Kiawah Island, SC. On June 30, 1998, the Company acquired an existing
cellular system in Myrtle Beach, and on December 31, 1998, the Company
extended its PCS Service into the Norfolk, Virginia BTA through the
acquisition of licenses and assets from AT&T (see note 4).
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
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 personal communications services ("PCS")
and cellular activities. During the period March 6, 1997 through October
1, 1997, L.L.C.'s activities consisted principally of hiring a management
team, raising capital, and negotiating strategic business relationships,
primarily related to PCS business opportunities. Subsequent to October 2,
1997, these activities continued but were conducted primarily through the
Company. Consequently, for purposes of the accompanying financial
statements, L.L.C. has been treated as a "predecessor" entity. As a result
of certain financing relationships and the similar nature of the business
activities conducted by each respective legal entity, L.L.C. and the
Company are considered companies under common control.
The combined financial statements incorporate the PCS-related business
activities of L.L.C. and the activities of the Company. The consolidated
accounts of the Company include 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 financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities, at the date of the
financial statements and the reported amount of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand, demand deposits and short
term investments with maturities of three months or less.
F-7
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
MARKETABLE SECURITIES
Marketable securities at December 31, 1998, consist of debt securities with
maturities between three and ten months. The Company has adopted the
provisions of Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities"
("Statement No. 115") in fiscal 1998. Under Statement No. 115, the Company
classifies all of its debt securities as available for sale and records
them at fair value with unrealized holding gains and losses to be included
as a separate component of other comprehensive income until realized.
Realized gains and losses from the sale of available for sale securities
are determined on the specific identification basis.
INVENTORIES
Inventories, consisting primarily of wireless handsets and accessories held
for resale, are valued at lower of cost or market. Cost is determined by
the first-in, first-out method.
PROPERTY AND EQUIPMENT
Property and equipment is stated at original cost and includes primarily
computer equipment, software, and office equipment. Depreciation is
calculated based on the straight-line method over the estimated useful
lives of the respective assets. In connection with the construction of the
PCS network, the Company capitalizes expenditures related to the design,
construction, and microwave relocation. In addition, the Company
capitalizes interest on expenditures related to the buildout of the
network. Expenditures for repairs and maintenance are charged to expense
as incurred.
CONSTRUCTION IN PROGRESS
Construction in progress includes expenditures for the design, construction
and testing of the Company's PCS network and also includes costs associated
with developing information systems. The Company capitalizes interest on
certain of its construction in progress activities. Interest capitalized
for the year ended December 31, 1998 totaled $3.5 million. When the assets
are placed in service, the Company transfers the assets to the appropriate
property and equipment category and depreciates these assets over their
respective estimated useful lives.
INVESTMENT IN PCS LICENSES
Investments in PCS Licenses are recorded at their estimated fair value at
the time of acquisition (See Notes 3 and 4). Licenses are amortized on a
straight line basis over 40 years.
DEFERRED TRANSACTION COSTS
Costs incurred in connection with the negotiation and documentation of the
AT&T transaction, are deferred and included in the aggregate purchase price
allocated to the net assets acquired upon completion of the transaction.
Costs incurred in connection with the negotiation and documentation of the
bank financing and the Company's issuance of senior subordinated discount
notes are deferred and amortized over the terms of the bank financing and
notes using the effective interest rate method.
F-8
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
LONG-LIVED ASSETS
In accordance with SFAS No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of," the Company
periodically evaluates the carrying value of long-term assets when events
and circumstances warrant such review. The carrying value of a long lived
asset is considered impaired when the anticipated undiscounted cash flow
from such asset is separately identifiable and is less than the carrying
value. In that event a loss is recognized based on the amount by which the
carrying value exceeds the fair market value of the long lived asset. Fair
market value is determined by using the anticipated cash flows discounted
at a rate commensurate with the risk involved. Measurement of the
impairment, if any, will be based upon the difference between carrying
value and the fair value of the asset. The Company has identified no such
impairment losses.
REVENUE RECOGNITION
Revenues from operations primarily consist of charges to customers for
monthly access, airtime, roaming charges, long-distance charges, and
equipment sales. Revenues are recognized as services are rendered net of
sales allowance. Unbilled revenues result from service provided from the
billing cycle date to the end of the month and from other carrier's
customers using the Company's systems for the last half of each month.
Equipment sales are recognized upon delivery to the customer and reflect
charges to customers for wireless handset equipment purchases.
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes". Under the asset and liability method of SFAS No. 109, deferred
income tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred income tax assets and liabilities are measured using
statutory tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
FINANCIAL INSTRUMENTS
The Company utilized derivative financial instruments to reduce its
exposure resulting from fluctuations in interest rates. Amounts to be paid
or received under interest rate swap agreements are accrued as interest
rates change and are recognized over the life of the swap agreements as an
adjustment to interest expense.
F-9
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
ADVERTISING COSTS
The Company expenses advertising costs when the advertisement occurs.
Total advertising expense amounted to $643,000 in 1998.
COMPREHENSIVE INCOME (LOSS)
The Company adopted Statement of Financial Accounting Standard No. 130,
"Reporting Comprehensive Income" (SFAS 130), 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 financial
statements. Comprehensive income is the change in equity of a business
enterprise during a period from certain transactions and the events and
circumstances from non-owner sources. For the periods presented in the
accompanying combined statements of operations, comprehensive loss equals
the amounts of net loss reported on the accompanying combined statements
of operations.
NEW ACCOUNTING PRONOUNCEMENTS
In April 1998, the Accounting Standards Executive Committee (AcSEC) of the
AICPA issued Statement of Position (SOP) 98-5, Reporting on the Costs of
Start-up Activities ("SOP 98-5"). This statement requires that the costs
of start-up activities, including organization costs, be expensed as
incurred and is effective for fiscal years beginning after December 31,
1998. The Company has elected early adoption of this statement as of
January 1, 1998. The initial application of the statement did not have a
material effect on the Company's combined 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. The Company adopted SFAS 131 and determined that there are no
separate reportable segments, as defined by the standards.
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133") which establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments imbedded in other contracts and for hedging
activities. SFAS 133 is effective for fiscal years beginning after June
15, 1999. The initial application of this statement is not expected to
have a material effect on the Company's financial statements.
(3) AT&T TRANSACTION
On October 8, 1997, Holdings entered into a Securities Purchase Agreement
with AT&T Wireless PCS, Inc, a subsidiary of AT&T Corp.,and the other
stockholders of Holdings, whereby the Company became the exclusive provider
of wireless mobility services in the AT&T Southeast regions.
On February 4, 1998, Holdings executed the Closing Agreement with AT&T 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 and the other stockholders of Holdings
consented that one or more of Holdings' subsidiaries shall enter into
certain agreements or conduct certain operations on the condition that such
subsidiaries shall at all times be direct or indirect wholly-owned
subsidiaries of Holdings and Holdings shall cause such subsidiaries to
perform the obligations and conduct such operations required to be
performed or conducted under those agreements.
F-10
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
Under the Closing Agreement, Holdings issued equity to AT&T in exchange for
20 MHz A and B Block PCS licenses, which were contributed to the Company
and certain other agreements covering certain areas in the southeastern
United States. The fair value of the FCC licenses, as determined by an
independent appraisal, was $92.8 million with an estimated useful life of
40 years.
In connection with the closing of the AT&T transaction, the Company
executed or was a party to certain agreements, including the following:
STOCKHOLDERS' AGREEMENT
Resale Agreement
Pursuant to the Stockholders' Agreement, the Company is required to enter
into a Resale Agreement at the request of AT&T. Under this agreement, AT&T
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.
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 may terminate the Resale Agreement at any time for any
reason on 180 days written notice.
The Company has agreed that the rates, terms, and conditions of service,
taken as a whole, provided by the Company to AT&T pursuant to the Resale
Agreement, shall be at least as favorable as (or if permitted by applicable
law, superior to) the rates, terms, and conditions of service, taken as a
whole, provided by the Company to any other customer. Without limiting the
foregoing, the rate plans offered by the Company pursuant to the Resale
Agreement shall be designed to result in a discounted average actual rate
per minute paid by AT&T 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 or shortly thereafter.
Exclusivity
Under the Stockholders' Agreement, none of the Stockholders will provide or
resell, or act as the agent for any person offering, within the Territory
mobile wireless telecommunications services initiated or terminated using
Time Division Multiple Access and frequencies licensed by the FCC ("Company
Communications Services"), except AT&T and its affiliates may (i) resell or
act as agent for the Company in connection with the provision of Company
Communications Services, (ii) provide or resell wireless telecommunications
services to or from certain specific locations, and (iii) resell Company
Communications Services for another person in any area where the Company
has not placed a system into commercial service, provided that AT&T PCS has
provided the Company with prior written notice of
F-11
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
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 in the Roaming Agreement, each of the Company and AT&T
agreed 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 programming.
Build-out
The Company is required to conform to certain requirements regarding the
construction of the Company's PCS system. In the event that the Company
breaches these requirements, AT&T 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 telecommunications, 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, 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
expire 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 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
Commercial Mobile Radio Services ("CMRS") provided in accordance 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 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 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.
F-12
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
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 9)
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, AT&T may also terminate the License Agreement upon
the occurrence of certain transactions described in the Stockholders'
Agreement.
The License Agreement, along with the Exclusivity and Resale Agreements,
have a fair value of $20.3 million, as determined by an independent
appraisal, with an estimated useful life of 10 years. Amortization
commenced upon the effective date of the agreement.
ROAMING AGREEMENT
Pursuant to the Intercarrier Roamer Service Agreement, dated as of February
4, 1998 (as amended the "Roaming Agreement"), between AT&T Wireless
Services, Inc. and 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 radio/telephone 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). Except with respect to the Norfolk BTA, each Service Carrier's
service charges per minute or partial minute 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, 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 Service 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 license or permit to provide CMRS.
Neither party may assign or transfer the Roaming Agreement or any of its
rights thereunder except to an assignee of all or part of its license or
permit to provide CMRS, provided that such assignee expressly assumes all
or the applicable part of the obligations of such party under the Roaming
Agreement.
The fair value of the Roaming Agreement, as determined by an independent
appraisal, was $5.5 million, with an estimated useful life of 20 years.
Amortization commenced upon the effective date of the agreement.
F-13
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
(4) ACQUISITIONS
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 $164.5
million from Vanguard Cellular Systems. The Company has integrated the
Myrtle Beach System into its planned PCS Network. As a result of the
acquisition, the Company is no longer considered a development stage
enterprise under SFAS No. 7. 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 estimate of their fair value.
The purchase price was allocated to the net assets acquired with
approximately $116 million allocated to Licenses with a useful life of 40
years and approximately $20 million allocated to Subscriber List with a
useful of 5 years.
Results of operations after the acquisition date are included in the
Statement of Operations from July 1, 1998. The following unaudited pro
forma information has been prepared assuming that this acquisition had
taken place on January 1, 1997. The pro forma information includes
adjustments to interest expense that would have been incurred to finance
the purchase, additional depreciation based on the fair market value of the
property, plant and equipment acquired, and the amortization of intangibles
arising from the transaction.
<TABLE>
<CAPTION>
1997 1998
---------- ----------
unaudited
<S> <C> <C>
Net revenues $23,608 $31,116
Net loss $47,336 $38,945
</TABLE>
Norfolk Acquisition
On December 31, 1998, the Company acquired from AT&T (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 used in the operation of the
PCS system in such BTA for an aggregate purchase price of approximately
$111 million, including $14.6 million of Series D Preferred Stock of
Holdings, which was subsequently contributed to the Company. The excess of
the aggregate purchase price over the fair market value of tangible net
assets acquired of approximately $46.3 million is attributed to licenses
and is being amortized over 40 years. The build-out of the network relating
to the Norfolk Acquisition, including the installation of a switch, has
been substantially completed. The Company has commenced PCS service in the
Norfolk BTA in the first quarter 1999. The purchase price allocation is
preliminary at December 31, 1998 and is expected to be finalized in the
first quarter of 1999.
F-14
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
(5) PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
December 31, Depreciable
1997 1998 Lives
--------------------------- -----------
($ 000's)
<S> <C> <C> <C>
Land $ - $ 313
Network infrastructure and equipment - 34,147 10-12 years
Office furniture and equipment 121 17,642 3-5 years
Capital lease assets - 2,263
Construction in progress 357 145,667
----- --------
478 200,032
Accumulated depreciation and amortization (5) (1,079)
----- --------
Property, plant, and equipment, net $ 473 $198,953
===== ========
</TABLE>
The depreciable life of capital lease assets is based upon the life of the
underlying asset or the life of the lease, whichever is shorter.
(6) INTANGIBLE ASSETS
<TABLE>
<CAPTION>
December 31, Amortizable
1997 1998 Lives
--------------------------- -----------
($ 000's)
<S> <C> <C> <C>
AT&T License $ - $95,248 40 years
AT&T Agreements - 26,026 10 - 20 years
Myrtle Beach License - 116,252 40 years
Norfolk License - 46,299 40 years
Subscriber Lists - 20,000 5 years
Bank Financing 1,249 10,994 8.5 - 10 years
------- -------
1,249 314,819
Accumulated amortization - (6,552)
------- -------
Other assets, net 1,249 308,267
======= =======
</TABLE>
Amortization charged to operations for the year ended December 31, 1998
totaled $5,589.
(7) SHORT-TERM DEBT
Convertible Notes
At various dates in 1997, certain private equity investors provided $1.6
million 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 arrangement under which no interest
F-15
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
would be paid on the notes, which became convertible 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 $11.8 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 contribution. Concurrently, Holdings contributed these funds
to the Company, which has recorded the transaction as additional paid in
capital on the date of the contribution.
(8) LONG TERM DEBT
<TABLE>
<CAPTION>
December 31,
1997 1998
-------- --------
<S> <C> <C>
Bank credit facility $ - $150,000
Senior subordinated debt - 313,648
-------- --------
- 463,648
Current portion of long-term debt - -
-------- --------
Long-term debt $ - $463,648
======== ========
</TABLE>
The weighted average interest rate for total debt outstanding during
December 31, 1998 was 10.33%. The average rate at December 31, 1998 was
10.16%.
(9) BANK CREDIT FACILITY
On February 3, 1998, (the "Credit Facility Effective Date"), the Company
entered into a Credit Agreement (as amended from time to time, 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 $175.0 million senior secured term
loan (the "Tranche A Term Loan") which may be drawn in installments at any
time through the third anniversary of the Credit Facility Effective Date
and matures on the date that is eight and one-half years from the credit
Facility Effective Date, (ii) a $150.0 million senior secured term loan
(the "Tranche B Term Loan" and, together with the Tranche A Term Loan, the
"Term Loans") which matures on the date that is nine and one-quarter years
from the "Credit Facility Effective Date," and (iii) a $100.0 million
senior secured revolving credit facility (the "Revolving Credit Facility"
and, together with the commitments to make the Term Loans, the
"Facilities") which matures on the date that is eight and one-half years
from the Credit Facility Effective Date.
The commitment to make loans under the Revolving Credit Facility
("Revolving Credit Loans" and, together with the Term Loans, the "Loans")
automatically and permanently reduces, beginning on the date that is six
years and six months 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 installments,
$26,250,000). The Tranche B Term Loans are required to be repaid beginning
on the date that is four years
F-16
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
after the Credit Facility Effective Date, in twenty-one consecutive
quarterly installments (the amount of the first sixteen installments,
$375,000, the next four installments $7.5 million, and the last
installment, $114.0 million).
Interest on all loans accrue, at the Company's option, either at (i) (a) a
LIBOR rate, a defined in the Credit Facility plus (b) the Applicable Rate
(as defined below) (Loans bearing interest described in (i), "Eurodollar
Loans") or (ii) (a) the higher of (1) the Administrative Agent's prime rate
and (2) the Federal Funds Effective Rate (as defined in the Credit
Facility) plus 0.5%, plus (b) the Applicable Rate (Loans bearing interest
described in (ii), "ABR Loans"). Interest on any overdue amounts will be at
a rate per annum equal to 2% plus the rate otherwise applicable to such
amounts. The Applicable Rate means, with respect to Tranche B Term Loans,
1.75% per annum, in the case of an ABR Loan, and 3.00% per annum, in the
case of a Eurodollar Loan, and, with 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 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 fix or limit the interest cost with
respect to at least 60% (as amended in July 1998) of the total amount of
the outstanding indebtedness of the Company. The Company incurred
commitment fees of $2.0 million in 1998. At December 31, 1998,
approximately 84% of the Company's outstanding debt was fixed.
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 issuances of debt obligations and (iv) 50% of the
net cash proceeds of issuances of equity securities (other than in
connection with the Equity Commitments); 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) 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
irrevocably guaranteed (the "Bank Facility Guarantees") by Holdings and
each existing and subsequently acquired or organized domestic subsidiary of
the Company. 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 the Company and
each existing and subsequently 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,
although the equity interests of such subsidiaries will be pledged
thereunder. 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 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 of the purchaser, owner of lessee of
equipment and taxes and other liabilities incurred in the ordinary course
in order to maintain its existence.
F-17
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
The Credit Facility contains covenants customary for facilities and
transactions 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, 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. All indebtedness under the Credit Facility will
constitute Senior Debt under the Company's 11% Senior Subordinated Discount
Notes.
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 April 1998, the Company
negotiated an amendment to the Credit Facility, which included provisions
that (i) permit certain acquisitions (note 4); (ii) permit up to a total of
$450 million in high yield debt; and (iii) exclude the equity issuances
associated with certain acquisitions from the mandatory prepayment
requirement.
(10) SUBORDINATED DEBT
On May 7, 1998, the Company completed an offering (the "Offering") of $512
million 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 Offering (after deducting an Initial Purchaser's Discount of $9
million) were approximately $291 million. The Company has used and intends
to use the net proceeds from the Offering, together with the Capital
Contributions (note 15) and borrowings under the Credit Facility, to fund:
(i) capital expenditures, including the build-out of its PCS network; (ii)
the Myrtle Beach acquisition and the Norfolk acquisition (note 4); (iii)
working capital as required; (iv) operating losses; (v) general corporate
purposes, and (vi) potential acquisitions.
Cash interest will not accrue prior to May 1, 2003. Commencing on November
1, 2003, cash interest will be payable semiannually. Each Note was offered
at an original issue discount (Initial Purchaser's Discount). Although
cash interest will not be paid prior to May 1, 2003, the original issue
discount will accrue from the issue date to May 1, 2003.
The Notes are not redeemable prior to May 1, 2003, except as set forth
below. The Notes will be redeemable at the option of the Company, in whole
or in part, at any time on or after May 1, 2003 and prior to maturity at
the following redemption prices (expressed as percentages of principal
amount), plus accrued interest, if any, up to but excluding the redemption
date, if redeemed during the 12-month period beginning on May 1 of the
years indicated:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003 105.50%
2004 103.67
2005 101.84
2006 and thereafter 100.00
</TABLE>
In addition, on or prior to May 1, 2001, the Company may redeem up to 35%
of the principal amount at maturity of Notes issued under the Indenture at
a redemption 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 qualified stock of the Company
F-18
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
or Holdings, 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.
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.
The debt principal begins to mature in 2003 and is fully repaid in 2008.
(11) INCOME TAXES
Income tax expense (benefit) consists of the following:
<TABLE>
<CAPTION>
Year ended December 31, 1998: Current Deferred Total
------- --------- ---------
<S> <C> <C> <C>
Federal $ - $(7,054) $(7,054)
State $ - $ (482) $ (482)
------- ------- -------
$ - $(7,536) $(7,536)
------- ------- -------
</TABLE>
The income tax expense (benefit) differs from those computed using the
statutory U.S. Federal income tax rate as set forth below.
<TABLE>
<CAPTION>
1997 1998
------------------
<S> <C> <C>
U.S. Federal statutory rate 35.00% 35.00%
State income taxes, net of federal benefit - 0.80%
Change in valuation allowance (35.00%) (16.56%)
Other, net - 0.01%
------------------
Effective Tax Rate 0.00% 19.25%
==================
</TABLE>
The tax effects of significant temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax liabilities
are as follows.
<TABLE>
<CAPTION>
1997 1998
Deferred tax assets ------------------
<S> <C> <C>
Non-deductible accrued liabilities $ 491 $ 1,049
Capitalized start up costs 1,093 2,736
Net operating loss carryforward - 16,022
------------------
1,584 19,807
Valuation allowance (1,584) (8,506)
------------------
Net deferred tax assets - 11,301
------------------
Deferred tax liabilities
Intangible assets - 21,438
Capitalized interest - 1,150
Others - 376
------------------
Deferred tax liabilities - 22,964
------------------
Net deferred tax liabilities $ - $11,663
------------------
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those
F-19
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
temporary differences become deductible. Because the Company does not have
an operating history, management has only considered the scheduled reversal
of deferred tax liabilities and tax planning strategies in making this
assessment. Based upon the assessment, management believes it is more
likely than not the Company will realize the benefits of the deferred tax
assets, net of the existing valuation allowance at December 31, 1998. The
Company recorded a Deferred tax liability of $17,771 in connection with the
contribution of licenses pursuant to the AT&T Transaction (note 3).
(12) FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates, assumptions, and methods used to estimate the fair
value of the Company's financial instruments are made in accordance with
the requirements of Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments." The Company has
used available market information to derive its estimates. However,
because these estimates are made as of a specific point in time, they are
not necessarily indicative of amounts the Company could realize currently.
The use of different assumptions or estimating methods may have a material
effect on the estimated fair value amounts.
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------
1997 1998
----------------------------------------------------------
($000's)
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
------------ -------------- ------------ -------------
<S> <C> <C> <C> <C>
Cash and cash equivalents... $11,362 $11,362 $146,172 $146,172
Marketable securities....... - - 23,612 23,612
Accounts and notes
receivable................. - - 3,102 3,102
Accounts payable............ 1,581 1,581 25,256 25,256
Accrued expenses............ 1,016 1,016 7,365 7,365
Capital leases.............. - - 2,322 2,322
Interest rate risk
management agreements...... - - - 623
Long-term debt
Subodinated debt........... - - 313,648 239,355
Bank term loan............. - - 150,000 150,000
</TABLE>
CASH AND CASH EQUIVALENTS, ACCOUNTS RECEIVABLE, ACCOUNTS PAYABLE AND
ACCRUED EXPENSES - The carrying amounts of these items are a reasonable
estimate of their fair value due to the short-term nature of the
instruments.
MARKETABLE SECURITIES - The fair value of these securities are estimated
based on quoted market prices. At December 31, 1998, marketable securities
consist of the following:
<TABLE>
<CAPTION>
Unrealized
Cost Fair Value Gain (Loss)
-------- ------------ -------------
($000's) ($000's) ($000's)
<S> <C> <C> <C>
Available for sale securities:
Debt securities due in one year or less...... $23,612 $23,612 $ -
</TABLE>
LONG-TERM DEBT - Long-term debt is comprised of subordinated debt, bank
term loan, and capital leases. The fair value of subordinated debt is
stated at quoted market value. The carrying amount of the bank term loan
is a reasonable estimate of its fair value. Capital leases are recorded at
their net present value, which approximates fair value.
F-20
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
INTEREST RATE RISK MANAGEMENT AGREEMENTS - The Company enters into interest
rate protection agreements to lock in interest rates on the variable
portion of its debt. The Company does not use these agreements for trading
or other speculative purposes, nor is it a party to any leveraged
derivative instrument. Although these agreements are subject to
fluctuations in value, they are generally offset by fluctuations in the
value of the underlying instrument or anticipated transaction.
In an interest rate swap, the Company agrees to exchange, at specified
intervals, the difference between a variable interest rate (based on 3
month Libor) and either a fixed or another variable interest rate
calculated by reference to an agreed-upon notional principal amount. The
resulting rate differential is reflected as an adjustment to interest
expense over the life of the swap. The Company did not exercise this swap
during 1998; at December 31, 1998, the Company would receive $23,000 to
settle these agreements.
The following table summarizes the Company's off-balance sheet interest
rate swap agreements at December 31, 1998:
<TABLE>
<CAPTION>
Notional Fair Pay Rate Receive
Amount Value Maturity (Fixed) Rate (Variable)
--------- -------- ---------- ----------- ----------------
($000's) ($000's) ($000's) ($000's)
<S> <C> <C> <C> <C> <C>
Pay fixed rate, receive floating rate... $35,000 $254 12/03 4.805% 5.156%
Pay fixed rate, receive floating rate... $40,000 $369 12/03 4.760% 5.156%
</TABLE>
Payments under each agreement are quarterly, commencing March 1999 and
ending December 2003.
(13) RELATED-PARTY TRANSACTIONS
The Company is associated with Triton Cellular Partners L.P. (Triton
Cellular) by virtue of certain management overlap and the sharing of leased
facilities. As part of this association certain costs are incurred on
behalf of Triton Cellular and subsequently reimbursed to the Company. Such
costs totaled $482,000 during 1998. In addition, under agreement between
the Company and Triton Cellular, allocations for management services
rendered are charged to Triton Cellular. Such allocations totaled $469,000
during 1998. The outstanding balance at December 31, 1998 was $951,000.
The Company expects settlement of these outstanding charges during 1999.
(14) COMMITMENTS & CONTINGENCIES
Leases
The Company has entered into various leases for its offices, land for cell
sites, cell sites, and furniture and equipment under capital and operating
leases expiring through 2010. The Company has various capital lease
commitments of approximately $2.4 million as of December 31, 1998. As of
December 31, 1998, the future minimum rental payments under these lease
agreements having an initial or remaining term in excess of one year were
as follows:
<TABLE>
<CAPTION>
Operating Capital
--------- -------
($000)
<S> <C> <C>
1999 6,484 474
2000 6,305 614
2001 5,962 600
2002 5,849 578
2003 4,397 434
Thereafter 1,724 -
-------------------
Total 30,721 2,700
Interest expense 378
-------
Net present value of future payments 2,322
Current portion of capital lease obligation 281
-------
2,041
=======
</TABLE>
Rent expense under operating leases was $3.0 million for the year ended
December 31, 1998 and $59,000 for the period from March 6, 1997 to December
31, 1997, respectively.
F-21
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
Employment Agreements
In 1998, the Company entered into five-year employment agreements with
three of its officers. The employment agreements provide for minimum
aggregate annual compensation of $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 death or disability
of the officers, the Company will be required to make certain payments.
(15) CAPITAL CONTRIBUTIONS
On February 4, 1998, pursuant to the Securities Purchase Agreement,
Holdings issued $140.0 million of equity to certain institutional investors
and management stockholders. The Securities Purchase Agreement requires the
institutional investors and management stockholders to fund their
unconditional and irrevocable obligations in installments in accordance
with the following schedule:
<TABLE>
<CAPTION>
DATE DUE AMOUNT
($ MILLIONS)
<S> <C>
Initial closing (funded on February 4, 1998) $ 45.0
First anniversary of initial closing (funded February 4, 1999) 35.0
Second anniversary of initial closing 35.0
Third anniversary of initial closing 25.0
------
$140.0
======
</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 subsequent to the initial cash contribution be made
directly to the Company.
As of December 31, 1998, Holdings received $49.3 million of additional
equity contributions, of which $35.0 million related to the acquisition of
the Myrtle Beach System (see note 4), and $14.3 million related to the
Norfolk Acquisition (see note 4). These funds were concurrently
contributed to the Company. As of December 31, 1998, Holdings had
outstanding equity commitments of $2.2 million related to the Norfolk
Acquisition, which were received in January 1999.
Common Stock
On October 2, 1997, the Company issued 100 shares of its common stock to
Holdings. No additional shares were issued during 1998.
L.L.C. Members' Capital
Members' capital contributions are recorded when received. Total committed
capital at December 31, 1998 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
F-22
<PAGE>
TRITON PCS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 6, 1997 (INCEPTION) TO DECEMBER 31, 1998
(16) 401(K) SAVINGS PLAN
The Company sponsors a 401(k) Savings Plan which permits employees to make
contributions to the Savings plan on a pre-tax salary reduction basis in
accordance with the Internal Revenue Code. Substantially all full-time
employees are eligible to participate in the next quarterly open enrollment
after 90 days of service. The Company matches a portion of the voluntary
employee contributions. The cost of the Savings Plan charged to expense was
$65,000 and in 1998.
(17) SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
1997 1998
-------------------
$000's)
<S> <C> <C>
Cash paid during the year for interest, net of amounts capitalized $ - $ 8,150
Cash paid during the year for income taxes - -
Noncash Investing and Financing Activities
Equipment acquired under capital lease obligations - 2,529
Interest capitalized - 3,538
Capital contribution from parent in connection with conversion
of short term debt to equity - 13,362
Capital contribution from parent related to Norfolk Acquisition - 14,555
Capital contribution from parent related to AT&T transaction net of
deferred taxes - 100,947
Capital expenditures included in accounts payable - 21,027
</TABLE>
F-23
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
NONE
Part III
EXECUTIVE OFFICERS AND DIRECTORS
The table below sets forth certain information regarding the directors of
Holdings and the executive officers of Triton License Company and certain
executive officers of Triton's subsidiaries. Triton is a wholly-owned subsidiary
of Holdings.
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Michael Kalogris.. 50 Chairman of the Board of Directors and Chief Executive Officer
Steven Skinner.... 57 President, Chief Operating Officer and Director
Clyde Smith....... 60 Executive Vice President and Chief Technical Officer
David Clark....... 34 Senior Vice President, Chief Financial Officer and Secretary
Steven McNulty.... 46 President and General Manager of the Mid-Atlantic Region
Michael Mears..... 44 President and General Manager of the South Carolina Region
Scott Anderson.... 40 Director
John Beletic...... 47 Director
Arnold Chavkin.... 48 Director
Mary Hawkins Key.. 48 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 Cellular Group 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, 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.
38
<PAGE>
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. 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 Cellular Telecommunications Industry Association Chief
Technical Officers Forum. In addition, Mr. Smith served as Secretary/Treasurer
of the CDMA Development Group.
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.
STEVEN MCNULTY has served as President and General Manager of the Company's
Mid Atlantic region since July 1998. Prior to joining Triton, he was Vice
President Central / West Operations with United States Cellular in Chicago,
Illinois. Mr. McNulty previously served as Vice President of Marketing for
ALLTEL Communications from January 1994 to June 1998.
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 Partners, L.P. 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.
39
<PAGE>
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.
MARY HAWKINS KEY has served as a member of the Board of Directors of Holdings
since January 1999. Ms. Hawkins Key is the Senior Vice President of Partnership
Operations for AT&T Wireless Services. Partnership operations include AT&T's
proportionate interests in active 850 MHz cellular markets (such as Bay Area
Cellular Telephone), strategic alliances such as Rogers Cantel, and AT&T's
equity participation in affiliated new PCS businesses which are members of the
AT&T Wireless Network. Ms. Hawkins Key leads the multi-disciplinary team which
provides guidance, consulting and assistance to partnership operations in
virtually every area of the business. Ms. Hawkins Key joined AT&T Wireless'
Messaging Division in 1995, and subsequently became Chief Operating Officer for
the 1100 employee division. While in this role, Ms. Hawkins Key served as
business leader of the team responsible for spinning off the Messaging business
unit.
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 Partners L.P. 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.
40
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the compensation
paid by the Company for the years ended December 31, 1997 and 1998 to the Chief
Executive Officer of the Company and to each of the Company's other four most
highly compensated 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 Chairman of the Board of 1998 $350,000 $350,000 -
Kalogris....................... Directors and Chief 1997 228,619 350,000 -
Executive Officer
Steven Skinner ................ President and Chief 1998 225,000 225,000 -
Operating Officer 1997 148,712 225,000 1,996
David Clark ................... Senior Vice President, 1998 190,000 190,000 -
Chief Financial Officer 1997 122,243 165,000 83,188
And Secretary
Clyde Smith ................... Executive Vice President 1998 205,051 220,000 25,842
And Chief Technical 1997 - - -
Officer
David Standig (2)............... Senior Vice President of 1998 156,962 82,500 -
Marketing 1997 - - -
</TABLE>
(1) "All Other Compensation" includes relocation and related expenses.
(2) Mr. Standig resigned from the Company on March 1, 1999 (effective March 26,
1999).
EMPLOYMENT AGREEMENTS
On February 4, 1998, Triton Management Co. (Management Co.), a wholly-owned
subsidiary of Triton, entered into an 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 his 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
41
<PAGE>
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. 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 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 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 his 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 a stock
purchase plan and is required to invest toward the purchase of such shares 30%
of any amounts he receives on account of an annual bonus in excess of 50% of his
base salary.
On January 8, 1998, Management Co. entered into an employment agreement 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
his 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
42
<PAGE>
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, between Management Company and Mr. Smith.
43
<PAGE>
Item 12. SECURITY OWNERSHIP
The following table sets forth, as of December 31, 1998, certain information
with respect to the beneficial holdings of each director, each of the Named
Executive Officers 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 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>
TOTAL
COMMON STOCK PREFERRED STOCK
--------------------------- --------------------------- ---------------------------
NAME (1) NUMBER PERCENTAGE NUMBER PERCENTAGE NUMBER PERCENTAGE
- ----------------------------------- -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Michael Kalogris.................... 165,515.56(9) 61.7% 5,000 *% 170,515.56 6.4%
Steven Skinner...................... 80,537.70(10) 30.0 2,500 * 83,037.70 3.1
Clyde Smith......................... 4,295.34(11) 1.6 -- -- 4,295.34 *
David Clark......................... 8,053.77(12) 3.0 -- -- 8,053.77 *
David Standig....................... 4,026.89(13) 1.5 -- -- 4,026.89 *
Scott Anderson...................... 967.20 * -- -- 967.20 *
John Beletic........................ 967.20 * -- -- 967.20 *
Arnold Chavkin(2)................... -- -- -- -- -- --
William Hague....................... -- -- -- -- -- --
John Watkins(3)..................... -- -- -- -- -- --
CB Capital Investors, L.P.(4)....... -- -- 533,510.62 22.1 533,510.62 19.9
J.P. Morgan Investment
Corporation(5)..................... -- -- 469,113.00(15) 19.4 469,113.00(15) 17.5
Desai Capital Management
Incorporated(6).................... -- -- 517,510.62(16) 21.4 517,510.62(16) 19.3
Toronto Dominion Capital (USA),
Inc.(7)............................ -- -- 129,378.18 5.4 129,378.18 4.8
First Union Capital Partners,
Inc................................ -- 177,385.94 7.3 177,385.94 6.6
DAG - Triton PCS, L.P............... 80,788.15 3.3 80,788.15 3.0
AT&T Wireless PCS, Inc.(8).......... 500,944.49(17) 17.3 500,944.49(17) 18.7
All directors and executive
officers........................... 268,459.01(14) 100.0 7,500.00 * 275,959.01 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., 375 Technology Drive, 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.
44
<PAGE>
(9) Includes 58,131.96 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. 96,645.24 of the 107,383.60
shares of common stock directly held by Mr. Kalogris are subject to
forfeiture in accordance with the Kalogris employment agreement.
(10) 63,483.93 of the 80,537.70 shares of common stock are subject to forfeiture
in accordance with the Skinner employment agreement.
(11) All 3,762.01 shares of common stock are subject to forfeiture in accordance
with the Smith employment agreement.
(12) All 8,053.77 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.
(13) All 4,026.89 shares of common stock are subject to forfeiture in accordance
with the letter agreement, dated as of February 4, 1998, between the
Company and Mr. Standig. Mr. Standig resigned from the Company on March 1,
1999 (effective as of March 26, 1999). In connection with the termination
of his employment, as of March 29, 1999, Mr. Standig's share ownership in
Holdings was reduced to 805.36 fully vested shares. The remaining shares
were sold back to the Company and will be eligible for distribution to
management members and independent directors of Holdings pursuant to the
Common Stock Trust Agreement.
(14) See footnotes (9)-(13). Also includes 2,684.59 shares of common stock held
by a certain management employee, all of which are subject to forfeiture in
accordance with the terms of a letter agreement with such employee, and
1,410.76 shares of Common Stock held by a certain former management
employee, all of which are subject to forfeiture in accordance with the
terms of a separation agreement with such former employee.
(15) Includes 23,907 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 258,755.31 shares of Series C Preferred Stock held by Private
Equity Investors III, L.P., and 258,755.31 shares of Series C preferred
stock held by Equity Linked Investors II, each an affiliate of Desai
Capital Management Incorporated.
(17) Consists of 500,944.49 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.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The closing under the securities purchase agreement occurred on February 4,
1998. 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, 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.
THE SECURITIES PURCHASE AGREEMENT
Pursuant to the securities purchase agreement, dated as of October 8, 1997, 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 certain 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.
45
<PAGE>
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 DAG-Triton PCS, 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 $80 million of their $140 million commitment as of December 31,
1998. 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 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 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 1997
securities purchase agreement. These contributions were concurrently contributed
to Triton.
THE NORFOLK CONTRIBUTION
Pursuant to the terms of a Norfolk Preferred Stock Purchase agreement dated as
of December 31, 1998, Holdings received an additional contribution of $16.5
million from certain of the Cash Equity Investors in order to fund a portion of
the $111 million purchase price for the Norfolk Acquisition. In consideration
therefor, at the closing of such acquisition, Holdings issued to such Cash
Equity Investors an additional $16.5 million of Holdings' Series C preferred
stock which it contributed to the Company. At closing, Holdings also issued to
AT&T PCS an additional $14.6 million of Holdings' Series D preferred stock. The
balance of the purchase price was financed through use of $96.6 million from the
net proceeds of the Private Offering.
THE AT&T AGREEMENTS
The Stockholders' Agreement
General. Pursuant to a stockholders' agreement, dated as of February 4,
1998, 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
46
<PAGE>
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 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 selected by AT&T PCS in its capacity as holder of the Series A
preferred stock so long as it has the right to elect one director in accordance
with the Restated Certificate of Incorporation (as defined herein).
Representatives of AT&T PCS and certain Cash Equity Investors also have the
right to attend each meeting of the Board of Directors as observers, provided
that certain capital stock ownership thresholds are met. Any transactions
between the Company and the stockholders (other than the AT&T Agreements and
other arms-length agreements or transactions entered into from time to time
between the Company and AT&T) must be approved by a majority of disinterested
directors. Under the stockholders' agreement, the two directors selected
pursuant to clause (ii) above of this paragraph are deemed not to have been
designated by any of the stockholders. If an executive committee of the Board of
Directors is formed, it must consist of at least the Series A Director, one of
the directors selected pursuant to clause (i) above of this paragraph and
Michael Kalogris (so long as he is an officer of Holdings). The Cash Equity
Investors also have agreed to contribute all or part of the unfunded commitment
amount at any time to Holdings upon 20 business days' notice from the Board of
Directors.
Restrictions on Transfer. The stockholders' agreement imposes numerous
restrictions with respect to the sale, transfer or other disposition 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), 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
47
<PAGE>
an Equity Investor Affiliate and (iii) common stock may be transferred to any
person, subject to certain 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, Series D preferred stock or common stock to a
Prohibited Transferee. A "Prohibited Transferee" is defined generally as one of
the three largest carriers (other than AT&T, or any person that derives a
material portion of its business from wireless communications systems and
utilizes TDMA technology in a substantial majority of those systems) of
telecommunications services that currently constitute interexchange services.
Registration Rights. The stockholders' agreement grants certain demand and
piggyback registration rights to the Stockholders. On or after the 91st day
after the IPO Date, the following Stockholders may cause an underwritten demand
registration, subject to customary pro rata cutback and blackout restrictions,
so long as such registration is reasonably expected to result in aggregate
proceeds of at least $10 million: (a) AT&T PCS, (b) a holder of shares of Series
C preferred stock or common stock (if such registration is reasonably expected
to result in aggregate gross proceeds of at least $25 million) or (c) Employee
Stockholders beneficially owning at least 50.1% of the shares of common stock
then beneficially owned by the Employee Stockholders. In addition to such demand
registration rights, any Stockholder may piggyback on a registration by Holdings
at any time (other than registrations on Forms S-4 or S-8 of the Securities
Act), subject to customary pro rata cutback restrictions. The demand and
piggyback registration rights and obligations survive 20 years.
Furthermore, if the IPO Date has not occurred by the fifth anniversary of the
securities purchase closing date, Holdings, at the request of (i) any holders
beneficially owning in the aggregate greater than one-third of the Series C
preferred stock and common stock then outstanding or (ii) AT&T PCS for so long
as it beneficially owns greater than two-thirds of the initial issuance to AT&T
PCS of Series A preferred stock, shall undertake a registration of common stock
that results in the IPO Date.
Preemptive Rights. The stockholders' agreement grants preemptive rights in
certain circumstances to the Stockholders. If, on or prior to the IPO Date,
Holdings proposes to issue any equity security (including in an initial public
offering, but excluding pursuant to any stock option or stock appreciation
rights plan), for cash, each Stockholder shall have a preemptive right to
purchase its pro rata portion of such securities.
Exclusivity. Holdings and the stockholders have also reached several
agreements regarding operational matters pertaining to the Company. The
Stockholders have agreed that during the term of the Stockholders' Agreement,
none of the Stockholders nor their respective affiliates will provide or resell,
or act as the agent for any person offering, within the Territory (as defined in
the stockholders' agreement) mobile wireless telecommunications services
initiated or terminated using TDMA and frequencies licensed by the FCC ("Company
Communications Services"), except AT&T PCS and its affiliates may (i) resell or
act as agent for the Company in connection with the provision of Company
Communications Services, (ii) provide or resell wireless telecommunications
services to or from certain specific locations, and (iii) resell Company
Communications Services for another person in any area where the Company has not
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 in 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
48
<PAGE>
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 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 Commercial Mobile Radio Service 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.
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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, 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 Commercial Mobile Radio Service provided in
accordance with the AT&T Agreements (collectively, the "Licensed Services") and
(ii) marketing and offering the Licensed Services within the Territory. The
License Agreement also grants to the Company the right and license to use
Licensed Marks on certain permitted mobile phones.
Except in certain instances, AT&T has agreed not to grant to any other person
a right or license to provide or resell, or act as agent for any person
offering, Company Communications Services within the Territory under the
Licensed Marks. In all other instances, AT&T reserves for itself the right to
use the Licensed Marks in the providing of its services (subject to its
exclusivity obligations described above), whether within or without the
Territory.
The license agreement contains numerous restrictions with respect to the use
and modification of any of the Licensed Marks. Furthermore, the Company is
obligated to use commercially reasonable efforts to cause all Licensed Services
marketed and provided using the Licensed Marks to be of comparable quality to
the Licensed Services marketed and provided by AT&T in areas that are comparable
to the Territory taking into account, among other things, the relative stage of
development of the areas. The license agreement also sets forth specific testing
procedures to determine compliance with these standards, and affords the Company
with a grace period to cure any instances of alleged noncompliance therewith.
Following the cure period, the Company must cease using the Licensed Marks until
the Company is back in compliance.
The Company may not assign or sublicense any of its rights under the license
agreement; provided, however, that the License Agreement may be, and has been,
assigned to the Company's lenders under our 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
50
<PAGE>
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--" 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--."
Roaming Agreement
Pursuant to the Intercarrier Roamer Service Agreement, dated as of February 4,
1998, 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, 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.
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 Commercial Mobile Radio Service, 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 (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 days prior written notice.
Furthermore, AT&T PCS may terminate the resale agreement at any time for any
reason on 180 days written notice.
51
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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
The Company is associated with Triton Cellular Partners L.P. by virtue of
certain management overlap and the sharing of leased facilities. As part of this
association, certain costs are incurred on behalf of Triton Cellular and
subsequently reimbursed to the Company. Such costs totaled $482,000 during 1998.
In addition, under agreement between the Company and Triton Cellular,
allocations for management services rendered are charged to Triton Cellular.
Such allocations totaled $469,000 during 1998. The outstanding balance at
December 31, 1998 was $951,000. The Company expects settlement of these
outstanding charges during 1999.
Over the course of fiscal year 1997, Triton L.L.C., a predecessor of Triton
License Company, incurred certain costs on behalf of Triton Cellular. Such costs
totaled $148,100 and will be reimbursed by Triton Cellular in 1998. In
addition, the Company purchased $22,800 of equipment from Horizon Cellular
Telephone Company, L.P. , 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 17% of the issued and outstanding capital stock of the Company,
and CB Capital Investors, a holder of approximately 20% 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
and $106, respectively, in their capacity as agent and lender under such
facility.
On February 4, 1998, Holdings 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."
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 Triton L.L.C. in the form of convertible promissory
notes in order to fund Triton 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, Triton L.L.C. assigned the notes to the Company. Triton, in
52
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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 Triton 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 radio
frequency 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 $291 million. J.P. Morgan
Securities Inc. and Chase Securities Inc., each an affiliate of entities that
own in the aggregate approximately 52.4% 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.
53
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TRITON PCS, INC. AND PREDECESSOR COMPANY
VALUATION AND QUALIFYING ACCOUNTS
($000'S)
<TABLE>
<CAPTION>
Additions Deductions Add
Balance at charged to credited to Myrtle Balance
Beginning cost and costs and Beach at end
of year expenses expenses acquisitions year
---------- ---------- ----------- ------------ -------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997
Allowance for doubtful accounts - - - - -
Year ended December 31, 1998
Allowance for doubtful accounts - $ 636 $480 $915 $1,071
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, 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 March 31, 1999.
Triton PCS, Inc
By: /s/ Michael Kalogris
-----------------------------------------
Sole Director and Chief Executive Officer
Triton Management Company, Inc.
By: /s/ Michael Kalogris
-----------------------------------------
Sole Director and Chief Executive Officer
Triton PCS Holdings Company L.L.C.
By:Triton Management Company, Inc., its
manager
By: /s/ Michael Kalogris
-----------------------------------------
Sole Director and Chief Executive Officer
Triton PCS Property Company L.L.C., Inc.
By:Triton Management Company, Inc., its
manager
By: /s/ Michael Kalogris
-----------------------------------------
Sole Director and Chief Executive Officer
Triton PCS Equipment Company L.L.C.
By:Triton Management Company, Inc., its
manager
BY: /s/ Michael Kalogris
-----------------------------------------
Sole Director and Chief Executive Officer
Triton PCS Operating Company L.L.C.
By:Triton Management Company, Inc., its
manager
By: /s/ Michael Kalogris
-----------------------------------------
Sole Director and Chief Executive Officer
Triton PCS License Company L.L.C
By:Triton Management Company, Inc., its
manager
By: /s/ Michael Kalogris
-----------------------------------------
Sole Director and Chief Executive Officer
By: /s/ David Clark
-----------------------------------------
Senior Vice President, Chief Financial
Officer, and Secretary
<PAGE>
MASTER BUILD TO SUIT
LEASE AGREEMENT
between
Triton PCS Property Company L.L.C.,
a Delaware Limited Liability Company
and
Crown Communication Inc.,
a Delaware Corporation
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
RECITALS.......................................................................................................... 6
1. MASTER LEASE AGREEMENT....................................................................................... 6
2. SITE APPROVAL AND CONSTRUCTION PROCESS....................................................................... 7
2.1 TRITON'S Proposals...................................................................................... 7
2.2 Commencement of Work; SLA Package....................................................................... 7
2.3 Substantial Completion of Site.......................................................................... 8
2.4 Site Acquisition Services and Construction Services..................................................... 9
2.4.1 Site Acquisition Services....................................................................... 9
2.4.2 Termination by TRITON........................................................................... 10
2.4.3 Construction Services........................................................................... 10
2.5 Process................................................................................................. 11
3. CONSTRUCTION OF IMPROVEMENTS................................................................................. 13
4. SITE USE..................................................................................................... 15
5. TERM......................................................................................................... 15
5.1 Term of Agreement....................................................................................... 15
5.2 Term of SLA............................................................................................. 15
6. SITE APPROVAL TERMINATION.................................................................................... 15
7. FEES......................................................................................................... 16
7.1 Annual Fee.............................................................................................. 16
7.2 Fee Adjustment.......................................................................................... 16
7.3 Additional Fees......................................................................................... 16
7.4 Interest................................................................................................ 16
7.5 Other Amounts........................................................................................... 17
8. LIENS......................................................................................................... 17
8.1 No Liens by TRITON...................................................................................... 17
8.2 Waiver of CROWN'S Lien.................................................................................. 17
9. SUITABLILTY; OPERATING CONDITION............................................................................. 17
10. SITE ALTERATIONS............................................................................................. 18
10.1 Approved Site........................................................................................... 18
11. UTILITIES.................................................................................................... 19
12. ACCESS....................................................................................................... 20
13. MEMORANDUM OF LEASE.......................................................................................... 20
14. INSURANCE.................................................................................................... 20
14.1 Required Insurance of TRITON............................................................................ 20
</TABLE>
1
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<TABLE>
<S> <C>
14.2 Required Insurance of CROWN............................................................................ 21
14.3 Insurance Standards.................................................................................... 21
14.4 Insurance Rating....................................................................................... 21
14.4 Waiver................................................................................................. 21
15. INDEMNIFICATION.............................................................................................. 22
15.1 Indemnification by TRITON.............................................................................. 22
15.2 Indemnification by CROWN............................................................................... 22
16. ASSIGNMENT AND GUARANTY...................................................................................... 22
16.1 Assignment by Triton................................................................................... 22
16.2 Assignment by Crown.................................................................................... 23
17. CASUALTY OR CONDEMNATION..................................................................................... 23
17.1 Casualty............................................................................................... 23
17.2 Condemnation........................................................................................... 24
18. SURRENDER OF SITE............................................................................................ 24
19. INTERFERENCE................................................................................................. 24
20. DEFAULT AND REMEDIES......................................................................................... 25
20.1 TRITON'S Default....................................................................................... 25
20.2 CROWN'S Remedies....................................................................................... 25
20.3 CROWN'S Default and TRITON'S Remedies.................................................................. 26
21. COVENANT OF QUIET ENJOYMENT.................................................................................. 26
22. COVENANTS AND WARRANTIES..................................................................................... 27
22.1 CROWN.................................................................................................. 27
22.2 TRITON................................................................................................. 27
22.3 Mutual................................................................................................. 28
22.4 No Broker.............................................................................................. 28
23. ENVIRONMENTAL MATTERS........................................................................................ 28
24. PRIME LEASE.................................................................................................. 29
25. ENTIRE AGREEMENT............................................................................................. 29
26. SEVERABILITY................................................................................................. 29
27. BINDING EFFECT............................................................................................... 29
28. CAPTIONS..................................................................................................... 30
29. NO WAIVER.................................................................................................... 30
30. REPRESENTATION............................................................................................... 30
31. NOTICES...................................................................................................... 31
32. GOVERNING LAW................................................................................................ 31
</TABLE>
2
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<TABLE>
<S> <C>
33. THIRD PARTIES................................................................................................ 31
34. COMPLIANCE WITH FCC RADIO FREQUENCY.......................................................................... 32
RADIATION REQUIREMENTS............................................................................................ 32
34.1 Future Cooperation..................................................................................... 32
34.2 Protection of Workers or Public........................................................................ 32
34.3 CROWN'S Obligations.................................................................................... 32
34.5 Mutual Certifications.................................................................................. 32
35. INDEX OF TERMS............................................................................................... 33
EXHIBIT "A" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT............................................................ 1
Initial Sites*............................................................................................... 1
Site and Market Areas........................................................................................ 1
EXHIBIT "B" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT............................................................ 1
Site Lease Acknowledgment.................................................................................... 1
Exhibit "1" to the SLA........................................................................................ 3
Site Description........................................................................................... 3
Exhibit "2" to the SLA........................................................................................ 4
Location of Antennas....................................................................................... 4
Exhibit "3" to the SLA........................................................................................ 5
Equipment Area/Building Space.............................................................................. 5
Exhibit "4" to the SLA........................................................................................ 6
Prime Lease................................................................................................ 6
EXHIBIT "C" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT............................................................ 1
1.1. PHASE I ENVIRONMENTAL SITE ASSESSMENT (ESA).............................................................. 15
1.1.4. SITE RECONNAISSANCE................................................................................. 16
1.1.5. Interviews....................................................................................... 16
1.1.6. PHASE I ESA REPORT.................................................................................. 17
1.0. GEOTECHNICAL INVESTIGATIONS.............................................................................. 20
1.0.5. RECORD OF SUBSURFACE EXPLORATION......................................................................... 21
Milestone & Task Reporting Responsibilities and Definitions................................................. 29
EXHIBIT "D" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT............................................................ 1
IMPROVEMENTS................................................................................................. 1
Antenna System Installation............................................................................... 1
As-Built Drawings......................................................................................... 1
Materials Handling and Delivery........................................................................... 1
Additional Construction Services.......................................................................... 1
EXHIBIT "E" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT............................................................ 1
CROWN Site Acquisition Standards............................................................................. 1
EXHIBIT "F" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT............................................................ 1
GENERAL........................................................................................................... 4
</TABLE>
3
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<TABLE>
<S> <C>
EXHIBIT "G" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT............................................................ 1
Schedule of Termination Fees................................................................................. 1
EXHIBIT "H" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT............................................................ 1
SITE STANDARDS............................................................................................... 1
I. General............................................................................................. 1
II. Antennas And Antenna Mounts......................................................................... 3
III. Cable............................................................................................... 3
IV. Connectors.......................................................................................... 3
V. Receivers........................................................................................... 4
VI. Transmitters........................................................................................ 4
VII. Combiners/multicouplers............................................................................. 5
VIII. Cabinets............................................................................................ 5
IX. Maintenance/tuning Procedures....................................................................... 5
X. Interference Diagnostic Procedures.................................................................. 5
XI. Tower Structure..................................................................................... 5
XII. Equipment Located Within CROWN'S Equipment Building................................................. 7
XIII. Grounding........................................................................................... 8
XIV. Electrical.......................................................................................... 8
XV. Electrical Distribution............................................................................. 9
XVI. Temporary Loads..................................................................................... 9
XVII. Doors............................................................................................... 9
XVIII. Site Appearance..................................................................................... 9
XIX. Storage............................................................................................. 9
XX. Damage.............................................................................................. 9
XXI. Reporting On Site................................................................................... 9
EXHIBIT "J" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT............................................................ 1
ANNUAL FEE................................................................................................... 1
I. Initial Monthly Rent Schedule.......................................................................... 1
II. Additional Rent........................................................................................ 1
</TABLE>
4
<PAGE>
MASTER BUILD TO SUIT LEASE AGREEMENT
------------------------------------
THIS MASTER BUILD TO SUIT LEASE AGREEMENT (the "Agreement") is entered
into as of the ______ day of November, 1998, by and between Crown Communication
Inc., a Delaware corporation ("CROWN"), and Triton PCS Property Company L.L.C.,
a Delaware limited liability company ("TRITON").
RECITALS
--------
CROWN will own, lease or otherwise control real property on which
CROWN will have constructed a wireless communications facility, including an
antenna support structure for the attachment of communications equipment. TRITON
wishes to lease from CROWN certain portions of such real property and the
wireless communications facility for the operation of TRITON's communications
facility. Each location for which TRITON, pursuant to this Agreement, enters
into a lease for a portion of the property and the wireless communications
facility will be referred to individually as a "Site" and collectively as
"Sites".
TRITON is an affiliate of a provider of wireless communications
services which operates networks of wireless communications facilities. CROWN
and TRITON are desirous of establishing terms and conditions that will apply to
the leasing of certain Sites by CROWN to TRITON in the areas described in
Exhibit "A" to this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, CROWN and TRITON agree as follows:
1. MASTER LEASE AGREEMENT
--------------------------
This Agreement contains the basic terms and conditions upon which each Site
shall be leased by CROWN to TRITON. When the parties agree on the particular
terms for a Site, the parties will execute a completed Site Lease Acknowledgment
in the form attached hereto as Exhibit "B" ("SLA"). Each executed SLA is deemed
to be a part of this Agreement. The terms and conditions of the SLA will govern
and control if there is a conflict or inconsistency between the terms and
conditions of a SLA and this Agreement. The SLA shall become effective and
become part of this Agreement upon its execution by both CROWN and TRITON. The
parties agree that an SLA shall terminate and have no force and effect if,
despite the reasonable efforts of Crown and Triton, a building permit for the
applicable Site is not issued or the Site Acquisition Package is not delivered
within a reasonable timeframe after the timeframes contemplated by this
Agreement. The parties acknowledge and agree that, notwithstanding any other
language in this Agreement to the contrary, TRITON's use of a Site pursuant to
this Agreement does not constitute a conveyance of any interest in real estate
to TRITON. The
5
<PAGE>
relationship between CROWN and TRITON is not one of tenancy and no leasehold
interest or other interest in real estate has been or will be created.
2. SITE APPROVAL AND CONSTRUCTION PROCESS
------------------------------------------
2.1 TRITON'S PROPOSALS
----------------------
TRITON shall make CROWN aware of an opportunity to construct a group of Sites in
the areas identified in Exhibit "A" pursuant to this Agreement by providing
CROWN with a written proposal ("Proposal"), identifying the applicable search
areas for the potential Sites. TRITON and CROWN shall agree within twenty-one
(21) days of the execution of this Agreement upon the schedule to be set forth
on Exhibit "F".
As more fully described herein, CROWN will provide "Site Acquisition Services"
and "Construction Services" for the "A Sites" identified on Exhibit "A" (the "A
Sites") and "Construction Services" for the "B Sites" identified on Exhibit "A"
(the "B Sites"). CROWN will also be providing site development services to
TRITON for approximately 45 Sites pursuant to a Site Development Agreement
executed by the parties on November ____, 1998 (the "SDA"). The parties
expressly agree that if, at anytime during the term of this Agreement, CROWN
notifies TRITON of CROWN's preference to co-locate TRITON on an existing
structure in any of the areas described in Exhibit "A", rather than building a
Site pursuant to the terms of this Agreement, then TRITON agrees to co-locate on
such Sites if such Sites meet the requirements of Viable Co-Locate Candidates as
described in Exhibit "C-3, paragraph 5". In the event that the parties mutually
agree, as described in the preceding sentence, then their respective rights and
obligations with respect to such Sites, shall be governed by the SDA and they
shall have no further obligations hereunder with respect to such Sites.
2.2 COMMENCEMENT OF WORK; SLA PACKAGE
-------------------------------------
2.2.1 A SITES:
---------------
Upon release of Search Areas CROWN will perform the Site Acquisition Services
set forth in Section 2.4. Thirty (30) days prior to the anticipated building
permit issue date CROWN will deliver a completed SLA to TRITON. Within ten (10)
days of receipt, TRITON will provide a response ( an "SLA Response") consisting
of: (i) return an executed SLA or; (ii) reject the SLA for reasons noted on the
SLA transmittal or; (iii) request an extension of review time as noted on the
SLA transmittal. TRITON shall provide for CROWN's engineering services, after
designation of a Primary Site, an RF site build specification (antenna and cable
size, type, and location information).
2.2.2 B SITES:
---------------
6
<PAGE>
Upon TRITON's delivery or anticipated delivery of a Site Acquisition Package to
CROWN, no later than thirty (30) days prior to the anticipated building permit
issue date, CROWN will deliver a completed SLA to TRITON. Within ten (10) days
of receipt, TRITON will provide an SLA Response. The "Site Acquisition Package"
shall contain: (i) a ground lease and/or other instruments such as an easement
evidencing CROWN's real estate interest in the Site; (ii) a title abstract;
(iii) a Federal Aviation Administration ("FAA") approval; and (iv) a final non-
appealable zoning permit.
TRITON shall provide for CROWN's engineering services, after designation of a
Primary Site, an engineering information package (a "Tech Team Visit Checklist")
that includes: a site survey report, a sketch of the BTS, antenna and cable
locations, existing drawings and surveys (to the extent reasonably possible), a
deed, tax map, zoning map, zoning ordinance, applicable zoning application and
drawing preparation checklists (where they exist), RF site build specifications
(antenna and cable size, type, and location information) and site directions.
2.2.3 A AND B SITES
Upon designation of a "Primary Site", a Viable Candidate selected by TRITON,
CROWN will proceed with all required engineering services including but not
limited to surveys, drawings, geotechnical evaluations and environmental studies
unless otherwise directed by TRITON.
Failure of TRITON to provide CROWN with an SLA Response within ten (10) days
shall be deemed termination by TRITON pursuant to Section 2.4.2.
TRITON recognizes that the successful completion of CROWN's scope of work in
accordance with the schedules set forth in Exhibit "F", for B sites, depends on
the successful completion of Site Acquisition Services provided by independent
contractors engaged by TRITON who are not affiliated with CROWN. TRITON will
cause such contractors to cooperate with CROWN in the sharing information
required for the procurement of building permits included in CROWN's scope of
work.
2.3 SUBSTANTIAL COMPLETION OF SITE
----------------------------------
Upon anticipated or actual receipt of the executed SLA, CROWN shall proceed to
perform the Services required by this Agreement by the dates identified in
Exhibit "F".
For the purposes of this Agreement, "Substantial Completion" of a Site and
Improvements is defined as the Site being constructed to TRITON standards (as
set forth in Exhibit "I") and the site being capable of transmitting and
receiving RF signal at it's designed and licensed frequency range without
violating equipment warrantees or any statute, law, or ordinance of any federal,
state, or local agency having jurisdiction. Substantial Completion is evidenced
by receipt and approval by TRITON of a Site Acceptance Package in a form
acceptable to TRITON. Unless otherwise specified in the applicable SLA,
Substantial Completion of a Site and Improvements specifically excludes
installation of TRITON's BTS (which will be performed by independent
7
<PAGE>
contractors), the provision of telephone service to TRITON's equipment, but
includes any CROWN service extension required to provide telephone service to
the Site and the utility work set forth in Section 2.4.3.3. The Substantial
Completion date may be extended by reason of an event of "Force Majeure" which
is defined as being any of the following events: delays in delivery of TRITON
provided construction materials, strikes, walk-outs, labor disputes, embargoes,
flood, earthquake, storm, dust storm, lightening, fire and any other weather
conditions that prevent construction (according to the tower construction
industry's standard of prudence), epidemic, acts of God, war, national
emergency, civil disturbance or disobedience, riot, sabotage, terrorism, threats
of sabotage or terrorism, restraint by court order or order of public authority,
and similar occurrences beyond the reasonable control of CROWN, and such non-
performance shall be excused for the period of time any such Force Majeure
causes such non-performance. The Substantial Completion period may also be
extended by mutual agreement of the parties.
2.4 SITE ACQUISITION SERVICES AND CONSTRUCTION SERVICES
-------------------------------------------------------
Services to be provided by CROWN shall include the Site Acquisition Services and
Construction Services described below:
2.4.1 SITE ACQUISITION SERVICES
-------------------------------
For the A Sites, CROWN will perform the "Site Acquisition Services" more fully
described in Exhibits "C-1", "C-2", "C-3", "C-4", "C-8" and "C-9".
The parties acknowledge that TRITON intends to engage independent third party
contractors not affiliated with CROWN to perform Site Acquisition Services for
the B Sites. TRITON agrees to cause such independent third party contractor to
meet both TRITON's site acquisition standards and the "Crown Site Acquisition
Standards" identified in Exhibit "E", to the extent possible, without delaying
the schedule set forth in Exhibit "F". TRITON further agrees to permit CROWN's
active participation in the candidate review process related to the B Sites
Furthermore, CROWN will reimburse TRITON for the actual site acquisition service
costs incurred for engaging such independent third party contractors up to a
maximum of $30,000 per B Site for which a building permit has been issued.
The parties acknowledge that from time to time during the zoning or building
permitting process, CROWN may want to reasonably continue with a proceeding that
TRITON either is not required to or is not desirous of continuing. In such
event, the parties agree that CROWN may continue to do so at its sole cost, so
long as such continuation by CROWN is not likely to delay the time frame set
forth on Exhibit "F", as determined within TRITON's reasonable discretion.
The parties also acknowledge that CROWN may desire to obtain zoning approval at
greater heights than required by TRITON to accommodate other tenants on the
tower. However, in no event shall CROWN attempt to obtain initial zoning
approval for a tower at such greater height if doing so in any way causes delay
in the approval of any permits required for TRITON's Improvements.
8
<PAGE>
2.4.2 TERMINATION BY TRITON
---------------------------
Notwithstanding any provision to the contrary, TRITON has the right of
termination of any Site or SLA at any time prior to the issuance of a building
permit for such Site by providing written notice of the same to CROWN. If CROWN
has not completed Services in accordance with the schedule set forth in Exhibit
"F" or the maximum average cycle times identified in Exhibit "F-2", and such
failure was not caused by TRITON or TRITON's contractor, CROWN will not be
compensated for the work performed prior to such Site termination and TRITON
shall have no further obligation hereunder with respect to such Site. In the
event of any termination without cause, TRITON shall pay to CROWN a termination
fee according to the schedule set forth in Exhibit "G" and shall have no further
obligations hereunder with respect to such Site. TRITON expressly agrees that it
shall have no right to terminate this Agreement with respect to a Site at any
time after CROWN commences construction on such Site, unless CROWN materially
breaches under this Agreement. TRITON may terminate this Agreement and any or
all SLAs executed in connection herewith upon executing an agreement with CROWN
to sell CROWN any communications tower owned by TRITON. Such termination upon
sale shall not apply to Sites for which a construction permit has been granted
and which is currently under construction.
2.4.3 CONSTRUCTION SERVICES
---------------------------
The services to be provided by CROWN as identified below in Sections 2.4.3.1
through 2.4.3.4 shall be referred to as the "Construction Services" more fully
defined in Exhibits "C-5", "C-6", "C-7" and "C-10 through C-14".
2.4.3.1 PROJECT AND CONSTRUCTION MANAGEMENT
-------------------------------------------
CROWN will perform civil construction activities; project management (i.e.,
scheduling, cost tracking and reporting, expediting, resource allocation); and,
construction management (i.e., subcontractor qualification, bidding/bid walk/bid
review and award, on-site construction supervision and punch list resolution) as
more fully defined in Exhibits "C-5", "C-6", "C-7" and "C-10" through "C-14".
2.4.3.2 EQUIPMENT PAD INSTALLATION
----------------------------------
CROWN will install, per TRITON's specifications, up to a 10' x 12' (for normal
Sites) and up to two (2) 12' x 28' concrete equipment pads per BTA (for hub
Sites) inside the applicable Sites' compound areas. Should TRITON wish to
install a larger equipment pad or equipment shelter inside of the applicable
Sites' compound areas, TRITON shall pay a cost to CROWN as identified in Exhibit
"J" under Additional Rent.
9
<PAGE>
2.4.3.3 UTILITIES
-----------------
CROWN will install two 4" PVC underground conduits (or alternate size and type
if required by the utility providers or TRITON construction standards), in
separate trenches, when required and pull cable from the applicable Sites'
common power and "telco demarc" points to TRITON's equipment location. TRITON
will be separately metered for electric utility service in accordance with
Section 11 of this Agreement if allowed by the power service provider. TRITON
will be responsible for placing service orders with the telephone service
provider at each Site. CROWN will be responsible for placing service orders with
the power service provider at each Site. CROWN will coordinate the "utility site
walk" with the utility companies, TRITON, and third party contractors. CROWN
will obtain all easements and/or rights-of-way needed for the provision of
utility services to TRITON for A Sites. CROWN will pay for all special
construction charges for utilities excluding electronics.
2.4.3.4 GROUNDING SYSTEM
------------------------
CROWN will install a buried Site ring in accordance with Ericsson standards (to
be provided by TRITON to CROWN)and provide a coiled length of ground wire to
connect to TRITON's BTS equipment. CROWN will install all other required
external grounding. Ground ring connections will be cadwelded except the
connection to the master ground bar and all coax grounding kit connections will
be mechanical. Notwithstanding the foregoing, all grounding shall meet or exceed
Ericsson grounding requirements identified in Exhibit "I-I-B-i".
2.4.3.5 ADDITIONAL SERVICES
---------------------------
In connection with the construction of Improvements, as defined in Section 3
below, CROWN will perform additional construction services at the A and B Sites
as described in Exhibit "D".
2.5 PROCESS
-----------
2.5.1 SCOPE OF SERVICES.
-------------------------
In addition to the requirements imposed upon them by this Agreement, CROWN and
TRITON shall be responsible for completing their respective tasks set forth in
the Exhibits attached hereto including every item in the Responsibility Matrix
(Exhibit "F-3").
(REST OF PAGE LEFT INTENTIONALLY BLANK)
10
<PAGE>
2.5.2 CHANGES TO CONTRACT SCOPE.
-------------------------
TRITON may make changes at any time to the general scope of the Services
contained herein only by means of a written order (a "Change Order") issued by
CROWN and approved by TRITON. Any Change Order that exceeds the scope of
Services and which requires additional services on the part of CROWN shall
result in an adjustment of the price to be paid to CROWN. CROWN shall, upon
receipt of a written request for a Change Order from TRITON, provide TRITON with
an estimate of additional charges required to complete the proposed Change
Order. Prior to commencement of additional work, the proposed Change Order shall
be approved in writing by a TRITON representative. Any charges for additional
work commenced by CROWN without a written Change Order approved by a TRITON
representative may be denied by TRITON, in full or in part, in its sole
discretion.
2.5.3 SCHEDULE
---------------
Within 21 days after execution of this Agreement, TRITON and CROWN shall agree
upon the schedule for the completion of Services on a site-by-site basis which
will replace Exhibit "F" to this Agreement. The schedule will contain milestone
dates for completion by CROWN of the following milestones: Site Selection, Site
Leasing and Site Zoning for A Sites, and Building Permit, Construction Start and
Construction Complete (Substantial Completion) for A and B sites. This Agreement
shall terminate upon notice by either party to the other if the parties are
unable, after good faith negotiations, to agree to a schedule within the
allotted 21 days. Notwithstanding the foregoing, CROWN agrees to proceed working
under this Agreement, including deploying necessary personnel, immediately after
execution of this Agreement as set forth in Exhibits "H" and "H-1".
After the schedule in Exhibit "F" is submitted by CROWN and accepted by TRITON,
CROWN may be awarded schedule extensions for impacts by TRITON or TRITON's
contractors upon written notification to TRITON, subject to TRITON's
verification. Such schedule extensions shall be awarded for each day of notified
and verified impact.
Following approval of the schedule by TRITON, CROWN shall thereafter, for the
term of this Agreement, provide TRITON with not less than a written weekly
report outlining the progress made to attain the previously-agreed to schedule,
which reports must include the information required by Exhibit "C-12".
Any proposed change in schedule which results in a time extension of one week or
greater on an individual Site basis shall be clearly noted and the reasons
therefore shall be explained in writing. TRITON may, in its sole discretion,
agree to a time extension from the detailed schedule originally provided. CROWN
shall attend all project meetings reasonably requested by TRITON. CROWN further
agrees to the maximum average cycle times set forth in Exhibit "F-2".
Within 5 days after execution of this Agreement, CROWN will provide an
Organization Chart and Staffing Plan that will replace Exhibit "H-1". Within 10
days after execution of this
11
<PAGE>
Agreement, CROWN will provide a revised Exhibit "H" indicating at minimum all
Managers by name. Within 20 days of the execution of this Agreement, Exhibit "H"
will be revised by CROWN to indicate the names of all personnel set forth on
Exhibit "H".
(REMAINDER OF PAGE LEFT INTENTIONALLY BLANK)
2.5.4 RESOURCES
----------------
TRITON has the right at any time upon written notice to require the removal of
any employee of CROWN or subcontractor utilized or supervised by CROWN in
TRITON's sole discretion. Resumes will be provided for review and approval prior
to CROWN's employees starting work on this project. CROWN will not add or remove
any personnel once assigned to the project and accepted by TRITON without prior
written agreement with TRITON. CROWN will use the necessary quantity and quality
of resources to maintain the agreed upon schedule set forth in Exhibit "F".
2.5.5 CONTRACT CLOSEOUT
------------------------
Prior to submitting a final invoice for payment for any Site, CROWN must provide
to TRITON the documentation set forth on Exhibit "C-14".
3. CONSTRUCTION OF IMPROVEMENTS
--------------------------------
At the time each SLA is executed, the Site described in the SLA will be
undeveloped real estate. In accordance with Sections 2.3, 2.4 and 2.5 above,
CROWN will provide the Site Acquisition Services and the Construction Services
to TRITON. To enable TRITON to use the Site as a communications facility, CROWN
further agrees to substantially complete construction on each Site the
improvements described in Exhibit "D" (the "Improvements") on or before the
Substantial Completion date specified in Exhibit "F" for that Site. The timely
Substantial Completion of the Improvements is of the essence in this Agreement
and the SLA and, by execution of the SLA, CROWN confirms that the Substantial
Completion date is a reasonable period for the completion of the Improvements.
Construction of the Improvements will be completed (a) in a good and workmanlike
manner; (b) in accordance with all applicable governmental laws, codes, rules
and regulations; and (c) in accordance with the building plans. CROWN agrees
that it will be responsible for obtaining and maintaining any permits, zoning
approvals, variances or similar governmental requirements or approvals necessary
for the construction and operation of a wireless communications facility at the
Site, excluding, however, any FCC or other licenses related specifically to
TRITON's operations ("Government Approvals"). TRITON shall cooperate with CROWN
in obtaining Government Approvals, including acting as applicant, if necessary,
and executing documents reasonably needed to obtain the Government Approvals.
The parties agree that CROWN shall not be responsible for installing TRITON's
"BTS".
12
<PAGE>
4. SITE USE
------------
A Site may be used by TRITON only for the installation, operation and
maintenance of unmanned radio communications equipment consistent with the terms
of the SLA. TRITON must, at TRITON's sole expense, comply with all laws, orders,
ordinances, regulations and directives of applicable federal, state, county and
municipal authorities or regulatory agencies including, without limitation, the
Federal Communications Commission (the "FCC"). TRITON shall operate and maintain
its equipment within its licensed frequency and power such that it does not
interfere with the operations at the communications facility or any other prior
existing users of the communications facility. CROWN agrees to cooperate with
TRITON, at TRITON's expense, in executing such documents or applications
required in order for TRITON to obtain such licenses, permits or other
Governmental Approvals needed for TRITON's permitted use of the Site.
5. TERM
--------
5.1 TERM OF AGREEMENT
---------------------
The term of this Agreement shall be twelve (12) years commencing on the date
first written above.
5.2 TERM OF SLA
---------------
Each Site leased by CROWN to TRITON pursuant to a SLA shall be leased for an
initial term of twelve (12) years with the commencement date as of the date of
full execution of the particular SLA ("Commencement Date"). The term of each
particular SLA shall automatically be extended for up to three (3) additional
five (5) year terms unless TRITON terminates it at the end of the then current
term by giving CROWN written notice of the intent to terminate at least six (6)
months prior to the end of the then current term. Notwithstanding the foregoing,
if CROWN's rights in the Site are derived from a prime lease or other agreement
with a third party ("Prime Lease") and such Prime Lease has a shorter term or
extension terms than those provided for under this paragraph, then TRITON's
right to extend any particular SLA shall only be for as long as CROWN retains
its interest in the same applicable property pursuant to said Prime Lease.
6. SITE APPROVAL TERMINATION
-----------------------------
In the event any previously approved zoning or governmental permit affecting the
use of the property or the Site as a communications facility is withdrawn or
terminated, the SLA relating to the property covered by said permit or approval
shall be deemed to have been terminated effective the date of the termination of
the permit or approval. In addition to any other rights to terminate an SLA,
CROWN has a right to terminate an SLA, and TRITON's rights related to
13
<PAGE>
such SLA, if TRITON fails to meet its obligations set forth in Section 4 with
respect to interference, if TRITON fails to resolve such problem as provided in
this Agreement.
7. FEES
--------
7.1 ANNUAL FEE
--------------
TRITON will commence paying an annual fee, to be paid in equal monthly
installments (the "Annual Fee"), for a Site on the earlier of: (i) first day of
the month following the Substantial Completion of the Site and Improvements; or
(ii) TRITON beginning to operate its communications facility as a Site ("Rent
Commencement Date"). The Annual Fee will be due on or before the first day of
each month thereafter. The Annual Fee will be payable to CROWN at:
Crown Communication Inc.
375 Southpointe Boulevard
Canonsburg, Pennsylvania 15317
Attn: Accounts Receivable
Subject to adjustment as provided below, the Annual Fee for the Site is
stated in the SLA for that Site. All fee amounts for a SLA shall be calculated
according to the schedule set forth in Exhibit "J", such amounts shall be
adjusted on each Adjustment Date according to the formula set forth in Section
7.2.
7.2 FEE ADJUSTMENT
------------------
The Annual Fee and other fees identified in this Agreement shall be adjusted
upward (collectively, the "Adjusted Fee") on the first anniversary of the date
of this Agreement and every annual anniversary thereafter ("Adjustment Date") by
three percent (3%).
7.3 ADDITIONAL FEES
-------------------
TRITON agrees to pay as additional Annual Fee any taxes or other assessments
levied against any Sites solely applicable to TRITON's business activities at
such Site. To the extent CROWN receives notice of any such charges, CROWN will
provide notice of the same to TRITON and cooperate with TRITON in any appeal
deemed reasonably necessary by TRITON.
7.4 INTEREST
------------
Any fee not paid within ten (10) business days of when due may, at CROWN's
option, bear interest until paid at the lesser of:
(a) the rate of Prime + 1 percent per annum; or
14
<PAGE>
(b) the maximum rate allowed under the laws of the jurisdiction in
which the Site is located.
(REMAINDER OF PAGE LEFT INTENTIONALLY BLANK)
7.5 OTHER AMOUNTS Any sums due to CROWN under this Agreement which are not
specifically defined as "Fees" are hereby deemed additional fees and are subject
to the interest charges and adjustments as specified herein and in the other
provisions of this Agreement which address fees.
8. LIENS
--------
8.1 NO LIENS BY TRITON
----------------------
TRITON must keep the Site free from any liens arising from any work performed or
materials furnished by or at the request of TRITON. If any such lien is filed
against the Site as a result of the acts or omissions of TRITON's employees,
agents or contractors, TRITON must discharge the lien or bond the lien off in a
manner reasonably satisfactory to CROWN within thirty (30) days after TRITON
receives written notice from any party that the lien has been filed. If TRITON
fails to discharge or bond any such lien within such period, then, in addition
to any other right or remedy of CROWN, CROWN may, at CROWN's election, discharge
the lien by either paying the amount claimed to be due or obtaining the
discharge by deposit with a court or a title company or by bonding. TRITON must
pay on demand any amount paid by CROWN for the discharge or satisfaction of any
lien, and all reasonable attorneys' fees and other legal expenses of CROWN
incurred in defending any such action or in obtaining the discharge of such
lien, together with all necessary disbursements in connection therewith.
8.2 WAIVER OF CROWN'S LIEN
--------------------------
CROWN hereby waives any and all lien rights it may have, statutory or otherwise,
concerning TRITON's equipment or any portion thereof, which shall be deemed
personal property for the purposes of this Agreement, regardless of whether or
not same is deemed real or personal property under applicable laws, and CROWN
gives TRITON the right to remove all or any portion of same from time to time in
TRITON's sole discretion and without CROWN'S consent.
9. SUITABLILTY; OPERATING CONDITION
-----------------------------------
15
<PAGE>
CROWN represents and warrants with respect to each Site that, upon Substantial
Completion of the Site and the Improvements for a period of one year thereafter,
such Site and Improvements will be in good operating condition, suitable for
their intended purpose. The foregoing representation and warranty shall not
extend to any materials or equipment provided by TRITON or for services properly
performed by CROWN within the stricter of CROWN, TRITON, and Ericsson standards
described herein or any applicable codes, statutes ordinances, regulations or
other requirements of any government unit or authority having jurisdiction.
10. SITE ALTERATIONS
---------------------
10.1 APPROVED SITE
------------------
TRITON has the right to erect, maintain, replace and operate at the Site only
that communications equipment specified on the SLA. It is understood that TRITON
shall have the right at each and every Site, subject to compliance with the
terms of this Agreement and particularly those set forth in this Section, to
replace the equipment described in a SLA with similar and comparable equipment
so long as: (a) there is no greater wind loading, structural loading, size,
weight or height; and (b) the equipment operates at the frequency or range of
frequencies designated in the applicable SLA, or at the frequency or range of
frequencies identified in TRITON's current FCC licensee or successor licensee
thereto, for the transmission of wireless communications signals at that given
Site. It is understood that any such replacement equipment must be frequency
compatible with then existing uses of the Site. Prior to commencing any material
alteration at a Site and prior to accessing the communications tower structure
for any reason whatsoever, TRITON must obtain CROWN's approval of:
(a) TRITON's plans for material alteration work; and
(b) the contractor performing the material alteration or in any way
accessing the tower structure itself.
CROWN's approval must not be unreasonably withheld, conditioned or delayed. All
of TRITON's alteration work must be performed:
(a) at TRITON's sole cost and expense;
(b) in a good and workmanlike manner, using the care and skill
ordinarily used by members of the profession practicing under
similar conditions at the same time and in the same geographic
area;
(c) in accordance with applicable building codes and with the
provisions of Exhibit "I"; and
16
<PAGE>
(d) must not adversely affect the structural integrity or maintenance
of the Site or any structure on or use of the Site.
Any alterations to a structure at the Site must be designed, at TRITON's sole
cost and expense, by a structural engineer licensed in the jurisdiction where
the Site is located. Notwithstanding the foregoing, for any structural
alterations of the communications facility, such structural engineer must be
approved by CROWN which approval will not be unreasonably withheld, conditioned
or delayed. For structural alterations requiring a municipal permit, the
structural engineer must be satisfactory to the local municipality.
Following the initial installation at a Site, any installation, maintenance,
material alteration or removal of equipment at a Site by TRITON and any
activities whatsoever requiring access to a tower structure, must be performed
by a contractor reasonably acceptable to CROWN (which acceptance may
specifically include a requirement that all such contractors provide to CROWN,
in advance of any such work, certificates of insurance consistent with the
provisions of this Agreement). CROWN's consent thereto shall not be unreasonably
withheld, conditioned or delayed.
Said erection, maintenance, replacement and operation will in no way damage or
mechanically interfere with CROWN's use of or any operations at the
communications facility. If damage or mechanical interference is caused by
TRITON and TRITON fails to make such repairs immediately after notice by CROWN,
CROWN may make the repairs and the reasonable costs thereof shall be payable to
CROWN by TRITON upon written notice. If TRITON does not make payment to CROWN
within thirty (30) days after such notice, CROWN shall have the right to
immediately terminate the applicable SLA. No materials may be used in the
installation of the antennas or transmission lines that will cause corrosion or
rust or deterioration of the tower structure or its appurtenances.
11. UTILITIES
--------------
TRITON acknowledges that CROWN's obligation as to utility service is indicated
above in Section 2.4.3.3. TRITON has the right, at TRITON's sole cost and
expense, to obtain electrical and telephone service to TRITON's equipment at the
Site subject to the terms and conditions of this Agreement and any limitations
contained in underlying real estate interests, including the Prime Lease. TRITON
understands and acknowledges that:
(a) the Site includes such non-exclusive easements as necessary to
enable TRITON to connect utility wires, cables, fibers and
conduits to its equipment; and
(b) CROWN does have the right to approve the route and the manner of
installation which approval shall not be unreasonably withheld,
conditioned or delayed.
17
<PAGE>
12. ACCESS
-----------
TRITON shall have free access during the term of a SLA to the Site twenty-four
(24) hours per day, seven (7) days per week. TRITON acknowledges that the
foregoing access rights are subject to any restrictions identified in the
underlying real estate interests related to the communications facility,
including but not limited to any restrictions identified in the Prime Lease.
CROWN shall furnish TRITON with necessary devices for the purpose of ingress and
egress to the said Site and communications facility. It is agreed, however, that
only authorized engineers, employees or properly authorized contractors of
TRITON or persons under their direct supervision will be permitted to enter said
Site. TRITON will retain ownership of all buildings, equipment and appurtenances
TRITON installs at any Site; provided, however, that the removal of said
equipment will not adversely affect the integrity of any structures.
13. MEMORANDUM OF LEASE
------------------------
After execution of a SLA, each party, at the request of the other, will sign a
recordable Memorandum of Lease for the Site described in the SLA. CROWN, at its
sole expense, shall record the Memorandum of Lease in the land records of the
recording office(s) responsible for notice purposes.
14. INSURANCE
--------------
14.1 REQUIRED INSURANCE OF TRITON
---------------------------------
TRITON shall maintain at its expense throughout the term of this Agreement,
general liability insurance with a combined single limit of Five Million Dollar
($5,000,000.00) for each occurrence for bodily injury, personal injury and
property damage. Coverage shall include Independent Contractors Liability. At
execution of this Agreement, TRITON shall provide to CROWN a Certificate of
Insurance evidencing CROWN as an additional insured and which shall contain a
provision for thirty (30) day notice to CROWN of cancellation or material
change. TRITON shall also maintain Auto Liability insurance in an amount no less
than One Million Dollars ($1,000,000.00) combined single limit for bodily injury
and/or property damage. TRITON must also maintain statutory Workers'
Compensation Insurance and Employee's Liability for the statutory limit but in
no event less than One Million Dollars ($1,000,000.00). Such insurance
requirements may be obtained by having an umbrella policy. TRITON will not do or
permit to be done in or about the Site nor bring or keep or permit to be brought
to the Site anything that: (a) is prohibited by any insurance policy carried by
CROWN covering the Site, any overall improvements thereon, or the Site; or (b)
will increase the existing premiums for any such policy beyond that contemplated
for the addition of TRITON's communications equipment.
18
<PAGE>
14.2 REQUIRED INSURANCE OF CROWN
--------------------------------
CROWN shall maintain at its expense throughout the term of this Agreement, the
following insurance (such insurance requirements may be obtained by having an
umbrella policy):
(a) Property insurance, including coverage for fire, extended
coverage, vandalism and malicious mischief on the Improvements,
in an amount equal to ninety percent (90%) of the full
replacement cost of the Improvements;
(b) Commercial General Liability insurance insuring operations
hazard, independent contractor hazard, contractual liability and
products and completed operations liability, in limits not less
than Five Million Dollars ($5,000,000.00) combined single limit
for each occurrence for bodily injury, personal injury and
property damage liability;
(c) Workers' Compensation and Employer's Liability insurance; and
(d) Business Auto Insurance covering the ownership, maintenance or
use of any owned, non-owned or hired automobile, with a limit of
not less than One Million Dollars ($1,000,000.00) combined single
limit per accident for bodily injury and property damage
liability.
CROWN acknowledges and agrees that the installation of TRITON's communications
equipment upon the Site in accordance with the terms and conditions of this
Agreement will be considered within the underwriting requirements of any of
CROWN's insurers and such premiums contemplate the addition of the
communications equipment.
14.3 INSURANCE STANDARDS
------------------------
TRITON and CROWN agree to review the insurance requirements set forth in sub-
sections 14.1 and 14.2 above every five years and, as necessary, to revise such
requirements for the next five years to be consistent with then prevailing
industry standards.
14.4 INSURANCE RATING
---------------------
All insurers will be rated A-IX(9) or better and must be licensed to do business
in the jurisdiction where the respective Sites are located. The provision of
insurance required in this Agreement shall not be construed to limit or
otherwise affect the liability of either party pursuant to the terms of this
Agreement.
14.4 WAIVER
-----------
19
<PAGE>
The parties hereby waive any and all rights of action for negligence against the
other which may hereafter arise on account of damages to the premises or Site
resulting from any fire, or other casualty of the kind covered by standard fire
insurance policies, regardless of whether or not, or in what amounts, such
insurance is now or hereafter carried by the parties, or either of them. TRITON
and CROWN shall each obtain a Waiver of Subrogation from their respective
insurance companies in which said insurance companies also waive their
respective rights to recover.
15. INDEMNIFICATION
--------------------
15.1 INDEMNIFICATION BY TRITON
------------------------------
TRITON shall indemnify and hold CROWN and all subsidiary companies and
affiliates harmless against any claim of liability or loss from bodily injury
and/or property damage resulting from or arising out of TRITON's and/or any of
its subcontractors', servants', agents' or invitees' use or occupancy of the
Site, including but not limited to any claim of liability or loss associated
with any Environmental Hazards as defined in this Agreement, excepting, however,
such claims or damages as may be due to or caused by the negligence or willful
misconduct of CROWN, or its subcontractors, servants, agents or invitees. If
CROWN is made a party to any litigation commenced by or against TRITON for any
of the above reasons, then TRITON shall protect and hold CROWN harmless and pay
all costs, penalties, charges, damages, expenses and reasonable attorneys' fees
incurred or paid by CROWN in connection therewith.
15.2 INDEMNIFICATION BY CROWN
------------------------------
CROWN shall indemnify and hold TRITON and all subsidiary companies and
affiliates harmless against any claim of liability or loss from bodily injury
and/or property damage resulting from or arising out CROWN's and/or any of its
subcontractors', servants', agents' or invitees' use or occupancy of the Site,
including but not limited to any claim of liability or loss associated with any
Environmental Hazards as defined in this Agreement, excepting, however, such
claims or damages as may be due to or caused by the negligence or willful
misconduct of TRITON, or its subcontractors, servants, agents or invitees. If
TRITON is made a party to any litigation commenced by or against CROWN for any
of the above reasons, then CROWN shall protect and hold TRITON harmless and pay
all costs, penalties, charges, damages, expenses and reasonable attorneys' fees
incurred or paid by TRITON in connection therewith.
16. ASSIGNMENT AND GUARANTY
----------------------------
16.1 ASSIGNMENT BY TRITON
-------------------------
This Agreement may not be sold, assigned or transferred, in whole or in part, by
TRITON without prior approval or consent of CROWN (such approval and consent not
to be unreasonably withheld, conditioned, or delayed); provided, however, that,
notwithstanding anything to the
20
<PAGE>
contrary contained herein, TRITON may sell, assign or transfer this Agreement or
any SLA without the written approval or consent of CROWN to (i) any affiliate of
TRITON or (ii) any person or entity that acquires, through merger, purchase or
otherwise, all or substantially all of the assets of TRITON. Additionally,
TRITON may, upon notice to CROWN, mortgage or grant a security interest in this
Agreement and TRITON's equipment, and may assign this Agreement and such
equipment to any such mortgagees or holders of security interests including
their successors or assigns (hereinafter collectively referred to as
"Mortgagees"). In such event, CROWN shall execute such consent to leasehold
financing as may reasonably be required by Mortgagees.
16.2 ASSIGNMENT BY CROWN
------------------------
This Agreement may not be sold, assigned or transferred, in whole or in part, by
CROWN without prior approval or consent of TRITON, which consent may not be
unreasonably witheld, conditioned or delayed. Furthermore, CROWN may assign its
interest herein without TRITON's approval once all sites under this agreement
are accepted by TRITON. Without limiting the foregoing, TRITON acknowledges that
CROWN intends to assign its rights and obligations with respect as to Site
Acquisition Services, Construction Services and any services related to the
Improvements to its wholly-owned subsidiary Crown Network Systems, Inc., a
Pennsylvania corporation. Additionally, CROWN may, upon notice to TRITON,
mortgage or grant a security interest in this Agreement or any of its assets
related to this Agreement, and may assign this Agreement and such assets to any
such mortgagees or holders of security interests including their successors and
assigns (hereinafter collectively referred to as "Mortgagees"). In such event,
TRITON shall execute such consent to leasehold financing as may reasonably be
required by Mortgagees.
17. CASUALTY OR CONDEMNATION
-----------------------------
17.1 CASUALTY
-------------
If there is a casualty to any structure upon which a TRITON communications
facility is located, CROWN must within forty-five (45) days repair or restore
the structure. During said period of repair or restoration, fees identified in
this Agreement applicable to that Site shall be abated. Upon completion of such
repair or restoration, TRITON is entitled to reinstall TRITON's communications
equipment. In the event such repairs or restoration will reasonably require more
than forty-five (45) days to complete, TRITON is entitled to terminate the
applicable SLA upon thirty (30) days prior written notice. Notwithstanding the
foregoing, TRITON may elect to pursue on its own, or through CROWN, an alternate
Site if such Site can be constructed in a shorter timeframe as reasonably
determined by TRITON.
21
<PAGE>
17.2 CONDEMNATION
-----------------
If there is a condemnation of the Site, including without limitation a transfer
of the Site by consensual deed in lieu of condemnation, then the SLA for the
condemned Site will terminate upon transfer of title to the condemning
authority, without further liability to either party under this Agreement.
TRITON is entitled to pursue a separate condemnation award for TRITON's
communications equipment from the condemning authority.
18. SURRENDER OF SITE
----------------------
TRITON, upon termination of the Agreement or the applicable SLA, shall have
removed its equipment, personal property and all fixtures and have restored the
Site to its original condition, reasonable wear and tear excepted. If such time
for removal causes TRITON to remain on the Site after termination of this
Agreement or the applicable SLA, the annual fee shall be increased to one and
one-half times the then existing annual fee until such time as the removal of
all equipment is completed. Nothing in this provision shall be construed as
providing TRITON the right to hold over and CROWN, immediately upon the
termination or expiration of the Agreement or the applicable SLA, shall have the
right to remove TRITON from the Site.
19. INTERFERENCE
-----------------
TRITON agrees to have installed transmitting and receiving equipment of the
type, power and frequency consistent with its licenses. In the event TRITON'S
equipment fails to operate within such licensed power or frequency, and causes
interference, TRITON will take steps customary and reasonably necessary within
48 hours to eliminate such interference in a timely manner. CROWN agrees that
any future users of the Site who take possession after the date of execution of
any SLA will have properly installed transmitting and receiving equipment of the
type and frequency which will not cause interference to TRITON as defined by the
FCC. This provision shall not apply to test periods where the source of the
interference is being determined for purposes of suppression. IN THE EVENT THAT
ANY DEVICES INSTALLED ON A SITE AFTER THE DATE OF TRITON'S INSTALLATION AT SUCH
SITE, BY ANY AUTHORIZED USER SHALL INTERFERE WITH TRITON'S TRANSMISSION OR
RECEPTION, CROWN SHALL CAUSE THE INTERFERENCE TO BE ELIMINATED AS SOON AS
REASONABLY POSSIBLE AT NO COST TO TRITON. In the event such interference to
TRITON caused by a future user on a site is not analyzed with corrections
initiated within 48 hours, and does not cease within a reasonable period, the
parties acknowledge that continuing interference will cause irreparable injury
to TRITON and TRITON shall have the right, in addition to any other rights that
it may have at law or equity, to bring action to enjoin the interference or to
terminate the applicable SLA.
22
<PAGE>
20. DEFAULT AND REMEDIES
-------------------------
20.1 TRITON'S DEFAULT
---------------------
The occurrence of any one or more of the following events constitutes an "Event
of Default" by TRITON under this Agreement:
(a) if TRITON fails with respect to any Site to pay any fee or other
sums payable by TRITON within thirty (30) business days of
TRITON's receipt of written request for payment;
(b) breach of any agreement, representation, warranty or covenant set
forth in this Agreement including any SLA, with the exception of
the non-payment of any fee or other sums by TRITON, which is not
cured within thirty (30) days of receipt of written notice,
except such thirty (30) day cure period will be extended as
reasonably necessary to permit TRITON to complete the cure so
long as TRITON commences the cure within such thirty (30) day
period and thereafter continuously and diligently pursues and
completes such cure;
(c) if any petition is filed by or against TRITON, under any section
or chapter of the present or any future federal Bankruptcy Code
or under any similar law or statute of the United States or any
state thereof (and with respect to any petition filed against
TRITON, such petition is not dismissed within sixty (60) days
after the filing thereof), or TRITON is adjudged bankrupt or
insolvent in proceedings filed under any section or chapter of
the present or any future Bankruptcy Code or under any similar
law or statute of the United States or any state thereof;
(d) if a receiver, custodian or trustee is appointed for TRITON or
for any of the assets of TRITON and such appointment is not
vacated within sixty (60) days of the date of appointment; or
(e) if TRITON makes a transfer in fraud of creditors.
20.2 CROWN'S REMEDIES
---------------------
If an Event of Default occurs, CROWN (without notice or demand except as
expressly required above) may terminate this Agreement including applicable
SLAs, in which event TRITON will immediately surrender the Sites to CROWN.
TRITON will become liable for damages equal to the total of:
23
<PAGE>
(a) the amounts owed hereunder; and
(b) the amount of any fees and other benefits that CROWN would have
received under the applicable SLAs for the remainder of the term
under the applicable SLA.
CROWN may elect any one or more of the foregoing remedies with respect to this
Agreement or to any particular SLA. CROWN agrees to forego seeking any
consequential damages.
20.3 CROWN'S DEFAULT AND TRITON'S REMEDIES
------------------------------------------
If CROWN is in breach of any representation, warranty or covenant set forth in
this Agreement or any Exhibit hereto and such breach is not cured within thirty
(30) days of receipt of written notice thereof, except such thirty (30) day cure
period will be extended as reasonably necessary to permit CROWN to complete the
cure so long as CROWN commences the cure within such thirty (30) day period and
thereafter continuously and diligently pursues and completes such cure, TRITON
may, at TRITON's option and upon written notice:
(a) terminate the applicable SLA; or
(b) incur any expense reasonably necessary to perform the obligation
of CROWN specified in such notice and invoice CROWN for the
actual expenses, together with interest as set forth herein from
the date named. (Any invoice shall be accompanied by
documentation reasonably detailing actual expenses. If CROWN
fails to reimburse the costs within thirty (30) days of receipt
of written notice, then TRITON is entitled to offset and deduct
such expenses from the fees or other charges next becoming due
under any SLA.)
TRITON agrees to forego seeking any consequential damages.
21. COVENANT OF QUIET ENJOYMENT
--------------------------------
CROWN covenants and warrants to TRITON that TRITON, upon the payment of all fees
and performance of all the material terms, covenants and conditions under this
Agreement, will have, hold and enjoy each Site leased under a SLA during the
term of the applicable SLA and any renewal or extension thereof. CROWN will not
take any action not expressly permitted under the terms of this Agreement that
will interfere with TRITON's intended use of the Site nor will CROWN fail to
take any action or perform any obligation identified in this Agreement to
fulfill CROWN's aforesaid covenant of quiet enjoyment in favor of TRITON.
24
<PAGE>
22. COVENANTS AND WARRANTIES
-----------------------------
22.1 CROWN
----------
CROWN warrants, with respect to each particular SLA that:
(a) CROWN, or the entity for which CROWN possesses the management
rights, owns good, marketable fee simple title, has a good and
marketable leasehold interest, has the right as a manager or has
a valid lease, easement, or other interest in the land on which
the Site is located and has the right of access thereto;
(b) CROWN will not permit or suffer the installation and existence of
any other improvement upon the structure or land of which the
Site is a portion if such improvement interferes with
transmission or reception by TRITON's communications equipment;
(c) the Sites, to the best knowledge of CROWN, are not contaminated
by any Environmental Hazards as set forth in Section 23 below;
(d) telephone service and electrical service are available to TRITON
at each and every Site with the understanding that TRITON will
pay for utility services needed to operate its communications
equipment; and
(e) CROWN will keep, at CROWN's expense, the communications structure
upon which TRITON's antennas are installed in good repair as
required by law and applicable state and local codes and
regulations and shall also comply with all rules and regulations
enforced by the FCC and FAA with regard to the lighting, marking
and painting.
22.2 TRITON
-----------
TRITON warrants, with respect to each particular SLA that:
(a) TRITON will maintain the antennas, transmission lines and other
appurtenances in proper operating condition and maintain same as
to appearance and safety; and
(b) all installations and operations by TRITON in connection with
this Agreement shall meet with all applicable rules and
regulations of the FCC and all applicable state and local codes
and regulations. CROWN specifically assumes no responsibility for
the licensing, operation and/or maintenance of TRITON's radio
equipment.
25
<PAGE>
22.3 MUTUAL
-----------
Each party represents and warrants to the other party:
(a) it has full right, power and authority to make this Agreement and
to enter into the SLAs;
(b) the making of this Agreement and the performance thereof will not
violate any laws, ordinances, restrictive covenants, or other
agreements under which such party is bound;
(c) that such party is qualified to do business in any states in
which the Sites are located; and
(d) all persons signing on behalf of such party were authorized to do
so by appropriate corporate or partnership action.
22.4 NO BROKER
---------------
CROWN and TRITON represent to each other that neither has had any dealings with
any real estate brokers or other brokers or agents in connection with this
Agreement.
23. ENVIRONMENTAL MATTERS
--------------------------
CROWN represents and warrants that to the best of CROWN's knowledge there are no
Environmental Hazards on any Site. Nothing in this Agreement or in any SLA will
be construed or interpreted to require that TRITON remediate any Environmental
Hazards located at any Site unless TRITON or TRITON's officers, employee, agents
or contractors placed the Environmental Hazards on the Site. TRITON will not
bring to, transport across or dispose of any Environmental Hazards on any
particular premises or Site without CROWN's prior written approval, which
approval shall not unduly be withheld or delayed. TRITON's use of any approved
substances constituting Environmental Hazards must comply with all applicable
laws, ordinances and regulations governing such use.
The term "Environmental Hazards" means hazardous substances, hazardous wastes,
pollutants, asbestos, polychlorinated biphenyl (PCB), petroleum or other fuels
(including crude oil or any fraction or derivative thereof) and underground
storage tanks. The term "Hazardous Substances" shall be defined in the
Comprehensive Environmental Response, Compensation, and Liability Act, and any
regulations promulgated pursuant thereto. The term "Pollutants" shall be as
defined in the Clean Water Act, and any regulations promulgated pursuant
thereto. This Section shall survive termination of the Agreement and any
particular SLA.
26
<PAGE>
24. PRIME LEASE
----------------
The parties acknowledge that CROWN's rights in a Site may be derived from a
separate agreement with a third party hereinafter referred to generally as a
"Prime Lease," in which CROWN is lessee, grantee or licensee therein. If this is
the case, a copy of said Prime Lease shall be attached as Exhibit "4" to the
SLA, and the following provisions shall be applicable. In the event approval of
the prime lessor, grantor or licensor is required in the Prime Lease, the
effectiveness of any SLA concerning such property shall be specifically subject
to the obtaining of such approval. Further, all the terms, conditions and
covenants contained in this Agreement shall be specifically subject to and
subordinate to the terms and conditions of any Prime Lease affecting the Site
that is the subject of the particular SLA. In the event any of the provisions of
the Prime Lease supersede or contradict the terms of this Agreement, such terms
of this Agreement shall be deemed deleted or superseded to the extent of the
contradiction as applicable to the Site utilized by TRITON. Further, TRITON
agrees to be bound by and agrees to perform all the acts and responsibilities
required of the lessee, grantee or licensee pursuant to the Prime Lease as are
applicable to the access and occupancy of the premises utilized by TRITON.
Lastly, in the event the Prime Lease terminates for any reason, the SLA relating
to the Site covered by said Prime Lease, shall be deemed to have terminated
effective the date of the termination of the Prime Lease.
25. ENTIRE AGREEMENT
---------------------
It is agreed and understood that this Agreement, including all SLAs, contain all
the agreements, promises and understandings between CROWN and TRITON as to the
Build to Suit services set forth herein and that no verbal or oral agreements,
promises or understandings shall be binding upon either CROWN or TRITON in any
dispute, controversy or proceeding at law, and any addition, variation or
modification to this Agreement shall be void and ineffective unless made in
writing signed by the parties. As such, this Agreement revokes and supersedes
any other oral or written agreements between the parties, whether or not in
writing, that pertain to the subject matter described herein. Notwithstanding
the foregoing, the parties agree to continue to be bound by that Confidentiality
Agreement dated November 12, 1998.
26. SEVERABILITY
-----------------
If any provision of this Agreement or any SLA is invalid or unenforceable with
respect to any party, the remainder of this Agreement, or the application of
such provision to persons other than those as to whom it is held invalid or
unenforceable, is not to be affected and each provision of this Agreement is
valid and enforceable to the fullest extent permitted by law.
27. BINDING EFFECT
-------------------
27
<PAGE>
This Agreement shall extend to and bind the heirs, personal representatives,
successors and assigns of the parties hereto.
(REMAINDER OF PAGE LEFT INTENTIONALLY BLANK)
28. CAPTIONS
-------------
The captions of this Agreement are inserted for convenience only and are not to
be construed as part of this Agreement or the applicable SLA or in any way
limiting the scope or intent of its provision.
29. NO WAIVER
--------------
No provision of this Agreement will be deemed to have been waived by either
party unless the waiver is in writing and signed by the party against whom
enforcement is attempted. The rights granted in this Agreement are cumulative of
every other right or remedy that the enforcing party may otherwise have at law
or in equity or by statute and the exercise of one or more rights or remedies
will not prejudice or impair the concurrent or subsequent exercise of other
rights or remedies.
30. REPRESENTATION
-------------------
The parties acknowledge and agree that they have been represented by counsel and
that each of the parties has participated in the drafting of this Agreement.
Accordingly, it is the intention and agreement of the parties that the language,
terms and conditions of this Agreement are not be construed in any way against
or in favor of any party hereto by reason of the responsibilities in connection
with the preparation of this Agreement.
(REMAINDER OF PAGE LEFT INTENTIONALLY BLANK)
28
<PAGE>
31. NOTICES
------------
All notices hereunder shall be in writing and shall be given by (i) established
express delivery service which maintains delivery records, (ii) hand delivery,
or (iii) certified or registered mail, postage prepaid, return receipt
requested. Notices may also be given by facsimile transmission, provided the
notice is concurrently given by one of the above methods. Notices are effective
upon receipt, or upon attempted delivery if delivery is refused or if delivery
is impossible because of failure to provide reasonable means for accomplishing
delivery. The notices shall be sent to the parties at the following addresses:
As to TRITON: Triton PCS Property Company L.L.C.
c/o Triton Management Company, Inc.
375 Technology Drive
Malvern, Pennsylvania 19355
Attn: President
As to CROWN: Crown Communication Inc.
375 Southpointe Boulevard
Canonsburg, Pennsylvania 15317
Attn: Legal Department
CROWN or TRITON may from time to time designate any other address for this
purpose by giving written notice to the other party.
32. GOVERNING LAW
------------------
The laws of the Commonwealth of Pennsylvania, disregarding conflict of law
principles, shall govern this Agreement.
33. THIRD PARTIES
------------------
Any obligations imposed on TRITON in this Agreement shall be equally and fully
applicable to any other third parties that TRITON brings on to the property or
comes upon the property through or under the authority of TRITON.
29
<PAGE>
34. COMPLIANCE WITH FCC RADIO FREQUENCY
----------------------------------------
RADIATION REQUIREMENTS
----------------------
34.1 FUTURE COOPERATION
-----------------------
In the event that TRITON desires to add equipment for new services under a new
or revised SLA (subsequent to an existing Site that has been accepted by TRITON
in accordance with Section 2.3), TRITON will cooperate with CROWN to identify
and resolve any non-compliance with FCC exposure limits prior to construction or
as required by the FCC.
34.2 PROTECTION OF WORKERS OR PUBLIC
------------------------------------
TRITON agrees to temporarily reduce power to allow for maintenance of the tower
upon reasonable notice to prevent possible overexposure of workers to RF
radiation.
34.3 CROWN'S OBLIGATIONS
------------------------
CROWN agrees not to permit any subsequent installation and/or modification on or
to the Site if such installation and/or modification would put any user of the
Site into non-compliance with the FCC's exposure limits for radio frequency
radiation. CROWN further agrees to limit access to the general public in areas
where the FCC's exposure limits are exceeded and agrees to post appropriate
signs warning the general population of such limited access. CROWN also agrees
to create and maintain a site safety plan including limits to RFE exposure as
required by OSHA.
34.5 MUTUAL CERTIFICATIONS
--------------------------
CROWN and TRITON each certifies to the other that (i) it has adopted (or is in
the process of adopting) a safety plan for its employees working in the vicinity
of the Site to ensure that no such person is exposed to RF emissions in excess
of the limits specified by the FCC; (ii) it has distributed (or will distribute)
the safety plans to its employees who have the potential to be exposed to RF
emissions in excess of FCC prescribed limits; and, (iii) its employees have been
directed to comply with the safety plan. Furthermore, CROWN and TRITON agree
that any authorized subcontractors working on either's behalf shall be required
to comply with applicable FCC and Occupational Safety and Health Administration
("OSHA") requirements applicable to RF radiation.
30
<PAGE>
35. INDEX OF TERMS
--------------------
A Sites...............................................................7, 9, 12
Adjusted Fee............................................................ 17
Adjustment Date......................................................... 17
Agreement............................................................... 6
Annual Fee.............................................................. 17
B Sites................................................................. 7, 9
BTS..................................................................... 15
Clean Water Act......................................................... 31
Commencement Date....................................................... 16
Confidentiality Agreement............................................... 31
Construction Services.................................. 7, 9, 10, 11, 15, 32
CROWN................................................................... 6
Crown Site Acquisition Standards........................................ 10
Environmental Hazards.............................................. 24, 29, 30
Event of Default........................................................ 27
Facility................................................................ 15, 4
FCC..................................................................... 16
Force Majeure........................................................... 9
Government Approvals.................................................... 15
Hazardous Substances..................................................... 31
Improvements...................... 9, 10, 12, 15, 17, 19, 23, 25, 16, 32, xiv
Optimization Services.................................................... 32
OSHA................................................................. 35, xiv
Pollutants............................................................... 31
Primary Site........................................................ 7, 8, iii
Prime Lease................................................ 16, 21, 22, 31, 5
Proposal................................................................. 7
Rent Commencement Date................................................... 17
RFE................................................................... 27, 35
Search Areas.............................................................. 7
Site...................................................................... 6
Site Acceptance Package................................................... 9
Site Acquisition Package................................................ 6, 8
Site Acquisition Services................................................. 9
Site Development Agreement................................................ 7
Sites..................................................................... 6
SLA....................................................................... 6
SLA Response............................................................ 7, 8
Substantial Completion.................................................... 9
Tech Team Visit Checklist................................................. 8
TRITON.................................................................... 6
Viable Co-Locate Candidates............................................... 7
31
<PAGE>
[INTENTIONALLY LEFT BLANK]
32
<PAGE>
IN WITNESS WHEREOF, CROWN and TRITON have executed this Agreement as of the
date first above written.
TRITON PCS PROPERTY COMPANY L.L.C.
BY: TRITON MANAGEMENT COMPANY, INC., ITS MANAGER
By: ______________________________
Name: Clyde Smith
Title: CTO and Executive Vice-President
CROWN COMMUNICATION INC., A
DELAWARE CORPORATION
By: ______________________________
John P. Kelly, Executive Vice President
and Chief Operating Officer
33
<PAGE>
EXHIBIT "A" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT
-------------------------------------------------------
INITIAL SITES*
--------------
Site and Market Areas
---------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
SITE STATE BTA NUMBER OF BUILD TO CROWN SITE
TYPE SUITS ACQUISITION
SERVICES
REQUIRED
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A North Carolina Goldsboro-Kingston 8 Yes
- ---------------------------------------------------------------------------------------------------------------------------
A North Carolina Greenville-Washington 8 Yes
- ---------------------------------------------------------------------------------------------------------------------------
A North Carolina Jacksonville 4 Yes
- ---------------------------------------------------------------------------------------------------------------------------
A North Carolina New Bern 8 Yes
- ---------------------------------------------------------------------------------------------------------------------------
A North Carolina Rocky Mount-Wilson 6 Yes
- ---------------------------------------------------------------------------------------------------------------------------
A North Carolina Martinsville 4 Yes
- ---------------------------------------------------------------------------------------------------------------------------
A North Carolina Norfolk 2 Yes
- ---------------------------------------------------------------------------------------------------------------------------
B Virginia Danville 4 No
- ---------------------------------------------------------------------------------------------------------------------------
B Virginia Harrisonburg 4 No
- ---------------------------------------------------------------------------------------------------------------------------
B Virginia Lynchburg 12 No
- ---------------------------------------------------------------------------------------------------------------------------
B Virginia Roanoke 0 No
- ---------------------------------------------------------------------------------------------------------------------------
B Virginia Staunton 8 No
- ---------------------------------------------------------------------------------------------------------------------------
B Virginia Winchester 7 No
- ---------------------------------------------------------------------------------------------------------------------------
B Virginia I-64 Richmond to 4 No
Norfolk
- ---------------------------------------------------------------------------------------------------------------------------
B Virginia I-95 Richmond to 5 No
Fredericksburg
- ---------------------------------------------------------------------------------------------------------------------------
B Virginia I-64 Richmond to 7 No
Charlottesville
- ---------------------------------------------------------------------------------------------------------------------------
B Virginia Route 29 0 No
Charlottesville to
Culpepper
- ---------------------------------------------------------------------------------------------------------------------------
B Virginia I-64 Charlottesville 0 No
to Waynesboro
- ---------------------------------------------------------------------------------------------------------------------------
B Tennessee Kingsport-Johnson City 34 No
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* This table identifies the areas and approximate number of sites that may
become available as new towers in Virginia, North Carolina and Tennessee.
34
<PAGE>
EXHIBIT "B" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT
-------------------------------------------------------
SITE LEASE ACKNOWLEDGMENT
-------------------------
This Site Lease Acknowledgment (the "SLA") is made this ____ day of _________,
19___, by and between TRITON PCS PROPERTY COMPANY L.L.C. ("TRITON") and CROWN
COMMUNICATION INC. ("CROWN"), as part of that certain Master Build to Suit Lease
Agreement (the "Agreement") by and between the parties hereto, dated
___________, 1998. Pursuant and subject to the Agreement, CROWN hereby leases
that portion of the Site described below for the installation, operation and
maintenance of the following wireless communications facility (the "Facility"):
1. The Facility shall consist of TRITON's right to lease the portion of the
Site on that certain parcel of property located in the City of _______________,
the County of ________________ in the State of _______________, more
particularly described as a ___ feet by ___ feet parcel containing approximately
_____ square feet situated at ______, together with the non-exclusive right for
ingress and egress, seven days a week, twenty-four hours a day, on foot or motor
vehicle, including trucks, and for the installation and maintenance of utility
wires, poles, cables, conduits and pipes, over, under or along a ____ feet wide
right of way extending from the nearest public right of way, _____________, to
the demised premises, said premises and right of way for access being
substantially as described in Exhibit "1" to the SLA attached hereto and made a
part hereof. In the event any public utility is unable to use the described
right of way, CROWN hereby agrees to grant, if CROWN has the ability to grant
such right at no additional expense to CROWN, an additional right of way to
TRITON at no cost to TRITON.
2. TRITON shall have the right to install antennas and equipment consistent
with the specifications and in the locations described below:
Manufacturer and type-number: _______
Number of antennas: _______
Weight and dimension of antenna(s) (LxWxD): _______
Transmission line mfr. & type no.: _______
Diameter & length of transmission line: _______
Location of antennas (as described in Exhibit "2"
attached hereto and made a part hereof): _______
Height of antenna(s) on structure: _______
Direction of radiation: _______
Equipment area/building space dimensions (as described
in Exhibit "3" attached hereto and made a part hereof): _______
Frequencies/Max Power Output _______
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3. Unless otherwise agreed in writing, CROWN shall not be responsible for
supplying heating, air conditioning, air conditioning distribution, cable trays,
utilities or emergency power.
4. The Initial Rent due by TRITON is $ ______.
5. TRITON acknowledges that CROWN's rights in the Site derive from a certain
agreement dated ______ between CROWN and ______, hereinafter referred to as the
"Prime Lease" which is to be attached as Exhibit "4" to the SLA attached hereto
and made a part hereof. CROWN shall not terminate the Prime Lease prior to the
expiration of its term or any subsequent extension terms without the express
written consent of TRITON and CROWN shall exercise its rights to extend the term
of the Prime Lease to accommodate TRITON's use of the Site. In the event CROWN
receives any written notice of failure to pay or failure to perform any
covenant, agreement or obligation, CROWN shall notify TRITON of such notice as
soon as the notice is received by CROWN pursuant to the terms of the Prime Lease
and TRITON may take any such action to cure any such failure if CROWN does not
cure the same within the time frame allotted in the Prime Lease. TRITON shall
not be under any obligation to take such action but may do so solely at its own
discretion. In the event TRITON pays any amount or performs any obligations on
behalf of CROWN pursuant to the terms of the Prime Lease, such amounts paid or
the reasonable value of the performance may be deducted from the amount that
would otherwise be due pursuant to this Agreement.
6. TRITON shall have the right to terminate the SLA as provided in Section
2.4.2 of the Agreement.
IN WITNESS WHEREOF, the parties hereto have set their hands and affixed their
respective seals the day and year first written above.
TRITON PCS PROPERTY COMPANY L.L.C.
BY: TRITON MANAGEMENT COMPANY, INC., ITS MANAGER
By: ____________________
Name: ____________________
Title: ____________________
CROWN COMMUNICATION INC.,
A DELAWARE CORPORATION
By: ____________________
John P. Kelly, Executive Vice President
and Chief Operating Officer
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Exhibit "1" to the SLA
----------------------
SITE DESCRIPTION
----------------
37
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Exhibit "2" to the SLA
----------------------
LOCATION OF ANTENNAS
--------------------
38
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Exhibit "3" to the SLA
----------------------
EQUIPMENT AREA/BUILDING SPACE
-----------------------------
39
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Exhibit "4" to the SLA
----------------------
PRIME LEASE
-----------
40
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EXHIBIT "C" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT
-------------------------------------------------------
EXHIBIT C
SCOPE OF WORK
SERVICES: To enable TRITON to develop, deploy and deliver its PCS network, CROWN
has been engaged to perform the various services as more specifically described
in the Attachments to this Exhibit C ("Services").
Work Item Site Type Exhibit Milestone
--------- --------- ------- ---------
Pre-Zoning A C-1 Site Selection
Pre-Design A C-2 Site Selection
Site Selection A C-3 Site Selection
Site Acquisition A & B* C-4 Site Acquisition
Site Survey A & B C-5 Site Construction
Environmental Trans. Screen/NEPA A & B C-6 Site Construction
Geotechnical Report A & B C-7 Site Construction
FAA Survey A & B C-8 Site Acquisition
Zoning A C-9 Site Zoning
Building Permit A & B C-10 Site Construction
Construction Management A & B C-11 Site Construction
Project Reporting A & B* C-12 Site Construction
Project Management A & B** C-13 Site Construction
Closeout A & B** C-14 Site Closeout
* as noted
** except as noted
DEFINITIONS: For purposes of this Agreement, in addition to the items
identified in Section 35 of the Agreement, the following words will have the
following meanings:
"Deliverables" means any items or work product arising from the performance of
CROWN's Services under this Agreement and delivered to TRITON, including letters
of intent, leases, purchase agreements, zoning approvals, building permits,
soil, environmental, title and site reports and studies, drawings, status
reports and similar data, as are to be provided by CROWN under this Agreement.
"PCS" Equipment means TRITON's towers, antennas and related equipment necessary
to deploy and deliver PCS from Sites in the Trading Areas covered by this
Agreement.
"RF" means Wireless Facilities, Inc. or other radio frequency engineering
resource selected by TRITON.
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"Site Selection Milestone" means completing to the satisfaction of the TRITON
the Pre-Zoning, Pre-Design and Site Selection Services described in Exhibits C-1
through C-3.
"Site Acquisition Milestone" means completing to the satisfaction of TRITON all
Site Acquisition, and FAA Survey Services described in Exhibits C-4 and C-8.
"Site Zoning Milestone" means completing to the satisfaction of TRITON all
Zoning Permit Services described in Exhibit C-9.
"Site Construction Milestone" means completing to the satisfaction of TRITON all
Site Survey, Environmental Transaction Screen/NEPA , Geotechnical Report,
Building Permit, Construction Management, Project Reporting and Project
Management services described in Exhibits C-5 through C-7 and C-10 through C-13.
"Site Closeout Milestone" means completing to the satisfaction of TRITON all
Closeout and documentation Services described in Exhibit C-14.
"Search Area" means an area defined by RF as the area in which CROWN should
identify Viable Candidates as indicated by a search ring overlaid on a map to
achieve stated coverage objectives.
"Building Permit" means a permit for construction and any other permits required
by the authorities having jurisdiction that must be issued prior to the start of
construction.
"Third Parties" means other parties that TRITON or CROWN contract in the
performance of their respective obligations under this Agreement.
"Trading Areas" means the BTAs listed in Exhibit A.
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EXHIBIT C-1
PRE-ZONING (A SITES)
1. CROWN will provide for TRITON approval zoning classifications to be
utilized in this phase of the project.
2. CROWN will identify, as defined by TRITON, all zoning jurisdictions within
the Search Area. CROWN will obtain zoning maps and regulations for each
jurisdiction, identifying all restrictions, including, but not limited to;
locations, height restrictions, setback requirements, fence height
restrictions, tower fall zones, and other restrictions. CROWN will obtain
the names and telephone numbers of zoning and building permit contact
persons.
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EXHIBIT C-2
PRE-DESIGN (A SITES)
1. CROWN will identify and catalog all potential sites available to TRITON
from site providers that previously leased space to a CROWN client (to
extent consistent with CROWN's confidentiality obligations to such third
parties), expressed an interest in leasing space to TRITON or are found in
any database listing sites where collocations or communications sites are
welcomed or desired ("Friendly Sites").
2. CROWN will analyze the zoning information collected in Exhibit C-1 to
predetermine the most viable locations and site types within each search
area based on a preliminary zoning prognosis.
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EXHIBIT C-3
SITE SELECTION (A SITES)
1. RF will issue a search area based on its preliminary design (such design will
consider Friendly Sites).
2. RF will deliver search areas to TRITON, which will then issue search areas to
CROWN.
3. CROWN, unless terms or TRITON dictate otherwise, must always give preference
to sites available under TRITON's existing master lease agreements entered
into by TRITON ("Master Leases"). If CROWN cannot utilize sites under Master
Leases, written documentation must be provided to TRITON giving justification
as to why sites under Master Leases cannot be used.
4. CROWN will visit each search area for the purpose of identifying candidates,
catalog ALL viable candidates, prioritize the candidates, and submit the 3
most viable candidates for TRITON approval.
5. A "Viable Candidate" is a site that meets the following criteria:
5.1. The Candidate meets or exceeds RF design requirements based on
acceptable drive tests and/or propagation model results.
5.2. CROWN has determined that the respective property owner (s) has (have)
expressed interest in entering into a lessor-lessee relationship with
TRITON.
5.3. CROWN has determined that the proposed site can be permitted in
accordance with local ordinances within the agreed upon timeline set
forth in Exhibit F.
5.4. CROWN has determined that the proposed site is constructible and can be
completed within the time limits set forth in Exhibit F.
6. CROWN will prioritize the candidates submitted based on leasing and zoning
prognosis to identify the relative viability of the candidates. CROWN will
not submit candidates that cannot be leased and zoned within the agreed upon
timeline set forth in Exhibit F.
7. CROWN will identify a minimum of three (3) viable candidates for each search
area within 20 work days after receipt of the search area from TRITON. CROWN
shall have an additional 10 days to identify potential candidates for
additional search areas if TRITON has delivered more than 50 search areas to
CROWN within a calendar week. If three (3) such candidates are not
available, CROWN will furnish to TRITON a written explanation of CROWN's
reason(s) why unavailable.
8. CROWN will provide search area reports containing the following minimum
information:
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BTA (Trading Area).
Site name.
Acquisition Agent.
GPS coordinates.
Site locale.
Site address or exact location if address unavailable.
4 photos taken from site (photos should be taken for a 360 degree orientation
for all collocation Sites).
Name of site owner and manager and address (if applicable).
Lessor name and address.
Proposed monthly lease rate/purchase price/term.
Physical data (overall structure height, height(s) available to mount
antennas, space available for TRITON's electronic equipment, distance
for coax from antennas to equipment, tower manufacturer and type,
primary use of structure, etc.) Additional specifics will be required as
needed by TRITON.
Presence of transmitters, receivers or antennas visible in the area including
operating frequencies, photographs.
Indicate if space available is/has:
Clean.
phone circuits.
ventilation.
loading dock.
pest infestation.
air conditioning.
emergency power.
moisture/water.
24 hrs/7 day access.
elevator to equipment room.
adjacent or nearby man-made or natural obstructions.
transmitter shelter area - prepare drawings.
describe exact dimensions and locations.
electrical service available.
map with street level detail showing site location.
additional information to assist with site evaluation.
9. TRITON will approve or reject candidates within seven (7) calendar days or
re-design a search area within fourteen (14) calendar days, at TRITON's
option.
10. Site Selection is complete when enough candidates have been submitted with
enough leasing and zoning information to allow for the designation of a
primary and secondary candidate for that search area as provided in Exhibit
C-4(2.2).
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11. CROWN will utilize necessary resources to comply with TRITON's established
scheduled time lines in accordance with this Agreement.
Notwithstanding the foregoing, upon request from CROWN, TRITON may modify its
requirements to decrease the number of site candidates for each search area to
less than three, if TRITON reasonably believes such reduction will facilitate
the objectives of the Agreement.
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EXHIBIT C-4
SITE ACQUISITION (A & B SITES AS NOTED)
1. GENERAL (A SITES)
1.1. CROWN shall coordinate closely all site acquisition work with any Third
Party and TRITON.
1.2. CROWN shall coordinate (and attend if necessary) with owners, TRITON,
and contractors to provide site access for drive tests, RF evaluation,
construction evaluations, or any other reasonable evaluation.
1.3. CROWN shall provide an Inventory (RF Emissions Inventory), to the
extent reasonably possible, of all antennas and microwave dishes on
collocation sites providing the carrier, technology, number of
channels, transmit and receive frequency, power, antenna gain and type.
As part of this inventory CROWN shall provide a sketch locating
(dimensioning) each antenna or microwave dish on the structure
including rad center. CROWN is not obligated to climb any antenna
support facilities or perform any tower mapping to fulfill its
obligation under this Section.
2. LEASING AND SITE ACQUISITION (A SITES)
2.1. CROWN will use CROWN's standard form of lease Agreement as approved by
TRITON. CROWN will pursue raw land candidates only when such candidates
are a better choice from a cost and time to market prospective as
defined by TRITON, or as a backup candidate. Search rings where there
are better choice candidates (candidates better than raw land from a
time to market prospective) will be removed from the scope of this
contract and completed under the Site Development Agreement between
TRITON and CROWN dated November 12,1998, if an A site, or be removed
from the scope of this contract and completed by others if a B site.
48
<PAGE>
2.2. TRITON shall select one primary and one secondary candidate site per
search area for which CROWN shall secure a leasehold or other ownership
interest in the primary and the secondary if so requested by TRITON. At
its sole discretion, TRITON may reduce the required three candidate
sites per search area to one or two sites, as well as require two
leasehold interests to be secured.
2.3. CROWN shall provide a lease summary that provides a summary of all
changes to CROWN's standard lease, all language that is not consistent
with CROWN's standard lease in the case of an Owner lease, all business
terms including but not limited to rate, escalation, access limitations
and construction requirements, and a search area analysis that clearly
identifies why the lease should be accepted by TRITON.
2.4. CROWN shall identify and procure any additional easements or secondary
ground leases needed for ingress or egress to each site.
3. TITLE & OWNERSHIP (A SITES)
3.1. Due diligence with respect to title of all sites to be acquired by
TRITON (by lease, purchase or otherwise) shall be performed at the
option of TRITON as follows:
3.1.1. Acquire an ownership and encumbrance report ("O&E Report") from
a nationally known title insurance company satisfactory to
TRITON which sets forth the same information as required for an
ALTA title insurance policy described below relating to the
proposed site (to the extent ascertainable by the title
company);
3.1.2. Acquire an ALTA title insurance policy on ground leases,
insuring that CROWN is the owner of the leasehold estate
created by the lease covering the site in question, such policy
to be issued by a nationally recognized title insurance company
acceptable to TRITON and CROWN and to be in such amount and to
contain such exceptions to title as are satisfactory to TRITON
and CROWN and in this regard the title insurance requirements
to be followed by CROWN with respect to the insuring of the
leasehold shall be as requested by TRITON.
3.2. CROWN shall manage all title curative work identified in the title
report analysis.
4. THIRD-PARTY SERVICES (A & B SITES EXCEPT AS NOTED)
49
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4.1. Perform or coordinate with the third party to ensure that all applicable
due diligence tests and studies have been performed prior to the start
of site construction to determine to TRITON's and CROWN's reasonable
satisfaction that the proposed site is suitable for TRITON's and CROWN's
intended use, including, but not limited to:
4.1.1. with respect to ground lease sites and vacant land sites only,
soil suitability and compaction testing in accordance with
Exhibits C-6 and C-7;
4.1.2. with respect to sites where TRITON's electronic equipment will
be located on or in existing improvements constructed prior to
1980, obtain an asbestos survey; and
4.2. CROWN shall order and manage (except for title reports for B Sites) and
receive, review, analyze, and make recommendations for TRITON review for
title reports, environmental reports, structural reports, geotechnical
reports, surveys, and other evaluations as required during the
development of the site..
4.3. CROWN shall manage the services provided by architects, engineers,
environmental consultants, surveyors and other third-party contractors
as may be required to carry out this component of service. All such
third-party contractors shall contract directly with CROWN to provide
their services. TRITON reserves the right to approve or disapprove any
third-party contractors or consultants recommended by CROWN.
4.4. CROWN shall procure and provide owner information for the purpose of
site design including, but not limited to: existing drawings, deeds,
zoning ordinances, zoning checklists, drawing review checklists, zoning
maps, tax maps, frequency and antenna spacing information and owner
limitation on the use of space.
5. CONFIRMATIONS (A SITES, EXCEPT AS INDICATED)
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5.1. The following shall be performed and confirmed in writing by CROWN or
CROWN shall coordinate with a Third Party to perform and confirm in
writing:
5.1.1. Legal access to the site;
5.1.2. The site will have adequate utility service available consistent
with specifications provided by TRITON to CROWN;
5.1.3. Necessary building permits or other required governmental
approvals relating to the construction and installation of
TRITON's and CROWN's equipment or other improvements at the site
(A & B Sites);
5.1.4. No easements, conditions, restrictions, liens or other matters
exist of record which negatively impact TRITON's or CROWN's
ability to use the site for its intended purposes, and that
there are no delinquent taxes or assessments;
5.1.5. Properly zoned for TRITON's and CROWN's intended use or whether
a zoning change or variance will be necessary;
5.1.6. Receipt in a recordable form of a Memorandum of Lease and any
Subordination and Non-Disturbance Agreements for signature by
applicable parties, substantially in forms provided by CROWN and
reasonably acceptable to TRITON;
5.1.7. That CROWN has obtained detailed construction drawings and plans
and specifications for all improvements to be constructed or
located upon the site (A & B Sites);
5.1.8. Obtain resolutions or other appropriate authorizations or
consents pertaining to the due execution and delivery of the
lease in question by the lessor/owner of the site.
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6. LAND PURCHASE (A SITES)
6.1.0 If the site is to be acquired by purchase, CROWN shall in addition to
Sections 1 through 5 above:
6.1.0.1 Complete all due diligence items to TRITON's and CROWN's
reasonable satisfaction which are conditions to CROWN's
purchase of a site as set forth in a purchase agreement
(which is to be substantially in the form provided by CROWN
and acceptable to TRITON), including, without limitation,
all requirements and conditions pertaining to title
insurance, survey matters, soil testing, environmental
compliance, governmental authorizations and approvals
relating to the development of the site for TRITON's and
CROWN's intended use of it, the availability of adequate
utility service and legal access to the site, and any other
matters permitted by the terms and provisions of a purchase
agreement to enable TRITON and CROWN's to reasonably
determine whether the site is suitable for TRITON's and
CROWN's intended use of it;
6.1.0.2 Collect from the seller of the site for delivery to CROWN
all documents, surveys, drawings and other information
pertaining to the site which the seller is required to
deliver to CROWN pursuant to the terms of a purchase
agreement;
6.1.0.3 Assure that all requirements of the title company with
respect to the issuance of its policy of owner's title
insurance are satisfied prior to the closing date, to the
extent feasible, but if CROWN completes the purchase of a
site with outstanding title requirements unsatisfied, and
CROWN has so advised TRITON in writing thereof, then CROWN
has no liability or responsibility to TRITON with respect to
any such unsatisfied requirement.
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EXHIBIT C-5
SITE SURVEY (A & B SITES)
1. The Topographic Survey shall be completed within ten (10) business days from
the "Notice to Proceed". Some sites may require a second trip to stake out
monopole/tower foundation centerpoints. All surveys will provide sufficient
information to complete an accurate set of zoning and construction drawings
and shall conform to the requirements of the municipality having
jurisdiction.
1.1. Metes and Bounds survey
1.2. Prepare a boundary survey of the lease area. Show length and bearing of
each line and all significant surface features. This includes natural
features such as lakes, ponds, streams, rock formations, etc. Show all
easements, buildings, utility lines (overhead or underground), fences,
driveways, etc. Tie base area to the parcel containing lease area.
Indicate total square footage area of site and acreage.
1.3. Prepare a contour survey of the lease area. Use contour intervals of
one (1) foot or as required by zoning regulations unless otherwise
directed. Contour lines shall extend 25 feet beyond the boundary of the
leased area in all directions or as required by zoning regulations.
1.4. Indicate roads abutting the property with applicable rights-of-way.
1.5. Stake center point of monopole, tower leg and guy wire anchor pier
foundations.
1.6. Stake corner of lease boundary.
1.7. Set an elevation control point or bench mark.
1.8. Coordinate longitude/latitude conforming to the North American Datum
of 1927 (NAD27) or 1983 (NAD83), as agreed to by TRITON and CROWN.
1.9. Show North (true) using two points with backsight. Stake one azimuth
off True North (Sector A per RF design).
1.10. Include a title block with surveyors' name and address, telephone
number, and date of survey on the drawing. The surveyor's name,
address, date of map production, and registered land surveyor's seal
shall appear on each drawing.
1.11. Indicate whether or not the property is located in a flood zone, and if
so, show the limits of the 100-year flood hazard.
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1.12. Provide a 2C Certificate meeting the FAA regulations for all new
structures and existing structures over 199' or where applicable to
meet FAA regulations. The coordinates and elevation shall be
determined for the highest point on the structure or a point
determined by TRITON. The certificate shall include the registered
land surveyor's seal.
1.13. The surveyor shall provide three copies of the drawings on mylar or
high quality bond paper and an electronic file of the drawing. The
electronic file shall be in AutoCAD Release 12 or higher version.
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EXHIBIT C-6
ENVIRONMENTAL SCREENING/NEPA (A & B SITES)
1. CROWN will provide an Environmental Transaction Screen or a Phase I
Environmental Site Assessment at TRITON's option .
1.1. PHASE I ENVIRONMENTAL SITE ASSESSMENT (ESA)
-----------------------------------------------
1.1.1. Schedule: All Phase I shall be completed within ten (10)
business days from "Notice to Proceed".
1.1.2. The purpose of a Phase I ESA is to identify and define
recognized environmental conditions within the range of
contaminants within the scope of the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA) and petroleum
products. As such, the Phase I ESA satisfies one of the
requirements to qualify for the innocent Company defense to
CERCLA liability: that is, the practices that constitute "all
appropriate inquiry into the previous Ownership and uses of the
property consistent with good commercial or customary practice,"
as defined in 42 USC 9601(35)(B). The ESAs will be conducted in
accordance with American Society for Testing and Materials
(ASTM) Standard: E 1527-94 Practice for Environmental Site
Assessments for Commercial Real Estate, and will consist of four
components: records review, site reconnaissance, interviews, and
a Phase I report. In addition, the Federal Communication
Commission's (FCC) checklist for the National Environmental
Policy Act (NEPA) will be completed as part of the Phase I ESA
report. Each of the Phase I ESA components is discussed in the
following subsections.
1.1.3. Records Review
1.1.3.1. The record review will include a review of environmental
databases, physical setting sources, and historical use
information. The environmental database search will
include both federal and state databases to ASTM-specified
radii of the site. Databases will include the National
Priorities List; the Comprehensive Environmental Response,
Compensation, and Liability Information System (CERCLIS);
Resource Conservation and Recovery Information System
(RCRIS) treatment, storage and disposal facilities and
generators; Emergency Response Notification System; state
list of hazardous waste sites; state landfill and/or solid
waste disposal sites; state leaking underground storage
tank sites (USTs); and state registered USTS. A current
U.S. Geological Survey (USGS) 7.5 minute topographic map
will be obtained for the area in which the property is
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located to evaluate the physical setting. USGS or state
ground water and geological maps may be obtained in some
instances to provide further information. Historical use
information will be obtained from the present to the
property's first developed use or to 1940, whichever is
earlier. Historical sources to be reviewed may include
aerial photographs, fire insurance maps, property tax
files, recorded land title records, USGS maps, local
street directories, building department records, and
zoning and land use records. In addition, records will be
reviewed to determine designated wilderness areas or
preserve, threatened or endangered species, Indian
religious sites, flood plains, wetlands, and zoning for
high intensity white lights under the National
Environmental Policy Act.
1.1.4. Site Reconnaissance
1.1.4.1. A site reconnaissance will be conducted to obtain
information indicating the likelihood of identifying
recognized environmental conditions in connection with the
property. An environmental professional will visit the
site and visually and physically observe the property and
any structures on the property. The interiors of any
structures will be inspected. The methodology used and any
limitations to the observations will be documented. Uses
and conditions to be evaluated include current and past
use of the property and adjoining properties and
surrounding area; geologic, hydrogeologic, hydrologic, and
topographic conditions; structures; roads; potable water
supply; sewage disposal; hazardous substances to include
asbestos and petroleum products; storage tanks; odors;
pools of liquid; drums; containers; polychlorinated
biphenyls (PCBs); heating/cooling; stains or corrosion;
drains and sumps; pits, ponds, or lagoons; stained soil or
pavement; stressed vegetation; solid waste; waste water;
wells; and septic systems. In addition, threatened or
endangered species, and wetlands will be identified during
the site reconnaissance.
1.1.5. Interviews
1.1.5.1. An environmental professional will conduct interviews with
the property owner and occupants and local government
officials to obtain information indicating recognized
environmental conditions in connection with the property.
The information sought during the interviews will be the
same as the uses and conditions to be observed during the
site reconnaissance. The transaction screen questionnaire
in ASTM Standard E 1528-93 Environmental Site Assessments:
Transaction Screen Process will be used during the
interviews. Prior to the site visit the property owner,
site manager, or user will be contacted to obtain any
helpful documents, such as environmental audit reports,
environmental permits, registrations for
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storage tanks, hydrogeological or geotechnical studies,
etc. Local agency officials to be contacted may include
the fire department, public health department, etc.
1.1.6. Phase I ESA Report
1.1.6.1. The report format will follow the table of contents
recommended in Appendix X2 of ASTM E 1527-94, as follows:
1.0. Summary
2. Introduction
2.0. Purpose
2.1. Special Terms and Conditions
2.2. Limitations and Exceptions to Assessment
2.3. Limiting Conditions and Methodology used
3. Site Description
3.0. Location and Legal Description
3.1. Site and Vicinity Characteristics
3.2. Descriptions of Structures, Roads, Other
Improvements
3.3. Information on Environmental Liens or
Specialized Knowledge
3.4. Current Uses of the Property
3.5. Past Uses of the Property
3.6. Current and Past Uses of Adjoining Properties
4. Records Review
4.0. Environmental Database Search
4.1. Physical Setting Sources
4.2. Historical Use Information
4.3. Additional Record Sources
5. Information from Site Reconnaissance and Interviews
5.0. Hazardous Substances in Connection with
Identified Uses
5.1. Hazardous Substance Containers and
Unidentified Substance Containers
5.2. Storage Tanks
5.3. Indications of PCBs
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5.4. Indications of Solid Waste Disposal
5.5. Physical Setting Analysis
5.6. Any Other Conditions of Concern
5.7. Site Plan
6. FCC Checklist for National Environmental Policy Act
7. Findings and Conclusions
8. Qualifications/Signatures of Environmental
Professionals
1.1.6.2 The report appendices will include the USGS map; the
environmental database search report; any documentation of
past use, such as property tax files and land title records;
photographs; any documentation such as previous
environmental reports; and copies of the ESA transaction
screen questionnaire used during interviews.
1.1.6.3 The FCC checklist for NEPA investigations will also be
provided as an appendix in the Phase I ESA report. This FCC
checklist will include answering the following questions:
1. Is the proposed facility located in an officially
designated wilderness area?
2. Is the proposed facility located in an officially
designated wilderness preserve?
3. Will the proposed facility likely affect threatened or
endangered species or designated critical habitats?
4. Will the proposed facility likely jeopardize the
continued existence of any proposed endangered or
threatened species?
5. Will the proposed facility likely result in the
destruction or adverse modification of proposed critical
habitats (as determined by the Endangered Species Act of
1973)?
6. Will the facility affect districts, sites, buildings,
structures or objects, significant in American history,
architecture, archeology, engineering or culture, that
are listed (or eligible for listing) in the National
Register of Historic Places?
7. Will the facility affect Indian religious site(s)?
8. Is the facility located in a flood plain?
9. Will construction of the proposed facility involve
significant change in surface features (e.g., wetland
fill, deforestation or water diversion)?
10. Is the proposed facility located in a residential
neighborhood and is required to be equipped with high
intensity white lights (as defined by local zoning
law)?
58
<PAGE>
1.1.6.4 The RF Exposure Screening Under NEPA will not be included as part of
this work. Specifically the following questions will not be answered.
1. Will the proposed NON-ROOFTOP facility equal or exceed
total power (of all channels) of 2000 Watts ERP (3280
Watts EIRP) and have antennae located less than 10
meters above ground level?
2. Will the proposed ROOFTOP facility equal or exceed total
power (of all channels) of 2000 Watts ERP (3280 Watts
EIRP)?
2. At TRITON's option and expense, CROWN will oversee and cause to be
performed activities required to complete the Environmental Screening
requirement on radio frequency emissions to determine whether the proposed
facilities are located where an operator or transmitter would cause human
exposure to levels of radio frequency radiation in excess of the limits
specified in Subsections 1.1310 and 2.1093, 47 C.F.R. (Applications to the
FCC for construction permits, licenses to transmit or renewals thereof,
equipment authorizations or modifications in existing facilities must
contain a statement confirming compliance with the radio frequency limits
unless the facility, operation or transmitter is categorically excluded as
discussed in Subsection 1.1307. Technical information showing the basis
for this statement must be submitted to the FCC upon request.) This
particular Environmental Screening requirement shall be sufficient to
uncover the impact or potential impact of any such jurisdictional
requirements, including but not limited to, regulatory filings, hearings,
approvals, and/or fees, site sampling, testing, or relocation of the site
requirements.
3. CROWN agrees that the results of any and all Environmental Screening
performed by sub-contractor or third party ("Third Party") shall be timely
reported to TRITON. CROWN acknowledges that the timely reporting of such
information may influence the site acquisition decision, and CROWN shall pro-
actively work in good faith with TRITON to arrive at the optimal site
acquisition decision in light of such information. CROWN agrees to seek
indemnification for TRITON from the Third Party for any costs, including
reasonable attorney fees associated with any environmental remediation, fine or
other penalty imposed on TRITON as the direct or indirect result of Third
Party's failure to detect such impact or requirement as described in this
Exhibit C-6. Should CROWN not obtain this indemnification for TRITON in
CROWN/Third party agreement, CROWN agrees to indemnify TRITON for any costs,
including reasonable attorney fees associated with any environmental
remediation, fine or other penalty imposed on TRITON as the direct or indirect
result of Third party's failure to detect such impact or requirement as
described in this Exhibit C-6.
59
<PAGE>
EXHIBIT C-7
GEOTECHNICAL REPORT (A & B SITES)
CROWN through a Third Party will obtain Geotechnical report for applicable land
sites.
1.0. GEOTECHNICAL INVESTIGATIONS
--------------------------------
1.0.1. Geotechnical Investigations shall be completed within ten (10)
business days from "Notice to Proceed". Geotechnical
investigations, testing, and reporting will allow tower foundation
design by others including but not limited to the following:
1.0.2. Written report shall include the following:
. Site Identification number
. Site Address
. Project description
. Purpose and scope of service
. Site description and local geography
. Seismicity (if applicable)
. Subsurface conditions
. Groundwater information
. Site map of boring area
1.0.3. Tower Data should include but not be limited to:
. Assumed tower foundation type
. Recommended tower foundation types
. Ultimate end bearing pressure
1.0.4. Soil Data should include but not be limited to:
. The depth in which each sample is based
. Resistivity Test (list type of test and conditions at test
site)
. Composition of soil at depths
. Soil unit weight (pcf) moist and submerged
. Friction angle (deg)
. Cohesion (ksf)
. Ultimate side friction (ksf)
. Shear strength (psf)
. Modulus of subgrade reaction (pci)
. 50% strain value
60
<PAGE>
. Ground water depth
. Topsoil/Pavement depth
. Maximum frost depth
. Passive pressure (psf)
1.0.5. RECORD OF SUBSURFACE EXPLORATION
----------------------------------------
. One 40 foot boring per site with sampling at 5-foot intervals
with Split Spoon Sampling and Thin Wall tubes in
representative samples of cohesive materials.
. No rock coring required
. Laboratory testing consisting of gradations and Atterberg
limits on representative materials. Strength tests limited to
unconfined compressive tests on representative cohesive
materials.
61
<PAGE>
EXHIBIT C-8
FAA SURVEY (A & B SITES)
1. FAA Survey to be coordinated and tracked by RF or as otherwise specified by
TRITON.
2. CROWN is responsible to verify the completion of the survey, review the
report, and advise TRITON of approval or "not applicable" status prior to a
construction Notice To Proceed.
62
<PAGE>
EXHIBIT C-9
ZONING (A SITES)
1. CROWN will upon identification of a primary candidate, develop and
continuously manage a relationship with the appropriate zoning authorities
and potential community and jurisdictional opposition groups to eliminate
zoning hearing suprises and ensure timely zoning approval of the site.
2. CROWN will represent TRITON at planning commission, review board, city
council, historical commission, and any other entity necessary to secure
zoning approvals and building permits. TRITON will reasonably cooperate
with CROWN in such process, including, as reasonably determined by CROWN,
making employees/agents of TRITON available to participate at any such
meeting.
3. CROWN will prepare and submit all zoning applications and appeals with
required drawings, and other related materials and obtain any required
zoning approval.
4. CROWN will attend all required hearings and represent TRITON at TRITON's
request, provided however, if reasonably requested by CROWN, TRITON shall
also attend such hearings.
5. CROWN will determine needed compliance with any subdivision regulations for
purchased sites.
6. CROWN will secure zoning approval as evidenced by the jurisdictions
required documentation to the extent required to successfully request and
have a building permit issued to CROWN. CROWN will provide a determination
in writing in the event the jurisdiction does not provide evidence of
approval.
7. CROWN will provide a written zoning strategy for TRITON's prior approval
for any site or group of sites where there is significant potential for
strong opposition or rejection. The zoning strategy will include an
estimate of cost for all required expert testimony and legal counsel.
8. CROWN will be excused from obligations set forth in this Exhibit C-9 to
provide a zoning permit that will result in a building permit upon
fulfilling the following requirements:
. CROWN has in good faith attempted to procure such permits and to no
fault of CROWN, the jurisdiction has refused permitting or otherwise
prevented a permit from being issued, or the site cannot be leased.
63
<PAGE>
. CROWN has diligently pursued the site and met the zoning submission
timeline consistent with the zoning approval forecast identified in
Exhibit F, or the site cannot be leased.
. There is no site in the search area that can be permitted as defined
in the jurisdiction's ordinance or such site that can be permitted can
not be leased.
. CROWN no longer has sufficient work available in the applicable
Trading Area to warrant in-market resources as agreed by TRITON and
CROWN.
. A minimum of 18 months has elapsed since the release of search areas
to CROWN.
. A written request to be excused from the requirements of Exhibit C-9
has been provided by CROWN to TRITON. Such written request will
provide a complete list of all RF acceptable sites in the search area
along with a chronology of contacts and a detailed disposition of each
site (why they cannot be zoned or leased).
9. CROWN will staff at CROWN's expense an M.I.S. graphics specialist and provide
the necessary associated equipment to prepare photo simulations. Photo
simulation will be a critical tool in obtaining landlord and zoning approval.
64
<PAGE>
EXHIBIT C-10
BUILDING PERMIT (A & B SITES)
CROWN shall apply for, coordinate/track and obtain building permit. .
TRITON will for itself and shall cause its subcontractors to cooperate with
Crown in this process. CROWN will be excused from this obligation if:
. CROWN has in good faith attempted to procure such permits and to no fault
of CROWN, the issuing authority has refused permitting or otherwise
prevented a permit from being issued, or the site cannot be leased.
. CROWN has diligently pursued the Site and met the building permit
submission timeline consistent with the building permit approval forecast
identified in Exhibit F, or the Site cannot be leased.
. There is no Site in the search area that can be permitted as defined in the
jurisdiction's ordinance or such site that can be permitted cannot be
leased.
. CROWN no longer has sufficient work available in the applicable Trading
Area to warrant in-market resources as agreed by TRITON and CROWN.
. A minimum of 18 months has elapsed since the release of search areas to
CROWN.
. A written request to be excused from the requirements to Exhibit C-10 has
been provided by CROWN to TRITON. Such written request will provide a
complete list of all RF acceptable sites in the search area along with a
chronology of contacts and a detailed disposition of each site (why they
cannot be permitted or leased).
65
<PAGE>
EXHIBIT C-11
CONSTRUCTION MANAGEMENT (A & B SITES)
1. PRE-CONSTRUCTION PLANNING
1.1. In support of the pre-construction planning requirements, CROWN will
complete the following activities:
1.2. Conduct construction feasibility assessments with all applicable
contractors to assess construction costs, identify potential problems,
and develop the most efficient design for each of the Sites.
Coordinate the production and review of all construction drawings to
comply with TRITON's specifications and requirements set forth in
Exhibit I.
1.3. Coordinate and manage new service requests, field surveys and the
installation of power and telephone service to manage the delivery of
new utility service on time and in compliance with TRITON's
specifications. Act as a liaison with local building jurisdictions to
expedite and obtain construction permits , answer questions and
provide additional information as required. TRITON will provide the
necessary power of attorney or other authorization for CROWN to obtain
power on TRITON's behalf if required by the power company. TRITON will
also assist CROWN in setting up an escrow account to expedite power
delivery if required by the power company.
1.4. Qualify and select Construction subcontractors. Develop and deliver
request for quotation packages, perform pre-bid meetings (bid walks)
with Construction subcontractors, and systematically evaluate the
responses. Each subcontractor is required to participate in a thorough
qualification process during which CROWN will verify, through review
of relevant documents that each is fully insured and has obtained all
required local, state and federal licenses and certifications. Review
safety programs and records, references and the financial viability of
any subcontractor. Coordinate subcontractor selection activities with
TRITON.
1.5. At TRITON's request and additional expense (i) procure materials and
supplies from wireless industry suppliers and manufacturer and (ii)
implement a customized inventory management system, designed to
effectively control material orders and their distribution.
1.6. Provide Material takeoff, expediting, and warehousing support as
required by TRITON.
1.7. Develop a Master Construction Plan that includes a detailed schedule
for each of the Sites. CROWN shall continuously monitor and update to
ensure compliance with project milestones.
66
<PAGE>
1.8. Coordinate with TRITON to minimize, to TRITON's satisfaction, the use
of the same contract labor or contractors (by CROWN and TRITON) to
build the Sites.
67
<PAGE>
2. CONSTRUCTION EXECUTION
2.1. In support of construction execution, CROWN will:
2.2. Conduct pre-construction meetings with subcontractors, property
managers and utility service providers to ensure that construction
objectives, property owner concerns and site specific requirements
are understood and agreed upon by all parties involved in the
buildout of TRITON's network.
2.3. Provide supervision of all construction activities to minimize
disruption to property owners, to adhere to construction
specifications and standards, and complete construction in compliance
with the terms of this Agreement, without limitation, Exhibit F.
3. QUALITY ASSURANCE
3.1. As part of its quality assurance services, CROWN will:
3.2. Conduct a thorough quality assurance inspection upon completion of
each site, ensuring that each of TRITON's punch list items are
resolved within 48 hours.
3.3. Coordinate and attend site inspections with all local building
department representatives.
3.4. Prepare detailed as-built drawings that accurately reflect the
installation at each site.
3.5. Close out each site by compiling and providing TRITON with a
comprehensive site completion package. This package will create an
historical record of everything related to the construction of the
site and includes, without limitation, site identification data,
construction permit documentation, material reconciliation
construction test results, site photographs and as-built drawings.
68
<PAGE>
EXHIBIT C-12
PROJECT REPORTING (A & B SITES AS NOTED)
CROWN will provide TRITON with weekly information regarding the progress of the
work. A list of the tasks that must be reported is found in the matrix below and
next to it a definition of the task and the abbreviation of the site specialist
responsible for reporting the task. This information will be put into a format
acceptable to TRITON. Each status report must include all the following items as
they have changed during that reporting interval. Next to each task must be
included the date it was completed or the expected date of completion. Intervals
for information reporting will be established by TRITON Project Manager in the
market.
MILESTONE & TASK REPORTING RESPONSIBILITIES AND DEFINITIONS
-----------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
MILESTONE/TASK NAME MILESTONE/ TASK DESCRIPTION RESPONSIBILITY SITE
- ------------------- --------------------------- -------------- ----
TYPE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RELEASE SEARCH AREA The date that Search Area has been issued by TRITON to TRITON
CROWN.
- -----------------------------------------------------------------------------------------------------------------
CANDIDATE IDENTIFIED The date that the Site Acquisition has submitted a SITE SA A
CANDIDATE SA A APPROVAL FORM for 3 viable candidates to
TRITON Project Management and the RF group.
- -----------------------------------------------------------------------------------------------------------------
RF APPROVAL The date that the RF Engineer determines that the RF
Candidate in question will provide the coverage
needed for this area.
- -----------------------------------------------------------------------------------------------------------------
PRIMARY DESIGNATED The date that the best candidate for the search area TRITON
has been selected . The Primary site is the site
that is intended to be the site that TRITON builds.
- -----------------------------------------------------------------------------------------------------------------
TECH. TEAM VISIT The date that the team of RF, Site
Acquisition, Zoning, Construction SA, RF, A & B
and Interconnect meet at the site to Plan the site PZ, CM
design, determine the location of ALL equipment and IC
utility runs and create a site sketch.
- -----------------------------------------------------------------------------------------------------------------
LEASE PROCESS This date incorporates the entire lease process from SA A
beginning to end. The completion date for this
task is when the Primary Lease is fully executed by
Landlord and TRITON, all easements are obtained,
secondary landowner leases are fully executed and any
other site license requirements have been obtained.
- -----------------------------------------------------------------------------------------------------------------
STRUCTURAL This is the date when all structural evaluations and CM A & B
engineering has been completed, allowing for
all construction documents to be completed which
includes all requirements for building permits and
bidding purposes.
- -----------------------------------------------------------------------------------------------------------------
SURVEY The date of the land survey being completed. In this CM A & B
case, surveys will only be conducted on raw land sites.
- -----------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL This includes the date of completion of all CM A & B
environmental analysis such as Transaction
Screens, Phase I's, NEPA, Asbestos studies, Wetland
studies and RF Emission studies.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
69
<PAGE>
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
GEOTECH Geotechnical study of soil completed for foundation design. CM A & B
- ----------------------------------------------------------------------------------------------------------------
FAA & AM STUDIES Date of the Airspace study program run and FAA filing completed RF
if required, and the Evaluation, re-tuning and re-evaluation
required to locate antennas on an AM transmission site.
- ----------------------------------------------------------------------------------------------------------------
ZONING DRAWINGS The date that the Drawings for Zoning applications have been CM A & B
completed.
- ----------------------------------------------------------------------------------------------------------------
APPLICATION DEADLINE The deadline date for turning in the application which initiates PZ A
the process of putting the project on the hearing board's calendar
in the jurisdiction.
- ----------------------------------------------------------------------------------------------------------------
ZONING APPLICATION The date that the ZONING APPLICATION has actually been submitted PZ A
SUBMITTED to the jurisdiction.
- ----------------------------------------------------------------------------------------------------------------
HEARING DATE Actual date of the HEARING for that site in the jurisdiction. PZ A
- ----------------------------------------------------------------------------------------------------------------
POWER ORDERED The date that first contact has been made to the electrical CM A & B
utility for ordering power to the site.
- ----------------------------------------------------------------------------------------------------------------
TOWER ORDER AND DELIVERY This is the start date that the TOWER ORDER (monopole, etc.) is CM A & B
placed from the tower manufacturing company, and the finish date
that the tower is delivered.
- ----------------------------------------------------------------------------------------------------------------
FOUNDATION DESIGN ORDER This is the start date that the FOUNDATION DESIGN is ordered from CM A & B
& DELIVERY the tower manufacturing company, and the finish date that the
FOUNDATION DESIGN is delivered.
- ----------------------------------------------------------------------------------------------------------------
CONSTRUCTION DRAWINGS The start and finish dates for the start and completion of the CM A & B
CONSTRUCTION DRAWINGS.
- ----------------------------------------------------------------------------------------------------------------
ZONING APPROVAL The date of the completion of the ZONING APPROVAL process with PZ A
all documents required (resolution, etc.) that enable the building
permit to be applied for or obtained. The start date for this task
is the day of the hearing (if applicable).
- ----------------------------------------------------------------------------------------------------------------
TELCO ORDERED The date of the first contact with the TELCO service provider for IC
the site.
- ----------------------------------------------------------------------------------------------------------------
OBTAIN PERMITS The finish date for this task is the date that ALL construction CM A & B
permits for the site have been approved. The start date for this
task is the date that the first permit is applied for. The finish
date for this task is the date the last permit is received
- ----------------------------------------------------------------------------------------------------------------
NTP TO GC The date that the NOTICE TO PROCEED has been issued to the General CM A & B
Contractor. The is the document that gives the General Contractor
permission to enter the site and begin construction.
- ----------------------------------------------------------------------------------------------------------------
CONSTRUCTION START This is the date that the General Contractor starts construction at CM A & B
the site.
- ----------------------------------------------------------------------------------------------------------------
ANTENNA SYSTEM The finish date for this task is the date that the antenna system CM A & B
installation is complete and ready for testing. The start date for
this task is the first day of construction.
- ----------------------------------------------------------------------------------------------------------------
POWER COMPLETE The finish date for this task is the date that all electrical CM A & B
wiring is complete and the power utility has installed the power
to the site. The start date for this task is the first day of
construction.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
70
<PAGE>
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
SUBSTANTIAL COMPLETION This is the date that the General Contractor has substantially CM A & B
Completed the work at the site. This does not include punch list or
clean up items. In order for a site to be substantially complete
all items that enable the site to go into service must be complete.
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
TELCO ACCEPTANCE This is the date that the TELCO service provider has completed IC
their installation and testing of T 1 service and the conduits
needed to bring service from the DEMARK to the BTS are
installed. There must be a complete circuit from the BTS to
the Switch.
- ----------------------------------------------------------------------------------------------------------------
VENDOR INTEGRATE SITE This is the date that the Equipment Vendor (Ericsson or Nortel) TRITON
have completed the installation of the BTS and integrated it
into the Switch. The start date for this task will be the day
that the vendor installs the BTS.
- ----------------------------------------------------------------------------------------------------------------
RF OPTIMIZATION This is the date that the RF group completes the RF optimization RF
of the site after it is transmitting signal.
- ----------------------------------------------------------------------------------------------------------------
ON AIR This is the date that the site is transmitting signal and TRITON
the site is ready for on air service.
- ----------------------------------------------------------------------------------------------------------------
LEGEND SA = Site Acquisition RF = RF Engineering PZ = Planning & Zoning
CM = Construction Management IC = Interconnect Engineering (TRITION)
</TABLE>
In addition to the items listed above, CROWN is required to provide to TRITON
core site data, such as the site address. A list of this core site data will
be provided upon CROWN entering the market. Additional items to report may be
added to the above list as reasonably determined necessary by TRITON.
In the case of the B Sites, independent contractors not affiliated with CROWN
have been engaged by TRITON to perform the Site Acquisition and Planning and
Zoning tasks tracked in this Exhibit C-12
71
<PAGE>
EXHIBIT C-13
PROJECT MANAGEMENT (A & B SITES EXCEPT AS NOTED)
1. CROWN will provide as they relate to requirements imposed upon CROWN by this
Agreement (ie. Excluding Site Acquisition Services in B Sites), the following
services:
1.1. Develop and implement a thorough deployment plan which tracks all
activities associated with site acquisition (A Sites only) and
construction management for each Site. The deployment plan will clearly
articulate schedule dependencies and critical path elements, identify
the allocation of resources, and update regularly to reflect the actual
deployment.
1.2. Implement a quality assurance program which ensures that all activities
are performed to the highest quality standards .
1.3. Utilize a comprehensive cost accounting system which will include, at a
minimum, procedures for conducting financial transactions, financial
tracking and management, and comprehensive financial reporting .
1.4. Implement a comprehensive relational database that allows single entry
and sharing of all project data. Reporting capabilities must be
developed to accommodate any reasonable TRITON request.
1.5. Implement comprehensive reporting mechanisms so that detailed site
progress is tracked on a daily basis and complete reports are provided
when required by TRITON.
1.6. Implement a comprehensive filing system which ensures that all relevant
site information is organized and available. Utilize electronic means
whenever possible.
1.7. Manage and coordinate interactions among site acquisition, zoning and
other disciplines (A Sites only) and construction management and other
disciplines involved in the system deployment (e.g., RF engineering,
network engineering, marketing). Ensure that both formal and informal
communications among these disciplines are effective and in the best
interest of TRITON.
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<PAGE>
EXHIBIT C-14
CLOSEOUT DOCUMENTATION (A & B SITES, EXCEPT AS NOTED)
Upon completion of the project, compile and produce a file, binder or comparable
package for each site, containing the following minimum information as
applicable to each site.
1. Original Lease/Purchase Agreement (A sites only)
2. Recorded Memorandum of Lease (A sites only)
3. Original Easements (A sites only)
4. Site Candidate Report with Photo's (A sites only)
5. Site Survey
6. Geotechnical Report
7. Environmental Report with TRITON approval
8. Structural Analysis
9. Title Report, Insurance Policy and other curative documentation (A sites
only)
10. FAA consultant study
11. FAA approval
12. Zoning Approval and Use Permit (A sites only)
13. FCC Tower Registration
14. List of all sub-contractors, vendors and A/E trades used on the site, with
contact names, address and telephone numbers listed for each.
15. Test reports for concrete, grounding systems and other construction related
items
16. Stamped tower and tower foundation drawings along with tower design
calculations
17. Stamped equipment shelter plans (if used)
18. Antenna system sweep test results
19. Site construction progress photographs
20. Full lien waivers for all materials and labor used to construct the site
21. Warranties on work, equipment, materials, etc. used on the project.
22. All project correspondence
23. Building Permit Sign-Off
24. Original "Permitted" Drawings
25. Earth Compaction Test (If Applicable)
26. Manufacturer Warranties, Guarantees And Manuals (If Applicable)
27. As-Built Drawings, Submit the field set of red-lines, which would include
all red-lines made during construction. Verify that all Superintendents are
marking up the "For Construction" set each and every day. At a minimum these
drawings should dimensionally locate all underground conduit and/or
conductor lines from permanently located objects or benchmarks, including
lengths of runs between turns, bends, pull boxes, etc. and lateral
dimensions from existing lines and/or critical objects (tanks, buildings,
fences, etc.).
28. Prior to final application for payment, turn over to a TRITON representative
a copy of signed receipt for all keys to locked doors, panels, gates, etc.,
all properly tagged and organized.
29. Final waiver of lien for all Services under this Agreement.
73
<PAGE>
EXHIBIT "D" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT
-------------------------------------------------------
IMPROVEMENTS
------------
"Improvements" include all TRITON material and installations required for
Substantial Completion.
Antenna System Installation
---------------------------
TRITON will provide their own antennas, coaxial cable and jumpers, hoisting
grips, connectors and grounding kits. TRITON will provide all antenna mounting
brackets/frames, coaxial hangers/brackets and clamps and waveguide bridge
materials. CROWN will install all TRITON and CROWN provided antenna and cable
system materials. CROWN will sweep the installed antenna systems per TRITON
specifications and provide the sweep data to TRITON. CROWN will not provide
Optimization Services.
As-Built Drawings
-----------------
Following completion of the construction of the Improvements at each Site, CROWN
will provide "As-Built" drawings for that Site to TRITON detailing all of the
pertinent information relating to TRITON's equipment and antenna system at the
particular Site.
Materials Handling and Delivery
-------------------------------
TRITON will ship all of their coaxial cable, jumpers, hoisting grips,
connectors, grounding kits and antennas to a CROWN designated warehouse
location. CROWN will offload, inventory, store and deliver these materials to
the Site as needed. TRITON will retain responsibility for the storage, delivery,
offloading and installation of their electronics cabinet(s) or frames. If TRITON
wishes to have CROWN take delivery of their electronics, store and deliver
electronics to the Site, and offload and install the cabinet(s), additional
payments will be made by TRITON to CROWN as the parties shall mutually agree.
Additional Construction Services
--------------------------------
CROWN will perform the following under its exclusive direction in accordance
with TRITON's approved specifications and standards set forth in Exhibit I:
(a) install antennas and downtilt brackets.
(b) installation and grounding of coaxial cable for all TRITON antennas
with the appropriate manufacturer's approved hangers;
74
<PAGE>
EXHIBIT "E" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT
-------------------------------------------------------
CROWN SITE ACQUISITION STANDARDS
--------------------------------
1. Ground Lease area no less than:
. Rural - 100' x 100'
. Suburban - 100' x 100'
. Urban - 50' x 50'
2. Access road easement area to be less than:
. up to 200' from the closest public thoroughfare for 95% of Sites
. 201'-300' from the closest public thoroughfare for 3% of Sites
. 301'-900' from the closed public thoroughfare for 2% of Sites
3. Nearest power and "telco" utility connections point to be less than:
. up to 200' from the Site for 95% of Sites
. 201'-300' from the Site for 3% of Sites
. 301'-900' from the Site for 2% of Sites
4. Normal Soil Conditions (i.e., no rock conditions) for 98% of the Sites
5. Average Ground Lease not to exceed $500 per month
6. No revenue sharing with ground owner
7. Minimum permitted tower height:
. Rural - TRITON requirement plus 100'
. Suburban - TRITON requirement plus 50'
. Urban - TRITON requirement plus 25'
8. Zoning and permitting can be reasonably anticipated to be completed in the
time frame consistent with the time frames set forth on Exhibit "F".
9. Construction can be completed within reasonable cost and time limits as set
forth in CROWN's capital budget and development schedule.
75
<PAGE>
EXHIBIT "F" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT
-------------------------------------------------------
SCHEDULE (A & B SITES AS NOTED)*
This page will be replaced with milestone delivery dates for Site selection,
leasing (Site Acquisition work item C-4(2), site zoning, building permit,
Construction start and Construction Complete for each site ( A & B as indicated)
within 21 calendar days of the release of search areas to Crown.
<TABLE>
<CAPTION>
<S>
- ----------------------------------------------------------------------------------------------------------------------
Site Number Site Selection Site Acquisition Site Zoning Building Permit Construction Start Construction
(A & B (A sites) (A Sites) (A Sites) (A & B Sites) (A & B Sites) Complete
Sites) (Substantial
Completion)
(A & B Sites)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Triton has engaged independent third parties not affiliated with Crown to
- ---------------------------------------------------------------------------
perform site selection, site acquisition and site zoning services for the B
- ---------------------------------------------------------------------------
Sides. Therefore, Triton shall cause such independent contractors to meet the
- -----------------------------------------------------------------------------
above timeframes for the B Sites.
- --------------------------------
76
<PAGE>
EXHIBIT F-1
BASE PLAN (A & B SITES AS NOTED [ON EXHIBIT C-12])
The attached base plan represents the Milestones, tasks, and logic that Triton
will use to manage and report progress on this project. Although individual
site plans will vary, the attached represents an average duration for cell site
development.
77
<PAGE>
EXHIBIT F-2
AVERAGE CYCLE TIMES
Following is a list of maximum average cycle times that will be achieved by
Crown (and Triton AS INDICATED) for all assigned sites:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CYCLE MAXIMUM AVERAGE CYCLE TIME SITE TYPE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Final zoning drawings 15 work days from Tech Team Visit A & B
- -----------------------------------------------------------------------------------------------------------------
Final Construction drawings (with Zoning) 25 work days from Tech Team Visit A & B
- -----------------------------------------------------------------------------------------------------------------
Final Construction drawings (no Zoning) 15 Work Days From Tech Team Visit A & B
- -----------------------------------------------------------------------------------------------------------------
Lease Execution (signed by both parties) 60 work days after release of search area A
- -----------------------------------------------------------------------------------------------------------------
TRITON Approval, conditional approval or 5 work days after submission by Crown A
rejection of candidates
- -----------------------------------------------------------------------------------------------------------------
TRITON Acceptance or rejection of friendly 15 work days after submission by Crown A
sites
- ----------------------------------------------------------------------------------------------------------------
Final signoff of lease when terms are 5 work days A
acceptable by Triton
- ----------------------------------------------------------------------------------------------------------------
Surveys, environmentals, geotechs, 10 work days after tech team visit A & B
structurals and other engineering services
- ----------------------------------------------------------------------------------------------------------------
Construction Start to Construction Complete 20 work days A & B
- ----------------------------------------------------------------------------------------------------------------
Zoning resolution to consrtuction permitted 5 work days A & B
- ----------------------------------------------------------------------------------------------------------------
Primary Site Selection to Tech Team Visit 5 Work days A
- -----------------------------------------------------------------------------------------------------------------
Zoning start to zoning finish (hearing) 60 work days A
- ----------------------------------------------------------------------------------------------------------------
Zoning start to zoning finish (no hearing) 15 work days A
- -----------------------------------------------------------------------------------------------------------------
Sac identify and submit 3 candidates 20 work days after reciept of search area. A
- -----------------------------------------------------------------------------------------------------------------
Title Reports 10 work days from release A
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
78
<PAGE>
BUILD - TO - SUITEXHIBIT F-3
Responsibility Matrix
The following matrix specifies the basic responsibilities of all parties to this
agreement.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
RESPONSIBILITY COMPANY CONTRACTOR INCLUDED EXTRA
MANAGED IN EXPENSE TO
SUB QUOTATION COMPANY
CONTRACTS
- ------------------------------------------------------------------------------------------------------------------------------------
GENERAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Design, coordinate, and implement processes and X X
systems for tracking, analyzing, and approving
vendor costs.
- ------------------------------------------------------------------------------------------------------------------------------------
Establish procedures for coordination between X X
Contractors supplying Site Acquisition, Planning,
RF Engineering and Construction Management services
- ------------------------------------------------------------------------------------------------------------------------------------
Develop project budget and schedule X
- ------------------------------------------------------------------------------------------------------------------------------------
Provide project reporting to COMPANY schedule X
reporting system
- ------------------------------------------------------------------------------------------------------------------------------------
Ensure project quality control X X
- ------------------------------------------------------------------------------------------------------------------------------------
Manage status meetings X X
- ------------------------------------------------------------------------------------------------------------------------------------
Attend deployment meetings and report on status X
- ------------------------------------------------------------------------------------------------------------------------------------
Provide specifications and design standards for site X X
development and construction based on RF providing the
Company's height requirement.
- ------------------------------------------------------------------------------------------------------------------------------------
Use Company site numbering system. X X
- ------------------------------------------------------------------------------------------------------------------------------------
Work Order numbering for construction services. X X
- ------------------------------------------------------------------------------------------------------------------------------------
Provide hard or soft copy information / site data for X X
COMPANY site database.
- ------------------------------------------------------------------------------------------------------------------------------------
Input site data field information requirements for X
COMPANY site database.
- ------------------------------------------------------------------------------------------------------------------------------------
Negotiate bulk order purchase agreements with X
Vendors providing Antennas, Coaxial cable,
Connectors, Radio Equipment
- ------------------------------------------------------------------------------------------------------------------------------------
Negotiate bulk order purchase agreements with X X
Vendors providing Towers.
- ------------------------------------------------------------------------------------------------------------------------------------
Determine Milestone tracking parameters X
- ------------------------------------------------------------------------------------------------------------------------------------
Office Space, workstations, telephones, fax X X
machines, printer, paper.
- ------------------------------------------------------------------------------------------------------------------------------------
Computer workstations or laptops, Windows 97 X X
operating system, MS Office Pro 97, McAffee virus
protection for windows 97, Ethernet network
interface cards, individual slave printers (purchase
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
79
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
after verifying with IS) and miscellaneous
office supplies
- ------------------------------------------------------------------------------------------------------------------------------------
Cellular telephones / pagers X X
- ------------------------------------------------------------------------------------------------------------------------------------
Overnight mail services X X
- ------------------------------------------------------------------------------------------------------------------------------------
Film developing, reprographics, etc. X X
- ------------------------------------------------------------------------------------------------------------------------------------
Per diem living expenses for travel X X
- ------------------------------------------------------------------------------------------------------------------------------------
Provide database for all Site Development X X
Disciplines (A sites) and for all Construction
Management disciplines (B sites) to Report and
Access Data
- ------------------------------------------------------------------------------------------------------------------------------------
RESPONSIBILITY COMPANY CONTRACTOR CONTRACTOR INCLUDED EXTRA
MANAGED IN EXPENSE TO
SUB QUOTATION COMPANY
CONTRACTS
- ------------------------------------------------------------------------------------------------------------------------------------
PLANNING & ZONING (A SITES ONLY, EXCEPT AS
NOTED)
- ------------------------------------------------------------------------------------------------------------------------------------
Planing feasibility analysis including existing X X
structures, collocation, and publicly owned land
- ------------------------------------------------------------------------------------------------------------------------------------
Site specific Planning analysis X X
- ------------------------------------------------------------------------------------------------------------------------------------
Prepare Planning applications X X
- ------------------------------------------------------------------------------------------------------------------------------------
Submit Planning applications X X
- ------------------------------------------------------------------------------------------------------------------------------------
Paying for Planing permits (A & B sites) X X
- ------------------------------------------------------------------------------------------------------------------------------------
Submit for building permits (A & B sites) X X
- ------------------------------------------------------------------------------------------------------------------------------------
Provide Planning information to construction X X
management
- ------------------------------------------------------------------------------------------------------------------------------------
Coordinate Planning approvals X X
- ------------------------------------------------------------------------------------------------------------------------------------
Photo simulations X X
- ------------------------------------------------------------------------------------------------------------------------------------
Prepare materials for Public Hearings X X
- ------------------------------------------------------------------------------------------------------------------------------------
Building permit application submittal (A & B sites) X X
- ------------------------------------------------------------------------------------------------------------------------------------
Expert testimony (A & B sites) X X
- ------------------------------------------------------------------------------------------------------------------------------------
Attend public hearings as required X X
- ------------------------------------------------------------------------------------------------------------------------------------
Provide RF Design, drive test, traffic and frequency X
planning and optimization.
- ------------------------------------------------------------------------------------------------------------------------------------
SITE ACQUISITION ( A SITES ONLY, EXCEPT AS
NOTED)
- ------------------------------------------------------------------------------------------------------------------------------------
Approve candidates based on RF plan. X
- ------------------------------------------------------------------------------------------------------------------------------------
Coordinate and arrange for drive test & site visits. X X
- ------------------------------------------------------------------------------------------------------------------------------------
Perform all site acquisition (leasing and zoning) X X
services on Build-to-suit sites.
- ------------------------------------------------------------------------------------------------------------------------------------
Create standard lease agreements (ground lease) X X
[A & B sites].
- ------------------------------------------------------------------------------------------------------------------------------------
Legal review (ground lease) [A & B sites). X X
- ------------------------------------------------------------------------------------------------------------------------------------
Investigate search area map for potential X X
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
80
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
candidates
- ------------------------------------------------------------------------------------------------------------------------------------
Coordinate site candidate visits with Planning and X X
RF.
- ------------------------------------------------------------------------------------------------------------------------------------
Coordinate site candidate visits with Planning, RF, X X
interconnect and Construction (A & B sites).
- ------------------------------------------------------------------------------------------------------------------------------------
Coordinate & pay for Environmental reports as required X X
(A & B sites).
- ------------------------------------------------------------------------------------------------------------------------------------
Conduct Environmental reports as required (A & B X X
sites).
- ------------------------------------------------------------------------------------------------------------------------------------
Provide site data information (A & B sites). X X
- ------------------------------------------------------------------------------------------------------------------------------------
Negotiate Agreement with Property Owner as per X X
Company's policy
- ------------------------------------------------------------------------------------------------------------------------------------
Coordinate Title Search X X
- ------------------------------------------------------------------------------------------------------------------------------------
Pay for Title Search (A & B sites). X X
- ------------------------------------------------------------------------------------------------------------------------------------
Negotiate final lease X X
- ------------------------------------------------------------------------------------------------------------------------------------
Provide lease exhibits X X
- ------------------------------------------------------------------------------------------------------------------------------------
Write initial letter to landlord with first rent check X X
- ------------------------------------------------------------------------------------------------------------------------------------
Rent checks (Ground Lease) (A & B sites). X X
- ------------------------------------------------------------------------------------------------------------------------------------
Perform all FAA & FCC filings required (A & B X X
sites).
- ------------------------------------------------------------------------------------------------------------------------------------
Provide Lease Memo & Subordination and Non- X X
disturbance agreements.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
81
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY CONTRACTOR CONTRACTOR INCLUDED EXTRA
MANAGED IN EXPENSE TO
SUB QUOTATION COMPANY
CONTRACTS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CONSTRUCTION MANAGEMENT
- ------------------------------------------------------------------------------------------------------------------------------------
Perform all construction management on Build-to-suit sites. X X
- ------------------------------------------------------------------------------------------------------------------------------------
Install all Owner supplied material (except BTS and X X
final connections from Telco & Power box to BTS)
- ------------------------------------------------------------------------------------------------------------------------------------
Conduct feasibility for constructability reviews X X
(Power, Telco, Access, design engineering)
- ------------------------------------------------------------------------------------------------------------------------------------
Create or coordinate initial site designs with X X
Planning, Site Acquisition and RF Engineering
- ------------------------------------------------------------------------------------------------------------------------------------
Coordinate the development of Planning and X X
Construction Documents / Drawings
- ------------------------------------------------------------------------------------------------------------------------------------
Pay for Drawings $1,500 per site (Company portion X
of cost to include Company's antennas, cables,
supports, and equipment on Contractor's drawings)
as agreed prior to design.
- ------------------------------------------------------------------------------------------------------------------------------------
Pay for Drawings (Contractor portion of cost to X X
include Contractor's foundation, tower, compound,
and access road on Contractor's drawings) as
agreed prior to design.
- ------------------------------------------------------------------------------------------------------------------------------------
Order geotechnical reports X X
- ------------------------------------------------------------------------------------------------------------------------------------
Pay for geotechnical reports X X
- ------------------------------------------------------------------------------------------------------------------------------------
Coordinate, / order and conduct Site Surveys X X
- ------------------------------------------------------------------------------------------------------------------------------------
Pay for Surveys X X
- ------------------------------------------------------------------------------------------------------------------------------------
Coordinate Structural Evaluations on Towers X X
- ------------------------------------------------------------------------------------------------------------------------------------
Pre-qualify civil and installation contractors X X
- ------------------------------------------------------------------------------------------------------------------------------------
Determine construction NTP process (with X X
flowchart) and work order processing and payment
methods.
- ------------------------------------------------------------------------------------------------------------------------------------
Negotiate Master Construction Agreements with GCs X X
- ------------------------------------------------------------------------------------------------------------------------------------
Obtain construction cost quotes from civil contractors X X
- ------------------------------------------------------------------------------------------------------------------------------------
Coordinate contracts with civil contractors X X
- ------------------------------------------------------------------------------------------------------------------------------------
Pick up building permits X X
- ------------------------------------------------------------------------------------------------------------------------------------
Pay for building permits X X
- ------------------------------------------------------------------------------------------------------------------------------------
Initiate "Notice to Proceed" X X
- ------------------------------------------------------------------------------------------------------------------------------------
Coordination with electric utility for power supply to X X
site
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
82
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Conduct site inspections X X
- ------------------------------------------------------------------------------------------------------------------------------------
Provide punch lists and final civil site acceptance X X
- ------------------------------------------------------------------------------------------------------------------------------------
Coordinate Equipment Delivery and Installation X X
- ------------------------------------------------------------------------------------------------------------------------------------
Coordinate Equipment Vendor and Equipment Installation crews X X
- ------------------------------------------------------------------------------------------------------------------------------------
Provide Construction Status Reports X X
- ------------------------------------------------------------------------------------------------------------------------------------
Assemble close-out documentation and site files X X
- ------------------------------------------------------------------------------------------------------------------------------------
Review civil construction billing X X
- ------------------------------------------------------------------------------------------------------------------------------------
Ensure land use clearance requirements X X
- ------------------------------------------------------------------------------------------------------------------------------------
Prepare Zoning Exhibits X X
- ------------------------------------------------------------------------------------------------------------------------------------
Prepare construction drawings X X
- ------------------------------------------------------------------------------------------------------------------------------------
Develop tower foundation designs X X
- ------------------------------------------------------------------------------------------------------------------------------------
Pay for Structural Analysis and Design X X
- ------------------------------------------------------------------------------------------------------------------------------------
Acquire building and electrical permit approval X X
- ------------------------------------------------------------------------------------------------------------------------------------
Provide As-Built comments and redlines on existing drawings X X
- ------------------------------------------------------------------------------------------------------------------------------------
RESPONSIBILITY COMPANY CONTRACTOR CONTRACTOR INCLUDED EXTRA EXPENSE
MANAGED SUB IN TO COMPANY
CONTRACTS QUOTATION
- ------------------------------------------------------------------------------------------------------------------------------------
Civil site construction X X
- ------------------------------------------------------------------------------------------------------------------------------------
Tower Foundation Installation X X
- ------------------------------------------------------------------------------------------------------------------------------------
Equipment Pad Installation X X
- ------------------------------------------------------------------------------------------------------------------------------------
Access Road Clearing, Grading and Paving X X
- ------------------------------------------------------------------------------------------------------------------------------------
Tower Erection X X
- ------------------------------------------------------------------------------------------------------------------------------------
Tower Obstruction Lighting X X
- ------------------------------------------------------------------------------------------------------------------------------------
Install Equipment Enclosure X X
- ------------------------------------------------------------------------------------------------------------------------------------
AC Power and TELCO support structures X X
- ------------------------------------------------------------------------------------------------------------------------------------
Provide Grounding System Design, Installation and Testing X X
- ------------------------------------------------------------------------------------------------------------------------------------
Provide Site Fencing X X
- ------------------------------------------------------------------------------------------------------------------------------------
Landscaping where required by jurisdiction. X X
- ------------------------------------------------------------------------------------------------------------------------------------
Antenna Support Structures - provide material X
- ------------------------------------------------------------------------------------------------------------------------------------
Antenna Support Structures -- install X X
- ------------------------------------------------------------------------------------------------------------------------------------
Equipment Delivery Off-Loading and Installation (BTS) X
- ------------------------------------------------------------------------------------------------------------------------------------
Provide site installation parameters, specifications and details X X
- ------------------------------------------------------------------------------------------------------------------------------------
Antenna, coax, ice bridge, waveguide ladders and supports Installation X X
- ------------------------------------------------------------------------------------------------------------------------------------
Antenna sweep testing, VSWR Reporting X X
- ------------------------------------------------------------------------------------------------------------------------------------
As-Built drawing Mark-up X X
- ------------------------------------------------------------------------------------------------------------------------------------
Place purchase orders for Antennas, Coaxial cable, X
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
83
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Connectors, Radio Equipment
- ------------------------------------------------------------------------------------------------------------------------------------
Place purchase orders for towers X X
- ------------------------------------------------------------------------------------------------------------------------------------
Coordinate the delivery of Antennas, Towers, X X
Coaxial cable, Connectors, Radio Equipment
- ------------------------------------------------------------------------------------------------------------------------------------
Provide warehousing for equipment as necessary X X
- ------------------------------------------------------------------------------------------------------------------------------------
Order and manage Telco Delivery X
- ------------------------------------------------------------------------------------------------------------------------------------
Coordinate site visits and access for Telco delivery X X
- ------------------------------------------------------------------------------------------------------------------------------------
Order and manage electric service delivery X
- ------------------------------------------------------------------------------------------------------------------------------------
Coordinate site visits and access for electric delivery X X
- ------------------------------------------------------------------------------------------------------------------------------------
Pay for special construction of Telco or power (not X X
to include electronics required by Company).
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
84
<PAGE>
EXHIBIT "G" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT
-------------------------------------------------------
SCHEDULE OF TERMINATION FEES
----------------------------
If Company terminates this Agreement without cause (in absence of a
material breach), Company shall pay to Contractor an amount for each A Site
equal to the aggregate of all of the milestones complete, described below,
achieved by Contractor as of the date of termination. To the extent that
Contractor is between milestones, in addition to payment for all pervious
milestones, Contractor shall be paid fifty (50%) percent of the next
milestone. Company shall also pay to Contractor all third party costs
reasonably incurred prior to such termination or for which Contractor is
obligated to pay related to the terminated Site(s).
<TABLE>
<CAPTION>
Milestone Attachments Milestone Rate
--------- ----------- --------------
<S> <C> <C>
A. Site Selection C-1, C-2, C-3 $1500
B. Site Acquisition-standard C-4 and C-8 $5500
B. Site Acquisition-site license C-4 and C-8 $3800
(MLA by others)
C. Site Zoning-By Right C-9 $3000
C. Site Zoning-Admin Review C-9 $5000
C. Site Zoning-Hearing C-9 $9000
</TABLE>
85
<PAGE>
EXHIBIT "H" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT
-------------------------------------------------------
PERSONNEL
Crown will provide the following minimum personnel at Triton's Richmond office
(9211 Arboretum Parkway, Suite 200, Richmond, VA 23236), or alternate location
acceptable to Triton. These personnel shall remain on the project until CROWN
and TRITON agree upon staff reductions consistent with the reduction of the
outstanding Services to be completed under this Agreement.
<TABLE>
<CAPTION>
<S> <C>
- --------------------------------------------------------------------------------
Title Name
- --------------------------------------------------------------------------------
Project Director
- --------------------------------------------------------------------------------
Project Manager
- --------------------------------------------------------------------------------
Project coordinator/planner/expeditor
- --------------------------------------------------------------------------------
Leasing Manager
- --------------------------------------------------------------------------------
Zoning Manager
- --------------------------------------------------------------------------------
Leasing agents (site acquisition specialists)
[1 for every 8 sites]
- --------------------------------------------------------------------------------
Zoning specialist [1 for every 12 sites,
based on schedule of zoning phase]
- --------------------------------------------------------------------------------
Administrative support [ 1 for every 25 sites]
- --------------------------------------------------------------------------------
paralegal
- --------------------------------------------------------------------------------
Attorney
- --------------------------------------------------------------------------------
Construction Manager
- --------------------------------------------------------------------------------
AE Manager w/ admin and technician
- --------------------------------------------------------------------------------
Construction Superintendents [1 for every 8
sites]
- --------------------------------------------------------------------------------
Utility Coordinator (telco & power)
- --------------------------------------------------------------------------------
Procurement coordinator (mtl takeoff & order)
- --------------------------------------------------------------------------------
Construction contract administrator
- --------------------------------------------------------------------------------
Construction Coordinator
- --------------------------------------------------------------------------------
Engineer for drawings review
- --------------------------------------------------------------------------------
Permit expeditor
- --------------------------------------------------------------------------------
Database Administrator
- --------------------------------------------------------------------------------
</TABLE>
86
<PAGE>
EXHIBIT H-1
ORGANIZATION CHART AND STAFFING PLAN
This page will be replaced with Crown's Organization Chart and staffing plan
within 5 calendar Days of agreement Execution Date.
87
<PAGE>
Exhibit "I" to the Master Build to Suit Lease Agreement
SITE STANDARDS
--------------
I. GENERAL
----------
A. PURPOSE
The purpose of these Site Standards is to create a quality site installation.
These standards are to be in effect for each site at which TRITON has equipment
in, on or at the site and at which TRITON has a right to occupy pursuant to the
Agreement to which this document is an attachment.
B. STATE, NATIONAL, AND OTHER STANDARDS
All installations must conform with all state, national, and other regulations
and the following state and national codes or any supplements, amendments or
provisions which supersede them:
a. American National Standards Institute:
ANSI/EIA-222F Structural Standards for Steel Antenna Towers and
Antenna Supporting Structures
b. FAA Regulations:
Vol. XI, Part 77 Objects Affecting Navigable Airspace
Advisory Circular Obstruction Marking and Lighting AC 70/7460
Advisory Circular High Intensity Obstruction Lighting Systems AC
150/5345-43, FAA/DOD Specifications L-856
c. FCC Rules and Regulations:
Code of Federal Construction, Marking and Lighting of Antenna
Regulations Title 47 Structures Chapter I, Part 17
d. National Electrical Code
e. Building Officials and Code Administrators International, Inc.
Basic National Building Code
Basic National Mechanical Code
State Building Code
f. National Fire Protection Association
Code 101 - Life Safety
Code 90A - Air Conditioning and Ventilating Systems
Code 110 - Emergency and Standby Power Systems
g. State Fire Safety Code
88
<PAGE>
h. OSHA
Safety and Health Standards (29 CFR 1910) General Industry
Subpart R Special Industries
1910.268 Telecommunications
1926.510 Subpart M Fall Prevention
i) Ericsson Radio Systems Inc., Technical Document, RBS Engineering,
Security Level S2, Site Grounding Standards, EUS/E931931.TEC,
Revision B, May 23, 1995, or latest revision
j) Triton Construction Standards to be delivered to CROWN on or
about November 27, 1998.
C. GENERAL/APPROVAL
1. All users shall furnish the following to CROWN prior to installation of any
equipment:
a. Completed Application. (TRITON must make new Application to CROWN for
change in Antenna position or type.)
b. Fully executed supplement.
c. Copies of FCC licenses and construction/building permits.
d. Final site plan outlining property boundaries, Improvements, easements
and access
e. Accurate block diagrams showing operating frequencies, all system
components (active or passive) with gains and losses in dB, along with
power levels.
D. LIABILITY
It shall be the responsibility of TRITON to comply with all of the site
standards set forth herein. TRITON specifically agrees to indemnify and hold
harmless CROWN against any claim of liability, loss, damage or costs including
reasonable attorneys' fees, arising out of or resulting from TRITON's non-
compliance with the standards set forth herein.
E. INSPECTION
CROWN reserves the right to inspect TRITON's area without prior notice at any
time during the term of the Agreement in order to ensure compliance with the
standards set forth herein. Any such inspection shall be solely for the benefit
and use of CROWN and does not constitute any approval of or acquiescence to the
conditions that might be revealed during the course of the inspection.
CROWN reserves the right to inspect TRITON's area without prior notice.
89
<PAGE>
II. ANTENNAS AND ANTENNA MOUNTS
-------------------------------
A. All mounting hardware to be utilized by TRITON to be as specified by tower
manufacturer and approved by CROWN.
B. Connections to be taped with stretch vinyl tape (Scotch #33-T or
equivalent) and Scotchkoted or equivalent (including booted pigtails).
C. Must meet manufacturer's VSWR specifications.
D. Any corroded elements must be repaired or replaced.
E. Must be DC grounded type, or have the appropriate lightning protection as
determined by CROWN.
F. No welding or drilling on mounts will be permitted.
G. All antennas must be encased in fiberglass radomes and be painted or
impregnated with a color designated by CROWN as the standard antenna color
for aesthetic uniformity.
III. CABLE
----------
A. All transmission line(s) will be installed and maintained to avoid kinking
and/or cracking.
B. Tagged with weatherproof labels showing manufacturer, model, and owner's
name at both ends of cable run.
C. Any cable fasteners exposed to weather must be stainless steel.
D. All interconnecting cables/jumpers must have shielded outer conductor.
E. Internally, all cable must be run in troughs or on cable trays and on cable
or waveguide bridges at intervals of no less than 3'. Externally, all cable
must be attached with stainless steel hangers and non-corrosive hardware.
F. All unused lines must be tagged at both ends showing termination points
with the appropriate impedance termination at each end.
G. All AC line cords must be 3 conductor with grounding plugs.
H. All antenna transmission lines shall be grounded at both the antenna and
equipment ends at the equipment ends and at building entry point, with the
appropriate grounding kits.
I. All cables running to and from the exterior of the cabinet must be 100%
ground shielded. Preferred cables are: Heliax, Superflex or braided
grounds with foil wrap.
IV. CONNECTORS
--------------
90
<PAGE>
A. Must be Teflon filled, UHF or N type, including chassis/bulkhead
connectors.
B. Must be properly fabricated (soldered if applicable) if field installed.
C. Must be taped and Scotchkoted or equivalent at least 4" onto jacket if
exposed to weather.
D. Male pins must be of proper length according to manufacturer's
specifications.
E. Female contacts may not be spread.
F. Connectors must be pliers tight as opposed to hand tight.
G. Must be silver plated or brass.
H. Must be electrically and mechanically equivalent to Original Equipment
Manufacturers (OEM) connectors.
V. RECEIVERS
------------
A. No RF preamps permitted in front end unless authorized by CROWN.
B. All RF shielding must be in place.
C. VHF frequencies and higher must use helical resonator front ends.
D. Must meet manufacturer's specifications, particularly with regard to
bandwidth, discriminator, swing and symmetry, and spurious responses.
E. Crystal filters/pre-selectors/cavities must be installed in RX legs where
appropriate.
F. All repeater tone squelch circuitry must use "AND" logic.
VI. TRANSMITTERS
----------------
A. Must meet original manufacturer's specifications.
B. All RF shielding must be in place.
C. Must have a visual indicator of transmitter operation.
D. Must be tagged with TRITON's name, equipment model number, serial number,
and operating frequency(ies).
E. All low-level, pre-driver and driver stages in exciter must be shielded.
F. All power amplifiers must be shielded.
G. Output power may not exceed that specified on applicable FCC license.
91
<PAGE>
VII. COMBINERS/MULTICOUPLERS
----------------------------
A. Shall at all times meet manufacturer's specifications.
B. Must be tuned using manufacturer approval procedures.
C. Must provide a minimum of 60 dB transmitter to transmitter isolation.
VIII. CABINETS
--------------
A. All cabinets must be bonded together and to the equipment building ground
system.
B. All doors must be secured.
C. All non-original holes larger than I" must be covered with copper screen or
solid metal plates.
D. Current license for all operating frequencies should be mounted on the
cabinet exterior for display at all times.
IX. MAINTENANCE/TUNING PROCEDURES
---------------------------------
A. All external indicator lamps/LED's must be working.
B. Equipment parameters must meet manufacturer's specifications.
C. All cover, shield, and rack fasteners must be in place and securely
tightened.
D. Local speakers and/or orderwire systems must be turned off except during
service, testing or other maintenance operations.
X. INTERFERENCE DIAGNOSTIC PROCEDURES
-------------------------------------
TRITON must cooperate immediately with CROWN when called upon to investigate a
source of interference, whether or not it can be conclusively proven that
TRITON's equipment is involved.
XI. TOWER STRUCTURE
-------------------
This section deals with items which are to be mounted on, attached to or affixed
to the tower.
A. ICE SHIELDS
At TRITON's sole discretion, protective ice shields may be required and
manufacturer of ice shield will be determined by CROWN.
92
<PAGE>
B. CLIMBING BOLTS AND LADDERS
All attachments made to the tower structure shall be made in such a manner as
not to cause any safety hazard to other users or cause any restriction of
movement on, or to any climbing ladders, leg step bolts or safety cables
provided.
C. BRIDGE
1. If required, and in accordance with the manufacturer's recommendations for
the spacing of supports on horizontal runs for the particular type of cable
or waveguide, the cable or waveguide shall be secured to the brackets on
the bridge using clamps and hardware specifically manufactured for that
purpose.
2. No cable or waveguide run shall be clamped, tied or in any way affixed to a
run belonging to CROWN.
D. CABLE LADDER AND WAVEGUIDE
1. CROWN shall install a ladder for the vertical routing of cable and
waveguide. From the horizontal to vertical transition at the point where
the bridge meets the tower structure to the point at which the cable or
waveguide must leave the bridge to route to the antenna, all cable and
waveguide is to be attached to the ladder in accordance with the
recommendations of the manufacturer of the cable or waveguide.
2. No cable or waveguide run shall be clamped, tied or any way affixed to a
run belonging to CROWN.
E. DISTRIBUTION RUNS
1. Cable or waveguide runs from the cable ladder to the point at which they
connect to the antenna shall be routed along tower structure members in a
manner producing a neat and professional site appearance.
2. Cable and/or waveguide runs shall be specifically routed so as not to
impede the safe use of the tower structure leg or climbing bolts, or to
restrict the access of CROWN or any another licensee/lessee.
3. Distribution runs shall be clamped to the tower structure in accordance
with the recommendations of the manufacturer of the cable or waveguide.
4. No cable or waveguide run shall be clamped, tied or in any way affixed to a
run belonging to CROWN.
F. LENGTHS
1. Cable and/or waveguide runs shall not be longer than necessary to provide a
proper connection and normal maintenance and operation.
2. No coiled lengths shall be permitted on the tower structure, bridge or on
the ground.
93
<PAGE>
G. ENTRY
1. Entry of the cable or waveguide to the interior of the shelter shall be via
ports provided in the shelter wall.
2. Cable and/or waveguide entering a port shall be provided with a boot to
seal the port; the boot shall be a Microflect or equivalent commercial
product made specifically for the type of cable or waveguide and for
diameter of the entry port. It shall be installed in accordance with the
instructions of the manufacturer and the port shall be sealed against the
intrusion of moisture.
XII. EQUIPMENT LOCATED WITHIN CROWN'S EQUIPMENT BUILDING
--------------------------------------------------------
A. EQUIPMENT INSTALLATION REQUIREMENTS IN CROWN BUILDINGS
1. Any mounting to walls either outside or inside CROWN's building must be
pre-approved by CROWN.
2. All racks and equipment are to be plumb and true with the walls and floor
of the shelter and reflect an installation consistent with the electrical
and operational requirements of the equipment and appearance standards of a
professional installation.
3. Racks are to be bolted to the floor and aligned on the center line as in
the site drawing provided to CROWN.
4. Racks are not to be attached to the cable trays.
B. TRANSMISSION LINES AND/OR WAVEGUIDE ROUTING
1. Cable trays and/or troughs are required within the shelter for the routing
of cable and waveguide to the equipment racks and termination points.
2. All cable and waveguide shall be placed and secured to the cable tray.
C. LENGTHS
1. Cable and/or waveguide runs in the equipment shelter shall not be longer
than necessary in order to provide a proper connection.
2. While adequate slack for purposes of maintenance and operation is
permitted, no coiled lengths on the tray or elsewhere in the shelter are
permitted for normal maintenance and operation.
94
<PAGE>
XIII. GROUNDING
---------------
1. CROWN must adhere to the stricter of the Ericsson, CROWN's, or TRITON's
grounding specification outlined above based on TRITON's equipment at
facility.
2. All exterior grounding shall be C.A.D. welding.
3. All antenna masts shall be bonded via a ground bar to the tower structure.
4. Cable and waveguide shall be grounded as a minimum at three specific
points, and for vertical runs in excess of 200 feet at intermediate points.
5. All cable and waveguide shall be grounded to the tower structure at the
point where the run effectively breaks from the tower structure for its
connection to the antenna, using clamps and hardware specifically
manufactured for that purpose.
6. On the vertical portion of the cable or waveguide run, just above where it
starts to make its transition from a vertical tower to a horizontal bridge
run, all cable and waveguide shall be grounded to the tower structure using
clamps and hardware specifically manufactured for that purpose.
7. On the exterior of each shelter, at a point near the entry ports, a
grounding plate must be provided for terminating ground leads brought from
the cable and waveguide. Each cable and waveguide run shall be grounded at
this point using clamps and hardware specifically manufactured for that
purpose.
8. On cable and waveguide installations where the vertical tower structure
length exceeds 200 feet, the run shall be grounded at equally spaced
intermediate points along the length of the run so as not to have a
distance between grounding points longer than 100 feet.
9. Cable and waveguide grounding leads shall connect to a separate point for
each run to the common ground point.
10. Grounding straps shall be kept to a minimum length and as near as possible
to vertical down lead and shall be consistent with the restraints of
protective dress and access.
11. Grounding plates must be provided for single point access to the site
grounding system. Each rack shall have a properly sized, insulated ground
lead from the rack safety and signal grounds to one of the grounding points
on the ground plate.
12. The insulated ground lead shall follow the route of and be placed in the
cable tray.
13. Each rack shall be separately grounded.
XIV. ELECTRICAL
---------------
1. Polarized electrical outlets should be installed for all transmitters when
possible.
95
<PAGE>
XV. ELECTRICAL DISTRIBUTION
---------------------------
All electrical wiring from the distribution breaker panel shall be via rigid
metal conduit, thin wall, routed along the under side of the cable tray to a
point directly above the equipment rack. From this point, TRITON may select how
to distribute to its equipment or rack.
XVI. TEMPORARY LOADS
--------------------
1. Test equipment, soldering irons or other equipment serving a test or repair
function may be used only if the total load connected to any single dual
receptacle does not exceed 15 amps.
2. Except as otherwise provided in the Agreement, test equipment to be in
place for more than seven (7) days will require prior approval of CROWN.
XVII. DOORS
-----------
Equipment building doors shall be kept closed at all times unless when actually
moving equipment in or out.
XVIII. SITE APPEARANCE
----------------------
1. Each licensee/lessee is expected and required to remove from the site all
trash, dirt and other materials brought into the shelter, or onto the site
during their installation and maintenance efforts.
2. No food or drink is allowed within CROWN equipment shelters.
3. No smoking is allowed at the Site.
XIX. STORAGE
------------
No parts or material may be stored on site by TRITON.
XX. DAMAGE
----------
TRITON shall report to CROWN any damage to any item of the facility, structure,
component or equipment, whether or not caused by TRITON.
XXI. REPORTING ON SITE
----------------------
Emergency 24 hour contact number(s) must be displayed on outside of equipment
cabinet/building
96
<PAGE>
EXHIBIT "J" TO THE MASTER BUILD TO SUIT LEASE AGREEMENT
-------------------------------------------------------
ANNUAL FEE
----------
I. Initial Monthly Rent Schedule/1/
-----------------------------------
First Year - $1,200.00 per month
Fee adjustment per Section 7 applies after first year.
II. Additional Rent
-------------------
A. For each additional antenna or transmission line in excess of the
maximum set forth in footnote 1, below, the additional monthly rent
shall be as mutually agreed upon by the parties.
B. For a foundation and grounding system larger than 10' x 12' a one-time
additional payment shall be as mutually agreed by the parties;
provided, however, Triton may without additional charge be entitled to
a maximum of two 12' x 28' pads per BTA.
C. For a foundation and grounding system exceeding 10' x 12' , the
additional monthly rent shall be as mutually agreed by the parties,
provided, however Triton may without additional charge be entitled to
a maximum of two 12' x 28' pads per BTA.
/1/ The Initial Monthly Rent Schedule is for a maximum of nine (9) PCS panel
antennas and UP TO 12 transmission lines (none of which transmission lines
shall exceed a diameter of 2 1/4"). 2 Microwave dishes up to 6 feet in diameter
are specifically included in this Agreement. Notwithstanding the foregoing or
any provision in the Agreement to the contrary, in the event that technological
advances or changes occur and TRITON desires to substitute or replace the
antennas upon any applicable Site, TRITON may substitute modify, alter or change
the antennas and/or transmission lines upon the applicable tower structure and
applicable Site provided that such substitution, modification, alteration or
change does not increase the burden that such antennas and cable impose upon the
structural load or wind load upon the applicable tower structure and does not
require an increase in the ground or tower space for the applicable Site.
97
<PAGE>
[EXECUTION COPY]
EXHIBIT
================================================================================
NORFOLK PREFERRED STOCK PURCHASE AGREEMENT
by and among
CASH EQUITY INVESTORS,
MANAGEMENT STOCKHOLDERS,
INDEPENDENT DIRECTORS,
and
TRITON PCS HOLDINGS, INC.
Dated as of December 31, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I................................................................................................. -2-
DEFINITIONS...................................................................................... -2-
ARTICLE II................................................................................................ -8-
CONTRIBUTIONS; PURCHASE AND SALE OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER................. -8-
2.1 Norfolk Commitments............................................................ -8-
-------------------
2.2 Issuance of Securities......................................................... -8-
----------------------
2.3 Restrictive Legends............................................................ -8-
-------------------
2.4 Use of Proceeds................................................................ -9-
---------------
ARTICLE III............................................................................................... -9-
CLOSING.......................................................................................... -9-
3.1 Time and Place of Closing...................................................... -9-
-------------------------
3.2 Closing Actions and Deliveries................................................. -9-
------------------------------
3.3 Payment of Transfer Taxes...................................................... -10-
-------------------------
ARTICLE IV................................................................................................ -10-
REPRESENTATIONS AND WARRANTIES OF CASH EQUITY INVESTORS,MANAGEMENT STOCKHOLDERS AND INDEPENDENT
DIRECTORS........................................................................................ -10-
4.1 Organization, Power and Authority.............................................. -10-
---------------------------------
4.2 Consents; No Conflicts......................................................... -11-
----------------------
4.3 Litigation..................................................................... -12-
----------
4.4 FCC Compliance................................................................. -12-
--------------
4.5 Brokers........................................................................ -12-
-------
4.6 Capital Commitment............................................................. -12-
------------------
4.7 No Distribution................................................................ -12-
---------------
4.8 Investor Acknowledgments....................................................... -12-
------------------------
ARTICLE V................................................................................................. -13-
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................... -13-
5.1 Organization, Power and Authority.............................................. -13-
---------------------------------
5.2 Consents; No Conflicts......................................................... -14-
----------------------
5.3 Litigation..................................................................... -15-
----------
5.4 FCC Compliance................................................................. -15-
--------------
5.5 Brokers........................................................................ -15-
-------
5.6 Capitalization................................................................. -15-
--------------
5.7 Shares......................................................................... -15-
------
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
5.8 Subsidiaries................................................................... -16-
------------
5.9 Offering of Securities......................................................... -16-
----------------------
5.10 Small Business Matters......................................................... -16-
----------------------
ARTICLE VI................................................................................................ -16-
COVENANTS........................................................................................ -16-
6.1 Consummation of Transactions................................................... -16-
----------------------------
6.2 [INTENTIONALLY OMITTED]........................................................ -17-
6.3 [INTENTIONALLY OMITTED]........................................................ -17-
6.4 [INTENTIONALLY OMITTED]........................................................ -17-
6.5 Use of Proceeds................................................................ -17-
---------------
6.6 SBIC Regulatory Provisions..................................................... -17-
--------------------------
6.7 Regulatory Compliance Cooperation.............................................. -18-
---------------------------------
6.8 Related Agreement Amendments................................................... -18-
----------------------------
6.9 Offering of Securities......................................................... -19-
----------------------
6.10 Waiver of Preemptive Rights.................................................... -19-
---------------------------
ARTICLE VII............................................................................................... -19-
CLOSING CONDITIONS............................................................................... -19-
7.1 Conditions to Obligations of All Parties....................................... -19-
----------------------------------------
7.2 Conditions to the Obligations of the Company................................... -20-
--------------------------------------------
7.3 [INTENTIONALLY OMITTED]........................................................ -21-
7.4 Conditions to the Obligations of the Cash Equity Investors..................... -21-
----------------------------------------------------------
ARTICLE VIII.............................................................................................. -22-
SURVIVAL AND INDEMNIFICATION..................................................................... -22-
8.1 Survival....................................................................... -22-
--------
8.2 [INTENTIONALLY OMITTED]........................................................ -22-
8.3 Indemnification by the Cash Equity Investors................................... -22-
--------------------------------------------
8.4 Indemnification by the Company................................................. -23-
------------------------------
8.5 Indemnification by the Management Stockholders................................. -23-
----------------------------------------------
8.6 Indemnification by the Independent Directors................................... -23-
--------------------------------------------
8.7 Procedures..................................................................... -24-
----------
8.8 Registration Rights............................................................ -25-
-------------------
8.9 Limit on Indemnity............................................................. -25-
------------------
ARTICLE IX................................................................................................ -25-
TERMINATION...................................................................................... -25-
9.1 Termination.................................................................... -25-
-----------
9.2 Effect of Termination.......................................................... -26-
---------------------
ARTICLE X................................................................................................. -26-
MISCELLANEOUS PROVISIONS......................................................................... -26-
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
10.1 Amendment and Modification..................................................... -26-
--------------------------
10.2 Waiver of Compliance; Consents................................................. -26-
------------------------------
10.3 Notices........................................................................ -26-
-------
10.4 Expenses....................................................................... -27-
--------
10.5 Parties in Interest; Assignment................................................ -27-
-------------------------------
10.6 Applicable Law................................................................. -28-
--------------
10.7 Counterparts................................................................... -28-
------------
10.8 Interpretation................................................................. -28-
--------------
10.9 Entire Agreement............................................................... -28-
----------------
10.10 Specific Performance........................................................... -28-
--------------------
10.11 Remedies Cumulative............................................................ -28-
-------------------
</TABLE>
-iii-
<PAGE>
LIST OF SCHEDULES
Schedule I -- Cash Equity Investors and Commitments
Schedule II -- Management Stockholders
Schedule III -- Independent Directors
Schedule 4.2 -- Cash Equity Investor Consents
Schedule 4.4 -- Cash Equity Investor Attributable Interests
Schedule 5.2 -- Company Consents
Schedule 5.6(a) -- Equity Ownership
Schedule 5.6(b) -- Obligations to Issue Capital Stock
Schedule 5.8 -- Company Subsidiaries
<PAGE>
Norfolk Preferred Stock Purchase Agreement
NORFOLK PREFERRED STOCK PURCHASE AGREEMENT, dated as of December 31, 1998
by and among the investors listed on Schedule I (individually, a "Cash Equity
---------- -----------
Investor" and, collectively, the "Cash Equity Investors"), the individuals
- -------- ---------------------
listed on Schedule II (individually, a "Management Stockholder" and
----------- ----------------------
collectively, the "Management Stockholders"), the individuals listed on Schedule
----------------------- --------
III (individually, an "Independent Director" and collectively, the "Independent
- --- -------------------- -----------
Directors"), and Triton PCS Holdings, Inc., a Delaware corporation (the
- ---------
"Company").
-------
W I T N E S S E T H
WHEREAS, the Cash Equity Investors, the Management Stockholders and the
Independent Directors are stockholders of the Company; and
WHEREAS, the Company and AT&T Wireless PCS, Inc., a Delaware corporation
("AT&T PCS"), are parties to that certain Asset Purchase Agreement dated as
--------
August 20, 1998 (the "Norfolk Acquisition Agreement") pursuant to which the
-----------------------------
Company and/or one or more of its direct or indirect wholly-owned subsidiaries
intends to acquire certain of AT&T PCS' assets relating to the PCS system in the
Norfolk, Virginia BTA (the "Norfolk Acquisition"), including 20 MHz of the 30
-------------------
MHz of the PCS license owned by AT&T PCS covering such market (the "AT&T PCS
--------
License"); and
- -------
WHEREAS, in connection with the consummation of the transactions
contemplated by the Norfolk Acquisition Agreement, (a) as part of the
consideration payable by the Company to AT&T PCS thereunder, the Company will
issue additional securities to AT&T PCS, (b) each of the Cash Equity Investors
wishes to purchase additional securities of the Company in consideration of
contributions of cash to the capital of the Company, and (c) the Company wishes
to accept such contributions and to issue additional securities to each of the
Cash Equity Investors, the Management Stockholders and the Independent
Directors, all on the terms and subject to the conditions herein set forth; and
WHEREAS, the parties intend to consummate the transactions contemplated
hereby immediately prior to the consummation of the transactions contemplated by
the Norfolk Acquisition Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the parties agree as follows:
-1-
<PAGE>
ARTICLE I
DEFINITIONS
-----------
As used herein, the following terms have the following meanings
(unless indicated otherwise, all Section and Article references are to Sections
and Articles in this Agreement, and all Schedule and Exhibit references are to
Schedules and Exhibits to this Agreement):
"Affiliate" means, with respect to any Person, any other Person that
---------
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with that Person. For purposes of this
definition, "control" (including the terms "controlling" and "controlled") means
------- ----------- ----------
the power to direct or cause the direction of the management and policies of a
Person, directly or indirectly, whether through the ownership of securities or
partnership or other ownership interests, by contract or otherwise.
"Agreement" means this Norfolk Preferred Stock Purchase Agreement, as
---------
the same may be amended, modified or supplemented in accordance with the terms
hereof.
"AT&T PCS" has the meaning set forth in the recitals.
--------
"AT&T PCS License" has the meaning set forth in the recitals.
----------------
"Business Day" means any day that is not a Saturday, Sunday or other
------------
day on which commercial banks in New York City are authorized or required by Law
to remain closed.
"Capital Stock" means any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase or subscribe for any of
the foregoing, or any warrants, rights or options to purchase or subscribe for
any such warrants, rights or options.
"Cash Equity Investors" has the meaning set forth in the preamble.
---------------------
"Claim" has the meaning set forth in Section 8.7(a).
-----
"Closing" has the meaning set forth in Section 3.1.
-------
"Closing Date" has the meaning set forth in Section 3.1.
------------
"Common Stock" has the meaning set forth in Section 2.2(a).
------------
"Company" has the meaning set forth in the preamble.
-------
-2-
<PAGE>
"Confidential Information" means any and all information regarding the
------------------------
business, finances, operations, products, services and customers of the Person
specified and its Affiliates, in written or oral form or in any other medium.
"Consents" means all consents and approvals of Governmental
--------
Authorities or other third parties necessary to authorize, approve or permit the
parties hereto to consummate the Transactions.
"Contributions" means the cash contributions of Cash Equity Investors
-------------
in respect of their Norfolk Commitment.
"Credit Agreement" means the agreement among the Company, the lenders
----------------
and the agents referred to therein, dated as of the February 3, 1998, as amended
by the First Amendment, Consent and Waiver dated as of April 24, 1998 and the
Second Amendment dated as of July 29, 1998 and the Third Amendment dated as of
November 17, 1998, providing a credit facility having aggregate commitments of
$425 million, as the same may be amended, modified or supplemented in accordance
with the terms thereof.
"Credit Documents" means the Credit Agreement and all agreements,
----------------
instruments and documents executed and delivered pursuant thereto, as the same
may from time to time be amended, modified or supplemented in accordance with
the terms thereof.
"Employment Agreements" means collectively the Employment Agreements
---------------------
dated as of February 4, 1998 between Triton Management and each of Michael E.
Kalogris and Steven R. Skinner, and the Employment Agreement dated as of January
8, 1998 between Triton Management and Clyde Smith, each as amended as of June
29, 1998 and as the same may be amended, modified or supplemented in accordance
with the terms thereof.
"FCC" means the Federal Communications Commission or similar
---
regulatory authority established in replacement thereof.
"FCC Law" means the Communications Act of 1934, as amended, including
-------
as amended by the Telecommunications Act of 1996, and the rules, regulations and
policies promulgated thereunder.
"Final Order" has the meaning set forth in Section 7.1(b).
---------- --------------
"Financing" has the meaning set forth in the SBIC Regulations.
---------
"Governmental Authority" means a Federal, state or local court,
----------------------
legislature, governmental agency (including, without limitation, the United
States Department of Justice), commission or regulatory or administrative
authority or instrumentality.
-3-
<PAGE>
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
-------
of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning set forth in Section 8.7(a).
----------------- --------------
"Indemnifying Party" has the meaning set forth in Section 8.7(a).
------------------ -------------
"Independent Directors" has the meaning set forth in the preamble.
---------------------
"Investors Stockholders' Agreement" means the Investors Stockholders'
---------------------------------
Agreement dated as of February 4, 1998 by and among the Company and certain
stockholders of the Company, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Law" means applicable common law and any statute, ordinance, code or
---
other law, rule, permit, permit condition, regulation, order, decree, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority.
"License" means a license, permit, certificate of authority, waiver,
-------
approval, certificate of public convenience and necessity, registration or other
authorization, Consent or clearance issued or granted by a Governmental
Authority, including without limitation, Licenses to construct or operate a
facility, including any emissions, discharges or releases therefrom, or to
transact an activity or business, to construct a tower or to use an asset or
process.
"License Transfer" means the assignment of any License requiring the
----------------
Consent of the FCC or any equivalent state Governmental Authority.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest, right of first refusal or right of others therein, or
encumbrance of any nature whatsoever in respect of such asset.
"Losses" has the meaning set forth in Section 8.2.
------ -----------
"Management Agreement" means the Construction and Operating Agreement
--------------------
dated July 31, 1998 between AT&T PCS and Triton Operating Company.
"Management Stockholders" has the meaning set forth in the preamble.
-----------------------
"Material Adverse Effect" means a material adverse effect on the
-----------------------
business, financial condition, assets, liabilities or results of operations or
prospects of the Person specified.
"Morgan Entity" means J.P. Morgan Investment Corporation and Sixty
-------------
Wall Street SBIC Fund, L.P.
-4-
<PAGE>
"Network Membership License Agreement" means the Network Membership
------------------------------------
License Agreement dated as of February 4, 1998 between AT&T Corp., a New York
corporation, and Triton Operating Company, as the same may be amended, modified
or supplemented in accordance with the terms thereof.
"New York Courts" has the meaning set forth in Section 10.6.
--------------- ------------
"Norfolk Acquisition" has the meaning set forth in the recitals.
-------------------
"Norfolk Acquisition Agreement" has the meaning set forth in the
-----------------------------
recitals.
"Norfolk Commitment" means, with respect to each Cash Equity Investor,
------------------
the amount set forth opposite its name on Schedule I under the heading "Norfolk
----------
Commitment".
"Opinion of Counsel" or "Opinion of Special FCC Counsel" means, with
------------------ ------------------------------
respect to any Person, a legal opinion of such Person's counsel substantially in
the form and substance of the legal opinion rendered on behalf of such Person
in connection with the consummation on February 4, 1998 of the transactions
contemplated by the Securities Purchase Agreement.
"Person" means an individual, corporation, partnership, limited
------
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization, or other legal entity.
"Preferred Stock" means the shares of Series C Preferred Stock and
---------------
Series D Preferred Stock to be issued hereunder in accordance with the terms
hereof.
"Regulatory Problem" means, with respect to any SBIC Holder providing
------------------
Financing under this Agreement, any set of facts or circumstances wherein it has
been asserted by any Governmental Authority (or any SBIC Holder reasonably
believes in good faith that there is a substantial risk of such assertion) that
such SBIC Holder and its Affiliates are not entitled to hold, or exercise any
significant right with respect to, the Securities.
"Related Agreement Amendments" has the meaning set forth in Section
----------------------------
6.8.
"Related Agreements" means the Network Membership License Agreement,
------------------
the Employment Agreements, the Vesting Agreements, the Resale Agreement, the
Roaming Agreement, the Stockholders' Agreement, and the Investors Stockholders'
Agreement.
"Resale Agreement" means the form of Resale Agreement attached as
----------------
Exhibit C to the Securities Purchase Agreement, as the same may be amended,
- ---------
modified or supplemented in accordance with the terms thereof.
-5-
<PAGE>
"Restated Certificate" means the Amended and Restated Certificate of
--------------------
Incorporation of the Company, dated as of February 4, 1998, as amended December
7, 1998, as the same may be amended, modified or supplemented in accordance with
the terms thereof.
"Roaming Agreement" means the Intercarrier Roamer Service Agreement
-----------------
dated as of February 4, 1998 between Triton Operating Company and AT&T Wireless
Services, Inc., as the same may be amended, modified or supplemented in
accordance with the terms thereof.
"SBA" has the meaning set forth in Section 6.6(b).
--- --------------
"SBA Compliance Documents" has the meaning set forth in Section
------------------------ -------
7.4(f).
- -----
"SBIC" means a small business investment company licensed under the
----
SBIC Act.
"SBIC Act" means the Small Business Investment Company Act of 1958, as
--------
amended.
"SBIC Holder" means each Cash Equity Investor that is an SBIC.
-----------
"SBIC Regulations" means the SBIC Act and the regulations issued
----------------
thereunder as set forth in 13 CFR (S)(S)107 and 121, as amended.
"Section 8.3 Indemnified Party" has the meaning set forth in Section
----------------------------- -------
8.3.
- ---
"Section 8.4 Indemnified Party" has the meaning set forth in Section
----------------------------- -------
8.4.
- ----
"Section 8.5 Indemnified Party" has the meaning set forth in Section
------------------------------ -------
8.5.
- ---
"Section 8.6 Indemnified Party" has the meaning set forth in Section
----------------------------- -------
8.5.
- ---
"Securities" means the shares of Common Stock, Series C Preferred
----------
Stock and Series D Preferred Stock to be issued hereunder in accordance with the
terms hereof, together with any shares of Series C Preferred Stock or Common
Stock issued upon conversion of any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules, regulations and policies promulgated thereunder.
"Securities Purchase Agreement" means the Securities Purchase
-----------------------------
Agreement dated as of October 8, 1997 by and among the Company, AT&T PCS, the
Cash Equity Investors and certain of the Management Stockholders, as amended by
that certain Amendment No. 1 to Securities Purchase Agreement and Consent
Agreement dated as of March 10, 1998, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
-6-
<PAGE>
"Series A Preferred Stock" has the meaning set forth in Section
------------------------
5.6(a).
- -----
"Series B Preferred Stock" has the meaning set forth in Section
------------------------ -------
5.6(a).
- -----
"Series C Preferred Stock" has the meaning set forth in Section
------------------------
2.2(a).
- -----
"Series D Preferred Stock" has the meaning set forth in Section
------------------------
2.2(b).
- -----
"Stockholders' Agreement" means the Stockholders' Agreement dated as
-----------------------
of February 4, 1998 by and among the Company, AT&T PCS, and the other
stockholders of the Company, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Subsidiary" shall mean, with respect to any Person, a corporation or
----------
other entity of which 50% or more of the voting power or the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
"Transactions" means the transactions contemplated by this Agreement.
------------
"Transfer Taxes" has the meaning set forth in Section 3.3.
--------------
"Triton Management" means Triton Management Company, Inc., a Delaware
-----------------
corporation and Subsidiary of the Company.
"Triton Operating Company" means Triton PCS Operating Company L.L.C.,
------------------------
a Delaware limited liability company and Subsidiary of the Company.
"Triton PCS" means Triton PCS, Inc., a Delaware corporation and
----------
Subsidiary of the Company.
"Vesting Agreements" means the letter agreements dated as of February
------------------
4, 1998 among the Company, Triton Management and each of Clyde Smith, David
Clark, Patricia Gallagher, David Standig, Michael Mears, and any other Person
who has been required to sign a similar agreement (including the Independent
Directors pursuant to letter agreements dated as of June 26, 1998) as a
condition to the award of any of the Company's Capital Stock, each as amended as
of June 29, 1998 and as the same may be amended, modified or supplemented in
accordance with the terms thereof.
ARTICLE II
CONTRIBUTIONS; PURCHASE AND SALE
OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER
-----------------------------------------------
-7-
<PAGE>
1.1 Norfolk Commitments. Upon the terms and subject to the conditions
-------------------
hereof and in reliance upon the representations, warranties and agreements
herein contained: (a) each Cash Equity Investor hereby irrevocably commits,
severally and not jointly, to contribute to the capital of the Company an amount
equal to its Norfolk Commitment, and (b) at the Closing, each Cash Equity
Investor shall contribute to the capital of the Company an amount equal to its
Norfolk Commitment and the Company shall accept such Contribution to the capital
of the Company.
1.2 Issuance of Securities. Upon terms and subject to the conditions
----------------------
hereof and in reliance upon the representations, warranties and agreements
herein contained, in consideration of the Transactions, the Company shall issue,
sell and deliver to the Cash Equity Investors, the Management Stockholders and
the Independent Directors the following Securities at the Closing:
(1) to each of the Cash Equity Investors, the number of shares of the
Company's Series C Convertible Preferred Stock, par value $.01 per share (the
"Series C Preferred Stock"), the terms of which are set forth in the Restated
------------------------
Certificate, which, subject to the terms thereof, are convertible at any time
into shares of newly issued common stock, par value $.01 per share (the "Common
------
Stock") of the Company (as provided in the Restated Certificate), set forth
- -----
opposite its name on Schedule I under the heading "Number of Norfolk Shares";
----------
(2) to AT&T PCS, that number of shares, as set forth in the Norfolk
Acquisition Agreement (i.e., 134,813.49 shares), of the Company's Series D
Convertible Preferred Stock, par value $.01 per share (the "Series D Preferred
------------------
Stock"), the terms of which are set forth in the Restated Certificate, which,
- -----
subject to the terms thereof, are convertible at any time into shares of newly
issued Series C Preferred Stock or shares of newly issued Common Stock (as
provided in the Restated Certificate);
(3) to each of the Management Stockholders, the number of shares of Common
Stock set forth opposite his name on Schedule II under the heading "Number of
-----------
Norfolk Shares"; and
(4) to each of the Independent Directors, the number of shares of Common
Stock set forth opposite his name on Schedule III under the heading "Number of
------------
Norfolk Shares";
1.3 Restrictive Legends. Each certificate representing Securities
-------------------
(including Securities originally issued hereunder or delivered upon conversion
of the Preferred Stock, or delivered in substitution or exchange for any of the
foregoing) will bear a legend reading substantially as follows until such
Securities have been sold pursuant to an effective registration statement under
the Securities Act, Rule 144 under the Securities Act, or an opinion of counsel
reasonably satisfactory in form and substance to the Company and otherwise in
full compliance with any other applicable restrictions on transfer, including
those contained in this Agreement and the Stockholders' Agreement:
-8-
<PAGE>
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
ANY STATE SECURITIES OR 'BLUE SKY' LAWS. SAID SECURITIES MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF, UNLESS AND UNTIL REGISTERED UNDER THE
ACT AND THE RULES AND REGULATIONS THEREUNDER AND ALL
APPLICABLE STATE SECURITIES OR 'BLUE SKY' LAWS OR EXEMPTED
THEREFROM UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES
OR 'BLUE SKY' LAWS."
1.4 Use of Proceeds. The Company shall use the net cash proceeds of
---------------
its sale of Securities hereunder in respect of the Norfolk Commitments for
consummation of the Transactions contemplated by the Norfolk Acquisition.
ARTICLE III
CLOSING
-------
1.5 Time and Place of Closing. Upon the terms and subject to the
-------------------------
conditions hereof, the closing of the Transactions (the "Closing") shall take
-------
place at the offices of Mayer, Brown & Platt, 1675 Broadway, New York, New York
at 10:00 a.m. local time on the twelfth Business Day following the date of
receipt of the last Consent required by subsections (a) through (c) of Section
-------
7.1, or at such other place and/or time and/or on such other date as the parties
- ---
may agree or as may be necessary to permit the fulfillment or waiver of the
conditions set forth in Article VII (the "Closing Date").
----------- ------------
1.6 Closing Actions and Deliveries. Upon the terms and subject to the
------------------------------
satisfaction or waiver by the appropriate parties, if applicable, of the
conditions set forth in Article VII, to effect the purchase and sale of the
-----------
Securities and consummate the Transactions, the parties shall on the Closing
Date take the following actions:
(1) Each Cash Equity Investor shall deliver to the Company by wire
transfer of immediately available funds to the account designated by the Company
on or prior to the Closing Date an amount equal to its respective Norfolk
Commitment as set forth on Schedule I.
----------
(2) The Company shall deliver to each Cash Equity Investor,
certificates, duly executed by authorized signatories of the Company,
representing shares of Series C Preferred Stock to be issued to each of them in
accordance with the terms of Section 2.2(a).
--------------
(3) The Company shall deliver to each Management Stockholder and
Independent Director, certificates, duly executed by authorized signatories of
the Company,
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<PAGE>
representing shares of Common Stock to be issued to each of them in
accordance with the terms of Sections 2.2(c) and 2.2(d).
--------------------------
(4) On the terms and subject to the conditions contained in the
Norfolk Acquisition Agreement, the Company shall deliver to AT&T PCS a
certificate, duly executed by authorized signatories of the Company,
representing shares of Series D Preferred Stock to be issued to AT&T PCS in
accordance with the terms of Section 2.2(b).
--------------
(5) The parties shall execute and deliver or cause to be executed and
delivered all other documents, instruments, opinions and certificates
contemplated by this Agreement to be delivered at the Closing or necessary and
appropriate in order to consummate the Transactions.
1.7 Payment of Transfer Taxes. The Company shall pay or cause to be
-------------------------
paid at the Closing or, if due thereafter, promptly when due, all gross receipts
taxes, transfer taxes, sales taxes, stamp taxes, and any other taxes, but
excluding any Federal, State or local income taxes (collectively, "Transfer
--------
Taxes"), payable in connection with the transfer of the Contributions.
- -----
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CASH EQUITY INVESTORS,
--------------------------------------------------------
MANAGEMENT STOCKHOLDERS AND INDEPENDENT DIRECTORS
-------------------------------------------------
Each of the Cash Equity Investors (as to itself), the Management
Stockholders (as to himself, and solely with respect to the representations
contained in Sections 4.1(e), 4.1(f), 4.7 and 4.8) and the Independent Directors
------------------------------------
(as to himself, and solely with respect to the representations and warranties
contained in Sections 4.1(e), 4.1(f), and 4.7 and 4.8), represents and warrants
-----------------------------------------
to the Company and each of the other parties as follows:
1.8 Organization, Power and Authority.
---------------------------------
(1) Each Cash Equity Investor is a corporation, general partnership
or limited partnership, duly organized, validly existing and in good standing
under the Laws of its jurisdiction of organization and has the requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
(2) It has the requisite power and authority to execute, deliver and
perform this Agreement, each of the Related Agreement Amendments to which it is
(or shall be) a party and each other instrument, document, certificate and
agreement required or contemplated to be executed, delivered and performed by it
hereunder and thereunder to which it is or will be a party.
(3) It is duly qualified to do business in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification
-10-
<PAGE>
necessary other than any such jurisdiction in which the failure to be so
qualified would not have a Material Adverse Effect on it or materially adversely
affect the Transactions or its ability to perform its obligations under the
Related Agreements.
(4) The execution and delivery of this Agreement by it and the
consummation of the Transactions by it, including without limitation the
execution and delivery of the Related Agreement Amendments to which it is a
party, have been duly and validly authorized by its Board of Directors (or
equivalent body) and no other proceedings on its part which have not been taken
(including, without limitation, approval of its stockholders, partners or
members) are necessary to authorize this Agreement or to consummate the
Transactions.
(5) This Agreement has been duly executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar Laws affecting or relating
to enforcement of creditors' rights generally and may be subject to general
principles of equity. Each of the Related Agreement Amendments to which it is a
party upon execution and delivery, shall constitute its valid and binding
obligation, enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar Laws affecting or relating to enforcement of creditors' rights generally
and may be subject to general principles of equity.
(6) As of the Closing Date, after giving effect to the Transactions,
it is not in breach of any obligation under this Agreement or any of the Related
Agreements.
1.9 Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance by it of this Agreement or the Related Agreement Amendments to which
it is a party nor the consummation of the Transactions will (a) violate any
provision of its organizational documents; (b) constitute, with or without the
giving of notice or passage of time or both, a breach, violation or default,
create a Lien, or give rise to any right of termination, modification,
cancellation, prepayment or acceleration, under (i) any Law or License or (ii)
any note, bond, mortgage, indenture, lease, agreement or other instrument, in
each case which is applicable to or binding upon it or any of its assets; or (c)
require any Consent, other than those set forth on Schedule 4.2 or the approval
------------
of its board of directors, general partner, stockholders or similar constituent
bodies, as the case may be (which approvals have been obtained), except in each
case, where such breach, violation, default, Lien, right, or the failure to
obtain or give such Consent would not have a Material Adverse Effect on it or
materially adversely affect the Transactions or its ability to perform its
obligations under the Related Agreements and Related Agreement Amendments. To
its knowledge, there is no fact relating to it or its Affiliates that would be
reasonably expected to prevent it from consummating the Transactions or
performing its obligations under any of the Related Agreements and Related
Agreement Amendments or disqualify the Company from obtaining the Consents
(including without limitation, FCC Consent) required in order to consummate the
License Transfers as provided for in this Agreement.
-11-
<PAGE>
1.10 Litigation. There is no action, proceeding or investigation
----------
pending or, to its knowledge, threatened against it or any of its properties or
assets that would be reasonably expected to have an adverse effect on its
ability to consummate the Transactions or to fulfill its obligations under this
Agreement or any of the Related Agreements to which it is a party, or which
seeks to prevent or challenge the Transactions.
1.11 FCC Compliance. It complies with all eligibility rules issued by
--------------
the FCC to hold broadband PCS Licenses, including without limitation, FCC rules
on foreign ownership. Set forth opposite its name on Schedule 4.4 are all
------------
"attributable" interests (within the meaning of Section 20.6 of the FCC's rules)
that it holds in CMRS licenses that overlap the territory covered by the AT&T
PCS License.
1.12 Brokers. It has not employed any broker, finder or investment
-------
banker or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the Transactions.
1.13 Capital Commitment. Each Cash Equity Investor has, and will have
------------------
on the Closing Date, cash available to it in an amount sufficient to make its
respective Contributions in accordance with the terms of Section 2.1.
-----------
1.14 No Distribution. It is acquiring the Securities to be purchased
---------------
by it hereunder for the purpose of investment and not with a view to or for sale
in connection with any distribution thereof (other than in compliance with the
Securities Act and all applicable state securities Laws).
1.15 Investor Acknowledgments.
------------------------
(1) It is an "accredited investor" as defined in Regulation D of the
Securities Act. Its representatives have been provided an opportunity to ask
questions of, and have received answers thereto from, the Company and its
representatives regarding the terms and conditions of its purchase of
Securities, and the Company and its proposed business generally, and have
obtained all additional information requested by it to verify the accuracy of
all information furnished to it in connection with such purchase.
(2) It has such knowledge and experience in financial and business
affairs that it is capable of evaluating the merits and risks of purchasing the
Securities it is purchasing hereunder.
(3) It is not relying on and acknowledges that no representation is
being made by any other Cash Equity Investor, the Company or any of its
officers, employees, Affiliates, agents or representatives, or any Management
Stockholder or Independent Director, except for representations and warranties
expressly set forth in this Agreement and the Related Agreements, and, in
particular, it is not relying on, and acknowledges that no representation is
being made in respect of, (x) any projections, estimates or budgets delivered to
or made available to them of future revenues, expenses or expenditures, or
future results of operations and (y) any other information or documents
delivered
-12-
<PAGE>
or made available to it or its representatives, except for representations and
warranties expressly set forth in this Agreement and the Related Agreements.
(4) In deciding to invest in the Company, it has relied exclusively
on the representations and warranties expressly set forth in this Agreement and
the Related Agreements and the investigations made by itself and its
representatives and its and such representatives' knowledge of the industry in
which the Company operates. Based solely on such representations and warranties
and such investigations and knowledge, it has determined that the Securities it
is purchasing are a suitable investment for it.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
-----------
The Company represents and warrants to the Cash Equity Investors, the
Management Stockholders and the Independent Directors as follows:
1.16 Organization, Power and Authority.
---------------------------------
(1) Each of the Company and each of its Subsidiaries that is a
corporation is a corporation, duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and as proposed to be
conducted. Each of the Company's Subsidiaries that is a limited liability
company is a limited liability company, duly formed, validly existing and in
good standing under the Laws of the jurisdiction of its formation and has the
requisite limited liability company power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
as proposed to be conducted pursuant to the Related Agreements.
(2) It has the requisite power, authority and/or legal capacity to
execute, deliver and perform this Agreement, each of the Related Agreement
Amendments to which it is (or shall be) a party and each other instrument,
document, certificate and agreement required or contemplated to be executed,
delivered and performed by it hereunder and thereunder to which it is or will be
a party.
(3) Each of the Company and each of its Subsidiaries is duly
qualified to do business in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary other than any such jurisdiction in which the failure to
be so qualified would not have a Material Adverse Effect on the Company or such
Subsidiary or materially adversely affect the Transactions or its ability to
perform its obligations under the Related Agreements.
-13-
<PAGE>
(4) The execution and delivery of this Agreement by the Company and
the consummation of the Transactions by the Company, including without
limitation the execution and delivery of the Related Agreement Amendments to
which it is a party, have been duly and validly authorized by the Board of
Directors of the Company and, no other corporate proceedings on the part of the
Company which have not been taken (including, without limitation, approval of
its stockholders) are necessary to authorize this Agreement or to consummate the
Transactions.
(5) This Agreement has been duly executed and delivered by the Company
and constitutes the valid and binding obligation of the Company, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar Laws affecting or
relating to enforcement of creditors' rights generally and may be subject to
general principles of equity. Each of the Related Agreement Amendments to which
it is a party upon execution and delivery, shall constitute the valid and
binding obligation of it, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar Laws affecting or relating to enforcement of
creditors' rights generally and may be subject to general principles of equity.
(6) As of the Closing Date, after giving effect to the Transactions,
the Company is not in breach of any obligation under this Agreement, any Related
Agreement or any of the Credit Documents.
1.17 Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance by the Company of this Agreement and the Related Agreement
Amendments to which it is a party nor the consummation of the Transactions will
(a) violate any provision of the Company's organizational documents; (b)
constitute, with or without the giving of notice or passage of time or both, a
breach, violation or default, create a Lien (other than Liens under the Credit
Documents), or give rise to any right of termination, modification,
cancellation, prepayment or acceleration, under (i) any Law or License, or (ii)
any note, bond, mortgage, indenture, lease, agreement or other instrument, in
each case which is applicable to or binding upon the Company or any of its
assets; or (c) require any Consent on the part of the Company other than those
set forth on Schedule 5.2, except in each case where such breach, violation,
------------
default, Lien, right, or the failure to obtain or give such Consent would not
have a Material Adverse Effect on it or materially adversely affect the
Transactions, its ability to perform its obligations under the Related
Agreements and Related Agreement Amendments or the operation of the Company's
business after the Closing Date. To its knowledge, there is no fact relating to
it or its Affiliates that would be reasonably expected to prevent it from
consummating the Transactions or performing any of its obligations under the
Related Agreements and Related Agreement Amendments or disqualify the Company
from obtaining the Consents (including without limitation, FCC Consent) required
in order to consummate the License Transfers as provided for in this Agreement.
1.18 Litigation. There is no action, proceeding or investigation
----------
pending or, to the knowledge of the Company, threatened against the Company or
any of its properties or assets that would have an adverse effect on its ability
to consummate the Transactions or to fulfill its
-14-
<PAGE>
obligations under this Agreement or any of the Related Agreements, or to operate
its business after the Closing Date, or which seeks to prevent or challenge the
Transactions. There is no judgment, decree, injunction, rule or order
outstanding against the Company which would limit in any material respect the
ability of the Company to operate its business in the manner currently
contemplated.
1.19 FCC Compliance. Assuming the accuracy of the representations and
--------------
warranties contained in Section 4.4, it complies with all eligibility rules
-----------
issued by the FCC to hold broadband PCS Licenses, including without limitation,
FCC rules on foreign ownership, and with the CMRS spectrum cap as it applies to
the territory covered by the AT&T PCS License.
1.20 Brokers. The Company has not employed any broker, finder or
-------
investment banker or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the Transactions.
1.21 Capitalization.
--------------
(1) As of the date hereof, the authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock, 1,000,000 shares of the
Company's Series A Convertible Preferred Stock, par value $0.01 per share
("Series A Preferred Stock"), 2,000,000 shares of the Company's Series B
-------------------------
Preferred Stock, par value $.01 per share ("Series B Preferred Stock"),
------------------------
3,000,000 shares of Series C Preferred Stock, and 1,000,000 shares of Series D
Preferred Stock. As of the date hereof, there have been issued and are
outstanding 235,125.68 shares of Common Stock, 732,371 shares of Series A
Preferred Stock, no shares of Series B Preferred Stock, 1,750,000 shares of
Series C Preferred Stock and 366,131 shares of Series D Preferred Stock. The
record and beneficial owners of such outstanding shares of Common Stock and
Preferred Stock as of the date hereof are set forth on Schedule 5.6(a).
------------
(2) As of the date hereof, except as set forth on Schedule 5.6(b),
---------------
there are not any existing options, warrants, calls, subscriptions, or other
rights, or other agreements or commitments, obligating the Company to issue,
transfer or sell any shares of capital stock of the Company, except the
Preferred Stock and Common Stock hereunder.
1.22 Shares. The shares of Preferred Stock being issued to the Cash
------
Equity Investors hereunder, when issued and paid for pursuant to the terms of
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will be free of any Liens caused or created by the Company,
except as set forth in the Stockholders' Agreement and the Restated Certificate.
The shares of Common Stock or Preferred Stock, as the case may be, issued upon
conversion of the Preferred Stock, when issued pursuant to the terms of the
Preferred Stock, will be validly issued, fully paid and nonassessable, and will
be free of any Liens caused or created by the Company, except as set forth in
the Stockholders' Agreement and the Restated Certificate.
1.23 Subsidiaries. The Company owns directly or indirectly all of the
------------
outstanding shares of Capital Stock of each of its Subsidiaries, free and clear
of any Liens, except Liens granted
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<PAGE>
to the lenders pursuant to the Credit Documents. Set forth on Schedule 5.8 is a
------------
complete list of its direct and indirect Subsidiaries indicating the
jurisdictions in which each such Subsidiary is organized or qualified to conduct
business.
1.24 Offering of Securities.
----------------------
(1) None of the Company or any Person acting on its behalf has
offered the Securities or any similar equity securities of the Company for sale
to, or solicited any offers to buy Securities or any similar equity securities
of the Company from, any Person, other than the Cash Equity Investors and a
limited number of other "accredited investors" (as defined in Rule 501(a) under
the Securities Act ).
(2) Assuming the accuracy of the representations and warranties of
the Cash Equity Investors, the Management Stockholders and the Independent
Directors contained in Section 4.8, the offering and sale of Securities under
-----------
this Agreement to the Cash Equity Investors, the Management Stockholders and the
Independent Directors complies with all applicable requirements of Federal and
state securities Laws.
1.25 Small Business Matters. Neither the Company nor any Subsidiary:
----------------------
(a) presently engages in, and none of them shall hereafter engage in, any
activities, or (b) shall use directly or indirectly the proceeds from the sale
of the Securities for any purpose, which, in either case, a SBIC is prohibited
from engaging in or providing funds for by the SBIC Regulations (including Title
13, Code of Federal Regulations, Section 107.720).
ARTICLE VI
COVENANTS
---------
1.26 Consummation of Transactions. Each party shall use all
----------------------------
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable and
consistent with applicable Law to carry out all of its respective obligations
under this Agreement and to consummate the Transactions, which efforts shall
include, without limitation, the following:
(1) The parties shall use all commercially reasonable efforts to
cause the Closing to occur and the Transactions to be consummated in accordance
with the terms hereof, and, without limiting the generality of the foregoing, to
obtain all necessary Consents including, without limitation, the approval of
this Agreement and the Transactions by all Governmental Authorities and
agencies, including the FCC, applicable to the execution, delivery and
performance of this Agreement or the consummation of the Transactions, and to
make all filings with and to give all notices to third parties which may be
necessary or reasonably required in order for the parties to consummate the
Transactions.
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<PAGE>
(2) Each party shall furnish to the other parties all information
concerning such party and its Affiliates reasonably required for inclusion in
any application or filing to be made by the Company or any other party in
connection with the Transactions or otherwise to determine compliance with
applicable FCC Law.
(3) Upon the request of any other party, each party shall forthwith
execute and deliver, or cause to be executed and delivered, such further
instruments of assignment, transfer, conveyance, endorsement, direction or
authorization and other documents as may reasonably be requested by such party
in order to effectuate the purposes of this Agreement.
Nothing in this Agreement shall be construed to require the parties to
consummate the Closing if any regulatory approval would require that it (i)
divest or hold separate any of its assets existing as of the date hereof other
than as contemplated by this Agreement or (ii) otherwise take or commit to take
any action that limits its freedom of action in any material respect with
respect to any of its businesses, product lines or assets.
1.27 [INTENTIONALLY OMITTED]
1.28 [INTENTIONALLY OMITTED]
1.29 [INTENTIONALLY OMITTED]
1.30 Use of Proceeds. The Company shall use the proceeds of the sale
---------------
of Securities only for the purpose described in Section 2.4.
-----------
1.31 SBIC Regulatory Provisions.
--------------------------
(1) The Company shall notify each SBIC Holder as soon as practicable
(and, in any event, not later than 15 days) prior to taking any action after
which the number of record holders of the Company's voting stock would be
increased from fewer than 50 to 50 or more, and the Company shall notify each
SBIC Holder of any other action or occurrence after which the number of record
holders of the Company's voting stock was increased (or would increase) from
fewer than 50 to 50 or more, as soon as practicable after the Company becomes
aware that such other action or occurrence has occurred or is proposed to occur.
(2) Within 75 days after the Closing, the Company shall deliver to
each SBIC Holder a written statement certified by the Company's president or
chief financial officer describing in reasonable detail the use of the proceeds
of the sale of Securities hereunder by the Company and its Subsidiaries. In
addition to any other rights granted hereunder, the Company shall grant each
SBIC Holder and the United States Small Business Administration (the "SBA")
---
access to the Company's records for the purpose of verifying the use of such
proceeds to the extent required pursuant to SBIC Regulations.
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<PAGE>
(3) Promptly after the end of each fiscal year (but in any event
prior to February 28 of each year), the Company shall deliver to each SBIC
Holder a written assessment of the economic impact of each SBIC Holder's
investment in the Company, specifying the full-time equivalent jobs created or
retained in connection with the investment, the impact of the investment on the
revenues and profits of the business and on taxes paid by the business and its
employees.
1.32 Regulatory Compliance Cooperation. In the event that any SBIC
---------------------------------
Holder reasonably determines that it has a Regulatory Problem, to the extent
reasonably necessary, such SBIC Holder shall have the right to transfer its
Securities (and any shares of Common Stock issued upon conversion thereof) to
another Person without regard to any restrictions on transfer set forth in this
Agreement or in Section 4.1(c) of the Stockholders' Agreement and without
-------------
complying with the provisions of Section 4.3 of the Stockholders' Agreement, but
-----------
subject to the other provisions of the Stockholders' Agreement and all
applicable Laws, including without limitation federal and state securities Law
restrictions, and the Company shall take all such actions as are reasonably
requested by such SBIC Holder in order to (a) effectuate and facilitate such
transfer by such SBIC Holder of any Securities of the Company then held by such
SBIC Holder to such Person, (b) permit such SBIC Holder (or any of its
Affiliates) to exchange all or any portion of voting Securities then held by it
on a share-for-share basis for shares of a class of non-voting Securities of the
Company, which non-voting Securities shall be identical in all respects to such
voting Securities, except that such non-voting Securities (or Common Stock, as
applicable) shall be non-voting and shall be convertible into voting Securities
(or Common Stock, as applicable) on such terms as are requested by such SBIC
Holder in light of regulatory considerations then prevailing, (c) continue and
preserve the respective allocation of the voting interests with respect to the
Company arising out of the SBIC Holder's ownership of voting Securities and/or
provided for in the Stockholders' Agreement before the transfers and amendments
referred to in this Section (including entering into such additional agreements
as are reasonably requested by such SBIC Holder to permit any Person(s)
designated by such SBIC Holder) to exercise any voting power which is
relinquished by such SBIC Holder and (d) amend this Agreement, the Restated
Certificate, and any other related documents, agreements or instruments to
effectuate and reflect the foregoing. The parties to this Agreement agree to
vote their Securities in favor of such amendments and actions.
1.33 Related Agreement Amendments. Certain of the parties hereto
----------------------------
(and/or certain of their respective Affiliates) are (or, with respect to the
Resale Agreement, will be) parties to the Related Agreements. It is the
intention of the parties hereto that, upon consummation of the Transactions,
each Related Agreement shall be amended and/or restated as necessary (the
"Related Agreement Amendments") to give effect to, among other things, (a) the
----------------------------
additional Licenses acquired by the Company upon the Closing and (b) the
Securities issued to the Cash Equity Investors, the Management Stockholders and
the Independent Directors at the Closing, it being agreed that the rights and
obligations of the parties under the Related Agreements pertaining to the
Licenses and securities thereunder shall pertain also to the Licenses and
Securities hereunder. The parties agree to use their respective best efforts to
effectuate any and all such amendments at the Closing.
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<PAGE>
1.34 Offering of Securities. None of the Company or any Person acting
----------------------
on its behalf will, directly or indirectly, take any action which might subject
the offering, issuance or sale of the Securities to the registration and
prospectus delivery requirements of Section 5 of the Securities Act.
1.35 Waiver of Preemptive Rights. With respect to the Transactions and
---------------------------
the issuance of the shares of Series C Preferred Stock, Series D Preferred Stock
and Common Stock hereunder, each of the Cash Equity Investors and the Management
Stockholders hereby waives (a) the notice requirements set forth in Section
-------
7.2(b) of the Stockholders' Agreement and (b) its preemptive rights that are
- -----
afforded such party in Section 7.2 of the Stockholders Agreement.
-----------
ARTICLE VII
CLOSING CONDITIONS
------------------
1.36 Conditions to Obligations of All Parties. With respect to the
----------------------------------------
consummation of the Transactions, the obligation of each of the parties to
consummate the Transactions contemplated to occur at the Closing shall be
conditioned on the following, unless waived by each of the parties at or prior
to the Closing:
(1) Any applicable waiting period under the HSR Act shall have expired
or been terminated.
(2) The Consent of the FCC to any License Transfer shall have been
obtained pursuant to a Final Order, free of any conditions materially adverse to
the Company or any of the Cash Equity Investors. For the purposes of this
paragraph, "Final Order" means an action or decision that has been granted by
-----------
the FCC as to which (i) no request for a stay or similar request is pending, no
stay is in effect, the action or decision has not been vacated, reversed, set
aside, annulled or suspended and any deadline for filing such request that may
be designated by statute or regulation has passed, (ii) no petition for
rehearing or reconsideration or application for review is pending and the time
for the filing of any such petition or application has passed, (iii) the FCC
does not have the action or decision under reconsideration on its own motion and
the time within which it may effect such reconsideration has passed and (iv) no
appeal is pending including other administrative or judicial review, or in
effect and any deadline for filing any such appeal that may be designated by
statute or rule has passed.
(3) All Consents by any Governmental Authority (other than the
Consents referred to in paragraphs (a) and (b) above) or third parties required
to permit the consummation of the Transactions, the failure to obtain or make
which would be reasonably expected to have a Material Adverse Effect on the
Company or any of the Cash Equity Investors or materially adversely affect the
Transactions or its ability to perform its obligations under the Related
Agreements, shall have been obtained or made.
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<PAGE>
(4) No preliminary or permanent injunction or other order, decree or
ruling issued by a Governmental Authority, nor any statute, rule, regulation or
executive order promulgated or enacted by any Governmental Authority, shall be
in effect that would (i) impose material limitations on the ability of any party
to consummate the Transactions or (ii) impair in any material respect the
operation of the Company.
1.37 Conditions to the Obligations of the Company. With respect to the
--------------------------------------------
consummation of the Transactions, the obligation of the Company to consummate
the Transactions shall be further conditioned upon the satisfaction or
fulfillment, at or prior to such Closing, of the following conditions, unless
waived by the Company at or prior to the Closing:
(1) The representations and warranties of each of the Cash Equity
Investors contained herein shall be true and correct in all material respects
(except for representations and warranties that are qualified as to materiality,
which shall be true and correct), in each case when made and at and as of the
Closing (except for representations and warranties made as of a specified date,
which shall be true and correct as of such date) with the same force and effect
as though made at and as of such time, except for inaccuracies in respect of the
representations and warranties set forth in Sections 4.3 and 4.5 (disregarding
--------------------
any qualifications as to materiality contained therein) that in the aggregate
would not be reasonably expected to have a Material Adverse Effect on the
Company or materially adversely affect the Transactions or its ability to
perform its obligations hereunder.
(2) Each Cash Equity Investor shall have performed in all material
respects all agreements contained herein required to be performed by it at or
before the Closing.
(3) An officer of each of the Cash Equity Investors shall have
delivered to the Company a certificate, dated the Closing Date, certifying as to
the fulfillment of the conditions set forth in paragraphs (a) and (b) above as
to such Cash Equity Investor.
(4) Each of the Related Agreement Amendments shall have been executed
and delivered by the parties thereto (other than the Company) and shall be in
full force and effect.
(5) The Company shall have received any Consent of the lenders that
may be required pursuant to the terms of the Credit Agreement.
(6) All corporate and other proceedings of each of the Cash Equity
Investors, and all documents and instruments incident thereto, shall be
reasonably satisfactory in form and substance to the Company, and each of the
Cash Equity Investors shall have delivered to the Company all such receipts,
documents, instruments and certificates, in form and substance reasonably
satisfactory to the Company, which the Company shall have reasonably requested
in order to consummate the Transactions.
-20-
<PAGE>
1.38 [INTENTIONALLY OMITTED]
1.39 Conditions to the Obligations of the Cash Equity Investors. The
----------------------------------------------------------
obligation of each Cash Equity Investor to consummate the Transactions shall be
further conditioned upon the satisfaction or fulfillment, at or prior to the
Closing, of the following conditions, unless waived by such Cash Equity Investor
at or prior to the Closing:
(1) The representations and warranties of each of the Company, each
other Cash Equity Investor, each Management Stockholder and each Independent
Director contained herein shall be true and correct in all material respects
(except for representations and warranties that are qualified as to materiality,
which shall be true and correct), in each case when made and at and as of such
Closing (except for representations and warranties made as of a specified date,
which shall be true and correct as of such date) with the same force and effect
as though made at and as of such time, except for inaccuracies in respect of the
representations and warranties set forth in Sections 4.3, 4.5, 5.3 and 5.5
------------------------------
(disregarding any qualifications as to materiality contained therein) that in
the aggregate would not be reasonably expected to have a Material Adverse Effect
on the Company or materially adversely affect the Transactions or its ability to
perform its obligations hereunder.
(2) Each of the Company, each other Cash Equity Investor, each
Management Stockholder and each Independent Director shall have performed in all
material respects all agreements contained herein required to be performed by it
at or before the Closing.
(3) Each Management Stockholder, each Independent Director, and an
officer of each of the Company and each other Cash Equity Investor shall have
delivered to such Cash Equity Investor a certificate, dated the Closing Date,
certifying as to the fulfillment of the conditions set forth in paragraphs (a)
and (b) above as to itself.
(4) Such Cash Equity Investor shall have been furnished with an
Opinion of Counsel to each other Cash Equity Investor and the Company, each
dated the Closing Date.
(5) Each of the Related Agreement Amendments shall have been executed
and delivered by the parties thereto (other than the Cash Equity Investors) and
shall be in full force and effect.
(6) All corporate and other proceedings of each other Cash Equity
Investor and the Company in connection with the Transactions, and all documents
and instruments incident thereto, shall be reasonably satisfactory in form and
substance to such Cash Equity Investor, and each other Cash Equity Investor and
the Company shall have delivered to such Cash Equity Investor all such receipts,
documents, instruments and certificates, in form and substance reasonably
satisfactory to such Cash Equity Investor, which such Cash Equity Investor shall
have reasonably requested in order to consummate the Transactions.
-21-
<PAGE>
(7) For each SBIC Holder, the Company shall have prepared the Size
Status Declaration on Form 480, the Assurance of Compliance for
Nondiscrimination on Form 652 and the Portfolio Financing Report on Form 1031
(Parts A and B) (collectively, the "SBA Compliance Documents"), the Company
------------------------
shall have duly executed and delivered the Forms 480 and 652 to each SBIC
Holder, and all of the information set forth in the SBA Compliance Documents
shall be true and correct in all respects. The Company shall have delivered a
list, after giving effect to the Transactions, of: (i) the name of each of the
Company's directors, (ii) the name and title of each of the Company's officers
and (iii) the name of each of the Company's stockholders and the number and
class of shares held by each stockholder.
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
----------------------------
1.40 Survival. The representations and warranties made in this
Agreement shall survive the Closing until the second anniversary thereof and
shall thereupon expire together with any right to indemnification in respect
thereof (except to the extent a written notice asserting a claim for breach of
any such representation or warranty and describing such claim in reasonable
detail shall have been given prior to such date to the party which made such
representation or warranty). The covenants and agreements contained herein to be
performed or complied with prior to the Closing shall expire at the Closing. The
covenants and agreements contained in this Agreement to be performed or complied
with after the Closing shall survive the Closing; provided that the right to
indemnification pursuant to this Article VIII in respect of a breach of a
------------
representation or warranty shall expire on the second anniversary of the Closing
(except to the extent written notice asserting a claim thereunder and describing
such claim in reasonable detail shall have been given prior to such date to the
party from whom such indemnification is sought). After the Closing, the sole and
exclusive remedy of the parties for any breach or inaccuracy of any
representation or warranty contained in this Agreement, or any other claim
(whether or not alleging a breach of this Agreement) that arises out of the
facts and circumstances constituting such breach or inaccuracy, shall be the
indemnity provided in this Article VIII.
------------
1.41 [INTENTIONALLY OMITTED]
1.42 Indemnification by the Cash Equity Investors. Each Cash Equity
--------------------------------------------
Investor, severally and not jointly, shall indemnify and hold harmless each of
the other Cash Equity Investors, the Company, each Management Stockholder, each
Independent Director and their respective Affiliates, and the shareholders,
members, managers, officers, employees, agents and/or the legal representatives
of any of them (each, a "Section 8.3 Indemnified Party"), against all Losses
-----------------------------
incurred by him or it in connection with the investigation, defense, or
disposition of any action, suit or other proceeding in which any Section 8.3
Indemnified Party may be involved or with which he or it may be threatened that
arises out of or results from (a) any representation or warranty of such Cash
Equity Investor contained in this Agreement being untrue in any material respect
as of the date on which it was made or (b) any material default by such Cash
Equity Investor or any of its Affiliates in the
-22-
<PAGE>
performance of their respective obligations under this Agreement, except to the
extent (but only to the extent) any such Losses arise out of or result from the
gross negligence or willful misconduct of such Section 8.3 Indemnified Party or
its Affiliates.
1.43 Indemnification by the Company. The Company shall indemnify and
hold harmless each Cash Equity Investor, each Management Stockholder, each
Independent Director and their respective Affiliates, and the shareholders,
members, managers, officers, employees, agents and/or the legal representatives
of any of them (each, a "Section 8.4 Indemnified Party"), against all Losses
-----------------------------
incurred by him or it in connection with the investigation, defense, or
disposition of any action, suit or other proceeding in which any Section 8.4
Indemnified Party may be involved or with which he or it may be threatened that
arises out of or results from (a) any representation or warranty of the Company
contained in this Agreement being untrue in any material respect as of the date
on which it was made or (b) any material default by the Company or any of its
Affiliates in the performance of their respective obligations under this
Agreement, except to the extent (but only to the extent) any such Losses arise
out of or result from the gross negligence or willful misconduct of such Section
8.4 Indemnified Party or its Affiliates.
1.44 Indemnification by the Management Stockholders. Each Management
----------------------------------------------
Stockholder, severally and not jointly, shall indemnify and hold harmless each
of the Cash Equity Investors, the Company, the Independent Directors, the other
Management Stockholders and their respective Affiliates, and the shareholders,
members, managers, officers, employees, agents and/or the legal representatives
of any of them (each, a "Section 8.5 Indemnified Party"), against all Losses
-----------------------------
incurred by him or it in connection with the investigation, defense, or
disposition of any action, suit or other proceeding in which any Section 8.5
Indemnified Party may be involved or with which he or it may be threatened that
arises out of or results from (a) any representation or warranty of such
Management Stockholder contained in this Agreement being untrue in any material
respect as of the date on which it was made or (b) any material default by such
Management Stockholder or any of its Affiliates in the performance of their
respective obligations under this Agreement, except to the extent (but only to
the extent) any such Losses arise out of or result from the gross negligence or
willful misconduct of such Section 8.5 Indemnified Party or its Affiliates.
1.45 Indemnification by the Independent Directors. Each Independent
--------------------------------------------
Director, severally and not jointly, shall indemnify and hold harmless each of
the Cash Equity Investors, the Company, any other Independent Director, the
Management Stockholders and their respective Affiliates, and the shareholders,
members, managers, officers, employees, agents and/or the legal representatives
of any of them (each, a "Section 8.6 Indemnified Party"), against all Losses
-----------------------------
incurred by him or it in connection with the investigation, defense, or
disposition of any action, suit or other proceeding in which any Section 8.6
Indemnified Party may be involved or with which he or it may be threatened that
arises out of or results from (a) any representation or warranty of such
Independent Director contained in this Agreement being untrue in any material
respect as of the date on which it was made or (b) any material default by such
Independent Director or any of its Affiliates in the performance of their
respective obligations under this Agreement, except to the extent (but only to
-23-
<PAGE>
the extent) any such Losses arise out of or result from the gross negligence or
willful misconduct of such Section 8.6 Indemnified Party or its Affiliates.
1.46 Procedures.
----------
(1) The terms of this Section 8.7 shall apply to any claim (a
-----------
"Claim") for indemnification under the terms of Sections 8.3, 8.4, 8.5 or 8.6.
-----
The Section 8.3 Indemnified Party, Section 8.4 Indemnified Party, Section 8.5
Indemnified Party or Section 8.6 Indemnified Party (each, an "Indemnified
-----------
Party"), as the case may be, shall give prompt written notice of such Claim to
- -----
the indemnifying party (the "Indemnifying Party") under the applicable Section,
------------------
which party may assume the defense thereof, provided that any delay or failure
to so notify the Indemnifying Party shall relieve the Indemnifying Party of its
obligations hereunder only to the extent, if at all, that it is materially
prejudiced by reason of such delay or failure. The Indemnified Party shall have
the right to approve any counsel selected by the Indemnifying Party and to
approve the terms of any proposed settlement, such approval not to be
unreasonably delayed or withheld (unless such settlement provides only, as to
the Indemnified Party, the payment of money damages actually paid by the
Indemnifying Party and a complete release of the Indemnified Party in respect of
the claim in question). Notwithstanding any of the foregoing to the contrary,
the provisions of this Article VIII shall not be construed so as to provide for
------------
the indemnification of any Indemnified Party for any liability to the extent
(but only to the extent) that such indemnification would be in violation of
applicable Law or that such liability may not be waived, modified or limited
under applicable Law, but shall be construed so as to effectuate the provisions
of this Article VIII to the fullest extent permitted by Law.
------------
(2) In the event that the Indemnifying Party undertakes the defense
of any Claim, the Indemnifying Party will keep the Indemnified Party advised as
to all material developments in connection with such Claim, including, but not
limited to, promptly furnishing the Indemnified Party with copies of all
material documents filed or served in connection therewith.
(3) In the event that the Indemnifying Party fails to assume the
defense of any Claim within ten Business Days after receiving written notice
thereof, the Indemnified Party shall have the right, subject to the Indemnifying
Party's right to assume the defense pursuant to the provisions of this Article
--------
VIII, to undertake the defense, compromise or settlement of such Claim for the
- ----
account of the Indemnifying Party. Unless and until the Indemnifying Party
assumes the defense of any Claim, the Indemnifying Party shall advance to the
Indemnified Party any of its reasonable attorneys' fees and other costs and
expenses incurred in connection with the defense of any such action or
proceeding. Each Indemnified Party shall agree in writing prior to any such
advancement that, in the event he or it receives any such advance, such
Indemnified Party shall reimburse the Indemnifying Party for such fees, costs
and expenses to the extent that it shall be determined that he or it was not
entitled to indemnification under this Article VIII.
(4) In no event shall an Indemnifying Party be required to pay in
connection with any Claim for more than one firm of counsel (and local counsel)
for each of the following groups
-24-
<PAGE>
of Indemnified Parties: (i) the Cash Equity Investors, their respective
Affiliates and the shareholders, members, managers, officers, employees, agents
and/or the legal representatives of any of them; and (ii) the Management
Stockholders, the Independent Directors, the Company, its Affiliates and the
shareholders, members, managers, officers, employees, agents and/or the legal
representatives of any of them.
1.47 Registration Rights. Notwithstanding anything to the contrary in
-------------------
this Article VIII, the indemnification and contribution provisions set forth in
------------
Sections 5(e) and 5(f) of the Stockholders' Agreement shall govern any claim
- ----------------------
made with respect to the registration statements filed pursuant to Section 5 of
---------
the Stockholders' Agreement or sales made thereunder.
1.48 Limit on Indemnity. So long as the Company does not conduct any
------------------
business or engage in any activities other than those described in the first
sentence of the definition of "Business" (as such term is defined in the
Stockholders' Agreement), each party waives its right to indemnification under
this Article VIII or any other right to assert any claim arising from any
------------
inaccuracy in the Company's representations and warranties set forth in Section
-------
5.10 or the violation by the Company of the covenant set forth in Section 6.6(d)
- ---- --------------
to the extent such Section relates to ineligible or prohibited activities of
SBICs.
ARTICLE IX
TERMINATION
-----------
1.49 Termination. This Agreement may be terminated, without further
-----------
obligation of any party, except as set forth herein, at any time prior to the
Closing Date:
(1) by mutual written consent of the parties;
(2) by any party (other than any Management Stockholder or any
Independent Director) by written notice to the other parties, if the Closing
shall not have occurred on or before the date that is 10 months after the date
hereof, provided that the party electing to exercise such right is not otherwise
in breach of its obligations under this Agreement; or
(3) by any party by written notice to the other parties, if the
consummation of the Transactions shall be prohibited by a final, non-appealable
order, decree or injunction of a court of competent jurisdiction.
(3) Effect of Termination. (a) In the event of a termination of this
---------------------
Agreement, no party hereto shall have any liability or further obligation to any
other party to this Agreement except as set forth in paragraph (b) below, and
except that nothing herein will relieve any party from liability for any breach
by such party of this Agreement.
-25-
<PAGE>
(1) In the event of a termination of this Agreement pursuant to
Section 9.1, all provisions of this Agreement shall terminate, except Section
- ----------- -------
6.2, and Articles VIII and X.
- --- -------------------
(2) Whether or not the Closing occurs, except as otherwise expressly
provided in this Agreement, all costs and expenses incurred in connection with
this Agreement and the Transactions shall be paid by the party incurring such
expenses.
ARTICLE X
MISCELLANEOUS PROVISIONS
------------------------
1.51 Amendment and Modification. This Agreement may be amended,
--------------------------
modified or supplemented only by written agreement of each of the parties.
1.52 Waiver of Compliance; Consents. Any failure of any of the
------------------------------
parties to comply with any obligation, covenant, agreement or condition herein
may be waived by the party or parties entitled to the benefits thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirement for a waiver of
compliance as set forth in this Section 10.2.
------------
1.53 Notices. All notices or other communications hereunder shall
-------
be in writing and shall be given (and shall be deemed to have been duly given
upon receipt) by delivery in person, by facsimile transmission, or by overnight
courier or registered or certified mail (return receipt requested), postage
prepaid, with an acknowledgment of receipt signed by the addressee or an
authorized representative thereof, addressed as follows (or to such other
address for a party as shall be specified by like notice; provided that notice
of a change of address shall be effective only upon receipt thereof):
-26-
<PAGE>
If to a Cash Equity Investor, to its address set forth on Schedule I.
----------
With a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Mark S. Wojciechowski
Facsimile: (212) 262-1910
If to the Company or any Management Stockholder or Independent
Director, to it or him/her:
c/o Triton Management Company, Inc.
375 Technology Drive
Malvern, PA 19355
Attention: Michael E. Kalogris
Steven R. Skinner
Facsimile: (610) 993-2683
With a copy to:
Kleinbard Bell & Brecker LLP
1900 Market Street, Suite 700
Philadelphia, PA 19103
Attention: Howard J. Davis
Facsimile: (215) 568-0140
And with a copy to each other party sent to the addresses set forth in
this Section 10.3.
------------
1.54 Expenses. The Company agrees to pay, and save the Cash Equity
--------
Investors harmless against, the reasonable fees and disbursements of counsel to
each of the Cash Equity Investors in connection with the preparation,
negotiation, execution and delivery of this Agreement, the instruments and
documents executed pursuant hereto or thereto or in connection herewith or
therewith, and the consummation the Transactions; provided, however, that as a
condition to the Company's foregoing obligation, counsel for the Cash Equity
Investors shall be directed to, and shall, deliver to the Company on a monthly
basis detailed invoices for legal services rendered during such month.
1.55 Parties in Interest; Assignment. This Agreement is binding
-------------------------------
upon and is solely for the benefit of the parties hereto and their respective
permitted successors, legal representatives and permitted assigns. None of the
Company or any Cash Equity Investor may assign its rights and
-27-
<PAGE>
obligations hereunder without the prior written consent of each of the other
parties, except (a) either Morgan Entity may assign its rights and obligations
hereunder to the other without any prior consent and (b) CB Capital Investors,
L.P. shall have the right to assign to one or more of its Affiliates, any and
all rights and obligations of C.B. Capital Investors, L.P. under this Agreement
(provided that such assignee shall have assumed in writing all the obligations
of C.B. Capital Investors, L.P. hereunder and no such assignment shall relieve
C.B. Capital Investors, L.P. of its obligations hereunder).
1.56 Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the Laws of the State of New York without giving
effect to the conflicts of Law principles thereof. The parties hereto hereby
irrevocably and unconditionally consent to submit to the non-exclusive
jurisdiction of the courts of the State Of New York and of the United States of
America located in the County of New York, New York (the "New York Courts") for
---------------
any litigation arising out of or relating to this Agreement and the
Transactions, waive any objection to the laying of venue of any such litigation
in the New York Courts and agrees not to plead or claim in any New York Court
that such litigation brought therein has been brought in an inconvenient forum.
1.57 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
1.58 Interpretation. The article and section headings contained in
--------------
this Agreement are for convenience of reference only, are not part of the
agreement of the parties and shall not affect in any way the meaning or
interpretation of this Agreement. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the antecedent Person or Person may require.
1.59 Entire Agreement. This Agreement, including the exhibits and
----------------
schedules hereto and the certificates and instruments delivered pursuant to the
terms of this Agreement, embodies the entire agreement and understanding of the
parties hereto in respect of the Transactions. There are no restrictions,
promises, representations, warranties, covenants or undertakings, other than
those expressly set forth or referred to herein or therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such Transactions.
1.60 Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any New York Courts.
1.61 Remedies Cumulative. All rights, powers and remedies provided
-------------------
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not
-28-
<PAGE>
alternative, and the exercise or beginning of the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
[signature pages follow]
* * *
-29-
<PAGE>
[SIGNATURE PAGES TO NORFOLK PREFERRED STOCK PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Company:
TRITON PCS HOLDINGS, INC.
By:__________________________________
Name:
Title:
AT&T PCS:
AT&T PCS WIRELESS, INC.
By:__________________________________
Name:
Title:
Cash Equity Investors:
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc.,
its general partner
By:__________________________________
Name:
Title:
J.P. MORGAN INVESTMENT CORPORATION
By:__________________________________
Name:
Title:
SIXTY WALL STREET SBIC FUND, L.P.
By: Sixty Wall Street SBIC
Corporation its general partner
By:__________________________________
Name:
Title:
<PAGE>
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
PRIVATE EQUITY INVESTORS III, L.P.
By: Rohit M. Desai Associates III, L.L.C.,
its general partner
By:_______________________________________
Name:
Title:
EQUITY-LINKED INVESTORS-II
By: Rohit M. Desai Associates-II, its
general partner
By:_______________________________________
Name:
Title:
TORONTO DOMINION CAPITAL (U.S.A.), INC.
By:_______________________________________
Name:
Title:
FIRST UNION CAPITAL PARTNERS, INC.
By:_______________________________________
Name:
Title:
DAG-TRITON PCS, L.P.
By: Duff Ackerman Goodrich, LLC, its
general partner
By:_______________________________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
Management Stockholders:
______________________________________
Michael E. Kalogris
______________________________________
Steven R. Skinner
______________________________________
David D. Clark
______________________________________
Clyde Smith
______________________________________
David Standig
______________________________________
Michael Mears
______________________________________
Michael E. Kalogris, as Trustee under
Amended and Restated Common Stock Trust
Agreement for Management Employees and
Independent Directors dated June 26,
1998
Independent Directors:
<PAGE>
_____________________________________
Scott Anderson
_____________________________________
John Beletic
<PAGE>
SCHEDULE I
CASH EQUITY INVESTORS
<TABLE>
<CAPTION>
AGGREGATE NORFOLK NUMBER OF NORFOLK
CONTRIBUTION SHARES
------------------ -----------------
<S> <C> <C>
CB Capital Investors, L.P. $2,169,183 21,691.83
JP Morgan Capital Investment Corporation 0 0.00
Sixty Wall Street SBIC Fund, L.P. 0 0.00
Private Equity Investors III, L.P. 1,251,164 12,511.64
Equity-Linked Investors-II 1,251,164 12,511.64
Toronto Dominion Capital (U.S.A.) Inc. 625,574 6,255.74
First Union Capital Partners, Inc. 9,584,273 95,842.73
DAG-Triton PCS, L.P. 1,637,293 16,372.93
---------- ---------
Total $16,518,651 165,186.51
</TABLE>
<PAGE>
SCHEDULE I (CONT.)
ADDRESS FOR NOTICES
-------------------
CB Capital Investors, L.P. Toronto Dominion Capital (U.S.A.), Inc.
380 Madison Avenue, 12th Floor 909 Fannin
New York, NY 10017 Suite 1700
Attn: Arnie Chavkin Houston, TX 77010
Tel: (212) 622-3100 Attn: Martha Gariepy
Fax: (212) 622-3101 Tel: (713) 653-8225
Fax: (713) 652-2647
J.P. Morgan Investment Corporation First Union Capital Partners, Inc.
101 California Street, 38th Floor One First Union Center
San Francisco, CA 94111 301 South College Street / 5th Floor
Attn: John Watkins Charlotte, NC 28288-0732
Tel: (415) 954-3200 Attn: Watts Hamrick
Fax: (415) 954-4737 Tel: (704) 374-4791
Fax: (704) 374-6711
Sixty Wall Street SBIC Fund, L.P.
101 California Street, 38th Floor DAG-Triton PCS, L.P.
San Francisco, CA 94111 Two Embarcadero Center
Attn: John Watkins Suite 2930
Tel: (415) 954-3200 San Francisco, CA 94111
Fax: (415) 954-4737 Attn: John Duff
Tel: (415) 788-2755
Private Equity Investors III, L.P. Fax: (415) 788-7311
540 Madison Avenue, 36th Floor
New York, NY 10022
Attn: Damon Ball
Tel: (212) 838-9191
Fax: (212) 838-9807
Equity-Linked Investors-II
540 Madison Avenue, 36th Floor
New York, NY 10022
Attn: Damon Ball
Tel: (212) 838-9191
Fax: (212) 838-9807
Toronto Dominion Capital (U.S.A.), Inc.
31 West 52nd Street
New York, NY 10019
Attn: Brian Rich
Tel: (212) 468-0740
Fax: (212) 974-0429
<PAGE>
SCHEDULE II
MANAGEMENT STOCKHOLDERS
NUMBER OF NORFOLK
SHARES
------------------
Michael E. Kalogris 13,333.33
Steven R. Skinner 10,000.00
David D. Clark 1,000.00
Clyde Smith 533.33
David Standig 500.00
Michael Mears 333.33
Michael E. Kalogris, as
Trustee under Amended and
Restated Common Stock
Trust Agreement for
Management Employees and
Independent Directors
dated June 26, 1998 7,393.16
---------
Total 33,093.15
<PAGE>
SCHEDULE III
INDEPENDENT DIRECTORS
NUMBER OF NORFOLK
SHARES
------------------
Scott Anderson 120.09
John Beletic 120.09
------
Total 240.18
<PAGE>
SCHEDULE 4.2
CASH EQUITY INVESTOR CONSENTS
-----------------------------
The execution, delivery and performance of the Agreement will or may
require the following consents, approvals and reviews:
1. The Federal Communications Commission
2. The Federal Trade Commission/Department of Justice
3. Various Governmental Authorities with respect to Franchise Laws
<PAGE>
SCHEDULE 4.4
CASH EQUITY INVESTOR ATTRIBUTABLE INTERESTS
-------------------------------------------
None.
<PAGE>
SCHEDULE 5.2
COMPANY CONSENTS
----------------
The execution, delivery and performance of the Agreement will or may
require the following consents, approvals and reviews:
1. The Federal Communications Commission
2. The Federal Trade Commission/Department of Justice
3. Various Governmental Authorities with respect to Franchise Laws
4. The lenders pursuant to the terms of the Credit Agreement
<PAGE>
SCHEDULE 5.6(A)
EQUITY OWNERSHIP
----------------
Shares
Stockholders Owned
- --------------------------------------------------
Series A Preferred Stock:
- ------------------------
AT&T Wireless PCS, Inc. 732,371.00
Total Series A 732,371.00
Series C Preferred Stock:
- -------------------------
CB Capital Investors, L.P. 511,818.79
J.P. Morgan Investment
Corporation 445,206.00
Sixty Wall Street SBIC
Fund, L.P. 23,907.00
Private Equity Investors III, L.P. 246,243.67
Equity-Linked Investors-II 246,243.67
Toronto Dominion Capital
(USA) Inc. 123,122.44
First Union Capital Partners, Inc. 81,543.21
Duff Ackerman Goodrich &
Associates, L.P. 64,415.22
Michael E. Kalogris 5,000.00
Steven R. Skinner 2,500.00
Total Series C 1,750,000.00
<PAGE>
SCHEDULE 5.6(A) (CONT.)
Series D Preferred Stock:
- ------------------------
AT&T Wireless PCS, Inc. 366,131.00
Total Series D 366,131.00
Common Stock:
- -------------
Michael E. Kalogris 94,050.27
Steven R. Skinner 70,537.70
David D. Clark 7,053.77
Clyde Smith 3,762.01
Patricia Gallagher 1,410.76
David Standig 3,526.89
Michael Mears 2,351.26
Scott Anderson 847.11
John Beletic 847.11
Michael E. Kalogris, as Trustee
under Amended and Restated
Common Stock Trust
Agreement for Management
Employees and Independent
Directors dated June 26, 1998 50,738.80
Total Common 235,125.68
<PAGE>
SCHEDULE 5.6(B)
OBLIGATIONS TO ISSUE CAPITAL STOCK
----------------------------------
1. Pursuant to the terms of the Restated Certificate, the Series A
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock,
the Company may be required under certain circumstances contained therein to
issue shares of Preferred Stock or Common Stock, as the case may be, upon
conversion thereof.
<PAGE>
SCHEDULE 5.8
COMPANY SUBSIDIARIES
--------------------
State of Foreign
Subsidiary Organization Qualification
----------------------------------- ------------ --------------
1. Triton PCS, Inc. DE None
2. Triton Management Company, Inc. DE PA, VA, SC, NC
3. Triton PCS Holdings Company L.L.C. DE None
4. Triton PCS Property Company L.L.C. DE VA, SC, NC, GA
5. Triton PCS License Company L.L.C. DE None
6. Triton PCS Equipment Company L.L.C. DE VA, SC, NC, GA
7. Triton PCS Operating Company L.L.C. DE VA, SC, NC, GA
<PAGE>
[EXECUTION COPY]
================================================================================
PREFERRED STOCK REPURCHASE AND ISSUANCE AGREEMENT
by and among
MORGAN ENTITIES,
CASH EQUITY INVESTORS,
OTHER STOCKHOLDERS,
and
TRITON PCS HOLDINGS, INC.
Dated as of December 7, 1998
==--============================================================================
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C>
ARTICLE I.................................................................................................. 1
DEFINITIONS........................................................................................... 1
ARTICLE II................................................................................................. 7
REPURCHASE AND ISSUANCE OF SECURITIES;
CERTAIN RESTRICTIONS ON TRANSFER...................................................................... 7
2.1 Repurchase of Shares.................................................................... 7
--------------------
2.2 Issuance of Shares...................................................................... 8
------------------
2.3 Restrictive Legends..................................................................... 8
-------------------
2.4 Use of Proceeds......................................................................... 9
---------------
ARTICLE III................................................................................................ 9
REPRESENTATIONS AND WARRANTIES OF CASH EQUITY INVESTORS AND MORGAN ENTITIES .......................... 9
3.1 Organization, Power and Authority....................................................... 9
---------------------------------
3.2 Consents; No Conflicts.................................................................. 10
----------------------
3.3 Litigation.............................................................................. 10
----------
3.4 FCC Compliance.......................................................................... 11
--------------
3.5 Brokers................................................................................. 11
-------
3.6 No Distribution......................................................................... 11
---------------
3.7 Investor Acknowledgments................................................................ 11
------------------------
ARTICLE IV................................................................................................. 12
REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................................... 12
4.1 Organization, Power and Authority....................................................... 12
---------------------------------
4.2 Consents; No Conflicts.................................................................. 13
----------------------
4.3 Litigation.............................................................................. 13
----------
4.4 FCC Compliance.......................................................................... 13
--------------
4.5 Brokers................................................................................. 13
-------
4.6 Capitalization.......................................................................... 14
--------------
4.7 Shares.................................................................................. 14
------
4.8 Subsidiaries............................................................................ 14
------------
4.9 Offering of Securities.................................................................. 14
----------------------
4.10 Small Business Matters.................................................................. 15
----------------------
ARTICLE V.................................................................................................. 15
COVENANTS............................................................................................. 15
5.1 Use of Proceeds......................................................................... 15
---------------
5.2 SBIC Regulatory Provisions............................................................ 15
--------------------------
5.3 Regulatory Compliance Cooperation..................................................... 15
---------------------------------
5.4 Related Agreement Amendments.......................................................... 16
----------------------------
5.5 Offering of Securities................................................................ 16
----------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
5.6 Certain Waivers and Consents. ....................................................... 16
----------------------------
ARTICLE VI............................................................................................... 17
SURVIVAL AND INDEMNIFICATION........................................................................ 17
6.1 Survival.............................................................................. 17
--------
6.2 Indemnification by the Cash Equity Investors and Morgan Entities...................... 17
----------------------------------------------------------------
6.3 Indemnification by the Company........................................................ 17
------------------------------
6.4 Procedures............................................................................ 18
----------
6.5 Registration Rights................................................................... 19
-------------------
6.6 Limit on Indemnity.................................................................... 19
------------------
ARTICLE VII.............................................................................................. 19
MISCELLANEOUS PROVISIONS............................................................................ 19
7.1 Amendment and Modification............................................................ 19
--------------------------
7.2 Waiver of Compliance; Consents........................................................ 19
------------------------------
7.3 Notices............................................................................... 19
-------
7.4 Expenses.............................................................................. 20
--------
7.5 Parties in Interest; Assignment....................................................... 21
-------------------------------
7.6 Applicable Law........................................................................ 21
--------------
7.7 Counterparts.......................................................................... 21
------------
7.8 Interpretation........................................................................ 21
--------------
7.9 Entire Agreement...................................................................... 21
----------------
7.10 Specific Performance.................................................................. 21
--------------------
7.11 Remedies Cumulative................................................................... 22
-------------------
</TABLE>
ii
<PAGE>
LIST OF SCHEDULES AND EXHIBITS
Schedules
- ---------
Schedule I -- Morgan Entities
Schedule II -- Cash Equity Investors
Schedule 4.6(a) -- Equity Ownership
Schedule 4.6(b) -- Obligations to Issue Capital Stock
Schedule 4.8 -- Company Subsidiaries
iii
<PAGE>
PREFERRED STOCK REPURCHASE AND ISSUANCE AGREEMENT
PREFERRED STOCK REPURCHASE AND ISSUANCE AGREEMENT, dated as of December 7,
1998 by and among J.P. MORGAN INVESTMENT CORPORATION ("J.P. Morgan"), SIXTY WALL
-----------
STREET SBIC FUND, L.P. ("Sixty Wall Street" and collectively with J.P. Morgan,
-----------------
the "Morgan Entities"), the investors listed as cash equity investors on the
---------------
signature pages hereto (individually, a "Cash Equity Investor" and,
--------------------
collectively, the "Cash Equity Investors"), Triton PCS Holdings, Inc., a
---------------------
Delaware corporation (the "Company"), and certain of the Company's other
-------
stockholders listed on the signature pages hereto (collectively, the "Other
-----
Stockholders").
- ------------
W I T N E S S E T H
WHEREAS, the Morgan Entities, the Cash Equity Investors and the Other
Stockholders are stockholders of the Company; and
WHEREAS, in connection with the consummation of the transactions
contemplated by that certain Preferred Stock Purchase Agreement dated as of July
29, 1998 (the "Myrtle Beach Stock Purchase Agreement"), the Morgan Entities
-------------------------------------
purchased an aggregate of 100,000 shares (the "Myrtle Beach Shares") of the
-------------------
Company's Series C Convertible Preferred Stock, par value $0.01 per share (the
"Series C Preferred Stock"), in consideration of contributions of cash to the
------------------------
capital of the Company in the aggregate amount of $10 million, all as more fully
set forth on Schedule I ; and
----------
WHEREAS, in connection with the consummation of the transactions
contemplated hereby, on the date hereof (a) J.P. Morgan and Sixty Wall Street
wish to sell to the Company, and the Company wishes to repurchase from J.P.
Morgan and Sixty Wall Street, 33,822 and 1,780 shares, respectively, of the
Series C Preferred Stock that the Morgan Entities purchased from the Company
pursuant to the Myrtle Beach Stock Purchase Agreement (the "Repurchased
-----------
Shares"), and (b) the Cash Equity Investors wish to purchase from the Company
the Repurchased Shares in consideration of contributions of cash to the capital
of the Company, and the Company wishes to accept such contributions and issue
additional shares of Series C Preferred Stock to the Cash Equity Investors, all
on the terms and subject to the conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
As used herein, the following terms have the following meanings (unless
indicated otherwise, all Section and Article references are to Sections and
Articles in this Agreement, and all Schedule and Exhibit references are to
Schedules and Exhibits to this Agreement):
1
<PAGE>
"Affiliate" means, with respect to any Person, any other Person that
---------
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with that Person. For purposes of this
definition, "control" (including the terms "controlling" and "controlled") means
------- ----------- ----------
the power to direct or cause the direction of the management and policies of a
Person, directly or indirectly, whether through the ownership of securities or
partnership or other ownership interests, by contract or otherwise.
"Agreement" means this Preferred Stock Repurchase and Issuance Agreement,
---------
as the same may be amended, modified or supplemented in accordance with the
terms hereof.
"Business Day" means any day that is not a Saturday, Sunday or other day on
------------
which commercial banks in New York City are authorized or required by Law to
remain closed.
"Capital Stock" means any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase or subscribe for any of
the foregoing, or any warrants, rights or options to purchase or subscribe for
any such warrants, rights or options.
"Cash Equity Investors" has the meaning set forth in the preamble.
---------------------
"Claim" has the meaning set forth in Section 6.4(a).
----- --------------
"Common Stock" has the meaning set forth in Section 2.1(b).
------------ --------------
"Company" has the meaning set forth in the preamble.
-------
"Consents" means all consents and approvals of Governmental Authorities or
--------
other third parties necessary to authorize, approve or permit the parties hereto
to consummate the Transactions.
"Contributions" means the contributions of cash to the capital of the
-------------
Company by the Cash Equity Investors as set forth on Schedule II.
-----------
"Credit Agreement" means the agreement among Triton PCS, the lenders and
----------------
the agents referred to therein, dated as of the February 3, 1998, as amended by
the First Amendment, Consent and Waiver dated as of April 24, 1998, the Second
Amendment to Credit Agreement dated as of July 29, 1998 and the Third Amendment
to Credit Agreement dated as of November ____, 1998, providing a credit facility
having aggregate commitments of $425 million, as the same may be amended,
modified or supplemented in accordance with the terms thereof.
"Credit Documents" means the Credit Agreement and all agreements,
----------------
instruments and documents executed and delivered pursuant thereto, as the same
may from time to time be amended, modified or supplemented in accordance with
the terms thereof.
2
<PAGE>
"Employment Agreements" means collectively the Employment Agreements dated
---------------------
as of February 4, 1998 between Triton Management and each of Michael E. Kalogris
and Steven R. Skinner, and the Employment Agreement dated as of January 8, 1998
between Triton Management and Clyde Smith, each as amended as of June 29, 1998
and as the same may be amended, modified or supplemented in accordance with the
terms thereof.
"FCC" means the Federal Communications Commission or similar regulatory
---
authority established in replacement thereof.
"FCC Law" means the Communications Act of 1934, as amended, including as
-------
amended by the Telecommunications Act of 1996, and the rules, regulations and
policies promulgated thereunder.
"Financing" has the meaning set forth in the SBIC Regulations.
---------
"Governmental Authority" means a Federal, state or local court,
----------------------
legislature, governmental agency (including, without limitation, the United
States Department of Justice), commission or regulatory or administrative
authority or instrumentality.
"Indemnified Party" has the meaning set forth in Section 6.4(a).
----------------- --------------
"Indemnifying Party" has the meaning set forth in Section 6.4(a).
------------------ --------------
"Investors Stockholders' Agreement" means the Investors Stockholders'
---------------------------------
Agreement dated as of February 4, 1998 by and among certain stockholders of the
Company, as the same may be amended, modified or supplemented in accordance with
the terms thereof.
"J.P. Morgan" has the meaning set forth in the preamble.
-----------
"Law" means applicable common law and any statute, ordinance, code or other
---
law, rule, permit, permit condition, regulation, order, decree, technical or
other standard, requirement or procedure enacted, adopted, promulgated, applied
or followed by any Governmental Authority.
"License" means a license, permit, certificate of authority, waiver,
-------
approval, certificate of public convenience and necessity, registration or other
authorization, consent or clearance issued or granted by a Governmental
Authority, including without limitation, Licenses to construct or operate a
facility, including any emissions, discharges or releases therefrom, or to
transact an activity or business, to construct a tower or to use an asset or
process.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest, right of first refusal or right of others therein, or
encumbrance of any nature whatsoever in respect of such asset.
"Losses" has the meaning set forth in Section 6.2.
------ -----------
3
<PAGE>
"Material Adverse Effect" means a material adverse effect on the business,
-----------------------
financial condition, assets, liabilities or results of operations or prospects
of the Person specified.
"Morgan Entities" has the meaning set forth in the preamble.
---------------
"Myrtle Beach Shares" has the meaning set forth in the recitals.
-------------------
"Myrtle Beach Stock Purchase Agreement" has the meaning set forth in the
-------------------------------------
recitals.
"Network Membership License Agreement" means the Network Membership License
------------------------------------
Agreement dated as of February 4, 1998 between AT&T Corp., a New York
corporation, and Triton Operating Company, as the same may be amended, modified
or supplemented in accordance with the terms thereof.
"New York Courts" has the meaning set forth in Section 7.6.
--------------- -----------
"Other Stockholders" has the meaning set forth in the preamble.
------------------
"Person" means an individual, corporation, partnership, limited liability
------
company, association, joint stock company, Governmental Authority, business
trust, unincorporated organization, or other legal entity.
"Preferred Stock" means, collectively, the Series A Preferred Stock, the
---------------
Series B Preferred Stock, the Series C Preferred Stock and the Series D
Preferred Stock.
"Regulatory Problem" means, with respect to any SBIC Holder providing
------------------
Financing under this Agreement, any set of facts or circumstances wherein it has
been asserted by any governmental regulatory agency (or any SBIC Holder
reasonably believes in good faith that there is a substantial risk of such
assertion) that such SBIC Holder and its Affiliates are not entitled to hold, or
exercise any significant right with respect to, the Securities.
"Related Agreements" means the Network Membership License Agreement, the
------------------
Employment Agreements, the Vesting Agreements, the Resale Agreement, the Roaming
Agreement, the Stockholders' Agreement, and the Investors Stockholders'
Agreement.
"Repurchased Shares" has the meaning set forth in the recitals.
------------------
"Resale Agreement" means the form of Resale Agreement attached as Exhibit C
---------------- ---------
to the Securities Purchase Agreement, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Restated Certificate" means the Amended and Restated Certificate of
--------------------
Incorporation of the Company, dated as of February 4, 1998, as amended as of the
date hereof, as the same may be amended, modified or supplemented in accordance
with the terms thereof.
4
<PAGE>
"Roaming Agreement" means the Intercarrier Roamer Service Agreement dated
-----------------
as of February 4, 1998 between Triton Operating Company and AT&T Wireless
Services, Inc., as the same may be amended, modified or supplemented in
accordance with the terms thereof.
"SBA" has the meaning set forth in Section 5.2(b).
--- --------------
"SBA Compliance Documents" has the meaning set forth in Section 2.2(b).
------------------------ --------------
"SBIC" means a small business investment company licensed under the SBIC
----
Act.
"SBIC Act" means the Small Business Investment Company Act of 1958, as
--------
amended.
"SBIC Holder" means each Cash Equity Investor that is an SBIC.
-----------
"SBIC Regulations" means the SBIC Act and the regulations issued thereunder
----------------
as set forth in 13 CFR (S)(S)107 and 121, as amended.
"Section 6.2 Indemnified Party" has the meaning set forth in Section 6.2.
----------------------------- -----------
"Section 6.3 Indemnified Party" has the meaning set forth in Section 6.3.
----------------------------- -----------
"Securities" means the shares of Series C Preferred Stock to be issued
----------
hereunder in accordance with the terms hereof, together with any shares of
Common Stock issued upon conversion of the Series C Preferred Stock.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules, regulations and policies promulgated thereunder.
"Series A Preferred Stock" means the Company's Series A Convertible
------------------------
Preferred Stock, par value $0.01 per share.
"Series B Preferred Stock" means the Company's Series B Preferred Stock,
------------------------
par value $0.01 per share.
"Series C Preferred Stock" has the meaning set forth in the recitals.
------------------------
"Series C Shares" means the shares of Series C Preferred Stock that are
---------------
issued hereunder by the Company to the Cash Equity Investors.
"Series D Preferred Stock" means the Company's Series D Convertible
------------------------
Preferred Stock, par value $0.01 per share.
5
<PAGE>
"Share Repurchase Price" has the meaning set forth in Section 2.1(a).
---------------------- --------------
"Sixty Wall Street" has the meaning set forth in the preamble.
-----------------
"Stockholders" means, collectively, the Morgan Entities, the Cash Equity
------------
Investors and the Other Stockholders.
"Stockholders' Agreement" means the Stockholders' Agreement dated as of
-----------------------
February 4, 1998 by and among the Company, AT&T Wireless PCS, Inc. and the other
stockholders of the Company, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Subsidiary" shall mean, with respect to any Person, a corporation or other
----------
entity of which 50% or more of the voting power or the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
"Transactions" means the transactions contemplated by this Agreement in its
------------
entirety.
"Triton Management" means Triton Management Company, Inc., a Delaware
-----------------
corporation and Subsidiary of the Company.
"Triton Operating Company" means Triton PCS Operating Company L.L.C., a
------------------------
Delaware limited liability company and Subsidiary of the Company.
"Triton PCS" means Triton PCS, Inc., a Delaware corporation and Subsidiary
----------
of the Company.
"Vesting Agreements" means the letter agreements dated as of February 4,
------------------
1998 among Triton Management, the Company and each of Clyde Smith, David Clark,
Patricia Gallagher, David Standig, Michael Mears, and any other Person
(including the Independent Directors who have executed similar agreements dated
June 26, 1998) who has been required to sign a similar agreement as a condition
to the award of any of the Company's Capital Stock, each as amended as of June
29, 1998 and as the same may be amended, modified or supplemented in accordance
with the terms thereof.
6
<PAGE>
ARTICLE II
REPURCHASE AND ISSUANCE
OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER
-----------------------------------------------
1.1 Repurchase of Shares.
--------------------
(1) In reliance upon the representations, warranties and agreements
of the parties herein contained, the Morgan Entities hereby transfer, assign,
sell and deliver to the Company, and the Company hereby purchases, the
Repurchased Shares in consideration of the payment by the Company to the Morgan
Entities of the aggregate amount of $3,560,200 (the "Share Repurchase Price").
----------------------
(2) On the date hereof, the Company and the Morgan Entities shall
take the following actions to effectuate the foregoing:
(i) the Morgan Entities shall deliver to the Company
certificates representing the Myrtle Beach Shares, duly endorsed or accompanied
by stock powers duly executed in blank;
(ii) the Company shall deliver to the Morgan Entities (as
specified on Schedule I) by wire transfer of immediately available funds an
----------
aggregate amount equal to the Share Repurchase Price; and
(iii) the Company shall deliver to J.P. Morgan and Sixty Wall,
61,527 and 2,871 shares, respectively, of Series C Preferred Stock (representing
in the aggregate the difference between the number of Myrtle Beach Shares issued
to the Morgan Entities pursuant to the Myrtle Beach Stock Purchase Agreement and
the number of Repurchased Shares being repurchased from the Morgan Entities
hereunder), the terms of which are set forth in the Restated Certificate, which,
subject to the terms thereof, are convertible at any time into shares of newly
issued common stock, par value $.01 per share (the "Common Stock") of the
------------
Company (as provided in the Restated Certificate).
1.2 Issuance of Shares.
------------------
(1) In reliance upon the representations, warranties and agreements
of the parties herein contained, each Cash Equity Investor hereby agrees to
contribute to the capital of the Company an amount equal to its portion of the
Contribution, and the Company hereby agrees to accept such contribution to the
capital of the Company and to issue to the Cash Equity Investors the Series C
Shares, all as more fully set forth on Schedule II.
-----------
(2) On the date hereof, the Company and the Cash Equity Investors
shall take the following actions to effectuate the foregoing:
7
<PAGE>
(i) each Cash Equity Investor shall deliver by wire transfer
of immediately available funds an amount equal to the portion of the
Contribution set forth opposite its name on Schedule II under the heading
-----------
"Contribution";
(ii) the Company shall deliver to each Cash Equity Investor the
number of Series C Shares set forth opposite its name on Schedule II under the
-----------
heading "Number of Series C Shares";
(iii) the Company shall deliver to each SBIC Holder, (A) the
Size Status Declaration on Form 480, the Assurance of Compliance for
Nondiscrimination on Form 652 and the Portfolio Financing Report on Form 1031
(Parts A and B) (collectively, the "SBA Compliance Documents"), and (B) a list,
------------------------
after giving effect to the Transactions of (1) the name of each of the Company's
directors, (2) the name and title of each of the Company's officers and (3) the
name of each of the Company's stockholders and the number and class of shares
held by each stockholder; and
(iv) the Company shall deliver to the Cash Equity Investors,
one or more opinions of the Company's counsel respecting the valid issuance of
the Series C Preferred Stock and the enforceability of this Agreement against
the Company.
1.3 Restrictive Legends. Each certificate representing
-------------------
Securities (including Securities issued hereunder or delivered upon conversion
of the Series C Preferred Stock, or delivered in substitution or exchange for
any of the foregoing) will bear a legend reading substantially as follows until
such Securities have been sold pursuant to an effective registration statement
under the Securities Act, Rule 144 under the Securities Act, or an opinion of
counsel reasonably satisfactory in form and substance to the Company and
otherwise in full compliance with any other applicable restrictions on transfer,
including those contained in this Agreement and the Stockholders' Agreement:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES OR 'BLUE SKY'
LAWS. SAID SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, UNLESS AND UNTIL REGISTERED UNDER
THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND ALL APPLICABLE STATE
SECURITIES OR 'BLUE SKY' LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND
ALL APPLICABLE STATE SECURITIES OR 'BLUE SKY' LAWS."
8
<PAGE>
1.4 Use of Proceeds. The Company shall use the net cash proceeds
---------------
of its sale of Series C Preferred Stock hereunder for consummation of the
purchase of the Repurchased Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
---------------------------------
CASH EQUITY INVESTORS AND MORGAN ENTITIES
-----------------------------------------
Each of the Cash Equity Investors (as to itself) and each of the
Morgan Entities (as to itself) represents and warrants to the Company and each
of the other parties as follows (it being understood and agreed that all of the
following representations and warranties are made by the Cash Equity Investors
and the Morgan Entities unless otherwise specified below):
1.5 Organization, Power and Authority.
---------------------------------
(1) It is a corporation, general partnership or limited
partnership, duly organized, validly existing and in good standing under the
Laws of its jurisdiction of organization and has the requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.
(2) It has the requisite power and authority to execute, deliver
and perform this Agreement, and each other instrument, document, certificate and
agreement required or contemplated to be executed, delivered and performed by it
hereunder and thereunder to which it is or will be a party.
(3) It is duly qualified to do business in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary other than any such jurisdiction
in which the failure to be so qualified would not have a Material Adverse Effect
on it or materially adversely affect the Transactions or its ability to perform
its obligations under the Related Agreements.
(4) The execution and delivery of this Agreement by it and the
consummation of the Transactions by it have been duly and validly authorized by
its Board of Directors (or equivalent body) and no other proceedings on its part
which have not been taken (including, without limitation, approval of its
stockholders, partners or members) are necessary to authorize this Agreement or
to consummate the Transactions.
(5) This Agreement has been duly executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar Laws affecting or relating
to enforcement of creditors' rights generally and may be subject to general
principles of equity.
9
<PAGE>
(6) After giving effect to the Transactions, it is not in breach of
any obligation under this Agreement or any of the Related Agreements.
1.6 Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance by it of this Agreement nor the consummation of the Transactions
will (a) conflict with, or result in a breach or violation of, any provision of
its organizational documents; (b) constitute, with or without the giving of
notice or passage of time or both, a breach, violation or default, create a
Lien, or give rise to any right of termination, modification, cancellation,
prepayment or acceleration, under (i) any Law or License or (ii) any note, bond,
mortgage, indenture, lease, agreement or other instrument, in each case which is
applicable to or binding upon it or any of its assets; or (c) require any
Consent or the approval of its board of directors, general partner, stockholders
or similar constituent bodies, as the case may be (which approvals have been
obtained), except in each case, where such breach, violation, default, Lien,
right, or the failure to obtain or give such Consent would not have a Material
Adverse Effect on it or materially adversely affect the Transactions or its
ability to perform its obligations under the Related Agreements. To its
knowledge, there is no fact relating to it or its Affiliates that would be
reasonably expected to prevent it from consummating any of the Transactions or
performing its obligations under any of the Related Agreements.
1.7 Litigation. There is no action, proceeding or investigation
----------
pending or, to its knowledge, threatened against it or any of its properties or
assets that would be reasonably expected to have an adverse effect on its
ability to consummate the Transactions to which it is a party or to fulfill its
obligations under this Agreement or any of the Related Agreements to which it is
a party, or which seeks to prevent or challenge the Transactions.
1.8 FCC Compliance. It complies with all eligibility rules issued
--------------
by the FCC to hold broadband PCS licenses, including without limitation, FCC
rules on foreign ownership and the CMRS spectrum cap. The fact that it owns an
equity interest in the Company will not cause the Company to be ineligible under
FCC rules to hold PCS Licenses in general or any other FCC licenses held by the
Company.
1.9 Brokers. It has not employed any broker, finder or investment
-------
banker or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the Transactions.
1.10 No Distribution. Each Cash Equity Investor has acquired the
---------------
Securities purchased by it hereunder for the purpose of investment and not with
a view to or for sale in connection with any distribution thereof (other than in
compliance with the Securities Act and all applicable state securities Laws).
1.11 Investor Acknowledgments.
------------------------
(1) Each Cash Equity Investor is an "accredited investor" as defined
in Regulation D of the Securities Act. Its representatives have been provided an
opportunity to ask questions of, and have received answers thereto from, the
Company and its representatives regarding
10
<PAGE>
the terms and conditions of its purchase of Securities, and the Company and its
proposed business generally, and have obtained all additional information
requested by it to verify the accuracy of all information furnished to it in
connection with such purchase.
(2) Each Cash Equity Investor has such knowledge and experience in
financial and business affairs that it is capable of evaluating the merits and
risks of purchasing the Securities it is purchasing hereunder.
(3) Each Cash Equity Investor agrees that it is not relying on and
acknowledges that no representation is being made by any other Cash Equity
Investor, the Morgan Entities, the Company or any of its officers, employees,
Affiliates, agents or representatives, except for representations and warranties
expressly set forth in this Agreement, and, in particular, it is not relying on,
and acknowledges that no representation is being made in respect of, (x) any
projections, estimates or budgets delivered to or made available to them of
future revenues, expenses or expenditures, or future results of operations and
(y) any other information or documents delivered or made available to it or its
representatives, except for representations and warranties expressly set forth
in this Agreement.
(4) In deciding to invest in the Company, each Cash Equity Investor
has relied exclusively on the representations and warranties expressly set forth
in this Agreement and the investigations made by itself and its representatives
and its and such representatives' knowledge of the industry in which the Company
operates. Based solely on such representations and warranties and such
investigations and knowledge, it has determined that the Securities it is
purchasing are a suitable investment for it.
11
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
-----------
The Company represents and warrants to the Cash Equity Investors and
the Morgan Entities as follows:
1.12 Organization, Power and Authority.
---------------------------------
(1) Each of the Company and each of its Subsidiaries that is a
corporation is a corporation, duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and as proposed to be
conducted pursuant to the Related Agreements. Each of the Company's Subsidiaries
that is a limited liability company is a limited liability company, duly formed,
validly existing and in good standing under the Laws of the jurisdiction of
formation and has the requisite limited liability company power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted and as proposed to be conducted pursuant to the Related Agreements.
(2) It has the requisite power, authority and/or legal capacity to
execute, deliver and perform this Agreement and each other instrument, document,
certificate and agreement required or contemplated to be executed, delivered and
performed by it hereunder and thereunder to which it is or will be a party.
(3) Each of the Company and each of its Subsidiaries is duly
qualified to do business in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary other than any such jurisdiction in which the failure to
be so qualified would not have a Material Adverse Effect on the Company or such
Subsidiary or materially adversely affect the Transactions or its ability to
perform its obligations under the Related Agreements.
(4) The execution and delivery of this Agreement by the Company and
the consummation of the Transactions by the Company have been duly and validly
authorized by the Board of Directors of the Company and, no other corporate
proceedings on the part of the Company which have not been taken (including,
without limitation, approval of its stockholders) are necessary to authorize
this Agreement or to consummate the Transactions.
(5) This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium
12
<PAGE>
or other similar Laws affecting or relating to enforcement of creditors' rights
generally and may be subject to general principles of equity.
(6) After giving effect to the Transactions, the Company is not in
breach of any obligation under this Agreement, any Related Agreement or any of
the Credit Documents.
1.13 Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance by the Company of this Agreement nor the consummation of the
Transactions will (a) conflict with, or result in a breach or violation of, any
provision of the Company's organizational documents; (b) constitute, with or
without the giving of notice or passage of time or both, a breach, violation or
default, create a Lien (other than Liens under the Credit Documents), or give
rise to any right of termination, modification, cancellation, prepayment or
acceleration, under (i) any Law or License, or (ii) any note, bond, mortgage,
indenture, lease, agreement or other instrument, in each case which is
applicable to or binding upon the Company or any of its assets; or (c) require
any Consent on the part of the Company or the approval of the Company's Board of
Directors (which approval has been obtained), except in each case where such
breach, violation, default, Lien, right, or the failure to obtain or give such
Consent would not have a Material Adverse Effect on it or materially adversely
affect the Transactions, its ability to perform its obligations under the
Related Agreements or the operation of the Company's business after the date
hereof. To its knowledge, there is no fact relating to it or its Affiliates that
would be reasonably expected to prevent it from consummating any of the
Transactions or performing any of its obligations under the Related Agreements.
1.14 Litigation. There is no action, proceeding or investigation
----------
pending or, to the knowledge of the Company, threatened against the Company or
any of its properties or assets that would have an adverse effect on its ability
to consummate the Transactions or to fulfill its obligations under this
Agreement or any of the Related Agreements, or to operate its business after the
date hereof, or which seeks to prevent or challenge the Transactions. There is
no judgment, decree, injunction, rule or order outstanding against the Company
which would limit in any material respect the ability of the Company to operate
its business in the manner currently contemplated.
1.15 FCC Compliance. Assuming the accuracy of the representations
--------------
and warranties contained in Section 3.4, it complies with all eligibility rules
-----------
issued by the FCC to hold broadband PCS licenses, including without limitation,
FCC rules on foreign ownership and the CMRS spectrum cap.
1.16 Brokers. The Company has not employed any broker, finder or
-------
investment banker or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the Transactions.
13
<PAGE>
1.17 Capitalization.
--------------
(1) As of the date hereof, the authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock, 1,000,000 shares of
Series A Preferred Stock, 2,000,000 shares of Series B Preferred Stock,
3,000,000 shares of Series C Preferred Stock, and 1,000,000 shares of Series D
Preferred Stock. As of the date hereof, prior to giving effect to the
Transactions, there have been issued and are outstanding 235,125.68 shares of
Common Stock, 732,371 shares of Series A Preferred Stock, no shares of Series B
Preferred Stock, 1,750,000 shares of Series C Preferred Stock and 366,131 shares
of Series D Preferred Stock. The record and beneficial owners of such
outstanding shares of Common Stock and Preferred Stock are set forth on Schedule
--------
4.6(a).
- ------
(2) Except as set forth on Schedule 4.6(b), there are not any
---------------
existing options, warrants, calls, subscriptions, or other rights, or other
agreements or commitments, obligating the Company to issue, transfer or sell any
shares of capital stock of the Company, except the Series C Preferred Stock
hereunder.
1.18 Shares. The shares of Series C Preferred Stock being issued to
------
the Cash Equity Investors hereunder, when issued and paid for pursuant to the
terms of this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will be free of any Liens caused or created by the Company,
except as set forth in the Stockholders' Agreement and the Restated Certificate.
The shares of Common Stock issued upon conversion of the Series C Preferred
Stock, when issued pursuant to the terms of the Series C Preferred Stock, will
be validly issued, fully paid and nonassessable, and will be free of any Liens
caused or created by the Company, except as set forth in the Stockholders'
Agreement and the Restated Certificate.
1.19 Subsidiaries. The Company owns directly or indirectly all of the
------------
outstanding shares of Capital Stock of each of its Subsidiaries, free and clear
of any Liens, except Liens granted to the Lenders pursuant to the Credit
Documents. Set forth on Schedule 4.8 is a complete list of its direct and
------------
indirect Subsidiaries indicating the jurisdictions in which each such Subsidiary
is organized or qualified to conduct business.
1.20 Offering of Securities.
----------------------
(1) None of the Company or any Person acting on its behalf has
offered the Securities or any similar equity securities of the Company for sale
to, or solicited any offers to buy the Securities or any similar equity
securities of the Company from, any Person, other than the Cash Equity Investors
and a limited number of other "accredited investors" (as defined in Rule 501(a)
under the Securities Act).
(2) Assuming the accuracy of the representations and warranties of
the Cash Equity Investors contained in Sections 3.6 and 3.7, the offering and
--------------------
sale of Securities under this
14
<PAGE>
Agreement to the Cash Equity Investors complies with all applicable requirements
of Federal and state securities Laws.
1.21 Small Business Matters. Neither the Company nor any Subsidiary:
----------------------
(a) presently engages in, and none of them shall hereafter engage in, any
activities, or (b) shall use directly or indirectly the proceeds from the sale
of the Securities for any purpose, which, in either case, a SBIC is prohibited
from engaging in or providing funds for by the SBIC Act and the regulations
thereunder (including Title 13, Code of Federal Regulations, Section 107.720).
ARTICLE V
COVENANTS
---------
1.22 Use of Proceeds. The Company shall use the proceeds of the sale
---------------
of Securities only for the purpose described in Section 2.4.
-----------
1.23 SBIC Regulatory Provisions.
--------------------------
(1) The Company shall notify each SBIC Holder as soon as practicable
(and, in any event, not later than 15 days) prior to taking any action after
which the number of record holders of the Company's voting stock would be
increased from fewer than 50 to 50 or more, and the Company shall notify each
SBIC Holder of any other action or occurrence after which the number of record
holders of the Company's voting stock was increased (or would increase) from
fewer than 50 to 50 or more, as soon as practicable after the Company becomes
aware that such other action or occurrence has occurred or is proposed to occur.
(2) Within 75 days after the date hereof, the Company shall deliver
to each SBIC Holder a written statement certified by the Company's president or
chief financial officer describing in reasonable detail the use of the proceeds
of the sale of Securities hereunder by the Company and its Subsidiaries. In
addition to any other rights granted hereunder, the Company shall grant each
SBIC Holder and the United States Small Business Administration (the "SBA")
---
access to the Company's records for the purpose of verifying the use of such
proceeds to the extent required pursuant to SBIC Regulations.
(3) Promptly after the end of each fiscal year (but in any event
prior to February 28 of each year), the Company shall deliver to each SBIC
Holder a written assessment of the economic impact of each SBIC Holder's
investment in the Company, specifying the full-time equivalent jobs created or
retained in connection with the investment, the impact of the investment on the
revenues and profits of the business and on taxes paid by the business and its
employees.
1.24 Regulatory Compliance Cooperation. In the event that any SBIC
---------------------------------
Holder reasonably determines that it has a Regulatory Problem, to the extent
reasonably necessary, such SBIC Holder shall have the right to transfer its
Securities (and any shares of Common Stock issued
15
<PAGE>
upon conversion thereof) to another Person without regard to any restrictions on
transfer set forth in this Agreement or in Section 4.1(c) of the Stockholders'
--------------
Agreement and without complying with the provisions of Section 4.3 of the
-----------
Stockholders' Agreement, but subject to the other provisions of the
Stockholders' Agreement and all applicable Laws, including without limitation
federal and state securities Law restrictions, and the Company shall take all
such actions as are reasonably requested by such SBIC Holder in order to (i)
effectuate and facilitate such transfer by such SBIC Holder of any Securities of
the Company then held by such SBIC Holder to such Person, (ii) permit such SBIC
Holder (or any of its Affiliates) to exchange all or any portion of voting
Securities then held by it on a share-for-share basis for shares of a class of
non-voting Securities of the Company, which non-voting Securities shall be
identical in all respects to such voting Securities, except that such non-voting
Securities (or Common Stock, as applicable) shall be non-voting and shall be
convertible into voting Securities (or Common Stock, as applicable) on such
reasonable terms as are requested by such SBIC Holder in light of regulatory
considerations then prevailing, (iii) continue and preserve the respective
allocation of the voting interests with respect to the Company arising out of
the SBIC Holder's ownership of voting Securities and/or provided for in the
Stockholders' Agreement before the transfers and amendments referred to in this
Section (including entering into such additional agreements as are reasonably
requested by such SBIC Holder to permit any Person(s) designated by such SBIC
Holder) to exercise any voting power which is relinquished by such SBIC Holder
and (iv) amend this Agreement, the Restated Certificate, and any other related
documents, agreements or instruments to effectuate and reflect the foregoing.
The parties to this Agreement agree to vote their Securities in favor of such
amendments and actions.
1.25 Related Agreement Amendments. Certain of the parties hereto
----------------------------
(and/or certain of their respective Affiliates) are (or, with respect to the
Resale Agreement, will be) parties to the Related Agreements. It is the
intention of the parties hereto that, upon consummation of the Transactions,
each Related Agreement shall be amended and/or restated as necessary to give
effect to, among other things, the Securities issued to the Cash Equity
Investors, it being agreed that the rights and obligations of the parties under
the Related Agreements pertaining to the securities thereunder shall pertain
also to the Securities hereunder.
1.26 Offering of Securities. None of the Company or any Person
----------------------
acting on its behalf will, directly or indirectly, take any action which might
subject the offering, issuance or sale of the Securities to the registration and
prospectus delivery requirements of Section 5 of the Securities Act.
1.27 Certain Waivers and Consents. With respect to the Transactions
----------------------------
and the issuance of the Series C Shares hereunder, each of the Stockholders
hereby (a) waives the notice requirements set forth in Section 7.2(b) of the
--------------
Stockholders' Agreement; (b) waives its preemptive rights that are afforded such
party in Section 7.2 of the Stockholders' Agreement; (c) waives compliance by
-----------
the Morgan Entities and the Cash Equity Investors with the transfer restrictions
contained in Article 4 of the Stockholders' Agreement, and (d) consents to the
amendment of the Restated Certificate to (i) increase the number of authorized
shares of Series C Preferred Stock from 2,000,000 to 3,000,000, (ii) increase
the number of authorized shares of Series D Preferred Stock from 500,000 to
1,000,000, and (iii) authorize the redemption by the Company of shares of Series
16
<PAGE>
C Preferred Stock upon receiving the affirmative vote of all of the holders of
shares of Series C Preferred Stock.
ARTICLE VI
SURVIVAL AND INDEMNIFICATION
----------------------------
1.28 Survival. The representations and warranties made in this
--------
Agreement shall survive until the second anniversary of the date hereof and
shall thereupon expire together with any right to indemnification in respect
thereof (except to the extent a written notice asserting a claim for breach of
any such representation or warranty and describing such claim in reasonable
detail shall have been given prior to such date to the party which made such
representation or warranty). The sole and exclusive remedy of the parties for
any breach or inaccuracy of any representation or warranty contained in this
Agreement, or any other claim (whether or not alleging a breach of this
Agreement) that arises out of the facts and circumstances constituting such
breach or inaccuracy, shall be the indemnity provided in this Article VI.
----------
1.29 Indemnification by the Cash Equity Investors and Morgan
-------------------------------------------------------
Entities. Each Cash Equity Investor and Morgan Entity, severally and not
- --------
jointly, shall indemnify and hold harmless each other Cash Equity Investor and
Morgan Entity, the Company and their respective Affiliates, and the
shareholders, members, managers, officers, employees, agents and/or the legal
representatives of any of them (each, a "Section 6.2 Indemnified Party"),
-----------------------------
against all liabilities and expenses (including amounts paid in satisfaction of
judgments, in compromise, as fines and penalties, and as counsel fees)
(collectively, "Losses") incurred by him or it in connection with the
------
investigation, defense, or disposition of any action, suit or other proceeding
in which any Section 6.2 Indemnified Party may be involved or with which he or
it may be threatened that arises out of or results from (a) any representation
or warranty of such Cash Equity Investor or Morgan Entity contained in this
Agreement being untrue in any material respect as of the date on which it was
made or (b) any material default by such Cash Equity Investor or Morgan Entity
or any of its Affiliates in the performance of their respective obligations
under this Agreement, except to the extent (but only to the extent) any such
Losses arise out of or result from the gross negligence or willful misconduct of
such Section 6.2 Indemnified Party or its Affiliates.
1.30 Indemnification by the Company. The Company shall indemnify and
------------------------------
hold harmless each Cash Equity Investor and Morgan Entity and their respective
Affiliates, and the shareholders, members, managers, officers, employees, agents
and/or the legal representatives of any of them (each, a "Section 6.3
-----------
Indemnified Party"), against all Losses incurred by him or it in connection with
- -----------------
the investigation, defense, or disposition of any action, suit or other
proceeding in which any Section 6.3 Indemnified Party may be involved or with
which he or it may be threatened that arises out of or results from (a) any
representation or warranty of the Company contained in this Agreement being
untrue in any material respect as of the date on which it was made or (b) any
material default by the Company or any of its Affiliates in the performance of
their respective obligations under this Agreement, except to the extent (but
only to the extent) any such Losses arise
17
<PAGE>
out of or result from the gross negligence or willful misconduct of such Section
6.3 Indemnified Party or its Affiliates.
1.31 Procedures.
----------
(1) The terms of this Section 6.4 shall apply to any claim (a
-----------
"Claim") for indemnification under the terms of Sections 6.2 or 6.3. The Section
----- -------------------
6.2 Indemnified Party or Section 6.3 Indemnified Party (each, an "Indemnified
-----------
Party"), as the case may be, shall give prompt written notice of such Claim to
- -----
the indemnifying party (the "Indemnifying Party") under the applicable Section,
------------------
which party may assume the defense thereof, provided that any delay or failure
to so notify the Indemnifying Party shall relieve the Indemnifying Party of its
obligations hereunder only to the extent, if at all, that it is materially
prejudiced by reason of such delay or failure. The Indemnified Party shall have
the right to approve any counsel selected by the Indemnifying Party and to
approve the terms of any proposed settlement, such approval not to be
unreasonably delayed or withheld (unless such settlement provides only, as to
the Indemnified Party, the payment of money damages actually paid by the
Indemnifying Party and a complete release of the Indemnified Party in respect of
the claim in question). Notwithstanding any of the foregoing to the contrary,
the provisions of this Article VI shall not be construed so as to provide for
----------
the indemnification of any Indemnified Party for any liability to the extent
(but only to the extent) that such indemnification would be in violation of
applicable Law or that such liability may not be waived, modified or limited
under applicable Law, but shall be construed so as to effectuate the provisions
of this Article VI to the fullest extent permitted by Law.
----------
(2) In the event that the Indemnifying Party undertakes the defense
of any Claim, the Indemnifying Party will keep the Indemnified Party advised as
to all material developments in connection with such Claim, including, but not
limited to, promptly furnishing the Indemnified Party with copies of all
material documents filed or served in connection therewith.
(3) In the event that the Indemnifying Party fails to assume the
defense of any Claim within ten Business Days after receiving written notice
thereof, the Indemnified Party shall have the right, subject to the Indemnifying
Party's right to assume the defense pursuant to the provisions of this Article
-------
VI, to undertake the defense, compromise or settlement of such Claim for the
- --
account of the Indemnifying Party. Unless and until the Indemnifying Party
assumes the defense of any Claim, the Indemnifying Party shall advance to the
Indemnified Party any of its reasonable attorneys' fees and other costs and
expenses incurred in connection with the defense of any such action or
proceeding. Each Indemnified Party shall agree in writing prior to any such
advancement that, in the event he or it receives any such advance, such
Indemnified Party shall reimburse the Indemnifying Party for such fees, costs
and expenses to the extent that it shall be determined that he or it was not
entitled to indemnification under this Article VI.
----------
(4) In no event shall an Indemnifying Party be required to pay in
connection with any Claim for more than one firm of counsel (and local counsel)
for each of the following groups of Indemnified Parties: (i) the Cash Equity
Investors and the Morgan Entities, their respective Affiliates and the
shareholders, members, managers, officers, employees, agents and/or the legal
18
<PAGE>
representatives of any of them; and (ii) the Company, its Affiliates and the
shareholders, members, managers, officers, employees, agents and/or the legal
representatives of any of them.
1.32 Registration Rights. Notwithstanding anything to the contrary
-------------------
in this Article VI, the indemnification and contribution provisions set forth in
----------
Sections 5(e) and 5(f) of the Stockholders' Agreement shall govern any claim
- ----------------------
made with respect to the registration statements filed pursuant to Section 5 of
---------
the Stockholders' Agreement or sales made thereunder.
1.33 Limit on Indemnity. So long as the Company does not conduct any
------------------
business or engage in any activities other than those described in the first
sentence of the definition of "Business" (as such term is defined in the
Stockholders' Agreement), each party waives its right to indemnification under
this Article VI or any other right to assert any claim arising from any
----------
inaccuracy in the Company's representations and warranties set forth in Section
-------
4.10 or the violation by the Company of the covenant set forth in Section 5.2(d)
- ---- --------------
to the extent such Section relates to ineligible or prohibited activities of
SBICs.
ARTICLE VII
MISCELLANEOUS PROVISIONS
------------------------
1.34 Amendment and Modification. This Agreement may be amended,
--------------------------
modified or supplemented only by written agreement of each of the Cash Equity
Investors, the Morgan Entities and the Company, and (solely with respect to the
provisions contained in Section 5.6) the Other Stockholders.
-----------
1.35 Waiver of Compliance; Consents. Any failure of any of the
------------------------------
parties to comply with any obligation, covenant, agreement or condition herein
may be waived by the party or parties entitled to the benefits thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirement for a waiver of
compliance as set forth in this Section 7.2.
-----------
1.36 Notices. All notices or other communications hereunder shall be
-------
in writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by facsimile transmission, or by overnight
courier or registered or certified mail (return receipt requested), postage
prepaid, with an acknowledgment of receipt signed by the addressee or an
authorized representative thereof, addressed as follows (or to such other
address for a party as shall be specified by like notice; provided that notice
of a change of address shall be effective only upon receipt thereof):
19
<PAGE>
If to a Cash Equity Investor or a Morgan Entity, to its address
set forth on Schedule I.
----------
With a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Mark S. Wojciechowski
Facsimile: (212) 262-1910
If to the Company or any Other Stockholder, to it or him/her:
c/o Triton Management Company, Inc.
375 Technology Drive
Malvern, PA 19355
Attention: Michael E. Kalogris
Steven R. Skinner
Facsimile: (610) 993-2683
With a copy to:
Kleinbard Bell & Brecker LLP
1900 Market Street, Suite 700
Philadelphia, PA 19103
Attention: Howard J. Davis
Facsimile: (215) 568-0140
And with a copy to each other party sent to the addresses set forth in
this Section 7.3.
-----------
1.37 Expenses. The Company agrees to pay, and save the Cash Equity
--------
Investors and Morgan Entities harmless against, the reasonable fees and
disbursements of counsel to each of the Cash Equity Investors and Morgan
Entities in connection with the preparation, negotiation, execution and delivery
of this Agreement, the instruments and documents executed pursuant hereto or
thereto or in connection herewith or therewith, and the consummation of any such
Transaction; provided, however, that as a condition to the Company's foregoing
obligation, counsel for the Cash Equity Investors and Morgan Entities shall be
directed to, and shall, deliver to the Company on a monthly basis detailed
invoices for legal services rendered during such month.
1.38 Parties in Interest; Assignment. This Agreement is binding upon
-------------------------------
and is solely for the benefit of the parties hereto and their respective
permitted successors, legal representatives and permitted assigns. None of the
Company or any Stockholder may assign its rights and
20
<PAGE>
obligations hereunder without the prior written consent of each of the other
parties, except (a) either Morgan Entity may assign its rights and obligations
hereunder to the other without any prior consent and (b) CB Capital Investors,
L.P. shall have the right to assign to one or more of its Affiliates, any and
all rights and obligations of C.B. Capital Investors, L.P. under this Agreement
(provided that such assignee shall have assumed in writing all the obligations
of C.B. Capital Investors, L.P. hereunder and no such assignment shall relieve
C.B. Capital Investors, L.P. of its obligations hereunder).
1.39 Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the Laws of the State of New York without giving
effect to the conflicts of Law principles thereof. The parties hereto hereby
irrevocably and unconditionally consent to submit to the non-exclusive
jurisdiction of the courts of the State Of New York and of the United States of
America located in the County of New York, New York (the "New York Courts") for
---------------
any litigation arising out of or relating to this Agreement and the
Transactions, waive any objection to the laying of venue of any such litigation
in the New York Courts and agrees not to plead or claim in any New York Court
that such litigation brought therein has been brought in an inconvenient forum.
1.40 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
1.41 Interpretation. The article and section headings contained in
--------------
this Agreement are for convenience of reference only, are not part of the
agreement of the parties and shall not affect in any way the meaning or
interpretation of this Agreement. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the antecedent Person or Person may require.
1.42 Entire Agreement. This Agreement, including the exhibits and
----------------
schedules hereto and the certificates and instruments delivered pursuant to the
terms of this Agreement, embodies the entire agreement and understanding of the
parties hereto in respect of the Transactions. There are no restrictions,
promises, representations, warranties, covenants or undertakings, other than
those expressly set forth or referred to herein or therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such Transactions.
1.43 Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any New York Courts.
1.44 Remedies Cumulative. All rights, powers and remedies provided
-------------------
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not
21
<PAGE>
alternative, and the exercise or beginning of the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
[signature pages follow]
* * *
22
<PAGE>
[SIGNATURE PAGES TO PREFERRED STOCK REPURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Company:
TRITON PCS HOLDINGS, INC.
By:_______________________________________________
Name:
Title:
Morgan Entities:
J.P. MORGAN INVESTMENT CORPORATION
By:_______________________________________________
Name:
Title:
SIXTY WALL STREET SBIC FUND, L.P.
By: Sixty Wall Street SBIC Corporation, its
general partner
By:_______________________________________________
Name:
Title:
Cash Equity Investors:
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc., its general
partner
By:_______________________________________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
PRIVATE EQUITY INVESTORS III, L.P.
By: Rohit M. Desai Associates III, L.L.C., its
general partner
By:_______________________________________________
Name:
Title:
EQUITY-LINKED INVESTORS-II
By: Rohit M. Desai Associates-II, its general
partner
By:_______________________________________________
Name:
Title:
TORONTO DOMINION CAPITAL (U.S.A.), INC.
By:_______________________________________________
Name:
Title:
FIRST UNION CAPITAL PARTNERS, INC.
By:_______________________________________________
Name:
Title:
DAG-TRITON PCS, L.P.
By: Duff Ackerman Goodrich, L.L.C., its general
partner
By:_______________________________________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
Other Stockholders:
_________________________________________________
Michael E. Kalogris
_________________________________________________
Steven R. Skinner
_________________________________________________
David D. Clark
_________________________________________________
Clyde Smith
_________________________________________________
David Standig
_________________________________________________
Michael Mears
_________________________________________________
Michael E. Kalogris, as Trustee under Amended and
Restated Common Stock Trust Agreement for
Management Employees and Independent Directors
dated June 26, 1998
_________________________________________________
Scott Anderson
<PAGE>
_________________________________________________
John Beletic
<PAGE>
SCHEDULE I
MORGAN ENTITIES
<TABLE>
<CAPTION>
AGGREGATE MYRTLE NUMBER OF MYRTLE
BEACH CONTRIBUTION BEACH SHARES
------------------ --------------------
<S> <C> <C>
JP Morgan Capital Investment Corporation $ 9,534,900 95,349.00
Sixty Wall Street SBIC Fund, L.P. 465,100 4,651.00
----------- ----------
Total $10,000,000 100,000.00
</TABLE>
27
<PAGE>
SCHEDULE II
CASH EQUITY INVESTORS
<TABLE>
<CAPTION>
NUMBER OF
CONTRIBUTION SERIES C SHARES
------------ ---------------
<S> <C> <C>
CB Capital Investors, L.P. $ 467,511 4,675.11
Private Equity Investors III, L.P. 269,656 2,696.56
Equity-Linked Investors-II 269,656 2,696.56
Toronto Dominion Capital (U.S.A.) Inc. 134,826 1,348.26
First Union Capital Partners, Inc. 2,065,675 20,656.75
DAG-Triton PCS, L.P. 352,876 3,528.76
---------- ---------
Total $3,560,200 35,602.00
</TABLE>
<PAGE>
SCHEDULE III
ADDRESS FOR NOTICES
<TABLE>
<S> <C>
CB Capital Investors, L.P. Attn: Brian Rich
380 Madison Avenue, 12th Floor Tel: (212) 468-0740
New York, NY 10017 Fax: (212) 974-0429
Attn: Arnie Chavkin
Tel: (212) 622-3100 Toronto Dominion Capital (U.S.A.), Inc.
Fax: (212) 622-3101 909 Fannin
Suite 1700
J.P. Morgan Investment Corporation Houston, TX 77010
101 California Street, 38th Floor Attn: Martha Gariepy
San Francisco, CA 94111 Tel: (713) 653-8225
Attn: John Watkins Fax: (713) 652-2647
Tel: (415) 954-3200
Fax: (415) 954-4737 First Union Capital Partners, Inc.
One First Union Center
Sixty Wall Street SBIC Fund, L.P. 301 South College Street / 5th Floor
101 California Street, 38th Floor Charlotte, NC 28288-0732
San Francisco, CA 94111 Attn: Watts Hamrick
Attn: John Watkins Tel: (704) 374-4791
Tel: (415) 954-3200 Fax: (704) 374-6711
Fax: (415) 954-4737
DAG-Triton PCS, L.P.
Private Equity Investors III, L.P. Two Embarcadero Center
540 Madison Avenue, 36th Floor Suite 2930
New York, NY 10022 San Francisco, CA 94111
Attn: Damon Ball Attn: John Duff
Tel: (212) 838-9191 Tel: (415) 788-2755
Fax: (212) 838-9807 Fax: (415) 788-7311
Equity-Linked Investors-II
540 Madison Avenue, 36th Floor
New York, NY 10022
Attn: Damon Ball
Tel: (212) 838-9191
Fax: (212) 838-9807
Toronto Dominion Capital (U.S.A.), Inc.
31 West 52nd Street
New York, NY 10019
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
SCHEDULE 4.6(A)
EQUITY OWNERSHIP
<TABLE>
<CAPTION>
Shares
Stockholders Owned
- ------------------------------------------------------
<S> <C>
Series A Preferred Stock:
- ------------------------
AT&T Wireless PCS, Inc. 732,371.00
Total Series A 732,371.00
Series C Preferred Stock:
- -------------------------
CB Capital Investors, L.P. 507,143.68
J.P. Morgan Investment
Corporation 479,028.00
Sixty Wall Street SBIC
Fund, L.P. 25,687.00
Private Equity Investors III, L.P. 243,547.11
Equity-Linked Investors-II 243,547.11
Toronto Dominion Capital
(USA) Inc. 121,774.18
First Union Capital Partners, Inc. 60,886.46
DAG-Triton PCS, L.P. 60,886.46
Michael E. Kalogris 5,000.00
Steven R. Skinner 2,500.00
Total Series C 1,750,000.00
</TABLE>
<PAGE>
SCHEDULE 4.6(A) (CONT.)
<TABLE>
<S> <C>
Series D Preferred Stock:
- ------------------------
AT&T Wireless PCS, Inc. 366,131.00
Total Series D 366,131.00
Common Stock:
- ------------
Michael E. Kalogris 94,050.27
Steven R. Skinner 70,537.70
David D. Clark 7,053.77
Clyde Smith 3,762.01
Patricia Gallagher 1,410.76
David Standig 3,526.89
Michael Mears 2,351.26
Scott Anderson 847.11
John Beletic 847.11
Michael E. Kalogris, as Trustee
under Amended and Restated
Common Stock Trust
Agreement for Management
Employees and Independent
Directors dated June 26, 1998 50,738.80
Total Common 235,125.68
</TABLE>
<PAGE>
SCHEDULE 4.6(B)
OBLIGATIONS TO ISSUE CAPITAL STOCK
1. Pursuant to the terms of the Restated Certificate, the Series A
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock,
the Company may be required under certain circumstances contained therein to
issue shares of Preferred Stock or Common Stock, as the case may be, upon
conversion thereof.
2. The Company and AT&T Wireless PCS, Inc. ("AT&T PCS") are parties to
that certain Asset Purchase Agreement dated as August 20, 1998 (the "Norfolk
Acquisition Agreement") pursuant to which the Company and/or one or more of its
direct or indirect wholly-owned subsidiaries intends to acquire substantially
all of AT&T PCS' assets relating to the PCS system in the Norfolk, Virginia BTA
(the "Norfolk Acquisition"), including 20 MHz of the 30 MHz of the PCS license
owned by AT&T PCS covering such market. On the terms and subject to the
conditions contained in the Norfolk Acquisition Agreement, upon consummation of
the Norfolk Acquisition, the Company has agreed to issue to AT&T PCS 134,813.49
shares of Series D Preferred Stock.
<PAGE>
SCHEDULE 5.8
COMPANY SUBSIDIARIES
<TABLE>
<CAPTION>
State of Foreign
Subsidiary Organization Qualification
----------------------------------- ------------ --------------
<S> <C> <C> <C>
1. Triton PCS, Inc. DE None
2. Triton Management Company, Inc. DE PA, VA, SC, NC
3. Triton PCS Holdings Company L.L.C. DE None
4. Triton PCS Property Company L.L.C. DE VA, SC, NC, GA
5. Triton PCS License Company L.L.C. DE None
6. Triton PCS Equipment Company L.L.C. DE VA, SC, NC, GA
7. Triton PCS Operating Company L.L.C. DE VA, SC, NC, GA
</TABLE>
<PAGE>
EXHIBIT 99.4
SITE DEVELOPMENT
----------------
AND
---
BUILD TO SUIT AGREEMENT
-----------------------
THIS SITE DEVELOPMENT AND BUILD-TO-SUIT AGREEMENT (the "Agreement"),
is made and entered into as of this ____ day of November, _____ by and between
Triton PCS Property Company, L.L.C. ("Client") and American Tower, L.P.
("American Tower"),
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Client desires American Tower to identify potential cell site
locations within specified search areas to be acquired or leased and to be
developed for use and occupancy by and in the lease to Client; and
WHEREAS, Client also desires to engage American Tower as an
independent contractor, upon the terms and conditions set forth herein, to
provide, or cause the provision of, among other things, ongoing services related
to each such selected cell site and American Tower desires to perform such
services for Client.
NOW, THEREFORE, for and in consideration of the premises, and other
good and valuable consideration, the receipt and sufficiency of which the
parties acknowledge, the parties agree as follows:
ARTICLE 1
---------
DEFINITIONS
-----------
1.01 DEFINITIONS.
-----------
(A) The following capitalized terms shall have the following
respective meanings for purposes of this Agreement:
"Acquisition" means the acquisition by American Tower in its name fee
simple title to or a leasehold interest in each Site, or other acceptable use
right, and the performance of all investigations, examinations, tests and
inspections, and other due diligence activities incidental thereto.
"Build-to-Suit Site" means a Site, its use rights, and the Tower and
Improvements on it that are obtained and constructed by American Tower at
American Tower's sole cost and expense and in its own name.
"Business Day" means any day other than a Saturday, Sunday or holiday
of the federal government of the United States of America.
<PAGE>
"Client's Improvements" means any equipment and other facilities to be
provided by Client or American Tower and installed by American Tower on a Site,
including up to nine (9) panel antennas, twelve (12) 2 1/4" coax cables, two
(2) 6 foot microwave dishes (if copper or fiber T1 service is not available for
a reasonable cost as determined by Client), and a BTS or shelter pad.
"Completion," "Complete" or "Completed" means or refers, with respect
to a Site: (i) the receipt of all FAA and zoning approvals and other Permits in
accordance with all Governmental Requirements, (ii) the Site is ready for the
installation of Client's Improvements; (iii) receipt of a certificate of
occupancy or any other final municipal approval from the applicable Governmental
Authority; (iv) the issuance of a Completion Certificate if construction of a
Tower and Improvements is required; and (v) if American Tower has been engaged
to supervise and coordinate the their installation, the Client Improvements have
been installed.
"Completion Certificate" means the certificate of completion issued by
American Tower and accepted by Client with respect to the construction of a
Tower and Improvements on a Site stating that the Work is Completed.
"Completion Date" means the date on which the Tower and Improvements
are Completed, as required, with respect to a Site.
"Day" means a calendar day unless specifically stated to be a Business
Day.
"Development of Site" means and includes with respect to each Site (i)
the Acquisition of the Site, (ii) the performance of the Work and Services on
the Site, as required, and (iii) the Completion of the Site.
"Effective Date" means the date first above written, being the date on
which the parties have executed and delivered this Agreement.
"Excusable Delay" means a delay in the performance of the Work or
Services caused by a Force Majeure event requiring an extension of the Site
Schedule for any Site or the Project Completion Date.
"Force Majeure" means those events constituting excuse from timely
performance by American Tower of any duty or obligation required of it under
this Agreement.
"Governmental Authority" means any federal, state, county or municipal
governmental authority, including all executive, legislative, judicial and
administrative bodies thereof.
"Governmental Requirements" means (i) all federal, state and local
laws, ordinances, and regulations and all orders and decrees of all Governmental
Authorities, which in any manner affect the Work and Services provided under
this Agreement.
2
<PAGE>
"Ground Lease" means a ground lease of a Site entered into by American
Tower or Client, as the case may be, substantially in the form agreed to by
American Tower and Client.
"Improvements" means, among other things, with respect to new
construction on a Site: (i) an equipment pad or raised platform capable of
accommodating exterior cabinets, electrical and other utilities service and
access for the placement and servicing of Client's Improvements; (ii) a
grounding ring; (iii) fencing; (iv) signage; (v) connections for utility
service; and (vi) hardware constituting a tower platform to hold Client's
Improvements, as more particularly described in the Specifications attached as
Exhibit D.
"Intended Use" has the meaning ascribed to such term in the Master
Lease.
"Master Lease" means the Master Lease between Client and American
Tower relating to Client's use of Build-to-Suit Sites, in the form attached as
Exhibit E.
"Other Tenant" means any other Person entitled to use any Build-to-
Suit Site under agreement between American Tower and the Other Tenant.
"Permits" means any and all certificates, licenses, permits,
authorizations, consents, special use permits and other approvals by the
applicable Governmental Authorities having jurisdiction in such matters required
to be obtained, issued, granted or received for the performance of the Work and
Services, including, as required, the Completion of any Tower and Improvements.
"Person" means any individual, firm, corporation, partnership, limited
liability company, trust, unincorporated business association or Governmental
Authority.
"Project" means American Tower's Acquisition of all the Sites and
performance of the Work and Services to be performed on or with respect to all
Sites as set forth in this Agreement.
"Project Completion Date" means the date on which the last Site
Completion Certificate is accepted by Client subject to extension as otherwise
provided in this Agreement.
"Project Schedule" means a timetable for the Project consisting of all
material components and events for the Completion of the Project, and the time
periods necessary for the various aspects of it, including revisions and
adjustments permitted by the terms of this Agreement, as set forth in Exhibit C.
"Services" means all services required to be performed or procured by
American Tower pursuant to the terms and conditions of this Agreement,
including, without limitation: (i) provision of cell site searching services in
search areas designated by Client; (ii) Acquisition of the Sites; (iii)
construction and installation of a Tower and Improvements on the Sites as
required; and (iv) as applicable, American Tower's supervision and coordination
of the installation of the Client Improvements, all as more particularly
described in this Agreement.
"Site" means any site that becomes part of the Project pursuant to
Client's selection.
3
<PAGE>
"Site Lease" means the Site Lease between Client and American Tower
relating to Client's use of a specific Build-to-Suit Site, in the form attached
as an exhibit to the Master Lease.
"Site Schedule" means a timetable prepared by American Tower and
approved in writing by Client with respect to each Site which graphically
describes the time periods and completion dates for each of the activities
necessary to complete the Development of such Site, in the form of and
consistent with Exhibit C.
"Specifications" means the drawings and technical specifications and
standards for the Towers and Improvements and other installations on Sites, as
set forth in Exhibit D
"Tower" means a radio tower structure constructed and installed by
American Tower pursuant to this Agreement.
"Work" means the American Tower's construction and installation of the
Tower and Improvements on a Site in accordance with the Specifications, whether
such Tower and Improvements are to be owned by Client or American Tower.
(B) Any other capitalized terms used in this Agreement shall have the
respective meanings given to them elsewhere in this Agreement.
ARTICLE 2
---------
AGREEMENT DOCUMENTS
-------------------
This Agreement shall consist of the following documents, as amended
from time to time by the written agreement of the parties:
(A) this Agreement document;
(B) the following Exhibits, which are incorporated herein by
this reference:
Exhibit A Scope of Work
Exhibit B Payments
Exhibit C Schedules & Personnel
Exhibit D Specifications
Exhibit E Master Lease
(C) such additional documents as are incorporated by reference.
4
<PAGE>
ARTICLE 3
---------
SCOPE OF WORK; PAYMENT; SCHEDULE;
---------------------------------
NATURE OF THE ENGAGEMENT
------------------------
3.01 SCOPE OF WORK. Client hereby engages American Tower to perform
-------------
the Work and Services as set forth in Exhibit A, "Scope of Work". American
Tower hereby accepts such engagement in accordance with the terms and conditions
of this Agreement.
In addition to the scope of services defined in the Exhibits, American Tower is
responsible for every item identified in the Responsibility Matrix (Exhibit C-6)
as a American Tower responsibility. American Tower shall devote such time and
resources as are necessary to ensure proper and expeditious completion of its
duties hereunder and shall make available to Client the full range of its
expertise and experience in constructing wireless systems, using the methods for
wireless site development that will ensure speed of delivery and simplification
of the required work.
The scope includes approximately 115 Build to Suit Sites and includes the Site
Development work associated with these Build to Suit Sites. Any Sites that
become collocations in accordance with Exhibit A-4, paragraph 2.1 will be
removed from the scope of this Agreement and be completed under the separate
Site Acquisition, Zoning and Construction Supervision Master Services Agreement,
Amendment No. 1, dated September 30, 1998, between American Tower and Client.
3.02 PAYMENTS. American Tower's compensation for the Project or any
--------
part thereof shall be as set forth in Exhibit B, "Payments".
3.03 SCHEDULE.
---------
Within 21 days after execution of this Agreement, Client and American Tower
shall agree upon the schedule for the completion of Services on a site-by-site
basis which will replace Exhibit C to this Agreement. The schedule will contain
milestone dates for completion by American Tower of the following milestones:
Site Selection, Site Acquisition, Site Zoning, Building Permit, Construction
Start and Construction Complete. This Agreement shall terminate upon notice by
either party to the other if the parties are unable, after good faith
negotiations, to agree to a schedule within the allotted 21 days.
Notwithstanding the foregoing, American Tower agrees to proceed working under
this Agreement, including deploying necessary personnel, immediately after
execution of this Agreement as set forth in Exhibits C-4 and C-5, provided,
however, that Client shall reimburse American Tower for all reasonable costs
incurred in so proceeding, should the Agreement be terminated on account of the
parties' inability to agree on a schedule as provided above.
Following approval of the schedule by Client, American Tower shall thereafter,
for the term of this Agreement, provide Client with not less than a written
weekly report outlining the progress made to attain the previously-agreed to
schedule, which reports must include the information required by Exhibit A-12.
5
<PAGE>
Any proposed change in schedule which results in a time extension of one week or
greater on an individual site basis shall be clearly noted and the reasons
therefore shall be explained in writing. Client may, in its sole discretion,
agree to a time extension from the detailed schedule originally provided.
Notwithstanding the foregoing, American Tower shall be entitled to a reasonable
time extension for any delay caused by Client, and delay caused by an event of
Force Majeure shall be governed by Article 9 of the Agreement. American Tower
shall attend all project meetings reasonably requested by Client. American Tower
further agrees to the maximum average cycle times set forth in Exhibit C-2.
Within 5 days after execution of this agreement, American Tower will provide an
Organization Chart and Staffing Plan that will replace Exhibit C-5. Within 10
days after execution of this agreement American Tower will provide a revised
Exhibit C-4 indicating at minimum all Managers by name. Within 20 days of the
execution of this agreement Exhibit C-4 will be revised by American Tower to
indicate the names of all personnel set forth on Exhibit C-4.
The term of this Agreement shall commence on the Effective Date, and shall
continue until (i) terminated as provided herein; or (ii) performance of the
Agreement is extended as a result of an Excusable Delay.
3.04 WITHDRAW OF SITES. If American Tower has not completed Services
-----------------
in accordance with the Schedule identified in Exhibit C or the Maximum Average
Cycle Times identified in Exhibit C-2, with respect to a Site, then, in addition
to any other remedy allowed under the Agreement, Client may withdraw that Site
if American Tower fails to cure such default within fifteen (15) days of receipt
of written notice thereof; provided, however, that if such failure shall
necessitate longer to cure than fifteen (15) days, then such cure period shall
be extended for such time as is reasonably necessary to cure such default (not
to exceed sixty (60) days). American Tower will not be compensated for work
performed prior to such withdrawal.
3.05 RELATIONSHIP. The parties agree to reasonably cooperate with
------------
each other in the performance of this Agreement. Client and American Tower, in
the performance of this Agreement, will be acting in their individual capacities
and not as employees, partners, joint venturers, agents or associates of one
another. In the performance of this Agreement, American Tower is, and shall at
all times during the term of this Agreement be, an independent contractor.
Nothing contained in this Agreement creates the relationship of a joint venture,
partnership, association or agency between the parties. No party shall have any
authority to bind or otherwise obligate the other. Persons retained by either
party as employees or agents shall not be deemed to be employees or agents of
the other party.
3.06 PROJECT PERSONNEL.
-----------------
(A) American Tower shall employ only competent and able
personnel for the performance of American Tower's obligations under this
Agreement, including, without limitation, contractors and subcontractors that
are properly licensed and legally qualified to construct the
6
<PAGE>
Towers and Improvements and complete the Work and Services on each Site, as
required. American Tower shall, at all times during the term of this Agreement,
keep a sufficient number of qualified personnel to the extent required to
Complete the Project by the Project Completion Date pursuant to the Site
Schedules and Project Schedule. American Tower shall have exclusive control of
and direction over the Persons engaged in the performance of American Tower's
obligations under this Agreement.
(B) American Tower will be responsible to Client for the
actions and conduct of all American Tower's employees, agents, consultants,
advisors, contractors and subcontractors employed in the performance of this
Agreement, including their compliance with Governmental Requirements.
(C) Notwithstanding the foregoing, Client has the right at any
time upon written notice to require the removal of any employee of American
Tower or subcontractor utilized or supervised by American Tower for reasonable
cause in Client's sole discretion. Resumes will be provided for review and
approval prior to American Tower's employees starting work on this project.
American Tower will not remove any personnel once assigned to the project and
accepted by Client without prior written agreement with Client, except for
personal and compassionate reasons upon mutual agreement by American Tower and
Client. Further, personnel involved in site acquisition activities may be
reassigned at American Tower's discretion and Client's consent, after five (5)
or fewer site rings remain to be administered.
3.07 QUALITY STANDARD. American Tower agrees to perform its
----------------
obligations and furnish its Work and Services hereunder properly, diligently,
and in good faith, in accordance with the standards of its industry, to Client's
reasonable satisfaction and in accordance with all applicable Governmental
Requirements. American Tower shall implement quality control procedures
sufficient to ensure compliance with the Specifications and shall otherwise
maintain quality standards for the Work and Services at least equal to the
normal quality standards applied by American Tower prior to the date of this
Agreement.
3.08 EXPANSION IN SCOPE OF PROJECT. The parties may agree to add
-----------------------------
additional cell sites to this Agreement (the "Additional Sites"), within
Georgia, North Carolina, and south Carolina, on the same terms and conditions as
are applicable to the original Sites.
Client may make changes at any time to the general scope of the
Services contained herein only by means of a written order (a "Change Order")
issued by American Tower and approved by Client. Any Change Order that exceeds
the scope of Services and which requires additional services on the part of
American Tower may result in an adjustment of the price to be paid to American
Tower. American Tower shall, upon receipt of a written request for a Change
Order from Client, provide Client with an estimate of additional charges
required to complete the proposed Change Order. Prior to commencement of
additional work, the proposed Change Order shall be approved in writing by a
Client representative. Any charges for additional work commenced by American
Tower without a written Change Order approved by a Client representative may be
denied by Client, in full or in part, in its sole discretion.
7
<PAGE>
3.09 CONTRACT CLOSEOUT. Prior to submitting a final invoice for
-----------------
payment for any site, American Tower must provide to Client the documentation
set forth in Exhibit A-14.
ARTICLE 4
---------
SITE IDENTIFICATION, SELECTION, AND ACQUISITION
-----------------------------------------------
4.01 PROPOSAL OF CELL SITES. American Tower shall propose to Client
----------------------
up to three (3) viable cell site locations within each radio frequency search
area set forth in Exhibit C, "Search Rings," in accordance with the Project
Schedule. American Tower shall not propose any such potential cell site unless
it reasonably believes that such site meets the requirements of this Agreement
for a Site in all material respects. Not later than five (5) Business Days
after receipt of any such proposal as to any potential cell site, Client shall
notify American Tower as to which (if any) of such proposed cell sites is
acceptable, whereupon such cell sites shall become Sites for all purposes of
this Agreement. If no potential cell site is approved because the proposed site
or sites fail to meet the requisite specifications, then American Tower shall
provide a minimum of one additional viable candidate, or indicate in writing why
such additional viable candidates are not available, and no adjustment shall be
made to the Completion Date, unless such failure to meet the requisite
specifications is for reasons beyond American Tower's control.
4.02 BUILD-TO-SUIT DETERMINATION. Where new construction of a Tower
---------------------------
and Improvements will be required for a Site selected by Client, the Site shall
be a Build-to-Suit Site, provided however, that Sites that must be built with
"stealth" Towers shall be Build-to-Suit Sites only upon the mutual agreement of
the parties. If the Site is determined to be Build-to-Suit Site, American Tower
shall lease an exclusive space on the Build-to-Suit Site (the Premises) to
Client, and Client shall accept and rent such Premises from American Tower, all
pursuant to and in accordance with the terms and conditions set forth in this
Agreement, the Master Lease and a Site Lease for such Site. American Tower
shall have the right to lease any Build-to-Suit Site to Other Tenants, on any
terms and conditions acceptable to American Tower, so long as such Other Tenants
do not materially interfere with Client's Intended Use.
4.03 ACQUISITION; ZONING AND LAND USE APPROVAL SERVICES.
--------------------------------------------------
(A) Once Client has selected a Site, American Tower shall
acquire fee simple title to or a leasehold interest in the Site, or other
acceptable use right in American Tower's name for a Build-to-Suit Site, to allow
Development of the Site.
(B) American Tower shall: (i) compile and review all existing
relevant data with respect to each Site from a seller or lessor of such Site and
any and all Governmental Authorities having jurisdiction thereof, and any other
Persons who may have relevant information necessary to develop each Site; (ii)
cause to be performed any and all reasonable and customary analyses,
examinations, investigations, tests and inspections of each Site, including, but
not limited to, environmental studies, surveys, geotechnical studies, soil
borings and the like and cause to be accurately completed and returned to Client
with respect to each Site, the Closeout Documentation
8
<PAGE>
consistent with the form attached hereto as Exhibit A-14; (iii) make, or cause
to be made, inquiries of all Governmental Authorities and Persons who will
furnish electric power, telephone service or any other utility to each Site as
to any matters which may affect or be necessary to the Development of each Site;
(iv) determine all Governmental Requirements necessary for the Development of
each Site, including, but not limited to, zoning laws or regulations. American
Tower shall perform or supervise the activities described in items (i) through
(iv) above, and, upon Client's request, shall deliver to Client copies of all
written reports, memoranda or material correspondence prepared by or for
American Tower with respect to the foregoing.
4.04 GOVERNMENTAL APPROVALS AND PERMITS.
----------------------------------
(A) American Tower shall obtain, or caused to be obtained, the
consent or approval of all Governmental Authorities, and all Permits necessary
for, the Development of each Site and the Project.
(B) Except where prohibited by applicable laws, American Tower
shall be the applicant for any and all necessary Permits. American Tower shall
coordinate and manage all professional and technical services required in
connection with the preparation and filing of applications for and obtaining all
Permits. American Tower shall be responsible for diligently preparing and filing
all applications for, and pursuing and obtaining, the Permits. Client shall
provide reasonable assistance to American Tower in securing the Permits.
ARTICLE 5
---------
CONSTRUCTION
------------
5.01 GENERAL. American Tower shall cause the Towers and the
-------
Improvements to be constructed and installed diligently and in a timely fashion,
in a good and workmanlike manner, in accordance with the Specifications and all
applicable laws, and in accordance with the terms and conditions of this
Agreement, and in particular this Article.
5.02 PROGRESS AND INFORMATION.
------------------------
(A) The parties shall hold progress meetings, and American
Tower shall submit progress reports to Client on a weekly, bi-weekly or monthly
basis as may be agreed between parties. Progress reports will show for each
Site, at a minimum, and not by way of limitation, all dates and schedules
referred to in the applicable Site Schedule, any anticipated delays, other
relevant information, and the corresponding activity period. In addition, Client
may request and American Tower shall facilitate progress meetings with American
Tower's key managers and subcontractors, including the establishment of
oversight committees to monitor specific work in progress on Sites at times and
locations agreed upon by Client and American Tower in writing no less than seven
days prior to such meetings. Progress reports shall be for planning purposes and
monitoring compliance with this Agreement.
9
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(B) Should any information or approval be required from Client
as Work progresses, American Tower shall request such information or approval in
writing. Client shall respond in writing to such requests no later than five (5)
days following receipt of the request.
5.03 PERFORMANCE OF THE WORK. American Tower shall have the
-----------------------
responsibility and obligation to perform the Work in accordance with the
Specifications. American Tower shall provide a management team or a
representative on each Site to provide supervision and administration of the
Completion of the Work for each such Site. American Tower shall establish and
implement coordination and communication procedures between American Tower and
Client including procedures for reviewing and processing requests for
clarifications and interpretations of the Specifications. American Tower shall
receive operation and maintenance manuals, warranties and guarantees for
materials and equipment used in the Completion of the Project and shall deliver
this information to Client upon Completion of the Project.
5.04 SCHEDULE ADJUSTMENTS.
--------------------
(A) Upon the occurrence of an event of Force Majeure, the Site
Schedule for any affected Site and, as necessary, the Project Schedule, shall be
adjusted to reflect all additional time which will be required as a result of
such event for the performance of any of the duties or obligations of American
Tower under this Agreement, which adjustment shall be subject to the written
agreement of Client and American Tower, as provided in SECTION 5.04(B).
(B) Within five (5) Business Days after the receipt of any
request from American Tower for a change to any Site Schedule or the Project
Schedule, Client shall notify American Tower in writing of its approval or
disapproval of such proposed change. If the parties do not agree on the
appropriate change to any Site Schedule or the Project Schedule, the
disagreement shall be resolved as a dispute under this Agreement.
5.05 CLIENT APPROVAL. Client will have the right to approve or
---------------
reject the quality of all materials, equipment and systems to be used in the
Completion of the Towers and Improvements, provided that Client's rejection of
materials, equipment, or systems that satisfy the requirements of the
Specifications shall result in an appropriate adjustment in the schedule and
Client shall compensate American Tower for any increased costs of providing
other materials, equipment, or systems.
5.06 COMPLIANCE WITH REQUIREMENTS, LICENSES, BONDS. American Tower
---------------------------------------------
shall comply with all Governmental Requirements, including environmental, health
and safety requirements imposed by Governmental Authorities, as of the Effective
Date, as they relate to the Work and Services. American Tower shall, at its own
cost and expense, procure and maintain all licenses required by local, state or
federal regulatory agencies and authorities with respect to the construction.
American Tower shall obtain, or cause to be obtained, all required bonds
necessary or advisable for the commencement of construction and Completion of
the Work with respect to each Site.
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5.07 SPECIFICATION CHANGES. If Client requests changes to any
---------------------
Specifications, American Tower shall promptly make such changes to the
Specifications, and the Site Schedule for any affected Site or the Project
Schedule shall be adjusted as may be necessary or required. In addition, Client
shall compensate American Tower for any increased costs attributable to such
change in any Specifications.
5.08 ENVIRONMENTAL CONDITIONS. Within five (5) Business Days after
------------------------
discovery of any environmental condition on any Site not disclosed by, or in
excess of the conditions disclosed by, the required environmental assessment,
American Tower shall advise Client in writing of the condition and its effect
upon the Site Schedule and the Project Schedule.. Client, at Client's sole
discretion, upon review of the appropriate site data, may terminate the lease on
such Site.
5.09 WARRANTY. American Tower warrants and guarantees that the Tower
--------
and Improvements on each Site and all workmanship and materials incorporated
therein will be constructed in accordance with the Specifications and will be
free from defects in workmanship and materials for a period commencing on the
Completion Date for such Site and ending one year thereafter (the "Warranty
Period"). If any defect or deviation should exist, develop, be discovered or
appear within the Warranty Period, American Tower, at its sole cost and
expense, immediately upon demand, shall fully and completely repair, correct and
eliminate such defect or deviation. The expiration of the Warranty Period shall
not affect American Tower's obligations in the Master Lease or any Site Lease
with respect to maintenance or otherwise. THE FOREGOING WARRANTIES AND
GUARANTEES ARE EXCLUSIVE, AND EXPRESSLY DISCLAIMS ANY OTHER WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING ANY STATUTORY OR COMMON LAW WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE.
5.10 ACCESS AND INSPECTION.
---------------------
(A) The construction shall be performed in such a manner as will
permit Client to inspect each Site during all working hours, and will have the
right to observe the Work performed; provided, however, that Client shall not
-------- -------
delay, hinder or interfere with the performance of the Work. If Client notifies
American Tower of any observed defects or nonconformities with the
Specifications, American Tower shall promptly correct any defect or
nonconformity in such time and manner as will permit Completion of each Site or
Sites in accordance with the Site Schedule and the Project Schedule. The
failure of Client to inspect any Site or Sites, however, will not in any way
limit, waive, or otherwise affect the rights of Client with respect to any of
American Tower's warranties or obligations under this Agreement.
(B) Should Client consider it necessary or advisable at any time
before Completion to examine Work already completed, American Tower shall, on
request of Client, promptly furnish all necessary facilities, labor, and
material for that purpose. If such Work is found to be defective in any
material respect, American Tower shall pay all expenses of such examination.
If, however, such Work is not found to be defective in any material respect,
Client shall pay all expenses of such examination and restoration of the Work.
The Site Schedule, and, as necessary, the Project Schedule, shall be equitably
adjusted.
11
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5.11 COMPLETION. Promptly following the Completion of the Work at
----------
any Site, American Tower shall notify Client in writing of its good faith belief
that such Site is Completed. The parties shall execute a Completion Certificate
with respect to such Site within five (5) Business Days after Client receives
such notification.
5.12 CONDEMNATION; APPLICATION OF COMPENSATION. In the event that
-----------------------------------------
all or any part of a Build-to-Suit Site is damaged or taken by the exercise of
the power of eminent domain at any time prior to the Completion Date, the
compensation awarded to and received by American Tower shall be applied to
restoration, reconstruction and repair of the Build-to-Suit Site, provided, that
--------
the Build-to-Suit Site can (i) be restored, reconstructed or repaired, and (ii)
be commercially feasible for its Intended Use as contemplated by this Agreement
after the taking. The parties agree to adjust the Site Schedule in order to
extend the timetable for the Completion of Work with respect to the taken Build-
to-Suit Site, and, as necessary, the Project Schedule.
ARTICLE 6
---------
INSURANCE
---------
6.01 AMERICAN TOWER'S INSURANCE REQUIREMENTS. Throughout the term of
---------------------------------------
this Agreement, American Tower shall carry and maintain in force the following
insurance:
(A) Commercial General Liability Insurance (including
protective liability coverage on operations of independent contractors engaged
in construction, blanket contractual liability coverage, products liability
coverage, and explosion, collapse and underground hazards coverage) covering
claims for personal injury, bodily injury and property damage, with a limit of
not less than $5,000,000 in the event of personal injury or bodily injury to any
number of persons or of damage to property arising out of any one occurrence,
and not less than $5,000,000 in the aggregate applicable to this Project. Such
insurance may be furnished under a primary policy or an "umbrella" policy or
policies, and shall name Client as an additional insured.
(B) Worker's compensation insurance covering all employees of
American Tower employed in, on or about the Project to provide statutory
benefits as required by the applicable laws and otherwise in compliance with the
requirements applicable to such insurance.
(C) Comprehensive automobile liability insurance with limits of
not less than $3,000,000 per occurrence and in the aggregate for bodily injury,
including death and property damage and otherwise in compliance with the
requirements applicable to such insurance.
(D) Builder's all risk insurance with limits of not less than
$3,000,000.
6.02 CLIENT'S INSURANCE REQUIREMENTS. Throughout the term of this
-------------------------------
Agreement, Client shall carry and maintain in force the following insurance:
12
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(A) Commercial General Liability Insurance (including
protective liability coverage on operations of independent contractors engaged
in construction, blanket contractual liability coverage, products liability
coverage, and explosion, collapse and underground hazards coverage) covering
claims for personal injury, bodily injury and property damage, with a limit of
not less than $5,000,000 in the event of personal injury or bodily injury to any
number of persons or of damage to property arising out of any one occurrence,
and not less than $5,000,000 in the aggregate applicable to this Project. Such
insurance may be furnished under a primary policy or an "umbrella" policy or
policies, and shall name American Tower as an additional insured.
(B) Worker's compensation insurance covering all employees of
client employed in, on or about the Project to provide statutory benefits as
required by the applicable laws and otherwise in compliance with the
requirements applicable to such insurance.
(C) Comprehensive automobile liability insurance with limits of
not less than $3,000,000 per occurrence and in the aggregate for bodily injury,
including death and property damage and otherwise in compliance with the
requirements applicable to such insurance.
6.03 EVIDENCE OF INSURANCE. American Tower and Client shall furnish
---------------------
each other with appropriate certificates evidencing the insurance each is
required to maintain under the Agreement. No insurance limits will be reduced
or eliminated without 30 days prior written notice to Client.
13
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ARTICLE 7
---------
LIABILITY; INDEMNITY
--------------------
7.01 INDEMNITY.
---------
(A) AMERICAN TOWER'S OBLIGATION. American Tower shall, and
---------------------------
American Tower does hereby agree to, indemnify and hold harmless each Client
Indemnitee [WHERE IS THIS DEFINED?] from and against any loss, damage,
liability, cost, expense, action or claim, including reasonable attorneys' fees
and amounts paid in settlement ("CLAIMS"), by reason of or arising out of: (a)
personal injury, death, and damage to tangible property resulting from (i) the
intentional or negligent acts or omissions of American Tower's directors,
officers, employees, agents, consultants, contractors or subcontractors in
connection with the Completion of the Project and performance of this Agreement,
or (ii) any design or manufacturing defect in any Tower or Improvements, whether
manufactured by American Tower hereunder or otherwise; (b) American Tower's
breach of its obligations under this Agreement, including without limitation in
respect of any Services; (d) American Tower's breach of any representation or
warranty made by it in this Agreement; or (e) failure of American Tower to
comply with any obligation under this Agreement as to Governmental Requirements.
(B) CLIENT'S OBLIGATION. Client shall, and Client does hereby
-------------------
agree to, indemnify and hold harmless American Tower from and against any loss,
damage, liability, cost, expense, action or claim, including reasonable
attorneys' fees and amounts paid in settlement ("CLAIMS"), by reason of or
arising out of: (a) personal injury, death, and damage to tangible property
resulting from the intentional or negligent acts or omissions of Client's
directors, officers, employees, agents, consultants, contractors or
subcontractors in connection with the Completion of the Project and performance
of this Agreement; (b) Client's breach of its obligations under this Agreement;
and (c) Client's breach of any representation or warranty made by it in this
Agreement.
7.02 NO THIRD-PARTY BENEFICIARIES. None of the duties and
----------------------------
obligations of American Tower under this Agreement shall in any way or in any
manner be deemed to create any liability of American Tower to, or any rights in,
any person or entity other than the Client Indemnities.
7.03 LIMITATION OF LIABILITY. Neither party shall be liable to the
-----------------------
other for indirect, incidental, special or consequential damages, including but
not limited to lost profits, however arising, even if a party has been advised
of the possibility of such damages.
14
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ARTICLE 8
---------
DEFAULT; TERMINATION
--------------------
8.01 DEFAULT.
-------
(A) Either party shall be in default under this Agreement if the
party fails to perform any material duty or obligations under this Agreement and
does not cure or remedy such failure to perform within fifteen (15) days after
receipt of written notice with respect thereto; provided, however, that, if such
-------- -------
failure to perform shall necessitate longer to cure than fifteen (15) days, then
such cure period shall be extended for such time as is reasonably necessary to
cure such failure to perform (not to exceed 60 days), but only so long as such
efforts to cure are commenced within fifteen (15) days after receipt of written
notice from the other party and thereafter proceed diligently and in good faith.
In no event shall the time within which a party may cure a default in the
payment of money be extended beyond the initial fifteen (15) day period in this
Section.
(B) Upon the occurrence of a default the nondefaulting party may
pursue any and all remedies available under applicable law and any one or more
of the following remedies, separately or concurrently or in any combination,
without further notice or demand whatsoever:
(I) Termination of this Agreement by giving the defaulting
party written notice of such termination, in which event this Agreement shall be
terminated at the time designated in the notice.
(II) The nondefaulting party will have the right to recover
from the defaulting party all costs and expenses incurred by the nondefaulting
party in enforcing its rights and remedies hereunder, including reasonable
attorneys' fees and expenses.
(C) The termination of this Agreement by reason of a party's default
shall not relieve the defaulting party of any of its duties and obligations
accrued under this Agreement prior to the effective date of such termination.
(D) Client may terminate this Agreement and any or all Site Leases
executed in connection herewith upon executing an agreement with American Tower
to sell any communications tower owned by Client. Such termination upon sale
shall not apply to Sites permitted and currently under construction. Client and
American Tower agree to include in any purchase agreement terms and conditions
to address the disposition of this Site Development and Build to Suite
Agreement.
8.02 TERMINATION OF BUILD-TO-SUIT SITE.
---------------------------------
(A) Should Client terminate a Build-to-Suit Site for any reason then
American Tower shall promptly:
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(I) Upon request by Client, deliver to Client or such other
person as Client may designate all materials, supplies, equipment, keys,
contracts and documents, all books of account and records maintained pursuant to
this Agreement pertaining to the Build-to-Suit Site.
(II) Upon Client's request, assign all existing contracts
relating to the Build-to-Suit Site to Client or such other person or entity as
Client shall designate.
(III) Furnish all such information, take all such other action,
and cooperate with Client as Client shall reasonably require in order to
effectuate an orderly and systematic termination of Development of the Build-to-
Suit Site and American Tower's other, duties, obligations and activities related
to it.
(B) WITHDRAWN SITES/TERMINATED WORK. If Client withdraws a site or
terminates American Tower's work on a site for reasons other than American
Tower's breach under its obligations under this Agreement, Client shall pay
American Tower compensation for all completed milestones at the time of such
withdrawal or termination, to the extent not previously paid. Client shall also
pay American Tower the lesser of (i) American Tower's time (calculated at the
rates set forth in Exhibit B, Section 3) and expenses incurred in pursuing that
milestone, or (ii) fifty percent (50%) of the applicable Milestone Rate listed
in Exhibit B.
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ARTICLE 9
---------
FORCE MAJEURE
-------------
9.01 FORCE MAJEURE. An event of "FORCE MAJEURE" shall mean the
-------------
following events or circumstances, to the extent that they delay the Completion
of any Site or the performance by American Tower of its other duties and
obligations under this Agreement:
(A) any orders, decisions, or decrees of any Governmental
Authorities which in any manner affect the Work and Services provided under this
Agreement, including, but not limited to, zoning matters, extended site studies,
or construction moratoria, and condemnation or other exercise of the power of
eminent domain. Notwithstanding the foregoing, this paragraph qualifies as an
event of Force Majeure only if such Site achieved each milestone identified in
Exhibit C by the date committed prior to such order or decree;
(B) changes in any federal, state and local laws, ordinances,
and regulations effective after the Effective Date which in any manner affect
the Work and Services provided under this Agreement Notwithstanding the
foregoing, this paragraph qualifies as an event of Force Majeure only if such
Site achieved each milestone identified in Exhibit C by the date committed prior
to such order or decree;
(C) acts of God, including, with out limitation, tornadoes,
hurricanes, floods, sinkholes, landslides, earthquakes, epidemics, quarantine
and pestilence;
(D) fire and other casualties, such as explosions and
accidents; and
(E) acts of a public enemy, acts of war, terrorism, effects of
nuclear radiation, blockades, insurrections, riots, civil disturbances, the
combined action of workers, failure of transportation, national or international
calamities, and other acts and circumstances beyond a party's reasonable
control.
9.02 EFFECT OF FORCE MAJEURE. American Tower shall be entitled to an
-----------------------
adjustment of the Site Schedule, and, as necessary, the Project Schedule, for
Force Majeure but only for the number of days due to such causes and only to the
extent that such occurrences actually delay the Completion of such Site or the
Project. The extent of any such adjustment is subject to the agreement of the
parties and the prior written approval of Client, not to be unreasonably
withheld or delayed. Failure of the parties to agree on the appropriate
adjustment in a Site Schedule or the Project Schedule shall be treated as a
dispute under this Agreement (as it applies to Force Majeure).
ARTICLE 10
----------
17
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MISCELLANEOUS
-------------
10.01 NOTICES. Whenever any notice, demand, request, advice or other
-------
communication is required or permitted under this Agreement, such notice, demand
or request shall be in writing and shall be sent by registered or certified
mail, postage prepaid, return receipt requested, or be sent by nationally
recognized commercial courier for next Business Day delivery to the addresses
set forth below or to such other addresses as are specified by written notice
given in accordance herewith:
CLIENT: Triton PCS Property Company, L.L.C.
------
375 Technology Drive
Malvern, PA 19355
Attention: Clyde Smith, CTO and Executive
Vice-President
Telecopier No.: 610-993-2683
with a copy to:
Triton PCS Operating Company L.L.C.
4055 Faber Place, Suite 101
Charleston, SC 29405
Attention: Mike Mears
Telephone No.: 843-740-3510
AMERICAN TOWER: American Tower L.P.
---------------
1760 The Exchange N.W. Suite 200
Atlanta, GA 30339
Attention: Sue B. Chapman
Telephone No.: 770-308-2002
10.02 ASSIGNMENT; BINDING EFFECT. This Agreement may not be sold, assigned
--------------------------
or transferred, in whole or in part, by either party without prior approval or
consent of the other (such approval and consent not to be unreasonably withheld,
conditioned, or delayed); provided, however, that, notwithstanding anything to
the contrary contained herein, either party may sell, assign or transfer this
Agreement or any Site Lease without the written approval or consent of the other
to (i) any affiliate of a party or (ii) any person or entity that acquires,
through merger, purchase or otherwise, all or substantially all of the assets of
the party. Additionally, Client may, upon notice to American Tower, mortgage or
grant a security interest in this Agreement and Client's improvements, and may
assign this Agreement and such improvements to any such mortgagees or holders of
security interests including their successors or assigns (hereinafter
collectively referred to as "Mortgagees"). In such event, American Tower shall
execute such consent to leasehold financing as may reasonably be required by
Mortgagees. American Tower
18
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agrees to notify Client and Client's Mortgagees simultaneously of any default by
Client and to give Mortgagees the same right to cure any defaults as Client
except that the cure period for any Mortgagee shall not be less than ten (10)
days after receipt of the default notice
10.03 HEADINGS. The use of headings, captions and numbers in this
--------
Agreement is solely for the convenience of identifying and indexing the various
provisions in this Agreement and shall in no event be considered otherwise in
construing or interpreting any provision in this Agreement.
10.04 PUBLICITY. Neither party will advertise or publish any information
---------
related to this Agreement without the prior written approval of the other party.
10.05 SEVERABILITY. If any term, covenant, condition or provision of this
------------
Agreement, or the application thereof to any person or circumstance, shall be
held to be invalid or unenforceable, then in each such event the remainder of
this Agreement or the application of such term, covenant, condition or provision
to any other person or any other circumstance (other than those as to which it
shall be invalid or unenforceable) shall not be thereby affected, and each term,
covenant, condition and provision hereof shall remain valid and enforceable to
the fullest extent permitted by law.
10.06 WAIVER. Failure by either party to complain of any action, non-
------
action or default of the other party shall not constitute a waiver of any
aggrieved party's rights hereunder. Waiver by either party of any right arising
from any default of the other party shall not constitute a waiver of any other
right arising from a subsequent default of the same obligation or for any other
default, past, present or future.
10.07 RIGHTS CUMULATIVE. All rights, remedies, powers and privileges
-----------------
conferred under this Agreement on the parties shall be cumulative of and in
addition to, but not restrictive of or in lieu of, those conferred by law or
equity.
10.08 TIME OF ESSENCE; PROMPT RESPONSES. Time is of the essence of this
---------------------------------
Agreement. Anywhere a day certain is stated for payment or for performance of
any obligation, the day certain so stated enters into and becomes a part of the
consideration for this Agreement. The parties recognize and agree that the time
limits and time periods provided herein are of the essence of this Agreement.
The parties mutually agree to exercise their mutual and separate good faith,
reasonable efforts to consider and respond promptly and as expeditiously as is
reasonably possible notwithstanding any time period provided in this Agreement.
10.09 APPLICABLE LAW. This Agreement shall be governed by, construed
--------------
under and interpreted and enforced in accordance with the laws of the
Commonwealth of Pennsylvania, without regard to its conflicts of laws
provisions.
10.10 DISPUTE RESOLUTION PROCEDURES.
-----------------------------
(A) NEGOTIATION AND MEDIATION:
-------------------------
19
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(I) Either party to the Agreement may from time to time call a
special meeting for the resolution of a dispute or disputes that
would have a material impact on the cost or progress of the
Project. Such meeting shall be held at a mutually agreeable
location within five (5) Business Days of a written request,
which request shall specify in reasonable detail the nature of
the dispute to be resolved at the meeting. The meeting shall be
attended by representatives of the parties to the Agreement and
any other party affected in any material respect by the
resolution of the disputes. Such representatives shall have
authority to settle the dispute and shall attempt in good faith
to resolve the dispute.
(II) If the dispute has not been resolved within five (5) days
after the special meeting has been held, a mediator, mutually
acceptable to the parties, shall be appointed. The cost of the
mediator shall be shared by the parties. The mediator shall be
given written statement(s) of the parties and may review the site
and any relevant documents. The mediator shall call a meeting of
the parties affected by such dispute within ten (10) Business
Days after the mediator's appointment, which meeting shall be
attended by representatives of the parties with authority to
settle the dispute. During the ten-day (10-day) period, the
mediator may meet with the affected parties separately.
(III) No minutes shall be kept and the comments and/or findings
of the mediator, together with any written statements prepared,
shall be non-binding, confidential, and without prejudice to the
rights and remedies of any party. The entire mediation process
shall be completed within twenty (20) Business Days of the date
upon which the special meeting referred to above is held, unless
the parties agree otherwise in writing. If the dispute is
settled through the mediation process, it will be implemented by
written agreement signed by all affected parties. The cost of
mediation shall be borne equally by the parties.
(B) ARBITRATION:
-----------
(I) As a condition precedent to arbitration, the parties shall
endeavor to resolve their disputes using business-like
negotiation and mediation, as provided for above. Any claim,
dispute, or controversy arising out of or relating to the
Agreement not so resolved shall be decided by arbitration in
accordance with the Commercial Rules of the American Arbitration
Association. The locale for such arbitration shall be the City
of Philadelphia, Commonwealth of Pennsylvania, and the demand for
arbitration must be filed with, and the arbitration administered
by, the Atlanta Tribunal of the American Arbitration Association.
The foregoing agreement to arbitrate shall be specifically
enforceable in any court of competent jurisdiction. Upon its
request, a party shall be entitled to
20
<PAGE>
consolidation or joinder of any arbitration related arbitrations
involving other parties. The award rendered by the arbitrators
shall be final and judgment may be entered upon it in accordance
with applicable law in any court of competent jurisdiction.
(II) Any demand for arbitration hereunder must be filed within
a reasonable time of the occurrence of the facts giving rise to
the dispute. In no event shall any demand for arbitration be
filed after the running of any applicable statutes of limitation.
(III) The parties shall promptly proceed with performance of
their respective obligations under the Agreement pending
resolution of any claim or dispute, and failure to do so is a
material breach of the Agreement.
10.11 ENTIRE AGREEMENT. This Agreement contains the entire agreement of
----------------
Client and American Tower with respect to the engagement of American Tower
relating to the Project, and all representations, warranties, inducements,
promises or agreements, oral or otherwise, between the parties not embodied in
this Agreement shall be of no force or effect.
10.12 MODIFICATIONS. This Agreement shall not be modified or amended in
-------------
any respect except by a written agreement executed by both parties.
10.13 COUNTERPARTS. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed an original, and all of such
counterparts together shall constitute one and the same instrument.
10.14 NO BROKERS. Client and American Tower hereby represent, agree and
----------
acknowledge that no real estate broker or other person is entitled to claim or
to be paid a commission as a result of the execution and delivery of this
Agreement, including any of the Exhibits, or any proposed improvement, use,
disposition or lease of any or all of the Site.
10.15 REPRESENTATIONS. Each party represents and warrants to the other
---------------
that it has the full and complete right, power, authority, and financial
ability to enter into this Agreement and to perform its duties and obligations
under this Agreement.
21
<PAGE>
IN WITNESS WHEREOF, Client and American Tower have caused their respective
duly authorized representatives to execute, seal and deliver this
Agreement, all as of the day and year first above written.
CLIENT: TRITON PCS OPERATING COMPANY L.L.C.
BY: TRITON MANAGEMENT COMPANY, INC.,
ITS MANAGER
By:_______________________________
_______________________________ Name:Clyde Smith
Witness Title:CTO and Executive Vice-President
_______________________________ Attest:____________________________________
Witness Name:_______________________________
Title:______________________________
(CORPORATE SEAL)
AMERICAN TOWER:
By:_______________________________
Name: Jeffrey A. Ebihara
Title:Vice-President/Regional Manager
_______________________________
Witness Attest:____________________________________
Name:_______________________________
_______________________________ Title:_____________________________
Witness
(CORPORATE SEAL)
22
<PAGE>
EXHIBIT A
SCOPE OF WORK
SERVICES: To enable Client to develop, deploy and deliver its PCS network,
American Tower has been engaged to perform the various services as more
specifically described in the Exhibits to this Exhibit A ("Services").
Work Item Exhibit Milestone
--------- ------- ---------
Pre-Zoning A-1 Site Selection
Pre-Design A-2 Site Selection
Site Selection A-3 Site Selection
Site Acquisition A-4 Site Acquisition
Site Survey A-5 Site Acquisition
Environmental Trans. Screen/NEPA A-6 Site Acquisition
Geotechnical Report A-7 Site Acquisition
FAA Survey A-8 Site Acquisition
Zoning A-9 Site Zoning
Building Permit A-10 Site Zoning
Construction Management A-11 Site Construction
Project Reporting A-12 Site Construction
Project Management A-13 Site Construction
Closeout A-14 Site Closeout
DEFINITIONS: For purposes of this Agreement, the following words will have the
following meanings:
"Deliverables" means any items or work product arising from the performance of
American Tower's Services under this Agreement and delivered to Client,
including letters of intent, leases, purchase agreements, zoning approvals,
building permits, soil, environmental, title and site reports and studies,
drawings, status reports and similar data, as are to be provided by American
Tower under this Agreement.
"PCS" Equipment means Client's towers, antennas and related equipment necessary
to deploy and deliver PCS from Sites in the Trading Areas covered by this
Agreement.
"RF" means Wireless Facilities, Inc. or other radio frequency engineering
resource selected by Client.
"Site Selection Milestone" means completing to the satisfaction of the Client
the Pre-Zoning, Pre-Design and Site Selection Services described in Exhibits A-1
through A-3.
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"Site Acquisition Milestone" means completing to the satisfaction of Client all
Site Acquisition, Site Survey, Environmental Transaction Screen/NEPA ,
Geotechnical Report, and FAA Survey Services described in Exhibits A-4 through
A-8.
"Site Zoning Milestone" means completing to the satisfaction of Client all
Zoning and Building Permit Services described in Exhibits A-9 and A-10.
"Site Construction Milestone" means completing to the satisfaction of Client all
Construction Management, Project Reporting and Project Management services
described in Exhibits A-11 through A-13.
"Site Closeout Milestone" means completing to the satisfaction of Client all
Closeout and documentation Services described in Exhibit A-14.
24
<PAGE>
EXHIBIT A-1
PRE-ZONING
1. American Tower will provide for Client approval zoning classifications to
be utilized in this phase of the project.
2. American Tower will identify, within the Trading Area coverage area as
defined by Client, all zoning jurisdictions within the Trading Area.
American Tower will obtain zoning maps and regulations for each
jurisdiction, identifying all restrictions, including, but not limited to;
locations, height restrictions, setback requirements, fence height
restrictions, tower fall zones, and other restrictions. American Tower
will obtain the names and telephone numbers of zoning and building permit
contact persons.
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EXHIBIT A-2
PRE-DESIGN
1. American Tower will identify and catalog all potential sites available to
Client from site providers that previously leased space to a American Tower
client (to extent consistent with American Tower's confidentiality
obligations to such third parties), expressed an interest in leasing space
to Client or are found in any database listing sites where collocations or
communications sites are welcomed or desired ("Friendly Sites").
2. American Tower will analyze the zoning information collected in Exhibit A-1
to predetermine the most viable locations and site types within each search
area based on a preliminary zoning prognosis.
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EXHIBIT A-3
SITE SELECTION
1. RF will issue a search area based on its preliminary design (such design
will consider Friendly Sites).
2. RF will deliver search areas to Client, which will then issue search areas
to American Tower.
3. American Tower, unless terms or Client dictate otherwise, must always give
preference to sites available under Client's existing master lease
agreements entered into by Client ("Master Leases"). If American Tower
cannot utilize sites under Master Leases, written documentation must be
provided to Client giving justification as to why sites under Master Leases
cannot be used.
4. American Tower will visit each search area for the purpose of identifying
candidates, catalog ALL viable candidates, prioritize the candidates, and
submit the 3 most viable candidates for Client approval.
5. A Viable Candidate is a site that meets the following criteria:
5.1. The Candidate meets or exceeds RF design requirements based on
acceptable drive tests and/or propagation model results.
5.2. American Tower has determined that the respective property owner (s)
has (have) expressed interest in entering into a lessor-leasee
relationship with Client.
5.3. American Tower has determined that the proposed site can be permitted
in accordance with local ordinances within the agreed upon timeline
set forth in Exhibit C.
5.4. American Tower has determined that the proposed site is constructible
and can be completed within the time limits set forth in Exhibit C.
6. American Tower will prioritize the candidates submitted based on leasing
and zoning prognosis to identify the relative viability of the candidates.
American Tower will not submit candidates that cannot be leased and zoned
within the agreed upon timeline set forth in Exhibit C.
7. American Tower will identify a minimum of three (3) viable candidates for
each search area within 20 work days after receipt of the search area from
Client. American Tower shall have an additional 10 days to identify
potential candidates for additional search areas if Client has delivered
more than 50 search areas to American Tower within a calendar week. If
three (3) such candidates are not available, American Tower will furnish to
Client a written explanation of American Tower's reason(s) why unavailable.
8. American Tower will provide search area reports containing the following
minimum information:
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BTA (Trading Area).
Site name.
Acquisition Agent.
GPS coordinates.
Site locale.
Site address or exact location if address unavailable.
4 photos taken from site (photos should be taken for a 360 degree
orientation for a rooftop site).
Name of site owner and manager and address (if applicable).
Lessor name and address.
Proposed monthly lease rate/purchase price/term.
Physical data (overall structure height, height(s) available to mount
antennas, space available for Client's electronic equipment, distance
for coax from antennas to equipment, tower manufacturer and type,
primary use of structure, etc.) Additional specifics will be required
as needed by Client.
Presence of transmitters, receivers or antennas visible in the area
including operating frequencies, photographs.
Indicate if space available is/has:
Clean.
phone circuits.
ventilation.
loading dock.
pest infestation.
air conditioning.
emergency power.
moisture/water.
24 hrs/7 day access.
elevator to equipment room.
adjacent or nearby man-made or natural obstructions.
transmitter shelter area - prepare drawings.
describe exact dimensions and locations.
electrical service available.
map with street level detail showing site location.
additional information to assist with site evaluation.
9. Client will approve or reject candidates within seven (7) calendar days or
re-design a search area within fourteen (14) calendar days, at Client's
option.
10. Site Selection is complete when enough candidates have been submitted with
enough leasing and zoning information to allow for the designation of a
primary and secondary candidate for that search area as provided in Exhibit
A-4(2.2).
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11. American Tower will utilize necessary resources to comply with Client's
established scheduled time lines in accordance with this Agreement.
12. Notwithstanding the foregoing, upon request from American Tower, Client may
modify its requirements to decrease the number of site candidates for each
search area to less than three, if Client reasonably believes such
reduction will facilitate the objectives of the Agreement.
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EXHIBIT A-4
SITE ACQUISITION
1. GENERAL
-------
1.1. American Tower shall coordinate closely all site acquisition work with
any Third Party and Client.
1.2. American Tower shall coordinate (and attend if necessary) with owners
and Client American Towers or Staff to provide site access for drive
tests, RF evaluation, construction evaluations, or any other
reasonable evaluation.
1.3. American Tower shall provide an Inventory (RF Emissions Inventory), to
the extent reasonably possible, of all antennas and microwave dishes
on collocation sites providing the carrier, technology, number of
channels, transmit and receive frequency, power, antenna gain and
type. As part of this inventory American Tower shall provide a sketch
locating (dimensioning) each antenna or microwave dish on the
structure including rad center. American Tower is not obligated to
climb any antenna support facilities or perform any tower mapping to
fulfill its obligation under this Section.
2. LEASING AND SITE ACQUISITION
----------------------------
2.1. If the site is to be acquired by lease, American Tower will be
responsible for securing proper execution by the site owner/landlord
of the appropriate form of lease with respect to each proposed site.
American Tower must use best efforts to use Client's standard forms of
Master Lease Agreement, PCS Site Agreement or other lease forms to
acquire rights to proposed sites and will use lease agreements
provided by an owner/landlord only as a last resort. American Tower
must also use best efforts to use sites available under negotiated
Master Leases. American Tower will obtain and follow all negotiating
guidelines provided by Client and augment and formalize those
guidelines for distribution and training of Site Acquisition
personnel.
2.2. American Tower will use Client's standard form of lease Agreement as
approved by Client. American Tower will pursue raw land candidates
only when such candidates are a better choice from a cost and time to
market prospective as defined by Client, or as a backup candidate.
Search rings where there are better choice candidates (candidates
better than raw land from a time to market prospective) will be
removed from the scope of this Agreement and be completed under the
separate Site Acquisition, Zoning and Construction Supervision Master
Services Agreement, Amendment No. 1, dated September 30, 1998, between
American Tower and Client.
2.3. Client shall select one primary and one secondary candidate site per
search area for which American Tower shall secure a leasehold or other
ownership interest in the primary and the secondary if so requested by
Client. At its sole discretion, Client may
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reduce the required three candidate sites per search area to one or
two sites, as well as require two leasehold interests to be secured.
2.4. American Tower shall provide a lease summary that provides a summary
of all changes to Client's standard lease, all language that is not
consistent with Client's standard lease in the case of an Owner lease,
all business terms including but not limited to rate, escalation,
access limitations and construction requirements, and a search area
analysis that clearly identifies why the lease should be accepted by
Client.
2.5. American Tower shall identify and procure any additional easements or
secondary ground leases needed for ingress or egress to each site.
3. TITLE & OWNERSHIP
-----------------
3.1. Due diligence with respect to title of all sites to be acquired by
Client (by lease, purchase or otherwise) shall be performed at the
option of Client as follows:
3.1.1. Acquire an ownership and encumbrance report ("O&E Report")
from a nationally known title insurance company satisfactory
to Client which sets forth the same information as required
for an ALTA title insurance policy described below relating to
the proposed site (to the extent ascertainable by the title
company);
3.1.2. Acquire an ALTA title insurance policy on ground leases,
insuring that Client is the owner of the leasehold estate
created by the lease covering the site in question, such
policy to be issued by a nationally recognized title insurance
company acceptable to Client and to be in such amount and to
contain such exceptions to title as are satisfactory to Client
in Client's sole discretion and in this regard the title
insurance requirements to be followed by American Tower with
respect to the insuring of the leasehold shall be
substantially the same as the title insurance requirements set
forth by Client.
3.2. American Tower shall manage all title curative work identified in the
title report analysis.
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4. THIRD-PARTY SERVICES
--------------------
4.1 Perform or coordinate with the third party to ensure that all
applicable due diligence tests and studies have been performed prior
to the start of site construction to determine to Client's reasonable
satisfaction that the proposed site is suitable for Client's intended
use, including, but not limited to:
4.1.1 with respect to ground lease sites and vacant land sites only,
soil suitability and compaction testing in accordance with
Exhibits A-6 and A-7;
4.1.2 with respect to sites where Client's electronic equipment will
be located on or in existing improvements constructed prior to
1980, obtain an asbestos survey; and
4.2 American Tower shall order, manage, receive, review, analyze, and make
recommendations for Client review for title reports, environmental
reports, structural reports, geotechnical reports, surveys, and other
evaluations as required during the development of the site.
4.3 American Tower shall manage the services provided by architects,
engineers, environmental consultants, surveyors and other third-party
contractors as may be required to carry out this component of service.
All such third-party contractors shall contract directly with Client
to provide their services. Client reserves the right to approve or
disapprove any third-party contractors or consultants recommended by
American Tower.
4.4 American Tower shall procure and provide owner information for the
purpose of site design including, but not limited to: existing
drawings, deeds, zoning ordinances, zoning checklists, drawing review
checklists, zoning maps, tax maps, frequency and antenna spacing
information and owner limitation on the use of space.
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5. CONFIRMATIONS
-------------
5.1 The following shall be performed and confirmed in writing by American
Tower or American Tower shall coordinate with a Third Party to perform
and confirm in writing:
5.1.1 Legal access to the site;
5.1.2 The site will have adequate utility service available
consistent with specifications provided by Client to American
Tower;
5.1.3 Necessary building permits or other required governmental
approvals relating to the construction and installation of
Client's equipment or other improvements at the site;
5.1.4 No easements, conditions, restrictions, liens or other matters
exist of record which negatively impact Client's ability to use
the site for its intended purposes, and that there are no
delinquent taxes or assessments;
5.1.5 Properly zoned for Client's intended use or whether a zoning
change or variance will be necessary;
5.1.6 Receipt in a recordable form of a Memorandum of Lease and any
Subordination and Non-Disturbance Agreements for signature by
applicable parties, substantially in forms provided to American
Tower by Client;
5.1.7 That American Tower has obtained detailed construction drawings
and plans and specifications for all improvements to be
constructed or located upon the site;
5.1.8 Obtain resolutions or other appropriate authorizations or
consents pertaining to the due execution and delivery of the
lease in question by the lessor/owner of the site.
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6. LAND PURCHASE
-------------
6.1.0 If the site is to be acquired by purchase, American Tower shall in
addition to Sections 1 through 5 above:
6.1.0.1 Complete all due diligence items to Client's reasonable
satisfaction which are conditions to Client's purchase of a
site as set forth in a purchase agreement (which is to be
substantially in the form provided by Client to American
Tower), including, without limitation, all requirements and
conditions pertaining to title insurance, survey matters,
soil testing, environmental compliance, governmental
authorizations and approvals relating to the development of
the site for Client's intended use of it, the availability of
adequate utility service and legal access to the site, and
any other matters permitted by the terms and provisions of a
purchase agreement to enable Client to reasonably determine
whether the site is suitable for Client's intended use of it;
6.1.0.2 Collect from the seller of the site for delivery to Client
all documents, surveys, drawings and other information
pertaining to the site which the seller is required to
deliver to Client pursuant to the terms of a purchase
agreement;
6.1.0.3 Provide preliminary closing statement figures to Client with
respect to the purchase of the site not less than ten (10)
days prior to the projected closing date; and
6.1.0.4 Assure that all requirements of the title company with
respect to the issuance of its policy of owner's title
insurance are satisfied prior to the closing date, to the
extent feasible, but if Client completes the purchase of a
site with outstanding title requirements unsatisfied, and
American Tower has so advised Client in writing thereof, then
American Tower has no liability or responsibility to Client
with respect to any such unsatisfied requirement.
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EXHIBIT A-5
SITE SURVEY
1. THE TOPOGRAPHIC SURVEY SHALL BE COMPLETED WITHIN TEN (10) BUSINESS DAYS
- ----------------------------------------------------------------------------
FROM THE "NOTICE TO PROCEED". SOME SITES MAY REQUIRE A SECOND TRIP TO
---------------------------------------------------------------------
STAKE OUT MONOPOLE/TOWER FOUNDATION CENTERPOINTS. ALL SURVEYS WILL PROVIDE
---------------------------------------------------------------------------
SUFFICIENT INFORMATION TO COMPLETE AN ACCURATE SET OF ZONING AND
----------------------------------------------------------------
CONSTRUCTION DRAWINGS AND SHALL CONFORM TO THE REQUIREMENTS OF THE
------------------------------------------------------------------
MUNICIPALITY HAVING JURISDICTION.
--------------------------------
1.1. Meets and Bounds survey
1.2. Prepare a boundary survey of the lease area. Show length and bearing
of each line and all significant surface features. This includes
natural features such as lakes, ponds, streams, rock formations, etc.
Show all easements, buildings, utility lines (overhead or
underground), fences, driveways, etc. Tie base area to the parcel
containing lease area. Indicate total square footage area of site and
acreage.
1.3. Prepare a contour survey of the lease area. Use contour intervals of
one (1) foot or as required by zoning regulations unless otherwise
directed. Contour lines shall extend 25 feet beyond the boundary of
the leased area in all directions or as required by zoning
regulations.
1.4. Indicate roads abutting the property with applicable rights-of-way.
1.5. Stake center point of monopole, tower leg and guy wire anchor pier
foundations.
1.6. Stake corner of lease boundary.
1.7. Set an elevation control point or bench mark.
1.8. Coordinate longitude/latitude conforming to the North American Datum
of 1983 (NAD83).
1.9. Show North (true) using two points with backsight. Stake one azimuth
off True North (Sector A per RF design).
1.10 Include a title block with surveyors' name and address, telephone
number, and date of survey on the drawing. The surveyor's name,
address, date of map production and registered land surveyor's seal
shall appear on each drawing.
1.11 Indicate whether or not the property is located in a flood zone, and
if so, show the limits of the 100-year flood hazard zone.
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1.12 Provide a 2C Certificate meeting the FAA regulations for all new
structures and existing structures over 199' or where applicable to
meet FAA regulations. The coordinates and elevation shall be
determined for the highest point on the structure or a point
determined by Client. The certificate shall include the registered
land surveyor's seal.
1.13 The surveyor shall provide three copies of the drawings on mylar or
high quality bond paper and an electronic file of the drawing. The
electronic file shall be in AutoCAD Release 12 or higher version.
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EXHIBIT A-6
ENVIRONMENTAL SCREENING/NEPA
1. American Tower will provide a Phase I Environmental Site Assessment or an
Environmental Transaction Screen at Client's option .
1.1. PHASE I ENVIRONMENTAL SITE ASSESSMENT (ESA)
------------------------------------------------
1.1.1. Schedule: All Phase I shall be completed within ten (10)
business days from "Notice to Proceed".
1.1.2. The purpose of a Phase I ESA is to identify and define
recognized environmental conditions within the range of
contaminants within the scope of the Comprehensive
Environmental Response, Compensation, and Liability Act
(CERCLA) and petroleum products. As such, the Phase I ESA
satisfies one of the requirements to qualify for the
innocent Companydefense to CERCLA liability: that is, the
practices that constitute "all appropriate inquiry into the
previous Ownership and uses of the property consistent with
good commercial or customary practice," as defined in 42 USC
9601(35)(B). The ESAs will be conducted in accordance with
American Society for Testing and Materials (ASTM) Standard:
E 1527-94 Practice for Environmental Site Assessments for
Commercial Real Estate, and will consist of four components:
records review, site reconnaissance, interviews, and a Phase
I report. In addition, the Federal Communication
Commission's (FCC) checklist for the National Environmental
Policy Act (NEPA) will be completed as part of the Phase I
ESA report. Each of the Phase I ESA components is discussed
in the following subsections.
1.1.3. Records Review
1.1.3.1. The record review will include a review of
environmental databases, physical setting sources,
and historical use information. The environmental
database search will include both federal and
state databases to ASTM-specified radii of the
site. Databases will include the National
Priorities List; the Comprehensive Environmental
Response, Compensation, and Liability Information
System (CERCLIS); Resource Conservation and
Recovery Information System (RCRIS) treatment,
storage and disposal facilities and generators;
Emergency Response Notification System; state list
of hazardous waste sites; state landfill and/or
solid waste disposal sites; state leaking
underground storage tank sites (USTs); and state
registered USTS. A current U.S. Geological Survey
(USGS) 7.5 minute topographic map will be obtained
for the area in which the property is located to
evaluate the physical setting. USGS or state
ground water and geological maps may be obtained
in some instances to provide further information.
Historical use
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information will be obtained from the present to
the property's first developed use or to 1940,
whichever is earlier. Historical sources to be
reviewed may include aerial photographs, fire
insurance maps, property tax files, recorded land
title records, USGS maps, local street
directories, building department records, and
zoning and land use records. In addition, records
will be reviewed to determine designated
wilderness areas or preserve, threatened or
endangered species, Indian religious sites, flood
plains, wetlands, and zoning for high intensity
white lights under the National Environmental
Policy Act.
1.1.4. Site Reconnaissance
-------------------
1.1.4.1. A site reconnaissance will be conducted to obtain
information indicating the likelihood of
identifying recognized environmental conditions in
connection with the property. An environmental
professional will visit the site and visually and
physically observe the property and any structures
on the property. The interiors of any structures
will be inspected. The methodology used and any
limitations to the observations will be
documented. Uses and conditions to be evaluated
include current and past use of the property and
adjoining properties and surrounding area;
geologic, hydrogeologic, hydrologic, and
topographic conditions; structures; roads; potable
water supply; sewage disposal; hazardous
substances to include asbestos and petroleum
products; storage tanks; odors; pools of liquid;
drums; containers; polychlorinated biphenyls
(PCBs); heating/cooling; stains or corrosion;
drains and sumps; pits, ponds, or lagoons; stained
soil or pavement; stressed vegetation; solid
waste; waste water; wells; and septic systems. In
addition, threatened or endangered species, and
wetlands will be identified during the site
reconnaissance.
1.1.5. Interviews
------------------
1.1.5.1. An environmental professional will conduct
interviews with the property owner and occupants
and local government officials to obtain
information indicating recognized environmental
conditions in connection with the property. The
information sought during the interviews will be
the same as the uses and conditions to be observed
during the site reconnaissance. The transaction
screen questionnaire in ASTM Standard E 1528-93
Environmental Site Assessments: Transaction Screen
Process will be used during the interviews. Prior
to the site visit the property owner, site
manager, or user will be contacted to obtain any
helpful documents, such as environmental audit
reports, environmental permits, registrations for
storage tanks, hydrogeological or geotechnical
studies, etc. Local agency officials to be
contacted may include the fire department, public
health department, etc.
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1.1.6. PHASE I ESA REPORT
--------------------------
1.1.6.1. The report format will follow the table of contents
recommended in Appendix X2 of ASTM E 1527-94, as follows:
1.0. Summary
2. Introduction
2.0. Purpose
2.1. Special Terms and Conditions
2.2. Limitations and Exceptions to Assessment
2.3. Limiting Conditions and Methodology used
3. Site Description
3.0. Location and Legal Description
3.1. Site and Vicinity Characteristics
3.2. Descriptions of Structures, Roads, Other Improvements
3.3. Information on Environmental Liens or Specialized
Knowledge
3.4. Current Uses of the Property
3.5. Past Uses of the Property
3.6. Current and Past Uses of Adjoining Properties
4. Records Review
4.0. Environmental Database Search
4.1. Physical Setting Sources
4.2. Historical Use Information
4.3. Additional Record Sources
5. Information from Site Reconnaissance and Interviews
5.0. Hazardous Substances in Connection with Identified Use
5.1. Hazardous Substance Containers and Unidentified Substance
Containers
5.2. Storage Tanks
5.3. Indications of PCBs
5.4. Indications of Solid Waste Disposal
5.5. Physical Setting Analysis
5.6. Any Other Conditions of Concern
5.7. Site Plan
6. FCC Checklist for National Environmental Policy Act
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7. Findings and Conclusions
8. Qualifications/Signatures of Environmental Professionals
1.1.6.2 The report appendices will include the USGS map; the environmental
database search report; any documentation of past use, such as
property tax files and land title records; photographs; any
documentation such as previous environmental reports; and copies
of the ESA transaction screen questionnaire used during
interviews.
1.1.6.3 The FCC checklist for NEPA investigations will also be provided as
an appendix in the Phase I ESA report. This FCC checklist will
include answering the following questions:
1. Is the proposed facility located in an officially designated
wilderness area?
2. Is the proposed facility located in an officially designated
wilderness preserve?
3. Will the proposed facility likely affect threatened or
endangered species or designated critical habitats?
4. Will the proposed facility likely jeopardize the continued
existence of any proposed endangered or threatened species?
5. Will the proposed facility likely result in the destruction
or adverse modification of proposed critical habitats (as
determined by the Endangered Species Act of 1973)?
6. Will the facility affect districts, sites, buildings,
structures or objects, significant in American history,
architecture, archeology, engineering or culture, that are
listed (or eligible for listing) in the National Register of
Historic Places?
7. Will the facility affect Indian religious site(s)?
8. Is the facility located in a flood plain?
9. Will construction of the proposed facility involve
significant change in surface features (e.g., wetland fill,
deforestation or water diversion)?
10. Is the proposed facility located in a residential
neighborhood and is required to be equipped with high
intensity white lights (as defined by local zoning law)?
1.1.6.4 The RF Exposure Screening Under NEPA will not be included as part
of this work. Specifically the following questions will not be
answered.
1. Will the proposed NON-ROOFTOP facility equal or exceed
total power (of all channels) of 2000 Watts ERP (3280
Watts EIRP) and have antennae located less than 10
meters above ground level?
2. Will the proposed ROOFTOP facility equal or exceed
total power (of all channels) of 2000 Watts ERP (3280
Watts EIRP)?
40
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2. At Client's option, American Tower will oversee and cause to be performed
activities required to complete the Environmental Screening requirement on
radio frequency emissions to determine whether the proposed facilities are
located where an operator or transmitter would cause human exposure to
levels of radio frequency radiation in excess of the limits specified in
Subsections 1.1310 and 2.1093, 47 C.F.R. (Applications to the FCC for
construction permits, licenses to transmit or renewals thereof, equipment
authorizations or modifications in existing facilities must contain a
statement confirming compliance with the radio frequency limits unless the
facility, operation or transmitter is categorically excluded as discussed
in Subsection 1.1307. Technical information showing the basis for this
statement must be submitted to the FCC upon request.) This particular
Environmental Screening requirement shall be sufficient to uncover the
impact or potential impact of any such jurisdictional requirements,
including but not limited to, regulatory filings, hearings, approvals,
and/or fees, site sampling, testing, or relocation of the site
requirements.
3. American Tower agrees that the results of any and all Environmental
Screening performed by sub-contractor or third party ("Third Party") shall
be timely reported to Client. American Tower acknowledges that the timely
reporting of such information may influence the site acquisition decision,
and American Tower shall pro-actively work in good faith with Client to
arrive at the optimal site acquisition decision in light of such
information. American Tower agrees to seek indemnification for Client from
the Third Party for any costs, including reasonable attorney fees
associated with any environmental remediation, fine or other penalty
imposed on Client as the direct or indirect result of Third Party's failure
to detect such impact or requirement as described in this Exhibit A-6.
Should American Tower not obtain this indemnification for Client in
American Tower/Third party agreement, American Tower agrees to indemnify
Client for any costs, including reasonable attorney fees associated with
any environmental remediation, fine or other penalty imposed on Client as
the direct or indirect result of Third party's failure to detect such
impact or requirement as described in this Exhibit A-6.
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EXHIBIT A-7
GEOTECHNICAL REPORT
American Tower through a Third Party will obtain Geotechnical report for
applicable land sites.
1.0. GEOTECHNICAL INVESTIGATIONS
- --------------------------------
1.0.1. Geotechnical Investigations shall be completed within ten (10)
business days from "Notice to Proceed". Geotechnical investigations,
testing, and reporting will allow tower foundation design by others
including but not limited to the following:
1.0.2. Written report shall include the following:
. Site Identification number
. Site Address
. Project description
. Purpose and scope of service
. Site description and local geography
. Seismicity (if applicable)
. Subsurface conditions
. Groundwater information
. Site map of boring area
1.0.3. Tower Data should include but not be limited to:
. Assumed tower foundation type
. Recommended tower foundation types
. Ultimate end bearing pressure
1.0.4. Soil Data should include but not be limited to:
. The depth in which each sample is based
. Resistivity Test (list type of test and conditions at test site
. Composition of soil at depths
. Soil unit weight (pcf) moist and submerged
. Friction angle (deg)
. Cohesion (ksf)
. Ultimate side friction (ksf)
. Shear strength (psf)
. Modulus of subgrade reaction (pci)
. 50% strain value
. Ground water depth
. Topsoil/Pavement depth
. Maximum frost depth
. Passive pressure (psf)
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1.0.3. RECORD OF SUBSURFACE EXPLORATION
- ----------------------------------------
. One 40 foot boring per site with sampling at 5-foot intervals with
Split Spoon Sampling and Thin Wall tubes in representative samples
of cohesive materials.
. No rock coring required
. Laboratory testing consisting of gradations and Atterberg limits on
representative materials. Strength tests limited to unconfined
compressive tests on representative cohesive materials.
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EXHIBIT A-8
FAA SURVEY
1. FAA Survey to be coordinated and tracked by RF or as otherwise specified by
Client.
2. American Tower is responsible to verify the completion of the survey, review
the report, and advise Client of approval or "not applicable" status prior
to a construction Notice To Proceed.
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EXHIBIT A-9
ZONING
1. American Tower will upon identification of a primary candidate, develop and
continuously manage a relationship with the appropriate zoning authorities
and potential community and jurisdictional opposition groups to eliminate
zoning hearing surprises and ensure timely zoning approval of the site.
2. American Tower will represent Client at planning commission, review board,
city council, historical commission, and any other entity necessary to
secure zoning approvals and building permits.
3. American Tower will prepare and submit all zoning applications and appeals
with required drawings, and other related materials and obtain any required
zoning approval.
4. American Tower will attend all required hearings and represent Client at
Client's request.
5. American Tower will determine needed compliance with any subdivision
regulations for purchased sites.
6. American Tower will involve legal counsel only in zoning situations in
which Client agrees legal representation is warranted.
7. American Tower will secure zoning approval as evidenced by the
jurisdictions required documentation to the extent required to successfully
request and have a building permit issued to the Client's construction
management contractor. American Tower will provide a determination in
writing, in the event the jurisdiction does not provide evidence of
approval.
8. American Tower will provide a written zoning strategy for Client's prior
approval for any site or group of sites where there is significant
potential for strong opposition or rejection. The zoning strategy will
include an estimate of cost for all required expert testimony and legal
counsel.
9. American Tower will be excused from obligations set forth in this
Exhibit A-9 to provide a zoning permit that will result in a building
permit upon fulfilling the following requirements:
. American Tower has in good faith attempted to procure such permits and to
no fault of American Tower, the jurisdiction has refused permitting or
otherwise prevented a permit from being issued, or the site cannot be
leased.
. American Tower has diligently pursued the site and met the zoning
submission timeline consistent with the zoning approval forecast
identified in Exhibit C, or the
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<PAGE>
site cannot be leased.
. There is no site in the search area that can be permitted as defined in
the jurisdiction's ordinance or such site that can be permitted can not
be leased.
. American Tower no longer has sufficient work available in the applicable
Trading Area to warrant in-market resources as agreed by Client and
American Tower.
. A minimum of 18 months has elapsed since the release of search areas to
American Tower.
. A written request to be excused from the requirements of Exhibit A-9 has
been provided by American Tower to Client. Such written request will
provide a complete list of all RF acceptable sites in the search area
along with a chronology of contacts and a detailed disposition of each
site (why they cannot be zoned or leased).
9. American Tower will staff at American Tower's expense an M.I.S. graphics
specialist and provide the necessary associated equipment to prepare photo
simulations. Photo simulation will be a critical tool in obtaining landlord
and zoning approval.
46
<PAGE>
EXHIBIT A-10
BUILDING PERMIT
American Tower shall apply for, coordinate/track and obtain building permit.
47
<PAGE>
EXHIBIT A-11
CONSTRUCTION MANAGEMENT
1. PRE-CONSTRUCTION PLANNING
1.1. In support of the pre-construction planning requirements, American
Tower will complete the following activities:
1.2. Conduct construction feasibility assessments with all applicable
contractors to assess construction costs, identify potential problems,
and develop the most efficient design for each of Client's sites.
Coordinate the production and review of all construction drawings to
comply with Client's specifications and requirements.
1.3. Coordinate and manage new service requests, field surveys and the
installation of power and telephone service to manage the delivery of
new utility service on time and in compliance with Client's
specifications. Act as a liaison with local building jurisdictions to
expedite and obtain construction permits, answer questions and provide
additional information as required. Client will provide the necessary
power of attorney or other authorization for American Tower to obtain
power on Client's behalf if required by the power company. Client will
also assist American Tower in setting up an escrow account to expedite
power delivery if required by the power company.
1.4. Qualify and select Construction subcontractors. Develop and deliver
request for quotation packages, perform pre-bid meetings (bid walks)
with Construction subcontractors, and systematically evaluate the
responses. Each subcontractor is required to participate in a thorough
qualification process during which American Tower will verify, through
review of relevant documents that each is fully insured and has
obtained all required local, state and federal licenses and
certifications. Review safety programs and records, references and the
financial viability of any subcontractor. Coordinate subcontractor
selection activities with Client.
1.5. At Client's request and additional expense (i) procure materials and
supplies from wireless industry suppliers and manufacturer and (ii)
implement a customized inventory management system, designed to
effectively control material orders and their distribution.
1.6. Provide Material takeoff, expediting, and warehousing support as
required by Client.
1.7. Develop a Master Construction Plan that includes a detailed schedule
for each of Client's sites. American Tower shall continuously monitor
and update to ensure compliance with project milestones.
1.8. Coordinate with Client to minimize, to Client's satisfaction, the use
of the same contract labor or contractors to build the sites.
48
<PAGE>
2. CONSTRUCTION EXECUTION
2.1. In support of construction execution, American Tower will:
2.2. Conduct pre-construction meetings with subcontractors, property
managers and utility service providers to ensure that construction
objectives, property owner concerns and site specific requirements are
understood and agreed upon by all parties involved in the buildout of
Client's network.
2.3. Provide supervision of all construction activities to minimize
disruption to property owners, to adhere to construction
specifications and standards, and complete construction in compliance
with Client construction schedule.
3. QUALITY ASSURANCE
3.1. As part of its quality assurance services, American Tower will:
3.2. Conduct a thorough quality assurance inspection upon completion of
each site, ensuring that each of Client's punch list items are
resolved within 48 hours.
3.3. Coordinate and attend site inspections with all local building
department representatives.
3.4. Prepare detailed as-built drawings that accurately reflect the
installation at each site.
3.5. Close out each site by compiling and providing Client with a
comprehensive site completion package. This package will create an
historical record of everything related to the construction of the
site and includes, without limitation, site identification data,
construction permit documentation, material reconciliation
construction test results, site photographs and as-built drawings.
49
<PAGE>
EXHIBIT A-12
PROJECT REPORTING
American Tower will provide Client with weekly information regarding the
progress of the work. A list of the tasks that must be reported is found in the
matrix below and next to it a definition of the task and the abbreviation of the
site specialist responsible for reporting the task. This information will be put
into a format acceptable to Client. Each status report must include all the
following items as they have changed during that reporting interval. Next to
each task must be included the date it was completed or the expected date of
completion. Intervals for information reporting will be established by Client
Project Manager in the market.
MILESTONE & TASK REPORTING RESPONSIBILITIES AND DEFINITIONS
-----------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
MILESTONE/TASK NAME MILESTONE/ TASK DESCIPTION RESPONSIBILITY MILESTONE
- ------------------- -------------------------- -------------- ---------
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
RELEASE SEARCH AREA The date that Search Area has been issued by Client to CLIENT
American Tower.
- -------------------------------------------------------------------------------------------------------------------
CANDIDATE IDENTIFIED The date that the Site Acquisition has submitted a SITE SA A
CANDIDATE APPROVAL FORM for 3 viable candidates to Client
Project Management and the RF group.
- -------------------------------------------------------------------------------------------------------------------
RF APPROVAL The date that the RF Engineer determines that the RF A
Candidate in question will provide the coverage needed
for this search area.
- -------------------------------------------------------------------------------------------------------------------
PRIMARY DESIGNATED The date that the best candidate for the search area has CLIENT A
been selected. The Primary site is the site that is
intended to be the site that Client builds.
- -------------------------------------------------------------------------------------------------------------------
TECH. TEAM VISIT The date that the team of RF, Site Acquisition, Zoning, SA, RF, B
Construction and Interconnect meet at the site to Plan PZ, CM
the site design, determine the location of ALL equipment
and utility runs and create a site sketch.
- -------------------------------------------------------------------------------------------------------------------
LEASE PROCESS This date incorporates the entire lease process from SA A
beginning to end. The completion date for this task is
when the Primary Lease is fully executed by Landlord and
Client, all easements are obtained, secondary landowner
leases are fully executed and any other site license
requirements have been obtained.
- -------------------------------------------------------------------------------------------------------------------
STRUCTURAL This is the date when all structural evaluations and CM C
engineering has been completed, allowing for all
construction documents to be completed which includes all
requirements for building permits and bidding purposes.
- -------------------------------------------------------------------------------------------------------------------
SURVEY The date of the land survey being completed. In this CM C
case,
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
50
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
surveys will only be conducted on raw land sites.
- -------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL This includes the date of completion of all environmental CM C
analysis such as Transaction Screens, Phase I's, NEPA,
Asbestos studies, Wetland studies and RF Emission studies.
- -------------------------------------------------------------------------------------------------------------------
GEOTECH Geotechnical study of soil completed for foundation CM C
design.
- -------------------------------------------------------------------------------------------------------------------
FAA & AM STUDIES Date of the Airspace study program run and FAA filing RF
completed if required, and the Evaluation, re-tuning and
re-evaluation required to locate antennas on an AM
transmission site.
- -------------------------------------------------------------------------------------------------------------------
ZONING DRAWINGS The date that the Drawings for Zoning applications have CM C
been completed.
- -------------------------------------------------------------------------------------------------------------------
APPLICATION DEADLINE The deadline date for turning in the application which PZ C
initiates the process of putting the project on the
hearing board's calendar in the jurisdiction.
- -------------------------------------------------------------------------------------------------------------------
ZONING APPLICATION The date that the ZONING APPLICATION has actually been PZ C
SUBMITTED submitted to the jurisdiction.
- -------------------------------------------------------------------------------------------------------------------
HEARING DATE Actual date of the HEARING for that site in the PZ C
jurisdiction.
- -------------------------------------------------------------------------------------------------------------------
POWER ORDERED The date that first contact has been made to the CM D
electrical utility for ordering power to the site.
- -------------------------------------------------------------------------------------------------------------------
TOWER ORDER AND DELIVERY This is the start date that the TOWER ORDER (monopole, CM D
etc.) is placed from the tower manufacturing company, and
the finish date that the tower is delivered.
- -------------------------------------------------------------------------------------------------------------------
FOUNDATION DESIGN ORDER & This is the start date that the FOUNDATION DESIGN is CM D
DELIVERY ordered from the tower manufacturing company, and the
finish date that the FOUNDATION DESIGN is delivered.
- -------------------------------------------------------------------------------------------------------------------
CONSTRUCTION DRAWINGS The start and finish dates for the start and completion CM D
of the CONSTRUCTION DRAWINGS.
- -------------------------------------------------------------------------------------------------------------------
ZONING APPROVAL The date of the completion of the ZONING APPROVAL process PZ C
with all documents required (resolution, etc.) that
enable the building permit to be applied for or obtained.
The start date for this task is the day of the hearing
(if applicable).
- -------------------------------------------------------------------------------------------------------------------
TELCO ORDERED The date of the first contact with the TELCO service IC D
provider for the site.
- -------------------------------------------------------------------------------------------------------------------
OBTAIN PERMITS The finish date for this task is the date that ALL CM D
construction permits for the site have been approved. The
start date for this task is the date that the first
permit is applied for. The finish date for this task is
the date the last
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
permit is received
- -------------------------------------------------------------------------------------------------------------------
NTP TO GC The date that the NOTICE TO PROCEED has been issued to CM D
the General Contractor. The is the document that gives
the General Contractor permission to enter the site and
begin construction.
- -------------------------------------------------------------------------------------------------------------------
CONSTRUCTION START This is the date that the General Contractor starts CM D
construction at the site.
- -------------------------------------------------------------------------------------------------------------------
ANTENNA SYSTEM The finish date for this task is the date that the CM D
antenna system installation is complete and ready for
testing. The start date for this task is the first day of
construction.
- -------------------------------------------------------------------------------------------------------------------
POWER COMPLETE The finish date for this task is the date that all CM D
electrical wiring is complete and the power utility has
installed the power to the site. The start date for this
task is the first day of construction.
- -------------------------------------------------------------------------------------------------------------------
SUBSTANTIAL COMPLETION This is the date that the General Contractor has CM D
substantially Completed the work at the site. This does
not include punch list or clean up items. In order for a
site to be substantially complete all items that enable
the site to go into service must be complete.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELCO ACCEPTANCE This is the date that the TELCO service provider has IC
completed their installation and testing of T 1 service
and the conduits needed to bring service from the DEMARK
to the BTS are installed. There must be a complete
circuit from the BTS to the Switch.
- -------------------------------------------------------------------------------------------------------------------
VENDOR INTEGRATE SITE This is the date that the Equipment Vendor (Ericsson or CLIENT
Nortel) have completed the installation of the BTS and
integrated it into the Switch. The start date for this
task will be the day that the vendor installs the BTS.
- -------------------------------------------------------------------------------------------------------------------
RF OPTIMIZATION This is the date that the RF group completes the RF RF
optimization of the site after it is transmitting signal.
- -------------------------------------------------------------------------------------------------------------------
ON AIR This is the date that the site is transmitting signal and CLIENT
the site is ready for on air service.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
LEGEND SA = Site Acquisition RF = RF Engineering PZ = Planning & Zoning
CM = Construction Management IC = Interconnect Engineering (Client)
In addition to the items listed above, American Tower is required to provide to
Client core site data, such as the site address. A list of this core site data
will be provided upon American Tower entering the market. Additional items to
report may be added to the above list as reasonably determined necessary by
Client.
52
<PAGE>
EXHIBIT A-13
PROJECT MANAGEMENT
1. American Tower will provide the following services:
1.1. Develop and implement a thorough deployment plan which tracks all
activities associated with site acquisition and construction
management for each Site. The deployment plan will clearly articulate
schedule dependencies and critical path elements, identify the
allocation of resources, and update regularly to reflect the actual
deployment.
1.2. Implement a quality assurance program which, ensures that all
activities are performed to the highest quality standards.
1.3. Utilize a comprehensive cost accounting system which, will include, at
a minimum, procedures for conducting financial transactions, financial
tracking and management, and comprehensive financial reporting.
1.4. Implement a comprehensive relational database that allows single entry
and sharing of all project data. Reporting capabilities must be
developed to accommodate any reasonable Client request.
1.5. Implement comprehensive reporting mechanisms so that detailed site
progress is tracked on a daily basis and complete reports are provided
when required by Client.
1.6. Implement a comprehensive filing system which, ensures that all
relevant site information is organized and available. Utilize
electronic means whenever possible.
1.7. Manage and coordinate interactions among site acquisition, zoning and
other disciplines and construction management and other disciplines
involved in the system deployment (e.g., RF engineering, network
engineering, marketing). Ensure that both formal and informal
communications among these disciplines are effective and in the best
interest of Client.
53
<PAGE>
EXHIBIT A-14
CLOSEOUT DOCUMENTATION
Upon completion of the project, compile and produce a file, binder or comparable
package for each site, containing the following minimum information as
applicable to each site.
1. Original Lease/Purchase Agreement
2. Recorded Memorandum of Lease
3. Original Easements
4. Site Candidate Report with Photo's
5. Site Survey
6. Geotechnical Report
7. Environmental Report with Client approval
8. Structural Analysis
9. Title Report, Insurance Policy and other curative documentation
10. FAA consultant study
11. FAA approval
12. Zoning Approval and Use Permit
13. FCC Tower Registration
14. List of all sub-contractors, vendors and A/E trades used on the site,
with contact names, address and telephone numbers listed for each.
15. Test reports for concrete, grounding systems and other construction
related items
16. Stamped tower and tower foundation drawings along with tower design
calculations
17. Stamped equipment shelter plans (if used)
18. Antenna system sweep test results
19. Site construction progress photographs
20. Full lien waivers for all materials and labor used to construct the
site
21. Warranties on work, equipment, materials, etc. used on the project.
22. All project correspondence
23. Building Permit Sign-Off
24. Original "Permitted" Drawings
25. Earth Compaction Test (If Applicable)
26. Manufacturer Warranties, Guarantees And Manuals (If Applicable)
27. As-Built Drawings, Submit the field set of red-lines, which would
include all red-lines made during construction. Verify that all
Superintendents are marking up the "For Construction" set each and
every day. At a minimum these drawings should dimensionally locate all
underground conduit and/or conductor lines from permanently located
objects or benchmarks, including lengths of runs between turns, bends,
pull boxes, etc. and lateral dimensions from existing lines and/or
critical objects (tanks, buildings, fences, etc.).
28. Prior to final application for payment, turn over to a Client
representative a copy of signed receipt for all keys to locked doors,
panels, gates, etc., all properly tagged and organized.
29. Final waiver of lien for all Services under this Agreement.
54
<PAGE>
EXHIBIT B
1. MILESTONE SERVICES
Upon completion to the satisfaction of Company of the Milestone Services
set forth in Section 1 below, and as indicated in Exhibit A-12, Contractor will
receive the milestone rates below for sites withdrawn in accordance with Section
8.02 (b).
<TABLE>
<CAPTION>
Milestone Services Milestone Rate
------------------ --------------
<S> <C> <C>
A. Site Selection $3,000
B. Site Acquisition $4,333
C. Site Zoning $6,566
D. Site Construction $7,334
</TABLE>
2. EXPENSES
2.1. Included Expenses
2.1.1. The following expenses are included in the Milestone Rates set
forth above:
2.1.1.1. Travel and living
2.1.1.2. Field expenses for maps
2.1.1.3. Deeds and film development
2.1.1.4. Cellular phones/pagers
2.1.1.5. Cellular/paging service
2.1.1.6. Vehicles
2.1.1.7. Office equipment, including computers and copiers
(if additional copiers are required beyond what is
provided by Company)
2.1.1.8. Office rent (if additional space is required beyond
what is provided by Company); office supplies;
overnight mail and telephone service.
2.2. Excluded Expenses
2.2.1. The following expenses shall be considered expenses payable by
Company and in are addition to the Milestone Rates set forth above.
2.2.1.1. Any and all construction materials used in the
construction of the Sites:
2.2.1.2. Any and all construction subcontractor cost including,
but not limited to, cable and antenna contractors,
electricians, and tower erectors;
2.2.1.3. Architectural and electrical drawings;
2.2.1.4. Azimuth verification surveys;
2.2.1.5. Blueprint reproduction.
2.2.1.6. Building inspection fees;
55
<PAGE>
2.2.1.7. Cable sweeps and other technical tests;
2.2.1.8. Purchase price for real estate acquisition and easement
rights;
2.2.1.9. All municipal filings, permit and inspection fees;
2.2.1.10. Delivery costs for all materials;
2.2.1.11. Engineering services;
2.2.1.12. Federation Aviation Administration study and analysis;
2.2.1.13. Floodway investigation;
2.2.1.14. Independent inspection agencies;
2.2.1.15. Legal support and expert witness fees for zoning
hearings;
2.2.1.16. Option fees for leases, lease options, purchase
agreements and purchase agreement options;
2.2.1.17. Environmental Study including soil compaction,
engineering and other inspections of the property
required or reasonably deemed necessary to provide a
thorough due diligence review of the project;
2.2.1.18. survey;
2.2.1.19. Soils tests and reports, including Geotechnical testing;
2.2.1.20. Structure loading study and analysis for towers,
rooftops, water tanks, billboards and signs, and other
similar facilities expected to contain PCS equipment;
2.2.1.21. Appraisals, title reports and title insurance premiums;
and
2.2.1.22. Tower/foundation design information.
2.2.1.23. GIS mapping.
3. TIME AND MATERIALS. The following rates will be used for work not included
in the milestone rates in Section 1 or Included Expenses in Section 2.1.
<TABLE>
<CAPTION>
<S> <C>
3.1. Project Manager $ 110/hour
3.2. Site Acquisition Manager $ 90/hour
3.3. Construction/Development Manager $ 70/hour
3.4. In-house Attorney $ 150/hour
3.5. Site Acquisition Specialist $ 60/hour
3.6. Paralegal $ 60/hour
3.7. Zoning Manager $ 70/hour
3.8. Zoning Assistant $ 50/hour
3.9. Project tracking $ 30/hour
3.10. Administrative Assistant $ 25/hour
3.11. Site Acquisition Specialist $ 70/hour
</TABLE>
56
<PAGE>
4. INVOICES
4.1. Contractor will submit invoices on the first of each month for
Milestone Services completed during the prior month. Such invoices
must be on the format provided to Contractor by Company. Accompanying
the written invoice shall be an electronic invoice on templates
provided to the Contractor by Company, structured to facilitate
electronic interface to Company's financial accounting systems.
4.2. Contractor may submit invoices upon reaching the following:
4.2.1. Milestone A . Upon Submission of candidate sheets. If no
candidate is found to be acceptable, then Contractor will
supply additional candidates at no additional charge until on
is found or RF redesigns the search area.
4.2.2. Milestone B. Upon submission of lease on primary candidate.
4.2.3. Milestone C. Upon submission of zoning application. If
Contractor is unable to acquire zoning approval, then
Contractor will zone another candidate at no additional charge.
4.2.4. Milestone D. Upon submission for building permit. If
Contractor does not complete construction on previously agreed
upon completion date, Contractor will pay a $1,000 per week
penalty for every week late after first being given written
notice of being late and a 15 day right to cure. Penalty will
be retroactive to the date of notice, if not cured. Force
majure events will extend the due date.
4.3. Company will make payments for all amounts due hereunder within 30
days of receipt of invoice less any payments in dispute which will be
payable within 30 days of resolution of such dispute. Contractor shall
be entitled to assess a 3/4 of 1 % per month late fee on all
outstanding invoices properly issued, aged over 45 days and not in
dispute.
57
<PAGE>
EXHIBIT C
---------
SCHEDULE
THIS PAGE WILL BE REPLACED WITH MILESTONE DELIVERY DATES FOR SITE SELECTION,
LEASING (SITE ACQUISITION WORK ITEM A-4(2), SITE ZONING, BUILDING PERMIT,
CONSTRUCTION START AND CONSTRUCTION COMPLETE FOR EACH SITE WITHIN 21 CALENDAR
DAYS OF THE RELEASE OF SEARCH AREAS TO AMERICAN TOWER..
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
SITE SITE SITE SITE BUILDING CONSTRUCTION CONSTRUCTION
NUMBER SELECTION ACQUISITION ZONING PERMIT START COMPLETE
(SUBSTANTIAL
COMPLETION)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE>
EXHIBIT C-1
BASE PLAN
The attached base plan represents the Milestones, tasks, and logic that Client
will use to manage and report progress on this project. Although individual site
plans will vary, the attached represents an average duration for cell site
development.
59
<PAGE>
EXHIBIT C-2
AVERAGE CYCLE TIMES
FOLLOWING IS A LIST OF MAXIMUM AVERAGE CYCLE TIMES THAT WILL BE ACHIEVED BY
AMERICAN TOWER (AND CLIENT AS INDICATED) FOR ALL ASSIGNED SITES:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
CYCLE MAXIMUM AVERAGE CYCLE TIME
- ------------------------------------------------------------------------------------------------------
<S> <C>
Final zoning drawings 15 work days from Tech Team Visit
- ------------------------------------------------------------------------------------------------------
Final Construction drawings (with Zoning) 25 work days from Tech Team Visit
- ------------------------------------------------------------------------------------------------------
Final Construction drawings (no Zoning) 15 Work Days From Tech Team Visit
- ------------------------------------------------------------------------------------------------------
Lease Execution (signed by both parties) 60 work days after release of search area
- ------------------------------------------------------------------------------------------------------
CLIENT Approval, conditional approval or rejection 5 work days after submission by American Tower
of candidates
- ------------------------------------------------------------------------------------------------------
CLIENT Acceptance or rejection of friendly sites 15 work days after submission by American Tower
- ------------------------------------------------------------------------------------------------------
Final signoff of lease when terms are acceptable by 5 work days
Client
- ------------------------------------------------------------------------------------------------------
Surveys, environmentals, geotechs, structurals and 10 work days after tech team visit
other engineering services
- ------------------------------------------------------------------------------------------------------
Construction Start to Construction Complete 20 work days
- ------------------------------------------------------------------------------------------------------
Zoning resolution to construction permitted 5 work days
- ------------------------------------------------------------------------------------------------------
Primary Site Selection to Tech Team Visit 5 Work days
- ------------------------------------------------------------------------------------------------------
Zoning start to zoning finish (hearing) 60 work days
- ------------------------------------------------------------------------------------------------------
Zoning start to zoning finish (no hearing) 15 work days
- ------------------------------------------------------------------------------------------------------
Sac identify and submit 3 candidates 20 work days after receipt of search area.
- ------------------------------------------------------------------------------------------------------
Title Reports 10 work days from release
- ------------------------------------------------------------------------------------------------------
</TABLE>
60
<PAGE>
EXHIBIT C-4
-----------
PERSONNEL
AMERICAN TOWER WILL PROVIDE THE FOLLOWING MINIMUM PERSONNEL AT LOCATIONS
- ------------------------------------------------------------------------
ACCEPTABLE TO CLIENT.
- ---------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TITLE NAME
- --------------------------------------------------------------------------------
<S> <C>
PROJECT DIRECTOR
- --------------------------------------------------------------------------------
PROJECT MANAGER
- --------------------------------------------------------------------------------
PROJECT COORDINATOR/PLANNER/EXPEDITOR
- --------------------------------------------------------------------------------
LEASING MANAGER
- --------------------------------------------------------------------------------
ZONING MANAGER
- --------------------------------------------------------------------------------
LEASING AGENTS (SITE ACQUISITION SPECIALISTS)
[1 FOR EVERY 8 SITES]
- --------------------------------------------------------------------------------
ZONING SPECIALIST [1 FOR EVERY 12 SITES,
BASED ON SCHEDULE OF ZONING PHASE]
- --------------------------------------------------------------------------------
ADMINISTRATIVE SUPPORT [ 1 FOR EVERY 25 SITES]
- --------------------------------------------------------------------------------
PARALEGAL
- --------------------------------------------------------------------------------
ATTORNEY
- --------------------------------------------------------------------------------
CONSTRUCTION MANAGER
- --------------------------------------------------------------------------------
AE MANAGER W/ ADMIN AND TECHNICIAN
- --------------------------------------------------------------------------------
CONSTRUCTION SUPERINTENDENTS [1 FOR EVERY 8
SITES]
- --------------------------------------------------------------------------------
UTILITY COORDINATOR (TELCO & POWER)
- --------------------------------------------------------------------------------
PROCUREMENT COORDINATOR (MTL TAKEOFF & ORDER)
- --------------------------------------------------------------------------------
CONSTRUCTION CONTRACT ADMINISTRATOR
- --------------------------------------------------------------------------------
CONSTRUCTION COORDINATOR
- --------------------------------------------------------------------------------
ENGINEER FOR DRAWINGS REVIEW
- --------------------------------------------------------------------------------
PERMIT EXPEDITOR
- --------------------------------------------------------------------------------
DATABASE ADMINISTRATOR
- --------------------------------------------------------------------------------
</TABLE>
61
<PAGE>
EXHIBIT C-5
ORGANIZATION CHART AND STAFFING PLAN
THIS PAGE WILL BE REPLACED WITH AMERICAN TOWER'S ORGANIZATION CHART AND STAFFING
PLAN WITHIN 5 CALENDAR DAYS OF AGREEMENT EXECUTION DATE.
62
<PAGE>
EXHIBIT D
A. PURPOSE
The purpose of these Site Standards is to create a quality site installation.
These standards are to be in effect for each site at which Client has equipment
in, on or at the site and at which Client has a right to occupy pursuant to the
Agreement to which this document is an attachment.
B. STATE, NATIONAL, AND OTHER STANDARDS
All installations must conform with all state, national, and other regulations
and the following state and national codes or any supplements, amendments or
provisions which supersede them:
a. American National Standards Institute:
ANSI/EIA-222F Structural Standards for Steel Antenna Towers and
Antenna Supporting Structures
b. FAA Regulations:
Vol. XI, Part 77 Objects Affecting Navigable Airspace
Advisory Circular Obstruction Marking and Lighting AC 70/7460
Advisory Circular High Intensity Obstruction Lighting Systems AC
150/5345-43, FAA/DOD Specifications L-856
c. FCC Rules and Regulations:
Code of Federal Construction, Marking and Lighting of Antenna
Regulations Title 47 Structures Chapter I, Part 17
d. National Electrical Code
e. Building Officials and Code Administrators International, Inc.
Basic National Building Code
Basic National Mechanical Code
State Building Code
f. National Fire Protection Association
Code 101 - Life Safety
Code 90A - Air Conditioning and Ventilating Systems
Code 110 - Emergency and Standby Power Systems
g. State Fire Safety Code
h. OSHA
Safety and Health Standards (29 CFR 1910) General Industry
Subpart R Special Industries
1910.268 Telecommunications
1926.510 Subpart M Fall Prevention
63
<PAGE>
i) Ericsson Radio Systems Inc., Technical Document, RBS Engineering,
Security Level S2, Site Grounding Standards, EUS/E931931.TEC,
Revision B, May 23, 1995, or latest revision
j) Triton Construction Standards.
64
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998
<PERIOD-START> MAR-06-1997 JAN-01-1998
<PERIOD-END> DEC-31-1997 DEC-31-1998
<CASH> 11,362 146,172
<SECURITIES> 0 23,612
<RECEIVABLES> 0 4,173
<ALLOWANCES> 0 1,071
<INVENTORY> 0 1,433
<CURRENT-ASSETS> 1,418 312,516
<PP&E> 473 198,953
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 13,253 686,859
<CURRENT-LIABILITIES> 17,214 210,880
<BONDS> 0 300,000
0 0
0 0
<COMMON> 0 0
<OTHER-SE> (3,961) (75,979)
<TOTAL-LIABILITY-AND-EQUITY> 13,253 686,859
<SALES> 0 755
<TOTAL-REVENUES> 0 16,578
<CGS> 0 1,699
<TOTAL-COSTS> 0 5,997
<OTHER-EXPENSES> 2,741 29,981
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,228 30,391
<INCOME-PRETAX> 8 10,635
<INCOME-TAX> 0 7,536
<INCOME-CONTINUING> (3,961) (31,620)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (3,961) (31,620)
<EPS-PRIMARY> 0.00 0.00
<EPS-DILUTED> 0.00 0.00
</TABLE>
