<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 9, 1999
REGISTRATION NO. 333-82509
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
<TABLE>
<S> <C> <C> <C>
TRITEL PCS, INC. DELAWARE 4812 64-0896438
TRITEL, INC. DELAWARE 4812 64-0896417
TRITEL COMMUNICATIONS, INC. DELAWARE 4812 64-0896042
TRITEL FINANCE, INC. DELAWARE 4812 64-0896439
(Exact Name of Registrant (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
as Specified in its Charter) Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
---------------
111 E. CAPITOL STREET, SUITE 500, JACKSON, MISSISSIPPI 39201
ATTENTION: CORPORATE SECRETARY (601) 914-8000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
---------------
JAMES H. NEELD, IV, ESQ.
TRITEL PCS, INC.
111 E. CAPITOL STREET, SUITE 500
JACKSON, MISSISSIPPI 39201
(601) 914-8000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Agent For Service)
---------------
COPIES OF COMMUNICATIONS TO:
MICHAEL A. KING, ESQ.
BROWN & WOOD LLP
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 839-5300
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES
EFFECTIVE.
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
---------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMOUNT PROPOSED PROPOSED AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PRICE PER UNIT OFFERING PRICE FEE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12.75% Senior Subordinated Discount
Notes due 2009 $372,000,000 53.828% $200,239,971(2) $55,667(3)
- --------------------------------------------------------------------------------------------------------------------------
Guarantees of 12.75% Senior Subordinated
Discount Notes due 2009 -- -- -- (4)
</TABLE>
- --------------------------------------------------------------------------------
(1) The "Amount to be registered" with respect to the 12.75% Senior
Subordinated Discount Notes due 2009 represents the aggregate principal
amount at maturity of such notes.
(2) Represents gross proceeds from the initial private offering of the 12.75%
Senior Subordinated Discount Notes due 2009 by Tritel PCS, Inc. The net
proceeds from the private offering were approximately $191 million after
deducting the Initial Purchasers' discounts and estimated transaction
fees payable by Tritel PCS, Inc.
(3) Previously paid.
(4) Pursuant to Rule 457(n), no separate registration fee is payable with
respect to the guarantees.
---------------
The Registrants hereby amend this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrants shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED SEPTEMBER 9, 1999
[GRAPHIC OMITTED]
PROSPECTUS
TRITEL PCS, INC.
Offer to Exchange its
12 3/4% Senior Subordinated Discount Notes Due 2009
which have been registered under the
Securities Act of 1933 for any and all of its
Outstanding 12 3/4% Senior Subordinated Discount Notes Due 2009
TERMS OF THE EXCHANGE OFFER
o The exchange offer expires at 5:00 p.m., New York City time, on ,
1999, unless we extend it.
o All outstanding notes that are validly tendered and not withdrawn will be
exchanged.
o Tenders of outstanding notes may be withdrawn at any time prior to the
expiration of the exchange offer.
The notes are eligible for trading in The Portal Market, a subsidiary of
the Nasdaq Market, Inc.
YOUR TENDERING OF OUTSTANDING NOTES FOR NEW NOTES INVOLVES CERTAIN RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF MATTERS THAT
PARTICIPANTS IN THE EXCHANGE OFFER SHOULD CONSIDER.
---------------------
We are not making an offer to exchange notes in any jurisdiction where the
offer is not permitted.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities or passed upon the
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
This prospectus and the related letter of transmittal contain important
information. We urge you to read this prospectus and the related letter of
transmittal carefully before deciding whether to tender outstanding notes
pursuant to the exchange offer.
THE DATE OF THIS PROSPECTUS IS , 1999.
<PAGE>
[INSIDE FRONT COVER]
[MAP OF TRITEL PCS'S, TRITON'S, TELECORP'S AND AT&T'S AND OTHER ROAMING
PARTNER'S NETWORKS]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary ............................. 1
Risk Factors ................................... 9
Information Regarding Forward-Looking
Statements .................................. 19
Where You Can Find More Information ............ 19
Use of Proceeds ................................ 20
Capitalization ................................. 21
Selected Consolidated Financial Data ........... 22
Management's Discussion and Analysis ........... 24
Organization of Tritel and Tritel PCS .......... 33
Business ....................................... 34
Government Regulation .......................... 54
Joint Venture Agreements with AT&T
Wireless .................................... 67
</TABLE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Management ..................................... 76
Certain Relationships and Related
Transactions ................................ 83
Principal Stockholders ......................... 87
Description of Certain Indebtedness ............ 89
The Exchange Offer ............................. 92
Description of the Notes ....................... 103
Description of Capital Stock ................... 140
Certain Federal Income Tax
Considerations .............................. 144
Plan of Distribution ........................... 149
Legal Matters .................................. 149
Experts ........................................ 149
Index to Financial Statements .................. F-1
</TABLE>
---------------------
Market data used throughout this prospectus is based on our good faith
estimates. Our estimates are based upon their review of internal surveys,
independent industry publications and other publicly available information.
Although we believe that these sources are reliable, the accuracy and
completeness of this information is not guaranteed and has not been
independently verified.
- ----------
* The map on the opposite page is not intended to be an exact
representation of each provider's wireless service area.
i
<PAGE>
PROSPECTUS SUMMARY
The following summary highlights information contained elsewhere in this
prospectus. This summary may not contain all of the information that may be
important to you. You should read the entire prospectus carefully.
TRITEL PCS
We are a development stage enterprise formed to develop wireless PCS
telecommunications markets in the south-central United States. Our PCS licenses
cover approximately 14.0 million people, or Pops, in contiguous markets in the
states of Alabama, Georgia, Kentucky, Mississippi and Tennessee. As a member of
the AT&T Wireless Network, we are the exclusive provider to AT&T Wireless of
mobile wireless PCS services in virtually all of our markets. Our agreements
with AT&T Wireless and certain affiliates allow us to use the AT&T brand name
and logo together with the SunCom name, our regional brand name.
We intend to commence commercial PCS service in the third quarter of 1999
and to provide coverage to approximately 80% of our Pops by the end of 2001. We
expect to offer PCS services in our major population and business centers as
follows:
<TABLE>
<CAPTION>
EXPECTED
MARKET LAUNCH DATE 1998 POPS
- ------------------ ------------------ ----------
<S> <C> <C>
Nashville, TN 4th Quarter 1999 1,675,700
Louisville, KY 4th Quarter 1999 1,448,400
Birmingham, AL 2nd Quarter 2000 1,297,800
Knoxville, TN 4th Quarter 1999 1,074,000
Lexington, KY 4th Quarter 1999 893,400
Jackson, MS 3rd Quarter 1999 657,800
Mobile, AL 2nd Quarter 2000 653,900
</TABLE>
We have also entered into an agreement with two other AT&T Wireless
affiliates, Triton PCS, Inc. and TeleCorp PCS, Inc., to operate with those
affiliates under a common regional brand name, SunCom, throughout an area
covering approximately 43 million Pops primarily in the south-central and
southeastern United States.
BUSINESS STRATEGY
We expect to take advantage of our affiliation with AT&T Wireless, the
SunCom brand alliance and our management's local market expertise in offering
our PCS services. In particular, we plan to pursue the following business
strategies:
Leverage the Benefits of Our AT&T Wireless Affiliation. We will
aggressively market our affiliation with AT&T Wireless and the AT&T Wireless
Network to distinguish ourselves from other wireless service providers in our
markets.
Distribute through Company Stores. Our distribution strategy will focus
principally on direct distribution through company-owned retail stores. We also
plan to employ a direct sales force to target small to medium-sized businesses.
Enhance Brand Awareness through the SunCom Brand Alliance. We intend to
promote the SunCom brand through joint marketing efforts with our SunCom
affiliates.
Emphasize Advantages of PCS Technology. We will seek to distinguish our
PCS services from those of our analog cellular competitors by emphasizing our
features and benefits.
Capitalize on Management Expertise and Local Market Presence. We intend to
leverage our management's experience in order to create strong ties with
subscribers and their communities.
1
<PAGE>
FINANCING PLAN AND USE OF PROCEEDS
We estimate that our projected capital requirements from inception through
year-end 2001, when our network is expected to be substantially complete and we
expect to generate positive cash flow, will be approximately $1.0 billion.
The following table highlights our projected sources and uses of capital
from inception through December 31, 2001:
<TABLE>
<CAPTION>
AMOUNT
(DOLLARS IN MILLIONS)
----------------------
<S> <C>
SOURCES:
Bank facility ............................................. $ 462.3
Senior subordinated discount notes ........................ 200.2
Government financing ...................................... 47.5
Cash equity ............................................... 163.4
Non-cash equity ........................................... 157.9
---------
Total sources ............................................ $ 1,031.3
=========
USES:
Acquisition of PCS licenses and intangible assets ......... $ 192.9
Capital expenditures ...................................... 529.9
Cash interest and fees .................................... 134.4
Working capital ........................................... 174.1
---------
Total uses ............................................... $ 1,031.3
=========
</TABLE>
2
<PAGE>
TRITEL CORPORATE STRUCTURE
[GRAPHIC OMITTED]
TRITEL, INC.
Holding Company
Issuer of Equity and Guarantor
of Senior Bank Debt
and High Yield Debt
TRITEL PCS, INC.
Holding Company
Issuer of Senior Bank Debt
and High Yield Debt
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TRITEL TRITEL TRITEL TRITEL
A/B HOLDING CORP. C/F HOLDING CORP. COMMUNICATIONS, INC. FINANCE, INC.
Holding Company Holding Company Operating Company Equipment Leasing and
Financing
Guarantor of Senior Guarantor of Senior Guarantor of Senior Bank Guarantor of Senior Bank
Bank Debt Bank Debt Debt and High Yield Debt Debt and High Yield Debt
Five License Four License
Subsidiaries Subsidiaries
Hold FCC A- and Hold FCC C- and
B- Block Licenses F- Block Licenses
Guarantors of Senior Issuers of FCC Debt
Bank Debt and Guarantors of
Senior Bank Debt
</TABLE>
We are a Delaware corporation. Our principal executive offices are located
at 111 E. Capitol Street, Suite 500, Jackson, Mississippi 39201, and our
telephone number is (601) 914-8000.
3
<PAGE>
SUMMARY OF THE EXCHANGE OFFER
Registration Rights
Agreement................... You have the right to exchange your notes for
registered notes with substantially identical
terms. This exchange offer is intended to satisfy
these rights. After the exchange offer is
complete, you will no longer be entitled to any
exchange or registration rights with respect to
your notes.
The Exchange Offer.......... We are offering to exchange $1,000 principal
amount of Tritel PCS's 12 3/4% Senior
Subordinated Discount Notes due 2009 which have
been registered under the Securities Act for each
$1,000 principal amount at maturity of Tritel
PCS's outstanding 12 3/4% Senior Subordinated
Discount Notes due 2009 which were issued in May
1999 in a private offering. In order to be
exchanged, an outstanding note must be properly
tendered and accepted. We will exchange all notes
validly tendered and not validly withdrawn. As
of this date there is $372,000,000 aggregate
principal amount at maturity of notes
outstanding. We will issue registered notes on
or promptly after the expiration of the exchange
offer.
Resales..................... We believe that the registered notes may be
offered for resale, resold and otherwise
transferred by you without compliance with the
registration and prospectus delivery provisions
of the Securities Act provided that:
o you acquire the registered notes issued in
the exchange offer in the ordinary course of
your business;
o you are not participating, do not intend to
participate, and have no arrangement or
understanding with any person to participate,
in the distribution of the registered notes
issued to you in the exchange offer; and
o you are not an "affiliate," as defined under
Rule 405 of the Securities Act, of Tritel
PCS.
If our belief is inaccurate and you transfer any
registered note issued to you in the exchange
offer without delivering a prospectus meeting
the requirements of the Securities Act or
without an exemption of your registered notes
from such requirements, you may incur liability
under the Securities Act. We do not assume or
indemnify you against such liability. Each
broker-dealer that issued registered notes for
its own account in exchange for outstanding
notes which were acquired by such broker-dealer
as a result of market-making or other trading
activities must acknowledge that it will deliver
a prospectus meeting the requirements of the
Securities Act in connection with any resale of
the registered notes. A broker-dealer may use
this prospectus for an offer to resell, resale
or other retransfer of the registered notes
issued to it in the exchange offer.
Record Date................. We mailed this prospectus and the related
exchange offer documents to registered holders of
outstanding notes on , 1999.
4
<PAGE>
Expiration Date............. The exchange offer will expire at 5:00 p.m.,
New York City time, , 1999, unless we
decide to extend the expiration date.
Conditions to the
Exchange Offer.............. We may terminate or amend the exchange offer if:
o any legal proceeding, government action or
other adverse development materially impairs
our ability to complete the exchange offer;
o any Securities and Exchange Commission rule,
regulation or interpretation materially
impairs the exchange offer; or
o we have not obtained any necessary
governmental approvals with respect to the
exchange offer.
We may waive any or all of these conditions. At
this time, there are no adverse proceedings,
actions or developments pending or, to our
knowledge, threatened and no governmental
approvals are necessary to complete the exchange
offer.
Procedures for Tendering Outstanding
Notes..................... Each holder of outstanding notes wishing to
accept the exchange offer must:
o complete, sign and date the accompanying
letter of transmittal, or a facsimile
thereof; or
o arrange for The Depository Trust Company to
transmit certain required information to the
exchange agent in connection with a
book-entry transfer.
You must mail or otherwise deliver such
documentation and your outstanding notes to The
Bank of New York, as exchange agent, at the
address set forth under "The Exchange
Offer--Exchange Agent." By tendering your
outstanding notes in this manner, you will be
representing, among other things, that:
o you are acquiring the registered notes
pursuant to the exchange offer in the
ordinary course of your business;
o you are not participating, do not intend to
participate, and have no arrangement or
understanding with any person to participate,
in the distribution of the registered notes
issued to you in the exchange offer; and
o you are not an affiliate of Tritel PCS.
Untendered Outstanding
Notes....................... If you are eligible to participate in the
exchange offer and you do not tender your
outstanding notes, you will not have any further
registration or exchange rights and your
outstanding notes will continue to be subject to
certain restrictions on transfer. Accordingly,
the liquidity of the market for such outstanding
notes could be adversely affected.
5
<PAGE>
Special Procedures for Beneficial
Owners.................... If you beneficially own outstanding notes
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and you wish to tender your outstanding notes in
the exchange offer, you should contact such
registered holder promptly and instruct it to
tender on your behalf. If you wish to tender on
your own behalf, you must, prior to completing
and executing the letter of transmittal for the
exchange offer and delivering your outstanding
notes, either arrange to have your outstanding
notes registered in your name or obtain a
properly completed bond power from the registered
holder. The transfer of registered ownership may
take considerable time.
Guaranteed Delivery
Procedures.................. If you wish to tender your outstanding notes and
time will not permit your required documents to
reach the exchange agent by the expiration date
of the exchange offer, or you cannot complete the
procedure for book-entry transfer on time or you
cannot deliver certificates for your outstanding
notes on time, you may tender your outstanding
notes pursuant to the procedures described in
this prospectus under the heading "The Exchange
Offer--Guaranteed Delivery Procedures."
Withdrawal Rights........... You may withdraw the tender of your outstanding
notes at any time prior to 5:00 p.m., New York
City time, on , 1999.
Certain U.S. Federal Tax
Considerations............ The exchange of notes will not be a taxable
event for United States federal income tax
purposes.
Use of Proceeds............. We will not receive any proceeds from the
issuance of registered notes pursuant to the
exchange offer. We will pay all our expenses
incident to the exchange offer.
Exchange Agent.............. The Bank of New York is serving as the exchange
agent in connection with the exchange offer.
SUMMARY OF TERMS OF THE REGISTERED NOTES
The form and terms of the registered notes are the same as the form and
terms of the outstanding notes except that the registered notes will be
registered under the Securities Act and, therefore, will not bear legends
restricting their transfer and will not be entitled to registration under the
Securities Act. In this regard, we use the term notes when describing
provisions that govern or otherwise pertain to both the outstanding notes and
the registered notes. The registered notes will evidence the same debt as the
outstanding notes, and the same indenture will govern both the registered notes
and the outstanding notes.
Issuer...................... Tritel PCS, Inc.
Notes Offered............... $372,000,000 aggregate principal amount at
maturity of 12 3/4% Senior Subordinated Discount
Notes due 2009.
6
<PAGE>
Maturity Date............. May 15, 2009.
Yield and Interest........ 12 3/4% per annum, compounded on a semi-annual
basis, calculated from May 11, 1999. Cash
interest will not accrue prior to May 15, 2004.
Thereafter, cash interest on the notes will
accrue at the rate of 12 3/4% per year and will be
payable semi-annually on May 15 and November 15
of each year, commencing November 15, 2004.
Original Issue Discount... The notes were issued at a substantial discount
from their principal amount at maturity.
Consequently, you will generally be required to
include amounts in your gross income for federal
income tax purposes before your receipt of the
cash payments attributable to that income. See
"Certain Federal Income Tax
Considerations--Original Issue Discount."
Optional Redemption....... We can redeem the notes, in whole or in part,
on or after May 15, 2004, at the redemption
prices set forth in this prospectus, plus accrued
and unpaid interest. In addition, before May 15,
2002, we can redeem up to 35% of the aggregate
principal amount at maturity of the notes, with
the proceeds of one or more equity offerings, at
112.75% of their accreted value on the redemption
date, if at least 65% of the aggregate principal
amount at maturity of the notes remains
outstanding.
Parent and
Subsidiary Guarantees..... Our parent company, Tritel, Inc., and two of our
subsidiaries will guarantee the notes on a senior
subordinated basis. All of our future
subsidiaries, other than subsidiaries solely
engaged in the business of holding PCS licenses,
or holding the stock of these subsidiaries, will
also be required to guarantee the notes. If we
fail to make payments on the notes, the
guarantors must make them instead. Our license
subsidiaries will not guarantee the notes.
Our parent company and each of our subsidiaries
have guaranteed our obligations under our bank
facility on a senior basis. We, our parent
company and all of our subsidiaries have pledged
substantially all of our assets, except our PCS
licenses, to secure our obligations under our
bank facility.
Change of Control......... Upon the occurrence of certain change of
control events, you may require us to repurchase
all or a portion of your notes at 101% of the
principal amount thereof, plus accrued and unpaid
interest.
Ranking..................... The notes:
o are unsecured obligations of Tritel PCS;
7
<PAGE>
o are senior in right of payment to existing
and future obligations expressly subordinated
in right of payment to the notes; and
o rank junior to all existing and future
senior debt.
The guarantees:
o are unsecured obligations of the guarantors;
o rank junior to all existing and future
senior debt of the guarantors; and
Because our license subsidiaries will not
guarantee the notes, the notes will be
structurally subordinated to all liabilities of
these subsidiaries, including trade payables.
As of June 30, 1999, you would have been
effectively subordinated to $63.8 million of
total liabilities of our subsidiaries.
Basic Indenture Covenants... The indenture governing the notes contains
covenants that, among other things, limit our
ability and the ability of our restricted
subsidiaries to:
o incur additional indebtedness;
o pay dividends, repurchase our capital stock,
make investments or make other restricted
payments;
o sell or exchange assets;
o engage in transactions with affiliates;
o issue or sell capital stock of restricted
subsidiaries;
o in the case of our restricted subsidiaries,
guarantee indebtedness;
o create liens securing indebtedness that is
pari passu with or subordinated to the notes
or the subsidiary guarantees;
o in the case of our restricted subsidiaries,
agree to certain payment restrictions; or
o engage in certain sale and leaseback
transactions or merge, consolidate or
transfer all or substantially all our assets
and the assets of our subsidiaries on a
consolidated basis.
These covenants are subject to important
exceptions and qualifications. See "Description
of the Notes--Certain Covenants."
8
<PAGE>
RISK FACTORS
Before tendering original notes, you should carefully read and think about
all of the information contained in this prospectus, especially the following
risk factors:
WE ARE A DEVELOPMENT STAGE COMPANY; WE HAVE NOT YET BEGUN COMMERCIAL PCS
OPERATIONS AND WE MAY NOT BE PROFITABLE AFTER WE DO
We are at an early stage of development and have no meaningful historical
financial information for you to evaluate. We will incur significant expenses
before generating revenues, and we expect to have significant operating losses
in our initial stages of operations.
We expect to grow rapidly while we develop and construct our PCS network
and build our customer base. We expect this growth to strain our financial
resources and result in operating losses and negative cash flows until at
earliest the end of 2001. We have not begun commercial PCS operations and,
therefore, have no revenues to fund expenditures. We have made cumulative cash
expenditures through June 30, 1999 of $105 million, primarily for capital
expenditures for the network buildout.
We cannot be certain of the timing and extent of revenue receipts and
expense disbursements. Also, we cannot be certain that we will achieve or
sustain profitability or positive cash flow from operating activities in the
future. If we do not achieve profitability or positive cash flow in a timely
manner and then sustain it, we may not be able to meet our working capital or
debt service requirements, including our obligations in respect of the notes.
Our future operating results over both the short and long term are
uncertain because of several factors, some of which are outside of our control.
These factors include:
o the significant cost of building our PCS network,
o the cost and availability of PCS infrastructure and subscriber
equipment, including tri-mode handsets,
o possible delays in introducing our services,
o fluctuating market demand and prices for our services,
o pricing strategies for competitive services,
o new offerings of competitive services,
o changes in federal, state and local legislation and regulations,
o the potential allocation by the FCC of additional PCS licenses or other
wireless licenses in our markets,
o technological changes, and
o general economic conditions.
OUR HIGHLY LEVERAGED CAPITAL STRUCTURE LIMITS OUR ABILITY TO OBTAIN ADDITIONAL
FINANCING AND COULD ADVERSELY AFFECT OUR BUSINESS IN SEVERAL OTHER WAYS
It will take substantial funds to complete the buildout of our PCS network
and to market and distribute our PCS products and services. We estimate that
our capital requirements, which include capital expenditures, the cost of
acquiring licenses, working capital, debt service requirements and anticipated
operating losses, will total approximately $1.0 billion for the period from our
inception through the end of 2001. This estimate assumes substantial completion
of the network buildout to cover 80% of our licensed Pops by the end of 2001.
We have expended approximately $105 million of these funds as of June 30, 1999.
9
<PAGE>
We are highly leveraged. As of June 30, 1999, we had $445.1 million of
total indebtedness outstanding, including debt owed to the FCC, which was
carried on our books at $41.4 million as of June 30, 1999 and was incurred in
connection with the acquisition of our C- and F-Block licenses, $200.0 million
outstanding under our bank facility and $203.7 million of the original notes at
their accreted value. This indebtedness represented approximately 69.3% of our
total capitalization at that date. At that date, we also had $69.1 million of
Series A 10% redeemable convertible preferred stock outstanding, which has not
been included in stockholders' equity in our financial statements.
Our large amount of indebtedness could significantly impact our business
for the following reasons:
o It limits our ability to obtain additional financing, if we need it, to
complete our network buildout, to cover our cash flow deficit or for
working capital, other capital expenditures, debt service requirements or
other purposes.
o Even though the notes will not pay cash interest for five years, we
will need to dedicate a substantial portion of our operating cash flow to
fund interest expense on our bank facility and other indebtedness,
thereby reducing funds available for our network buildout, operations or
other purposes.
o We are vulnerable to interest rate fluctuations because a significant
portion of our debt is at variable interest rates.
o It limits our ability to compete with competitors who are not as
highly leveraged.
o It limits our ability to react to changing market conditions, changes
in our industry and economic downturns.
Because the government financing incurred in connection with the
acquisition of our C- and F-Block licenses bears interest at a below-market
rate, our obligations under this government financing have been recorded in our
financial statements in accordance with generally accepted accounting
principles at its estimated fair market value of $41.4 million as of June 30,
1999, based on an estimated fair market borrowing rate of 10%. However, if the
government financing was declared immediately due and payable after a default,
the amount payable would be $47.5 million plus accrued interest of $1.1 million
as of June 30, 1999.
On July 31, 1998, we were required to begin quarterly installment payments
for interest on our C- and F-Block license debt. We will be required to make
quarterly installment payments for principal on our F-Block license debt
beginning January 31, 2000, and on our C-Block license debt beginning January
31, 2003.
If we default on the government financing or otherwise violate FCC
regulations, the FCC could take a variety of actions, including:
o requiring immediate repayment of all amounts due under the government
financing or repayment of amounts relating to our receipt of bidding
credits totaling $18.0 million,
o revoking some or all of our licenses and fining us an amount equal to
the difference between the price at which we acquired the licenses and
the amount of the winning bid at their re-auction, plus an additional
penalty of 3% of the lesser of the subsequent winning bid and our bid
amount. It is possible that we will default on the government financing
and, if we do, the FCC could take any of these actions. If the FCC were
to do so, we could default on our obligations to our other creditors,
including our bank lenders and you.
We believe we have taken steps to comply with and prevent violation of
these regulatory requirements, but it is possible that our ownership and
control structure will be challenged. If any challenges are successful, we
could be required to restructure or recapitalize, and possibly forfeit our C-
and F-Block PCS licenses. If we fail to maintain our designated entity status,
we may face less favorable payment schedules or the acceleration of payments
due under the government financing, or
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our licenses may be revoked. The inability of non-control group stockholders to
gain control of Tritel could negatively impact our ability to attract
additional capital. This control requirement may also discourage certain
transactions involving an actual or potential change of control of Tritel.
Our ability to pay interest on the notes beginning in 2004 and to satisfy
our other debt obligations will depend upon our future operating performance.
Prevailing economic conditions and financial, business and other factors, many
of which are beyond our control, will affect our ability to make these
payments. If, in the future, we cannot generate sufficient cash flow from
operations to make scheduled payments on the notes or to meet our other
obligations, we will need to refinance our indebtedness, obtain additional
financing or sell assets. We cannot be certain that our business will generate
cash flow, or that we will be able to obtain funding sufficient to satisfy our
debt service requirements.
ADDITIONAL FUNDING MAY BE REQUIRED BUT UNAVAILABLE TO US
Our actual capital needs may be greater than we currently anticipate.
Moreover, we may not generate enough cash flow to fund our operations in the
absence of other funding sources. We may require additional funding if certain
developments occur, including if:
o the costs of the buildout of our PCS network are greater than
anticipated,
o the acquisition costs of subscribers is higher than expected,
o other operating costs exceed management's estimates,
o we take advantage of license or market acquisition opportunities,
including those that may arise through future FCC auctions,
o the level of our revenues from subscribers is lower than anticipated,
or
o the number of subscribers is greater than anticipated, leading to
greater than anticipated handset costs and other subscriber acquisition
and operating costs.
In addition, we would require substantial additional funding if AT&T
Wireless does not exercise its option to purchase PCS licenses covering
approximately 2.0 million Pops in Florida and southern Georgia and we then
determine that we will build out these markets ourself.
We have no revenues at this point. Sources of future financing may include
equipment vendors, bank financing and the public or private debt and equity
markets. Additional required financing may be unavailable to us or it may not
be available on terms acceptable to us and consistent with any limitation under
our outstanding indebtedness or FCC regulations. If we are unable to obtain
such financing it could result in the delay or reduction of our development and
construction plans and could result in our failure to meet certain FCC buildout
requirements and our debt service obligations.
BECAUSE OUR RELATIONSHIP WITH AT&T WIRELESS MAY BE TERMINATED IN CERTAIN
CIRCUMSTANCES, WE MAY LOSE, AMONG OTHER THINGS, THE RIGHT TO USE THE AT&T BRAND
NAME
Our business strategy depends on our relationship with AT&T Wireless. We
are depending on co-branding, roaming and service relationships with them under
our joint venture agreements with them, that are central to our business plan.
The AT&T Wireless agreements create an organizational and operational structure
that defines the relationship between AT&T Wireless and us. Because of our
dependence on this relationship, it is important for you to understand that
there are circumstances in which AT&T Wireless can terminate our right to use
their brand name, as well as other important rights under the joint venture
agreements, if we violate the terms of the joint venture agreements or if
certain other events occur.
AT&T Wireless can terminate our license to use the AT&T brand name,
designation as a member of the AT&T Wireless Network, or use of other AT&T
service marks if we fail to meet AT&T Wireless's quality standards, violate the
terms of the license or otherwise breach one of the
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AT&T Wireless agreements. AT&T Wireless has also retained the right to
terminate its relationship with us in the event of a "Disqualifying
Transaction," as defined in the section headed "Joint Venture Agreements With
AT&T Wireless," which is in essence, a major financial transaction involving
AT&T Corp. and another entity that owns FCC mobile wireless licenses covering
at least 25% of our Pops. The exercise by AT&T Wireless of any of these rights,
or other rights described in the AT&T Wireless agreements, could significantly
and materially affect our operations, future prospects and results of
operations.
OUR RELATIONSHIP WITH AT&T WIRELESS MAY RESULT IN A CONFLICT OF INTEREST
Our interests and those of AT&T Wireless may conflict, and there can be no
assurance that any conflict will be resolved in our favor. Under a
stockholders' agreement, AT&T Wireless has the right to designate two of the
thirteen directors on our Board and approve the selection of three other
director nominees. AT&T Wireless owes no duty to us except to the extent
expressly set forth in the joint venture agreements. Officers and directors
generally do not have fiduciary duties to holders of debt securities such as
the notes.
WE FACE INTENSE COMPETITION FROM OTHER PCS AND CELLULAR PROVIDERS AND FROM
OTHER TECHNOLOGIES
There are two established cellular providers in each of our markets. These
providers have significant infrastructure in place, often at low historical
cost, have been operational for many years, have substantial existing
subscriber bases and have substantially greater capital resources than we do.
In addition, in most of our markets, there are at least three PCS providers
currently offering commercial service or likely to begin offering service
before we will. We will also face competition from paging, dispatch and
conventional mobile radio operations, specialized mobile radio, called SMR and
enhanced specialized mobile radio, called ESMR, including those ESMR networks
operated by Nextel Communications and its affiliates in our markets. We will
also be competing with resellers of wireless services. We expect competition in
the wireless telecommunications industry to be dynamic and intense as a result
of the entrance of new competition and the development and deployment of new
technologies, products and services.
In the future, cellular and PCS providers will also compete more directly
with traditional landline telephone service operators, and may compete with
services offered by energy utilities, and cable and wireless cable operators
seeking to offer communications services by leveraging their existing
infrastructure. Additionally, continuing technological advances in
telecommunications, the availability of more spectrum and FCC policies that
encourage the development of new spectrum-based technologies make it impossible
to accurately predict the extent of future competition.
The viability of our PCS business will depend upon, among other things,
our ability to compete, especially with respect to price, reliability, quality
of service and availability of voice and data features. In addition, our
ability to maintain the pricing of our services may be limited by competition,
including the entry of new service providers in our markets.
BECAUSE WE DEPEND ON EQUIPMENT AND SERVICE VENDORS TO BUILD OUT OUR PCS
NETWORK, WE CANNOT BE CERTAIN THAT OUR PCS NETWORK WILL BE BUILT OUT IN A
TIMELY AND COST-EFFECTIVE MANNER
Our future financial condition depends on our ability to build out rapidly
and then operate a commercial PCS network in our markets. To do so effectively
will require the timely delivery of infrastructure equipment for use in our
cell sites and switching offices, as well as handsets. There is considerable
demand for PCS infrastructure equipment that may result in substantial backlogs
of orders and long lead times for delivery of certain types of equipment.
Although we have entered into an exclusive equipment supply agreement with
Ericsson for the purchase of at least $300.0 million of certain equipment and
services related to the buildout of our PCS system over a five-year period, we
cannot be certain that we will receive this equipment in the quantities that
are needed to complete the buildout in our markets. If we do not receive this
equipment on time, then we will be unable to begin our PCS operations on
schedule. Because of our
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exclusive arrangements with Ericsson, our ability to adhere to our buildout
schedule will depend significantly on the ability of Ericsson to deliver its
equipment in a timely fashion. We cannot be certain that Ericsson or any other
vendor will be able to provide us with the equipment to build out our markets
in a timely and cost-effective manner. The termination of the Ericsson
agreement or the failure of any of the vendors to perform under any supply
agreement would adversely affect our ability to begin operations as planned.
In addition to equipment vendors, we depend on our service vendors for
radiofrequency engineering services, site acquisition services and
build-to-suit site construction services. If any of these service vendors fail
to perform on schedule, we may not be able to begin our PCS operations on
schedule.
We anticipate that our subscribers will access wireless services in our
markets and throughout the AT&T Wireless Network by using tri-mode handsets.
Two companies worldwide, Ericsson and Nokia Corporation, currently manufacture
and supply IS-136 TDMA tri-mode handsets in commercial quantities. Other
manufacturers are expected to supply tri-mode handsets in commercial quantities
by the end of 1999. If our vendors fail to supply these handsets when expected,
we will be required to delay our launch of service or offer our customers
handsets without tri-mode capabilities. Without tri-mode handsets, our
customers will not be able to roam on both analog cellular and digital cellular
systems. While we believe we will be able to purchase tri-mode handsets in
sufficient quantity to launch our service as planned, we may be unable to
obtain such handsets from our vendors in the quantities or at the prices we
expect. In that event, our service, our business and our operating results
could be adversely affected.
WE MAY BE UNABLE TO BUILD OUT OUR PCS NETWORK OR PROVIDE PCS SERVICE IN CERTAIN
OF OUR MARKETS
If we are unable to implement our construction plan, we may also be unable
to provide, or may be delayed in providing, PCS service in certain of our
markets. To construct our PCS network, we must first complete the design of the
network, acquire, purchase and install equipment, test the network and relocate
or otherwise accommodate microwave users currently using the spectrum.
Construction of our PCS network will also depend, to a significant degree, on
our ability to lease or acquire sites for the location of our transmission
equipment.
In areas where we are unable to co-locate our transmission equipment on
existing facilities, we will need to negotiate lease or acquisition agreements,
which may involve competitors as counterparties. In many cases, we will be
required to obtain zoning variances and other governmental approvals or
permits. In addition, because of concern over radiofrequency emissions and
tower appearance, local governments, including one city within our markets,
Knoxville, Tennessee, affecting approximately four cell sites, have instituted
moratoria on further construction of antenna sites until the respective health,
safety and historic preservation aspects of this matter are studied further.
Accordingly, we may be unable to construct our PCS network in any particular
market in accordance with our current construction plan and schedule. As a
result, our growth may be limited, our market entry may be delayed and the
costs of building out new markets may increase. Any one of these factors would
be likely to adversely affect our future operating performance in such markets.
THE TECHNOLOGY CHOSEN BY US MAY BECOME OBSOLETE
The wireless telecommunications industry is experiencing significant
technological changes, as evidenced by the increasing pace of digital
installations in existing analog cellular systems, evolving industry standards,
ongoing improvements in the capacity and quality of digital technology, shorter
development cycles for new products and enhancements, and changes in consumer
requirements and preferences. To remain competitive, we must develop or gain
access to new technologies in order to increase product performance and
functionality and to increase cost-effectiveness. Given the emerging nature of
the PCS industry, alternative technological and service advancements could
materialize in the future and prove viable, which could render the technology
employed by us, such as IS-136 TDMA, obsolete. The development of alternative
technologies could have a material adverse effect on our business and operating
results.
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OUR DIGITAL PCS TECHNOLOGY MAY NOT GAIN CUSTOMER ACCEPTANCE
Three standards are currently being used by PCS providers in the United
States: IS-136 TDMA, CDMA and GSM. Although all three standards are digital
transmission technologies and thus share certain basic characteristics and
contrasts to analog transmission technology, they are not compatible or
interchangeable with each other.
To roam in other markets where no PCS licensee utilizes the IS-136 TDMA
standard, our subscribers must utilize tri-mode handsets to use an analog or
digital cellular system in such markets. Generally, tri-mode handsets are more
expensive than single- or dual-mode handsets. The higher cost of these handsets
may impede our ability to attract subscribers or achieve positive cash flow as
planned.
It is anticipated that CDMA-based PCS providers will own licenses covering
virtually all of the United States population. Other PCS providers have
deployed GSM technology in many of our markets. GSM is the prevalent standard
in Europe.
It is possible that in the future a digital transmission technology other
than IS-136 TDMA may gain acceptance in the United States sufficient to affect
adversely the resources currently devoted by vendors to improving IS-136
digital cellular technology. Any differences that may from time to time exist
between the technology deployed by the other wireless telecommunications
service providers, such as CDMA, GSM or other transmission technology standards
that may be developed in the future, may affect customer acceptance of the
services we offer. If subsequent to our deployment of IS-136 TDMA, consumers
perceive that another technology has marketplace advantages over IS-136 TDMA,
we could experience a competitive disadvantage or be forced to implement that
technology at substantially increased cost.
WE EXPECT TO HAVE INCREASED OPERATING COSTS DUE TO THIRD-PARTY FRAUD
As do most companies in the wireless industry, we will likely incur costs
associated with the unauthorized use of our network, including administrative
and capital costs associated with detecting, monitoring and reducing the
incidence of fraud. Fraud impacts interconnection costs, capacity costs,
administrative costs, fraud prevention costs and payments to other carriers for
unbillable fraudulent roaming.
USE OF WIRELESS HANDSETS MAY POSE HEALTH AND SAFETY RISKS
Media reports have suggested that, and studies are currently being
undertaken to determine whether, radiofrequency emissions from cellular and PCS
wireless handsets may be linked with health risks, including cancer, and
interference with various electronic medical devices, including hearing aids
and pacemakers. It is possible that the findings of these studies will
adversely affect our business or will lead to government regulations that will
adversely affect our business.
Concerns over radiofrequency emissions may discourage the use of wireless
communications devices, such as PCS handsets, which could adversely affect our
business. In addition, the FCC requires that certain transmitters, facilities,
operations, and mobile and portable transmitting devices used in PCS handsets
meet specific radiofrequency emission standards. Compliance with any new
restrictions could materially increase our costs. Concerns about radiofrequency
emissions may affect our ability to obtain licenses from government entities
necessary to construct microwave sites in certain locations.
Separately, measures that would require hands free use of mobile phones
while operating motor vehicles have been proposed or are being considered in
legislatures in Connecticut, Hawaii, Illinois, Maryland, New York and Ohio,
among other states. Although no state has enacted a law barring the use of
mobile phones, California requires rental cars with mobile phones to include
written operating instructions concerning safe use, Florida permits mobile
phone use as long as the motorist has one ear free to hear surrounding sound
and Massachusetts allows mobile phone use as long as it does not interfere with
the safe operation of the vehicle and as long as the motorist keeps one hand on
the steering wheel at all times.
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We cannot predict the success of the proposed laws concerning hands free
car phone use or the effect on usage of mobile phones as a result of the
publicity surrounding the consideration or passage of such laws. In addition,
more restrictive measures or measures aimed at wireless services companies as
opposed to users may be proposed or passed in state legislatures in the future.
The proliferation of such legislation could materially adversely affect us.
OUR FCC LICENSES MAY BE REVOKED UNDER CERTAIN CIRCUMSTANCES
Our principal assets are PCS licenses issued by the FCC. The FCC has
imposed certain requirements on its licensees, including PCS operators. For
example, PCS licenses may be revoked by the FCC at any time for cause,
including failure to comply with the terms of the licenses, a violation of FCC
regulations, failure to continue to qualify for the licenses, malfeasance or
other misconduct. The loss of any license, or an action that threatens the loss
of any license, would have a material adverse effect on our business and our
operating results. We have no reason, however, to believe that any of our
licenses will be revoked or will not be renewed.
C- and F-Block License Requirements. The FCC imposed certain additional
restrictions on its C- and F-Block licenses. Participants in the C- and F-Block
auctions, including our predeccessors, Airwave Communications and Digital PCS,
which contributed our C- and F-Block licenses to us, were subject to certain
requirements to qualify as an entrepreneur, as defined by the FCC. In addition,
because Airwave Communications and Digital PCS qualified as small businesses,
as defined by the FCC at the time of the C-Block auction and very small
businesses, as defined by the FCC at the time of the F-Block auction, they
received substantial bidding credits and became entitled to pay a large portion
of the net purchase price for their licenses over a ten-year period at special
interest rates and terms, including making payments of interest only for a
period of time.
With respect to the C- and F-Block licenses, we believe that Airwave
Communications and Digital PCS satisfied the FCC's eligibility requirements for
those licenses. We intend to maintain diligently our qualification for those
licenses. If we do not comply with FCC rules, the FCC could fine us, revoke our
PCS licenses or require a restructuring of our equity. Any of these events
could adversely affect our business and financing.
Network Buildout Requirements. All PCS licenses, including those
contributed to us by AT&T Wireless, Airwave Communications and Digital PCS, are
subject to the FCC's buildout requirements. We have developed a buildout plan
that meets all FCC requirements. However, we may be unable to meet our buildout
schedule. If there are delays in implementing our network buildout, the FCC
could reassess our authorized service area or, in extreme cases, it may revoke
our licenses or impose fines.
Foreign Ownership Limitations. The current restrictions on foreign
ownership could adversely affect our ability to attract additional equity
financing from entities that are, or are owned by, foreign interests. We
believe that we do not have foreign ownership in excess of applicable limits.
However, if our foreign ownership were to exceed the then-applicable limits in
the future, the FCC could revoke our PCS licenses or order an ownership
restructuring.
BECAUSE WE FACE BROAD AND EVOLVING GOVERNMENT REGULATION WE MAY HAVE TO MODIFY
OUR BUSINESS PLANS OR OPERATIONS IN THE FUTURE
The licensing, construction, operation, sale and interconnection
arrangements of wireless telecommunications systems are regulated to varying
degrees by the FCC, Congress and state and local regulatory agencies. This
regulation is continually evolving. There are a number of issues as to which
regulation has been or in the future may be introduced, including interference
between different types of wireless telecommunications systems and the effect
of wireless telecommunications equipment on medical equipment and devices. As
new regulations are promulgated on these or other subjects, we may be required
to modify our business plans or operations to comply with any new regulations.
It is possible that the FCC, Congress or any state or local regulatory agency
having jurisdiction over our business will adopt or change regulations or take
other actions that could adversely affect our business and our operating
results.
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The Telecommunications Act of 1996 mandated significant changes in
existing regulation of the telecommunications industry to promote competitive
development of new service offerings, to expand public availability of
telecommunications services and to streamline regulation of the industry.
Nevertheless, the implementation of these mandates by the FCC and state
authorities will involve numerous changes in established rules and policies
that could adversely affect our business.
The government financing for C- and F-Block licenses is evidenced by an
FCC installment payment plan note and a security agreement for each license we
acquired in the C- and F-Block auctions. Terms and conditions of the FCC notes
have not yet been definitively interpreted, including, among other things,
matters involving collateral and the assignability of PCS licenses.
IF WE FAIL TO SATISFY FCC CONTROL GROUP REQUIREMENTS WE MAY LOSE OUR C- AND
F-BLOCK LICENSES
To retain the C- and F-Block licenses and the favorable government
financing granted to us, we must maintain our designated entity status as an
entrepreneur and small business or very small business. To maintain all of the
benefits of our designated entity status, our control group and qualifying
investors must retain certain minimum stock ownership and control of our voting
stock, as well as legal and actual control of us for ten years from the date of
grant of our C- and F-Block PCS licenses. The FCC has indicated that it will
not rely solely on legal control in determining whether the control group and
its qualifying investors are truly in control of an entity. Even if the control
group and the qualifying investors hold the requisite percentages of equity and
voting control, the FCC may still inquire to determine whether actual control
exists.
OUR SUBSIDIARIES' GUARANTEES OF THE NOTES MAY BE VOID UNDER CERTAIN
CIRCUMSTANCES
We are a holding company with no direct operations and no significant
assets other than the
stock of our subsidiaries. We will depend on funds from our subsidiaries to
meet our obligations, including cash interest payments on the notes beginning
in 2004. Our operating subsidiary, Tritel Communications, Inc., and our finance
subsidiary, Tritel Finance, Inc., will guarantee our obligations under the
notes and all of our future subsidiaries, other than subsidiaries whose primary
business is to hold PCS licenses and subsidiaries owning those subsidiaries,
may be required to guarantee the notes. You may need to be able to enforce the
subsidiary guarantees to recover your investment in the notes.
The issuance of a subsidiary guarantee may be subject to review under
federal or state fraudulent conveyance laws in the event of the bankruptcy or
other financial difficulty of the subsidiary guarantor. Although laws differ
among various jurisdictions, in general under fraudulent conveyance laws, a
court could subordinate or avoid a guarantee if it found that:
o the debt under the subsidiary guarantee was incurred with actual intent
to hinder, delay or defraud creditors, or
o the subsidiary guarantor did not receive fair consideration or
reasonably equivalent value for its subsidiary guarantee and the
subsidiary guarantor:
o was insolvent or rendered insolvent because of its subsidiary
guarantee,
o was engaged in a business or transaction for which its remaining
assets constituted unreasonably small capital, or
o intended to incur, or believed that it would incur, debts beyond its
ability to pay upon maturity.
A court is likely to find that a subsidiary guarantor did not receive fair
consideration or reasonably equivalent value for its subsidiary guarantee to
the extent that its liability under the subsidiary guarantee is greater than
the direct benefit it received from the issuance of the notes. By its terms,
each subsidiary guarantee will limit the liability of the subsidiary guarantor
to the maximum amount that it could pay without the subsidiary guarantee being
deemed a fraudulent transfer. A court may not give effect to this limitation on
liability. In this event, a court may find that the issuance of the subsidiary
guarantee rendered the subsidiary guarantor insolvent. If a court voided the
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guarantee or held it unenforceable, holders of notes would cease to have a
claim against that subsidiary guarantor and would be solely creditors of our
company and any remaining guarantors. If a court were to give effect to this
limitation on liability, the amount that the subsidiary guarantor, whose
liability was so limited, would be found to have guaranteed might be so low
that there would not be sufficient funds to pay the notes in full.
YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES AND GUARANTEES IS JUNIOR TO
PAYMENTS ON SENIOR INDEBTEDNESS AND TO OUR SECURED OBLIGATIONS
The notes will be subordinated to all our present and future senior debt
and the parent and subsidiary guarantees will be subordinated to all present
and future senior debt of the guarantors. The notes will not be secured by any
of our assets. Our obligations under our bank facility are guaranteed by our
parent and all of our subsidiaries and are secured by substantially all of our
assets and the assets of our parent and our subsidiaries other than our PCS
licenses. Certain of our PCS licenses are subject to liens securing our debt to
the FCC.
If we were to become insolvent or were to be liquidated, or if the banks
were to accelerate our payments under our bank facility, our assets would be
available to pay obligations on the notes only after all payments had been made
on our secured and other senior debt. Similarly, if any guarantor were to
become insolvent or were to be liquidated, its assets would be available to pay
obligations on the notes only after all payments had been made on its secured
and senior debt. In any such event, we cannot assure you that sufficient assets
would remain to make any payments on the notes.
Not all of our subsidiaries will guarantee the notes. In the event of a
bankruptcy, liquidation, dissolution, reorganization or similar proceeding with
respect to any of these subsidiaries, the assets of these non-guarantor
subsidiaries will be available to pay obligations on the notes only after all
outstanding liabilities, including trade payables, of these subsidiaries have
been paid in full. As of June 30, 1999, the total liabilities of these
subsidiaries would have been approximately $63.8 million.
BECAUSE A SIGNIFICANT PORTION OF OUR ASSETS ARE INTANGIBLE THEY MAY HAVE LITTLE
VALUE UPON A LIQUIDATION
Our assets consist primarily of intangible assets, principally FCC
licenses, the value of which will depend significantly upon the success of our
PCS network business and the growth of the PCS and wireless communications
industries in general. If we default on our indebtedness or upon our
liquidation, the value of these assets may not be sufficient to satisfy our
obligations. We had a net tangible book value deficit of $259.6 million
attributable to Tritel's common stock as of June 30, 1999.
YEAR 2000 ISSUES COULD CAUSE INTERRUPTION OR FAILURE OF OUR COMPUTER SYSTEMS
We use a significant number of computer systems and software programs in
our operations, including applications used in support of our PCS network
equipment and various administrative functions. Although we believe that our
computer systems and software applications contain source code that is able to
interpret appropriately dates after December 31, 1999, our failure to make or
obtain necessary modifications to our systems and software could result in
systems interruptions or failures that could have a material adverse effect on
our business.
We do not anticipate that we will incur material expenses to make our
systems Year 2000 compliant. However, unanticipated costs necessary to avoid
potential systems interruptions could exceed our present expectations and
consequently have a material adverse effect on our business. In addition, if
our key equipment and service providers fail to make their respective computer
systems and software programs Year 2000 compliant, then such failure could have
a material adverse effect on our business. See "Management's Discussion and
Analysis -- Year 2000."
YOU MAY HAVE TO INCLUDE INTEREST IN YOUR TAXABLE INCOME BEFORE YOU RECEIVE CASH
PAYMENTS
The notes will be issued at a substantial discount from their principal
amount at maturity. Consequently, you will generally be required to include
amounts in your gross income for federal income tax purposes before you receive
the cash payments attributable to that income. See "Certain Federal Income Tax
Considerations."
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In the event of our bankruptcy, your claim may be limited to the issue
price, as determined by the bankruptcy court, plus the accrued portion of the
original issue discount at the date of the bankruptcy filing. To the extent
that the federal bankruptcy laws differ from the Internal Revenue Code in
determining the method of amortization of original issue discount, you may
realize taxable gain or loss upon payment of your claim in bankruptcy.
WE ARE NOT OBLIGATED TO NOTIFY YOU OF UNTIMELY OR DEFECTIVE TENDERS OF
OUTSTANDING NOTES.
We will issue registered notes pursuant to this exchange offer only after
a timely receipt of your outstanding notes, a properly completed and duly
executed letter of transmittal and all other required documents. Therefore, if
you want to tender your outstanding notes, please allow sufficient time to
ensure timely delivery. We are under no duty to give notification of defects or
irregularities with respect to the tenders of outstanding notes for exchange.
AN ACTIVE TRADING MARKET FOR THE NOTES MAY NOT DEVELOP.
The outstanding notes were not registered under the Securities Act nor
under the securities laws of any state and may not be resold unless they are
subsequently registered or an exemption from the registration requirements of
the Securities Act and applicable state securities laws is available. The
registered notes will be registered under the Securities Act, but will
constitute a new issue of securities with no established trading market, and
there can be no assurance as to:
o the liquidity of any such market that may develop;
o the ability of registered note holders to sell their notes; or
o the price at which the registered note holders would be able to sell
their notes.
If such a market were to exist, the registered notes may trade at higher
or lower prices than their principal amount or purchase price, depending on
many factors, including prevailing interest rates, the market for similar
debentures and the financial performance of Tritel PCS.
The notes are designated for trading among qualified institutional buyers
in The Portal Market. We understand that certain of the Initial Purchasers
presently intend to make a market in the notes. However, they are not obligated
to do so, and any market-making activity with respect to the notes may be
discontinued at any time without notice. In addition, such market-making
activity will be subject to the limits imposed by the Securities Act and the
Securities Exchange Act of 1934, and may be limited during the exchange offer
or the pendency of an applicable shelf registration statement. There can be no
assurance that an active trading market will exist for the notes or that such
trading market will be liquid.
Notes that are not tendered or are tendered but not accepted will,
following the consummation of the exchange offer, continue to be subject to the
existing restrictions upon transfer, and, upon consummation of the exchange
offer, certain registration rights with respect to the outstanding notes will
terminate. In addition, any outstanding note holder who tenders in the exchange
offer for the purpose of participating in a distribution of the registered
notes may be deemed to have received restricted securities, and if so, will be
required to comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any resale transaction. To the extent
that outstanding notes are tendered and accepted in the exchange offer, the
trading market for untendered and tendered but unaccepted outstanding notes
could be adversely affected.
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INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements, including statements
regarding, among other items:
o future earnings and other operating results,
o the estimated cost and timing of our network buildout,
o competition and
o prospects and trends of the wireless industry.
Other statements contained in this prospectus are forward-looking
statements and are not based on historical fact, such as statements containing
the words "believes," "may," "will," "estimates," "continue," "anticipates,"
"intends," "expects" and words of similar import.
These forward-looking statements are subject to risks, uncertainties and
assumptions, including those discussed in "Risk Factors," "Management's
Discussion and Analysis," "Business" and elsewhere in this prospectus.
Actual results may differ materially from those projected. We believe that
our estimates are reasonable; but you should not unduly rely on these
estimates, which are based on our current expectations. We undertake no
obligation to update any forward-looking statement or statements to reflect
events or circumstances after the date on which such statement is made or to
reflect the occurrence of unanticipated events. New factors emerge from time to
time, and it is not possible for us to predict all of these factors. Further,
we cannot assess the impact of each such factor on our business or the extent
to which any factor, or combination of factors, may cause actual results to be
materially different from those contained in any forward-looking statements. We
make no representation, warranty (express or implied) or assurance as to the
completeness or accuracy of these projections and, accordingly, neither express
an opinion or any other form of assurance regarding them.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Commission a registration statement on Form S-4 to
register the new notes being offered in this prospectus. This prospectus, which
forms part of the registration statement, does not contain all of the
information included in the registration statement. For further information
about Tritel PCS and the registered notes offered in this prospectus, you
should refer to the registration statement and its exhibits.
Our Commission filings are available to the public over the internet at
the Commission's web site at http://www.sec.gov/. You also may read and copy
any document we file at the Commission's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. These documents also are available at the
public reference rooms at the Commission's regional offices in New York, New
York and Chicago, Illinois. Please call the Commission at 1-800-SEC0330 for
further information on the public reference rooms.
While any original notes remain outstanding, we will make available, upon
request, to any holder and any prospective purchaser of original notes the
information required pursuant to Rule 144A(d)(4) under the Securities Act
during any period in which we are not subject to Section 13 or 15(d) of the
Exchange Act. Written requests for such information should be directed to
Tritel, Inc., 111 E. Capitol Street, Suite 500, Jackson, Mississippi 39201,
Attention: Corporate Secretary.
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<PAGE>
USE OF PROCEEDS
Tritel PCS will not receive any cash proceeds from the issuance of the
registered notes in exchange for the outstanding notes. In consideration for
issuing the registered notes, Tritel PCS will receive outstanding notes in like
original principal amount at maturity. Outstanding notes received in the
exchange offer will be cancelled.
The net proceeds to Tritel PCS from the offering of the original notes
were approximately $191.0 million after deducting the discount payable to the
Initial Purchasers and the estimated offering expenses. The net proceeds of
that offering, together with the cash proceeds received by Tritel, Inc. from
the sale of its equity and funds drawn under Tritel PCS's bank facility, will
be used to cover each of the following through the end of 2001, when Tritel PCS
anticipates that it will have substantially completed the planned buildout of
its network and will have achieved positive cash flow from operations:
o approximately $529.9 million for Tritel PCS's capital expenditures,
including the buildout of its PCS network,
o approximately $125.2 million for cash interest and to cover financing
fees and expenses,
o approximately $192.9 million for acquisition of PCS licenses and
intangible assets, and
o approximately $174.1 million for working capital, including operating
cash flow losses.
20
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of Tritel,
Inc. as of June 30, 1999. The following table should be read in conjunction
with Tritel, Inc.'s consolidated financial statements and accompanying notes
thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1999
---------------
(IN THOUSANDS)
<S> <C>
Cash, cash equivalents and restricted cash .................................... $ 398,262
=========
Long-term debt:
Bank facility(a) ............................................................. $ 200,000
FCC debt(b) .................................................................. 41,430
Senior Subordinated Discount Notes ........................................... 203,656
---------
Total long-term debt ...................................................... 445,086
---------
Series A 10% redeemable convertible preferred stock(c) ........................ 90,668
Adjustment to fair value ...................................................... (21,559)
---------
Total Series A redeemable preferred stock(d) .............................. 69,109
Stockholders' equity(c):
Preferred Stock, par value -- $.01 per share; authorized 1,500,000 shares:
Series B Preferred Stock, no shares issued and outstanding ................ --
---------
Series C Preferred Stock, 184,233 shares issued and outstanding ........... 124,912
---------
Series D Preferred Stock, 46,374 shares issued and outstanding ............ 46,374
Adjustment to fair value .................................................. (11,278)
---------
Total Series D preferred stock(d) ....................................... 35,096
---------
Common Stock, par value -- $.01 per share; authorized 3,040,009 shares;
40,705 shares issued and outstanding ....................................... --
Deficit accumulated during the development stage ............................. (31,914)
---------
Total stockholders' equity ................................................. 128,094
=========
Total capitalization ...................................................... $ 642,289
=========
</TABLE>
- ----------
(a) See Note 20 to the Consolidated Financial Statements.
(b) The aggregate face amount of the FCC debt is $47.5 million, but this
debt is recorded in Tritel's financial statements at a discount to
reflect favorable financing terms.
(c) See Note 10 to the Consolidated Financial Statements.
(d) See the Consolidated Balance Sheets and related Notes.
21
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data for the periods indicated have been
derived from the Consolidated Financial Statements of Tritel, Inc. which
statements, except for the six-month periods ended June 30, 1998 and 1999, the
related balance sheet data as of June 30, 1999 and the period from inception to
June 30, 1999, have been audited by KPMG Peat Marwick LLP, independent
certified public accountants, whose report thereon, other than operations for
the period from inception through December 31, 1995 and balance sheets at
December 31, 1995 and 1996, appears elsewhere in this prospectus. The unaudited
financial data referred to above includes, in the opinion of management, all
necessary adjustments required for a fair presentation of such data. The
results of operations for the six months ended June 30, 1999 are not
necessarily indicative of results to be anticipated for the entire year. The
selected financial data should be read in conjunction with "Management's
Discussion and Analysis" and the Consolidated Financial Statements and notes
thereto of Tritel included elsewhere in this prospectus.
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION TO
DECEMBER 31, YEARS ENDED DECEMBER 31,
-------------- -------------------------------------
1995 1996 1997 1998
-------------- ----------- ----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues ...................... $ -- $ -- $ -- $ --
------ -------- -------- ---------
Operating expenses:
Plant expenses ................ -- 4 104 1,939
General and administrative..... 121 1,481 3,123 4,947
Other operating expenses ...... -- 7 48 800
------ -------- -------- ---------
Total operating expense ...... 121 1,492 3,275 7,686
------ -------- -------- ---------
Operating loss ................ (121) (1,492) (3,275) (7,686)
Interest income ............... 1 31 121 77
Interest expense and
financing cost ............... -- -- -- (722)
------ -------- -------- ---------
Loss before extraordinary
item and income taxes ....... (120) (1,461) (3,154) (8,331)
Extraordinary item --
Loss on return of spectrum..... -- -- -- (2,414)
------ -------- -------- ---------
Loss before income taxes...... (120) (1,461) (3,154) (10,745)
Income tax benefit ............ -- -- -- --
------ -------- -------- ---------
Net loss ..................... $ (120) $ (1,461) $ (3,154) $ (10,745)
====== ======== ======== =========
<CAPTION>
CUMULATIVE CUMULATIVE
AMOUNTS SIX MONTHS AMOUNTS
SINCE INCEPTION, ENDED SINCE INCEPTION,
AT DECEMBER 31, JUNE 30, AT JUNE 30,
------------------ ------------------------ -----------------
1998 1998 1999 1999
------------------ ----------- ------------ -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues ...................... $ -- $ -- $ -- $ --
--------- -------- --------- ---------
Operating expenses:
Plant expenses ................ 2,047 111 3,946 5,993
General and administrative..... 9,672 1,616 7,204 16,876
Other operating expenses ...... 855 33 5,122 5,977
--------- -------- --------- ---------
Total operating expense ...... 12,574 1,760 16,272 28,846
--------- -------- --------- ---------
Operating loss ................ (12,574) (1,760) (16,272) (28,846)
Interest income ............... 230 27 5,332 5,562
Interest expense and
financing cost ............... (722) -- (7,334) (8,056)
--------- -------- --------- ---------
Loss before extraordinary
item and income taxes ....... (13,066) (1,733) (18,274) (31,340)
Extraordinary item --
Loss on return of spectrum..... (2,414) -- -- (2,414)
--------- -------- --------- ---------
Loss before income taxes...... (15,480) (1,733) (18,274) (33,754)
Income tax benefit ............ -- -- 6,036 6,036
--------- -------- --------- ---------
Net loss ..................... $ (15,480) $ (1,733) $ (12,238) $ (27,718)
========= ======== ========= =========
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------------------------------- ----------
1995 1996 1997 1998 1999
-------- ---------- ----------- ----------------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents .......................... $ 400 $ 32 $ 1,763 $ 846 $393,101
Other current assets ............................... 4,501 5,000 285 960 2,631
Property and equipment, net ........................ -- 10 13 13,816 60,686
FCC licensing costs ................................ 40 62,503 99,425 71,466 (1) 158,893
Intangible assets .................................. -- -- -- -- 38,857
Other assets ....................................... 3 186 1,027 1,933 42,877
------ ------- -------- --------- --------
Total assets ....................................... $4,944 $67,731 $102,513 $ 89,021 $697,045
====== ======= ======== ========= ========
Total current liabilities .......................... $3,425 $ 8,553 $ 8,425 $ 32,911 $ 7,345
Long-term debt ..................................... -- 53,504 77,200 51,599 (2) 445,086
Other non-current liabilities ...................... -- -- 8,126 6,494 47,411
Total Series A redeemable preferred stock .......... -- -- -- -- 69,109
Total stockholders' equity (deficit) ............... 1,519 5,674 8,762 (1,983) 128,094
------ ------- -------- --------- --------
Total liabilities and stockholders' equity ......... $4,944 $67,731 $102,513 $ 89,021 $697,045
====== ======= ======== ========= ========
OTHER FINANCIAL DATA:
Ratio of earnings to fixed charges ................. -- -- -- -- --
</TABLE>
- ----------
(1) See Note 5 to the consolidated financial statements.
(2) See Note 8 to the consolidated financial statements.
For purposes of determining the ratio of earnings to fixed charges,
earnings are defined as income before income taxes plus fixed charges. Fixed
charges consist of interest expense and other financing costs on all
indebtedness, including amortization of discount and deferred debt issuance
costs. Earnings were insufficient to cover fixed charges by $140,000 for the
period from inception, July 27, 1995, through December 31, 1995, $4.8 million,
$10.4 million and $18.9 million for the years ended December 31, 1996, 1997 and
1998, respectively, and $6.4 million and $28.8 million for the six-month
periods ended June 30, 1998 and 1999.
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion and analysis of the financial condition and
results of operations of Tritel PCS and Tritel, Inc. should be read in
conjunction with the consolidated financial statements and notes thereto of
Tritel, Inc., which are included in this prospectus. See also "Special Note
Regarding Forward Looking Statements."
GENERAL
Tritel PCS is a development stage enterprise formed for the purpose of
developing PCS markets in the south-central United States. Tritel PCS's PCS
licenses cover approximately 14.0 million Pops in contiguous markets in the
states of Alabama, Georgia, Kentucky, Mississippi and Tennessee. As a member of
the AT&T Wireless Network, Tritel PCS is the exclusive provider to AT&T
Wireless of mobile wireless PCS services in virtually all of its markets.
Tritel PCS's agreements with AT&T Wireless and certain affiliates allow it to
use the AT&T brand name and logo together with the SunCom name.
Tritel PCS has incurred significant expenditures in conjunction with its
organization and financing, PCS license acquisitions, hiring key personnel and
the initial design and construction of its PCS network facilities. Tritel PCS
has not yet commenced commercial operations and, as a result, has not yet
generated operating revenues or earnings. Tritel PCS intends to initiate the
commercial launch of its service in Jackson, Mississippi in the third quarter
of 1999 and expects to initiate service in all of its markets by the end of
2001. The timing of launch in individual markets will be determined by various
factors, principally the success of Tritel PCS's site acquisition program,
zoning and microwave relocation activities, equipment delivery schedules and
local market and competitive considerations. Tritel PCS intends to continue to
expand its coverage in its PCS markets to reach approximately 80% of the
licensed Pops in the aggregate by the end of 2001. Thereafter, Tritel PCS will
evaluate further coverage expansion on a market-by-market basis.
The extent to which Tritel PCS is able to generate operating revenues and
earnings will be dependent on a number of business factors, including
successfully deploying the PCS network and attaining profitable levels of
market demand for Tritel PCS's products and services.
FACTORS AFFECTING FUTURE OPERATIONS
Tritel PCS expects to generate substantially all of its revenues from
sales of mobile wireless telephony services, including local, roaming and long
distance. Tritel PCS will sell its services and equipment to retail consumers,
businesses, institutions and governments at rates and prices that will be
competitive with other wireless providers in its markets. Tritel PCS will
distribute to retail consumers through company-owned stores and to a lesser
extent, independent retail distributors. Tritel PCS will also employ a direct
sales force that will focus primarily on business, institutional and government
sales. Tritel PCS believes that it will be able to generate higher sales and
penetration through the use of company-owned stores and a direct sales force
than would otherwise be achieved through dependence on agents and independent
retailers.
Tritel PCS will market its services and products under the national AT&T
Wireless and regional SunCom brand names. Tritel PCS's marketing efforts will
seek to distinguish its service and product offerings on the basis of the
quality and extent of its wireless coverage, including the virtually nationwide
coverage its subscribers will enjoy through the AT&T Wireless Network, and the
digital service features that will be available to its subscribers. Tritel PCS
believes that this focus on the AT&T and SunCom brand names and quality of
service, coupled with proactive customer care and simplified and flexible
billing will increase revenues and margins, increase customer loyalty and
reduce churn and cost per gross added subscriber.
Industry statistics indicate that average revenue per unit (ARPU) for the
wireless communications business has declined substantially over the period
1993-1998. Although this decline has stabilized recently, management believes
that some deterioration in ARPU will continue. While
24
<PAGE>
management believes that Tritel PCS will benefit from a decline in certain
direct operating costs, including billing, interconnect, roaming and long
distance charges, its ability to improve its margins will depend primarily on
its ability to manage its variable costs, including selling general and
administrative expense and costs per gross added subscriber.
A particular focus of Tritel PCS's strategy will be to reduce subscriber
churn. Industry data suggest that those providers, including PCS providers,
that have offered poor or spotty coverage, poor voice quality, unresponsive
customer care or confusing billing suffer higher than average churn rates.
Accordingly, Tritel PCS will launch service in its markets only after
comprehensive and reliable coverage and service can be maintained in a
particular market. In addition, Tritel PCS's billing systems will be designed
to provide simple and understandable options on flexible cycles.
Tritel PCS will also focus resources on a proactive subscriber retention
program, strict credit policies and alternative methods of payment for
credit-challenged customers. However, Tritel PCS expects PCS churn rates to be
higher than historical trends due to the increase in number of competitors and
expanded marketbase.
OPERATING EXPENSES
Tritel PCS's operating expenses consist of plant operations, sales and
marketing and general and administrative expenses.
Tritel PCS believes that its plant operations expenses will be favorably
affected by its ability to co-locate its antennae and base station equipment on
existing tower sites. Currently, of the total of 1,275 sites that Tritel PCS
plans to build out, it expects to co-locate approximately 70% on existing
towers, enabling Tritel PCS to avoid certain location costs and to share
certain other costs. However, cell site lease costs are competitive, and Tritel
PCS will be responsible for all costs associated with its own base stations and
antennae.
Costs per gross added subscriber include subsidies on handset sales.
Although management expects that handset costs will decline, it does not expect
that it will be able to reduce the overall level of handset subsidies since
management also believes that retail handset prices will decline proportionally
with costs.
Recent industry data indicate that interconnect, roaming and long distance
charges that Tritel PCS will incur will continue to decline, due principally to
competitive pressures and new technologies. Management will focus on
application of systems and procedures to reduce billing expense and improve
subscriber communication. These systems and procedures will include debit
billing, credit card billing, over-the-air payment and Internet billing
systems.
Tritel PCS will incur other costs, including costs related to network
maintenance, administrative overhead, office and store leases, and telephone
and utility costs. These costs will grow significantly as its operations expand
and its customer base and call volumes increase. Over time, these expenses
should represent a reduced percentage of revenues as the customer base grows.
RESULTS OF OPERATIONS
SIX-MONTH PERIODS ENDED JUNE 30, 1998 AND JUNE 30, 1999
Tritel PCS's net loss was $1.7 million for the six months ended June 30,
1998, as compared to a net loss of $12.2 million for the six months ended June
30, 1999. Tritel PCS expects to launch commercial service in some markets in
the third quarter of 1999, and until that time will have no revenue. The
expenses incurred to date primarily relate to developing an infrastructure and
hiring staffing to support the future services Tritel PCS will provide.
Operating Expenses
Plant expenses were $111,000 and $3.9 million for the six months ended
June 30, 1998 and 1999, respectively. Plant expenses include primarily the cost
of engineering and operating staff devoted to the oversight of the design and
implementation of Tritel PCS's network site lease expenses and construction
site office expenses.
25
<PAGE>
Tritel PCS expects that the majority of its future plant expenses will
consist of costs relating to operating the network, including the cost of
interconnection to wireline and other wireless networks, cell site lease costs,
network personnel and repair and maintenance. Tritel PCS expects plant expense
to increase during the remainder of 1999 as it begins commercial operation of
its network in various markets.
General and administrative expenses include primarily the cost of
administrative salaries and benefits, administrative office expenses, legal,
accounting and other professional fees, property taxes and other general office
expenses. General and administrative expenses increased from $1.6 million for
the six month period ended June 30, 1998 to $7.2 million for the six-month
period ended June 30, 1999. The increase was due primarily to increased
staffing in various departments, including information technology, billing and
customer care, accounting, human resources and other administrative functions,
incurred in the preparation for commercial launch of Tritel PCS's network in
1999.
Sales and marketing expenses include primarily the cost of sales and
marketing salaries and benefits, local sales office expenses, and advertising
and promotional expenses. Sales and marketing expenses increased from $20,000
in the first half of 1998 to $2.7 million for the same period in 1999. The
increase was associated with the salary and benefits for sales and marketing
personnel and for market development, including planning and leasing of sales
offices and retail store locations. Tritel PCS expects to incur significant
selling and marketing costs during the remainder of 1999 primarily related to
sales commissions, promotional events and advertising incurred in connection
with market launches in 1999.
Depreciation and amortization expenses were $13,000 for the six-month
period ended June 30, 1998, compared to $2.4 million for the six-month period
ended June 30, 1999. The 1999 expenses related primarily to the amortization of
Tritel PCS's roaming and license agreements with AT&T Wireless and the SunCom
trademark, as well as the depreciation of computer hardware, software,
furniture, fixtures, and office equipment.
Non-Operating Income and Expenses
Interest income increased from $27,000 for the six-month period ended June
30, 1998 to $5.3 million for the six-month period ended June 30, 1999. This
significant increase was a result of Tritel PCS's investment of the cash
received from equity investors of $113.6 million, advances under its bank
facility of $200.0 million and gross proceeds from the sale of senior
subordinated discount notes of approximately $200.2 million. Tritel PCS's
short-term cash investments consist primarily of U.S. Government securities
with a dollar-weighted average maturity of 90 days or less.
Financing costs were $2.2 million for the six-month period ended June 30,
1999. These costs were associated with the January 1999 conversion by Digital
PCS of debt to equity in Airwave Communications.
Interest expense was $5.1 million for the six-months ended June 30, 1999
and consisted of interest on debt in excess of the amount capitalized for the
purpose of completing the network buildout. All interest for the six months
ended June 30, 1998 was capitalized because all debt for that period was applied
to the network buildout.
For the six months ended June 30, 1999, Tritel PCS recorded a deferred
income tax benefit of $6.0 million. No valuation allowance was considered
necessary for this deferred tax asset, principally due to the existence of a
deferred tax liability which was recorded upon the closing of the AT&T
transaction on January 7, 1999. Prior to this date, the predecessor company was
a limited liability corporation and was not subject to income taxes.
YEARS ENDED DECEMBER 31, 1996, DECEMBER 31, 1997 AND DECEMBER 31, 1998
Operating Expenses
Plant expenses were $4,000, $104,000 and $1.9 million for the years ended
December 31, 1996, 1997 and 1998, respectively. These expenses were primarily
related to an increase in engineering and operating staff devoted to the design
and implementation of future operations of Tritel PCS's network.
26
<PAGE>
Tritel PCS expects the majority of its future plant expenses will consist
of costs relating to operating the network including the cost of
interconnection to wireline and other wireless networks, cell site lease costs,
network personnel and repair and maintenance.
General and administrative expenses increased from $1.5 million in 1996,
to $3.1 million in 1997 and $4.9 million in 1998. The increases were due to the
development and growth of infrastructure and staffing relating to information
technology, billing customer care, financial reporting and other administrative
functions incurred in the preparation for commercial launch of Tritel PCS's
network in 1999. Management's strategy of stressing the importance of customer
care will cause the customer care department to become a larger part of ongoing
general and administrative expenses. Billing costs will increase as the number
of customers increases. Tritel's general and administrative expenses also
increased because of the expenses incurred in raising capital for the buildout
and development of the network and certain start-up costs.
Sales and marketing expenses increased from $5,000 in 1996 to $28,000 in
1997 and $452,000 in 1998. These increases were associated with the salary and
benefits for sales and marketing personnel and for market development,
including planning and leasing of regional offices. Management expects to incur
significant selling and marketing costs, including commissions, promotional
events and advertising, as Tritel PCS prepares to launch markets in 1999.
Depreciation and amortization expenses were $2,000 in 1996 compared to
$20,000 in 1997 and $348,000 in 1998. These expenses in 1998 related to the
depreciation of furniture, fixtures and office equipment, as well as the
amortization of deferred charges.
Non-Operating Income and Expenses
Interest expense, net of interest income, for 1998 was $722,000. The
interest expense related to licenses retained by Digital PCS.
During July 1998, Tritel PCS recorded an extraordinary loss of $2.4
million on the forgiveness of debt related to the return of C-Block spectrum
allowed by the FCC under restructuring guidelines.
LIQUIDITY AND CAPITAL RESOURCES
The buildout of the Tritel PCS network and the marketing and distribution
of its products and services will require substantial capital. Tritel PCS
currently estimates that its capital requirements for the period from inception
through the end of 2001, assuming substantial completion of the Tritel PCS
network buildout to cover 80% of the Pops in the aggregate by the end of 2001,
will total approximately $1.0 billion. Tritel PCS estimates those capital
requirements will be met as follows:
Bank facility $ 462.3
Senior subordinated discount notes 200.2
Government financing 47.5
Cash equity 163.4
Non-cash equity 157.9
----------
Total estimated capital requirements $ 1,031.3
==========
On January 7, 1999, Tritel PCS entered into a loan agreement that provides
for a senior bank facility with a group of lenders for an aggregate amount of
$550 million of senior secured credit. The bank facility provides for:
o a $250 million reducing revolving credit facility maturing on June 30,
2007,
o a $100 million term credit facility maturing on June 30, 2007, and
o a $200 million term credit facility maturing on December 31, 2007.
Up to $10 million of the facility may be used for letters of credit. Tritel PCS
estimates that $462.3 million of the $550 million bank facility will be drawn
through the end of 2001 for capital requirements. The terms of the bank
facility will permit Tritel PCS, subject to certain terms and
27
<PAGE>
conditions, including compliance with certain leverage ratios and satisfaction
of buildout and subscriber milestones, to draw up to $550 million to finance
working capital requirements, capital expenditures or other corporate purposes.
As of June 30, 1999, Tritel PCS could have borrowed up to a total of
approximately $550 million pursuant to the terms of the bank facility. See
"Description of Certain Indebtedness -- Bank Facility."
On May 11, 1999, Tritel PCS issued senior subordinated discount notes with
a principal amount at maturity of $372.0 million. These notes were issued at a
substantial discount from their principal amount at maturity for proceeds of
$200.2 million. No interest will be paid or accrued on the notes prior to May
15, 2004. Thereafter, the notes will bear interest at the stated rate. The
notes mature on May 15, 2009.
Airwave Communications and Digital PCS received preferential financing
from the U.S. Government for the C and F-Block licenses, which were contributed
to Tritel, Inc. in exchange for Series C Preferred Stock. As a result, Tritel,
Inc. is obligated to pay $47.5 million to the U.S. Government under the terms
of preferential financing terms. The debt relating to the C-Block licenses
requires interest only payments for the first six years of the term and then
principal and interest payments in years seven through ten. The debt relating
to the F-Block licenses requires interest only payments for the first two years
of the term and then principal and interest payments in years three through
ten.
In connection with the consummation of the joint venture with AT&T
Wireless, Tritel, Inc. received unconditional and irrevocable equity
commitments from institutional equity investors in the aggregate amount of
$149.2 million in return for the issuance of Series C Preferred Stock. On
January 7, 1999, approximately $99.4 million of these commitments were funded.
The remaining equity commitments of $49.8 million are required to be funded on
September 30, 1999. Additionally, on January 7, 1999, Tritel, Inc. received
$14.2 million of cash in exchange for the issuance of Series C Preferred Stock
from Airwave Communications and Digital PCS.
Non-cash equity consists of:
o Series A Preferred Stock and Series D Preferred Stock valued at $137.0
million issued to AT&T Wireless on January 7, 1999 in exchange for the
licenses it contributed and for entering into exclusivity, license and
roaming agreements,
o Series C Preferred Stock valued at $18.3 million issued to Airwave
Communications and Digital PCS on January 7, 1999 in exchange for the net
assets it contributed, and
o Series C Preferred Stock valued at $2.6 million issued to Central
Alabama Partnership on January 7, 1999 in exchange for the net assets it
contributed.
Tritel PCS believes that the proceeds from the senior subordinated
discount notes, together with the financing made available to it by the FCC,
the availability under its bank facility and the equity investments it has
received or that have been committed, will provide it with sufficient funds to
build out its existing network as planned. Although management estimates that
it will have sufficient funds available from its existing financing sources to
build out 80% of its licensed Pops, it is possible that additional funding will
be necessary.
As stated above, Tritel PCS currently estimates that its capital
requirements, including capital expenditures, the cost of acquiring licenses,
working capital, debt service requirements and anticipated operating losses,
for the period from inception through the end of 2001, assuming substantial
completion of the Tritel PCS network buildout to cover 80% of the licensed Pops
in the aggregate by the end of 2001, will total approximately $1.0 billion.
Tritel PCS estimates those capital requirements will be applied as follows:
28
<PAGE>
Acquisition of PCS licenses and exclusivity,
license and roaming agreements $ 192.9
Capital expenditures 529.9
Cash interest and fees 134.4
Working capital 174.1
----------
Total estimated use of capital $ 1,031.3
==========
Tritel, Inc. has applied $192.9 million in capital for the acquisition of
the PCS licenses and the agreements with AT&T Wireless relating to exclusivity,
license and roaming. This amount includes the acquisition of PCS licenses from
AT&T Wireless, Central Alabama Partnership, Airwave Communications and Digital
PCS. The cash portion of this capital requirement of $14.7 million was paid by
Airwave Communications and Digital PCS as a downpayment on the purchase of the
C and F-Block licenses.
Management estimates that capital expenditures associated with the
buildout will total approximately $529.9 million from inception through the end
of 2001, including a commitment to purchase a minimum of $300 million in
equipment and services from Ericsson. Costs associated with the network
buildout include switches, base stations, towers and antennae, radiofrequency
engineering, cell site acquisition and construction, and microwave relocation.
The actual funds required to build out Tritel PCS's network may vary materially
from these estimates, and additional funds could be required in the event of
significant departures from the current business plan, unforeseen delays, cost
overruns, unanticipated expenses, regulatory expenses, engineering design
changes and other technological risks. As of June 30, 1999, Tritel, Inc. had
expended $50.7 million in capital expenditures.
Tritel, Inc. estimates that cash interest and fees through 2001 will total
$134.4 million, including fees relating to the offering of the senior
subordinated discount notes. This amount represents interest and fees on the
senior bank facility and interest on the preferential financing from the U.S.
Government for the C and F-Block licenses. Cash interest will not be paid on
the senior subordinated discount notes until 2004. As of June 30, 1999, Tritel,
Inc. has paid $15.6 million for interest and fees and has incurred fees of
approximately $9 million relating to the offering of the senior subordinated
discount notes.
During May 1999, Tritel PCS notified Digital PCS of its intent to exercise
its option to purchase from Digital PCS licenses covering an additional 2.0
million Pops for approximately $15 million, which will consist of $3.0 million
of Series C Preferred Stock and the assumption of $12 million of FCC debt.
These licenses will be transferred to Tritel PCS after approval by the FCC.
Tritel PCS has committed to grant an option to AT&T Wireless or its designee
for the purchase of these licenses. If AT&T Wireless does not exercise its
option to purchase these licenses and Tritel PCS decides to build out the
markets, Tritel PCS would require additional capital, probably including both
debt and equity of at least $110 million for additional capital expenditures
and to cover operating cash flow losses and working capital requirements.
However, Tritel PCS can not buildout and operate these markets using the AT&T
brand name without permission from AT&T.
In summary, from the inception of the Airwave Communications and Digital
PCS through June 30, 1999, Tritel PCS has used $27.5 million in operating
activities. Those activities have consisted mainly of plant expenses, general
and administrative expenses and sales and marketing expenses totalling over $26
million. Additionally, net interest expense during that same period by Tritel
PCS totaled almost $2.5 million. Also for that period, Tritel PCS has used over
$84 million in investing activities. The investing activities have consisted of
over $50 million spent so far on property and equipment, about $14.7 million
spent to obtain FCC licenses, $7.5 million loaned to ABC Wireless to obtain
licenses for Tritel PCS and $10.5 million in interest on the debt to finance the
FCC licenses and the network buildout. Tritel PCS has received almost $509.7
million in cash from financing activities. $400.2 million has been received to
date from the bank facility and the senior subordinated discount
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notes. Additionally, Tritel PCS and its predecessor companies, Airwave
Communications and Digital PCS, have received $115.6 million in capital, net of
costs, from the sale of preferred stock and membership interests in the
predecessor companies.
Tritel Finance, Inc. is a wholly owned finance subsidary of Tritel PCS.
Tritel Finance owns all of Tritel PCS's infrastructure equipment located
outside of Mississippi, and leases that equipment to Tritel Communications,
Inc., a wholly owned operating subsidary of Tritel PCS. These intercompany
leases are treated as operating leases. PCS infrastructure equipment located
within Mississippi is owned by Tritel Communications, Inc.
PENDING LICENSE ACQUISITION
On March 23, 1999, the FCC commenced a re-auction of the C-, D-, E- and F-
Block licenses that had been returned to the FCC under an FCC restructuring
order or that had been forfeited for noncompliance with FCC rules or for
default under the related FCC financing. Tritel PCS participated in this
re-auction along with AT&T Wireless and Triton PCS through ABC Wireless,
L.L.C., an entity formed for this purpose. ABC Wireless was eligible to
participate in the C-Block re-auction as a "very small business" under
applicable FCC rules. ABC Wireless agreed to bid on licenses in markets
designated by each of Tritel PCS, AT&T Wireless and Triton PCS, and each of
them agreed to purchase any licenses obtained by ABC Wireless in the markets
designated by them. Before the re-auction, Tritel PCS loaned $7.5 million to
ABC Wireless to fund Tritel PCS's participation in the re-auction.
In the re-auction, ABC Wireless was successful in bidding for an
additional 15 to 30 MHz of spectrum covering a total of 5.7 million Pops, all
of which are already covered by Tritel PCS's existing licenses. Nashville and
Chattanooga are the largest cities covered by the additional licenses. The
total bid price for these additional licenses was $7.8 million. Tritel PCS will
apply its $7.5 million loan to ABC Wireless and pay cash for the balance, to
pay for these licenses.
As a result of the re-auction, Tritel PCS will hold PCS licenses for
spectrum in excess of 45 MHz in several small cities in its markets. FCC rules
limit PCS providers to a total of 45 MHz of spectrum in any given market. In
order to hold a license for more than 45 MHz, Tritel PCS would have to obtain
the consent of the FCC. Tritel PCS believes that it will be able to obtain the
necessary consents, or the FCC will approve the disaggregation of the spectrum
and the transfer to Tritel PCS of a portion of the licenses so that the total
held by Tritel PCS does not exceed 45 MHz.
During July 1998, Tritel PCS took advantage of a reconsideration order by
the FCC allowing companies holding C-Block PCS licenses several options to
restructure their license holdings and associated obligations. Tritel PCS
elected the disagregation option and returned one-half of the broadcast
spectrum originally acquired for each of the C-Block license areas. As a
result, Tritel PCS reduced the carrying amount of the related licenses by
one-half, or $35.4 million, and reduced the discounted debt and accrued
interest due to the FCC by $33.0 million. As a result of the disaggregation
election, Tritel PCS recognized an extraordinary loss of approximately $2.4
million.
YEAR 2000
Many currently installed computer systems and software applications are
encoded to accept only two digit entries in the year entry of the date code
field. Beginning in the year 2000, these codes will need to accept four digit
year entries to distinguish 21st century dates from 20th century dates. Tritel
PCS has implemented a Year 2000 program to ensure that its computer systems and
applications will function properly after 1999. Tritel PCS believes that it has
allocated adequate resources for this purpose and expects to successfully
complete its Year 2000 compliance program on a timely basis, although there can
be no certainty that this will be the case. Tritel PCS does not expect to incur
material expenses or meaningful delays in completing its Year 2000 compliance
program.
Tritel PCS has sought to acquire and implement computer systems and
software that already have the ability to process Year 2000 data. Therefore,
Tritel PCS does not expect a need to convert any
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existing systems or software for Year 2000 compliance. Ericsson has represented
that the software within its PCS equipment will be able to process calendar
dates falling on or after January 1, 2000. However, Tritel PCS cannot be
certain that the Year 2000 software of this equipment will be compatible with
the other software it uses. The ability of Ericsson, or any other third parties
with whom Tritel PCS transacts business, to adequately address its Year 2000
issues is outside of Tritel PCS's control. It is possible that Tritel PCS's
failure, or a third party's failure, to adequately address Year 2000 issues
will adversely affect Tritel PCS's business and operating results.
Because Tritel PCS has sought to acquire systems and software that are
Year 2000 compliant, it does not have a contingency plan. Management will
continue to monitor the risk associated with Year 2000 processing, as well as
its vendors' Year 2000 compliance and will develop a contingency plan if the
circumstances warrant such a plan.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information ("FAS 131"). FAS 131 requires that a public
business enterprise report financial and descriptive information about its
reportable operating segments. The statement defines operating segments as
components of enterprises about which separate financial information in
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. Tritel PCS
adopted SFAS 131 and determined that there are no separate reportable segments,
as defined by the standard.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("FAS 133"). FAS 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. FAS 133 will significantly change the accounting
treatment of derivative instruments and, depending upon the underlying risk
management strategy, these accounting changes could affect future earnings,
assets, liabilities, and shareholders' equity. Tritel, Inc. and Tritel PCS are
closely monitoring the deliberations of the FASB's derivative implementation
task force. With the issuance of Statement of Financial Accounting Standards
No. 137, Accounting for Derivative Instruments and Hedging Activities --
Deferral of the Effective Date of FASB Statement No. 133, which delayed the
effective date of FAS 133, Tritel, Inc. and Tritel PCS will be required to
adopt FAS 133 on January 1, 2001. Presently, Tritel, Inc. and Tritel PCS have
not yet quantified the impact that the adoption will have on the consolidated
financial statements of Tritel, Inc.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Tritel PCS is exposed to market risk from changes in interest rates which
could impact results of operations. Tritel PCS manages interest rates through a
combination of fixed and variable rate debt. Tritel PCS has entered into
interest rate swap agreements as a risk management tool, not for speculative
purposes. See Note 23 of Notes to Consolidated Financial Statements.
At June 30, 1999 Tritel PCS has $200 million of Term B Notes under its
bank facility, which carried a rate of 9.45%; $372 million of the original
senior subordinated discount notes, due 2009; $38.0 million of 7%, discounted
to yield 10%, debt to the FCC, due in quarterly installments from 2003 to 2006;
and $9.5 million of 61/8%, discounted to yield 10%, debt to the FCC, due in
quarterly installments from 2000 to 2008.
Tritel PCS's senior subordinated discount notes and FCC debt are fixed
interest rate and as a result Tritel PCS is less sensitive to market rate
fluctuations. However, Tritel PCS's Term B Notes outstanding and other amounts
available to Tritel PCS under its bank facility agreement are variable interest
rate. Beginning in May 1999, Tritel PCS entered into interest rate swap
agreements with
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notional amounts totaling $200 million to manage its interest rate risk under
the bank facility. The swap agreements establish a fixed effective rate of
9.05% on the current balance outstanding under the bank facility through the
earlier of March 31, 2002 or the date on which Tritel PCS achieves operating
cash flow breakeven. Market risk, due to potential fluctuations in interest
rates, is inherent in swap agreements.
The following table provides information about Tritel PCS's market risk
exposure associated with changing interest rates on its fixed rate debt at
maturity value of the debt (dollars in millions):
<TABLE>
<CAPTION>
EXPECTED MATURITY
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 2000 2001 2002 2003 Thereafter Total
---- ---- ---- ---- ---- -------- ---
Long-term fixed rate debt -- $ 0.9 $ 1.0 $ 1.1 $ 9.7 $ 406.8 $ 419.5
Average interest rate -- 6.1% 6.1% 6.1% 6.9% 12.2% --
</TABLE>
Collectively, Tritel PCS's fixed rate debt has a carrying value of $245.1
million at June 30, 1999. The carrying amount of fixed rate debt is believed to
approximate fair value because a portion of such debt was discounted to reflect
a market interest rate at inception and the remaining portion of fixed rate
debt was issued in May 1999 and therefore approximates fair value due to its
recent issuance.
Tritel PCS is also exposed to the impact of interest rate changes on it's
short-term cash investments, consisting of U.S. Treasury obligations and
certain other investments with the highest credit ratings or fully guaranteed
or insured by the U.S. government, all of which have average maturities of
three months or less. As with all investments, these short-term investments
carry a degree of interest rate risk.
Tritel PCS is not exposed to fluctuations in currency exchange rates since
its operations are entirely within the United States.
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ORGANIZATION OF TRITEL, INC. AND TRITEL PCS
Prior to January 7, 1999, Tritel, Inc.'s operations were conducted through
Airwave Communications, formerly Mercury PCS, LLC, and Digital PCS, formerly
Mercury PCS II, LLC. Airwave Communications was formed in July 1995 by Messrs.
Mounger, Martin and Sullivan who are officers and directors of Tritel, Inc. and
Tritel PCS, and various other investors as a small business, as defined by the
FCC, to participate in the FCC's C-Block PCS spectrum auction. Airwave
Communications acquired six 30 MHz licenses in the C-Block covering
approximately 2.5 million Pops in northern Alabama. Digital PCS was similarly
formed in July 1996 as a very small business, as defined by the FCC, to
participate in the FCC's D-, E- and F-Block PCS spectrum auctions. Digital PCS
acquired 32 10 MHz licenses in the D-, E- and F-Blocks covering approximately
9.1 million Pops in Alabama, Florida, Kentucky, Louisiana, Mississippi, New
Mexico and Texas.
Tritel, Inc. was formed as a Delaware corporation in 1998. On May 20,
1998, Tritel, Inc., Airwave Communications and Digital PCS entered into a
Securities Purchase Agreement with AT&T Wireless and other parties, which
provided for the joint venture arrangement with AT&T Wireless. On January 7,
1999, the parties consummated the joint venture. Under the AT&T Wireless joint
venture, AT&T Wireless contributed to Tritel PCS A- and B-Block licenses
covering approximately 9.1 million licensed Pops, and Airwave Communications
and Digital PCS contributed to Tritel PCS their C-Block licenses and certain of
their E- and F-Block licenses covering 6.6 million licensed Pops. In addition,
Central Alabama Partnership, an unrelated party, contributed C-Block licenses
covering 475,000 Pops in Montgomery, Alabama to Tritel PCS. The Pops
contributed by Airwave Communications and Digital PCS include 1.7 million Pops
that overlap with those contributed by AT&T Wireless. All of the Central
Alabama Pops also overlap with those held by Tritel PCS. As a result, Tritel
PCS holds PCS licenses covering 14.0 million Pops.
In exchange for the licenses contributed by AT&T Wireless and intangible
benefits of the transaction, Tritel, Inc. issued $137.1 million of Series A
Preferred Stock and Series D Preferred Stock to AT&T Wireless. In exchange for
the licenses contributed by Airwave Communications and Digital PCS and
additional cash equity of $11.2 million and $3.0 million contributed by them,
respectively, Tritel, Inc. issued $25.6 million of Series C Preferred Stock to
Airwave Communications and $6.8 million of Series C Preferred Stock to Digital
PCS. Central Alabama received $2.6 million of Series C Preferred Stock in
exchange for its licenses and certain other assets.
In addition, Tritel, Inc. raised $149.2 million of cash equity from
institutional equity investors, $99.4 million of which has already been funded
and $49.8 million of which is committed to be funded, under the institutional
investors' irrevocable and unconditional commitments, on September 30, 1999. In
sum, Tritel, Inc. has received cash and non-cash equity funding and irrevocable
commitments totaling $321.3 million.
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BUSINESS
OVERVIEW
Tritel PCS is a member of the AT&T Wireless Network and intends to become
a leading provider of PCS services in the south-central United States. In May
1998, Tritel entered into a joint venture with AT&T Wireless PCS, Inc., a
wholly owned subsidiary of AT&T Corp., to become the exclusive provider of AT&T
Wireless mobile PCS services in virtually all of a contiguous area covering
approximately 14.0 million Pops in Alabama, Georgia, Kentucky, Mississippi and
Tennessee. In each of its markets, Tritel PCS will use the AT&T brand name with
equal emphasis to the SunCom brand. This joint venture is part of AT&T's
strategy to expand its PCS coverage in the United States.
As a result of the joint venture, Tritel PCS will be able to enter its
markets in a co-branding arrangement using the AT&T brand and logo, which
Tritel PCS believes to be among the most respected and recognized in the world.
Tritel PCS expects to offer its customers immediate, virtually nationwide
roaming over the AT&T Wireless Network. Tritel PCS also expects to benefit from
the nationwide advertising and promotional activities of AT&T Wireless and
AT&T, and from AT&T Wireless's vendor discounts on various products and
services, including handsets and infrastructure equipment.
Supplementally, Tritel has entered into an agreement with two other AT&T
affiliates, Triton PCS and TeleCorp PCS, to operate with those affiliates under
a common regional brand name, SunCom, throughout an area covering approximately
43 million Pops primarily in the south-central and southeastern United States.
Tritel PCS believes this arrangement will allow the SunCom participants to
establish a strong regional brand name within their markets and to achieve
advertising and marketing cost savings.
AT&T Wireless operates the largest digital wireless network in North
America. Its network consists of AT&T Wireless's existing digital and analog
systems, PCS systems being constructed by four joint venture partners,
including Tritel PCS, and systems currently operated by third parties with
which AT&T Wireless has roaming agreements. In the aggregate, these systems
covered 96% of the total Pops throughout the United States as of December 31,
1998.
In forming this joint venture, AT&T Wireless contributed licenses covering
approximately 9.1 million of our 14.0 million total licensed Pops. In exchange
for its licenses and the other benefits to us from the joint venture, AT&T
Wireless received 17.09% of our fully diluted common equity interest, with a
stated vaue of $137.1 million. Airwave Communications and Digital PCS
contributed PCS licenses covering 6.6 million licensed Pops. These contributed
Pops include 1.7 million Pops that overlap with those contributed by AT&T
Wireless, resulting in our holding PCS licenses covering a total of 14.0
million Pops. In exchange for their licenses and $14.2 million of cash, Airwave
Communications and Digital PCS received a total of $32.4 million of our equity.
In addition, we have raised $149.2 million of cash equity from institutional
equity investors, $99.4 million of which has already been funded and $49.8
million of which is committed to be funded, under the investors' irrevocable
and unconditional commitments on September 30, 1999. Central Alabama
Partnership contributed to us 475,000 overlapping Pops in Montgomery, Alabama
in exchange for $2.6 million of equity.
Tritel PCS's licenses authorize it to provide PCS services in the
following major population and business centers, including:
MARKET 1998 POPS
- ------------------ ----------
Nashville, TN 1,675,700
Louisville, KY 1,448,400
Birmingham, AL 1,297,800
Knoxville, TN 1,074,000
Lexington, KY 893,400
Jackson, MS 657,800
Mobile, AL 653,900
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Tritel PCS believes that a substantial majority of its licensed Pops are
located in areas that have demographic characteristics well-suited to the
provision of wireless telecommunications services, with favorable commuting
patterns and rapidly growing business environments.
THE TRITEL PCS NETWORK
The Tritel PCS network will offer advanced PCS services on a local and
regional basis and in many other markets throughout the United States. Tritel
PCS intends to offer contiguous market coverage using its own network
facilities, the regional markets covered by the SunCom brand alliance and the
AT&T Wireless Network, all of which use a common technology platform, IS-136
Time Division Multiple Access, or TDMA. Tritel PCS believes that IS-136 TDMA
will provide its subscribers with excellent voice quality, fewer dropped calls
than existing analog systems and virtually nationwide roaming over the AT&T
Wireless Network. To maximize the commercial utility of IS-136 TDMA, Tritel PCS
will offer its customers tri-mode handsets, which can automatically pass or
"hand-off" calls between IS-136 TDMA systems and analog or TDMA-based digital
cellular systems throughout the nation. Several major wireless
telecommunications service providers in North America have selected IS-136 TDMA
for their digital PCS networks, including AT&T Wireless, SBC Communications,
BellSouth, United States Cellular Corporation and Canada's Rogers Cantel Mobile
Communications Inc. BellSouth currently provides IS-136 TDMA service within
many of Tritel PCS's markets.
TRITEL PCS'S OWN NETWORK FACILITIES. Tritel PCS intends to provide
coverage to approximately 80% of its licensed Pops by the end of 2001. Tritel
PCS has begun its initial network buildout, including initial radiofrequency
design and cell site acquisition, in the concentrated population centers within
its markets. Tritel PCS expects to commence PCS service in Jackson, Mississippi
during the third quarter of 1999, Louisville and Lexington, Kentucky, Nashville
and Knoxville, Tennessee during the fourth quarter of 1999, and in Birmingham
and Mobile, Alabama during the second quarter of 2000.
Tritel PCS is designing its PCS network to offer efficient and extensive
coverage within its markets. Tritel PCS's cell site acquisition strategy is to
co-locate as many of its cell sites as possible on existing towers and other
transmitting or receiving facilities. Tritel PCS believes this strategy will
reduce its site acquisition costs and minimize delays due to zoning and other
local regulations. Tritel PCS plans to launch service only after comprehensive
and reliable coverage can be maintained within a particular market.
Tritel PCS expects that there will be areas within its market that it will
ultimately build out, but where it will not, at least initially, have coverage.
In these areas of its markets, Tritel PCS will have the immediate benefit of
AT&T Wireless's existing roaming arrangements with other carriers to provide
service. If it can obtain better rates than those offered by AT&T Wireless,
Tritel PCS may seek direct roaming agreements with some local carriers
providing compatible service. These "intra-market roaming agreements" will
permit Tritel PCS's customers to use their handsets in these areas with less
likelihood of dropped calls. These agreements will also allow Tritel PCS to
launch its service at a lower level of capital expenditures than would
otherwise be required, without adversely impacting the service it will be able
to offer its customers.
THE SUNCOM BRAND ALLIANCE. Tritel has entered into an agreement with two
other AT&T Wireless affiliates, Triton PCS and TeleCorp PCS, to create a common
regional market brand, SunCom, and to provide for sharing certain development,
research, advertising and support costs. This regional brand alliance holds PCS
licenses that cover approximately 43 million Pops in primarily the
south-central and southeastern United States from New Orleans, Louisiana to
Richmond, Virginia.
To ensure that all SunCom customers will receive the same high quality
service throughout the SunCom region, all three SunCom affiliates:
o have agreed to build out their respective networks, adhering to the same
AT&T Wireless quality standards,
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o have agreed to use tri-mode handsets with IS-136 TDMA technology, and
o are expected to enter into roaming agreements.
THE AT&T WIRELESS NETWORK. AT&T Wireless is one of the largest providers
of wireless telecommunications services, with over 9.7 million total wireless
subscribers worldwide, including 5.1 million digital wireless subscribers
worldwide, as of December 31, 1998. AT&T Wireless also has the largest digital
wireless network in North America. Through the AT&T Wireless Network, AT&T
Wireless and Tritel PCS can provide virtually nationwide coverage for wireless
services.
Tritel PCS will be the exclusive provider of mobile PCS services for the
AT&T Wireless Network within Tritel PCS's markets, except for 790,000 mostly
rural Pops in Kentucky. AT&T Wireless has granted Tritel PCS a license to
co-brand with the AT&T logo and other service marks in Tritel PCS's business.
Tritel PCS also has established roaming, purchasing, engineering and other
arrangements with AT&T Wireless. These arrangements will provide Tritel PCS
customers immediate, virtually nationwide roaming on the AT&T Wireless Network.
JOINT VENTURE AND STRATEGIC ALLIANCE WITH AT&T
Tritel PCS's joint venture with AT&T Wireless is part of AT&T's strategy
to expand its IS-136 TDMA digital wireless coverage in the United States.
AT&T's four affiliate agreements, including its joint venture with Tritel PCS,
will provide features and functionality within its national coverage area. The
relationship with AT&T Wireless is valuable to Tritel PCS because, among other
reasons, the relationship enables Tritel PCS to market its PCS service using
what Tritel PCS believes to be one of the world's most respected and
recognizable brands, AT&T. Tritel PCS also expects to take advantage of the
virtually nationwide coverage of the AT&T Wireless Network and the extensive
national advertising of AT&T Wireless and AT&T.
As part of the Tritel PCS-AT&T Wireless alliance, AT&T Wireless
contributed licenses for approximately 9.1 million of Tritel PCS's 14.0 million
total licensed Pops. In exchange for the AT&T contributed Pops and the other
benefits provided for in the agreements governing the joint venture, AT&T
Wireless received a 17.09% fully diluted common equity interest in Tritel PCS,
consisting of preferred stock with a stated value of $137.1 million.
AT&T Wireless contributed licenses provide for the right to use 20 MHz of
authorized frequencies in the geographic areas covered by those licenses. In
order to create these licenses, AT&T Wireless partitioned and disaggregated the
original 30 MHz A- and B-Block PCS licenses it received in these markets. AT&T
Wireless has retained 10 MHz of spectrum in Tritel PCS's coverage area and has
the right to offer any non-competing services on that spectrum. Tritel PCS
believes that its spectrum is sufficient for its coverage areas.
BUSINESS STRATEGY
Tritel PCS plans to employ the following strategies to develop its PCS
business:
LEVERAGE THE BENEFITS OF ITS AT&T WIRELESS AFFILIATION. Tritel PCS will
exploit the following benefits of its AT&T affiliation to distinguish itself
from other PCS providers in its markets, to increase its revenues and to reduce
its operating costs:
Use of AT&T Brand and Logo. Tritel PCS believes the AT&T brand is among the
most recognized brands in the United States. Management believes that
branding has become increasingly important as the consumer base for
wireless services has expanded. The AT&T brand affiliation will be the
highest point of emphasis in marketing Tritel PCS's PCS services. Tritel
PCS expects that, wherever possible, advertisements, handsets, product
packaging, billing statements and in-store retail displays will prominently
display the AT&T logo in equal emphasis with the SunCom logo. Tritel PCS
may not use the AT&T logo on the exterior of its retail stores.
Exclusive Provider of PCS to AT&T Wireless Customers. Tritel PCS will be
the exclusive provider of mobile PCS services for the AT&T Wireless Network
within Tritel PCS's markets,
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except for 790,000 mostly rural Pops in Kentucky. Tritel PCS will provide
PCS services to customers located in Tritel PCS's markets responding to
AT&T's national advertising and to AT&T's national account customers
located in Tritel PCS's markets. Additionally, Tritel PCS will supply
roaming services in its markets to customers of AT&T Wireless and other
AT&T joint venture partners.
Nationwide Roaming. Tritel PCS expects to offer its customers immediate,
virtually nationwide roaming on the AT&T Wireless Network. Tritel PCS
believes many of the roaming arrangements negotiated by AT&T Wireless are
at rates more favorable than Tritel PCS would be able to negotiate on its
own.
AT&T Sales Efforts. AT&T currently employs a sales force for long distance
and other AT&T services of approximately 275 representatives within Tritel
PCS's markets. Tritel PCS expects to piggyback on AT&T's sales efforts to
provide PCS services to those AT&T customers in its markets seeking
wireless services as part of their AT&T service package.
Access to AT&T Wireless Products and Services. As an affiliate of AT&T
Wireless, Tritel PCS expects to benefit from AT&T Wireless-related
discounts on purchases of various products and services including handsets
and infrastructure equipment. Although there is currently no written
agreement, Tritel PCS has access to engineering, technical support and
other AT&T Wireless support services and expects to benefit from AT&T
Wireless's research into new TDMA features.
DISTRIBUTE THROUGH COMPANY STORES. Tritel PCS's distribution strategy will
focus principally on direct distribution through company-owned retail stores.
Tritel PCS expects that the company stores will help foster higher quality
customer contact, resulting in higher sales and penetration, lower customer
acquisition costs and lower customer churn than can typically be achieved
through indirect distribution channels. Tritel PCS currently plans to open 54
company stores to service the markets being launched in 1999 and 2000.
Tritel PCS also plans to employ a direct sales force to target small to
medium-sized businesses. In addition, management believes that the ability to
perform over-the-air activation of service will lead to expanded opportunities
to gain subscribers through alternative channels for sales and marketing.
ENHANCE BRAND AWARENESS THROUGH THE SUNCOM BRAND ALLIANCE. Tritel PCS
intends to promote the SunCom brand through joint marketing efforts with its
SunCom affiliates. The overlapping media markets of the affiliates should allow
the affiliates to advertise effectively on a regional basis. The alliance
intends to produce advertising materials jointly and to seek sponsorship of
sporting and other events to create awareness of the SunCom brand. The alliance
will also be more likely to achieve minimum volume requirements that could not
have been met individually in purchasing customized products bearing the SunCom
logo.
In addition, Tritel PCS will engage in its own independent marketing
efforts under the SunCom brand, including stand-alone media campaigns. Thus,
Tritel PCS will have the flexibility to be a part of a regional brand alliance
and also market more heavily in its home markets according to its own schedule
for launching its PCS services.
CAPITALIZE ON MANAGEMENT EXPERTISE AND LOCAL MARKET KNOWLEDGE AND
PRESENCE. Tritel PCS's and its subsidiaries' management have extensive
experience in successfully building out and managing wireless communications
systems. Several executives of Tritel PCS and its subsidiaries have served as
senior managers at major wireless telecommunications providers, including
United States Cellular Corporation, Nextel Communications, Western Wireless
Corporation and MobileComm.
A number of key members of Tritel PCS's and its subsidiaries' management
teams also have experience managing and operating competitive wireless markets
within Tritel PCS's footprint. Tritel PCS intends to combine its local market
knowledge with the AT&T and SunCom brands to create strong ties with
subscribers and their communities. Additionally, Tritel PCS's and its
subsidiaries' decentralized management structure with regional managers,
company stores and local direct sales
37
<PAGE>
force should enable Tritel PCS to respond effectively to individual market
changes. Tritel PCS believes that its local market presence, local promotional
efforts and customer service focus, combined with strong consumer recognition
of the AT&T brand, will enable it to gain market share and achieve a favorable
competitive position.
EMPHASIZE ADVANTAGES OF PCS TECHNOLOGY. Tritel PCS will seek to
differentiate its PCS capability from that of its analog cellular competitors
by focusing on the services, features and benefits that digital technology
offers, including superior voice quality, longer battery life, more secure
communications, short text and numeric messages, voice mail, message waiting
indicator, caller ID and single number service. The IS-136 TDMA technology,
unlike the CDMA and GSM digital technologies, allows for the simultaneous use
of digital control channel and analog voice channels. This feature may offer
analog operators an economic means with which to provide digital data features
without the need to upgrade their entire analog systems. Tritel PCS expects
that its customers will roam on a number of analog cellular systems having
digital control channels that will provide digital data features and which are
operated by roaming partners of Tritel PCS and AT&T Wireless.
SERVICES AND FEATURES
Tritel PCS will seek to provide reliable, high quality service at
affordable prices. The following features and services are currently available
to IS-136 TDMA users, and Tritel PCS expects to offer them to its customers:
SUPERIOR VOICE QUALITY AND TECHNOLOGY. Tritel PCS plans to use enhanced
IS-136 TDMA equipment, which is capable of providing superior voice
quality.
EXTENDED BATTERY LIFE. Tritel PCS's handsets will have a battery life that
is significantly longer than the battery life on existing analog cellular
systems, because of the supporting digital control channel. The IS-136 TDMA
technology standard allows a handset to draw significantly less battery
power while accessing a digital control channel by entering into sleep
mode, which alerts the handset of an incoming call and thereby extends the
length of time a battery can be used without having to be recharged. Analog
cellular systems, on the other hand, must stay in constant contact with a
cell site in order to receive an incoming call.
MORE SECURE CALLS. Through the use of an authentication key, the digital
technology eliminates the need for personal identification numbers. Digital
technology also offers enhanced privacy of calls than is available on
analog systems. Because each voice signal is converted into a stream of
data bits, which are encoded and then separated, calls are more difficult
to decode.
SHORT MESSAGING AND SOPHISTICATED CALL MANAGEMENT. These services include a
set of advanced features for receiving short text and numeric messages and
managing calls such as short text messages, voice mail, message waiting
indicator, caller ID, call rejection, call routing and forwarding,
three-way calling and call waiting.
TRI-MODE HANDSETS. The tri-mode phone handsets that Tritel PCS will offer
to its customers can operate in analog mode on the 850 MHz bandwidth, in
digital mode on the 1900 MHz bandwidth and also with a digital control
channel and analog voice channel on the 850 MHz bandwidth. These handsets,
which are designed for use on an IS-136 TDMA system such as Tritel PCS's,
enable a user to initiate a call on a digital cellular or PCS network and
then be handed off, without interruption, to an analog network if the user
roams to a location where digital coverage is unavailable. A user may also
initiate a call on an analog network and have that call handed off to a
TDMA-based digital cellular network.
Tritel PCS currently plans to offer tri-mode handsets manufactured by Nokia
and Ericsson, and expects to offer additional handsets of other
manufacturers as they become available. The Nokia and Ericsson models are
capable of providing advanced digital PCS services and features that meet
the operability and feature set requirements with which Tritel PCS is
required to comply under the AT&T Wireless joint venture. Tritel PCS
expects that all handsets and their packaging will prominently display the
AT&T and SunCom logos with equal emphasis.
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<PAGE>
SINGLE NUMBER SERVICE. This service can transfer all incoming calls between
primary landline and wireless locations automatically. When a customer's
handset is activated, Tritel PCS's network can route all incoming calls to
the customer's wireless number. When the handset is deactivated, all calls
can be directed to the customer's primary landline location. This service
will make it possible for customers to receive all of their calls and text
messages through a single telephone number, enhancing the "anytime,
anywhere" functionality of Tritel PCS's wireless communications network.
ADVANCED DATA FEATURES. Tritel PCS expects to launch its PCS service
offering voice and short messaging services only. However, the IS-136 TDMA
technology and tri-mode handsets are capable of handling more complex data
exchange features, which include electronic mail, internet access, and
access to stock quotes, sports scores and weather reports. Tritel PCS will
continue to explore providing these services based on consumer demand.
CUSTOMIZED BILLING. Tritel PCS plans to offer special billing services that
cater to the needs of consumers, including simplified monthly billing
statements and flexible billing cycles. Tritel PCS believes that simple,
accurate bills are necessary to support the customer's perception of
quality service. In addition, Tritel PCS intends to offer customized
billing options, including debit billing, enabling customers to charge
calls against pre-paid accounts, threshold billing, which will limit
customers to a pre-selected level of charges per month and
neighborhood/zonal billing, which will provide service at reduced charges
within certain home areas. Tritel PCS will also be able to offer "Wireless
Office Services" to corporate customers, which can include zonal billing
for all usage and four-digit dialing within the wireless office.
The wireless communications industry continues to undergo substantial
technological innovation. As a result, Tritel PCS expects new services and
features to become commercially available for IS-136 TDMA systems in the
future. Tritel PCS plans to make those services and features available to its
customers.
MARKETING AND DISTRIBUTION
Tritel PCS's overall marketing strategy will be to emphasize the AT&T
brand name, the benefits of digital technology, the breadth of Tritel PCS's
coverage and its focus on customer service, all of which will be provided at
competitive prices. Tritel PCS will employ a sales and marketing approach with
highly definable and measurable goals, which will focus on the use of company
stores as a method of building a customer base.
COMPANY STORES. Tritel PCS's company-owned and operated retail stores will
be modeled after AT&T Wireless's retail stores, with the exception that Tritel
PCS may not use the AT&T logo on the outside of its store fronts. Sales
representatives in company stores will receive in-depth training on the
advantages of PCS and the AT&T Wireless and SunCom alliances. Management also
believes that in-store customer education on PCS services and features will
increase customer satisfaction and usage. The company stores are intended to be
customer destinations in response to advertising and promotions, rather than
impulse stops.
Company stores are being designed to facilitate demonstration of the
benefits of Tritel PCS's PCS services and features. The decentralized nature of
the stores will enable sales representatives to emphasize flexible rate plans
and the different advantages to customers on a market-by-market basis. In
addition, emphasis will be placed on the virtually nationwide roaming and
service features attributable to the IS-136 TDMA technology and the tri-mode
handsets.
Tritel PCS intends to locate company stores on heavy traffic arteries, in
high visibility areas, and near high profile anchor retailers. Nearly all of
the company stores will be located in retail shopping centers and the stores
are expected to range from 1,200 to 2,000 square feet. Tritel PCS plans to open
28 company stores in 1999 and an additional 26 stores in 2000 to service the
markets being launched by the end of 2000.
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<PAGE>
DIRECT SALES FORCE. Tritel PCS will also use a direct sales force. Tritel
PCS's sales agents will be assigned to specific regions within its markets
using company stores as bases of operations. Sales agents will receive training
on the advantages of PCS and will be provided with product and service
research, proposal writing and competitor analysis information. The Tritel PCS
sales force will seek to coordinate with AT&T to offer bundled telephony and
related services. Tritel PCS plans to have an initial direct sales force of
approximately 60 sales people to cover the markets expected to be launched in
1999.
INDIRECT DISTRIBUTION CHANNELS. To augment its direct distribution
efforts, Tritel PCS will seek to use mass retailers in its markets. Management
believes that the AT&T brand recognition along with over-the-air activation
capability will facilitate distribution through mass retailers. In the future,
Tritel PCS may use other distribution techniques as well, including simplified
retail sales processes and new, lower cost channels such as inbound telesales
through a toll-free number, affinity marketing programs and Internet sales.
Tritel PCS participates in the existing SunCom Internet website, which is
located on the Internet at http://www.suncom.com. Management believes that
there is a high correlation between Internet users and wireless
telecommunications users. The SunCom website is expected to provide for direct
sales to customers, as well as product and service information and customer
service. Customers on the SunCom website will be directed to the appropriate
SunCom affiliate based on the geographic location of the customer.
Internet-based services and features, such as the ability to e-mail a message
to a SunCom subscriber's handset, will also be explored. Over-the-air
activation will permit direct shipment to customers and remote activation.
Additionally, customers located in Tritel PCS's markets seeking to subscribe
for PCS services on the AT&T Wireless Internet website will be referred through
a toll-free number to Tritel PCS for their PCS services.
FOCUS ON LOCAL ADVERTISING AND PROMOTION. Tritel PCS plans to advertise
and promote its PCS services and products through various local media and
consumer education programs, including local television, radio, print,
billboard and direct mail. To reach a broad base of potential subscribers,
Tritel PCS will combine mass marketing efforts and direct marketing approaches
to build and promote the AT&T Wireless and SunCom brands locally, generate
sales and retain customers. Further, as markets are launched, Tritel PCS will
offer various promotional programs designed to entice new subscribers,
including special limited term and introductory rate and feature programs,
product demonstrations and special events. In addition to its local marketing
strategies, Tritel PCS expects that the national promotional efforts by AT&T
and AT&T Wireless will increase interest and sales through Tritel PCS's
distribution channels. Tritel PCS believes AT&T Wireless's national "customer
pull" strategies for promotion will encourage potential customers to visit
Tritel PCS's company stores and local retailers to seek out the branded
service.
PROMOTIONS TO TARGET SPECIFIC SUBSCRIBER TYPES. Tritel PCS plans to create
distinct marketing programs for different customer segments, including high
volume wireless users, home business operators, corporate accounts and casual
wireless users. For each segment, Tritel PCS expects to create a specific
marketing program including a service package, pricing plan and promotional
strategy. Management believes that by tailoring its service packages and
marketing efforts to specific market segments, customers will perceive a higher
value in relation to the cost of service, will be more inclined to use Tritel
PCS's service, and will have increased customer loyalty and higher levels of
customer satisfaction. Tritel PCS expects to employ sophisticated marketing and
database systems to enable personalization of services for individual customers
and implementation of a proactive customer retention program. The deployment of
these systems should enable Tritel PCS to better identify attractive niche
opportunities and provide feedback on the effectiveness of its marketing
campaigns.
PRICING. Management believes that a service- and feature-based strategy,
as opposed to a rate-based strategy, will be more successful in acquiring and
retaining subscribers. As part of a decentralized marketing strategy, Tritel
PCS will offer its retail subscribers and national and corporate
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account subscribers volume and service based rate plans that are responsive to
market trends. Tritel PCS's billing system has the technology and capacity to
enable Tritel PCS to offer numerous pricing plans to its customers. Tritel PCS
will also offer its customers prepaid debit pricing and neighborhood/zonal
pricing options.
Tritel PCS is not required to use any published AT&T Wireless pricing plan
in its markets, although it may choose to do so. Tritel PCS will evaluate
existing pricing plans of other service providers, including AT&T's Digital
OneRate(SM) plan, and will consider offering such plans to its customers. Tritel
PCS may also offer promotions such as free incoming calls for the first minute
in order to encourage customers to give out their phone numbers.
CUSTOMER SERVICE OPERATIONS. Tritel PCS's customer service strategy is
predicated upon building strong relationships with customers, beginning with
the subscriber's handset purchase. Subscribers who purchase handsets from
company stores will be able to activate service immediately through an in-store
representative of Tritel PCS. Subscribers purchasing their handsets from
independent retailers will be able to activate service by using the handset to
call a customer service representative of Tritel PCS. Either way, the
subscriber will be able to obtain immediate credit approval or establish a
debit billing plan, select service features and a rate plan and set up a
billing program. Tritel PCS also plans to offer special billing services that
cater to the needs of consumers, including simplified monthly billing
statements and flexible billing cycles. Tritel PCS expects future enhancements
to include on-line billing and account information. AT&T Wireless and the
SunCom affiliates, including Tritel PCS, will exchange information and share
best practices in order to provide customers with better customer care.
TRITEL PCS'S MARKETS
Tritel PCS's markets are situated principally in Alabama, Georgia,
Kentucky, Mississippi and Tennessee. The major population centers in Tritel
PCS's markets include the cities of Nashville, Louisville, Birmingham,
Knoxville, Lexington, Jackson and Mobile. Tritel PCS's licenses will complement
the PCS and cellular coverage areas of AT&T Wireless. Tritel PCS anticipates
that its footprint of licensed Pops will contribute to reduced operating
expenses due to its contiguous nature. Tritel PCS believes that a substantial
majority of its licensed Pops are located in areas that have demographic
characteristics that are well-suited to the provision of wireless
telecommunications services with favorable commuting patterns and rapidly
growing business environments. Four state capitals are included within Tritel
PCS's markets. There are over 2,500 total miles of interstate highway within
Tritel PCS's markets. Tritel PCS believes that the significant network of
interstate highways within its markets will lead to increased mobile
communications usage.
- ----------
(SM) "Digital OneRate" is a registered service mark of AT&T Corp.
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The following table sets forth certain key demographic information for
Tritel PCS's markets:
SELECT DEMOGRAPHIC STATISTICS
<TABLE>
<CAPTION>
GROWTH IN POPS
MARKET 1998 POPS 1990-1998 (%)
- -------------------------------------- ------------- ----------------
<S> <C> <C>
Nashville, TN 1,675,700 17.24%
Louisville, KY 1,448,400 7.05
Birmingham, AL 1,297,800 8.12
Knoxville, TN 1,074,000 13.28
Lexington, KY 893,400 9.47
Jackson, MS 657,800 6.87
Mobile, AL 653,900 10.01
Chattanooga, TN 548,400 7.34
Huntsville, AL 496,400 12.87
Montgomery, AL 475,300 7.85
Biloxi, MS 382,000 12.42
Tupelo-Corinth, MS 312,500 7.13
Clarkesville, TN/Hopkinsville, KY 260,800 18.28
Tuscaloosa, AL 253,100 6.39
Bowling Green--Glasgow, KY 244,200 9.65
Dothan--Enterprise, AL 217,500 3.47
Greenville--Greenwood, MS 210,500 (1.59)
Meridian, MS 205,900 2.95
Florence, AL 183,500 6.01
Gadsden, AL 183,500 5.46
Hattiesburg, MS 181,000 11.80
Columbus-Starkville, MS 171,000 2.76
Owensboro, KY 164,700 4.84
Anniston, AL 164,000 1.30
Decatur, AL 142,800 8.51
Corbin, KY 142,200 10.92
Opelika--Auburn, AL 136,900 10.40
Cookeville, TN 132,400 12.59
Somerset, KY 123,900 11.12
Rome, GA 122,300 6.26
Dalton, GA 116,300 17.95
McComb--Brookhaven, MS 110,100 2.61
Atlanta counties (Carroll, Haralson) 108,000 NA
Cleveland, TN 96,100 9.95
Laurel, MS 81,300 2.78
Selma, AL 74,100 (0.54)
Natchez, MS 71,800 (1.91)
La Grange, GA 70,100 9.19
Vicksburg, MS 61,700 4.05
Madisonville, KY 46,300 0.43
Montgomery, MS (Memphis MTA) 12,300 0.59
--------- -----
Total 14,003,900 10.19%
========== =====
National Total Pops and Average
Growth in Pops for all BTAs 276,675,000 9.55%
=========== =====
</TABLE>
- ----------
Source: 1999 Cellular/PCS Pop Book, Kagan
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The major metropolitan centers within Tritel PCS's markets are Louisville,
Nashville, Birmingham, Knoxville, Lexington, Jackson and Mobile.
LOUISVILLE. Greater Louisville, which is Tritel PCS's largest market with
approximately 2.3 million people, including Lexington, encompasses several
counties in Kentucky and southern Indiana. Greater Louisville is also at the
cross roads of three major highways, I-64, I-65 and I-71, as well as four major
railways. The Greater Louisville area is a leading manufacturing center,
particularly for automobiles and durable goods with an increasing emphasis on
services, particularly transportation and health care. Major employers include
United Parcel Service, General Electric, Ford Motor, Columbia/HCA Healthcare
and Humana Inc.
NASHVILLE. Nashville, Tennessee's capital, has a population of
approximately 1.7 million people and is a vital transportation, business,
educational and tourist center for the U.S. The population of the ten-county
area comprising Nashville grew by 27% between 1980 and 1996 to 1,250,300, or
23% of Tennessee's total population. Additionally, Nashville International
Airport is served by a number of the major U.S. carriers. Nashville is a major
rail transportation hub connecting 19 states and is a convergence point for
three major interstate highways, I-40, I-65 and I-24. Major employers include
Vanderbilt University and Medical Center, Columbia/HCA Healthcare, Saturn
Corporation, Nissan Motor Corp., Ford Motor Company, BellSouth, Bankers Trust,
SunTrust, Kroger and Ingram Industries.
BIRMINGHAM. Birmingham has a population of approximately 1.3 million
people. The four-county Birmingham area, which includes six colleges and
universities, anchors Alabama's business and cultural life with 21% of the
state's population, 23% of the total business establishments, 24% of the retail
sales and 31% of the payroll dollars. Three major highways pass through
Birmingham, I-20, I-59 and I-65. Major employers include University of Alabama
at Birmingham, Baptist Health System, Bruno's, SouthTrust Bank, BellSouth,
Wal-Mart, Alabama Power Company, Blue Cross-Blue Shield of Alabama and American
Cast Iron Pipe.
KNOXVILLE. Knoxville is a growing city with a population of approximately
1.1 million people and a solid economic foundation. Job growth since 1997 has
been 3.3%, significantly higher than the national average of 1.9%. Knoxville is
centrally located in the eastern United States and is served by three major
interstate highways, I-40, I-75 and I-81. Major manufacturing companies in the
area include Clayton Homes, DeRoyal Industries, Robertshaw Controls and
Matsushita Electronic Corp.
JACKSON. Jackson has a population of approximately 658,000 people and is
home to six colleges and universities. Two major interstate highways, I-20 and
I-55, pass through Jackson. Key industries include automobile parts
manufacturing, aircraft parts manufacturing, telecommunications, healthcare
delivery, government, transportation and poultry processing.
MOBILE. Mobile has a population of approximately 654,000 people and is a
regional center for medical care, research and education. Its port is one of
the nation's leading facilities for coal and forest product exports. Two major
highways, I-10 and I-65, pass through Mobile. Major employers include
BellSouth, Coca-Cola Bottling Company, International Paper Company, DuPont
Mobile Manufacturing and the University of South Alabama.
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NETWORK BUILDOUT
Tritel PCS has begun its initial buildout, including the radiofrequency
design and cell site acquisition, in the concentrated population centers within
its markets. Tritel PCS anticipates commencing PCS service during 1999 and 2000
in the following markets:
<TABLE>
<CAPTION>
EXPECTED
MARKET LAUNCH DATE 1998 POPS
- ---------------------------------- ------------------ ------------
<S> <C> <C>
Jackson and Vickburg, MS 3rd Quarter 1999 719,500
Louisville and Lexington, KY 4th Quarter 1999 2,341,800
Nashville and Clarksville, TN / 4th Quarter 1999 1,936,500
Hopkinsville, KY
Knoxville, TN 4th Quarter 1999 1,074,000
Chattanooga and Cleveland, TN / 4th Quarter 1999 760,800
Dalton, GA
Huntsville and Decatur, AL 4th Quarter 1999 639,200
Montgomery, AL 1st Quarter 2000 475,300
Birmingham, AL 2nd Quarter 2000 1,297,800
Mobile, AL 2nd Quarter 2000 653,900
Tupelo, MS 2nd Half 2000 312,500
Tuscaloosa, AL 2nd Half 2000 253,100
Meridian, MS 2nd Half 2000 205,900
Hattiesburg, MS 2nd Half 2000 181,000
Anniston, AL 2nd Half 2000 164,000
</TABLE>
Tritel PCS intends to build out its PCS network to provide coverage to 80%
of the licensed Pops by the end of 2001. Tritel PCS is focusing initially on
the concentrated population and business centers of the major metropolitan
areas and the adjoining interstate highways. Thereafter, Tritel PCS intends to
build out cities with fewer than 375,000 Pops and will continue to build out
interstate and state highways. Tritel PCS intends to launch service only after
a significant portion of the planned buildout for a given major city has been
completed. In addition, prior to launching service, Tritel PCS intends to
perform extensive field testing to ensure comprehensive and reliable coverage
within a particular market.
Bechtel Corporation is providing the overall project and construction
management of the design, site acquisition, installation and testing of its PCS
transmission system. Bechtel is a respected world leader in providing
engineering project and construction management services. The contract with
Bechtel is based on specified hourly fees.
Initial Radiofrequency Design. Two radiofrequency engineering firms,
Galaxy Personal Communications Services, Inc., a wholly owned subsidiary of
World Access, Inc., for the Mississippi, Alabama, Georgia and eastern Tennessee
sites, and Wireless Facilities, Inc., for the Nashville, Tennessee and the
Louisville and Lexington, Kentucky sites, are performing the initial
radiofrequency design for the network. Based upon their engineering designs,
Galaxy and Wireless Facilities determine the required number of cell sites to
operate the network and identify the general geographic areas in which they
propose to locate each of the required cell sites. Tritel PCS's network is
being designed to provide 90% in-building service reliability in urban areas,
88% in-building service reliability in suburban areas and 90% in-car service
reliability in rural areas. The initial radiofrequency design has been
completed for all markets that Tritel PCS expects to launch in 1999 and a
majority has been completed for the markets that Tritel PCS expects to launch
in 2000.
Site Identification, Acquisition and Construction. Tritel PCS has
arrangements with two firms, Spectrasite Communications, Inc. and GeoTrans
Wireless, to identify and acquire the sites on which it will locate the towers,
antennae and other equipment necessary for the operation of its PCS system.
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<PAGE>
After Galaxy and Wireless Facilities identify the general geographic area in
which to locate cell sites, Spectrasite and GeoTrans survey potential sites to
identify two potential tower sites within each geographic location. Galaxy and
Wireless Facilities evaluate the alternative sites within each of the
identified geographic areas, giving consideration to various engineering
criteria as well as the desirability of the site from an economic point of
view. The contracts with Spectrasite and GeoTrans are based upon specified
hourly fees.
Tritel PCS can obtain a cell site in three ways:
(1) co-location;
(2) construction of a tower by an independent build-to-suit company; or
(3) construction of a tower by Tritel PCS itself.
First preference in site acquisition is being given to sites on which Tritel
PCS can co-locate with another wireless company or companies by leasing space
on an existing tower or building. The advantages of co-location are that there
are lower construction costs to Tritel PCS associated with the building of a
tower and any zoning difficulties have likely been resolved. Second preference
is being given to sites where Tritel PCS would be able to arrange for the
construction of a tower on a build-to-suit basis by an independent tower
construction company who would acquire the site, build the tower and lease it
back to Tritel PCS. The principal advantage of this method is that it reduces
Tritel PCS's capital expenditures, although operating expenses will reflect the
required lease payments. Third preference is being given to those greenfield
sites that Tritel PCS would acquire and then arrange for the construction of a
tower that it would own.
Tritel PCS expects that it will need approximately 1,275 cell sites in
order to achieve 80% coverage of the licensed Pops. Based on its work to date,
Tritel PCS expects that approximately 70% will be co-locates on existing sites,
25% will be built-to-suit by tower construction companies and 5% will be
constructed by Tritel PCS.
Microwave Relocation. Prior to the FCC's auction of PCS licenses in the
1850-1970 MHz frequency bandwidths, these frequencies were used by various
fixed microwave operators. The FCC has established procedures for PCS licensees
to relocate these existing microwave paths, generally at the PCS licensee's
expense. Tritel PCS has engaged Wireless Facilities to relocate the microwave
paths that currently use its bandwidth. Under its arrangement with Tritel PCS,
Wireless Facilities is performing spectrum analysis, identifying which paths
require relocation, presenting a cost analysis and time frame for the
relocation and, ultimately, performing the relocation of those microwave paths.
Tritel PCS expects to relocate approximately 200 spectrum paths, of which
approximately 120 paths already have been relocated. Including cost sharing for
relocations performed by other PCS licensees and cost sharing reimbursements by
other PCS licenses paid to Tritel PCS, Tritel PCS expects to spend a net total
of approximately $25 million for microwave relocation. Tritel PCS plans to
complete the microwave relocation for all 1999 launch cities by August 1999 and
does not expect any delays to its scheduled service launches.
Mobile Switching Centers. In order to cover its approximately 14.0 million
Pops, Tritel PCS will utilize six switching centers located in six of its major
markets Louisville, Nashville, Birmingham, Knoxville, Mobile and Jackson.
Except for the Mobile location, the locations for the switching centers have
been leased and are currently being constructed or renovated. The Mobile
location is expected to be leased and built on a timely basis in conjunction
with the scheduled launch for that market. Each switching center will serve
several purposes, including, among others, routing calls, managing call
handoff, managing access to landlines and providing access to voice mail.
Network Operations Center. Tritel PCS will utilize Ericsson's Network
Operations Center located in Richardson, Texas during the initial buildout and
deployment of Tritel PCS's network in order to launch service earlier and
reduce its initial capital expenditures. The Network Operations Center's
function is to monitor the network on a real-time basis for, among other
things, alarm monitoring, power outages, tower lighting problems and traffic
patterns. Tritel PCS plans to build and operate its own Network Operations
Center at its switch facilities in Jackson, Mississippi by 2001.
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Interconnection. Tritel PCS's digital PCS network will connect to the
landline telephone system through local exchange carriers. Tritel PCS has
entered into an interconnection agreement with BellSouth and plans to enter
into interconnection agreements with smaller local exchange carriers within its
markets. Additionally, Tritel PCS has entered into a long distance agreement
with AT&T providing for preferred rates for long distance services.
Network Communications Equipment. Tritel PCS has entered into an exclusive
equipment supply agreement with Ericsson under which it will purchase the radio
base stations, switches and certain other related PCS transmission equipment,
software and services necessary to establish its PCS network. Ericsson has
assigned a dedicated project management team to assist Tritel PCS in the
installation and testing of the equipment that will comprise Tritel PCS's PCS
transmission system. Tritel PCS has agreed that, during the term of the
agreement, Ericsson shall be the exclusive provider to Tritel PCS of certain
PCS transmission equipment, materials and services within Tritel PCS's markets.
Tritel PCS has agreed to purchase at least $300 million of equipment over a
five-year period.
TDMA Technology Standard. One of the most important decisions for a PCS
operator is the selection of the network technology standard. Standards are
important in allowing compatability among different wireless systems,
permitting a customer to roam throughout various operators' systems using the
same telephone handset.
There are three primary digital wireless standards: IS-136 TDMA, CDMA or
GSM. Tritel PCS has chosen IS-136 TDMA as its digital technology standard to
offer the highest quality service, a full range of features and services and to
ensure compatibility with systems constructed by AT&T Wireless, which also uses
IS-136 TDMA. IS-136 TDMA offers well-developed features, integrated software
systems and equipment that is commercially available. Wireless providers that
have selected IS-136 TDMA for their digital networks include AT&T Wireless, SBC
Communications, BellSouth and Rogers Cantel. For this reason, IS-136 TDMA is
expected to be widely available in the United States, Canada and South America.
COMPETITION
There are two established cellular providers in each of Tritel PCS's
markets. These providers have significant infrastructure in place, often at low
historical cost, have been operational for many years, have substantial
existing subscriber bases and have substantially greater capital resources than
Tritel PCS. In addition, in most of Tritel PCS's markets, there are at least
three PCS providers currently offering commercial service or likely to begin
offering service before Tritel PCS will. Tritel PCS will also face competition
from paging, dispatch and conventional mobile radio operations, as well as SMR
and ESMR, including those ESMR networks operated by Nextel and its affiliates
in Tritel PCS's markets. Tritel PCS will also be competing with resellers of
wireless services. Tritel PCS expects competition in the wireless
telecommunications industry to be dynamic and intense as a result of the
entrance of new competition and the development of new technologies, products
and services.
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COMPETITION FROM OTHER PCS AND CELLULAR PROVIDERS. Tritel PCS may compete
directly with five or more PCS and cellular providers in each of its markets.
Principal PCS and cellular competitors in Tritel PCS's markets are BellSouth
and its BellSouth Mobility subsidiary, Powertel, GTE, Sprint PCS, Century
Telephone, PrimeCo and ALLTEL. The table set forth below shows the PCS and
cellular entities that management believes currently to hold wireless licenses
for a significant number of Pops within each of Tritel PCS's seven largest
markets. The table also provides for each competitor information on the type of
service, spectrum block, whether operational and technology standard that
management believes to be currently applicable. The table does not reflect the
recently concluded FCC re-auctioning of certain PCS licenses, which licenses
have not yet been granted.
<TABLE>
<CAPTION>
WIRELESS ANNOUNCED
SERVICE AND PCS DIGITAL
MARKET CARRIER SPECTRUM BLOCK OPERATIONAL STANDARD
- ------------------ ---------------------- ----------------- ------------- ----------
<S> <C> <C> <C> <C>
Birmingham, AL GTE Cellular Yes CDMA
(1,297,800 Pops) BellSouth Mobility Cellular Yes TDMA
Sprint PCS PCS -- A Yes CDMA
Powertel PCS -- B Yes GSM
ALLTEL PCS -- D Yes CDMA
Omnipoint PCS -- F No GSM
Jackson, MS BellSouth Mobility Cellular Yes TDMA
(657,800 Pops) Centurytel Cellular Yes Analog
Powertel PCS -- A Yes GSM
21st Century Telesis PCS -- C No --
Sprint PCS PCS -- D No CDMA
Bay Springs PCS -- E No --
PCSouth, Inc. PCS -- F Yes TDMA
Knoxville, TN GTE Cellular Yes CDMA
(1,074,000 Pops) U.S. Cellular Cellular Yes CDMA
BellSouth Mobility PCS -- B Yes GSM
Leap Wireless PCS -- C No CDMA
Sprint PCS PCS -- D Yes CDMA
Powertel PCS -- E No GSM
Tennessee L.P. PCS -- F No --
Lexington, KY BellSouth Mobility Cellular Yes TDMA
(893,400 Pops) GTE Cellular Yes CDMA
Sprint PCS PCS -- B Yes CDMA
Next Wave PCS -- C No CDMA
Powertel PCS -- D Yes GSM
Northcoast Oper Co. PCS -- F No --
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
WIRELESS ANNOUNCED
SERVICE AND PCS DIGITAL
MARKET CARRIER SPECTRUM BLOCK OPERATIONAL STANDARD
- ------------------ -------------------- ----------------- ------------- -----------
<S> <C> <C> <C> <C>
Louisville, KY BellSouth Mobility Cellular Yes TDMA
(1,448,400 Pops) GTE Cellular Yes CDMA
Sprint PCS PCS -- B Yes CDMA
Next Wave PCS -- C No CDMA
Powertel PCS -- D/E Yes GSM
Mobile, AL BellSouth Mobility Cellular Yes TDMA
(653,900 Pops) GTE Cellular Yes CDMA
Sprint PCS PCS -- A No CDMA
PrimeCo PCS -- B Yes CDMA
Mobile Tri-States PCS -- C Yes GSM
ALLTEL PCS -- D Yes CDMA
Nashville, TN BellSouth Mobility Cellular Yes TDMA
(1,675,700 Pops) GTE Cellular Yes CDMA
Sprint PCS PCS -- A Yes CDMA
Leap Wireless PCS -- C No CDMA
Powertel PCS -- D/E Yes GSM
Omnipoint-Galloway PCS -- F No GSM
</TABLE>
Tritel PCS considers its primary competitors to be BellSouth and Powertel.
BellSouth, through its BellSouth Mobility subsidiary, provides analog and
TDMA-based digital cellular services in markets that substantially overlap
Tritel PCS's markets. BellSouth has deployed IS-136 TDMA technology in all of
its digital markets in which it competes with Tritel PCS, except Knoxville
where it has deployed the GSM standard. GTE, Tritel PCS's other principal
cellular competitor, has begun to upgrade its network to provide digital
cellular service.
Powertel's PCS markets overlap nearly all of Tritel PCS's markets.
Powertel has deployed the GSM digital technology standard in all of its PCS
markets. The GSM technology currently does not permit roaming onto an analog
cellular system without reconnecting the call. As a result, Powertel customers
currently have to drop and reinitiate calls as they roam from Powertel's PCS
service to the service of an analog cellular provider.
FCC rules permit the partitioning and disaggregation of broadband PCS
licenses into licenses to serve smaller service areas, which could allow other
new wireless telecommunications providers to enter Tritel PCS's markets. It is
also possible for an A-, B- or C-Block license holder to subdivide its 30 MHz
license into several smaller components, such as 20 MHz and 10 MHz portions. If
such an apportionment did occur, Tritel PCS could face additional PCS
competition in certain of its markets.
COMPETITION FROM OTHER TECHNOLOGIES. In addition to PCS and cellular
operators and resellers, Tritel PCS may also face competition from other
existing communications technologies, including enhanced specialized mobile
radio. The ESMR system incorporates characteristics of cellular technology,
including low power transmission and interconnection with the landline
telephone network. A limited number of ESMR operators have recently begun
offering short messaging, data services and voice messaging service on a
limited basis. Nextel offers ESMR service in a number of Tritel PCS's markets.
The integrated digital enhanced network technology that Nextel has deployed
integrates the capabilities of three currently different devices: a dispatch
radio, a cellular telephone and an alphanumeric pager. Nextel is offering
service in Birmingham, Louisville, Knoxville and
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Nashville, and Tritel PCS believes it is likely that Nextel will expand its
service to other cities in Tritel PCS's markets. Within the area in which
Tritel PCS competes, Southern Communications Services, Inc. also has begun to
deploy ESMR cell sites over much of Georgia, Alabama and southeastern
Mississippi.
In the future, cellular and PCS offerings will also compete more directly
with traditional landline telephone service operators, and may compete with
services offered by energy utilities, and cable and wireless cable operators
seeking to offer communications services through their existing infrastructure.
Additionally, continuing technological advances in telecommunications, the
availability of more spectrum and FCC policies that encourage the development
of new spectrum-based technologies make it impossible to predict the extent of
future competition.
INDUSTRY OVERVIEW
Wireless telecommunications products and services evolved from basic
paging services to mass-market voice only analog cellular services and have now
progressed to PCS, digital cellular and wireless data. Each new generation of
wireless telecommunications products and services has generally been
characterized by improved product quality, broader service offerings and
enhanced features. Because PCS operators have selected different technologies
and are targeting different market segments, no uniform definition of PCS
exists. Rather, individual operators have implemented separate service
strategies with a wide range of differentiation in service offerings and
targeted markets.
The provision of cellular telephone service began with providers utilizing
the 850 MHz band of radio frequency in 1983 when the FCC began issuing two
licenses per market throughout the United States. Since then, the demand for
wireless telecommunications has grown rapidly, driven by the increased
availability of services, technological advancements, regulatory changes,
increased competition and lower prices. According to the Cellular
Telecommunications Industry Association, the number of wireless subscribers in
the United States, including cellular, PCS and SMR, has grown from
approximately 200,000 at June 30, 1985 to over 55.9 million at December 31,
1998, which reflected a penetration rate of 25%.
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The following graph and table set forth certain United States wireless industry
statistics:
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997 1998
WIRELESS INDUSTRY STATISTICS (1) ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total service revenues (in billions) $ 7.8 $ 10.9 $ 14.2 $ 19.1 $ 23.6 $ 27.5 $ 33.1
Wireless subscribers at end of
period (in millions) .............. 11.0 16.0 24.1 33.8 44.0 55.3 69.2
Subscriber growth .................. 46.0% 45.1% 50.8% 40.0% 30.4% 25.6% 25.1%
Average monthly revenues per
subscriber ........................ $68.68 $61.49 $56.21 $51.00 $47.70 $42.78 $39.43
Ending penetration ................. 4.3% 6.2% 9.2% 12.9% 16.6% 20.0% 25.0%
Digital subscribers at end of
period (in millions) .............. -- -- -- -- -- 6.5 18.3
</TABLE>
- ----------
Source: Cellular Telecommunications Industry Association and Census Bureau
Data.
(1) Reflects domestic U.S. commercially operational cellular, ESMR and PCS
providers.
In 1993, the FCC allocated a portion of the radio spectrum, 1850-1990 MHz,
for the provision of a new wireless communications service commonly known as
PCS. The FCC has described PCS as radio communications that encompass mobile
and ancillary communication that provide services to individuals and businesses
and can be integrated with a variety of competing networks. The FCC's stated
objectives in auctioning bandwidth for PCS were to foster competition to
existing carriers, increase availability of wireless services to a broader
segment of the public, and bring innovative technology to the U.S. wireless
industry. From 1995 through 1997, the FCC conducted auctions in which industry
participants were awarded PCS licenses for designated areas throughout the
United States.
INDUSTRY OUTLOOK. Wireless telecommunication technology developments are
expected to evolve and continue to drive consumer growth as users demand more
sophisticated services and products. Tritel PCS believes that wireless
telecommunications penetration rates will increase as prices fall and
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<PAGE>
greater emphasis is placed on the development and use of mass retail
distribution channels. Tritel PCS believes that the initial success of PCS
operators in the United States, and the corresponding acceleration of wireless
penetration overall, supports the forecasted rapid growth of PCS services.
OPERATION OF PCS AND CELLULAR COMMUNICATIONS SYSTEMS. Wireless
communications system service areas, whether PCS or cellular, are divided into
multiple cells. In both PCS and cellular systems, each cell site contains a
transmitter, a receiver and signaling equipment. The cell site is connected by
microwave or landline telephone to a switch that uses computers to control the
operation of the communications system for the entire service area. The system
controls the transfer of calls from cell to cell as a subscriber's handset
travels, coordinates calls to and from handsets, allocates calls among the
cells within the system and connects calls to the local landline telephone
system or to a long distance telephone carrier. Wireless communications
providers establish interconnection agreements with local exchange carriers and
interexchange carriers, thereby integrating their system with the existing
landline communications systems.
Because the signal strength of a transmission between a handset and a cell
site declines as the handset moves away from the cell site, the switching
office and the cell site monitor the signal strength of calls in progress. When
the signal strength of a call declines to a predetermined level, the switching
office tries to hand off the call to another cell site where the signal
strength is stronger. If a handset leaves the service area of a PCS or cellular
system, then the call will be disconnected unless there is a compatible
technology capable of a roaming connection in the adjacent system that will
enable a "hand off."
Analog cellular handsets are functionally compatible with cellular systems
in all markets within the United States. As a result, analog cellular handsets
may be used wherever a subscriber is located, as long as a cellular system is
operational in the area.
Although 1900 MHz PCS and 850 MHz cellular systems utilize similar
technologies and hardware, they operate on different frequencies and may use
different technical and network standards. As a result, until the recent
introduction of dual-mode handsets, it was not possible for users of one type
of system to place calls on a different type of system outside of their service
area, or to hand off calls from one type of system to another.
PCS systems operate under one of three principal digital signal
transmission technologies, or standards, that have been proposed by various
operators and vendors for use in PCS systems: TDMA, CDMA or GSM. TDMA and GSM
are both time division-based standards but are incompatible with each other and
with CDMA. Accordingly, a subscriber of a system that utilizes TDMA technology
is currently unable to use a tri-mode handset when traveling in an area not
served by TDMA-based PCS operators, unless the handset permits the subscriber
to use the analog cellular system in that area.
DIGITAL VS. ANALOG TECHNOLOGY. 850 MHz cellular services transmit voice
and data signals over analog-based systems, which use one continuous electronic
signal that varies in amplitude or frequency over a single radio channel.
Conversely, digital systems convert voice or data signals into a stream of
digits that is compressed before transmission, enabling a single radio channel
to carry multiple simultaneous signal transmissions. This increased capacity,
along with enhancements in digital technology standards, allows digital-based
wireless technologies to offer new and advanced services, such as greater call
privacy and more robust data transmission features, such as "mobile office"
applications, including facsimile, electronic mail, advanced text paging
services and connecting portable computers with computer/data networks.
PCS is an all-digital wireless telephony service, which differs from
existing cellular and other CMRS networks in three primary aspects:
o PCS operates in the 1850-1990 MHz frequency band while cellular and SMR
operate in the 800-900 MHz frequency band.
o PCS spectrum was auctioned in bands of 30 MHz or 10 MHz, while each
initial cellular provider received 25 MHz of bandwidth and ESMR providers
collected approximately 10 to 15 MHz in each market through a combination
of allocations, auctions, acquisitions and management agreements.
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<PAGE>
o PCS operators are expected, but not required, to operate fully digital
systems. Compared to analog cellular systems, digital systems, including
PCS and digital cellular systems, offer superior voice quality, increased
protection against eavesdropping and extended battery life due to the
reduced power consumption of digital components.
PCS AUCTIONS. In order to increase competition, promote improved quality
and service, and make available the widest possible range of wireless
telecommunications services to United States consumers, federal legislation was
enacted in 1993 directing the FCC to allocate radio frequency spectrum for PCS
by competitive bidding. In 1993, the FCC allocated 120 MHz of spectrum in the 2
GHz band for the provision of PCS. The 120 MHz of spectrum allocated for PCS
was divided into three 30 MHz blocks, A-, B- and C- Blocks and three 10 MHz
blocks, D-, E- and F- Blocks. Two different service areas have been designated:
51 MTAs for the A- and B-Blocks and 493 BTAs for the C-, D-, E- and F-Blocks.
In March 1995, the FCC completed the A- and B-Block PCS auctions,
resulting in the award of two 30 MHz licenses in all but three of the MTAs,
which three were the subject of previous awards pursuant to the FCC's pioneer
preference program. In May 1996, the FCC completed the C-Block auction,
resulting in the award of one 30 MHz license in each of the BTAs where the
applicant was found qualified to hold a license. In January 1997, the FCC
completed the auctions for the D-, E- and F-Block PCS auctions, resulting in
the award of three 10 MHz BTA licenses in each BTA where the applicant was
found qualified to hold a license. The C- and F-Block licenses are reserved for
Entrepreneurs while the A-, B-, D- and E- Block licenses are not restricted to
any specific type of applicant.
Certain C-Block PCS licensees have chosen to return all or a portion of
their spectrum to the government pursuant to an FCC order permitting such
licensees to restructure. Tritel PCS chose to return 15 MHz of spectrum for
certain Pops in northern Alabama. On April 15, 1999, the FCC completed an
auction of all C-Block spectrum, along with several D-, E- and F- Block
licenses, which have either been returned pursuant to the restructuring order
or otherwise forfeited for noncompliance with the rules or default under the
government financing. Tritel PCS participated in this auction along with AT&T
Wireless, TeleCorp PCS and Triton PCS. Tritel PCS made a loan of $7.5 million
for bidding on licenses to ABC Wireless, L.L.C., an entity through which these
parties participated in the auction. While Tritel PCS was unable to bid on the
northern Alabama licenses which it returned to the FCC, it did bid on
additional spectrum within its markets.
FACILITIES
Tritel PCS currently owns no real property. Tritel PCS has entered into
leases for an aggregate of 44,000 square feet of office space in Jackson,
Mississippi for use as Tritel PCS's principal executive offices. The leases
have initial terms ranging from five years to ten years, with an option to
renew for an additional five years. Tritel PCS has also entered into a lease
for 16,000 square feet of office space in Flowood, Mississippi for use as a
customer operations center. This lease has an initial term of five and one-half
years, with an option to renew for an additional five years. Management expects
that Tritel PCS's current executive office and customer operations office
facilities will be sufficient through at least 2004.
Tritel PCS has entered into leases in Jackson, Birmingham, Mobile,
Nashville, Knoxville, Louisville, Lexington and elsewhere for regional project
offices.
Tritel PCS has leased mobile switching centers in Knoxville, Nashville,
Birmingham, Louisville and Jackson and plans to enter into a lease for a switch
center in Mobile. Each switching center will have a common design with up to
13,000 square feet of space. The lease term for the switch centers is generally
in the range of ten to fifteen years, with Tritel PCS having an option to
extend the term for five or ten years. These six switch centers are sufficient
to cover all of Tritel PCS's markets and, accordingly, Tritel PCS does not
expect to add switch centers in the future.
Company retail stores will be located throughout Tritel PCS's markets.
These stores will generally cover 1,200 to 2,000 square feet of space and the
leases will generally be for an initial five year term,
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<PAGE>
with one or more five-year renewal options. Tritel PCS plans to open 28 company
stores in 1999 and an additional 26 in 2000 to service all markets being
launched in 1999 and 2000.
Tritel PCS expects to lease approximately 95% of its cell sites, either
through existing sites or built-to-suit sites. The cell site lease term is
generally for five years with one or more five year renewal options.
Maintenance of the site is typically included in the lease arrangement and
performed by the lessor. Additionally, Tritel PCS is currently negotiating
master lease agreements with other wireless providers and tower companies to
lease space on their existing cell sites throughout Tritel PCS's markets.
Tritel PCS expects that it will need to construct approximately 40 cell sites
for its planned network buildout through 2000.
PERSONNEL
At June 30, 1999, Tritel PCS had 219 employees, including 59 in technical
operations, 68 in marketing and sales operations, 33 in customer operations, 17
in management information systems, 14 in human resources and 28 in corporate
and financial. Most of Tritel PCS's employees are located at the corporate and
customer service operations locations in Jackson, Mississippi. Technical
operations and market and sales operations personnel are located in each of the
regional markets of Birmingham, Chattanooga, Huntsville, Knoxville, Louisville,
Lexington, Mobile, Montgomery and Nashville.
LEGAL PROCEEDINGS
Department of Justice Investigation
On April 25, 1997, Digital PCS, the predecessor-in-interest to Tritel PCS,
received a civil investigative demand letter from the Antitrust Division of the
Department of Justice requesting documents and information concerning its
participation in the FCC's PCS auctions. The civil investigative demand was
issued in connection with the Antitrust Division's investigation of allegations
that Digital PCS and others improperly communicated competitively significant
auction information through strategic bidding behavior. Other bidders
reportedly received similar civil investigative demands. While the FCC was
investigating this specific claim, it issued all but nine of the D-, E- and
F-Block licenses awarded to Digital PCS in the January 1997 auctions.
Subsequently, the FCC issued the remaining nine licenses to Digital PCS in
November 1997 and assessed Digital PCS a $650,000 fine for apparent violations
of FCC bidding rules in connection with Digital PCS's bidding practices. In
August 1998, the FCC rescinded the $650,000 fine, finding that its rules were
not sufficiently clear as to be enforceable against Tritel PCS.
In November 1998, as part of a prearranged settlement, the Department of
Justice simultaneously filed a lawsuit against, and entered into a consent
decree with, Digital PCS and two other companies. The consent decree imposed no
penalties and made no finding of wrongdoing. Pursuant to the terms of the
decree, Digital PCS promised not to use so-called "trailing numbers" in its
bids during future FCC auctions. However, the FCC recently modified its auction
structure so that it is no longer possible for anyone to use trailing numbers
in FCC auctions.
While Tritel PCS was not a party to either the litigation or the consent
decree, Tritel PCS intends to voluntarily abide by the terms of the consent
decree.
Other Proceedings
Tritel PCS is subject to various claims arising in the ordinary course of
business and is a party to various legal proceedings which constitute ordinary
routine litigation incidental to Tritel PCS's business. In the opinion of
management, all such matters in the aggregate are not expected to have a
material adverse effect on Tritel PCS.
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GOVERNMENT REGULATION
OVERVIEW
As a recipient of licenses acquired through the C-Block auction and the
F-Block auction, Tritel PCS's ownership structure and operations are and will
be subject to substantial FCC regulation.
FCC AUTHORITY
The Communications Act of 1934, as amended, grants the FCC the authority
to regulate the licensing and operation of all non-federal government
radio-based services in the United States. The scope of the FCC's authority
includes:
o allocating radio frequencies, or spectrum, for specific services;
o establishing qualifications for applicants seeking authority to operate
such services, including PCS applicants;
o approving initial licenses, modifications thereto, license renewals,
and the transfer or assignment of such licenses;
o promulgating and enforcing rules and policies that govern the
operation of spectrum licensees;
o the technical operation of wireless services, interconnection
responsibilities between and among PCS, other wireless services such as
cellular, and landline carriers; and
o imposition of monetary fines and for license revocation for any
substantial violations of those rules and regulations under its broad
oversight authority.
With respect to market entry and the promotion of a competitive
marketplace for wireless providers, the FCC regularly conducts rulemaking and
adjudicatory proceedings to determine and enforce rules and policies
potentially affecting broadband PCS operations.
REGULATORY FORBEARANCE
The FCC announced that it would forbear from applying several regulations
to CMRS services, including its rules concerning the filing of tariffs for the
provision of interstate services. Congress specifically authorized the FCC to
forbear from applying such regulation in the Omnibus Budget Reconciliation Act
of 1993. With respect to PCS, the FCC has stated its intent to continue
monitoring competition in the PCS service marketplace. The FCC also concluded
that Congress intended to preempt state and local rate and entry regulation of
all CMRS providers, including PCS, but established procedures for state and
local governments to petition the FCC for authority to continue or initiate
such regulation. Thus far the FCC has denied all state petitions seeking to
continue rate or entry regulation of CMRS.
REGULATORY PARITY
The FCC has adopted rules designed to create symmetry in the manner in
which it regulates similar types of mobile service providers. According to
these rules, all commercial mobile radio service, or CMRS, providers that
provide substantially similar services will be subject to similar regulation. A
CMRS service is one in which the mobile radio service is provided for a profit,
interconnected to the public switched telephone networks, and made available to
the public. Under these rules, providers of SMR and ESMR services are subject
to regulations similar to those governing cellular and PCS carriers if they
offer an interconnected commercial mobile service.
COMMERCIAL MOBILE RADIO SERVICE SPECTRUM OWNERSHIP LIMIT
The FCC has limited the amount of broadband CMRS spectrum, including
cellular, broadband PCS and SMR, in which an entity may hold an attributable
interest in a given geographic area to 45 MHz. For these purposes, only PCS and
other CMRS licenses are attributed to an entity where its
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equity exceeds certain thresholds, the entity is an officer or director of a
broadband PCS, cellular or SMR licensee, or certain other relationships exist
which cause an interest to be attributable. Thus, entities with attributable
interests in cellular licenses, which are for 25 MHz, in certain markets cannot
hold more than 20 MHz of PCS spectrum in the same markets. Tritel PCS's ability
to raise capital from entities with attributable broadband CMRS interests in
certain geographic areas is likely to be limited by this restriction. This
restriction was challenged and although the U.S. Court of Appeals for the
District of Columbia Circuit remanded the case to the FCC for further action,
the FCC has affirmed the restriction. Although the case has not been resolved
with finality, Tritel PCS has been advised by its special FCC counsel that the
possibility of a material adverse effect accruing to Tritel PCS as a result of
an unfavorable decision is remote.
OTHER FCC REQUIREMENTS
The FCC had been conducting rulemakings to address interconnection issues
among CMRS carriers and between CMRS and local exchange carriers. These
proceedings were significantly affected by the 1996 Act and FCC rulemakings
conducted pursuant to the 1996 Act.
The FCC has adopted rules that prohibit broadband PCS, cellular and
certain SMR licenses from restricting the resale of their services. The FCC has
determined that the availability of resale will increase competition at a
faster pace by allowing new entrants to the wireless market quickly through the
resale of their competitors' services while they are building out their own
facilities. This prohibition is scheduled to expire in November, 2002. However,
the FCC has received petitions requesting the FCC to extend the five-year
period. Additionally, the FCC requires such carriers to provide roaming service
to subscribers of other such carriers, through which traveling subscribers of
other carriers may make calls after establishing a method of payment with a
host carrier.
The FCC has revised its rules to permit CMRS operators, including PCS
licensees, to use their assigned spectrum to provide fixed local loop and other
services on a co-primary basis with mobile services. The FCC is continuing its
rulemaking proceeding to determine the extent to which such fixed services fall
within the scope of CMRS regulation.
The FCC has imposed number portability requirements on broadband PCS,
cellular and certain SMR providers. The Commission's number portability rules
requires that such licensees provide their customers with the ability to change
carriers while retaining phone numbers. Specifically, by December 31, 1998,
CMRS providers subject to the number portability requirements were required to
have the capability of obtaining routing information, such as by querying the
appropriate regional number portability database, administered by Lockheed
Martin IMS, in order to deliver calls from their networks to ported numbers
anywhere in the United States. Cellular and PCS licensees may accomplish this
end by either contracting with a local exchange carrier or an interexchange
carrier to query number portability databases, or investing in new equipment to
deliver the ported calls. By November 24, 2002, these providers must be able to
offer number portability without the impairment of quality, reliability, or
convenience when switching service providers, including the ability to support
roaming throughout their networks. The FCC has solicited further comment on the
appropriate cost-recovery methods regarding long-term number portability.
The FCC also requires cellular, PCS, and certain SMR carriers to transmit
all wireless 911 emergency calls to Public Safety Answering Points without any
credit checks or validation. The FCC also requires that such carriers must be
capable of transmitting 911 calls from individuals with speech or hearing
disabilities through means such as text telephone devices. Because of
difficulties associated with achieving compatibility on digital wireless
systems, the FCC granted a temporary waiver of this requirement for parties
that requested such a waiver, including Tritel, on December 31, 1998. The FCC
is reviewing the pending petitions for waiver. If Tritel's petition is not
granted, it would be expensive and very difficult to comply. Since October 1,
1998, carriers using digital equipment, including Tritel PCS, have been
required to relay the mobile telephone number of the originator of a 911 call
as well as the location of the cell that is handling the call. By October 2001,
carriers must be able to provide the Public Safety Answering Point with the
location of the mobile caller within a radius of 125 meters. The FCC proceeding
implementing these requirements is ongoing and these
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requirements remain subject to further modification. The FCC has denied
petitions to establish federal cost-recovery methods for the provision of
emergency 911 services, leaving it to local governments to develop
cost-recovery solutions tailored to meet local conditions and needs. In
addition, the Commission has refrained from adopting any limitation of
liability for carriers who transmit 911 calls placed by non-subscribers,
deferring instead to state tort law.
In August 1996, as revised in August 1997, the FCC adopted new guidelines
and methods for evaluating the effects of radiofrequency emissions from
transmitters including PCS mobile telephones and base stations. The new
guidelines, which are generally more stringent than previous requirements, were
effective immediately for hand-held devices and became effective for other
devices on October 15, 1998. These guidelines have been challenged in federal
court as insufficient to protect the public health. If the FCC is required to
impose more stringent requirements as a result, it would adversely affect
Tritel PCS's business.
Wireless providers are subject to the Communications Assistance for Law
Enforcement Act also known as the Wiretap Act, which is under the purview of
the Department of Justice. The Wiretap Act is designed to ensure that law
enforcement can conduct authorized wiretaps of communications utilizing
advanced technologies. Adherence to The Wiretap Act requires carriers to have a
specific number of open ports available for law enforcement personnel with the
appropriate legal authority to perform wiretaps on the carrier's network. In
addition, carriers are required to file their policies and procedures for
complying with The Wiretap Act with the FCC. Full implementation of The Wiretap
Act's assistance capability requirements, however, is not required until June
30, 2000 because the FCC has found that there is a lack of equipment available
to meet these requirements. In addition, there is strong disagreement over the
technical standards with which carriers must comply. The expense that will be
imposed upon wireless carriers as a result of full implementation cannot be
known until the technical standard is adopted.
In September 1997, the FCC initiated a Notice of Inquiry into the service
billing option calling party pays. This option would allow carriers to charge
the party placing the call for wireless air time and all other applicable
charges. Any such regulations in this area could have a significant impact on
wireless carriers as it is believed that overall minutes of use for carriers
would increase as the cost of incoming calls gets shifted to the calling party.
However, before the FCC could implement such a billing option in this country
there are several technological, legal and consumer protection issues which
must be resolved. The primary issue surrounds the ability to alert landline
subscribers placing a call to a mobile subscriber of premium charges resulting
from the use of both a wireless and landline network. Secondarily is the issue
of whether such a billing mechanism should even be regulated. Although the FCC
favors adopting calling party pays, the issues surrounding this proceeding
could take substantial time to resolve.
OTHER FEDERAL REGULATIONS
Wireless networks are subject to certain Federal Aviation Administration,
Environmental Protection Agency and FCC guidelines regarding the location,
lighting and construction of transmitter towers and antennas. In addition, the
FCC has authority to enforce certain provisions of the National Environmental
Policy Act as they would apply to Tritel PCS's facilities. Tritel PCS intends
to use common carrier point-to-point microwave and traditional landline
facilities to connect base station sites and to link them to their respective
main switching offices. These microwave facilities have historically been
separately licensed by the FCC on a first-come, first-served basis, although
the FCC could decide to auction certain of such licenses, and are subject to
specific service rules.
Wireless providers also must satisfy a variety of FCC requirements
relating to technical and reporting matters. One such requirement is the
coordination of proposed frequency usage with adjacent wireless users,
permittees and licensees in order to avoid radiofrequency interference between
adjacent networks. In addition, the height and power of base station
transmitting facilities and the type of signals they emit must fall within
specified parameters.
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STATE AND LOCAL REGULATION
The scope of state regulatory authority covers such matters as the terms
and conditions of interconnection between local exchange carriers and wireless
carriers, customer billing information and practices, billing disputes, other
consumer protection matters, environmental, zoning, and historical
preservation, certain facilities construction issues, the bundling of services
and equipment, and requirements relating to making capacity available to third
party carriers on a wholesale basis. In these areas, particularly the terms and
conditions of interconnection between local exchange carriers and wireless
providers, the FCC and state regulatory authorities share regulatory
responsibilities with respect to interstate and intrastate issues,
respectively.
Tritel PCS and its subsidiaries have been and intend to remain active
participants in rulemaking and other administrative policy proceedings before
the FCC and before state regulatory authorities. Proceedings with respect to
the foregoing policy issues before the FCC and state regulatory authorities
could have a significant impact on the competitive market structure among
wireless providers and the relationships between wireless providers and other
carriers.
GENERAL PCS REGULATIONS
In June 1994, the FCC allocated spectrum for broadband PCS services
between the 1850 to 1990 MHz bands. Of the 120 MHz available for licensed PCS
services, the FCC created six separate blocks of spectrum identified as the A-,
B-, C-, D-, E- and F-Blocks. The A-, B- and C-Blocks are each allocated 30 MHz
of spectrum, the D-, E- and F-Blocks are allocated 10 MHz each. For each block,
the FCC adopted a 10-year PCS license term with an opportunity to renew. The
FCC also allocated 20 MHz of spectrum within the PCS band for unlicensed use.
The FCC adopted a rebuttable presumption that all PCS licensees are common
carriers, subject to Title II of the Communications Act. Accordingly, each PCS
licensee deemed to be a common carrier must provide services upon reasonable
request and the rates, terms and conditions of service must not be unjustly or
unreasonably discriminatory.
STRUCTURE OF PCS BLOCK ALLOCATIONS
The FCC defines the geographic contours of the licenses within each PCS
block based on the major trading areas and basis trading areas. The FCC awarded
A- and B-Block licenses in 51 major trading areas. The C-, D-, E- and F-Block
spectrum were allocated on the basis of 493 smaller basis trading areas. In
addition, there is a CMRS spectrum cap limiting all CMRS licensees to an
aggregate of 45 MHz of PCS, cellular and SMR spectrum in any given market.
All but three of the 51 total A-Block licenses and all 51 B-Block licenses
were auctioned in 1995. Three A-Block licenses were awarded separately pursuant
to the FCC's "pioneer's preference" program. The auctioned A- and B-Block
licenses were awarded in June 1995. Spectrum in the C- and F-Blocks is reserved
for entrepreneurs. The FCC completed its initial auction for the C-Block on May
6, 1996 and relicensed 18 C-Block licenses on which initial auction winners
defaulted in a re-auction that ended on July 16, 1996. Before granting licenses
won by a successful bidder, the FCC requires that such bidder submit a Long
Form Application for each market in which it has submitted a winning bid.
Airwave Communications filed its Long Form Application for the C-Block auction
on May 22, 1996. This submission began an administrative process in which
parties, or the Commission on its own motion, had an opportunity to challenge
Airwave Communications' qualifications to be an FCC licensee. No member of the
public challenged the Airwave Communications' applications and on September 17,
1996, the FCC granted licenses to Airwave Communications for all of its C-Block
markets. On September 24, 1996, Airwave Communications paid to the U.S.
Government the full amount of the downpayment required following the grant of
C-Block licenses.
The D-, E-, and F-Block licenses were auctioned simultaneously, with the
auction closing on January 14, 1997. On January 23, 1997, Digital PCS paid to
the U.S. Government the full amount of the downpayment required following the
close of the D-, E- and F-Block auctions. On January 30,
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1997, Digital PCS submitted its long form application for the licenses won at
the D-, E- and F-Block auctions. The deadline for parties to challenge Digital
PCS's applications was March 21, 1997. Although Digital PCS's applications were
challenged, the FCC has granted licenses to Digital PCS.
In December 1996, the FCC adopted rules permitting broadband PCS carriers
to partition any service areas within their license areas and disaggregate any
amount of spectrum within their spectrum blocks to entities that meet the
eligibility requirements for the spectrum blocks. The purpose of the FCC's rule
change was to permit existing PCS licensees and new PCS entrants to have
greater flexibility to determine how much spectrum and geographic area they
need or desire in order to provide PCS service. Thus, A-, B-, D- and E-Block
licensees may sell or lease partitioned or disaggregated portions of their
licenses at any time to entities that meet the minimum eligibility requirements
of the Communications Act. C- and F-Block licensees may only sell or lease
partitioned or disaggregated portions of their licenses to other qualified
entrepreneurs during the first five years of their license terms, and such
entities would take over partitioned service areas subject to separately
established installment payment obligations. After five years, licenses are
freely transferable, subject to unjust enrichment penalties. If transfer occurs
during years six through ten of the initial license term to a company that does
not qualify for auction preferences, such a sale would be subject to immediate
payment of the outstanding balance of the government installment payment debt
as a condition of transfer. A transfer to a company which qualifies for a lower
level of auction preferences will be subject to partial repayment of bidding
credits and installment payments as a condition of transfer. Additionally, such
a sale may be subject to full repayment of the bidding credits. The FCC's rules
concerning whether C and F Block licenses must repay the bid credit as a
condition of transfer during years six through ten is currently under review.
THE 1996 ACT
On February 8, 1996, the President signed the 1996 Act, which effected a
sweeping overhaul of the Communications Act. In particular, the 1996 Act
substantially amended Title II of the Communications Act, which governs
telecommunications common carriers. The policy underlying this legislative
reform was the opening of the telephone exchange service markets to full
competition. The 1996 Act makes all state and local barriers to competition
unlawful, whether they are direct or indirect. It directs the FCC to initiate
rulemaking proceedings on local competition matters and to preempt all
inconsistent state and local laws and regulations. The 1996 Act requires
incumbent landline local exchange carriers to open their networks to
competition through interconnection and access to unbundled network elements
and prohibits state and local barriers to the provision of interstate and
intrastate telecommunications services.
The 1996 Act prohibits state and local governments from enforcing any law,
rule or legal requirement that prohibits or has the effect of prohibiting any
person from providing interstate or intrastate telecommunications services.
States retain jurisdiction under the 1996 Act to adopt laws necessary to
preserve universal service, protect public safety and welfare, ensure the
continued quality of telecommunications services and safeguard the rights of
consumers.
Implementation of the provisions of the 1996 Act is the task of the FCC,
the state public utility commissions and a joint federal-state board. Much of
the implementation of the 1996 Act is being completed in numerous rulemaking
proceedings with short statutory deadlines. These proceedings address some
issues and proposals that were already before the FCC in pending rulemaking
proceedings affecting the wireless industry, as well as additional areas of
telecommunications regulation not previously addressed by the FCC and the
states.
Some specific provisions of the 1996 Act which are expected to affect
wireless providers are summarized below. These provisions generally have proven
helpful to wireless carriers. There can be no assurance, however, that these
provisions or their implementation by federal or state regulators will not have
a material adverse effect on Tritel PCS.
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EXPANDED INTERCONNECTION OBLIGATIONS
The 1996 Act establishes a general duty of all telecommunications
carriers, including PCS licensees, to interconnect with other
telecommunications carriers, directly or indirectly. The 1996 Act also contains
a detailed list of requirements with respect to the interconnection obligations
of local exchange carriers. These interconnection obligations include resale,
number portability, dialing parity, access to rights-of-way and reciprocal
compensation. The FCC has determined that all CMRS carriers are considered
telecommunications carriers, but for now, CMRS providers such as Tritel do not
meet the 1996 Act's definition of a local exchange carrier.
Local exchange carriers designated as incumbents, those providing landline
local exchange telephone service at the time the 1996 Act was adopted, have
additional interconnection obligations including:
(1) to negotiate in good faith;
(2) to interconnect on terms that are reasonable and non-discriminatory at
any technically feasible point at cost-based rates, plus a reasonable
profit;
(3) to provide nondiscriminatory access to facilities and network elements
on an unbundled basis;
(4) to offer for resale at wholesale rates any service that local exchange
carriers provide on a retail basis; and
(5) to provide actual co-location of equipment necessary for
interconnection or access.
Portions of these requirements have been challenged in court.
The 1996 Act establishes a framework for state commissions to mediate and
arbitrate negotiations between incumbent local exchange carriers and carriers
requesting interconnection, services or network elements. The 1996 Act
establishes deadlines and policy guidelines for state commission
decision-making and federal preemption in the event a state commission fails to
act.
REVIEW OF UNIVERSAL SERVICE REQUIREMENTS
The 1996 Act contemplates that interstate telecommunications providers,
including CMRS providers, will "make an equitable and non-discriminatory
contribution" to support the cost of providing universal service, although the
FCC can grant exemptions in certain circumstances. A decision adopted by the
1996 Act-mandated Federal-State Joint Board rejected arguments that CMRS
providers should be exempted from universal service obligations and concluded
that, to the extent such carriers provide interstate service, they must
contribute to universal service support mechanisms. The Joint Board also found
that states could require CMRS providers to contribute to state support
mechanisms. The FCC now requires all CMRS carriers to contribute to a universal
service fund.
PROHIBITION AGAINST SUBSIDIZED TELEMESSAGING SERVICES
The 1996 Act prohibits incumbent local exchange carriers from subsidizing
telemessaging services, including voice mail, voice storage/retrieval, live
operator service, and related ancillary services) from their telephone exchange
service or exchange access and from discriminating in favor of its own
telemessaging operations.
CONDITIONS ON REGIONAL BELL OPERATING COMPANIES PROVISION OF IN-REGION
INTERLATA SERVICES
The 1996 Act establishes conditions generally requiring that, before
engaging in landline interexchange services in states in which they provide
landline local service, referred to as in-region interLATA services, regional
Bell Operating Companies and their affiliates must provide access and
interconnection to one or more unaffiliated competing providers of telephone
exchange service. Regional Bell Operating Companies and their affiliates may
provide wireless services, including broadband PCS, in markets that cross LATA
boundaries as an incidental interLATA service. The specific interconnection
requirements, which regional Bell Operating Companies must offer on a
non-discriminatory basis, include: interconnection and unbundled access; access
to poles, ducts,
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conduits and rights-of-way owned or controlled by regional Bell Operating
Companies; unbundled local loops; unbundled local transport; unbundled local
switching; access to emergency 911, directory assistance, operator call
completion and white pages; access to telephone numbers, databases and
signaling for call routing and completion; number portability; local dialing
parity; reciprocal compensation; and resale.
REGIONAL BELL OPERATING COMPANIES COMMERCIAL MOBILE JOINT MARKETING
The regional Bell Operating Companies are permitted to market jointly and
sell wireless services in conjunction with telephone exchange service, exchange
access, intraLATA and interLATA telecommunications and information services.
CMRS FACILITIES SITING
The 1996 Act limits the rights of states and localities to regulate
placement of CMRS facilities so as to prohibit or prohibit effectively the
provision of wireless services or to discriminate among providers of such
services. It also eliminates environmental effects from radiofrequency
emissions, provided the wireless system complies with FCC rules, as a basis for
states and localities to regulate the placement, construction or operation of
wireless facilities.
EQUAL ACCESS
The 1996 Act provides that wireless carriers are not required to provide
equal access to common carriers for interexchange toll services. The FCC is
authorized to require unblocked access to long distance providers of the user's
choice subject to certain conditions.
DEREGULATION
The FCC is required to forebear from applying any statutory or regulatory
provision that it determines is not necessary to keep telecommunications rates
and terms reasonable or to protect consumers. A state may not apply a statutory
or regulatory provision that the FCC decides to forebear from applying. In
addition, the FCC must review its telecommunications regulations every two
years and change any that are no longer necessary.
The 1996 Act was explicit in its preemption of certain components of local
regulation of CMRS carriers, including the authority to preclude antenna site
construction due to concerns over radiofrequency emissions. Rather than
directly challenge federal authority in this area, local governments have
instituted moratoria on further construction while the health, safety, and
historic preservation aspects of this matter are studied further. Currently
there are over 200 such moratoria in effect across the country, including one
city in Tritel PCS's markets, Decatur, Alabama. There are a number of bills
pending in Congress, some of which would strengthen the federal government's
preemption authority and some which would weaken federal authority. Tritel PCS
cannot predict how this issue will be resolved and the extent to which it may
have a material impact on its ability to rapidly and efficiently construct its
PCS network.
FCC INTERCONNECTION PROCEEDINGS
In August 1996, the FCC adopted rules to implement the interconnection
provisions of the 1996 Act. In its interconnection order, the FCC determined
that CMRS-to-CMRS interconnection may be accomplished indirectly through the
interconnection of each CMRS provider to an incumbent LEC's network. The FCC
determined that local exchange carriers are required to enter into reciprocal
compensation arrangements with all CMRS providers for the transport and
termination of traffic between local exchange carrier and CMRS networks.
Additionally, the FCC established default proxy rates for reciprocal
compensation, interconnection and unbundled network elements to be used unless
or until a state develops rates for these items based on the Total Element Long
Run Incremental
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Cost. The proxy rates for CMRS-to-local exchange carrier interconnection would
result in significant savings when compared with rates that CMRS providers,
principally cellular carriers, have been paying to local exchange carriers for
transport and termination of traffic.
On July 18, 1997, as amended October 14, 1997, the U.S Court of Appeals
for the Eighth Circuit, acting on consolidated petitions for review of the
FCC's interconnection order, struck down the rate-related portions of the
interconnection order. The court found that the FCC is without jurisdiction to
establish pricing regulations regarding intrastate telephone service. The FCC
appealed the Eighth Circuit's decision to the U.S. Supreme Court and on January
25, 1999, the Court reversed in part and affirmed in part the Eighth Circuit's
decision. The Court upheld the FCC's right to implement the local competition
provisions of the 1996 Act, including the rate-related portions of the
interconnection order. Only Section 51.139 of the FCC's rules was remanded for
further proceedings. Section 51.139 covers a competing carrier's access to a
local exchange carrier's network elements. The FCC has commenced a proceeding
to implement the Court's directive. The Court's ruling should have no material
adverse affect on Tritel PCS.
The portions of the FCC's interconnection order that are not related to
pricing issues went into effect on October 15, 1996. It is not possible to
determine the final outcome of the FCC's actions on remand or the effect such
outcome will have on CMRS carriers, including Tritel PCS.
RELOCATION OF FIXED MICROWAVE LICENSEES
In an effort to balance the competing interests of existing microwave
users and newly authorized PCS licensees in the spectrum allocated for PCS use,
the FCC has adopted (a) a transition plan to relocate fixed microwave operators
that currently are operating in the PCS spectrum, and (b) a cost sharing plan
so that if the relocation of an incumbent benefits more than one PCS licensee,
the benefiting PCS licensees will help defray the costs of the relocation. PCS
licensees will only be required to relocate fixed microwave incumbents if they
cannot share the same spectrum. 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 fixed microwave incumbents to alternate
spectrum locations.
Relocation generally involves a PCS operator compensating an incumbent for
costs associated with system modifications and new equipment required to move
to alternate, readily available spectrum. The transition plan, as modified,
allows 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 service operations, the
voluntary negotiation period is three years. The FCC recently shortened the
voluntary negotiation period to one year for commercial microwave operators,
but retained the three year negotiation period for public safety licenses.
Parties unable to reach agreement within these time periods may refer the
matter to the FCC for resolution, but the existing microwave user is permitted
to continue its operations until final FCC resolution of the matter.
The FCC's cost-sharing plan allows PCS licensees that relocate fixed
microwave links outside of their license areas to receive reimbursements from
later-entrant PCS licensees that benefit from the clearing of their spectrum.
Two non-profit clearinghouses currently administer the FCC's cost-sharing plan.
Thus, Tritel PCS may be required in certain circumstances to defray the cost of
earlier relocations by A-, B- and C-Block licensees.
Including cost sharing for relocations performed by other PCS licensees
and cost sharing reimbursements by other PCS licenses paid to Tritel PCS.
Tritel PCS expects to spend a total of approximately $25 million for microwave
relocation. Tritel PCS has completed the microwave relocation for all 1999
launch cities and does not expect any delays to scheduled service launches in
2000.
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C-BLOCK LICENSE REQUIREMENTS
Airwave Communications was the winning bidder for six licenses in the
C-Block auction, which was designated as an entrepreneurs Block. FCC rules
require each C-Block applicant and licensee qualify as entrepreneur in order to
hold C-Block licenses and that it qualify as a small business in order to
receive certain financing preferences. The FCC determined that Entrepreneurs
that qualify as small businesses would be eligible to receive a C-Block Loan
from the U.S. Government for 90% of the dollar amount of their net winning bids
in the C-Block auction. For small businesses, the period during which C-Block
licensees may make interest-only payments is six years, with payments of
principal and interest amortized over the remaining four years of the license
term. The interest rate for outstanding principal is 7.0%. In order to ensure
continued compliance with the FCC rules, the FCC has announced its intention to
conduct random audits during the initial ten-year PCS license terms.
ENTREPRENEURS REQUIREMENTS
In order to hold a C-Block license, an entity and its affiliates must have
had (a) less than $125 million in gross revenues in each of fiscal 1993 and
1994 and (b) less than $500 million in total assets at the time it filed its
application to qualify for the C-Block auction on FCC Form 175. Airwave
Communications filed its Form 175 on November 6, 1995. In calculating a
licensee's gross revenues and total assets for purposes of the entrepreneurs
requirements, the FCC includes the gross revenues and total assets of the
licensee's affiliates, those persons or entities that hold attributable
interests in the licensee, and the affiliates of such persons or entities.
However, the gross revenues and total assets of certain affiliates are not
attributable to the licensee if the licensee maintains an organizational
structure that satisfies certain control group requirements defined below. For
at least five years after winning a C-Block license, a licensee must continue
to meet the entrepreneurs requirements in order to remain eligible for the
bidding credits it received in the FCC's installment payment program.
By claiming status as an entrepreneur, Airwave Communications qualified to
enter the C-Block auction and is qualified to hold C-Block licenses. If the FCC
were to determine that Airwave Communications did not satisfy the entrepreneurs
requirements at the time it participated in the C-Block auction or that Tritel,
Inc. fails to meet the ongoing entrepreneurs requirements, the FCC could revoke
Tritel's PCS licenses, require Tritel, Inc. to restructure in order to come
into compliance with the relevant regulation, fine Tritel, Inc., or take other
enforcement actions, including imposing the unjust enrichment penalties.
Although Tritel, Inc. believes it has met the entrepreneurs requirements, there
can be no assurance that it will continue to meet such requirements or that, if
it fails to continue to meet such requirements, the FCC will not take action
against Tritel, Inc.
SMALL BUSINESS REQUIREMENTS
An entity that meets the entrepreneurs requirements may also receive
certain preferential financing terms if it meets certain other small business
requirements. These preferential financing terms include a 25% bidding credit
and the ability to make quarterly interest-only payments on its C-Block Loan
for the first six years of the license term. To meet the small business
requirements, a licensee must have had average annual gross revenues of not
more than $40 million for the three calendar years preceding the date it filed
its Form 175. In calculating a licensee's gross revenues for purposes of the
small business requirements, the FCC includes the gross revenues of the
licensee's affiliates, those persons or entities that hold attributable
interests in the licensee, and the affiliates of such persons or entities.
By claiming status as a small business, Airwave Communications, Tritel,
Inc.'s predecessor in interest, qualified for the 25% bidding credit and
preferential financing. If the FCC were to determine that Tritel does not
qualify as a small business, then Tritel, Inc. could be forced to repay the
value of the bidding credit and preferential financing for which it was not
qualified. Further, the FCC could revoke Tritel's PCS licenses, require Tritel,
Inc. to restructure in order to come into compliance with the relevant
regulation, fine Tritel, Inc. or take other enforcement actions, including
imposing unjust
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enrichment penalties. Although Tritel, Inc. has been structured to meet the
small business requirements, there can be no assurance that it will continue to
meet such requirements or that, if it fails to continue to meet such
requirements, the FCC will not take any of the aforementioned actions against
Tritel, Inc.
CONTROL GROUP REQUIREMENTS
If a C-Block licensee maintains an organizational structure in which at
least 25% of its total equity on a fully-diluted basis is held by a control
group that meets certain requirements, the FCC excludes certain assets and
revenues from being attributed to such total revenue and gross asset
calculations. The control group requirements mandate that the control group,
among other things, have and maintain both actual and legal control of the
licensee. Under the control group requirements:
o an established group of investors meeting certain financial
qualifications must own at least 15% of the licensee entity's total
equity interest on a fully-diluted basis and at least 50.1% of the voting
power in the licensee entity, and
o additional control group members must hold, on a fully-diluted basis,
the remaining 10% control group equity interest in the licensee entity.
Additional control group members must be either:
o other qualifying investors in the control group;
o individual members of the licensee's management; or
o non-controlling institutional investors, including most venture capital
firms meeting FCC-specified criteria.
A C-Block licensee must have met the control group requirements at the
time it filed its Form 175 and must continue to meet the control group
requirements for five years following the license grant date. Commencing the
fourth year of the license term, the FCC rules (a) eliminate the requirement
that additional control group members hold the 10% control group equity
interest and (b) allow the qualifying investors to reduce the minimum required
control group equity interest from 15% to 10%.
In order to meet the control group requirements, Tritel, Inc.'s Restated
Certificate of Incorporation provides that outstanding shares of capital stock
of Tritel, Inc. shall always be subject to redemption by action of the Board of
Directors of Tritel, Inc. if, in the judgment of the Board of Directors, such
redemption is necessary to prevent the loss or secure the reinstatement of any
license from the FCC held by Tritel, Inc. or any of its subsidiaries. Although
Tritel, Inc. believes that it has taken sufficient steps to meet the control
group requirements, there can be no assurance that Tritel, Inc. has met or will
continue to meet the control group requirements, or that the failure to meet
such requirements would not have a material adverse effect on Tritel PCS,
including the possible revocation of Tritel's PCS licenses by the FCC.
ASSET AND REVENUE CALCULATION
In determining whether an entity qualifies as an entrepreneur and as a
small business, the FCC attributes the gross revenues and assets of the entity,
its attributable investors and their affiliates to the entity's total gross
revenues and total assets. Generally, an individual or entity is an affiliate
of an applicant or person if it, directly or indirectly, (a) controls the
applicant or person or (b) is controlled by such an applicant or person.
Affiliation can arise from common investments, familial or spousal
relationships, contractual relationships, voting trusts, joint venture
agreements, stock ownership, stock options, convertible debentures and
agreements to merge. The gross revenues and assets of noncontrolling investors
and their affiliates with ownership interests that do not exceed the applicable
FCC passive investor ownership thresholds are not attributed to C-Block
licensees for purposes of determining whether such licensees financially
qualify for the applicable C-Block auction preferences.
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The entrepreneurs requirements and the small business requirements provide
that, to qualify as a passive investor, an entity may not own more than 25% of
Tritel, Inc.'s total equity on a fully diluted basis and may not vote more than
25% of the voting interests. Although Tritel, Inc. believes that it currently
complies with the entrepreneurs requirements and the small business
requirements, there can be no assurance that Tritel, Inc.'s ownership
composition will not, in the future, exceed these passive investor limits or
otherwise violate the entrepreneurs requirements or the small business
requirements.
In addition, if an entity makes bona fide loans to a C-Block licensee, the
assets and revenues of the creditor would not be attributed to the licensee
unless the creditor is otherwise deemed an affiliate of the licensee, or the
loan is treated by the FCC as an equity investment and such treatment would
cause the creditor/investor to exceed the applicable ownership interest
thresholds for purposes of the financial affiliation rules. The FCC permits a
creditor/investor to use standard terms to protect its investment in C-Block
licensees, such as covenants, rights of first refusal and super-majority voting
rights. On specified issues, such as those for which the holders of Tritel,
Inc.'s Common Stock have voting rights, the FCC has stated that it will be
guided, but not bound by, criteria used by the Internal Revenue Service to
determine whether a debt investment is bona fide debt. The FCC's application of
its affiliation rules is largely untested and there can be no assurance that
the FCC or the courts will not treat certain of Tritel, Inc.'s lenders or
investors as affiliates of Tritel, Inc. for purposes of determining Tritel,
Inc.'s compliance with the entrepreneurs requirements.
FOREIGN OWNERSHIP LIMITATIONS
The Communications Act requires that non-U.S. citizens, their
representatives, foreign governments or corporations otherwise subject to
domination and control by non-U.S. citizens may not own of record or vote (a)
more than 20% of the capital contribution to a common carrier directly, or (b)
more than 25% of the capital contribution to the parent corporation of a common
carrier licensee, if the FCC determines such holdings are not within the public
interest. Because the FCC classifies PCS as a common carrier offering, PCS
licensees are subject to the foreign ownership limits. Congress recently
eliminated restrictions on non-U.S. citizens serving as members on the board of
directors and officers of a common carrier radio licensee or its parent. In
January 1996, the United States, by its representative to the World Trade
Organization, entered into an agreement with 69 other countries around the
world which, among other things, expanded the permitted level of foreign
ownership in U.S. common carrier licenses. The agreement was ratified by the
United States and the other signatories as of February 5, 1998. Under the World
Trade Organization agreement, the United States has agreed to permit indirect
foreign ownership of up to 100% of a licensed company, however direct ownership
will continue to be limited to 20%. Entities wishing to exceed the 25% indirect
ownership threshold will now be accorded a strong presumption that foreign
investment by other World Trade Organization member countries would serve the
public interest. The FCC will review applications to exceed the 25% benchmark
on a streamlined processing schedule. Airwave Communications' long form
application with the FCC after the completion of the C-Block auction indicates
that Airwave Communications is in compliance with the FCC foreign-ownership
rules. However, if the foreign ownership of Tritel, Inc. were to exceed 25% in
the future, the FCC could revoke Tritel PCS's licenses, require Tritel, Inc. to
restructure its ownership to come into compliance with the foreign ownership
rules or impose other penalties. Further, Tritel, Inc.'s Restated Certificate
of Incorporation enables Tritel, Inc. to redeem shares from holders of Common
Stock whose acquisition of such shares results in a violation of such
limitation. The restrictions on foreign ownership could adversely affect
Tritel, Inc.'s ability to attract additional equity financing from entities
that are, or are owned by, non-U.S. entities.
F-BLOCK LICENSE REQUIREMENTS
The FCC has for the most part extended its C-Block eligibility
requirements and auction rules to the F-Block, with the following exceptions.
For the purposes of determining the entrepreneur's asset limit, F-Block
applicants do not count the value of C-Block licenses, although they must count
other
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CMRS licenses, including A-Block and B-Block PCS licenses. F-Block auction
participants, as well as D- and E-Block participants, were required to pay 20%
of their net winning bid, as opposed to only 10% required of C-Block bidders.
Participants in the F-Block auction could qualify for either of two bidding
credit levels: applicants with average gross revenues of not more than $40
million of the previous three years received a 15% bidding credit, while
applicants with average gross revenues of not more than $15 million for the
same period are referred to as very small businesses and received a 25% bidding
credit. For small businesses and very small businesses, the period during which
F-Block licensees may make interest-only payments is two years, as opposed to
six years for C-Block small businesses, with payments of principal and interest
amortized over the remaining eight years of the license term. The interest rate
applicable to Digital PCS for outstanding principal is 6.125%. Furthermore,
F-Block licensees that fall more than 180 days behind in scheduled installment
payments will incur a 5% late payment fee. By claiming status as a very small
business, Airwave Communications qualified for the 25% bidding credit and the
most favorable installment payment plan offered by the FCC.
Digital PCS was the winning bidder for 32 licenses in the D-, E- and
F-Block auction. The markets are comprised of 29 licenses in the F-Block, one
license in the D-Block and two licenses in the E-Block. With respect to those
licenses won in the F-Block auction, Tritel
1. believes that Digital PCS structured itself to satisfy the FCC's very
small business requirements,
2. intends to maintain diligently its qualification as a very small
business, and
3. has structured the notes, including certain restrictions on ownership
and transfer, in a manner intended to ensure compliance with the
applicable FCC rules.
Tritel, Inc. has relied on representations of its investors to determine
its compliance with the FCC's rules applicable to C-Block and F-Block licenses.
There can be no assurance, however, that Tritel, Inc.'s investors or Tritel,
Inc. itself will continue to satisfy these requirements during the term of any
PCS license granted to its license subsidiaries or that Tritel, Inc. will be
able to successfully implement divestiture or other mechanisms included in
Tritel, Inc.'s Restated Certificate of Incorporation that are designed to
ensure compliance with FCC rules. Any non-compliance with FCC rules could
subject Tritel, Inc. to penalties, including a fine or revocation of its PCS
licenses.
TRANSFER RESTRICTIONS
Within the first five years of the grant of a C- or F- Block license,
transfer of the license is permitted only to another entity eligible for the C-
or F-Block, such as another small business or very small business. If transfer
occurs during years six through ten of the initial license term to a company
that does not qualify for the same level of auction preferences as the
transferor, such a sale would be subject to full payment of bidding credits and
immediate payment of the outstanding balance of the government installment
payment debt as a condition of transfer, known as the FCC unjust enrichment
penalties. In addition, if Tritel, Inc. wishes to make any change in ownership
structure during the initial license term involving the de facto or de jure
control of Tritel, Inc., it must seek FCC approval and may be subject to the
FCC unjust enrichment penalties indicated above.
BUILDOUT REQUIREMENTS
The FCC has mandated that recipients of PCS licenses adhere to five-year
and 10-year buildout requirements. Under both five- and 10-year buildout
requirements, all 30 MHz PCS licensees, such as C-Block licensees, must
construct facilities that offer coverage to at least one-third of the
population in their service area within five years from the date of initial
license grants. Service must be provided to two-thirds of the population within
10 years. In the D-, E- and F-Blocks, 10 MHz PCS licenses are required to reach
one-quarter of the population within five years or make a showing of
substantial service within five years. The FCC, however, has not defined the
term "substantial services." Violations of these regulations could result in
license revocations or forfeitures or fines or other sanctions, such as
reductions in service areas.
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ADDITIONAL REQUIREMENTS
As a C- and F-Block licensee, Tritel, Inc. will be subject to certain
restrictions that limit, among other things, the number of broadband PCS
licenses it may hold as well as certain cross-ownership restrictions pertaining
to cellular and other wireless investments.
PENALTIES FOR PAYMENT DEFAULT
In the event that its license subsidiaries become unable to meet their
obligations under the government financing, the FCC could in such instances
reclaim some or possibly all of Tritel, Inc.'s licenses, re-auction them, and
subject Tritel, Inc. to a penalty comprised of the difference between the price
at which it acquired its license and the amount of the winning bid at
re-auction, plus an additional penalty of three percent of the lesser of the
subsequent winning bid and the defaulting bidder's bid amount.
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JOINT VENTURE AGREEMENTS WITH AT&T WIRELESS
On May 20, 1998, Tritel, Inc., Airwave Communications, Digital PCS, AT&T
Wireless, TWR Cellular, Inc., an indirect wholly-owned subsidiary of AT&T
Corp., cash equity investors purchasing shares of Series C Preferred in a
preferred equity offering and certain members of management entered into the
Securities Purchase Agreement which provided for the formation of the Tritel,
Inc.-AT&T Wireless joint venture and related equity investments. On January 7,
1999, the transactions contemplated by the Securities Purchase Agreement were
closed and the parties entered into a Network Membership License Agreement,
Roaming Agreement, Roaming Administration Agreement, Stockholders' Agreement,
Long Distance Agreement, Closing Agreement and agreed on a form of Resale
Agreement.
The following description is a summary of the material provisions of the
Securities Purchase Agreement, Network Membership License Agreement, Roaming
Agreement, Roaming Administration Agreement, Stockholders' Agreement, Long
Distance Agreement, Closing Agreement and form of Resale Agreement. It does not
restate those agreements in their entirety and is qualified in its entirety by
reference to each agreement.
Securities Purchase Agreement
Under the Securities Purchase Agreement: (1) AT&T Wireless and TWR
assigned the AT&T contributed Pops to Tritel, Inc. or one or more wholly-owned
subsidiaries of Tritel in exchange for shares of Tritel, Inc.'s Series A
Preferred Stock and Series D Preferred Stock (the "AT&T Equity"); (2) Airwave
Communications and Digital PCS assigned to Tritel or one or more wholly-owned
subsidiaries of Tritel, Inc. their contributed Pops and certain other assets in
exchange for shares of Series C Preferred and the assumption of certain
liabilities of Airwave Communications and Digital PCS, including the
indebtedness owed to the United States Department of the Treasury for the
Airwave Communications and Digital PCS contributed Pops; and (3) the Cash
Equity Investors purchased shares of the Series C Preferred.
The AT&T contributed Pops are comprised of licenses providing for the
right to use 20 MHz of authorized frequencies in geographic areas that cover
approximately 9.1 million Pops, which AT&T Wireless has partitioned and
disaggregated from certain of its 30 MHz A- and B-Block PCS licenses. AT&T
Wireless has reserved the right to use, and market and sell to others, any
services on the 10 MHz of spectrum that it retains in the creation of the AT&T
contributed Pops, subject to the exclusivity provisions of the Stockholders'
Agreement and the License Agreement.
In connection with its purchase of the AT&T Equity, AT&T Wireless and TWR
each made certain customary representations and warranties with respect to
their organization, power and authority, conflicts, litigation and their intent
to hold the AT&T Equity as an investment rather than with a view to
distribution. With respect to the AT&T contributed Pops, AT&T Wireless and TWR
each further represented and warranted that they are each in full compliance
with all eligibility rules of the FCC to hold their PCS licenses, and that they
are the authorized legal holders of the PCS licenses that support the AT&T
contributed Pops.
Tritel, Inc. also made certain customary representations and warranties
concerning, among other things, its organization, power and authority,
conflicts, litigation, capitalization, authority to issue the AT&T Equity, the
status of the AT&T Equity, liabilities and the ownership of its subsidiaries.
Tritel, Inc. also represented and warranted that it was in full compliance with
all eligibility rules of the FCC to hold PCS licenses, and that it would
continue to qualify as a small business and as a smaller business within the
meaning of the Small Business Investment Company Act of 1958, as amended.
Tritel, Inc. agreed not to engage in any activity which constitutes an
ineligible business activity within the meaning of the regulations under the
Small Business Investment Company Act. In addition, Tritel, Inc. agreed to take
certain measures to facilitate continued compliance with such regulations,
including using the proceeds of the sale of securities to the cash equity
investors only for eligible business activities within the meaning of the Small
Business Investment Company Act.
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Except as specified in the Securities Purchase Agreement and the related
agreements, none of AT&T Wireless, TWR nor any of their respective affiliates
has any further obligation or commitment to acquire debt or equity securities
of Tritel, Inc., provide or arrange for debt or equity financing for Tritel,
Inc. or provide services to or otherwise assist Tritel, Inc. in connection with
the conduct of its business. The Securities Purchase Agreement does not contain
any restrictions on AT&T Wireless, TWR, or any of their respective affiliates,
from competing, directly or indirectly, with Tritel.
AT&T Wireless Network Membership License Agreement
As part of its strategic alliance with AT&T Wireless, Tritel, Inc. has
entered into the AT&T Wireless Network Membership License Agreement with AT&T
Corp. and its affiliates, including AT&T Wireless. Under the License Agreement,
Tritel, Inc. has been granted a royalty-free, non-exclusive license to use the
AT&T logo with the globe design, the related trade dress and the expression
"Member, AT&T Wireless Services Network" and certain variations of the
foregoing, in equal emphasis with its own brands or marks, in its markets in
the marketing of its mobile wireless telecommunications products and services.
The license does not permit, however, the use of the AT&T licensed marks in
connection with providing or reselling long distance or local service or any
other product or service other than those covered by Tritel, Inc.'s PCS
licenses. AT&T has retained the unimpaired right to use the AT&T licensed marks
in Tritel, Inc.'s markets for marketing, offering or providing any products or
services. AT&T will not grant to any other person providing mobile wireless
telecommunications products or services in Tritel, Inc.'s markets a right or
license to use the AT&T licensed marks, except to a person that is a reseller
of Tritel, Inc.'s services, a person acting as Tritel, Inc.'s agent or a person
that provides fixed wireless telecommunications services to or from specific
locations, such as buildings or office complexes, so long as such services do
not constitute mobile wireless telecommunications services in Tritel, Inc.'s
markets. Tritel, Inc. is not permitted to assign, sub-license or transfer any
of its rights, obligations or benefits under the License Agreement.
In an effort to ensure that Tritel, Inc.'s service meets AT&T's high
quality standards, Tritel, Inc. has agreed to abide by certain quality
standards set forth in the License Agreement and to permit AT&T to conduct
inspections of its facilities from time to time.
The License Agreement is for an initial term of five years. The License
Agreement will be renewed for an additional five-year term if:
o each party gives the other notice of intent to renew at least 90 days
prior to the expiration of the initial term, or
o during the period which begins 120 days prior to expiration and ends
110 days prior to expiration, either party requests that the other party
provide notice of intent to renew, and the other party either gives
notice of intent to renew or fails to respond to such request.
AT&T is permitted to terminate the License Agreement if Tritel, Inc.:
o uses the AT&T licensed marks other than as provided in the License
Agreement;
o uses the AT&T licensed marks in connection with any marketing or
provision of telecommunications services that fails to meet AT&T's
quality standards in any material respect;
o refuses or neglects a request by AT&T Wireless for access to Tritel,
Inc.'s facilities or marketing materials for a period of more than five
business days after the receipt of notice thereof;
o experiences a change of control;
o becomes bankrupt;
o fails to maintain its rights to hold FCC licenses with respect to its
markets representing 5% or more of Tritel, Inc.'s Pops, unless the
failure is the result of AT&T's actions or inactions;
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o licenses, assigns, transfers, disposes of or relinquishes any of the
rights granted to it in, and other than as permitted by, the License
Agreement;
o fails to obtain permission from AT&T Wireless to use the AT&T licensed
marks in sponsoring, endorsing or affiliating with any event, meeting,
charitable endeavor or other undertaking that has a material adverse
effect on AT&T or the AT&T licensed marks;
o fails to maintain any and all confidential information furnished to it
in the strictest confidence; or
o commits a substantial company breach as defined in the Stockholders'
Agreement.
Upon the later to occur of: (a) consummation of a Disqualifying
Transaction, as defined below, or (b) the second anniversary of the date AT&T
gives notice to Tritel, Inc. that it has entered into a letter of intent or
binding agreement to engage in a Disqualifying Transaction, AT&T may terminate
the License Agreement with Tritel, Inc. by providing notice to Tritel, Inc.
However, no such termination may occur during the initial term. If Tritel, Inc.
has not exercised its right to convert all of AT&T's Series A and Series D
Preferred into Series B Preferred, the termination only applies to that portion
of Tritel's markets that overlap the markets in which a party to such
Disqualifying Transaction owns an FCC license to provide Commercial Mobile
Radio Service (the "Overlap Markets"). Upon a termination of the License
Agreement, Tritel must cease using the AT&T Licensed Marks within 90 days.
The License Agreement will also terminate in the event that AT&T Wireless
converts any of its shares of Series A Preferred into Common Stock on the later
of (a) the initial term plus any renewal periods, or (b) two years from the
date of such conversion.
The term "Disqualifying Transaction" means a merger, consolidation, asset
acquisition or disposition, or other business combination involving AT&T Corp.
or its affiliates and another person, which other person
(a) derives from telecommunications businesses annual revenues in excess
of $5 billion,
(b) derives less than one-third of its aggregate revenues from wireless
telecommunications services,
(c) owns FCC Licenses to offer, and does offer, mobile wireless
telecommunications services, except certain specified services, serving
more than 25% of the Pops within Tritel, Inc.'s licensed territory, and
(d) with respect to which AT&T Wireless has given notice to Tritel, Inc.
specifying that such merger, consolidation, asset acquisition or
disposition or other business combination shall be a Disqualifying
Transaction for purposes of this agreement and the transactions
contemplated thereby.
Roaming Agreement
Tritel, Inc. and AT&T Wireless, along with their respective affiliates,
have also entered into an intercarrier roamer service agreement, called the
Roaming Agreement, to allow subscribers of one party to roam onto the wireless
network of the other party when a subscriber travels into a geographic area
that the other party services.
The Roaming Agreement states that both Tritel, Inc. and AT&T Wireless will
provide automatic call delivery to the other party's customers who roam into
its geographic area. To facilitate this service, each party will agree to
provide continuously the necessary hardware, software and transmission
facilities to support such call delivery, either directly or through a separate
network of wireless communications carriers.
The Roaming Agreement has an initial term of 20 years, subject to earlier
termination, and thereafter will continue on a month-to-month basis until
terminated with 90 days written notice. The agreement may be terminated or
suspended upon default by either party for
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o material breach of any term of the Roaming Agreement that continues
unremedied for 30 days;
o a voluntary liquidation or dissolution of either party;
o a final order by the FCC revoking or denying renewal of a material PCS
license or permit granted to either party; or
o a bankruptcy of either party.
Either party may suspend its performance of the Roaming Agreement if it
determines that unauthorized use of the system has reached an unacceptable
level of financial loss.
Roaming Administration Service Agreement
Tritel, Inc. and AT&T Wireless also have entered into a roaming
administration service agreement to allow Tritel, Inc. to receive certain
benefits under intercarrier roaming services agreements between AT&T Wireless
and other specified wireless carriers, to permit subscribers of those other
wireless carriers to use the facilities of Tritel, Inc. in accordance with the
applicable intercarrier roaming services agreements and to make available to
Tritel, Inc. the roaming administration services of AT&T Wireless. The Roaming
Administration Agreement provides that AT&T Wireless will perform, for a fee,
roaming administration and settlement services to manage Tritel, Inc.'s roaming
program.
The Roaming Administration Agreement has an initial term of two years,
subject to earlier termination, and thereafter will renew automatically for
successive terms of one year each until either party chooses not to renew upon
90 days prior written notice. The Roaming Administration Agreement may be
terminated for any of the following reasons:
o material breach by either party;
o material and unreasonable interference of one party's operations by the
operations of the other party for a period exceeding ten days;
o by AT&T Wireless with respect to any intercarrier roaming services
agreement or its interoperability agreement with EDS Personal
Communications Corporation, in the event the applicable agreement expires
or is terminated. The current interoperability agreement with EDS
Personal Communications Corporation expires on March 31, 2000, with
respect to settlement services and on June 30, 1999, with respect to call
validation services;
o by AT&T Wireless in the event that Tritel, Inc. is no longer a member
in good standing with the North American Cellular Network, Inc.;
o by AT&T Wireless with respect to the roaming administration services
received under AT&T Wireless's interoperability agreement with EDS
Personal Communications Corporation should that agreement expire or
terminate; or
o by either party for any reason upon 180 days prior written notice.
Upon termination of the Roaming Administration Agreement for any of the
reasons set forth above, each party shall immediately, or upon final
accounting, pay all amounts owing to the other parties thereunder, whether due
or to become due.
Stockholders' Agreement
AT&T Wireless, the management stockholders and the cash equity investors
have entered into a Stockholders' Agreement with Tritel, Inc.
o to provide for the management of Tritel, Inc.;
o to impose certain restrictions on the sale, transfer or other
disposition of the securities of Tritel; and
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o to create certain rights related to such securities, including a right
of first offer, a right of participation, a right of inclusion and
registration rights.
Management. The Stockholders' Agreement provides that the Board of
Directors of Tritel, Inc. will consist of thirteen members. For so long as
required by the FCC, the management stockholders will designate four members,
each of whom must be an officer of Tritel, Inc. and each of whom will have 1/2
of a vote, AT&T Wireless will designate two members and the cash equity
investors will designate three members. The remaining four directors will be
designated by the management stockholders, and if permitted by FCC regulation,
one such designation will be subject to the consent of the cash equity
investors alone, with the remaining three subject to the consent of the cash
equity investors and AT&T Wireless. Once permitted by FCC regulation, the
remaining four directors will be designated by the cash equity Investors, with
three of these designations subject to the consent of AT&T Wireless and Messrs.
Mounger, Martin and Sullivan. No director may be removed without cause.
All actions of the Board of Directors will require a majority vote of the
entire Board of Directors, except that certain significant transactions will
require the vote of at least three of the five directors designated by the cash
equity investors and AT&T Wireless and four of the six votes cast by the
directors designated by the management stockholders and the four remaining
directors designated by the management stockholders or the cash equity
investors as described above. Such significant transactions include, but are
not limited to,
o a sale or transfer of a material portion of the assets of Tritel, Inc.
or any subsidiary;
o a merger or consolidation of Tritel, Inc. or any subsidiary;
o the offering of any securities of Tritel, Inc. or any subsidiary other
than as contemplated by the Securities Purchase Agreement;
o the hiring or termination of any executive officer of Tritel, Inc.;
o the incurrence of certain indebtedness;
o the making of certain capital expenditures; and
o the initiation of any bankruptcy proceeding, dissolution or liquidation
of Tritel, Inc. or any subsidiary.
Restrictions on Transfer. The stockholders, including AT&T Wireless and
TWR, have agreed not to, directly or indirectly, transfer or otherwise grant or
create certain liens in, give, place in trust or otherwise voluntarily or
involuntarily dispose of ("Transfer") any share of Company Stock, defined in
the Stockholders' Agreement, beneficially owned by such stockholder on or prior
to an initial public offering, or IPO, of Tritel, Inc.'s common stock, subject
to certain limited exceptions.
Right of First Offer. Prior to an IPO and following an IPO, for transfers
of 10% or more of the common stock on a fully diluted basis, if a non-AT&T
Wireless stockholder desires to sell shares of preferred or common stock, other
than Voting Preference Stock and Class C Common Stock, to a third party, such
stockholder must first offer such shares to AT&T Wireless. AT&T Wireless will
then have ten business days to offer to purchase all, but not less than all, of
such shares at the offered price. If AT&T Wireless does not accept such offer,
such investor may offer the shares to other potential purchasers at or above
the offer price, for up to 90 days. If AT&T Wireless or TWR desires to sell
shares of preferred or common stock, other than Voting Preference Stock and
Class C Common Stock, the cash equity investors will have the same right of
first offer. In the event that neither any cash equity investor nor AT&T
Wireless purchases such shares pursuant to the above rights, the shares may be
sold to any person other than a prohibited transferee as defined in the
Stockholders' Agreement.
Right of Participation. On or prior to an IPO, if Tritel, Inc. proposes to
offer, issue, sell or otherwise voluntarily or involuntarily dispose of any
equity security for cash, each stockholder shall have the right to acquire a
proportionate percentage of such equity securities based on the number of
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shares of Class A Voting Common Stock beneficially owned by such stockholder
relative to the total number of Class A Voting Common Stock outstanding. This
purchase right will not apply to an offering pursuant to a stock option or
stock appreciation rights plan.
Right of Inclusion. No stockholder shall Transfer shares of any series or
class of preferred, other than Series B Preferred, or common stock
(collectively, "Inclusion Stock") to persons who are not affiliates of such
person if the Transfer would result in such stockholder, or stockholders acting
in concert, Transferring 25% or more of the outstanding shares of any class of
Inclusion Stock (an "Inclusion Event"), unless the terms and conditions of such
Transfer include an offer to AT&T Wireless, the cash equity investors and the
management stockholders (each, an "Inclusion Event Offeree") for each of them
to sell to the purchaser of the Inclusion Stock the same proportion of each
Inclusion Event Offeree's Inclusion Stock as proposed to be sold by the selling
Stockholder. In the event that such person does not agree to purchase all of
the shares of Inclusion Stock proposed to be sold, then the selling stockholder
and each Inclusion Event Offeree will have the right to sell a proportionate
amount of Inclusion Stock to such person. For purposes of determining an
Inclusion Event, if the Inclusion Stock is Series C Preferred, then Series D
shall also be deemed to be Inclusion Stock, and Series C Preferred and Series D
Preferred shall be deemed to be one class of preferred stock.
Right of First Negotiation. Following an IPO, any stockholder desiring to
Transfer any shares of Common Stock or Series C Preferred (1) pursuant to an
underwritten registration, (2) pursuant to Rule 144 under the Securities Act or
(3) in a transaction or series of related transactions resulting in the
Transfer of not more than ten percent of all common stock on a fully diluted
basis, excluding for such purposes the Series A Preferred Stock, must first
give AT&T Wireless written notice thereof containing the proposed terms of such
sale. For the applicable first negotiation period, AT&T Wireless will have the
exclusive right to negotiate with such Stockholder regarding the purchase of
such shares. The stockholder has the right to reject any offer made by AT&T
Wireless during such first negotiation period. Upon the expiration of the first
negotiation period, the stockholder has the right to sell the shares included
in the notice on such terms and conditions as are acceptable to the Stockholder
in its sole discretion during the applicable offer period.
If shares of common stock are proposed to be Transferred pursuant to an
underwritten registration, the applicable first negotiation period is ten days
and the applicable offer period is 120 days. If shares of common stock are
proposed to be Transferred pursuant to Rule 144, the applicable first
negotiation period is three hours and the applicable offer period is five
business days. If shares of common stock are proposed to be Transferred in a
transaction or series of related transactions resulting in the sale of not more
than ten percent of all common stock on a fully diluted basis, excluding for
such purposes the Series A Preferred, the applicable first negotiation period
is one business day, provided the notice is given prior to 9:00 a.m. on the day
prior to the proposed Transfer, and the applicable offer period is ten business
days.
Demand Registration Rights. From and after the ninety-first day following
the date of the IPO, or such longer period as may be required by the managing
underwriter, any "Qualified Holder" and management stockholders that in the
aggregate beneficially own at least 50.1% of the Class A Voting Common Stock
then beneficially owned by the management stockholders (each, a "Demanding
Stockholder") will have the right to require Tritel, Inc. to file a
registration statement under the Securities Act covering the Class A Common
Stock (a "Demand Registration"), subject to certain limited exceptions.
A "Qualified Holder" is defined as:
(a) any stockholder or group of stockholders that beneficially owns (x)
greater than 331/3% of the outstanding shares of common stock on a
fully diluted basis or (y) shares of Class A Voting Common Stock
reasonably expected, upon sale, to result in aggregate gross proceeds
of at least $25 million; or
(b) AT&T Wireless and TWR for so long as they beneficially own in the
aggregate greater than two-thirds of the initial issuance to them of
shares of Series A Preferred.
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Tritel, Inc. will not be obligated to effect more than two separate Demand
Registrations in any twelve-month period, provided that only one request for
Demand Registration may be exercised by AT&T Wireless and/or Management
Stockholders that in the aggregate beneficially own at least 50.1% of the
shares of the Class A Voting Common Stock then beneficially owned by the
Management Stockholders during any twelve-month period. If Tritel, Inc.
determines that a Demand Registration would interfere with any pending or
contemplated material transaction, Tritel, Inc. may defer such Demand
Registration subject to certain limitations.
Piggyback Registration Rights. If Tritel, Inc. proposes to register any
shares of Class A Voting Common Stock with the Securities and Exchange
Commission under the Securities Act, Tritel, Inc. will, subject to certain
limitations, give notice of the proposed registration to all stockholders and
include all common stock as to which it has received a request for inclusion,
subject to customary underwriter cutbacks.
Consequences of a Disqualifying Transaction. Upon consummation of a
Disqualifying Transaction, the exclusivity provisions of the Stockholder
Agreement applicable to AT&T Wireless and TWR will terminate as to all of
Tritel, Inc.'s markets. However, if Tritel, Inc. has not exercised its right to
convert all of AT&T Wireless's Series A and Series D Preferred into Series B
Preferred, the termination applies only to the Overlap Markets.
Upon AT&T Wireless's terminating its obligations and those of TWR in
connection with a Disqualifying Transaction, Tritel, Inc. will have the right
to cause AT&T Wireless and TWR, or their transferees other than any cash equity
investor, to exchange all or a proportionate number of shares of Series A
Preferred then owned by AT&T Wireless and TWR equal to a fraction, the
numerator of which is the number of Pops in the Overlap Markets and the
denominator of which is the total number of Pops in all of Tritel, Inc.'s
markets, for an equivalent number of shares of Series B Preferred. Tritel, Inc.
shall have similar conversion rights with respect to any Series D Preferred
shares, or Series B Preferred or common stock into which such shares have been
converted, owned by AT&T Wireless and TWR.
Additional Covenants. To induce the stockholders to enter into the
Stockholders' Agreement, Tritel has agreed to, among other things:
o construct a network system to cover the territory of its PCS licenses
according to an agreed upon buildout plan;
o arrange for all necessary microwave relocation and reimburse AT&T for
any such relocation costs it incurs in connection with the AT&T
contributed Pops;
o offer certain service features and adhere to certain quality
standards;
o refrain from entering into certain merger, sale or liquidation
transactions or to effect a change in the business of Tritel, Inc.
without the prior consent of AT&T Wireless;
o refrain from marketing, offering, providing or reselling interexchange
services other than its own or AT&T Wireless's;
o enter into Resale Agreements with AT&T Wireless from time to time at
the request of AT&T Wireless;
o refrain from soliciting for employment AT&T Wireless's personnel for a
limited period; and
o permit AT&T Wireless to co-locate certain cell sites in locations
holding Tritel, Inc. cell sites.
Concurrently, AT&T Wireless has agreed to, among other things:
o assist Tritel, Inc. in obtaining discounts from AT&T Wireless
equipment vendors;
o refrain from soliciting for employment Tritel, Inc.'s personnel for a
limited period; and
o permit Tritel, Inc. to co-locate certain cell sites in locations
holding AT&T Wireless cell sites.
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In addition, stockholders other than AT&T Wireless that are subject to the
Stockholders' Agreement have agreed to refrain from providing, reselling or
acting as agent for any person offering wireless services in territories
designated to Tritel, Inc.
Term. The Stockholders' Agreement will terminate after eleven years and
may be terminated earlier upon the consent of all parties, or if one
stockholder should beneficially own all of the Class A Voting Common Stock. If
not otherwise terminated, the provisions regarding the management of Tritel,
Inc. will terminate upon the earlier to occur of an IPO or the expiration of
ten years, and the provisions regarding registration rights will terminate
after 20 years.
Long Distance Agreement
Tritel, Inc. and AT&T Wireless Services, Inc. have entered into a Long
Distance Agreement which provides that Tritel, Inc. will purchase interstate
and intrastate long distance services from AT&T Wireless for a term of up to
three years. These long distance services will be purchased at preferred rates,
which are contingent upon Tritel, Inc.'s continuing affiliation with AT&T
Wireless, and will be resold to Tritel, Inc.'s customers. Under the Long
Distance Agreement, Tritel, Inc. must meet a yearly minimum traffic volume
commitment which is to be negotiated between Tritel, Inc. and AT&T Wireless. If
the minimum traffic volume commitment is not met by Tritel, Inc., then it must
pay to AT&T Wireless an amount equal to the difference between AT&T Wireless's
expected fee based on the minimum traffic volume commitment and its fee based
on the actual traffic volume.
Closing Agreement
Tritel, Inc., AT&T Wireless and the other parties to the Securities
Purchase Agreement have entered into a Closing Agreement to provide for certain
matters set forth in the Securities Purchase Agreement, including, among other
things, consent for certain of Tritel, Inc.'s subsidiaries to enter into
agreements and to conduct Tritel, Inc.'s operations, and direction that certain
PCS licenses be transferred to Tritel, Inc.'s subsidiaries by AT&T Wireless,
Airwave Communications, Digital PCS and Central Alabama Partnership.
Resale Agreement
Tritel, Inc. and AT&T Wireless have also agreed on the form of a Resale
Agreement to be entered into from time to time, which permits AT&T Wireless,
its affiliates and one person designated by AT&T Wireless, who is licensed to
provide telecommunications services in such area under AT&T's service marks,
for any geographic area within the territory covered by Tritel, Inc.'s
licenses, each, referred to as a reseller, to purchase access to and usage of
Tritel, Inc.'s wireless telecommunications services for resale to its
subscribers. Tritel, Inc. has agreed to provide service to the reseller on a
nonexclusive basis, and therefore will retain the right to market and sell its
services to other customers in competition with AT&T Wireless.
The Resale Agreement will have an initial term of ten years and will be
automatically renewed for additional one-year terms, unless it is previously
terminated. The reseller has the right to terminate the Resale Agreement for
any reason upon 180 days written notice. Following the eleventh anniversary of
the commencement date of the Resale Agreement, either party may terminate the
agreement on 90 days written notice for any reason.
In addition, either the reseller or Tritel, Inc. may terminate the Resale
Agreement after any of the following events occur and continue unremedied for
some time period:
o certain bankruptcy events of Tritel, Inc. or the reseller;
o the failure of either the reseller or Tritel, Inc. to pay any sum owed
to the other at the time such amount comes due;
o the failure of the reseller or Tritel, Inc. to perform or observe any
other material term, condition, or covenant to be performed by it under
the Resale Agreement;
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<PAGE>
o the commission of any illegal act by or the filing of any criminal
indictment or information against the reseller, its proprietors,
partners, officers, or directors or stockholders controlling in the
aggregate or individual 10% or more of the voting rights or equity
interests of the reseller;
o the furnishing, within a twelve-month period, by the reseller to
Tritel, Inc. of two or more checks that are not paid when presented due
to insufficient funds;
o an unauthorized assignment of the Resale Agreement;
o failure by the reseller to meet the eligibility requirements as
described in the Resale Agreement; and
o either party attempts to incorporate into its marks, or challenge the
other party's service marks, trademarks or trade names, including,
without limitation, all terms and conditions of each service plan
selected by the reseller.
Upon termination, Tritel, Inc. will have no further obligation to provide
the reseller access to and usage of Tritel, Inc.'s PCS services.
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<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The executive officers and directors of Tritel, Inc., and their ages, at
July 31, 1999, were as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ ----- ---------------------------------------------------------------
<S> <C> <C>
William M. Mounger, II ....... 42 Chairman of the Board of Directors and Chief Executive
Officer
William S. Arnett ............ 49 Director and President
Jerry M. Sullivan, Jr. ....... 40 Director, Executive Vice President and Chief Operating Officer
E.B. Martin, Jr. ............. 43 Director, Executive Vice President, Treasurer and Chief
Financial Officer
Scott I. Anderson ............ 40 Director
Alex P. Coleman .............. 32 Director
Gary S. Fuqua ................ 47 Director
Ann K. Hall .................. 34 Director
Andrew Hubregsen ............. 38 Director
David A. Jones, Jr. .......... 41 Director
H. Lee Maschmann ............. 41 Director
Elizabeth L. Nichols ......... 45 Director
Kevin J. Shepherd ............ 43 Director
</TABLE>
The executive officers and directors of Tritel PCS, at July 31, 1999, were
as follows:
<TABLE>
<CAPTION>
NAME POSITION
- --------------------------------- ------------------------------------------------------------------
<S> <C>
William M. Mounger, II .......... Chairman of the Board of Directors, Chief Executive Officer and
President
Jerry M. Sullivan, Jr. .......... Director, Executive Vice President and Chief Operating Officer
E.B. Martin, Jr. ................ Director, Executive Vice President, Treasurer and Chief Financial
Officer
</TABLE>
The executive officers, directors and key employees of Tritel
Communications, Inc., our operating subsidiary, at July 31, 1999, were as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------- ----- --------------------------------------------------------
<S> <C> <C>
William M. Mounger, II .......... 42 Chairman of the Board of Directors and Chief Executive
Officer
William S. Arnett ............... 49 President
Jerry M. Sullivan, Jr. .......... 40 Director, Executive Vice President and Chief Operating
Officer
E.B. Martin, Jr. ................ 43 Director, Executive Vice President, Treasurer and Chief
Financial Officer
T. Clark Akers .................. 42 Senior Vice President-External Affairs
Timothy Burnette ................ 43 Senior Vice President-Engineering and Technical
Operations
Keith Halford ................... 48 Senior Vice President-Marketing
Kirk Hughes ..................... 39 Senior Vice President-Information Systems
Doug McQueen .................... 38 Senior Vice President-Market Operations
James H. Neeld, IV .............. 39 Senior Vice President-General Counsel and Secretary
Karlen Turbeville ............... 40 Senior Vice President-Finance
</TABLE>
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<PAGE>
William M. Mounger, II. Mr. Mounger has served as Chief Executive Officer
of Tritel, Inc. and Mercury Communications since 1998 and 1990, respectively.
In addition, Mr. Mounger served as President of Tritel, Inc. until January
1999. Mr. Mounger was a member of the Cellular One Advisory Council from
1992-1994 and served as its Chairman from 1993-94. In recent years, Mr. Mounger
has served as President of Delta Cellular Communications, as President of
Alaska-3 Cellular, as Vice President of Mobile Talk, Inc., an SMR operator, as
President of Southeastern Cellular Communications, and as President or
executive officer in several other cellular companies. In 1996, Mr. Mounger was
one of three original founders of Unity Communications, a reseller of long
distance and wireless services. From 1983 to 1988, he was a partner in Sunbelt
Cellular Partners, which merged with other entities to form Vanguard Cellular
in 1987.
William S. Arnett. Mr. Arnett has served as President of Tritel, Inc.
since January 1999. Mr. Arnett has served as President of Flying A Towers, a
communication tower leasing company. Mr. Arnett served as President of a
division of Dial Call Communications from 1994 to 1996 and with Nextel
Communications following the merger of Dial Call into Nextel Communications
until 1996. Mr. Arnett served as Chief Operating Officer of Transit
Communications Corporation from 1993 to 1994 and as President of Rural
Cellular, Inc. from 1990 to 1993. Mr. Arnett also held several positions at
United States Cellular from 1984 to 1990, most recently serving as Corporate
Vice President, Marketing and Operations.
Jerry M. Sullivan, Jr. Mr. Sullivan has served as Executive Vice President
and Chief Operating Officer of Tritel, Inc. since 1993. Mr. Sullivan has also
served as the Vice President and Chief Operating Officer of Mercury
Communications, and Alaska-3 Cellular Corporation. In 1994, Mr. Sullivan joined
and became an active member of the Universal Wireless Communications
Consortium. Mr. Sullivan also represents Tritel, Inc. in the Personal
Communications Industry Association, where he is actively involved with the
Broadband PCS Alliance Council.
As Vice President and Chief Operating Officer of Mercury Communications,
Mr. Sullivan was responsible for all operations applicable to Mercury's
cellular markets. Mr. Sullivan served as Regional Manager of Mercury
Communications for multiple Mississippi cellular markets, and was responsible
for seeking potential acquisitions and business opportunities for Mercury
throughout the United States. Prior to joining Mercury in 1993, Mr. Sullivan
was a senior manager of First Energy Corporation, a wholly owned subsidiary of
ChemFirst, Inc., formerly First Mississippi Corporation.
E.B. Martin, Jr. Mr. Martin has served as Executive Vice President,
Treasurer and Chief Financial Officer of Tritel, Inc. since 1997. Mr. Martin
has also served as the Vice President and Chief Financial Officer of Mercury
Communications from 1990 to 1993 and since 1997. Mr. Martin was a shareholder
of the law firm of Young, Williams, Henderson & Fuselier, P.A. from 1993 to
1996 and currently is a shareholder of its affiliate, Young, Williams,
Henderson, Fuselier & Associates, Ltd. Mr. Martin has experience in handling
mergers and acquisitions of domestic and international wireless companies. He
has been responsible for arranging debt and equity financing for numerous
cellular properties and has extensive experience in managing individual and
institutional venture capital investments, litigation and contractual
negotiations. Mr. Martin also serves as Secretary/Treasurer for Mercury
Communications, Alaska-3 Cellular Corporation and Mercury Wireless Management.
Scott I. Anderson. Mr. Anderson has served as a Director of Tritel, Inc.
since January 1999. Since 1997, Mr. Anderson has served as a principal in Cedar
Grove Partners, LLC, an investment and consulting/advisory partnership, and,
since 1998, as a principal in Cedar Grove Investments, LLC, a small "angel"
capital investment fund. Mr. Anderson was an independent board member of
PriCellular Corp from March 1997 through June 1998, when the company went
private. He is a board member and advisory board member of Tegic, a wireless
technology licensing company, a board member of TeleCorp PCS, a board member of
Triton PCS and a board member of Xypoint, a private emergency 911 service
company. He was employed by McCaw Cellular Communications and AT&T Wireless
from 1986 until 1997, where he last served as Senior Vice President of the
Acquisitions and Development group.
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<PAGE>
Alexander P. Coleman. Mr. Coleman has served as a Director of Tritel, Inc.
since January 1999. Since 1996, Mr. Coleman has served as a Vice President and
Investment Partner of Dresdner Kleinwort Benson Private Equity LLC's leveraged
buyout group. Prior to joining Dresdner Kleinwort Benson, Mr. Coleman served in
several corporate finance positions for Citicorp/Citibank N.A. from 1989
through 1995, most recently as Vice President of Citicorp Venture Capital.
Gary S. Fuqua. Mr. Fuqua has served as a Director of Tritel, Inc. since
January 1999. Mr. Fuqua has managed corporate development activities at Entergy
since 1998. In addition, Mr. Fuqua oversees Entergy's non-regulated domestic
retail businesses, including District Energy, Entergy Security and Entergy's
various telecommunications businesses. Before he joined Entergy, Mr. Fuqua
served as a Vice President with Enron Ventures Corporation in London. He also
founded and managed his own company prior to joining Enron in 1988. He is a
member of Entergy Enterprises' Board of Directors, and President of Entergy
Technology Holdings. Mr. Fuqua is also a member of the board of TeleCorp PCS.
Ann K. Hall. Ms. Hall has served as a Director of Tritel, Inc. since
January 1999. Since 1995, Ms. Hall has served in various roles for AT&T
Wireless Services, Inc., most recently as Director of Partnership Markets. In
this role, she has assisted AT&T Wireless's affiliate, Telecorp PCS, in
launching its wireless operations, and she was previously involved in
overseeing the financial operations for AT&T Wireless's partnership interests
in the Los Angeles and Houston markets. Prior to joining AT&T Wireless
Services, Inc., Ms. Hall worked for Ernst & Young LLP's Telecommunications
Consulting Practice, during which time McCaw Cellular was one of her main
clients. Before working in the Telecommunications Industry, Ms. Hall worked as
a Product Development Engineer at National Semiconductor and later at Intel
Corporation in the Technology Development Finance group.
Andrew Hubregsen. Mr. Hubregsen has served as a Director of Tritel, Inc.
since January 1999. Mr. Hubregsen is a Senior Vice President with Conseco
Private Capital Group, Inc. He is responsible for Conseco's approximately $700
million portfolio of private equity and equity related investments in a wide
variety of industries. Mr. Hubregsen joined Conseco in September 1992 in the
area of Corporate Development and has identified, negotiated and structured
acquisitions in both core and non-core business. Prior to joining Conseco, Mr.
Hubregsen was employed at GE Capital Services in the Financial Institutions
Group of the Corporate Finance Division. While at GE Capital, Mr. Hubregsen
worked on a variety of leveraged debt and equity transactions.
David A. Jones, Jr. Mr. Jones has served as a Director of Tritel, Inc.
since July 1999. Mr. Jones is a founder and the Chairman and Managing Director
of Chrysalis Ventures, LLC, a venture capital firm. Prior to founding Chrysalis
Ventures, LLC in 1994, Mr. Jones was an attorney in private practice. Mr. Jones
is also a director of Humana Inc., Mid-America Bancorp and High Speed Access
Corp.
H. Lee Maschmann. Mr. Maschmann has served as a Director of Tritel, Inc.
since January 1999. Mr. Maschmann is Vice President of Partnership Operations,
Engineering for AT&T Wireless Services, Inc. In this role, he has assisted AT&T
Wireless's affiliates, Telecorp PCS and Triton PCS in launching their wireless
operations. He was previously involved in overseeing the Technical Operations
and Engineering for AT&T Wireless's partnership interests in the Los Angeles
and Houston markets. Prior to that, he oversaw the engineering and construction
of AT&T Wireless's PCS markets in the Southwest region. Since 1985, Mr.
Maschmann has held a number of technical leadership positions with AT&T
Wireless Services, Inc., McCaw Communications, and MetroCel Cellular.
Elizabeth L. Nichols. Ms. Nichols has served as a Director of Tritel, Inc.
since January 1999. Ms. Nichols has served as a Director and President of JDN
Realty Corp., a publicly traded real estate investment trust since 1994 and is
a Director of Ruby Tuesday, Inc. Prior to joining JDN Realty Corp., Ms.
Nicholas worked for approximately 18 years in the real estate industry for JDN
Enterprises, Inc., Dobson & Johnson Mortgage Banking firm and First American
National Bank.
Kevin J. Shepherd. Mr. Shepherd has served as a Director of Tritel, Inc.
since January 1999. Mr. Shepherd has served as President of Triune, Inc., a
financial advisory firm servicing high net worth individuals since its
inception in 1989.
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<PAGE>
T. Clark Akers. Mr. Akers has served as Senior Vice President-External
Affairs since 1995. Mr. Akers is responsible for federal, state and local
governmental relations and maintaining Tritel, Inc.'s relationships with the
FCC and the Wireless Bureau and developing relationships with the Public
Service Commissions, Planning Commissions and other regulatory agencies in
states in which Tritel, Inc. will do business.
Timothy Burnette. Mr. Burnette has served as Senior Vice
President--Engineering & Technical Operations since May 1999. He is responsible
for the construction and operation of Tritel, Inc.'s TDMA IS-136 PCS network.
Prior to joining Tritel, Inc., Mr. Burnette served as Director of Network
Operations (River Region) for Nextel from 1994 to 1995, Vice President of
Network Operations (River Region) for Nextel from 1995 to 1996, and Vice
President, Corporate Development, for Hemphill Corporation, a tower and
construction company primarily focused on the wireless communications industry,
from 1996 to 1999.
Keith Halford. Mr. Halford has served as Senior Vice President-Marketing
since February 1999. He is responsible for Tritel, Inc.'s overall marketing
strategy. Prior to joining Tritel, Inc., Mr. Halford was Principal of
Transactional Marketing Consultants beginning in March 1995, where he assisted
television networks, advertising agencies and telemarketing firms in the
creation of e-commerce opportunities. From 1993 through March 1995, Mr. Halford
was President of RSTV Inc. where he created ViaTV, an auction-based, satellite
delivered television channel.
Kirk Hughes. Mr. Hughes has served as Senior Vice President-Information
Systems since 1998. He is responsible for Tritel, Inc.'s management information
systems and support. Prior to joining Tritel, Inc. in 1998, Mr. Hughes was
employed with MobileComm, a national paging company, for 13 years, where he
last served as Vice President of Information Systems. In that capacity Mr.
Hughes managed a staff of 75 employees serving a customer base of 4 million
people.
Doug McQueen. Mr. McQueen has served as Senior Vice President-Market
Operations since July 1998. He is responsible for direct and indirect sales,
oversight of the construction and staffing of the company's retail stores and
overall supervision of Tritel, Inc.'s regional managers. Prior to becoming
Senior Vice President-Market Operations, Mr. McQueen was Vice
President-Regional Manager with Tritel, Inc. from 1997 and General Manager of
Mercury Communications's Madisonville, Kentucky market from September 1991
through April 1994. From May 1994 through January 1997, Mr. McQueen was
employed with Clear Communications as a Regional Manager for its Kentucky and
West Virginia markets. Mr. McQueen was General Manager for United States
Cellular's Evansville, Indiana market from 1986 to 1991.
James H. Neeld, IV. Mr. Neeld has served as Senior Vice President-General
Counsel and Secretary since April 1999 and April 1998, respectively. He is
responsible for general corporate and other legal matters. Prior to becoming
Senior Vice President-General Counsel in 1999, Mr. Neeld was a shareholder of
the Jackson, Mississippi law firm, Young, Williams, Henderson & Fuselier, P.A.
and its affiliate Young, Williams, Henderson, Fuselier & Associates, Ltd. Mr.
Neeld began his career with Young, Williams, Henderson & Fuselier, P.A. in 1985
and was a director of the firm from 1994 through 1997, and remains of counsel
to the firm. While in private practice, Mr. Neeld focused on telecommunications
and general corporate law, corporate finance, acquisitions, transactions and
business planning. Mr. Neeld currently serves on the Executive Committee of the
Business Law Section of the Mississippi Bar and is a member of the Mississippi
Secretary of State's Business Law Advisory Group.
Karlen Turbeville. Ms. Turbeville has served as Senior Vice
President-Finance since 1991. She also has served as Vice President of Alaska -
3 Cellular Corporation and as Vice President of Finance and Director for
Mercury Communications. Since joining Mercury Communications in 1991, Ms.
Turbeville has held direct responsibility for the financial, treasury, billing,
customer care, roaming, investor relations, budgeting and regulatory reporting
functions for all RSA markets. Prior to joining Mercury Communications, Ms.
Turbeville was a Manager at Tann, Brown & Russ Co., Ltd., a Mississippi
accounting firm. Ms. Turbeville is a Certified Public Accountant with
experience in accounting, auditing and consulting, including six years with
Arthur Andersen & Co. where she worked with Worldcom, Skytel and cellular
companies, and companies in the transportation, public utility and banking
industries.
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<PAGE>
The Bylaws of Tritel, Inc. provide that the Board of Directors will have
between one and thirteen members. According to the terms of the Stockholders'
Agreement, the Board of Directors will consist of thirteen members. For so long
as required by the FCC, the management stockholders will designate four
members, each of whom must be an officer of Tritel, Inc. and each of whom will
have 1/2 of a vote, AT&T Wireless will designate two members and the cash
equity investors will designate three members. The remaining four directors
will be designated by the management stockholders, and if permitted by FCC
regulation, one such designation will be subject to the consent of the cash
equity investors alone, with the remaining three subject to the consent of the
cash equity investors and AT&T Wireless. Once permitted by FCC regulation, the
remaining four directors will be designated by the cash equity investors, with
three of these designations subject to the consent of AT&T Wireless and Messrs.
Mounger, Martin and Sullivan. All directors will hold office until the annual
meeting of stockholders next following their election and until their
successors are elected and qualified. No director may be removed without cause.
Officers are elected annually by and serve at the discretion of the Board of
Directors.
Tritel, Inc.'s Bylaws provide that the Board of Directors may establish
committees to exercise certain powers delegated by the Board of Directors. At
present, the Board has established an Audit Committee, whose members are Mr.
Coleman, Mr. Fuqua and Ms. Hall, and a Compensation Committee, whose members
are Messrs. Hubregsen, Maschmann and Shepherd.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
compensation paid by Tritel, Inc. for services rendered during fiscal year 1998
by its chief executive officer and its four most highly compensated executive
officers. Mr. Arnett became President in January 1999 and was not an employee
of Tritel, Inc. prior to such appointment.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------ -------------
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION OPTIONS
- ------------------------------------------- ----------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
William M. Mounger, II
Chairman of the Board and Chief
Executive Officer ........................ $225,000 $112,500 -- --
Jerry M. Sullivan, Jr.
Executive Vice President and
Chief Operating Officer .................. 225,000 112,500 -- --
E.B. Martin, Jr.
Executive Vice President and
Chief Financial Officer .................. 225,000 112,500 -- --
Karlen Turbeville
Senior Vice President -- Finance ......... 175,000 87,500 -- --
John Greathouse
Senior Vice President -- Chief
Technical Officer ........................ 175,000 97,500 $2,700 --
</TABLE>
Stock Options
There were no stock options granted to the named executive officers during
fiscal year 1998.
DIRECTORS COMPENSATION
It is not anticipated that the directors designated by the cash equity
investors will receive cash compensation for their service on the Board of
Directors. Other non-employee directors receive a
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<PAGE>
quarterly stipend of $2,500, $1,000 for attending each Board or committee
meeting and $500 for participating in each Board or committee meeting held by
teleconference. In addition, Tritel, Inc. has adopted the 1999 Stock Option
Plan for Non-Employee Directors and anticipates granting stock options to
qualifying non-employee directors in fiscal year 1999. All directors, including
directors who are Tritel, Inc. employees, will be reimbursed for out-of-pocket
expenses in connection with attendance at meetings.
EMPLOYMENT AGREEMENTS
Tritel, Inc. has entered into employment agreements with Messrs. Arnett,
Martin, Mounger and Sullivan. The employment agreements provide for a term of
five years at an annual base salary of $225,000, subject to increase as
determined by the Board of Directors. Each executive officer will also be
eligible for an annual bonus of up to 50% of his base salary upon achievement
of certain objectives to be determined by the Board of Directors or its
Compensation Committee.
The employment agreements provide for termination:
o by the executive officer, at any time and at his sole discretion upon
30 days' written notice to Tritel, Inc.;
o by the executive officer, at any time for "Good Reason," as defined in
the employment agreements, upon written notice to Tritel, Inc.;
o by Tritel, Inc., at any time for "cause," as defined in the employment
agreements, upon written notice to the executive officer;
o automatically, upon the executive officer's death;
o by Tritel, Inc., upon the executive officer's "Disability," as defined
in the employment agreements, upon written notice to the executive
officer;
o by Tritel, Inc., immediately in the event of an uncured breach of the
Management Agreement by the Manager, as defined below; and
o by Tritel, Inc., if Tritel, Inc. does not meet certain corporate
objectives.
Depending upon the reason for termination of the employment agreements,
the executive officer may be entitled to a severance payment upon such
termination.
The employment agreements grant to Tritel, Inc. certain repurchase rights
with respect to the shares of Class A Common and Class C Common received by
some of the executive officers upon the closing of the joint venture and the
shares of Class A Common received by William S. Arnett. The employment
agreements provide that the equity to be received by the executive officers is
subject to the following vesting schedule:
<TABLE>
<CAPTION>
VESTING DATE EVENT PERCENT OF BASE SHARES
- ------------------------------------------------------------------------- -----------------------
<S> <C>
Commencement Date(1) ............................................... 20%
Second Anniversary ................................................. 15
Third Anniversary .................................................. 15
Fourth Anniversary ................................................. 15
Fifth Anniversary .................................................. 15
Completion of Year 1 and Year 2 of Minimum Build-Out Plan .......... 10
Completion of Year 3 of Minimum Build-Out Plan ..................... 10
--
Total ............................................................. 100%
===
------------
(1) The first vesting date event for Mr. Arnett is the First Anniversary.
</TABLE>
For purposes of this vesting schedule, the term "Base Shares" means
eleven-fifteenths (11/15) of the executive officer's Class A Common and Class C
Common and, in the case of Mr. Arnett,
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<PAGE>
eleven-fifteenths (11/15) of Class A Common. The employment agreements provide
for repurchase by Tritel, Inc. of each executive officer's non-vested stock
upon the occurrence of specified events and allow for accelerated vesting upon
certain termination events. Until the stock is vested, the certificates
evidencing the shares of stock are to be held in escrow.
The employment agreements also contain customary restrictions on the
executive officers' ability to compete with Tritel, Inc., solicit employees of
Tritel, Inc. and on the disclosure of confidential information of Tritel, Inc.
Notwithstanding the foregoing, certain terms of Mr. Arnett's employment
agreement differ from the employment agreements of the other executive
officers. With respect to termination, Mr. Arnett may be terminated by Tritel,
Inc., at any time with or without "Cause," as defined in the employment
agreements, upon written notice to him, and Mr. Arnett's employment is not
subject to the terms of the Management Agreement.
1999 STOCK OPTION PLAN
Tritel, Inc.'s 1999 Stock Option Plan authorizes the grant of certain
tax-advantaged stock options that are intended to qualify as "incentive stock
options" under Section 422 of the Internal Revenue Code of 1986, as amended,
nonqualified stock options, restricted shares, deferred shares and stock
appreciation rights for the purchase of an aggregate of up to 13,566 shares of
common stock of Tritel, Inc. ("Awards"). The Stock Option Plan provides for the
grant of Awards to qualified officers, employee directors and other key
employees of, and consultants to, Tritel, Inc. and its subsidiaries, provided,
however that incentive stock options may only be granted to employees. As of
June 30, 1999, no options have been issued under the Stock Option Plan. As of
June 30, 1999, 11,395 shares have been issued pursuant to restricted stock
grants. The maximum term of any stock option to be granted under the Stock
Option Plan is ten years, except that with respect to incentive stock options
granted to an individual who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of Tritel, the term of those
stock options shall be for no more than five years. The number and terms of
each Award and all questions of interpretation with respect to the Stock Option
Plan, including the administration of, and amendments to, the Stock Option
Plan, are determined by the Board of Directors or a compensation committee
designated by the Board.
The exercise price of incentive stock options and nonqualified stock
options granted under the Stock Option Plan must not be less than the fair
market value of the common stock on the grant date, except that the exercise
price of incentive stock options granted to a 10% stockholder must not be less
than 110% of such fair market value on the grant date. The aggregate fair
market value on the date of grant of the common stock for which incentive stock
options are exercisable for the first time by an employee during any calendar
year may not exceed $100,000. The Stock Option Plan will terminate in 2009
unless extended by amendment.
In the event a participant in the Stock Option Plan terminates employment
with Tritel, Inc., the Board or the compensation committee may accelerate the
vesting and exercisability of any stock option or stock appreciation right or
lapse the restrictions on any restricted share or deferred share if it
determines such action to be equitable under the circumstances or in Tritel,
Inc.'s best interest.
1999 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Tritel, Inc.'s 1999 Stock Option Plan for Non-employee Directors
authorizes the grant of certain nonqualified stock options for the purchase of
an aggregate of up to 50,000 shares of common stock of Tritel, Inc. to
non-employee directors of Tritel, Inc. As of June 30, 1999, no options have
been issued under the Non-employee Directors Plan. The maximum term of any
stock option to be granted under the Non-employee Directors Plan is ten years.
Grants of options under the Non-employee Directors Plan and all questions of
interpretations with respect to the Non-employee Directors Plan, including the
administration of, and amendments to, the Non-employee Directors Plan, are
determined by the Board of Directors.
The exercise price of nonqualified stock options granted under the
Non-employee Directors Plan must not be less than the fair market value of the
common stock on the grant date. The Non-employee Directors Plan will terminate
in 2009 unless extended by amendment.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSFER OF LICENSES TO TRITEL, INC.
As part of the joint venture transactions, Tritel, Inc. acquired C-Block
PCS licenses from Airwave Communications and E- and F-Block PCS licenses from
Digital PCS. The members of Digital PCS are Messrs. Mounger, Sullivan and
Martin. Airwave Communications transferred its C-Block PCS licenses, comprising
approximately 2.5 million Pops in Alabama, and $31.9 million of government
financing, to Tritel, Inc. in exchange for $14.4 million of Series C Preferred
Stock. Digital PCS transferred certain of its E- and F-Block licenses,
comprising 4.1 million Pops in Alabama and Mississippi, and $9.5 million of
government financing, to Tritel, Inc., in exchange for $3.8 million of Series C
Preferred Stock. Of the 4.1 million Pops transferred by Digital PCS, 1.7
million overlap with those contributed by AT&T Wireless.
OWNERSHIP OF THE REMAINING AFFILIATE LICENSES; OPTION TO PURCHASE LICENSES IN
GEORGIA AND FLORIDA
Digital PCS continues to hold PCS licenses covering approximately 1.5
million Pops in New Mexico and Texas. Tritel, Inc. has exercised an option to
acquire PCS licenses covering approximately 2.0 million Pops in Florida and
southern Georgia owned by Digital PCS for a purchase price of approximately $15
million in cash and Series C Preferred Stock. These licenses will be
transferred to Tritel PCS upon approval by the FCC. Tritel PCS subsequently
committed to grant to AT&T Wireless or its designee two options to purchase
these licenses, one of which covers the Fort Walton and Pensacola, Florida Pops
and the other the remaining Pops in Florida and southern Georgia. These options
expire on November 20, 1999 and April 20, 2000, respectively, unless extended.
The purchase price for the licenses subject to the option was the number
of shares of Series C Preferred that has a value equal to the aggregate amount
paid by Digital PCS to the FCC for the licenses, excluding the FCC debt
outstanding. Additionally, Tritel, Inc. assumed the FCC debt. Under this
formula, the purchase price equaled approximately $3.0 million in Series C
Preferred Stock and Tritel assumed $12.0 million in FCC debt.
In order to obtain AT&T Wireless's consent to exercise its option with
Digital PCS, Tritel, Inc. has agreed to amend certain of the AT&T joint venture
agreements to provide that the definition of PCS Territory in these documents
excludes the territory covered by the licenses subject to the option and
Tritel, Inc. and its subsidiaries shall only engage in specified permitted
activities related to the licenses or the territories covered by the licenses.
On April 20, 1999, Digital PCS sold licenses covering 1.6 million Pops in
Louisiana to Telecorp PCS, another AT&T Wireless joint venture partner, in
exchange for an equity interest in Telecorp PCS. Management intends for the
remaining licenses, covering 1.5 million Pops in Texas and New Mexico, to
remain with Digital PCS.
LOANS TO PREDECESSORS
On January 7, 1999, Tritel, Inc. entered into a secured promissory note
agreement under which it agreed to lend up to $2.5 million to Airwave
Communications and Digital PCS. Interest on advances under the loan agreement
is 10% per year. The interest will compound annually and interest and principal
are due at maturity of the note. The note is secured by Airwave
Communications's and Digital PCS's ownership interest in Tritel, Inc. and
certain equity securities of TeleCorp PCS. Any proceeds from the sale of
licenses by Airwave Communications and Digital PCS, net of the FCC debt
repayment, are required to be applied to the note balance. If the note has not
been repaid within five years, it will be repaid through a reduction of Airwave
Communications's and Digital PCS's interest in Tritel, Inc. based on a
valuation of Tritel, Inc.'s stock at that time.
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MANAGEMENT AGREEMENT
Tritel, Inc. has entered into a Management Agreement with Tritel
Management, LLC, a Mississippi limited liability company, which is wholly owned
by the Messrs. Martin, Mounger and Sullivan. Pursuant to the Management
Agreement, Tritel Management is to be responsible for the design, construction
and operation of Tritel, Inc. and its business, all subject to Tritel, Inc.'s
oversight, review and ultimate control and approval. Tritel will pay Tritel
Management a fee of $10,000 per year for such services and will reimburse
Tritel Management for out-of-pocket expenses incurred on behalf of Tritel, Inc.
The term of the Management Agreement is five years, subject to termination upon
the occurrence of certain events described in the Management Agreement.
RELATIONSHIP WITH MERCURY COMMUNICATIONS
Mercury Communications, a company wholly owned by Messrs. Martin, Mounger
and Sullivan, provides management services to Alaska-3 Cellular, LLC, the owner
of the non-wireline Alaska-3 Cellular license. In conjunction with Mercury
Communications' transfer of its employees to Tritel, Inc., Mercury
Communications has subcontracted to Tritel, Inc. the back-office management
functions associated with managing Alaska-3's cellular market. For the services
provided by Tritel, Inc., Mercury Communications pays a monthly fee in the
amount of $14,250.
During 1997 and 1998, Tritel, Inc. reimbursed Mercury Communications for
actual expenses to cover the salaries and employee benefits of Mercury
Communications employees who were providing services almost exclusively to
Tritel, Inc. Tritel, Inc. reimbursed Mercury Communications $1,312,000 and
$3,709,000 for such expenses in 1997 and 1998, respectively. On January 7,
1999, after consummation of the transactions described herein, the employees of
Mercury Communications who were providing services to Tritel, Inc. became
employees of Tritel, Inc.
During April 1997, Tritel, Inc. advanced $249,000 on behalf of Mercury
Communications to repay a loan Mercury Communications had incurred from a third
party. The balance due from Mercury Communications on this advance was $247,000
at December 31, 1997 and 1998 and June 30, 1999.
RELATIONSHIP WITH MERCURY WIRELESS MANAGEMENT, INC.
Mercury Wireless Management, Inc., a company wholly owned by Messrs.
Martin, Mounger and Sullivan, provides management and marketing services to
communications tower owners, including municipalities. Mercury Wireless
Management has contracted to provide such services to the City of Jackson,
Mississippi. Under the City of Jackson contract, Mercury Wireless Management
receives a percentage of rentals generated from the leasing of the facilities
managed by Mercury Wireless Management. Tritel, Inc. has entered into various
leases to co-locate its equipment on certain towers owned by the City of
Jackson and managed by Mercury Wireless Management. These leases were
negotiated on an arms length basis and incorporate terms substantially
identical to those offered by the City of Jackson to unrelated third-party
carriers.
Tritel, Inc.'s employees perform certain services on behalf of Mercury
Wireless Management, and Mercury Wireless Management reimburses Tritel, Inc.
for these services. Such amounts totaled $17,000 for 1997 and $11,000 for 1998
and were included in amounts due from affiliates at December 31, 1997 and 1998.
RELATIONSHIP WITH WIRELESS FACILITIES, INC.
Tritel, Inc. receives site acquisition and microwave relocation services
from Wireless Facilities, Inc. Scott I. Anderson, who is a director of Tritel,
is also a director of Wireless Facilities.
RELATIONSHIP WITH AT&T WIRELESS
Tritel, Inc. has entered into joint venture agreements with AT&T Wireless
and its affiliates, including the Securities Purchase Agreement, the Closing
Agreement related thereto, Stockholders' Agreement, Network Membership License
Agreement, Roaming Agreement, Resale Agreement,
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Roaming Administration Agreement and Long Distance Agreement. AT&T Wireless
holds Series A Preferred Stock and Series D Preferred Stock valued at $137.1
million and has designated two directors to Tritel, Inc.'s Board of Directors,
Ann K. Hall and H. Lee Maschmann.
RELATIONSHIP WITH TELECORP PCS AND TRITON PCS
Tritel, Inc. has common stockholders with TeleCorp PCS and Triton PCS and
may be deemed an affiliate by virtue of this common ownership. Scott I.
Anderson and Gary S. Fuqua, two of Tritel, Inc.'s directors, serve as directors
of TeleCorp PCS. Mr. Anderson also serves as a director of Triton PCS. Tritel,
Inc. has entered into an agreement with TeleCorp PCS and Triton PCS to adopt
the common brand name, SunCom, that will be co-branded with the AT&T brand
name.
RELATIONSHIP WITH ABC WIRELESS, L.L.C.
Tritel, Inc. has made a loan of $7.5 million to ABC Wireless, L.L.C. for
the purpose of bidding on licenses in the FCC's auction of C-Block PCS
licenses. The members of ABC Wireless are Mr. Anderson, a director of Tritel,
Inc., and Gerald T. Vento and Thomas H. Sullivan, directors and executive
officers of TeleCorp PCS. See "Management's Discussion and Analysis -- Pending
License Acquisition."
RELATIONSHIP WITH FLYING A TOWERS
Tritel, Inc. has leased several communication towers and expects to lease
several additional towers from Flying A Towers. Mr. Arnett is President of
Flying A Towers.
RELATIONSHIP WITH INITIAL PURCHASERS
Affiliates of the Initial Purchasers also provide banking, advisory and
other financial services to Tritel PCS and its affiliates in the ordinary
course of business. Toronto Dominion (Texas), Inc., an affiliate of TD
Securities (USA) Inc., is the administrative agent and issuing bank and
affiliates of each of the Initial Purchasers are lenders under Tritel, Inc.'s
bank facility. Tritel, Inc. intends to enter into an interest rate swap
agreement with Barclays Bank PLC.
RELATIONSHIP WITH CASH EQUITY INVESTORS
Tritel, Inc. and the cash equity investors have entered into an Investors
Stockholders' Agreement to provide for certain rights with respect to the
management of Tritel, Inc., and to provide for certain restrictions with
respect to the sale, transfer or other disposition of Tritel, Inc. stock beyond
those rights and restrictions set forth in the Stockholders' Agreement.
The Investors Stockholders' Agreement provides, subject to limited
exceptions with respect to removal of directors and filling of vacancies, that
the cash equity investors will vote all of their shares to cause the election
of one individual to be designated as a director by each of Conseco, Dresdner
and Entergy. Initially, the directors designated by Conseco, Dresdner and
Entergy will be Andrew Hubregsen, Alexander P. Coleman and Gary S. Fuqua,
respectively. In the event that the right of the cash equity investors to
nominate directors is reduced to one director, then that right will be
exercisable by cash equity investors owning two-thirds of the outstanding
shares of common stock and/or Series C Preferred Stock held by all cash equity
investors.
Each cash equity investor has agreed, subject to certain limited
exceptions, that it will not directly or indirectly transfer or otherwise grant
or create certain liens in, give, place in trust or otherwise voluntarily or
involuntarily dispose of ("Transfer") any share of the capital stock of Tritel,
Inc. held by it as of January 7, 1999 or thereafter acquired, including a
proposed Transfer to any Prohibited Transferee, as defined in the Stockholders'
Agreement, or any Regional Bell Operating Companies, Microsoft Corporation,
GTE, SNET or any of their respective affiliates, successors or assigns. In
addition, if a cash equity investor desires to Transfer any or all of its
shares of the capital stock of Tritel, Inc. to an affiliate or affiliated
successor, then the cash equity investor must first offer all of
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those shares to the other cash equity investors, subject to certain terms and
conditions. Each cash equity investor also has tag along rights and drag along
rights. The tag along rights enable non-selling cash equity investors to
participate in a sale of certain capital stock of Tritel, Inc. by other selling
cash equity investors, subject to certain terms and conditions. The drag along
rights provide, under certain circumstances, that a cash equity investor that
proposes to sell its shares of the capital stock of Tritel, Inc. may compel
other non-selling cash equity investors to participate in the proposed sale.
The Investors Stockholders' Agreement will terminate upon the termination
of the Stockholders' Agreement.
RELATIONSHIP WITH YOUNG, WILLIAMS, HENDERSON & FUSELIER, P.A.
Young, Williams, Henderson & Fuselier, P.A. provides legal services to
Tritel. E.B. Martin, Jr., who is an officer and director of Tritel, is also a
shareholder of the law firm of Young, Williams, Henderson & Fuselier and
Associates Ltd., an affiliate of Young, Williams, Henderson & Fuselier, P.A.
James H. Neeld, IV, who is Senior Vice President-General Counsel and Secretary
of Tritel, Inc., is also of counsel to Young, Williams, Henderson & Fuselier,
P.A.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to
beneficial ownership of Tritel, Inc.'s voting securities, as well as its
non-voting common stock, as of the date of this prospectus, by
o each stockholder who is known by Tritel, Inc. to own beneficially more
than 5% of any class of Tritel, Inc.'s voting securities,
o each of Tritel, Inc.'s directors,
o each of the named executive officers and
o all directors and executive officers of Tritel, Inc. as a group.
On January 7, 1999, several institutional equity investors, some of which
are named in the table below, purchased an aggregate of $149.2 million of
Series C Preferred Stock of Tritel, Inc. Of this amount, $99.4 million was
funded on January 7, 1999 and the remaining $49.8 million is due to be funded,
under the institutional investors' irrevocable and unconditional commitments,
on September 30, 1999. Most of these institutional investors entered into
investor loan agreements with Ericsson pursuant to which Ericsson provided a
total of $60.8 million of loans to them, severally, to fund a portion of the
January 7, 1999 purchase.
On the same date, Airwave Communications purchased $11.2 million of the
Series C Preferred Stock of Tritel, Inc. and Digital PCS purchased $3.0 million
of Series C Preferred Stock. The full $14.2 million was funded on January 7,
1999 by means of an investor loan from Ericsson in that amount. As part of a
restructuring of their operations, Digital PCS has agreed to transfer all of
its Series C Preferred Stock, including the foregoing $3.0 million of Series C
Preferred Stock, to Airwave Communications, which will also assume the $3.0
million loan from Ericsson.
The investor loans are subject to limited recourse. The interest thereon,
which is at a fixed rate, is not payable for eight years, and the loans are
secured by $121.8 million of Series C Preferred Stock owned by the
institutional investors and $32.4 million of Series C Preferred Stock owned by
Airwave Communications, including the shares to be acquired from Digital PCS.
Ericsson made these loans as an additional inducement for Tritel, Inc. to agree
to purchase from Ericsson not less than $300 million of PCS infrastructure
equipment, including base stations, switches, software and related peripheral
equipment.
Shares of Series C Preferred Stock are convertible immediately into shares
of Class A 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 Class A
Common Stock. On all matters to be submited to the stockholders of Tritel,
Inc., the holders of Series C Preferred Stock have the right to vote on an
as-converted basis as a single class with the holders of Tritel, Inc.'s Class A
Common Stock.
Together the Class A Common Stock and the Series C Preferred Stock cast
4,990,000 votes on all matters not requiring a class vote, while the nine
shares of Voting Preference Common Stock cast 5,010,000 votes on all matters
not requiring a class vote. The votes to which the Class A Common Stock and
Series C Preferred Stock are collectively entitled are allocated to each share
on a pro rata basis. Similarily, the votes to which the nine shares of Voting
Preference Common Stock are entitled are allocated to each share on a pro rata
basis. The Voting Preference Common Stock loses its voting preference when the
rules of the FCC so permit, which is currently ten years after the respective
issuances of Tritel, Inc.'s C- and F-Block licenses. The Class C Common Stock
is non-voting stock.
Unless otherwise indicated, each person named below has sole voting and
investment power with respect to the shares beneficially owned. Unless
otherwise indicated, the address of each person named below is c/o Tritel,
Inc., 111 E. Capitol Street, Suite 500, Jackson, Mississippi 39201.
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<TABLE>
<CAPTION>
COMMON STOCK
---------------------------------------------------------------------
CLASS A CLASS C VOTING PREFERENCE
COMMON COMMON COMMON
------------------------ ------------------------ -------------------
NAME NUMBER % NUMBER % NUMBER %
- ----------------------------------- ------------- ---------- ------------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
AT&T Wireless(2) .................. -- -- -- -- -- --
Conseco, Inc.(4) .................. -- -- -- -- -- --
Dresdner Kleinwort Benson
Private Equity
Partners L.P.(5) ................. -- -- -- -- -- --
Triune PCS, LLC(6) ................ -- -- -- -- -- --
Entergy Wireless
Corporation(7) ................... -- -- -- -- -- --
MF Financial(8) ................... -- -- -- -- -- --
Airwave Communications,
LLC(9) ........................... -- -- -- -- -- --
William M. Mounger, II(9)(10) ..... 5,961.36 16.8% 1,725.56 33.3% 3.0 33.3%
Jerry M. Sullivan, Jr.(9) ......... 5,961.36 16.8 1,725.56 33.3 3.0 33.3
E.B. Martin, Jr. .................. 5,961.36 16.8 1,725.56 33.3 3.0 33.3
Karlen Turbeville ................. 2,713.03 7.7 -- -- -- --
William S. Arnett ................. 4,069.54 11.6 -- -- -- --
All officers and directors as a
group ............................ 33,551.82 100.0% 5,176.68 100.0% 9.0 100.0%
<CAPTION>
PREFERRED STOCK
-----------------------------
PERCENTAGE
SERIES C OF TOTAL
----------------------------- VOTING
NAME NUMBER %(1) POWER(2)
- ----------------------------------- ------------------ ---------- -----------
<S> <C> <C> <C>
AT&T Wireless(2) .................. 46,374.10(3) 20.1% 8.8%
Conseco, Inc.(4) .................. 50,000.00 27.1 9.5
Dresdner Kleinwort Benson
Private Equity
Partners L.P.(5) ................. 30,000.00 16.3 5.7
Triune PCS, LLC(6) ................ 24,139.04 13.1 4.6
Entergy Wireless
Corporation(7) ................... 20,000.00 10.9 3.8
MF Financial(8) ................... 10,000.00 5.4 1.9
Airwave Communications,
LLC(9) ........................... 32,392.36 17.6 6.1
William M. Mounger, II(9)(10) ..... 2,000.00 1.1 18.2
Jerry M. Sullivan, Jr.(9) ......... -- -- 17.8
E.B. Martin, Jr. .................. -- -- 17.8
Karlen Turbeville ................. -- -- *
William S. Arnett ................. -- -- *
All officers and directors as a
group ............................ 2,000.00 1.1% 56.8%
</TABLE>
- ----------
* Represents less than 1%.
(1) The percentage of the Series C Preferred Stock owned by AT&T Wireless
assumes it has converted all of its Series D Preferred Stock into Series C
Preferred Stock. The percentage of the Series C Preferred Stock owned by
each other holder assumes AT&T Wireless has not converted its Series D
Preferred Stock.
The percentage of the total voting power of Tritel, Inc. held by all
persons in the table assumes AT&T Wireless has converted its Series D
Preferred Stock.
(2) Address is: 5000 Carillon Point, Kirkland, WA 98033.
(3) Consists of 46,374.10 shares Series D Preferred Stock, which are assumed
to have been converted into an equivalent number of shares of Series C
Preferred Stock. AT&T Wireless also owns 90,668.33 shares of Series A
Preferred Stock.
(4) These shares are held through Washington National Insurance Company and
United Presidential Life Insurance Company. Address is: 11825 North
Pennsylvania Street, Carmel, IN 46032.
(5) Address is: 75 Wall Street, 24th Floor, New York, NY 10005.
(6) Address is: 4770 Baseline Road, Suite 380, Boulder, CO 80303.
(7) On April 26, 1999, Entergy Wireless Company notified Tritel, Inc. and the
stockholders of Tritel, Inc. of its offer to sell its 20,000 shares of
Series C Preferred Stock pursuant to the right of first offer held by
certain stockholders of Tritel, Inc. under the Stockholders' Agreement and
the Investors Stockholders' Agreement. Entergy has advised Tritel, Inc.
that its decision to sell its shares reflects a shift in its strategic
focus. Tritel, Inc. has received indications that certain other existing
stockholders are interested in purchasing Entergy's shares. Entergy's
address is: Three Financial Centre, 900 South Shackelford, Suite 210,
Little Rock, AR 72211.
(8) Address is: 73 Treemont Street, Suite 13, Boston, MA 02108.
(9) Assumes the transfer of 6,802.4 shares of Series C Preferred Stock from
Digital PCS to Airwave Communications. Southern Farm Bureau Life Insurance
Company has a controlling interest in Airwave Communications. Mr. Mounger
and his family have an approximately 10% equity interest in Airwave
Communications through M3, LLC. Jerry M. Sullivan, Jr.'s wife and members
of her family have a less than 10% equity interest in Airwave
Communications through McCarty Communications LLC. Messrs. Mounger and
Sullivan disclaim any beneficial interest in the shares of Tritel, Inc.
owned by Airwave Communications.
(10) Mr. Mounger controls Trillium PCS, LLC, which owns 2,000 shares of
Series C Preferred Stock.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
GOVERNMENT DEBT
Because Tritel, Inc. qualifies as a small business for the purpose of
C-Block licenses and a very small business for the purposes of F-Block
licenses, it is entitled to receive preferential financing for these licenses
from the U.S. Government. The total license fee payable to the U.S. Government
in respect of the C-Block licenses for which Airwave Communications was named
the winning bidder is approximately $35.5 million. Under the preferential
financing terms for the C-Block Licenses, Airwave Communications has paid a
deposit of 10% of the license fee, which is approximately $3.5 million. Under
the preferential financing terms for the C-Block licenses, Tritel, Inc. will
pay interest only for the first six years of the license term at a fixed
interest rate equal to 7.0% per annum with principal amortized during the
seventh through tenth years of the license. With respect to the F-Block
licenses, the total license fee payable to the U.S. Government is approximately
$12.0 million. Under the preferential financing terms for the F-Block licenses,
Tritel, Inc. will be required to make quarterly payments of interest only, at a
fixed interest rate of 6.125% per annum for the first two years after the
license grant date, and quarterly payments of interest and principal over the
remaining eight years of the license term.
As a C- and F-Block licensee, Tritel, Inc. may incur substantial financial
penalties, license revocation or other enforcement measures at the FCC's
discretion, in the event that it fails to make timely quarterly installment
payments. Where a C or F-Block licensee anticipates defaulting on any required
payment, it may request a three to six month grace period before the FCC
cancels its license. In the event of default by a C- or F-Block licensee, the
FCC could reclaim the licenses, re-auction them, and subject the defaulting
party to a penalty comprised of the difference between the price at which it
acquired its license and the amount of the winning bid at re-auction, plus an
additional penalty of three percent of the subsequent winning bid.
BANK FACILITY
The following description is not complete and is qualified in its entirety
by reference to the provisions of the Amended and Restated Loan Agreement,
dated as of March 31, 1999 among Tritel PCS, as borrower, Tritel, Inc., as
parent, Toronto Dominion (Texas), Inc., Barclays Bank PLC, NationsBank, N.A.,
and other financial institutions signatory thereto, as lenders, and Toronto
Dominion (Texas), Inc., as administrative agent for the lenders and The
Toronto-Dominion Bank, Houston Agency, as the issuing bank, and other related
documents entered into in connection with the bank facility.
The bank facility provides for an aggregate of up to $550 million of
senior secured credit facilities including up to:
o a $250 million reducing revolving credit facility (the "Revolver"),
o a $100 million term credit facility (the "Term Loan A") and
o a $200 million term credit facility (the "Term Loan B").
The final maturity date for the Revolver and the Term Loan A is June 30,
2007 and for the Term Loan B is December 31, 2007. At June 30, 1999, Tritel PCS
had amounts outstanding under the bank facility of approximately $200 million.
Tritel PCS's ability to draw funds under the bank facility is subject to
customary conditions including, among others, the following:
o Total Debt outstanding may not exceed 70% of Total Capital, and
o Senior Debt may not exceed 50% of Total Capital, except that under
certain circumstances, including satisfaction of buildout and
subscriber milestones, this percentage may be increased to as much
as 55%.
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As of June 30, 1999, Tritel PCS could have borrowed up to a total of
approximately $550 million pursuant to the terms of the bank facility.
The bank facility also provides Tritel PCS with letters of credit of up to
$10 million under the Revolver.
At the option of Tritel PCS, the Revolver and the Term Loan A bear
interest at either the base rate, which is the greater of the prime rate of
Toronto-Dominion Bank, New York Branch, or the federal funds rate, plus 0.5%,
plus an applicable margin ranging from a minimum of 0.75% to a maximum of
2.75%, or LIBOR, plus an applicable margin ranging from a minimum of 1.75% to a
maximum of 3.75% (the "LIBOR Margin"), in each case, depending on the
occurrence of the third anniversary of the Loan Agreement, the generation of
positive operating cash flow by Tritel PCS and Tritel PCS's total leverage
ratio. At the option of Tritel PCS, the Term Loan B bears interest at either
the base rate, plus an applicable margin of either 2.75% or 3.50%, or LIBOR,
plus an applicable margin of either 3.75% or 4.50%, in each case depending on
whether or not Tritel PCS has achieved positive cash flow and the third
anniversary of the bank facility has occurred. Tritel PCS must pay a per annum
commitment fee equal to the product of either 0.5%, 1% or 1.75%, depending on
the ratio of available Revolver and Term Loan A commitments to total Revolver
and Term Loan A commitments, and the sum of the available Revolver and Term
Loan A commitments. Tritel PCS also must pay a letter of credit fee equal to
the LIBOR Margin plus 0.125% per annum on the undrawn face amount of any
outstanding letters of credit from the date of issuance through the expiration
date of those letters of credit.
Outstanding loans drawn from the Revolver or the Term Loan A bearing
interest at the base rate plus the applicable margin may be prepaid without
penalty. Prepayments of the Term Loan B made on or before December 31, 2001
will require a prepayment fee ranging from 0% to 3% of the prepayment amount,
depending on the date of prepayment. Prepayments of any loans under the Bank
Facility bearing interest at LIBOR plus the LIBOR Margin will require payment
of an additional amount sufficient to compensate the lenders for all losses and
out-of-pocket expenses other than lost margins on the loans incurred in
connection with these prepayments.
The bank facility is secured by:
o a perfected first priority lien on all tangible and intangible assets,
including FCC licenses if legally permitted, of Tritel, Inc., Tritel PCS
and each of their present and future subsidiaries,
o a pledge of all the capital stock of Tritel PCS and each of its present
and future subsidiaries and
o a pledge of Tritel, Inc.'s equity subscription agreements.
In addition, the bank facility is secured by upstream guarantees from Tritel,
Inc. PCS's direct and indirect subsidiaries, both present and future, and a
downstream guarantee from Tritel, Inc.
The bank facility contains various covenants that restrict the ability of
Tritel, Inc. and its subsidiaries, among other things, to:
o incur additional indebtedness,
o grant liens,
o make guarantees,
o engage in mergers, acquisitions, investments, consolidations,
liquidations, dissolutions and asset sales,
o make distributions and other restricted payments,
o engage in transactions with affiliates,
o own real estate and
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o restrict upstream dividends by subsidiaries to Tritel PCS.
The bank facility contains certain financial and operating covenants
including, among other things:
o a maximum senior debt to total capitalization ratio,
o a maximum total debt to total capitalization ratio,
o a minimum percentage of covered Pops,
o a minimum number of subscribers,
o a minimum amount of revenues,
o a maximum amount of capital expenditures,
o a maximum total leverage ratio,
o a maximum senior leverage ratio,
o a minimum fixed charge coverage ratio and
o a minimum interest coverage ratio.
Events of default under the bank facility include:
o any acceleration of, or any default permitting acceleration of,
indebtedness of Tritel PCS, its subsidiaries or Tritel, Inc. exceeding
$5.0 million,
o loss of the right to use any AT&T trademark pursuant to the Network
Membership License Agreement within five years after March 31, 1999 and,
thereafter, loss of such right under specific circumstances,
o failure of any party to the Securities Purchase Agreement,
Stockholders' Agreement or Bid Equity Commitments Documentation, as
defined in the Loan Agreement, to comply with a funding or contribution
obligation thereunder exceeding 30 days,
o the occurrence or existence of any Change of Control Event, as defined
in the Loan Agreement, and
o other usual and customary events of default under senior secured
credit facilities.
The lenders under the bank facility received fees reflecting then-existing
market conditions, as well as reimbursement of their expenses.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
Tritel PCS originally sold the outstanding notes to NationsBanc Montgomery
Securities LLC, Barclays Capital Inc., TD Securities (USA) Inc., BNY Capital
Markets, Inc., CIBC World Markets Corp. (formerly CIBC Oppenheimer Corp.) and
Credit Lyonnais Securities (USA) Inc. (the "Initial Purchasers"). The Initial
Purchasers subsequently placed the outstanding notes with:
o qualified institutional buyers in reliance on Rule 144A under the
Securities Act; and
o qualified buyers outside the United States in reliance on Regulation S
under the Securities Act.
Tritel PCS entered into a registration rights agreement with the Initial
Purchasers, as a condition to their purchase of the outstanding notes, pursuant
to which Tritel PCS has agreed, for the benefit of the outstanding noteholders,
at its own expense, to use its reasonable best efforts file a registration
statement for this exchange offer, of which this prospectus is a part, with the
Securities and Exchange Commission within 60 days after the issue date of the
notes. In addition, Tritel PCS will use its reasonable best efforts to cause
the registration statement to become effective within 210 days after the issue
date of the notes. When the exchange offer registration statement is declared
effective, Tritel PCS will offer the registered notes in exchange for tender of
the outstanding notes. For each outstanding note tendered to Tritel PCS
pursuant to the exchange offer, the holder of such outstanding note will
receive a registered note having an original principal amount at maturity equal
to that of the tendered outstanding note.
Based upon interpretations by the SEC staff set forth in certain no-action
letters to third parties, including Exxon Capital Holdings Corp., SEC No-Action
Letter (April 13, 1989); Morgan Stanley & Co. Inc., SEC No-Action Letter (June
5, 1991); and Shearman & Sterling, SEC No-Action Letter (July 2, 1993), Tritel
PCS believes that the registered notes issued pursuant to this exchange offer
in exchange for the outstanding notes, in general, will be freely tradable
after the exchange offer, without compliance with the registration and
prospectus delivery requirements of the Securities Act. However, any purchaser
of outstanding notes who is a Tritel PCS "affiliate," within the meaning of
Rule 405 under the Securities Act, who does not acquire the registered notes in
the ordinary course of business, or who tenders in the exchange offer for the
purpose of participating in a distribution of the registered notes, could not
rely on the SEC staff position enunciated in such no-action letters and, in the
absence of an applicable exemption, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. A holder's failure to comply with those requirements in
such an instance may result in that holder incurring liability under the
Securities Act which we will not indemnify.
As the above-mentioned no-action letters and the registration rights
agreement contemplate, each holder accepting the exchange offer is required to
represent to us, in a letter of transmittal, that:
o the holder or the person receiving the registered notes, whether or not
such person is the holder, will acquire those registered notes in the
ordinary course of business;
o the holder or any other acquiror is not engaging in a distribution of
the registered notes;
o the holder or any other acquiror has no arrangement or understanding
with any person to participate in a distribution of the registered notes;
o neither the holder nor any other acquiror is a Tritel PCS affiliate
within the meaning of Rule 405 under the Securities Act; and
o the holder or any other acquiror acknowledges that if that holder or
other acquiror participates in the exchange offer for the purpose of
distributing the registered notes, it must comply with the registration
and prospectus delivery requirements of the Securities Act in connection
with any such resale and cannot rely on the above-mentioned no-action
letters.
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As indicated above, each broker-dealer that receives for its own account a
registered note in exchange for outstanding notes must acknowledge that it:
o acquired the outstanding notes for its own account as a result of
market-making activities or other trading activities;
o has not entered into any arrangement or understanding with Tritel PCS
or any Tritel PCS "affiliate" to distribute the registered notes; and
o will deliver a prospectus meeting the requirements of the Securities
Act in connection with any resale of the registered notes.
For a description of the procedures for resales by participating
broker-dealers, see "Plan of Distribution."
In the event that (1) changes in the law or the applicable interpretations
of the SEC staff do not permit Tritel PCS to effect this exchange offer, or (2)
if for any other reason the exchange offer is commenced and not consummated
within 30 days after the exchange offer registration statement is declared
effective, or (3) if any holder of Transfer Restricted Securities notifies
Tritel PCS prior to the 20th day following consummation of the exchange offer
that:
o it is prohibited by law or Commission policy from participating in the
exchange offer;
o that it may not resell the registered notes acquired by it in the
exchange offer to the public without delivering a prospectus and the
prospectus contained in the exchange offer registration statement is not
appropriate or available for such resales; or
o that it is a broker-dealer and owns outstanding notes acquired directly
from Tritel PCS or an affiliate of Tritel PCS,
then Tritel PCS will:
o file, on or prior to 30 days after the earlier of (a) the date on which
Tritel PCS determines that the exchange offer registration statement need
not or cannot be filed as a result of clause (1) above and (b) the date
on which Tritel PCS receives the notice specified in clause (3) above,
(such earlier date, the "Shelf Filing Deadline"), a shelf registration
statement pursuant to Rule 415 under the Act, which may be an amendment
to the exchange offer registration statement (the "Shelf Registration
Statement"), covering resales of the outstanding notes;
o use its reasonable best efforts to cause such Shelf Registration
Statement to become effective on or prior to 90 days after the Shelf
Filing Deadline for the Shelf Registration Statement; and
o use reasonable best efforts to keep effective the shelf registration
statement until the earlier of two years after the outstanding notes'
original issuance date, subject to extension under certain circumstances,
or such time as all of the applicable outstanding notes have been sold.
"Transfer Restricted Securities" means:
o each outstanding note until the date on which such outstanding note has
been exchanged by a person other than a broker-dealer for a registered
note in the exchange offer;
o each outstanding note until following the exchange by a broker-dealer
in the exchange offer of an outstanding note for a registered note, the
date on which such registered note is sold to a purchaser who receives
from such broker-dealer on or prior to the date of such sale a copy of
the prospectus contained in the exchange offer registration statement;
o each outstanding note until the date on which such outstanding note has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement;
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o each outstanding note until the date on which such outstanding note is
distributed to the public pursuant to Rule 144 under the Securities Act;
and
o each registered note held by a broker-dealer until the date on which
such registered note is disposed of by a broker-dealer pursuant to the
"Plan of Distribution" section in this prospectus.
If:
o Tritel PCS fails to file any of the registration statements required by
the registration rights agreement on or before the date specified for
such filing;
o any of such registration statements is not declared effective by the
Commission on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date");
o Tritel PCS fails to consummate the exchange offer within 30 business
days of the Effectiveness Target Date with respect to the exchange offer
registration statement;
o the Shelf Registration Statement is declared effective but thereafter
ceases to be effective or usable in connection with resales of Transfer
Restricted Securities during the periods specified in the registration
rights agreement; or
o the exchange offer registration statement is filed and declared
effective but thereafter will cease to be effective or fail to be usable
for its intended purpose without being succeeded immediately by a
post-effective amendment to such exchange offer registration statement
that cures such failure and that is itself declared effective immediately
(each such event referred to in the previous five clauses is a
"Registration Default"),
then Tritel PCS will pay liquidated damages to each holder of outstanding
notes, with respect to the first 90-day period immediately following the
occurrence of the first Registration Default in an amount equal to $.05 per
week per $1,000 principal amount of outstanding notes held by such holder.
The amount of the liquidated damages will increase by an additional $.05
per week per $1,000 principal amount of outstanding notes with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of liquidated damages for all Registration Defaults of $.25
per week per $1,000 principal amount of outstanding notes.
All accrued liquidated damages will be paid by Tritel PCS on each damages
payment date to the global note holder by wire transfer of immediately
available funds or by federal funds check and to holders of outstanding
certificated notes by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been
specified.
Following the cure of all Registration Defaults, the accrual of liquidated
damages will cease but liquidated damages accrued and unpaid will survive until
paid in full.
Tritel PCS will, if and when it files the Shelf Registration Statement,
provide to each applicable holder of the outstanding notes copies of the
prospectus which is a part of the Shelf Registration Statement. A holder that
sells the outstanding notes pursuant to the Shelf Registration Statement
generally:
o must be named as a selling security holder in the related prospectus;
o must deliver a prospectus to purchasers;
o will be subject to certain of the civil liability provisions under the
Securities Act in connection with such sales; and
o will be bound by the provisions of the registration rights agreement
which are applicable to that holder, including certain indemnification
obligations.
In addition, each of the outstanding noteholders must deliver information
to Tritel PCS, to be used in connection with the Shelf Registration Statement,
in order to have his or her outstanding notes included in the Shelf
Registration Statement and to benefit from the provisions set forth in the
foregoing paragraph.
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The registration rights agreement covering the outstanding notes provides
that Tritel PCS will file an exchange offer registration statement with the SEC
within 60 days after the issue date of the notes. In the event that Tritel PCS
and the guarantors do not comply with their obligations under the registration
rights agreement, they will be required to pay to the holders of the notes
liquidated damages up to a maximum of $0.25 per week per $1,000 in principal
amount of notes held by such holders for each week or part of a week that the
Registration Default continues. Tritel PCS will not be required to pay
liquidated damages for more than one Registration Default at any given time.
Liquidated damages will cease to accrue following the cure of all Registration
Defaults. The sole remedy available to the outstanding noteholders will be the
collection of these liquidated damages. All liquidated damages payable because
a Registration Default occurred will be payable to the outstanding notesholders
in cash on each May 15 and November 15, commencing with the first such date
occurring after any such liquidated damages begin to accrue, until the
Registration Default is cured.
Outstanding noteholders must:
o make certain representations to us in order to participate in the
exchange offer;
o deliver information to be used in connection with the shelf
registration statement, if required; and
o provide comments on the shelf registration statement within the time
periods set forth in the registration rights agreement,
in order to have their outstanding notes included in the Shelf Registration
Statement and to benefit from the provisions regarding liquidated damages
payable because a Registration Default occurred, as set forth above. By
acquiring Transfer Restricted Securities, a holder will be deemed to have
agreed to indemnify Tritel PCS against certain losses arising out of
information furnished by such holder in writing for inclusion in any Shelf
Registration Statement. holders of outstanding notes will also be required to
suspend their use of the prospectus included in the Shelf Registration
Statement under certain circumstances upon receipt of written notice to that
effect from Tritel PCS.
The preceding summary of the material provisions of the registration
rights agreement is subject to, and is qualified in its entirety by, all the
provisions of the registration rights agreement, a copy of which is filed as an
exhibit to the exchange offer registration statement of which this prospectus
is a part.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal for the exchange offer, we will accept any and
all outstanding notes validly tendered and not withdrawn prior to 5:00 p.m.,
New York City time, on the expiration date. See "--Expiration Date; Extensions;
Amendments." Tritel PCS will issue $1,000 original principal amount at maturity
of registered notes in exchange for each $1,000 original principal amount at
maturity of outstanding notes accepted in the exchange offer. Holders may
tender some or all of their outstanding notes pursuant to the exchange offer.
However, outstanding notes may be tendered only in integral multiples of
$1,000.
The form and terms of the registered notes are the same as the form and
terms of the outstanding notes except that:
o the registered notes have been registered under the Securities Act and
hence will not bear legends restricting their transfer; and
o the registered noteholders will not be entitled to certain rights under
the registration rights agreement covering the outstanding notes,
including the provisions providing for an increase in the interest rate
on the outstanding notes in certain circumstances relating to the timing
of the exchange offer, all of which rights will terminate when the
exchange offer is terminated.
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The registered notes will evidence the same debt as the outstanding notes
and will be entitled to the benefits of the indenture governing the outstanding
notes. As of the date of this prospectus, $372,000,000 aggregate principal
amount at maturity of notes were outstanding. We have fixed the close of
business on , 1999 as the record date for the exchange offer for purposes
of determining the persons to whom this prospectus and the letter of
transmittal will be mailed initially.
Outstanding noteholders do not have any appraisal or dissenters' rights
under the Delaware General Corporation Law or the indenture in connection with
the exchange offer. We intend to conduct the exchange offer in accordance with
the applicable requirements of the Exchange Act and the rules and regulations
of the SEC related to such offers.
Tritel PCS shall be deemed to have accepted validly tendered outstanding
notes when, as and if we give oral or written notice to The Bank of New York,
which is the exchange agent. The exchange agent will act as agent for the
tendering holders for the purpose of receiving the registered notes from Tritel
PCS.
If any tendered outstanding notes are not accepted for exchange either
because of an invalid tender, the occurrence of certain other events set forth
herein, or otherwise, the certificates for the unaccepted outstanding notes
will be returned, without expense, to the tendering holder as promptly as
practicable after the exchange offer's expiration date.
Holders who tender outstanding notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the letter of transmittal, transfer taxes with respect to the exchange of
outstanding notes pursuant to the exchange offer. We will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection
with the exchange offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
We shall keep the exchange offer open for at least 30 days, or longer if
required by applicable law, including in connection with any material
modification or waiver of the terms or conditions of the exchange offer that
requires such extension, after the date that notice of the exchange offer is
mailed to outstanding noteholders. The expiration date shall be 5:00 p.m., New
York City time, on , 1999, unless we, in our sole discretion, extend the
exchange offer, in which case the expiration date shall be the latest date and
time to which we extend the exchange offer.
If we decide to extend the exchange offer, we will notify the exchange
agent of the extension by oral or written notice, and will mail an announcement
of the extension to the registered holders prior to 10:00 a.m., New York City
time, on the next business day after the previously scheduled expiration date.
Tritel PCS reserves the right, in its sole discretion:
o to delay accepting any outstanding notes, to extend the exchange offer
or to terminate the exchange offer if any of the conditions set forth
below under "--Conditions" shall not have been satisfied, by giving oral
or written notice of such delay, extension or termination to the exchange
agent; or
o to amend the terms of the exchange offer in any manner.
We will give oral or written notice of any delay in acceptance, extension,
termination or amendment to the registered holders as promptly as practicable.
PROCEDURES FOR TENDERING
Only an outstanding noteholder may tender such outstanding notes in the
exchange offer. To tender in the exchange offer, a holder must complete, sign
and date the letter of transmittal, or a facsimile thereof, have the signatures
thereon guaranteed if the letter of transmittal so requires, or transmit an
agent's message in connection with a book-entry transfer, and mail or otherwise
deliver
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the letter of transmittal or facsimile, or agent's message, together with the
outstanding notes and any other required documents, to the exchange agent prior
to 5:00 p.m., New York City time, on the expiration date. In addition, either:
o the exchange agent must receive the letter of transmittal and
certificates for the outstanding notes prior to the expiration date;
o the exchange agent must receive a timely confirmation of a book-entry
transfer of the outstanding notes into the exchange agent's account at
The Depository Trust Company pursuant to the procedure for book-entry
transfer described below, prior to the expiration date; or
o the holder must comply with the guaranteed delivery procedures
described below.
For effective tender, the exchange agent must receive the outstanding
notes or book-entry confirmation, as the case may be, the letter of
transmittal, and other required documents, at the address set forth below under
"--Exchange Agent" prior to 5:00 p.m., New York City time, on the expiration
date. Delivery of documents to the book entry transfer facility in accordance
with its procedure does not constitute delivery to the exchange agent.
DTC has authorized DTC participants that hold outstanding notes on behalf
of the outstanding notes' beneficial owners to tender their outstanding notes
as if they were holders. To effect a tender of outstanding Notes, DTC
participants should either:
o complete and sign the letter of transmittal, or a manually signed
facsimile thereof, have the signature guaranteed if required by the
instructions, and mail or deliver the letter of transmittal, or the
manually signed facsimile, to the exchange agent pursuant to the
procedure set forth in "Procedures for Tendering;" or
o transmit their acceptance to DTC through the DTC automated tender offer
program for which the transaction will be eligible and follow the
procedure for book-entry transfer set forth in "--Book-Entry Transfer."
By executing the letter of transmittal or an agent's message, each holder
will make to Tritel PCS the representations set forth above in the third
paragraph under the heading "--Purpose and Effect of the Exchange Offer."
Each holder's tender, and Tritel PCS's acceptance, will constitute
agreement between such holder and Tritel PCS in accordance with the terms, and
subject to the conditions, set forth herein and in the letter of transmittal or
agent's message.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THE LETTER OF TRANSMITTAL OR
AGENT'S MESSAGE, AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT
THE HOLDER'S ELECTION AND SOLE RISK. AS AN ALTERNATIVE TO MAIL DELIVERY,
HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
HOLDERS SHOULD ALLOW SUFFICIENT TIME TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OUTSTANDING NOTES
SHOULD BE SENT TO TRITEL PCS. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE
TRANSACTIONS FOR THEM.
Any beneficial owner whose outstanding notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. See "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the letter of transmittal.
A member of the Medallion System must guarantee signatures on a letter of
transmittal or a notice of withdrawal, as the case may be, unless the
outstanding notes tendered pursuant thereto are tendered:
o by a registered holder who has not completed the box entitled "Special
Registration Instructions" or "Special Delivery Instructions" on the
letter of transmittal; or
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o for the account of a Medallion System member.
In the event that signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, must be guaranteed, such guarantee must be by a
Medallion System member.
If a person other than the registered holder of any outstanding notes
listed therein signs the accompanying letter of transmittal, the outstanding
notes must be endorsed or accompanied by a properly completed bond power,
signed by the registered holder as his or name appears on the outstanding
notes, with the signature guaranteed by a Medallion System member.
If trustees, executors, administrators, guardians, attorneys-in-fact,
offices of corporations, or others acting in a fiduciary or representative
capacity sign the letter of transmittal or any outstanding notes or bond
powers, such persons should so indicate when signing, and they must submit
evidence satisfactory to Tritel PCS of their authority to so act, with the
letter of transmittal.
Tritel PCS will determine, in its sole discretion, all questions as to the
validity, form, eligibility, including time of receipt, and acceptance and
withdrawal of tendered outstanding notes. This determination will be final and
binding. We reserve the absolute right to reject any and all outstanding notes
not properly tendered, or any outstanding notes, Tritel PCS's acceptance of
which would, in the opinion of Tritel PCS's counsel, be unlawful. We also
reserve the right, in our sole discretion, to waive any defects, irregularities
or conditions of tender as to particular outstanding notes. Our interpretation
of the terms and conditions of the exchange offer, including the instructions
in the letter of transmittal, will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of outstanding
notes must be cured within such time as we shall determine. Although we intend
to notify holders of defects or irregularities with respect to tenders of
outstanding notes, neither Tritel PCS, the exchange agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
outstanding notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. If the exchange agent receives any
outstanding notes that are not properly tendered, and as to which the defects
or irregularities have not been cured or waived, the exchange agent will return
them to the tendering holders, unless otherwise provided in the letter of
transmittal, as soon as practicable following the expiration date.
ACCEPTANCE OF OUTSTANDING NOTES FOR EXCHANGE; DELIVERY OF REGISTERED NOTES
For each outstanding note Tritel PCS accepts for exchange, the holder will
receive a registered note having a principal amount at maturity equal to that
of the surrendered outstanding note. For purposes of the exchange offer, Tritel
PCS shall be deemed to have accepted properly tendered outstanding notes for
exchange when, as and if Tritel PCS has given oral or written notice thereof to
the exchange agent.
In all cases, Tritel PCS will issue registered notes for outstanding notes
that are accepted for exchange pursuant to the exchange offer only after the
exchange agent's timely receipt of certificates for such outstanding notes, or
a timely book-entry confirmation of the outstanding notes into the exchange
agent's account at the book-entry transfer facility, plus a properly completed
and duly executed letter of transmittal or agent's message and all other
required documents. If Tritel PCS does not accept any tendered outstanding
notes for any reason set forth in the terms and conditions of the exchange
offer, we will return the unaccepted or non-exchanged outstanding notes without
expense to the tendering holder, or, in the case of outstanding notes tendered
by book-entry transfer into the exchange agent's account, the non-exchanged
outstanding notes will be credited to an account maintained with the book-entry
transfer facility, as promptly as practicable after the expiration date.
BOOK-ENTRY TRANSFER
The exchange agent will establish a new account or utilize an existing
account at DTC for the outstanding notes promptly after the date of this
prospectus, and any financial institution that is a participant in DTC and
whose name appears on a security position listing as the owner of outstanding
notes may make a book-entry tender of outstanding notes by causing DTC to
transfer such
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outstanding notes into the exchange agent's account in accordance with DTC's
procedures for such transfer. However, the exchange agent must receive, at its
address set forth below under the caption "Exchange Agent," on or prior to the
expiration date, or the holders must comply with the guaranteed delivery
procedures described below to submit, the letter of transmittal, or a manually
signed facsimile thereof, properly completed and validly executed, with any
required signature guarantees, or an agent's message, and any other required
documents. Document delivery to DTC in accordance with DTC's procedures does
not constitute delivery to the exchange agent.
The term "agent's message" means a message transmitted by DTC to, and
received by, the exchange agent, forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the DTC
participant tendering the outstanding notes, stating:
o the aggregate principal amount of outstanding notes which have been
tendered by such participant;
o that such participant has received and agrees to be bound by the terms
of the letter of transmittal; and
o that Tritel PCS may enforce that agreement against the participant.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their outstanding notes and:
o whose outstanding notes are not immediately available;
o who cannot deliver their outstanding notes, the letter of transmittal
or any other required documents, to The Bank of New York, which is the
exchange agent; or
o who cannot complete the procedures for book-entry transfer, prior to
the expiration date,
may effect a tender if:
(1) the tender is made through a firm which is a member of a registered
national securities exchange or of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company
having an office or correspondent in the United States;
(2) prior to the expiration date, the exchange agent receives from an
institution listed in clause (1) above a properly completed and duly
executed Notice of Guaranteed Delivery, by facsimile transmission,
mail or hand delivery, setting forth the name and address of the
holder, the certificate number(s) of the outstanding notes and the
principal amount of outstanding notes tendered, stating that the
tender is being made thereby and guaranteeing that, within five New
York Stock Exchange trading days after the expiration date, the
letter of transmittal, or facsimile thereof, or an agent's message,
together with the certificate(s) representing the outstanding notes,
or a confirmation of book-entry transfer of the notes into the
exchange agent's account at the book-entry transfer facility, and any
other documents required by the letter of transmittal, will be
deposited by the institution with the exchange agent; and
(3) the exchange agent receives, no later than five New York Stock
Exchange trading days after the expiration date, the certificate(s)
representing all tendered outstanding notes in proper form for
transfer, or a confirmation of book-entry transfer of such
outstanding notes into the exchange agent's account at the book-entry
transfer facility, together with a letter of transmittal, or
facsimile thereof, properly completed and duly executed, with any
required signature guarantees, or an agent's message, and all other
documents required by the letter of transmittal.
Holders who wish to tender their outstanding notes according to the
guaranteed delivery procedures set forth above may request that the exchange
agent send them a Notice of Guaranteed Delivery.
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WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of outstanding notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on , 1999;
otherwise such tenders are irrevocable.
To withdraw a tender of outstanding notes in the exchange offer, the
exchange agent must receive a telegram, telex, letter or facsimile transmission
notice of withdrawal at its address set forth herein prior to 5:00 p.m., New
York City time, on the expiration date. Any such notice of withdrawal must:
o specify the name of the person having deposited the outstanding notes
to be withdrawn;
o identify the outstanding notes to be withdrawn, including the
certificate number(s) and principal amount of such outstanding notes, or,
in the case of outstanding notes transferred by book-entry transfer, the
name and number of the account at the book-entry transfer facility to be
credited;
o be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the outstanding notes were tendered,
including any required signature guarantees, or be accompanied by
documents of transfer sufficient to have the trustee with respect to the
outstanding notes register the transfer of such outstanding notes into
the name of the person withdrawing the tender; and
o specify the name in which to register the outstanding notes, if
different from that of the depositor.
Tritel PCS will determine all questions as to the validity, form and
eligibility, including time of receipt, of the notices. This determination
shall be final and binding on all parties. Any outstanding notes so withdrawn
will be deemed not to have been validly tendered for purposes of the exchange
offer and no registered notes will be issued with respect thereto unless the
outstanding notes so withdrawn are validly retendered. Tritel PCS will return
to the holder any outstanding notes which have been tendered but which are not
accepted for exchange without expense to the holder, as soon as practicable
after withdrawal, rejection of tender, or termination of the exchange offer.
Holders may retender properly withdrawn outstanding notes by following one of
the procedures described above under "--Procedures for Tendering" at any time
prior to the expiration date.
CONDITIONS
Notwithstanding any other term of the exchange offer, we shall not be
required to accept for exchange, or offer registered notes for, any outstanding
notes, and may terminate or amend the exchange offer as provided herein before
the acceptance of the outstanding notes, if:
(1) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the exchange
offer which, in our judgment, might impair materially our ability to
proceed with the exchange offer, or any material adverse development
has occurred in any existing action or proceeding with respect to
Tritel PCS or any of its subsidiaries; or
(2) any law, statute, rule, regulation or interpretation by the SEC staff
is proposed, adopted or enacted, which, in our judgment, might impair
materially our ability to proceed with the exchange offer, or impair
materially our contemplated benefits from the exchange offer; or
(3) any governmental approval has not been obtained, which approval we
shall, in our discretion, deem necessary for the consummation of the
exchange offer as contemplated hereby.
If we determine in our discretion that any of the conditions are not
satisfied, we may:
o refuse to accept any outstanding notes and return all tendered
outstanding notes to the tendering holders;
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o extend the exchange offer and retain all outstanding notes tendered
prior to the expiration of the exchange offer, subject, however, to the
holders' rights to withdraw the outstanding notes; or
o waive the unsatisfied conditions and accept all properly tendered
outstanding notes which have not been withdrawn.
We shall keep the exchange offer open for at least 30 days, or longer if
applicable law so requires, including, in connection with any material
modification or waiver of the terms or conditions of the exchange offer that
requires such extension under applicable law, after the date we mail notice of
the exchange offer to outstanding noteholders.
EXCHANGE AGENT
The Bank of New York has been appointed as the exchange agent for this
exchange offer. Questions and requests for assistance, requests for additional
copies of this prospectus or of the letter of transmittal, and requests for
notice of guaranteed delivery should be directed to the exchange agent,
addressed as follows:
The Bank of New York
101 Barclay Street, 21W
New York, New York 10286
Attn: Corporate Trust Administration
By Facsimile:
(212) 815-5915
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
Tritel PCS will bear the expenses of soliciting tenders. The principal
solicitation is being made by mail; however, additional solicitation may be
made by telegraph, telecopy, telephone or in person by officers and regular
employees of Tritel PCS and its affiliates or its agents.
Tritel PCS has not retained any dealer-manager in connection with the
exchange offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the exchange offer. Tritel PCS, however, will pay the
exchange agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of pocket expenses in connection with the
exchange offer.
Tritel PCS will pay the cash expenses incurred in connection with the
exchange offer. Such expenses include the exchange agent's and the trustee's
fees and expenses, accounting and legal fees, and printing costs, among others.
ACCOUNTING TREATMENT
The registered notes will be recorded at the same carrying amount as the
outstanding notes, which is discounted face value, as reflected in Tritel PCS's
accounting records on the date of exchange.
Accordingly, Tritel PCS will not recognize any gain or loss for accounting
purposes. The exchange offer expenses will be expensed over the term of the
registered notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The outstanding notes that are not exchanged for registered notes pursuant
to the exchange offer will remain restricted securities. Accordingly, such
outstanding notes may be resold only:
o to Tritel PCS, upon redemption thereof or otherwise;
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o so long as the outstanding notes are eligible for resale pursuant to
Rule 144A, to a person inside the United States whom the seller
reasonably believes is a qualified institutional buyer within the
meaning of Rule 144A under the Securities Act in a transaction meeting
the requirements of Rule 144A, in accordance with Rule 144 under the
Securities Act, or pursuant to another exemption from the registration
requirements of the Securities Act, and based upon an opinion of
counsel reasonably acceptable to us;
o outside the United States to a foreign person in a transaction
meeting the requirements of Regulation S under the Securities Act; or
o pursuant to an effective registration statement under the Securities
Act.
Any resale of outstanding notes must comply with any applicable securities
laws of any state of the United States.
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DESCRIPTION OF THE NOTES
You can find the definitions of certain terms used in this description
below under the subheading "--Certain Definitions." Certain other capitalized
terms are defined in the indenture governing the notes. In this section,
"Tritel PCS" means Tritel PCS, Inc. and does not include its subsidiaries.
The registered notes have the same form and terms as the outstanding
notes, which they replace, with two exceptions. First, because the issuance of
the registered notes has been registered under the Securities Act, the
registered notes will not bear legends restricting their transfer. Second, the
holders of registered notes will not be entitled to rights under the
registration rights agreement, since the primary provision of that agreement
will terminate when the exchange offer is consummated. A copy of the indenture,
dated May 11, 1999 between Tritel PCS, the parent and subsidiary guarantors and
The Bank of New York, as trustee, has been filed as an exhibit to the exchange
offer registration statement of which this prospectus forms a part. The terms
of the notes include those stated in the indenture and those made part of the
indenture by reference to the Trust Indenture Act of 1939.
The following description is a summary of the material provisions of the
indenture and the Registration Rights Agreement. It does not restate those
agreements in their entirety. We urge you to read the indenture and the
Registration Rights Agreement because they, and not this description, define
your rights as holders of the notes. Copies of the indenture and the
Registration Rights Agreement are available as set forth below under "--
Additional Information." Certain defined terms used in this description but not
defined below under "-- Certain Definitions" have the meanings assigned to them
in the indenture.
BRIEF DESCRIPTION OF THE NOTES AND THE GUARANTEES
THE NOTES
The notes:
o are senior subordinated obligations of Tritel PCS;
o are subordinated in right of payment with all existing and future
Senior Debt of Tritel PCS;
o are senior in right of payment to any future Subordinated Indebtedness
of Tritel PCS; and
o are unconditionally guaranteed by the Guarantors.
THE GUARANTEES
The notes are guaranteed by:
o our parent company, Tritel, Inc., by means of the Parent Guarantee;
and
o all of our Subsidiaries, except our License Subsidiaries, by means of
the Subsidiary Guarantees.
Each Guarantee of the notes:
o is a general unsecured obligation of the Guarantor;
o is subordinated in right of payment to all existing and future Senior
Debt of the Guarantor; and
o is pari passu in right of payment with any future senior subordinated
Indebtedness of the Guarantor.
Our License Subsidiaries will not guarantee the notes. In the event of a
bankruptcy, liquidation or reorganization of any of these non-guarantor
Subsidiaries, they will pay the holders of their debts and their trade
creditors before they will be able to distribute any of their assets to us.
Tritel, Inc., Tritel PCS and the Subsidiary Guarantors held 77.4% of Tritel,
Inc.'s consolidated assets as of June 30, 1999.
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See footnote 17 to our Consolidated Financial Statements included at the back
of this prospectus for more detail about the division of our consolidated
revenues and assets between our guarantor and non-guarantor Subsidiaries.
As of June 30, 1999, Tritel PCS had $200.0 million of Senior Debt
outstanding and non-guarantor Subsidiaries had $41.4 million on a book value
basis of FCC debt outstanding.
As of the date of the indenture, all of Tritel PCS's subsidiaries will be
"Restricted Subsidiaries." However, under the circumstances described below
under the subheading "-- Certain Covenants -- Unrestricted Subsidiaries,"
Tritel PCS will be permitted to designate certain of its subsidiaries as
"Unrestricted Subsidiaries." Unrestricted Subsidiaries will not be subject to
many of the restrictive covenants in the indenture.
PRINCIPAL, MATURITY AND INTEREST
The notes will mature on May 15, 2009, will be limited to $372.0 million
aggregate principal amount at maturity. The notes will be issued at a
substantial discount from the aggregate stated principal amount thereof. For
federal income tax purposes, significant amounts of original issue discount,
taxable as ordinary income, will be recognized by holders of the notes annually
as long as they hold the notes, including in advance of the receipt of cash
interest payments thereon. See "Certain Federal Income Tax Considerations."
No interest will be paid or accrued on the notes prior to May 15, 2004.
Thereafter, each note will bear interest at the rate set forth on the cover
page hereof from May 15, 2004, or from the most recent interest payment date to
which interest has been paid or duly provided for, payable semiannually on May
15 and November 15 in each year, commencing May 15, 2004, until the principal
thereof is paid or duly provided for, to the person in whose name the Note, or
any predecessor note, is registered at the close of business on the May 1 or
November 1 next preceding such interest payment date. Interest will be computed
on the basis of a 360-day year comprised of twelve 30-day months.
The principal of and premium, if any, and interest on the notes will be
payable, and the notes will be exchangeable and transferable, at the office or
agency of Tritel PCS in The City of New York maintained for such purposes,
which initially will be the office of the Trustee located at 101 Barclay
Street, New York, NY 10286, Attn: Corporate Trust Administration Department.
The notes will be issued only in registered form without coupons and only in
denominations of $1,000 and any integral multiple thereof. No service charge
will be made for any registration of transfer or exchange or redemption of
notes, but Tritel PCS may require payment in certain circumstances of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.
Any notes that remain outstanding after the consummation of the exchange
offer and exchange notes issued in connection with the exchange offer will be
treated as a single class of securities under the Indenture.
The notes will not be entitled to the benefit of any sinking fund.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a Holder has given wire transfer instructions to Tritel PCS, Tritel PCS
will pay all principal, interest and premium and Liquidated Damages, if any, on
that Holder's notes in accordance with those instructions. All other payments
on Notes will be made at the office or agency of the Paying Agent and Registrar
within the City and State of New York unless Tritel PCS elects to make interest
payments by check mailed to the Holders at their addresses set forth in the
register of Holders.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The Trustee will initially act as Paying Agent and Registrar. Tritel PCS
may change the Paying Agent or Registrar without prior notice to the Holders,
and Tritel PCS or any of its Restricted Subsidiaries may act as Paying Agent or
Registrar.
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TRANSFER AND EXCHANGE
A Holder may transfer or exchange notes in accordance with the indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and Tritel PCS may
require a Holder to pay any taxes and fees required by law or permitted by the
indenture. Tritel PCS is not required to transfer or exchange any note selected
for redemption. Also, Tritel PCS is not required to transfer or exchange any
note for a period of 15 days before a selection of notes to be redeemed.
The registered Holder of a note will be treated as the owner of it for all
purposes.
SUBSIDIARY GUARANTEES
The Guarantors will jointly and severally guarantee Tritel PCS's
obligations under the notes. Each Guarantee will be subordinated to the prior
payment in full of all Senior Debt of that Guarantor. The obligations of each
Subsidiary Guarantor under its Subsidiary Guarantee will be limited as
necessary to prevent that Subsidiary Guarantee from constituting a fraudulent
conveyance under applicable law.
Except as provided below, a Guarantor may not sell or otherwise dispose of
all or substantially all of its assets to, or consolidate with or merge with or
into, whether or not such Guarantor is the surviving Person, another Person,
other than Tritel PCS or another Guarantor, unless:
(1) immediately after giving effect to that transaction, no Default or Event of
Default exists; and
(2) either:
(a) the Person acquiring the property in any such sale or disposition or
the Person formed by or surviving any such consolidation or merger
assumes all the obligations of that Guarantor under the Indenture, its
Guarantee and the Registration Rights Agreement pursuant to a
supplemental indenture and appropriate collateral documents
satisfactory to the Trustee; or
(b) the Net Proceeds of any such sale or other disposition of a Subsidiary
Guarantor are applied in accordance with the "Asset Sales" provisions
of the indenture.
A Guarantor will be released from its Guarantee:
(1) in connection with any sale or other disposition of all or substantially
all of the assets of that Guarantor, including by way of merger or
consolidation, to a Person that is not, either before or after giving
effect to such transaction, a Subsidiary of Tritel PCS, if the Guarantor
applies the Net Proceeds of that sale or other disposition in accordance
with the "Asset Sales" provisions of the indenture; or
(2) in connection with any sale of all of the Capital Stock of a Guarantor to a
Person that is not, either before or after giving effect to such
transaction, a Subsidiary of Tritel PCS, if Tritel PCS applies the Net
Proceeds of that sale in accordance with the "Asset Sales" provisions of
the indenture.
See "-- Repurchase at the Option of Holders -- Asset Sales."
A Subsidiary Guarantor will also be automatically released from its
Guarantee if the Subsidiary Guarantor is designated as an Unrestricted
Subsidiary.
The indenture will provide that, in the event the Banks release or
terminate a guarantee by Tritel, Inc. or a Subsidiary Guarantor of all the
obligations under the Bank Credit Agreement, except a release or termination by
or as a result of payment in full of all Obligations under the Bank Credit
Agreement, Tritel, Inc. or such Subsidiary Guarantor, as the case may be, will
be automatically and unconditionally released and discharged from all of its
obligations under its Guarantee.
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SUBORDINATION
The payment of principal, interest and premium and Liquidated Damages, if
any, on the notes will be subordinated to the prior payment in full of all
Senior Debt of Tritel PCS, including Senior Debt incurred after the date of the
indenture.
The holders of Senior Debt will be entitled to receive payment in full of
all Obligations due in respect of Senior Debt, including interest after the
commencement of any bankruptcy proceeding at the rate specified in the
applicable Senior Debt, before the Holders of notes will be entitled to receive
any payment with respect to the notes, except that Holders of notes may receive
and retain Permitted Junior Securities and payments made from the trust
described under "-- Legal Defeasance and Covenant Defeasance," in the event of
any distribution to creditors of Tritel PCS:
(1) in a liquidation or dissolution of Tritel PCS;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to Tritel PCS or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of Tritel PCS's assets and liabilities.
Tritel PCS also may not make any payment in respect of the notes, except
in Permitted Junior Securities or from the trust described under "-- Legal
Defeasance and Covenant Defeasance", if:
(1) a payment default on Designated Senior Debt occurs and is continuing beyond
any applicable grace period; or
(2) any other default occurs and is continuing on any series of Designated
Senior Debt that permits holders of that series of Designated Senior Debt
to accelerate its maturity and the Trustee receives a notice of such
default (a "Payment Blockage Notice") from Tritel PCS or the holders of
any Designated Senior Debt.
Payments on the notes may and will be resumed:
(1) in the case of a payment default, upon the date on which such default is
cured or waived; and
(2) in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on which
the applicable Payment Blockage Notice is received, unless the maturity of
any Designated Senior Debt has been accelerated.
No new Payment Blockage Notice may be delivered unless and until:
(1) 360 days have elapsed since the delivery of the immediately prior Payment
Blockage Notice; and
(2) all scheduled payments of principal, interest and premium and Liquidated
Damages, if any, on the notes that have come due have been paid in full in
cash.
No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee will be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default will have
been cured or waived for a period of not less than 90 days.
If the Trustee or any Holder of the notes receives a payment in respect of
the notes, except in Permitted Junior Securities or from the trust described
under "-- Legal Defeasance and Covenant Defeasance," when:
(1) the payment is prohibited by these subordination provisions; and
(2) the Trustee or the Holder has actual knowledge that the payment is
prohibited;
the Trustee or the Holder, as the case may be, will hold the payment in trust
for the benefit of the holders of Senior Debt. Upon the proper written request
of the holders of Senior Debt, the Trustee or the Holder, as the case may be,
will deliver the amounts in trust to the holders of Senior Debt or their proper
representative.
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Tritel PCS must promptly notify holders of Senior Debt if payment of the
notes is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event
of a bankruptcy, liquidation or reorganization of Tritel PCS, Holders of notes
may recover less ratably than creditors of Tritel PCS who are holders of Senior
Debt.
"Designated Senior Debt" means:
(1) any Indebtedness outstanding under the Bank Credit Agreement; and
(2) any other Senior Debt permitted under the indenture the principal amount of
which is $25.0 million or more and that has been designated by Tritel PCS
as "Designated Senior Debt" by the board of directors of Tritel PCS at the
time of its initial issuance in a resolution delivered to the Trustee.
"Designated Senior Indebtedness" of a Subsidiary Guarantor will have a
correlative meaning.
"Permitted Junior Securities" means:
(1) Equity Interests in Tritel PCS or any Guarantor; or
(2) debt securities that are subordinated to all Senior Debt, and to any debt
securities issued in exchange for Senior Debt, to substantially the same
extent as, or to a greater extent than, the notes and the Subsidiary
Guarantees are subordinated to Senior Debt under the indenture.
"Senior Debt" means:
(1) all Indebtedness of Tritel PCS or any Guarantor outstanding under the Bank
Credit Agreement and all Hedging Obligations with respect thereto;
(2) any other Indebtedness of Tritel PCS or any Guarantor permitted to be
incurred under the terms of the indenture, unless the instrument under
which such Indebtedness is incurred expressly provides that it is on a
parity with or subordinated in right of payment to the notes or any
Subsidiary Guarantee; and
(3) all Obligations with respect to the items listed in the preceding clauses
(1) and (2).
Notwithstanding anything to the contrary in clauses (1), (2) and (3)
above, Senior Debt will not include:
(1) any liability for federal, state, local or other taxes owed or owing by
Tritel PCS;
(2) any Indebtedness of Tritel PCS to any of its Subsidiaries or other
Affiliates;
(3) any trade payables; or
(4) the portion of any Indebtedness that is incurred in violation of the
indenture.
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REDEMPTION
The notes will be redeemable at the election of Tritel PCS, as a whole or
from time to time in part, at any time on or after May 15, 2004, on not less
than 30 nor more than 60 days' prior notice at the redemption prices, expressed
as percentages of principal amount at maturity, set forth below, together with
accrued interest and Liquidated Damages, if any, to the redemption date, if
redeemed during the 12-month period beginning on May 15 of the years indicated
below, subject to the right of holders of record on the relevant record date to
receive interest due on the related interest payment date:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ----------------------- -------------
<S> <C>
2004 ................ 106.375%
2005 ................ 104.250
2006 ................ 102.125
</TABLE>
and thereafter at 100% of the principal amount at maturity, together with
accrued interest and Liquidated Damages, if any, to the redemption date.
In addition, at any time prior to May 15, 2002, Tritel PCS may redeem up
to 35% of the aggregate principal amount at maturity of the notes with proceeds
of one or more Equity Offerings at a redemption price of 112.75% of the
Accreted Value thereof as of the Semi-Annual Accrual Date next preceding the
date of purchase, plus the Accreted Increment as of such date of purchase;
provided that:
(1) at least 65% of the aggregate principal amount at maturity of the notes
remains outstanding immediately after the occurrence of such redemption,
excluding notes held by Tritel PCS and its Restricted Subsidiaries; and
(2) the redemption must occur within 60 days following the date of the closing
of such Equity Offering.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each Holder of notes will have the right to
require Tritel PCS to repurchase all or any part, equal to $1,000 or an
integral multiple thereof, of that Holder's notes pursuant to an offer on the
terms set forth in the indenture ("Change of Control Offer"). In the Change of
Control Offer, Tritel PCS will offer a payment ("Change of Control Payment") in
cash equal to 101% of the Accreted Value as of the Semi-Annual Accrual Date
next preceding the date of purchase, plus the Accreted Increment as of such
date of purchase, if such redemption occurs prior to May 15, 2004, or 101% of
the Accreted Value as of the date of purchase, together with accrued and unpaid
interest and Liquidated Damages, if any, if such redemption date occurs on or
after May 15, 2004. Within ten days following any Change of Control, Tritel PCS
will mail a notice to each Holder describing the transaction or transactions
that constitute the Change of Control and offering to repurchase notes on the
date ("Change of Control Payment Date") specified in such notice, which date
shall be no earlier than 30 days and no later than 60 days from the date such
notice is mailed, pursuant to the procedures required by the indenture and
described in such notice. Tritel PCS will comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the notes as a result of a Change of Control. To the
extent that the provisions of any securities laws or regulations conflict with
the Change of Control provisions of the indenture, Tritel PCS will comply with
the applicable securities laws and regulations and will not be deemed to have
breached its obligations under the Change of Control provisions of the
Indenture by virtue of such conflict.
In the event that at the time of any Change of Control the terms of the
Bank Credit Agreement restrict or prohibit the repurchase of notes pursuant to
this covenant, then prior to the mailing of the
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notice to holders of notes provided for in the prior paragraph but in any event
within 30 days following any Change of Control, Tritel PCS convenants that it
will either
(1) repay in full all amounts outstanding under the Bank Credit Agreement or
offer to repay in full all amounts outstanding under the Bank Credit
Agreement and repay the amounts due to each Bank who has accepted such
offer or
(2) obtain the requisite consent under the agreements governing the Bank
Credit Agreement to permit the repurchase of the notes as provided for in
the prior paragraph.
On the Change of Control Payment Date, Tritel PCS will, to the extent
lawful:
(1) accept for payment all notes or portions thereof properly tendered pursuant
to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all notes or portions thereof so tendered; and
(3) deliver or cause to be delivered to the Trustee the notes so accepted
together with an Officers' Certificate stating the aggregate principal
amount at maturity of notes or portions thereof being purchased by Tritel
PCS.
The Paying Agent will promptly mail to each Holder of notes so tendered
the Change of Control Payment for such notes, and the Trustee will promptly
authenticate and mail, or cause to be transferred by book entry, to each Holder
a new note equal in principal amount to any unpurchased portion of the notes
surrendered, if any; provided that each such new note will be in a principal
amount of $1,000 or an integral multiple thereof.
The provisions described above that require Tritel PCS to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether any other provisions of the indenture are applicable. Except as
described above with respect to a Change of Control, the indenture does not
contain provisions that permit the Holders of the notes to require that Tritel
PCS repurchase or redeem the notes in the event of a takeover, recapitalization
or similar transaction.
Tritel PCS will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the indenture applicable to a Change of Control Offer made by Tritel
PCS and purchases all notes validly tendered and not withdrawn under such
Change of Control Offer.
The definition of Change of Control includes a phrase relating to the
direct or indirect sale, lease, transfer, conveyance or other disposition of
"all or substantially all" of the properties or assets of Tritel PCS and its
Restricted Subsidiaries taken as a whole. Although there is a limited body of
case law interpreting the phrase "substantially all," there is no precise
established definition of the phrase under applicable law. Accordingly, the
ability of a Holder of notes to require Tritel PCS to repurchase such notes as
a result of a sale, lease, transfer, conveyance or other disposition of less
than all of the assets of Tritel PCS and its Restricted Subsidiaries taken as a
whole to another Person or group may be uncertain.
ASSET SALES
Tritel PCS will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(1) Tritel PCS or the Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair
market value of the assets or Equity Interests issued or sold or otherwise
disposed of;
(2) such fair market value is determined by Tritel PCS's Board of Directors and
evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee; and
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(3) at least 75% of the consideration therefor received by Tritel PCS or such
Restricted Subsidiary is in the form of cash or Cash Equivalents, or
like-kind property in a like-kind exchange pursuant to Section 1031 of
the Internal Revenue Code. For purposes of this provision, each of the
following shall be deemed to be cash:
(a) any liabilities, as shown on Tritel PCS's or such Restricted
Subsidiary's most recent balance sheet, of Tritel PCS or any Restricted
Subsidiary, other than contingent liabilities and liabilities that are
by their terms subordinated to the notes, that are assumed by the
transferee of any such assets pursuant to a customary novation
agreement that releases Tritel PCS or such Restricted Subsidiary from
further liability; and
(b) any securities, notes or other obligations received by Tritel PCS or
any such Restricted Subsidiary from such transferee that are
contemporaneously, subject to ordinary settlement periods, converted by
Tritel PCS or such Restricted Subsidiary into cash, to the extent of
the cash received in that conversion.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
Tritel PCS may apply such Net Proceeds at its option:
(1) to permanently repay or prepay any then outstanding Indebtedness under the
Bank Credit Agreement, other senior Indebtedness of Tritel PCS or
Indebtedness of any Restricted Subsidiary; or
(2) to invest in properties or assets that replace the properties and assets
that are the subject of such Asset Sale or in properties or assets that
will be used in the business of Tritel PCS or any Restricted Subsidiary,
or enter into a legally binding agreement to do so.
If any such legally binding agreement to invest such Net Proceeds is
terminated, then Tritel PCS may, within 90 days of such termination or within
12 months after such Asset Sale, whichever is later, apply or invest such Net
Proceeds, or enter into another legally binding agreement to do so, which
closes within 16 months of such Asset Sale, as provided in clause (1) or (2),
without regard to the parenthetical contained in clause (2), above. Pending the
final application of any such Net Proceeds, Tritel PCS may temporarily reduce
revolving credit borrowings or otherwise invest such Net Proceeds in any manner
that is not prohibited by the indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15.0 million, Tritel PCS will make
an offer ("Asset Sale Offer") to all Holders of notes and all holders of other
indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in the indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets to purchase the maximum principal amount
of Notes and such other pari passu Indebtedness that may be purchased out of
the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to
100% of Accreted Value plus accrued and unpaid interest and Liquidated Damages,
if any, to the date of purchase, and will be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, Tritel PCS may use
such Excess Proceeds for any purpose not otherwise prohibited by the Indenture.
If the Accreted Value of the notes and such other pari passu Indebtedness
tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the
Trustee shall select the notes and such other pari passu Indebtedness to be
purchased on a pro rata basis based on the Accreted Value of the notes and such
other pari passu Indebtedness tendered. Upon completion of each Asset Sale
Offer, the amount of Excess Proceeds shall be reset at zero.
Tritel PCS will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sales
provisions of the indenture, Tritel PCS will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Asset Sale provisions of the indenture by virtue of such
conflict.
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The agreements governing Tritel PCS's other Indebtedness contain
prohibitions of certain events, including events that would constitute a Change
of Control or an Asset Sale. In addition, the exercise by the Holders of notes
of their right to require Tritel PCS to repurchase the notes upon a Change of
Control or an Asset Sale could cause a default under these other agreements,
even if the Change of Control or Asset Sale itself does not, due to the
financial effect of such repurchases on Tritel PCS. Finally, Tritel PCS's
ability to pay cash to the Holders of notes upon a repurchase may be limited by
Tritel PCS's then existing financial resources.
SELECTION AND NOTICE
If less than all of the notes are to be redeemed at any time, the Trustee
will select notes for redemption as follows:
(1) if the notes are listed, in compliance with the requirements of the
principal national securities exchange on which the notes are listed; or
(2) if the notes are not so listed, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate.
No notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of notes to be redeemed at its
registered address. Notices of redemption may not be conditional.
If any note is to be redeemed in part only, the notice of redemption that
relates to that note shall state the portion of the principal amount thereof to
be redeemed. A new note in principal amount equal to the unredeemed portion of
the original note will be issued in the name of the Holder thereof upon
cancellation of the original note. notes called for redemption become due on
the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on notes or portions of them called for redemption.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
Tritel PCS will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, take any of the following actions on
or prior to December 31, 2002:
(a) declare or pay any dividend on, or make any distribution to holders of,
any shares of the Capital Stock of Tritel PCS or any Restricted
Subsidiary, other than:
(1) dividends or distributions payable solely in Equity Interests, other
than Disqualified Stock; or
(2) dividends or distributions by a Restricted Subsidiary payable to
Tritel PCS or another Restricted Subsidiary;
(b) purchase, redeem or otherwise acquire or retire for value including,
without limitation, in connection with any merger or consolidation
involving Tritel PCS, any Equity Interests of Tritel PCS or any
Affiliate of Tritel PCS, other than any Restricted Subsidiary of Tritel
PCS;
(c) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Subordinated Indebtedness,
except a payment of interest or principal at the Stated Maturity
thereof; or
(d) make any Restricted Investment.
All such payments and other actions set forth in and not excluded from clauses
(a) through (d) above are collectively referred to as "Restricted Payments."
At any time after December 31, 2002, Tritel PCS will not, and will not
permit any Restricted Subsidiary to, directly or indirectly, make any
Restricted Payment unless at the time of, and immediately after giving effect
to, the proposed Restricted Payment:
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(1) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof;
(2) Tritel PCS would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness, other than Permitted
Debt, pursuant to the first paragraph of the covenant described below
under the caption "-- Incurrence of Indebtedness and Issuance of Preferred
Stock;" and
(3) immediately after giving effect to such Restricted Payment, the aggregate
amount of all Restricted Payments declared or made on or after the Issue
Date would not exceed an amount equal to the sum of:
(a) (A) Consolidated EBITDA accrued during the period, treated as one
accounting period, from January 1, 2003 to the end of Tritel PCS's most
recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (the "Computation
Period") less (B) 1.5 times Consolidated Interest Expense accrued
during the Computation Period; plus
(b) the aggregate Net Proceeds received by Tritel PCS either (x) as capital
contributions to Tritel PCS after the Issue Date or (y) from the issue
or sale, other than to a Subsidiary of Tritel PCS, of its Equity
Interests, other than Disqualified Stock, on or after the Issue Date,
excluding proceeds of any Equity Offering that are used to redeem notes
as discussed above under "-- Redemption"; plus
(c) the aggregate Net Proceeds received by Tritel PCS or any Restricted
Subsidiary from the sale, disposition or repayment, other than to
Tritel PCS or a Restricted Subsidiary, of any Investment made after the
Issue Date and constituting a Restricted Payment in an amount equal to
the lesser of (x) the return of capital with respect to such Investment
and (y) the initial amount of such Investment, in either case, less the
cost of disposition of such Investment; plus
(d) the aggregate Net Proceeds received by Tritel PCS from the issuance,
other than to a Subsidiary of Tritel PCS, on or after the Issue Date of
its Equity Interests, other than Disqualified Stock, upon the
conversion of, or exchange for, Indebtedness of Tritel PCS.
For purposes of determining the amount expended for Restricted Payments,
property other than cash will be valued at its fair market value as determined
by the Board of Directors of Tritel PCS, whose good faith determination will be
conclusive.
Notwithstanding the foregoing and so long as no Default or Event of
Default, except with respect to clauses (1), (2), (3) and (4) of this
paragraph, has occurred and is continuing or would be caused thereby, the
preceding provisions will not prohibit, whether the relevant event occurs
before or after December 31, 2002:
(1) the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied
with the provisions of the indenture;
(2) the redemption, repurchase, retirement, defeasance or other acquisition of
any Equity Interests of Tritel PCS in exchange for, or out of the net
proceeds of the substantially concurrent sale, other than to a Subsidiary
of Tritel PCS, of, Equity Interests of Tritel PCS, other than Disqualified
Stock;
(3) the purchase, redemption, defeasance or other acquisition or retirement for
value of any Subordinated Indebtedness in exchange for, or out of the Net
Proceeds of a substantially concurrent issuance and sale, other than to a
Subsidiary, of Equity Interests, other than Disqualified Stock, of Tritel
PCS;
(4) the purchase, redemption, defeasance or other acquisition or retirement for
value of Subordinated Indebtedness in exchange for, or out of the Net
Proceeds of a substantially
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concurrent issuance or sale, other than to a Restricted Subsidiary, of
Subordinated Indebtedness, so long as Tritel PCS or a Restricted Subsidiary
would be permitted to refinance such original Subordinated Indebtedness
with such new Subordinated Indebtedness pursuant to clause (11) of the
definition of "Permitted Debt" (see "-- Incurrence of Indebtedness and
Issuance of Preferred Stock");
(5) the repurchase of any Subordinated Indebtedness at a purchase price not
greater than 101% of the principal amount of such Subordinated
Indebtedness in the event of a change of control in accordance with
provisions similar to the "-- Repurchase at the Option of Holders --
Change of Control" covenant; so long as, prior to or simultaneously with
such repurchase, Tritel PCS has made the Change of Control Offer as
provided in such covenant with respect to the notes and has repurchased
all notes validly tendered for payment in connection with such Change of
Control Offer;
(6) the purchase, redemption, acquisition, cancellation or other retirement for
value of shares of Capital Stock of Tritel PCS, options on any such shares
or related stock appreciation rights or similar securities held by
officers or employees or former officers or employees, or their estates or
beneficiaries under their estates, or by any employee benefit plan, upon
death, disability, retirement or termination of employment or pursuant to
the terms of any employee benefit plan or any other agreement under which
such shares of stock or related rights were issued; provided that (A) the
aggregate cash consideration paid for such purchase, redemption,
acquisition, cancellation or other retirement of such shares of Capital
Stock after the Issue Date does not exceed $2 million in any fiscal year
and (B) any unused amount in any 12-month period may be carried forward to
one or more future periods;
(7) make payments to Tritel, Inc. pursuant to a tax sharing agreement so long
as such payments in the aggregate do not exceed the lesser of (A) the
aggregate amount of taxes that would be payable by Tritel PCS and its
Subsidiaries if they were filing on a separate return basis as a
consolidated entity and (B) the aggregate amount of taxes paid by Tritel,
Inc. and its consolidated subsidiaries;
(8) make payments to Tritel, Inc. to reimburse Tritel, Inc. for its
out-of-pocket operating and administrative expenses attributable to Tritel
PCS, provided this reimbursement may not exceed $1.0 million in any fiscal
year; and
(9) payments not otherwise permitted by clauses (1) through (8) in an amount
not to exceed $10 million.
The actions described in clauses (2), (3), (5), (6) and (9) of this paragraph
will be Restricted Payments that will be permitted to be taken in accordance
with this paragraph but will reduce the amount that would otherwise be
available for Restricted Payments under clause (3) of the first paragraph of
this covenant and the actions described in clauses (1), (4), (7) and (8) of
this paragraph will be Restricted Payments that will be permitted to be taken
in accordance with this paragraph and will not reduce the amount that would
otherwise be available for Restricted Payments under clause (3) of the first
paragraph of this covenant.
For the purpose of making any calculations under the indenture, (a) if a
Restricted Subsidiary is designated an Unrestricted Subsidiary, Tritel PCS will
be deemed to have made an Investment in amount equal to the fair market value
of the net assets of such Subsidiary at the time of such designation as
determined by the Board of Directors of Tritel PCS, whose good faith
determination will be conclusive, and (b) any property transferred to or from
an Unrestricted Subsidiary will be valued at fair market value at the time of
such transfer, as determined by the Board of Directors of Tritel PCS, whose
good faith determination will be conclusive.
If the aggregate amount of all Restricted Payments calculated under the
foregoing provision includes an Investment in an Unrestricted Subsidiary or
other Person that thereafter becomes a Restricted Subsidiary, the aggregate
amount of all Restricted Payments calculated under the foregoing provision will
be reduced by the lesser of (x) the net asset value of such Restricted
Subsidiary at the time it becomes a Restricted Subsidiary and (y) the initial
amount of such Investment.
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If an Investment resulted in the making of a Restricted Payment, the
aggregate amount of all Restricted Payments calculated under the foregoing
provision will be reduced by the amount of any net reduction in such
Investment, resulting from the payment of interest or dividends, loan
repayment, transfer of assets or otherwise, to the extent such net reduction is
not included in Tritel PCS's Consolidated Net Income, so long as the total
amount by which the aggregate amount of all Restricted Payments may be reduced
may not exceed the lesser of (x) the cash proceeds received by Tritel PCS and
its Restricted Subsidiaries in connection with such net reduction and (y) the
initial amount of such Investment.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
Tritel PCS will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness, including
Acquired Debt, and Tritel PCS will not issue any Disqualified Stock and will
not permit any of its Restricted Subsidiaries to issue any shares of preferred
stock. However, Tritel PCS and its Subsidiary Guarantors may incur
Indebtedness, including Acquired Debt, or issue Disqualified Stock, if, after
giving pro forma effect to such incurrence, including the application of the
net proceeds therefrom,
(1) the Consolidated Leverage Ratio would be less than or equal to (A) 7.0 to
1.0, if the Indebtedness is to be incurred prior to May 15, 2004 or (B)
6.0 to 1.0, if the Indebtedness is to be incurred on or after May 15,
2004, or
(2) in the case of any incurrence of Indebtedness prior to May 15, 2004, Total
Consolidated Indebtedness would be equal to or less than 75% of Total
Invested Capital.
In making the foregoing calculation,
(A) pro forma effect shall be given to any Indebtedness to be incurred or
repaid on such date;
(B) pro forma effect shall be given to Asset Dispositions and Asset
Acquisitions that occur during the four fiscal quarters for which
financial statements of Tritel PCS are available immediately prior to
such Transaction Date (the "Reference Period") or thereafter and on or
prior to the Transaction Date as if they had occurred and such proceeds
had been applied on the first day of such Reference Period;
(C) pro forma effect shall be given to asset dispositions and asset
acquisitions, including giving pro forma effect to the application of
proceeds of any asset disposition, that have been made by any Person
that has become a Restricted Subsidiary or has been merged with or into
Tritel PCS or any Restricted Subsidiary during such Reference Period or
subsequent to such period and on or prior to the Transaction Date and
that would have constituted Asset Dispositions or Asset Acquisitions
had such transactions occurred when such Person was a Restricted
Subsidiary as if such asset dispositions or asset acquisitions were
Asset Dispositions or Asset Acquisitions that occurred on the first day
of such Reference Period, so long as to the extent that clause (B) or
(C) of this sentence requires that pro forma effect be given to an
Asset Acquisition or Asset Disposition, such pro forma calculation
shall be based upon the four full fiscal quarters immediately preceding
the Transaction Date of the Person, or division or line of business of
the Person, that is acquired or disposed for which financial
information is available; and
(D) the aggregate amount of Indebtedness outstanding as of the Transaction
Date will be deemed to include the total amount of funds outstanding
and/or available under any revolving credit facilities of Tritel PCS
or its Restricted Subsidiaries.
The first paragraph of this covenant will not prohibit the incurrence of
any and all of the following items of Indebtedness (collectively, "Permitted
Debt"):
(1) Indebtedness of Tritel PCS or any Restricted Subsidiary under the Bank
Credit Agreement in an aggregate principal amount at any one time
outstanding not to exceed $600.0 million, and any guarantees of such
Indebtedness by a Restricted Subsidiary;
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(2) Indebtedness of Tritel PCS or any Restricted Subsidiary outstanding on the
Issue Date, other than Indebtedness described under clause (1) above or
(15) below but including Indebtedness then owed to the FCC;
(3) Telecommunications Indebtedness;
(4) Indebtedness represented by the notes and any Subsidiary Guarantee;
(5) Subordinated Indebtedness owed by Tritel PCS to any Restricted Subsidiary
or Indebtedness owed by any Restricted Subsidiary to Tritel PCS or any
other Restricted Subsidiary; provided that, in each case, such
Indebtedness is held by Tritel PCS or such Restricted Subsidiary;
(6) Obligations of Tritel PCS or any Restricted Subsidiary entered into in the
ordinary course of business (A) pursuant to Hedging Obligations relating
to Indebtedness of Tritel PCS or a Restricted Subsidiary otherwise
permitted under the indenture that are entered into for the purpose of
protecting against fluctuations in interest rates in respect of such
Indebtedness and not for speculative purposes, or (B) pursuant to Currency
Agreements entered into by Tritel PCS or any of its Restricted
Subsidiaries in respect of its (x) assets or (y) obligations, as the case
may be, denominated in a foreign currency;
(7) Indebtedness of Tritel PCS or any Restricted Subsidiary consisting of
guarantees, indemnities or obligations in respect of purchase price
adjustments in connection with the acquisition or disposition of assets,
including, without limitation, shares of Capital Stock;
(8) Acquired Debt of a Person, other than Indebtedness incurred in connection
with, or in contemplation of, such Person becoming a Restricted Subsidiary
or the acquisition of assets from such Person, as the case may be,
provided that Tritel PCS on a pro forma basis could incur $1.00 of
additional Indebtedness, other than Permitted Debt, pursuant to the first
paragraph of the "Incurrence of Indebtedness and Issuance of Preferred
Stock" covenant;
(9) Guarantees by any Restricted Subsidiary made in accordance with the
provisions of the "Limitation on Issuances of Guarantees of Indebtedness
by Restricted Subsidiaries" covenant;
(10) Indebtedness of Tritel PCS not permitted by any other clause of this
definition, in an aggregate principal amount not to exceed $50 million at
any one time outstanding;
(11) any renewals, extensions, substitutions, refinancings or replacements
(each, for purposes of this clause, a "refinancing") of any outstanding
Indebtedness, other than Indebtedness incurred pursuant to clause (1),
(3), (5), (6), (7), (9), (10), (12), (13) or (14) of this definition,
including any successive refinancings thereof, so long as
(A) any such new Indebtedness is in a principal amount that does not exceed
the principal amount so refinanced, plus the amount of any premium
required to be paid in connection with such refinancing pursuant to
the terms of the Indebtedness refinanced or the amount of any premium
reasonably determined by Tritel PCS as necessary to accomplish such
refinancing, plus the amount of the expenses of Tritel PCS incurred in
connection with such refinancing,
(B) in the case of any refinancing of Subordinated Indebtedness, such new
Indebtedness is made subordinate to the notes at least to the same
extent as the Indebtedness being refinanced and has a final maturity
date after the maturity date of the notes,
(C) such refinancing Indebtedness does not have an Average Life less than
the Average Life of the Indebtedness being refinanced and has a final
maturity date later than the Indebtedness being refinanced, or permit
redemption at the option of the holder earlier than the earliest date
of redemption at the option of the holder, of the Indebtedness being
refinanced and
(D) such Indebtedness incurred either by Tritel PCS or any Restricted
Subsidiary who is the obligor on the Indebtedness being refinanced;
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(12) Capital Lease Obligations of Tritel PCS or any Restricted Subsidiary with
respect to the leasing by Tritel PCS or any Restricted Subsidiary of tower
sites, telephone and computer systems, operating facilities and, in each
case, equipment that is a fixture thereto, so long as such Capital Lease
Obligations shall not exceed $25 million in aggregate principal amount at
any time outstanding;
(13) Indebtedness of Tritel PCS or a Restricted Subsidiary represented by
letters of credit for the account of Tritel PCS or a Restricted Subsidiary
to provide security for workers compensation claims, payment obligations
for self insurance or similar requirements in the ordinary course of
business;
(14) Indebtedness of Tritel PCS or any Restricted Subsidiary in respect of
statutory obligations; performance, surety, or appeal bonds, or other
obligations of a like nature incurred in the ordinary course of business;
and
(15) Indebtedness of an Restricted Subsidiary to the FCC in respect of PCS
licenses in an aggregate face amount not to exceed $75 million at any
time.
Tritel PCS will not incur any Indebtedness, including Permitted Debt, that
is contractually subordinated in right of payment to any other Indebtedness of
Tritel PCS unless such Indebtedness is also contractually subordinated in right
of payment to the notes on substantially identical terms. However, no
Indebtedness of Tritel PCS shall be deemed to be contractually subordinated in
right of payment to any other Indebtedness of Tritel PCS solely by virtue of
being unsecured.
For purposes of determining compliance with this "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant, in the event that an
item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (15) above, or is
entitled to be incurred pursuant to the first paragraph of this covenant,
Tritel PCS will be permitted to classify such item of Indebtedness on the date
of its incurrence in any manner that complies with this covenant.
LIMITATION ON OTHER SENIOR SUBORDINATED DEBT
Tritel PCS will not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any of its Senior Debt and senior in any respect in right of payment
to the notes. No Subsidiary Guarantor will incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that is subordinate
or junior in right of payment to any of its Senior Debt and senior in any
respect in right of payment to such Guarantor's Subsidiary Guarantee.
LIENS
Tritel PCS will not, and will not permit any Subsidiary Guarantor to,
create, incur, assume or otherwise cause or suffer to exist or become effective
any Lien of any kind securing Indebtedness that is pari passu with the notes or
the applicable Subsidiary Guarantee, as the case may be, or is Subordinated
Indebtedness, upon any of their property or assets, now owned or hereafter
acquired, unless all payments due under the Indenture and the notes are secured
equally and ratably with, or prior to, in the case of Subordinated
Indebtedness, the obligations so secured until such time as such obligations
are no longer secured by such Lien, so long as this restriction will not apply
to any Lien securing Acquired Debt created prior to the incurrence of such
Indebtedness by Tritel PCS or any Subsidiary Guarantor, and to successive
extensions or refinancings thereof, where such Lien only extends to the assets
that were subject to such Lien prior to the related acquisition by Tritel PCS
or the Subsidiary Guarantor.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
Tritel PCS will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:
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(1) pay dividends or make any other distributions on its Capital Stock to
Tritel PCS or any of its Restricted Subsidiaries, or with respect to any
other interest or participation in, or measured by, its profits, or pay
any indebtedness owed to Tritel PCS or any of its Restricted Subsidiaries;
(2) pay any Indebtedness owed to Tritel PCS or any other Restricted Subsidiary;
(3) make loans or advances to Tritel PCS or any of its Restricted Subsidiaries;
or
(4) transfer any of its properties or assets to Tritel PCS or any of its
Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the date of the indenture and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof, provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are no more restrictive, taken as
a whole, with respect to such dividend and other payment restrictions than
those contained in such Existing Indebtedness, as in effect on the date of
the indenture;
(2) any agreement or other instrument of a Person acquired by Tritel PCS or any
Restricted Subsidiary in existence at the time of such acquisition, but
not created in contemplation thereof, which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so
acquired;
(3) with respect to a Restricted Subsidiary, imposed pursuant to an agreement
that has been entered into for the sale or disposition of all or
substantially all of Tritel PCS's Capital Stock in, or substantially all
the assets of, such Restricted Subsidiary in compliance with the "--
Repurchase at the Option of Holders -- Asset Sales" covenant;
(4) any such customary encumbrance or restriction contained in a security
document creating a Lien permitted under the indenture to the extent
relating to the property or asset subject to such Lien, including, without
limitation, customary restrictions relating to assets securing any
Telecommunications Indebtedness or the Bank Credit Agreement under the
applicable security documents; or
(5) customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Tritel PCS may not, directly or indirectly: (1) consolidate or merge with
or into another Person, whether or not Tritel PCS is the surviving corporation;
or (2) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of Tritel PCS and its Restricted
Subsidiaries taken as a whole, in one or more related transactions, to another
Person; unless:
(1) either (a) Tritel PCS is the surviving corporation, or (b) the Person
formed by or surviving any such consolidation or merger, if other than
Tritel PCS, or to which such sale, assignment, transfer, conveyance or
other disposition shall have been made is a corporation organized or
existing under the laws of the United States, any state thereof or the
District of Columbia;
(2) the Person formed by or surviving any such consolidation or merger, if
other than Tritel PCS, or the Person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes all
the obligations of Tritel PCS under the notes, the indenture and the
Registration Rights Agreement pursuant to agreements reasonably
satisfactory to the Trustee;
(3) immediately after giving effect to such transaction or series of
transactions on a pro forma basis, and treating any obligation of Tritel
PCS or a Restricted Subsidiary in connection with or as a result of such
transaction as having been incurred as of the time of such transaction, no
Default or Event of Default exists;
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(4) Tritel PCS or the Person formed by or surviving any such consolidation or
merger, if other than Tritel PCS, or to which such sale, assignment,
transfer, conveyance or other disposition shall have been made:
(a) will have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of Tritel PCS
immediately preceding the transaction; and
(b) will, on the date of such transaction after giving pro forma effect
thereto and any related financing transactions as if the same had
occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness, other
than Permitted Indebtedness, pursuant to the first paragraph of the
covenant described above under the caption "-- Incurrence of
Indebtedness and Issuance of Preferred Stock;"
(5) if any of the property or assets of Tritel PCS or any of its Restricted
Subsidiaries would thereupon become subject to any Lien, the provisions of
the "Liens" covenant are complied with; and
(6) Tritel PCS or the Person formed by or surviving any such consolidation or
merger, if other than Tritel PCS, shall have delivered to the Trustee an
officers' certificate and an opinion of counsel, each stating that such
transaction complies with the terms of the indenture.
Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer, lease or disposition of all of substantially all of the properties
and assets of Tritel PCS in accordance with the immediately preceding paragraph
in which Tritel PCS is not the continuing obligor under the Indenture, the
Person formed by or surviving any such consolidation or merger, if other than
Tritel PCS, shall succeed to, and be substituted for, and may exercise every
right and power of, Tritel PCS under the indenture, with the same effect as if
such successor had been named as Tritel PCS therein. When a successor assumes
all the obligations of its predecessor under the indenture and the notes, the
predecessor shall be released from those obligations, so long as in the case of
a transfer by lease, the predecessor shall not be released from the payment of
principal and interest on the Notes.
TRANSACTIONS WITH AFFILIATES
Tritel PCS will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable to Tritel
PCS or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by Tritel PCS or such Restricted
Subsidiary with an unrelated Person; and
(2) Tritel PCS delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate Transaction has
been approved by a majority of the disinterested members of the Board
of Directors; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$25.0 million, an opinion as to the fairness to the Holders of such
Affiliate Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
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(1) any employment or consulting agreement entered into by Tritel PCS or any of
its Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of Tritel PCS or such Restricted
Subsidiary;
(2) transactions between or among Tritel PCS and/or its Restricted
Subsidiaries;
(3) transactions with a Person that is an Affiliate of Tritel PCS solely
because Tritel PCS owns an Equity Interest in such Person;
(4) payment of reasonable directors fees, expenses and indemnification to
Persons who are not otherwise Affiliates of Tritel PCS;
(5) sales of Equity Interests, other than Disqualified Stock, to Affiliates of
Tritel PCS;
(6) Restricted Payments that are permitted by the provisions of the Indenture
described above under the caption "-- Restricted Payments;"
(7) transactions with AT&T or any of its Affiliates relating to the marketing
or provision of telecommunication services or related hardware, software
or equipment on terms that are no less favorable, when taken as a whole,
to Tritel PCS or such Restricted Subsidiary, as applicable, than those
available from unaffiliated third parties;
(8) transactions involving the leasing or sharing or other use by Tritel PCS or
any Restricted Subsidiary of communications network facilities, including,
without limitation, cable or fiber lines, equipment of transmission
capacity, of any Affiliate of Tritel PCS (such Affiliate being a "Related
Party") on terms that are no less favorable, when taken as a whole, to
Tritel PCS or such Restricted Subsidiary, as applicable, than those
available from such Related Party to unaffiliated third parties;
(9) transactions involving the provision of telecommunication services by a
Related Party in the ordinary course of its business to Tritel PCS or any
Restricted Subsidiary, or by Tritel PCS or any Restricted Subsidiary to a
Related Party, on terms that are no less favorable, when taken as a whole,
to Tritel PCS or such Restricted Subsidiary, as applicable, than those
available from such Related Party to unaffiliated third parties;
(10) any sales agency agreements pursuant to which an Affiliate has the right
to market any or all of the products or services of Tritel PCS or any of
the Restricted Subsidiaries;
(11) transactions involving the sale, transfer or other disposition of any
shares of Capital Stock of any Marketing Affiliate, so long as such
Marketing Affiliate is not engaged in any activity other than the
registration, holding, maintenance or protection of trademarks and the
licensing thereof; and
(12) up to $2.5 million of loans from Tritel PCS to Airwave Communications and
Digital PCS to fund the payment of certain litigation-related expenses and
contingent liabilities, pursuant to the secured promissory note agreement
in effect on the Issue Date.
SALE AND LEASEBACK TRANSACTIONS
Tritel PCS will not, and will not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction. However, Tritel
PCS or any Restricted Subsidiary may enter into a sale and leaseback
transaction if:
(1) the lease is for a period, including renewal rights, of not in excess of
three years;
(2) the lease secures or relates to industrial revenue or pollution control
bonds;
(3) the transaction is between Tritel PCS and a Restricted Subsidiary or
between Restricted Subsidiaries; or
(4) Tritel PCS or such Restricted Subsidiary, within 12 months after the sale
or transfer of any assets or properties is completed, applies an amount
not less than the net proceeds received from such sale in accordance with
clause (1) or (2) of the second paragraph of the "-- Repurchase at the
Option of Holders -- Asset Sales" covenant.
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LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS IN RESTRICTED
SUBSIDIARIES
Tritel PCS (a) will not permit any Restricted Subsidiary to issue any
Capital Stock, other than to Tritel PCS or a Restricted Subsidiary, and (b)
will not permit any Person, other than Tritel PCS or a Restricted Subsidiary,
to own any Capital Stock of any Restricted Subsidiary. However, this covenant
shall not prohibit (1) the sale or other disposition of all, but not less than
all, of the issued and outstanding Capital Stock of any Restricted Subsidiary
owned by Tritel PCS or any Restricted Subsidiary in compliance with the other
provisions of the indenture or (2) the ownership by directors of directors'
qualifying shares or the ownership by foreign nationals of Capital Stock of any
Restricted Subsidiary, to the extent mandated by applicable law.
LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS BY RESTRICTED
SUBSIDIARIES
Tritel PCS will not permit any of its Restricted Subsidiaries, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any
other Indebtedness of Tritel PCS unless (a) such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture providing for the
Guarantee of the payment of the notes by such Restricted Subsidiary, and (b)
with respect to any guarantee of Subordinated Indebtedness by a Restricted
Subsidiary, any such guarantee is subordinated to such Restricted Subsidiary's
guarantee with respect to the notes at least to the same extent as such
Subordinated Indebtedness is subordinated to the notes, provided that the
foregoing provision will not be applicable to (1) any guarantee by any
Restricted Subsidiary that existed at the time such person became a Restricted
Subsidiary and was not incurred in connection with, or in contemplation of,
such person becoming a Restricted Subsidiary or (2) the Bank Credit Agreement.
Any guarantee by a Restricted Subsidiary of the notes pursuant to the
preceding paragraph may provide by its terms that it will be automatically and
unconditionally released and discharged upon (1) any sale, exchange or transfer
to any person not an Affiliate of Tritel PCS of all of Tritel PCS's and the
Restricted Subsidiaries' Capital Stock in, or all or substantially all the
assets of, such Restricted Subsidiary, which sale, exchange or transfer is not
prohibited by the indenture, or (2) the release or discharge of the guarantee
that resulted in the creation of such guarantee of the notes, except a
discharge or release by or as a result of payment under such guarantee.
AMENDMENTS TO SECURITIES PURCHASE AGREEMENT
The indenture will provide that Tritel PCS will cause Tritel, Inc. not to
amend, modify or waive, or refrain from enforcing, any provision of the
Securities Purchase Agreement in any manner that would delay the closing
thereunder of Tritel, Inc.'s preferred stock to a date later than September 30,
1999 or would cause the net cash proceeds from the sale of Tritel's preferred
stock to be less than $49.7 million. Tritel PCS will also cause Tritel, Inc. to
make a capital contribution to it of the net cash proceeds from such sale.
ADDITIONAL SUBSIDIARY GUARANTEES
If Tritel PCS or any of its Restricted Subsidiaries acquires or creates
another Restricted Subsidiary after the Issue Date, then that newly acquired or
created Restricted Subsidiary must become a Subsidiary Guarantor and execute a
supplemental indenture satisfactory to the Trustee, so long as Tritel PCS shall
not cause any License Subsidiary to become a Subsidiary Guarantor unless such
License Subsidiary incurs Indebtedness other than Indebtedness in respect of
the Bank Credit Agreement or Indebtedness to the FCC. Each new Subsidiary
Guarantee will have the same terms as the Subsidiary Guarantees described
above.
BUSINESS ACTIVITIES
Tritel PCS will not, and will not permit any Restricted Subsidiary to,
engage in any business other than a Permitted Business.
UNRESTRICTED SUBSIDIARIES
The Board of Directors of Tritel PCS may designate any Subsidiary,
including any newly acquired or newly formed Subsidiary, to be an Unrestricted
Subsidiary so long as
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(1) neither Tritel PCS nor any Restricted Subsidiary is directly or
indirectly liable for any Indebtedness of such Subsidiary,
(2) no default with respect to any Indebtedness of such Subsidiary would
permit, upon notice, lapse of time or otherwise, any holder of any other
Indebtedness of Tritel PCS or any Restricted Subsidiary to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity,
(3) any Investment in such Subsidiary made as result of designating such
Subsidiary an Unrestricted Subsidiary will not violate the provisions of
the "-- Restricted Payments" covenant,
(4) neither Tritel PCS nor any Restricted Subsidiary has a contract,
agreement, arrangement, understanding or obligation of any kind, whether
written or oral, with such Subsidiary other than those that might be
obtained at the time from persons who are not Affiliates of Tritel PCS
and
(5) neither Tritel PCS nor any Restricted Subsidiary has any obligation (a)
to subscribe for additional shares of Capital Stock or other equity
interest in such Subsidiary or (b) to maintain or preserve such
Subsidiary's financial condition or to cause such Subsidiary to achieve
certain levels of operating results. Any such designation by the Board of
Directors of Tritel PCS shall be evidenced to the Trustee by filing a
board resolution with such Trustee giving effect to such designation. The
Board of Directors of Tritel PCS may designate any Unrestricted
Subsidiary as a Restricted Subsidiary if immediately after giving effect
to such designation, there would be no Default or Event of Default under
the indenture and Tritel PCS could incur $1.00 of additional
Indebtedness, other than Permitted Indebtedness, pursuant to the first
paragraph of the "-- Incurrence of Indebtedness and Issuance of Preferred
Stock" covenant.
REPORTS
Whether or not required by the SEC, so long as any notes are outstanding,
Tritel PCS will furnish to the Holders of notes, within the time periods
specified in the SEC's rules and regulations:
(1) all quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if Tritel PCS
were required to file such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with
respect to the annual information only, a report on the annual financial
statements by Tritel PCS's certified independent accountants; and
(2) all current reports that would be required to be filed with the SEC on Form
8-K if Tritel PCS were required to file such reports.
In addition, following the consummation of the exchange offer contemplated
by the Registration Rights Agreement, whether or not required by the SEC,
Tritel PCS will file a copy of all of the information and reports referred to
in clauses (1) and (2) above with the SEC for public availability within the
time periods specified in the SEC's rules and regulations, unless the SEC will
not accept such a filing, and make such information available to securities
analysts and prospective investors upon request. In addition, Tritel PCS has
agreed that, for so long as any notes remain outstanding, it will furnish to
the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
Notwithstanding the preceding paragraphs, Tritel PCS may substitute
reports of its parent, Tritel, Inc., for its reports so long as Tritel, Inc. is
permitted under applicable rules, regulations and policies of the SEC to file
such reports with the SEC in lieu of Tritel PCS filing its own reports.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an "Event of Default":
(1) default for 30 days in the payment when due of interest on, or Liquidated
Damages with respect to, the notes;
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(2) default in payment when due of the principal of, or premium, if any, on the
notes;
(3) failure by Tritel PCS or any of its Restricted Subsidiaries to comply with
the provisions described under the captions "-- Repurchase at the Option
of Holders -- Change of Control," "-- Repurchase at the Option of Holders
-- Asset Sales," "-- Certain Covenants -- Restricted Payments," "--
Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred
Stock" or "-- Certain Covenants -- Merger, Consolidation or Sale of
Assets;"
(4) failure by Tritel PCS or any of its Restricted Subsidiaries for 30 days
after notice to comply with any of the other agreements in the indenture;
(5) default under any mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any Indebtedness
for money borrowed by Tritel PCS or any of its Restricted Subsidiaries, or
the payment of which is guaranteed by Tritel PCS or any of its Restricted
Subsidiaries, whether such Indebtedness or guarantee now exists, or is
created after the date of the indenture, if that default:
(a) is caused by a failure to pay principal of, or interest or premium, if
any, on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment
Default"); or
(b) results in the acceleration of such Indebtedness prior to its express
maturity,
and, in each case, the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which there
has been a Payment Default or the maturity of which has been so
accelerated, aggregates $15.0 million or more;
(6) failure by Tritel PCS or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $15.0 million, which judgments are not
paid, discharged or stayed for a period of 60 days;
(7) any holder or holders, or any Person acting on any such holder's behalf, of
any Indebtedness in excess of $15.0 million in the aggregate of Tritel PCS
or any Restricted Subsidiary shall, subsequent to the occurrence of a
default with respect to such Indebtedness, notify the Trustee of the
intended sale or disposition of any assets of Tritel PCS or any Restricted
Subsidiary that have been pledged to or for the benefit of such Person to
secure such Indebtedness or shall commence proceedings, or take action to
retain in satisfaction of any such Indebtedness, or to collect on, seize,
dispose of or apply, any such assets of Tritel PCS or any Restricted
Subsidiary pursuant to the terms of any agreement or instrument evidencing
any such Indebtedness of Tritel PCS or any Restricted Subsidiary or in
accordance with applicable law;
(8) the Parent Guarantee or any Subsidiary Guarantee issued by a Significant
Subsidiary ceases to be in full force and effect or is declared null and
void or the Parent Guarantor or any Subsidiary Guarantor that is a
Significant Subsidiary denies that it has any further liability under its
Guarantee, or gives notice to such effect, other than by reason of the
termination of the Indenture or the release of any such Guarantee in
accordance with the indenture, and such condition has continued for a
period of 30 days after written notice of such failure requiring the
Guarantor and Tritel PCS to remedy the same has been given (x) to Tritel
PCS by the Trustee or (y) to Tritel PCS and the Trustee by the holders of
25% in aggregate Accreted Value of the notes then outstanding; and
(9) certain events of bankruptcy or insolvency with respect to Tritel PCS,
Tritel or any Restricted Subsidiary that constitutes a Significant
Subsidiary.
In the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to Tritel PCS, any Restricted Subsidiary
that is a Significant Subsidiary or any group of Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding notes will
become due and payable immediately without further action or notice. If any
other Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in aggregate Accreted Value of the then outstanding notes may
declare all the notes to be due and payable immediately.
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Holders of the notes may not enforce the indenture or the notes except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in aggregate Accreted Value of the then outstanding notes may direct
the Trustee in its exercise of any trust or power. The Trustee may withhold
from Holders of the notes notice of any continuing Default or Event of Default,
except a Default or Event of Default relating to the payment of principal or
interest or Liquidated Damages, if it determines that withholding notice is in
their interest.
The Holders of a majority in aggregate Accreted Value of the notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
notes waive any existing Default or Event of Default and its consequences under
the indenture except a continuing Default or Event of Default in the payment of
interest or Liquidated Damages on, or the principal of, the notes.
In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of Tritel PCS or any
Restricted Subsidiary with the intention of avoiding payment of the premium
that Tritel PCS would have had to pay if Tritel PCS then had elected to redeem
the notes pursuant to the optional redemption provisions of the indenture, an
equivalent premium shall also become and be immediately due and payable to the
extent permitted by law upon the acceleration of the notes. If an Event of
Default occurs prior to May 15, 2004, by reason of any willful action, or
inaction, taken, or not taken, by or on behalf of Tritel PCS with the intention
of avoiding the prohibition on redemption of the notes prior to May 15, 2004,
then the premium specified in the indenture shall also become immediately due
and payable to the extent permitted by law upon the acceleration of the notes.
Tritel PCS is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture. Upon becoming aware of any Default or
Event of Default, Tritel PCS is required to deliver to the Trustee a statement
specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Tritel PCS,
as such, shall have any liability for any obligations of Tritel PCS under the
notes, the indenture or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder of notes by accepting a note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the notes. The waiver may not be effective to
waive liabilities under the federal securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Tritel PCS may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding notes ("Legal
Defeasance") except for:
(1) the rights of Holders of outstanding notes to receive payments in respect
of the principal of, or interest or premium and Liquidated Damages, if
any, on such notes when such payments are due from the trust referred to
below;
(2) Tritel PCS's obligations with respect to the notes concerning issuing
temporary notes, registration of notes, mutilated, destroyed, lost or
stolen notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee, and
Tritel PCS's obligations in connection therewith; and
(4) the Legal Defeasance and Covenant Defeasance provisions of the indenture.
In addition, Tritel PCS may, at its option and at any time, elect to have
the obligations of Tritel PCS released with respect to certain covenants that
are described in the indenture ("Covenant Defeasance") and thereafter any
omission to comply with those covenants shall not constitute a
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Default or Event of Default with respect to the notes. In the event Covenant
Defeasance occurs, certain events, not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events, described under "Events of
Default" will no longer constitute an Event of Default with respect to the
notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) Tritel PCS must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders of the notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will
be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, or interest and
premium and Liquidated Damages, if any, on the outstanding notes on the
stated maturity or on the applicable redemption date, as the case may be,
and Tritel PCS must specify whether the notes are being defeased to
maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, Tritel PCS shall have delivered to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that (a) Tritel PCS has received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the date
of the indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Holders of the outstanding notes will
not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would
have been the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, Tritel PCS shall have delivered to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Holders of the outstanding notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing
either: (a) on the date of such deposit, other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit; or (b) or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the
91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or
violation of, or constitute a default under any material agreement or
instrument, other than the indenture, to which Tritel PCS or any of its
Restricted Subsidiaries is a party or by which Tritel PCS or any of its
Restricted Subsidiaries is bound;
(6) Tritel PCS must have delivered to the Trustee an Opinion of Counsel to the
effect that, assuming no intervening bankruptcy of Tritel PCS between the
date of deposit and the 91st day following the deposit and assuming that
no Holder is an insider of Tritel PCS under applicable bankruptcy law,
after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(7) Tritel PCS must deliver to the Trustee an Officers' Certificate stating
that the deposit was not made by Tritel PCS with the intent of preferring
the Holders of notes over the other creditors of Tritel PCS with the
intent of defeating, hindering, delaying or defrauding creditors of Tritel
PCS or others; and
(8) Tritel PCS must deliver to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent relating to
the Legal Defeasance or the Covenant Defeasance have been complied with.
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AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture or
the notes may be amended or supplemented with the consent of the Holders of at
least a majority in aggregate Accreted Value of the notes then outstanding,
including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, the notes, and any existing default
or compliance with any provision of the indenture or the notes may be waived
with the consent of the Holders of a majority in aggregate Accreted Value of
the then outstanding Notes, including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, notes.
Without the consent of each Holder affected, an amendment or waiver may
not, with respect to any notes held by a non-consenting Holder:
(1) reduce the Accreted Value of notes whose Holders must consent to an
amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any note or alter
the provisions with respect to the redemption of the notes, other than
provisions relating to the covenants described above under the caption "--
Repurchase at the Option of Holders";
(3) reduce the rate of or change the time for payment of interest on any note;
(4) waive a Default or Event of Default in the payment of principal of, or
interest or premium or Liquidated Damages, if any, on the notes, except a
rescission of acceleration of the notes by the Holders of at least a
majority in aggregate Accreted Value of the notes and a waiver of the
payment default that resulted from such acceleration;
(5) make any note payable in money other than that stated in the notes;
(6) make any change in the provisions of the indenture relating to waivers of
past Defaults or the rights of Holders of notes to receive payments of
principal of, or interest or premium or Liquidated Damages, if any, on the
notes;
(7) waive a redemption payment with respect to any note, other than a payment
required by one of the covenants described above under the caption "--
Repurchase at the Option of Holders"; or
(8) make any change in the preceding amendment and waiver provisions.
Notwithstanding the preceding, without the consent of any Holder of notes,
Tritel PCS and the Trustee may amend or supplement the indenture or the notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in place of
certificated Notes;
(3) to evidence the succession of another Person to Tritel PCS or any other
obligor on the Notes and to provide for the assumption of Tritel PCS's
obligations to Holders of notes in the case of a merger or consolidation
or sale of all or substantially all of Tritel PCS's assets;
(4) to make any change that would provide any additional rights or benefits to
the Holders of notes or that does not adversely affect the legal rights
under the Indenture of any such Holder; or
(5) to comply with requirements of the Commission in order to effect or
maintain the qualification of the indenture under the Trust Indenture Act.
SATISFACTION AND DISCHARGE
The indenture will be discharged and will cease to be of further effect as
to all notes issued thereunder, when:
(1) either:
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(a) all notes that have been authenticated, except lost, stolen or
destroyed notes that have been replaced or paid and notes for whose
payment money has theretofore been deposited in trust and thereafter
repaid to Tritel PCS, have been delivered to the Trustee for
cancellation; or
(b) all notes that have not been delivered to the Trustee for cancellation
have become due and payable by reason of the making of a notice of
redemption or otherwise or will become due and payable within one year
and Tritel PCS has irrevocably deposited or caused to be deposited with
the Trustee as trust funds in trust solely for the benefit of the
Holders, cash in U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient without
consideration of any reinvestment of interest, to pay and discharge the
entire indebtedness on the notes not delivered to the Trustee for
cancellation for principal, premium and Liquidated Damages, if any, and
accrued interest to the date of maturity or redemption;
(2) no Default or Event of Default shall have occurred and be continuing on the
date of such deposit or shall occur as a result of such deposit and such
deposit will not result in a breach or violation of, or constitute a
default under, any other instrument to which Tritel PCS is a party or by
which Tritel PCS or any Guarantor is bound;
(3) Tritel PCS has paid or caused to be paid all sums payable by it under the
indenture; and
(4) Tritel PCS has delivered irrevocable instructions to the Trustee under the
indenture to apply the deposited money toward the payment of the notes at
maturity or the redemption date, as the case may be.
In addition, Tritel PCS must deliver an Officers' Certificate and an
Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
INFORMATION CONCERNING THE TRUSTEE
If the Trustee becomes a creditor of Tritel PCS, the Indenture limits its
right to obtain payment of claims in certain cases, or to realize on certain
property received in respect of any such claim as security or otherwise. The
Trustee will be permitted to engage in other transactions; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
The Holders of a majority in Accreted Value of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The indenture provides that in case an Event of Default
shall occur and be continuing, the Trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
Holder of notes, unless such Holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture and
Registration Rights Agreement without charge by writing to Tritel PCS, Inc.,
111 E. Capitol Street, Suite 500, Jackson, Mississippi 39201, Attention:
Corporate Secretary.
GOVERNING LAW
The indenture and the notes will be governed by, and construed in
accordance with, the laws of the State of New York.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the notes to be resold as set
forth herein will initially be issued in the form of one Global Note. The
Global Note will be deposited on the Closing Date
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with the Trustee as custodian for The Depository Trust Company (the
"Depositary") and registered in the name of Cede & Co., as nominee of the
Depositary (such nominee being referred to herein as the "Global Note Holder").
Notes originally purchased by persons outside the United States pursuant
to sales in accordance with Regulation S under the Securities Act will be
represented upon issuance by a temporary global Note certificate (the
"Temporary Certificate"), which will not be exchangeable for Certificated Notes
until the expiration of the "40-day restricted period" within the meaning of
Rule 903(c)(3) of Regulation S under the Securities Act. The Temporary
Certificate will be registered in the name of, and held by, a temporary
certificate holder until the expiration of such 40-day period, at which time
the Temporary Certificate will be delivered to the Trustee in exchange for
Certificated Notes registered in the names requested by such temporary
certificate holder. In addition, until the expiration of such 40-day period,
transfers of interests in the Temporary Certificate can only be effected
through such temporary certificate holder in accordance with the requirements
set forth in "Notice to Investors."
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the
"Participants" or the "Depositary's Participants") and to facilitate the
clearance and settlement of transactions in such securities between
Participants through electronic book-entry changes in accounts of its
Participants. The Depositary's Participants include securities brokers and
dealers, including the Initial Purchasers, banks and trust companies, clearing
corporations and certain other organizations. Access to the Depositary's system
is also available to other entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants" or the "Depositary's
Indirect Participants") that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly. Persons who are not
Participants may beneficially own securities held by or on behalf of the
Depositary only through the Depositary's Participants or the Depositary's
Indirect Participants.
Tritel PCS expects that pursuant to procedures established by the
Depositary (1) upon deposit of the Global Note, the Depositary will credit the
accounts of Participants designated by the Initial Purchasers with portions of
the principal amount of the Global Note and (2) ownership of the notes
evidenced by the Global Note will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by the Depositary,
with respect to the interests of the Depositary's Participants, the
Depositary's Participants and the Depositary's Indirect Participants.
Prospective purchasers are advised that the laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to own, transfer or pledge Notes evidenced
by the Global Note will be limited to such extent. For certain other
restrictions on the transferability of the notes, see "Notice to Investors."
So long as the Global Note Holder is the registered owner of any notes,
the Global Note Holder will be considered the sole Holder under the Indenture
of any notes evidenced by the Global Note. Beneficial owners of notes evidenced
by the Global Note will not be considered the owners or Holders thereof under
the indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. Neither Tritel
PCS, nor the Trustee will have any responsibility or liability for any aspect
of the records of the Depositary or for maintaining, supervising or reviewing
any records of the Depositary relating to the notes.
Payments in respect of the principal of and premium, if any, and interest
on any notes registered in the name of the Global Note Holder on the applicable
record date will be payable by the Trustee to or at the direction of the Global
Note Holder in its capacity as the registered Holder under the Indenture. Under
the terms of the indenture, Tritel PCS and the Trustee may treat the persons in
whose names notes, including the Global Note, are registered as the owners
thereof for the purpose of receiving such payments. Consequently, neither
Tritel PCS, nor the Trustee has or will have any responsibility or liability
for the payment of such amounts to beneficial owners of the notes. Tritel PCS
believes, however, that it is currently the policy of the Depositary to
immediately credit the accounts of the relevant Participants with such
payments, in amounts proportionate to their respective
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holdings of beneficial interests in the relevant security as shown on the
records of the Depositary. Payments by the Depositary's Participants and the
Depositary's Indirect Participants to the beneficial owners of the notes will
be governed by standing instructions and customary practice and will be the
responsibility of the Depositary's Participants or the Depositary's Indirect
Participants.
EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive notes in registered
certificated form ("Certificated Notes") if:
(1) DTC (a) notifies Tritel PCS that it is unwilling or unable to continue as
depositary for the Global Notes and Tritel PCS fails to appoint a
successor depositary or (b) has ceased to be a clearing agency registered
under the Exchange Act;
(2) Tritel PCS, at its option, notifies the Trustee in writing that it elects
to cause the issuance of the Certificated Notes; or
(3) there shall have occurred and be continuing a Default or Event of Default
with respect to the notes.
In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon prior written notice given to the Trustee by or on
behalf of DTC in accordance with the indenture. In all cases, Certificated
Notes delivered in exchange for any Global Note or beneficial interests in
Global Notes will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the depositary, in accordance with
its customary procedures, and will bear the applicable restrictive legend
referred to in "Notice to Investors," unless that legend is not required by
applicable law.
EXCHANGE OF CERTIFICATED NOTES FOR GLOBAL NOTES
Certificated Notes may not be exchanged for beneficial interests in any
Global Note unless the transferor first delivers to the Trustee a written
certificate, in the form provided in the indenture, to the effect that such
transfer will comply with the appropriate transfer restrictions applicable to
such notes. See "Notice to Investors."
SAME DAY SETTLEMENT AND PAYMENT
Tritel PCS will make payments in respect of the notes represented by the
Global Notes, including principal, premium, if any, interest and Liquidated
Damages, if any, by wire transfer of immediately available funds to the
accounts specified by the Global Note Holder. Tritel PCS will make all payments
of principal, interest and premium and Liquidated Damages, if any, with respect
to Certificated Notes by wire transfer of immediately available funds to the
accounts specified by the Holders thereof or, if no such account is specified,
by mailing a check to each such Holder's registered address. The notes
represented by the Global Notes are expected to be eligible to trade in the
PORTAL market and to trade in DTC's Same-Day Funds Settlement System, and any
permitted secondary market trading activity in such Notes will, therefore, be
required by DTC to be settled in immediately available funds. Tritel PCS
expects that secondary trading in any Certificated Notes will also be settled
in immediately available funds.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Global Note from a Participant in
DTC will be credited, and any such crediting will be reported to the relevant
Euroclear or Cedel participant, during the securities settlement processing
day, which must be a business day for Euroclear and Cedel, immediately
following the settlement date of DTC. DTC has advised Tritel PCS that cash
received in Euroclear or Cedel as a result of sales of interests in a Global
Note by or through a Euroclear or Cedel participant to a Participant in DTC
will be received with value on the settlement date of DTC but will be available
in the relevant Euroclear or Cedel cash account only as of the business day for
Euroclear or Cedel following DTC's settlement date.
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CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indenture. Reference
is made to the indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Accreted Increment" means (a) if the redemption date occurs before the
first Semi-Annual Accrual Date, an amount equal to the product of (1) the
Accreted Value for the first Semi-Annual Accrual Date less the original issue
price multiplied by (2) a fraction, the numerator of which is the number of
days from the Closing Date to the redemption date, using a 360-day year of
twelve 30-day months, and the denominator of which is the number of days
elapsed from the Closing Date to the first Semi-Annual Accrual Date, using a
360-day year of twelve 30-day months, or (b) if the redemption date occurs
between two Semi-Annual Accrual Dates, an amount equal to the product of (1)
the Accreted Value for the immediately following Semi-Annual Accrual Date less
the Accreted Value for the immediately preceding Semi-Annual Accrual Date
multiplied by (2) a fraction, the numerator of which is the number of days from
the immediately preceding Semi-Annual Accrual Date to the redemption date,
using a 360-day year of twelve 30-day months, and the denominator of which is
180.
"Accreted Value" means, for any particular date of determination (any such
date being herein referred to as a "Specified Date"), the amount provided below
for each $1,000 principal amount at maturity of notes outstanding:
A. If the Specified Date occurs on one of the following dates (each a
"Semi-Annual Accrual Date"), the Accreted Value will equal the amount set
forth below:
<TABLE>
<CAPTION>
SEMI-ANNUAL
ACCRUAL DATE ACCRETED VALUE
- ------------------------------------- ---------------
<S> <C>
November 15, 1999 $ 573.38
May 15, 2000 609.93
November 15, 2000 648.82
May 15, 2001 690.18
November 15, 2001 734.18
May 15, 2002 780.98
November 15, 2002 830.77
May 15, 2003 883.73
November 15, 2003 940.07
May 15, 2004 or thereafter $ 1,000.00
</TABLE>
B. If the Specified Date occurs before the first Semi-Annual Accrual
Date, the Accreted Value will equal the sum of (1) the original issue price
and (2) an amount equal to the product of (a) the Accreted Value for the
first Semi-Annual Accrual Date less the original issue price multiplied by
(b) a fraction, the numerator of which is the number of days from the issue
date of the notes to the Specified Date, using a 360-day year of twelve
30-day months, and the denominator of which is the number of days elapsed
from the issue date of the notes to the first Semi-Annual Accrual Date,
using a 360-day year of twelve 30-day months.
C. If the Specified Date occurs between two Semi-Annual Accrual Dates,
the Accreted Value will equal the sum of (1) the Accreted Value for the
Semi-Annual Accrual Date immediately preceding such Specified Date and (2)
an amount equal to the product of (a) the Accreted Value for the
immediately following Semi-Annual Accrual Date less the Accreted Value for
the immediately preceding Semi-Annual Accrual Date multiplied by (b) a
fraction, the numerator of which is the number of days from the immediately
preceding Semi-Annual Accrual Date to the Specified Date, using a 360-day
year of twelve 30-day months, and the denominator of which is 180.
D. If the Specified Date occurs after May 15, 2004, the Accreted Value
will equal $1,000.
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"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into, or becoming a
Subsidiary of, such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meaning correlative to the
foregoing.
"Asset Acquisition" means (a) any capital contribution, by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise, by Tritel PCS or any
Restricted Subsidiary in any other Person, or any acquisition or purchase of
Capital Stock of any other Person by Tritel PCS or any Restricted Subsidiary,
in either case pursuant to which such Person shall become a Restricted
Subsidiary or shall be merged with or into Tritel PCS or any Restricted
Subsidiary or (b) any acquisition by Tritel PCS or any Restricted Subsidiary of
the assets of any Person which constitute substantially all of an operating
unit or line of business of such Person or which is otherwise outside of the
ordinary course of business.
"Asset Disposition" means the sale or other disposition by Tritel PCS or
any of its Restricted Subsidiaries, other than to Tritel PCS or another
Restricted Subsidiary of Tritel PCS, of (a) all or substantially all of the
Capital Stock of any Restricted Subsidiary of Tritel PCS or (b) all or
substantially all of the assets that constitute a division or line of business
of Tritel PCS or any of its Restricted Subsidiaries.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or rights,
other than sales of inventory in the ordinary course of business
consistent with past practices; provided that the sale, conveyance or
other disposition of all or substantially all of the assets of Tritel PCS
and its Restricted Subsidiaries taken as a whole will be governed by the
provisions of the indenture described above under the caption "--
Repurchase at the Option of Holders -- Change of Control" and/or the
provisions described above under the caption "-- Certain Covenants --
Merger, Consolidation or Sale of Assets" and not by the provisions of the
"-- Repurchase at the Option of Holders -- Asset Sale" covenant; and
(2) the issuance of Equity Interests by any of Tritel PCS's Restricted
Subsidiaries or the sale of Equity Interests in any of its Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to
be Asset Sales:
(1) any single transaction or series of related transactions that involves
assets having a fair market value of less than $5.0 million;
(2) any disposition of properties and assets of Tritel PCS that is governed by
the provisions of the indenture described under "-- Merger, Consolidation
and Sale of Assets" above;
(3) a transfer of assets between or among Tritel PCS and its Restricted
Subsidiaries;
(4) transfers of property or assets to an Unrestricted Subsidiary, if permitted
under the "Restricted Payments" covenant;
(5) the sale or lease of equipment, inventory, accounts receivable or other
assets in the ordinary course of business; and
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(6) any transfer by Tritel PCS or a Subsidiary of property or equipment with a
fair market value of less than $5.0 million to a Person who is not an
Affiliate of Tritel PCS in exchange for property or equipment that has a
fair market value at least equal to the fair market value of the property
or equipment so transferred; provided that, in the event of a transfer
described in this clause (6), Tritel PCS shall deliver to the Trustee an
officer's certificate certifying that such exchange complies with this
clause (6).
"Average Life" means, as of the date of determination with respect to any
Indebtedness, the quotient obtained by dividing (a) the sum of the products of
(x) the number of years from the date of determination to the date or dates of
each successive scheduled principal payment, including, without limitation, any
sinking fund requirements, of such Indebtedness multiplied by (y) the amount of
each such principal payment by (b) the sum of all such principal payments.
"Bank Credit Agreement" means the Amended and Restated Loan Agreement
dated as of March 31, 1999 between Tritel PCS, Tritel, Inc., Toronto Dominion
(Texas), Inc, as administrative agent and the Banks, as such agreement may be
amended, restated, supplemented, refinanced or otherwise modified from time to
time.
"Banks" means the banks or other financial institutions that from time to
time are lenders under the Bank Credit Agreement.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person," as that term is used in Section 13(d)(3)
of the Exchange Act, such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding
meaning.
"Board of Directors" means:
(1) with respect to a corporation, the board of directors of the corporation;
(2) with respect to a partnership, the Board of Directors of the general
partner of the partnership; and
(3) with respect to any other Person, the board or committee of such Person
serving a similar function.
"Capital Lease Obligation" means, with respect to any person, an
obligation incurred or assumed under or in connection with any capital lease of
real or personal property that, in accordance with GAAP, has been recorded as a
capitalized lease.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents, however
designated, of corporate stock;
(3) in the case of a partnership or limited liability company, partnership or
membership interests, whether general or limited; and
(4) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets
of, the issuing Person.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof, so long as the
full faith and credit of the United States is pledged in support thereof,
having maturities of not more than six months from the date of
acquisition;
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(3) certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each
case, with any lender party to the Bank Credit Agreement or with any
domestic commercial bank having capital and surplus in excess of $500.0
million and a Thomson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Rating Services and in each
case maturing within six months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1) through (5) of this
definition.
"Change of Control" means the occurrence of any of the following:
(1) for so long as the Voting Preference Common Stock of Tritel, Inc. remains
outstanding and the Voting Preference Common Stock constitutes 50.1% or
more of the combined voting power of all classes of Tritel, Inc.'s
outstanding Voting Stock pursuant to the Restated Certificate of
Incorporation of Tritel, Inc., a "person" or "group," within the meaning
of Sections 13(d) and 14(d)(2) of the Exchange Act, other than a Permitted
Holder, becomes the "beneficial owner," as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that a person will be deemed to have
"beneficial ownership" of all securities that such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time, directly or indirectly, of shares of Voting Preference
Common Stock having more than 50% of the total voting power of such shares
of Voting Preference Common Stock;
(2) if there are no shares of Voting Preference Common Stock outstanding or the
Voting Preference Common Stock no longer constitutes 50.1% or more of the
combined voting power of all classes of Tritel, Inc.'s outstanding Voting
Stock pursuant to the Restated Certificate of Incorporation of Tritel,
Inc., a "person" or "group", other than a Permitted Holder, becomes the
"beneficial owner" of Voting Stock having more than 50% of the voting
power of the total Voting Stock of Tritel, Inc.;
(3) the direct or indirect sale, transfer, conveyance or other disposition,
other than by way of merger or consolidation, in one or a series of
related transactions, of all or substantially all of the properties or
assets of Tritel PCS and its Restricted Subsidiaries taken as a whole to
any "person," as that term is used in Section 13(d)(3) of the Exchange
Act, except to a Permitted Holder;
(4) the adoption of a plan relating to the liquidation or dissolution of Tritel
PCS;
(5) during any consecutive two year period, individuals who at the beginning of
such period constituted the Board of Directors of Tritel PCS, together
with any new directors whose election to such Board of Directors, or whose
nomination for election by the stockholders of Tritel PCS, was approved by
a vote of 66 2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination
for election was previously so approved, cease for any reason to
constitute a majority of the Board of Directors of Tritel PCS then in
office. However, that changes in specific representatives of the existing
investors that are entitled to nominate board representatives shall be
excluded from consideration for purposes of this clause (5); or
(6) Tritel ceases to own, directly or indirectly, 100% of the Capital Stock of
Tritel PCS.
"Consolidated EBITDA" means, for any period, the sum of, without
duplication, Consolidated Net Income for such period, plus, or, in the case of
clause (d) below, plus or minus, the following
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items to the extent included in computing Consolidated Net Income for such
period: (a) the Consolidated Interest Expense and preferred stock dividends of
Tritel PCS and its Restricted Subsidiaries for such period, plus (b) the
provision for federal, state, local and foreign income taxes of Tritel PCS and
its Restricted Subsidiaries for such period, plus (c) the aggregate
depreciation and amortization expense of Tritel PCS and any of its Restricted
Subsidiaries for such period, plus (d) any other non-cash charges for such
period, and minus non-cash credits for such period, other than non-cash charges
or credits resulting from changes in prepaid assets or accrued liabilities in
the ordinary course of business, so long as income tax expense, interest
expense and preferred stock dividends, depreciation and amortization expense,
and non-cash charges and credits of a Restricted Subsidiary will be included in
Consolidated EBITDA only to the extent, and in the same proportion, that the
net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income for such period.
"Consolidated Interest Expense" means, for any period, the aggregate
amount of (a) interest in respect of Indebtedness, including amortization of
original issue discount on any Indebtedness and the interest portion of any
deferred payment obligation, calculated in accordance with the effective
interest method of accounting; all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financings; the net costs associated with Hedging Obligations; and Indebtedness
that is guaranteed or secured by Tritel PCS or any of its Restricted
Subsidiaries, (b) the interest portion of Capital Lease Obligations paid,
accrued or scheduled to be paid or to be accrued by Tritel PCS and its
Restricted Subsidiaries during such period and (c) cash dividends paid on
Disqualified Stock by Tritel PCS and any Restricted Subsidiary to any Person
other than Tritel PCS and its Restricted Subsidiaries.
"Consolidated Leverage Ratio" means, on any Transaction Date, the ratio of
(a) the aggregate amount of Indebtedness of Tritel PCS and its Restricted
Subsidiaries on a consolidated basis as of such date to (b) the product of (x)
the aggregate amount of Consolidated EBITDA for the immediately preceding two
full fiscal quarters for which internal financial statements are available,
taken as one accounting period, multiplied by (y) two.
"Consolidated Net Income" means, for any period, the aggregate net income,
or loss, of Tritel PCS and its Restricted Subsidiaries for such period
determined in conformity with GAAP, so long as that the following items shall
be excluded in computing Consolidated Net Income, without duplication:
(1) the portion of net income, or loss, of any Person, other than Tritel PCS
or a Restricted Subsidiary, including Unrestricted Subsidiaries, in which
Tritel PCS or any Restricted Subsidiary has an ownership interest, except
to the extent of the amount of dividends or other distributions actually
paid to Tritel PCS or any Restricted Subsidiary in cash during such
period;
(2) the net income, or loss, of any Person combined with Tritel PCS or any
Restricted Subsidiary on a "pooling of interests" basis attributable to
any period prior to the date of combination;
(3) the net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
Restricted Subsidiary is at the date of determination restricted, directly
or indirectly, except to the extent that such net income could be paid to
Tritel PCS or a Restricted Subsidiary thereof by loans, advances,
intercompany transfers, principal repayments or otherwise;
(4) any gains or losses, on an after-tax basis, attributable to Asset Sales;
(5) except for purposes of calculating the amount of Restricted Payments that
may be made pursuant to clause (3) of the first paragraph of the
"Limitation on Restricted Payments" covenant, any amount paid or accrued
as dividends on Preferred Stock, other than accrued dividends which,
pursuant to the terms of the Preferred Stock, will not be payable prior to
the first anniversary after the Stated Maturity of the notes, of Tritel
PCS or any Restricted Subsidiary owned by Persons other than Tritel PCS
and any of its Restricted Subsidiaries; and
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(6) all extraordinary gains and extraordinary losses.
"Consolidated Net Worth" means, with respect to any specified Person as of
any date, the sum of:
(1) the consolidated equity of the common stockholders of such Person and its
Restricted Subsidiaries as of such date; plus
(2) the respective amounts reported on such Person's balance sheet as of such
date with respect to any series of preferred stock, other than
Disqualified Stock, that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only
to the extent of any cash received by such Person upon issuance of such
preferred stock.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement entered into by a Person
that is designed to protect such Person against fluctuations in currency
values.
"Default" means any event that is, or after notice or passage of time or
both, would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms, or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof, or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the notes mature. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require Tritel PCS to repurchase such Capital
Stock upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
Tritel PCS may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with the covenant
described above under the caption "-- Certain Covenants -- Restricted
Payments."
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock, but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock.
"Equity Offering" means a capital contribution to Tritel PCS from Tritel,
Inc. or a sale by Tritel PCS of its Capital Stock, which is not Disqualified
Stock, to Tritel, Inc.
"Existing Indebtedness" means up to $41.2 million book value in aggregate
principal amount of Indebtedness of Tritel PCS and its Restricted Subsidiaries
(other than Indebtedness under the Bank Credit Agreement) in existence on the
date of the Indenture, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Government Securities" means securities that are (x) direct obligations
of the United States of America for the payment of which its full faith and
credit is pledged or (y) obligations of a person controlled or supervised by
and acting as an agency or instrumentality of the United States of America, the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of Tritel PCS thereof, and shall also
include a depository receipt issued by a bank, as defined in Section 3(a)(2) of
the Securities Act, as a custodian with respect to any such U.S. Government
obligation or a specific payment of principal of or interest on any such U.S.
Government obligation held by such custodian for the account of the holder of
such depository receipt. However, except as required by law, such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the U.S. Government obligation or the specific payment of principal of or
interest on the U.S. Government obligation evidenced by such depository
receipt.
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"guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Guarantee" means the guarantees of the notes by the Parent Guarantor and
the Subsidiary Guarantors in accordance with the provisions of the indenture.
"Guarantors" means the Parent Guarantor and the Subsidiary Guarantors.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or letters of
credit, or reimbursement agreements in respect thereof;
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any property,
except any such balance that constitutes an accrued expense or trade
payable; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items, other than letters of credit,
would appear as a liability upon a balance sheet of the specified Person
prepared in accordance with GAAP. In addition, the term "Indebtedness" includes
all Indebtedness of others secured by a Lien on any asset of the specified
Person, whether or not such Indebtedness is assumed by the specified Person,
and, to the extent not otherwise included, the Guarantee by the specified
Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount; and
(2) the principal amount thereof, together with any interest thereon that is
more than 30 days past due, in the case of any other Indebtedness.
"Investments" means, with respect to any Person, all direct or indirect
investments by such Person: in other Persons, including Affiliates; in the
forms of loans, including Guarantees or other obligations; advances or capital
contributions, excluding commission, travel and similar advances to officers
and employees made in the ordinary course of business; purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If Tritel PCS
or any Restricted Subsidiary of Tritel PCS sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of Tritel PCS
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of Tritel PCS, Tritel PCS shall be deemed to
have made an Investment on the date of any such sale or disposition equal to
the fair market value of the Equity Interests of such Restricted Subsidiary not
sold or disposed of in an
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amount determined as provided in the final paragraph of the covenant described
above under the caption "-- Certain Covenants -- Restricted Payments." The
acquisition by Tritel PCS or any Restricted Subsidiary of Tritel PCS of a
Person that holds an Investment in a third Person shall be deemed to be an
Investment by Tritel PCS or such Restricted Subsidiary in such third Person in
an amount equal to the fair market value of the Investment held by the acquired
Person in such third Person in an amount determined as provided in the final
paragraph of the covenant described above under the caption "-- Certain
Covenants -- Restricted Payments."
"Issue Date" means the date of original issuance of the notes.
"License Subsidiary" means Tritel A/B Holding Corp., Tritel C/F Holding
Corp., NexCom, Inc., Clearcall, Inc., Global PCS, Inc., Clearwave, Inc.,
DigiNet PCS, Inc., DigiCom, Inc. and DigiCall, Inc., each a Delaware
corporation, and Aircom PCS, Inc. and QuinCom, Inc., each an Alabama
corporation, and any other wholly owned Subsidiary of Tritel PCS designated as
a License Subsidiary under the Bank Credit Agreement. However, any such
Subsidiary will be a License Subsidiary only so long as its sole assets consist
of stock on one or more other License Subsidiaries, one or more PCS Licenses
and/or cash from senior loans by Tritel PCS or any Restricted Subsidiary in
order to fund amounts due, substantially contemporaneously, to the FCC or with
respect to franchise taxes and other similar payments related to the PCS
Licenses, and its sole Indebtedness consists of Indebtedness owed to the FCC
attributable to such PCS License or Licenses, amounts owed to Tritel PCS or any
Restricted Subsidiary under such senior loans, and guarantees of the Bank
Credit Agreement.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code, or equivalent statutes, of any jurisdiction.
"Marketing Affiliate" means any Person which engages in no activity other
than the registration, holding, maintenance or protection of trademarks and the
licensing thereof.
"Net Income" means, with respect to any specified Person, the net income,
loss, of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(1) any gain, but not loss, together with any related provision for taxes on
such gain (but not loss), realized in connection with: (a) any Asset Sale;
or (b) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries; and
(2) any extraordinary gain (but not loss), together with any related provision
for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means (a) with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations or escrowed funds, but only when received in
the form of, or stock or other assets when disposed for, cash or Cash
Equivalents (except to the extent that such obligations are financed or sold
with recourse to Tritel PCS or any Restricted Subsidiary), net of (1) brokerage
commissions and other fees and expenses (including fees and expenses of legal
counsel and investment banks) related to such Asset Sale, (2) provisions for
all taxes payable as a result of such Asset Sale, (3) payments made to retire
Indebtedness where payment of such Indebtedness is secured by the assets or
properties the subject of such Asset Sale, (4) amounts required to be paid to
any Person, other than Tritel PCS or any Restricted Subsidiary, owning a
beneficial interest in the assets subject to the Asset Sale and (5) appropriate
amounts to be provided by Tritel PCS or any Restricted Subsidiary, as the case
may be, as a reserve required in accordance with GAAP against any liabilities
associated with such Asset Sale and retained by Tritel PCS or any Restricted
Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related
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to environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale and (b) with respect to any capital
contribution or issuance or sale of Capital Stock as referred to under the
"Restricted Payments" covenant, the proceeds of such capital contribution,
issuance or sale in the form of cash or Cash Equivalents, including payments in
respect of deferred payment obligations when received in the form of, or stock
or other assets when disposed for, cash or Cash Equivalents, except to the
extent that such obligations are financed or sold with recourse to Tritel PCS
or any Restricted Subsidiary, net of attorney's fees, accountant's fees and
brokerage, consultation, underwriting and other fees and expenses actually
incurred in connection with such capital contribution, issuance or sale and net
of taxes paid or payable as a result thereof.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Parent Guarantee" means a guarantee of the notes by the Parent Guarantor
in accordance with the provisions of the indenture.
"Parent Guarantor" means Tritel, Inc. and any successors or assigns
permitted under the indenture.
"Permitted Business" means (a) the delivery or distribution of
telecommunications, voice, data or video services or (b) any business or
activity reasonably related or ancillary thereto, including, without
limitation, any business conducted by Tritel PCS or any Restricted Subsidiary
on the Issue Date and the acquisition, holding or exploitation of any license
relating to the delivery of the services described in clause (a) of this
definition.
"Permitted Holders" means:
(1) each of AT&T, TeleCorp PCS, Triton PCS, the institutional equity investors
that purchased Series C Preferred Stock of Tritel, Inc. on January 7, 1999
and any of their respective Affiliates and the respective successors, by
merger, consolidation, transfer or otherwise, to all or substantially all
of the respective businesses and assets of any of the foregoing;
(2) William M. Mounger, II, E.B. Martin, Jr. and Jerry M. Sullivan, Jr.; the
spouse, descendants and heirs of any of the foregoing persons; any trust
existing solely for the benefit of one or more of the foregoing persons;
the estate or any executor, administrator, conservator or other legal
representative of one or more of the foregoing persons; and any
corporation, limited partnership, limited liability company or similar
entity, all of the Voting Stock of which is owned by one or more of the
foregoing persons; and
(3) any "person" or "group," as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act, controlled by one or more of the persons identified
in clauses (1) or (2) above.
"Permitted Investments" means:
(1) Investments in Cash Equivalents;
(2) Investments in prepaid expenses, negotiable instruments held for collection
and lease, utility and workers' compensation, performance and other
similar deposits;
(3) loans and advances to employees made in the ordinary course of business;
(4) bonds, notes, debentures or other securities received as a result of Asset
Sales permitted under the covenant "-- Repurchase at the Option of Holders
-- Asset Sales;"
(5) Investments by Tritel PCS or any Restricted Subsidiary in another Person,
if as a result of such Investment (a) such other Person becomes a
Restricted Subsidiary or (b) such other Person is merged or consolidated
with or into, or transfers or conveys all or substantially all of its
assets to, Tritel PCS or a Restricted Subsidiary;
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(6) Investments by Tritel PCS or any of the Restricted Subsidiaries in any one
of the other of them; and
(7) Investments the sum of which does not exceed $7.5 million at any one time
outstanding.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subordinated Indebtedness" means Indebtedness of Tritel PCS that is
subordinated in right of payment to the Notes.
"Subsidiary" means, with respect to any specified Person:
(1) any corporation, association or other business entity of which more than
50% of the total voting power of shares of Capital Stock entitled, without
regard to the occurrence of any contingency, to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by Tritel, Inc. and/or one or more
other subsidiaries of Tritel, Inc.; and
(2) any partnership (a) the sole general partner or the managing general
partner of which is Tritel, Inc. and/or one or more other subsidiaries of
Tritel, Inc. or (b) the only general partners of which are Tritel, Inc.
and/or one or more other subsidiaries of Tritel, Inc..
"Subsidiary Guarantee" means a guarantee of the Notes by a Restricted
Subsidiary in accordance with the provisions of the indenture.
"Subsidiary Guarantor" means any Restricted Subsidiary that issues a
Subsidiary Guarantee.
"Telecommunications Business" means (a) the delivery or distribution of
telecommunications, voice, data or video services or (b) any business or
activity reasonably related or ancillary thereto, including, without
limitation, any business conducted by Tritel PCS or any Restricted Subsidiary
on the Closing Date and the acquisition, holding or exploitation of any license
relating to the delivery of the services described in clause (a) of this
definition.
"Telecommunications Indebtedness" means any credit facility entered into
with any vendor or supplier, or any financial institution acting on behalf of
such a vendor or supplier, so long as the Indebtedness thereunder is incurred
solely for the purpose of (A) financing the cost, including the cost of design,
development, site acquisition, construction, integration, handset manufacture
or acquisition or microwave relocation, of wireless telecommunications networks
or systems or for which Tritel PCS or any Restricted Subsidiary has obtained
the applicable licenses or authorization to utilize the radio frequencies
necessary for the operation of such networks or systems, (B) acquiring the
Capital Stock of an entity engaged in the Telecommunications Business and (C)
paying fees and expenses incurred in connection therewith.
"Total Consolidated Indebtedness" means at any date of determination, an
amount equal to (a) the accreted value of all Indebtedness, in the case of any
Indebtedness issued with original issue discount, plus (b) the principal amount
of all Indebtedness, in the case of any other Indebtedness, of Tritel PCS and
the Restricted Subsidiaries outstanding as of the date of determination.
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"Total Invested Capital" means, at any time of determination, the sum of,
without duplication, (a) $271.5 million, the total amount of equity contributed
to Tritel, Inc. as of the Issue Date, plus (b) irrevocable binding commitments
to purchase Capital Stock, other than Disqualified Stock, of Tritel, Inc.
existing as of the Issue Date, plus (c) the aggregate Net Proceeds received by
Tritel PCS from capital contributions or the issuance or sale of Capital Stock,
other than Disqualified Stock but including Capital Stock issued upon the
conversion of convertible Indebtedness or from the exercise of options,
warrants or rights to purchase Capital Stock (other than Disqualified Stock)
subsequent to the Issue Date, other than to a Restricted Subsidiary. However,
such aggregate net proceeds received pursuant to this clause (c) shall exclude
any amounts included as commitments to purchase Capital Stock in the preceding
clause (b), plus (d) the aggregate Net Proceeds received by Tritel PCS or any
Restricted Subsidiary from the sale, disposition or repayment of any Investment
made after the Issue Date and constituting a Restricted Payment in an amount
equal to the lesser of (x) the return of capital with respect to such
Investment and (y) the initial amount of such Investment, in either case, less
the cost of the disposition of such Investment, plus (e) an amount equal to the
consolidated net Investment that Tritel PCS and/or any of the Restricted
Subsidiaries has in any Subsidiary that was designated as an Unrestricted
Subsidiary after the Issue Date and redesignated as a Restricted Subsidiary in
accordance with the covenant described under "-- Certain Covenants --
Unrestricted Subsidiaries," plus (f) Total Consolidated Indebtedness minus (g)
the aggregate amount of all Restricted Payments declared or made on or after
the Issue Date.
"Transaction Date" means, with respect to the incurrence of any
Indebtedness by Tritel PCS or any of its Restricted Subsidiaries, the date such
Indebtedness is to be incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Unrestricted Subsidiary" means (a) any Subsidiary that is designated by
the Board of Directors of Tritel PCS as an Unrestricted Subsidiary in
accordance with the "Unrestricted Subsidiaries" covenant and (b) any Subsidiary
of an Unrestricted Subsidiary.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
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DESCRIPTION OF CAPITAL STOCK
The following summary of certain provisions of the capital stock of
Tritel, Inc. does not purport to be complete and is subject to, and qualified
in its entirety by, the provisions of the Restated Certificate of Incorporation
of Tritel, Inc., dated January 4, 1999 (the "Restated Certificate of
Incorporation") and by the provisions of applicable law.
GENERAL
The authorized capital stock of Tritel, Inc., as set forth in the Restated
Certificate of Incorporation, is 4,540,009, which consists of the following:
o 1,500,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock"), including
o 200,000 shares designated "Series A Convertible Preferred Stock" (the
"Series A Preferred Stock"), 10% redeemable convertible, $1,000 stated
and liquidation value,
o 300,000 shares designated "Series B Convertible Preferred Stock" (the
"Series B Preferred Stock"), 10% cumulative, $1,000 stated and
liquidation value,
o 500,000 shares designated "Series C Convertible Preferred Stock" (the
"Series C Preferred Stock"), 6.5% cumulative convertible, $1,000 stated
and liquidation value, and
o 100,000 shares designated "Series D Convertible Preferred Stock" (the
"Series D Preferred Stock") (collectively, the "Preferred Stock"), 6.5%
cumulative convertible, $1,000 stated and liquidation value, and
o 3,040,009 shares of common stock, par value $.01 per share (the "Common
Stock"), including
o 1,500,000 shares designated "Class A Voting Common Stock" (the "Class
A Common Stock"),
o 1,500,000 shares designated "Class B Non-Voting Common Stock" (the
"Class B Common Stock"),
o 10,000 shares designated "Class C Common Stock" (the "Class C Common
Stock"),
o 30,000 shares designated "Class D Common Stock" (the "Class D Common
Stock") and
o 9 shares designated "Voting Preference Common Stock" (the "Voting
Preference Common Stock") (collectively, the "Common Stock").
SERIES A PREFERRED STOCK
The Series A Preferred Stock, with respect to dividend rights and rights
on liquidation, dissolution or winding up, ranks on a parity basis with the
Series B Preferred Stock, and ranks senior to the Series C Preferred Stock, the
Series D Preferred Stock and the Common Stock. The holders of Series A
Preferred Stock are entitled to receive cumulative quarterly cash dividends at
the annual rate of 10% multiplied by the liquidation preference, which is equal
to $1,000 per share plus declared but unpaid dividends. Tritel, Inc. may elect
to defer payment of any such dividends until the date on which the 42nd
quarterly dividend payment is due, at which time, and not earlier, all deferred
payments must be made. Except as required by law or in certain circumstances,
the holders of the Series A Preferred Stock do not have any voting rights. So
long as AT&T Wireless owns at least two-thirds of the number of shares of
Series A Preferred Stock owned by it on January 7, 1999, it has the exclusive
right, voting separately as a single class, to elect one director of Tritel,
Inc.. The Series A Preferred Stock is redeemable, in whole but not in part, at
the option of Tritel, Inc. on or after January 15, 2009 and at the option of
the holders of the Series A Preferred Stock on or after January 15, 2019. Upon
any liquidation, dissolution or winding up of Tritel, Inc., the holders of the
Series A Preferred Stock are entitled to receive a liquidation preference.
Additionally, on or after January 15, 2007, AT&T Wireless, and qualified
transferees, have the right to convert each share of Series A Preferred Stock
into shares of Class A Common Stock.
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Tritel, Inc. issued 90,668 shares of Series A Preferred Stock with a
stated value of $90.7 million to AT&T Wireless on January 7, 1999.
SERIES B PREFERRED STOCK
The Series B Preferred Stock ranks on a parity basis with the Series A
Preferred Stock and is identical in all respects to the Series A Preferred
Stock, except:
o the Series B Preferred Stock is not convertible into shares of Common
Stock or any other security issued by Tritel, Inc.;
o the Series B Preferred Stock is redeemable at any time at the option
of Tritel, Inc.;
o the Series B Preferred Stock may be issued by Tritel, Inc. pursuant to
an exchange of capital stock; and
o holders of Series B Preferred Stock do not have the right to elect any
directors of Tritel, Inc.
No Series B Preferred Stock has been issued by Tritel, Inc.
SERIES C PREFERRED STOCK
The Series C Preferred Stock (1) ranks junior to the Series A Preferred
Stock and the Series B Preferred Stock with respect to dividend rights and
rights on liquidation, dissolution or winding up, (2) ranks junior to the
Series D Preferred Stock with respect to rights on a statutory liquidation, (3)
ranks on a parity basis with the Series D Preferred Stock with respect to
rights on liquidation, dissolution or winding up, except a statutory
liquidation, (4) ranks on a parity basis with Series D Preferred Stock and
Common Stock with respect to dividend rights, and (5) ranks senior to the
Common Stock and any other series or class of Tritel, Inc.'s common or
preferred stock, now or hereafter authorized, other than Series A Preferred
Stock, Series B Preferred Stock or Series D Preferred Stock, with respect to
rights on liquidation, dissolution and winding up. The holders of Series C
Preferred Stock are entitled to dividends in cash or property when, as and if
declared by the Board of Directors of Tritel, Inc. Upon any liquidation,
dissolution or winding up of Tritel, Inc., the holders of Series C Preferred
Stock are entitled to receive, after payment to any stock ranking senior to the
Series C Preferred Stock, a liquidation preference equal to (1) the quotient of
the aggregate paid-in-capital of all Series C Preferred Stock held by a
stockholder divided by the total number of shares of Series C Preferred Stock
held by that stockholder (the "Invested Amount") plus (2) declared but unpaid
dividends on the Series C Preferred Stock, if any, plus (3) an amount equal to
interest on the Invested Amount at the rate of 6 1/2% per annum, compounded
quarterly. The holders of the Series C Preferred Stock have the right at any
time to convert each share of Series C Preferred Stock, and upon an initial
public offering meeting certain conditions (the "IPO Date"), each share of
Series C Preferred Stock will automatically convert, into shares of Class A
Common Stock of and, under certain circumstances, Class D Common Stock. On all
matters to be submitted to the stockholders of Tritel, Inc., the holders of
Series C Preferred Stock shall have the right to vote on an as-converted basis
as a single class with the holders of the Common Stock. Additionally, the
affirmative vote of the holders of a majority of the Series C Preferred Stock
is required to approve certain matters. The Series C Preferred Stock is not
redeemable.
Tritel, Inc. issued 32,392 shares of Series C Preferred Stock with a
stated value of $32.4 million to Airwave Communications and Digital PCS on
January 7, 1999 in exchange for PCS licenses covering 6.6 million Pops and
$14.2 million in cash. Tritel, Inc. also issued 149,239 shares of Series C
Preferred Stock with a stated value of $149.2 million to institutional
investors on January 7, 1999 in exchange for cash and subscriptions receivable.
Additionally, Tritel, Inc. issued 2,602 shares of Series C Preferred Stock with
a stated value of $2.6 million to Central Alabama Partnership LP on January 7,
1999 in exchange for its net assets.
SERIES D PREFERRED STOCK
The Series D Preferred Stock (1) ranks junior to the Series A Preferred
Stock and the Series B Preferred Stock with respect to dividend rights and
rights on liquidation, dissolution or winding up,
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(2) ranks senior to the Series C Preferred Stock with respect to rights on a
statutory liquidation, (3) ranks on a parity basis with Series C Preferred
Stock with respect to rights on liquidation, dissolution and winding up, except
a statutory liquidation, (4) ranks on a parity basis with Series C Preferred
Stock and Common Stock with respect to dividend rights, and (5) ranks senior to
the Common Stock and any other series or class of Tritel, Inc.'s common or
preferred stock, now or hereafter authorized, other than Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock, with respect to
rights on liquidation, dissolution and winding up. Subject to the preceding
sentence, the Series D Preferred Stock is identical in all respects to the
Series C Preferred Stock, except:
o the Series D Preferred Stock is convertible into an equivalent number
of shares of Series C Preferred Stock at any time;
o the liquidation preference for Series D Preferred Stock equals $1,000
plus declared but unpaid dividends plus an amount equal to interest on
$1,000 at the rate of 61/2% per annum, compounded quarterly, from the
date of issuance of such share to and including the date of the
calculation;
o the holders of Series D Preferred Stock do not have any voting rights,
other than those required by law or in certain circumstances; and
o shares of Series D Preferred Stock are not automatically convertible
upon the IPO Date, but will be renamed as "Senior Common Stock" on such
date.
Tritel, Inc. issued 46,374 shares of Series D Preferred Stock with a
stated value of $46.4 million to AT&T Wireless on January 7, 1999.
COMMON STOCK
The Common Stock is divided into two groups, the "Non-Tracked Common
Stock," which is comprised of the Class A Common Stock, the Class B Common
Stock and the Voting Preference Common Stock, and the "Tracked Common Stock,"
which is comprised of the Class C Common Stock and Class D Common Stock. Each
share of Common Stock is identical, and entitles the holder thereof to the same
rights, powers and privileges of stockholders under Delaware law, except:
o dividends on the Tracked Common Stock track the assets and liabilities
of Tritel C/F Holding Corp., a subsidiary of Tritel, Inc.;
o rights on liquidation, dissolution or winding up of Tritel, Inc. of the
Tracked Common Stock track the assets and liabilities of Tritel C/F
Holding Corp.;
o the Class A Common Stock, together with the Series C Preferred Stock,
has 4,990,000 votes, the Class B Common Stock has no votes, Class C
Common Stock has no votes, the Class D Common Stock has no votes and the
Voting Preference Common Stock has 5,010,000 votes, except that in any
matter requiring a separate class vote of any class of Common Stock or a
separate vote of two or more classes of Common Stock voting together as a
single class, for the purposes of such a class vote, each share of Common
Stock of such classes will be entitled to one vote per share;
o in the event the FCC indicates that the Class A Common Stock and Voting
Preference Stock (1) may be voted as a single class on all matters, (2)
may be treated as a single class for all quorum requirements and (3) may
have one vote per share, then, absent action by the Board of Directors
and upon an affirmative vote of 662/3% or more of the Class A Common
Stock, Tritel, Inc. must seek consent from the FCC to permit the Class A
Common Stock and Voting Preference Common Stock to vote and act as a
single class in the manner described above;
o the holders of shares of Class B Common Stock shall be entitled to vote
as a separate class on any amendment, repeal or modification of any
provision of the Restated Certificate of Incorporation that adversely
affects the powers, preferences or special rights of the holders of the
Class B Common Stock;
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o each share of Class B Common Stock may be converted, at any time at the
holder's option, into one share of Class A Common Stock;
o each share of Class A Common Stock may be converted, at any time at the
holder's option, into one share of Class B Common Stock; and
o in the event the FCC indicates that it will permit the conversion of
Tracked Common Stock into either Class A Common Stock or Class B Common
Stock, then, absent action by the Board of Directors and upon an
affirmative vote of 662/3% or more of the Class A Common Stock, such
conversion will be allowed by Tritel, Inc. at the option of the holders
of the Tracked Common Stock.
Tritel, Inc. issued 35,519 shares of Class A Common Stock, 5,177 shares of
Class C Common Stock and 9 shares of Voting Preference Common Stock to certain
members of its management on January 7, 1999.
LIMITATION ON DIRECTORS' LIABILITIES
The Delaware General Corporation Law authorizes corporations to limit or
eliminate the personal liability of directors to corporations and their
stockholders for monetary damages for breach of directors' fiduciary duty of
care. The duty of care requires that, when acting on behalf of the corporation,
directors must exercise an informed business judgment based on all material
information reasonably available to them. In the absence of the limitations of
personal liability authorized by the Delaware statute, directors could be
accountable to corporations and their stockholders for monetary damages for
conduct that does not satisfy their duty of care. Although the statute does not
change directors' duty of care, it enables corporations to limit available
relief to equitable remedies such as injunction or rescission. The Restated
Certificate of Incorporation limits the liability of Tritel, Inc.'s directors
to Tritel, Inc. or its stockholders to the fullest extent permitted by the
Delaware statute. Specifically, the directors of Tritel, Inc. will not be
personably liable for monetary damages for beach of a director's fiduciary duty
as a director, except for liability (1) for any breach of the director's duty
of loyalty to Tritel, Inc. or its stockholders, (2) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (3) under Section 174 of the Delaware General Corporation Law regarding
liability for any unlawful payment of dividends or unlawful stock purchase or
redemption or (4) for any transaction from which a director derived an improper
personal benefit. The inclusion of this provision in the Restated Certificate
of Incorporation may have the effect of reducing the likelihood of derivative
litigation against directors and may discourage or deter stockholders or
management from bringing a lawsuit against directors for beach of their duty of
care, even though such an action, if successful, might otherwise have benefited
Tritel, Inc. and its stockholders.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following is a summary of material United States federal income tax
consequences of the purchase, ownership and disposition of the notes, but does
not purport to be a complete analysis of all potential tax effects. This
summary is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), existing and proposed regulations thereunder, published rulings and
court decisions, all as in effect and existing on the date hereof and all of
which are subject to change at any time, which change may be retroactive. This
summary applies only to those persons who are the initial Holders of notes, who
acquire the notes for cash and who hold notes as capital assets and does not
address the tax consequences to taxpayers who are subject to special rules,
such as financial institutions, tax-exempt organizations, insurance companies
and, except as discussed below under "Foreign Holders," persons who are not
citizens or residents of the United States, domestic corporations or
partnerships, estates that are subject to United States federal income taxation
on income without regard to its source or a trust if a court within the United
States is able to exercise primary supervision of the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust, or aspects of federal income taxation that
may be relevant to a prospective investor based upon such investor's particular
tax situation. Accordingly, purchasers of notes should consult their own tax
advisors with respect to the particular consequences to them of the purchase,
ownership and disposition of the notes, including the applicability of any
state, local or foreign tax laws to which they may be subject, as well as with
respect to the possible effects of changes in federal and other tax laws.
Tritel PCS has received an opinion from Brown & Wood LLP, counsel to
Tritel PCS, that, based on the assumptions and subject to the qualifications
set forth therein, the information in the following discussion represents their
opinion of the material United States federal income tax consequences of the
purchase, ownership and disposition of the notes by Holders who acquire the
notes in their original issuance, as a capital asset, for a purchase price
equal to the issue price of the notes. The opinion is based on currently
applicable authorities, which are subject to change, and on the facts and
circumstances existing on the date of the opinion. The opinion is not binding
on the Internal Revenue Service or on the courts, and no ruling will be
requested from the Internal Revenue Service on the issues described below.
There can be no assurance that the Internal Revenue Service will not take a
different position concerning the matters discussed below and that such
positions of the Internal Revenue Service would not be sustained.
ORIGINAL ISSUE DISCOUNT
Because the notes are being issued at a discount in excess of a de minimis
amount as defined under Treasury Regulations from their "stated redemption
price at maturity," the notes will have original issue discount ("OID") for
federal income tax purposes. For federal income tax purposes, OID on a note
will be the excess of the stated redemption price at maturity of the note over
its issue price. The issue price of the notes will be the first price to the
public, excluding bond houses, brokers or similar persons or organizations
acting in the capacity of underwriters, placement agents or wholesalers, at
which a substantial amount of the notes is sold. For purposes of this
discussion, it is assumed that all initial Holders will purchase their notes at
the issue price. The stated redemption price at maturity of a note will be the
sum of all payments to be made on such note, including all stated interest
payments, other than payments of "qualified stated interest." Qualified stated
interest is stated interest that is unconditionally payable in cash or
property, other than debt instruments of the issuer, at least annually at a
single fixed rate. Because there will be no required payment of interest on the
notes until November 15, 2004, none of the interest payments on the notes,
under the stated payment schedule, will constitute qualified stated interest.
Therefore, each note will bear OID in an amount equal to the excess of (1) the
sum of its principal amount and all stated interest payments over (2) its issue
price.
A Holder will be required to include OID in income periodically over the
term of a note as such OID accrues, in accordance with a constant yield method
based on a compounding of interest, before
144
<PAGE>
receipt of the cash or other payment attributable to such income, regardless of
the Holder's method of tax accounting, but such Holder will not be required to
include separately in income cash payments received on the notes, even if
denominated as interest, to the extent they do not constitute qualified stated
interest. The amount of OID required to be included in a Holder's income for
any taxable year is the sum of the daily portions of OID with respect to the
note for each day during the taxable year or portion of a taxable year on which
such Holder holds the note. The daily portion is determined by allocating to
each day of an accrual period within a taxable year a pro rate portion of an
amount equal to the adjusted issue price of the note at the beginning of the
accrual period multiplied by the yield to maturity of the note. For purposes of
computing OID, Tritel PCS will use six-month accrual periods that end on the
days in the calendar year corresponding to the maturity date of the notes and
the date six months prior to such maturity date, with the exception of an
initial short accrual period. The adjusted issue price of a note at the
beginning of any accrual period is the issue price of the Note increased by the
amount of OID previously includible in the gross income of the Holder, and
decreased by any payments previously made on the note. The yield to maturity is
the discount rate that, when used in computing the present value of all
payments of principal and interest to be made on the note, produces an amount
equal to the issue price of the note. Under these rules, under the stated
payment schedule, Holders of notes will have to include in gross income
increasingly greater amounts of OID in each successive accrual period. A
Holder's tax basis in a note will be increased by the amount of OID includible
in the Holder's income under the rules discussed above and decreased by the
amount of any payment, including payments of stated interest, with respect to
the note.
Tritel PCS has determined that its obligations to pay Liquidated Damages
constitutes a remote and incidental contingency within the meaning of the OID
rules. Accordingly, Tritel PCS does not intend to treat the possibility of
payment of Liquidated Damages as affecting the yield to maturity of a note. In
the event that Liquidated Damages are actually paid, there will be adverse tax
consequences to the Holders of a note. Holders should consult their own tax
advisors as to the tax consequences to them of payment by Tritel PCS of
Liquidated Damages, if any.
EFFECT OF MANDATORY AND OPTIONAL REDEMPTION ON OID
Tritel PCS may redeem the notes, in whole or in part, at any time on or
after May 15, 2004, at redemption prices specified elsewhere herein plus
accrued interest to the date of redemption. The Treasury Regulations contain
rules for determining the "maturity date" and the stated redemption price at
maturity of an instrument that may be redeemed prior to its stated maturity
date at the option of the issuer. Under the OID rules, solely for purposes of
the accrual of OID, it is assumed that the issuer will exercise any option to
redeem a debt instrument if such exercise will lower the yield-to-maturity of
the debt instrument. Tritel PCS has determined that the exercise of its right
to redeem the notes prior to their stated maturity under these rules would not
lower the yield-to-maturity of the notes. On these facts, Tritel PCS would not
be presumed to exercise its right to redeem the notes, prior to their stated
maturity under these rules.
Prior to May 15, 2002, Tritel PCS at its option may redeem up to 35% of
the aggregate principal amount at maturity of the notes with the proceeds of
one or more equity offerings at the redemption price specified elsewhere
herein; provided that not less than 65% of the aggregate principal amount at
maturity of the notes would remain outstanding after such redemption. In the
event of a Change of Control, as defined in the indenture, each holder of notes
shall have the right to require that Tritel PCS purchase such holder's notes,
in whole or in part in integral multiples of $1,000, at a purchase price in
cash in an amount equal to 101% of the Accreted Value of the notes, plus, in
each case, accrued interest, if any, to the date of purchase. Such redemption
rights and obligations will be treated by Tritel PCS as not affecting the
determination of the yield or maturity of the notes. The Treasury Regulations
contain rules for determining the "maturity date" and the stated redemption
price at maturity of an instrument that may be redeemed prior to its stated
maturity date upon the occurrence of one or more contingencies. Under such
Treasury Regulations, if the timing and amounts of the payments that comprise
each payment schedule are known as of the issue date, the "maturity date" and
stated redemption price at maturity of such an instrument are determined by
assuming that payments will be made according to the instrument's stated
payment schedule, unless based upon all
145
<PAGE>
the facts and circumstances as of the issue date, it is more likely than not
that the instrument's stated payment schedule will not occur. Tritel PCS has
determined that the stated maturity date and stated payment schedule of the
notes is more likely than not to occur based on the facts and circumstances
known as of the issue date. On these facts, under these regulations, the
"maturity date" and stated redemption price at maturity of the notes would be
determined on the basis of the stated maturity and stated payment schedule.
If, notwithstanding the foregoing, it is presumed that Tritel PCS will
exercise its option to redeem, then the maturity date of the notes for the
purpose of calculating yield to maturity would be the exercise date of such
call option and the stated redemption price at maturity for each Note would
equal the amount payable upon such exercise. If subsequently the call option is
not exercised then, for purposes of the OID rules, the issuer would be treated
as having issued on the presumed exercise date of the call option a new debt
instrument in exchange for the existing instrument. The new debt instrument
deemed issued would have an issue price equal to the call price. As a result,
another OID computation would have to be made with respect to the
constructively issued new debt instrument.
SALE, EXCHANGE AND REDEMPTION OF NOTES
A sale, exchange or redemption of notes will result in taxable gain or
loss equal to the difference between the amount of cash or other property
received and the Holder's adjusted tax basis in the note. A Holder's adjusted
tax basis for determining gain or loss on the sale or other disposition of a
note will initially equal the cost of the note to such Holder and will be
increased by any amounts included in income as OID, and decreased by the amount
of any cash payments received by such Holder regardless of whether such
payments are denominated as principal or interest. Gain or loss upon a sale,
exchange, or redemption of a note will be capital gain or loss if the note is
held as a capital asset, and will be long term capital gain or loss if the note
has been held by the Holder for more than one year. The deductibility of
capital losses is subject to limitations. Prospective investors should consult
their own tax advisors concerning these tax law provisions.
EXCHANGE OF OUTSTANDING NOTES FOR REGISTERED NOTES
The exchange of the outstanding notes for registered notes pursuant to the
exchange offer will not be treated as an exchange for federal income tax
purposes because the registered notes will not differ materially in kind or
extent from the outstanding notes and because the exchange will occur by
operation of the original terms of the outstanding notes. As a result, Holders
who exchange their outstanding notes for registered notes will not recognize
any income, gain or loss for federal income tax purposes. A Holder will have
the same adjusted basis and holding period in the registered notes immediately
after the exchange as it had in the outstanding notes immediately before the
exchange.
FOREIGN HOLDERS
The following discussion is a summary of certain United States federal
income tax consequences to a Foreign Person that holds a note. The term
"Foreign Person" means a nonresident alien individual or foreign corporation,
but only if the income or gain on the note is not "effectively connected with
the conduct of a trade or business within the United States," in which case,
and subject to an applicable treaty, the nonresident alien individual or
foreign corporation will be subject to tax on such income or gain in
essentially the same manner as a United States citizen or resident or a
domestic corporation, as discussed above, and in the case of a foreign
corporation, may also be subject to the branch profits tax.
Under the "portfolio interest" exception to the general rules for the
withholding of tax on interest and original issue discount paid to a Foreign
Person, a Foreign Person will not be subject to United States tax, or to
withholding, on interest or OID on a note, provided that (a) the Foreign Person
does not actually or constructively own 10% or more of the total combined
voting power of all classes of stock of Tritel PCS entitled to vote and (b)
Tritel PCS, its paying agent or the person who would otherwise be required to
withhold tax receives either (1) a statement (an "Owner's Statement")
146
<PAGE>
on the applicable Internal Revenue Service's Form W-8 or substantially similar
form signed under penalties of perjury by the beneficial owner of the note in
which the owner certifies that the owner is not a United States person and
which provides the owner's name and address, or (2) a statement signed under
penalties of perjury by a financial institution holding the note on behalf of
the beneficial owners, together with a copy of the Owner's Statement.
Regulations which will be effective for payments made after December 31, 2000
would retain these procedures for certifying that a Holder is a Foreign Person
and would add several alternative certification procedures. A Foreign Person
who does not qualify for the "portfolio interest" exception would be subject to
United States withholding tax at a flat rate of 30%, or a lower applicable
treaty rate, on interest payments and payments, including proceeds from a sale,
exchange or retirement, attributable to OID on the notes.
Gain recognized by a Foreign Person upon the redemption, sale or exchange
of a note, including any gain representing accrued market discount, will not be
subject to United States tax unless the Foreign Person is an individual present
in the United States for 183 days or more during the taxable year in which the
note is redeemed, sold or exchanged, and certain other requirements are met, in
which case the Foreign Person will be subject to United States tax at a flat
rate of 30%, unless exempt by applicable treaty.
Federal Estate and Gift Tax
A note beneficially owned by an individual who at the time of death is not
a domiciliary of the United States will not be subject to United States federal
estate tax as a result of such individual's death, provided that such
individual does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of Tritel PCS entitled to vote
within the meaning of Section 871(h)(3) of the Code and provided that the
interest payments with respect to such note would not have been, if received at
the time of such individual's death, effectively connected with the conduct of
a United States trade or business by such individual.
Any individual will not be subject to United States federal gift tax on a
transfer of notes, unless such person is a domiciliary of the United States.
BACKUP WITHHOLDING
A Holder may be subject, under certain circumstances, to backup
withholding at a 31% rate with respect to payments received with respect to the
notes. This withholding applies if the Holder:
o fails to furnish his or her social security or other taxpayer
identification number,
o furnishes an incorrect taxpayer identification number,
o is notified by the Internal Revenue Service that he or she has failed
to report properly payments of interest and dividends and the Internal
Revenue Service has notified Tritel that he or she is subject to backup
withholding, or
o fails, under certain circumstances, to provide a certified statement,
signed under penalty of perjury, that the taxpayer identification number
provided is his or her correct number and that he or she is not subject
to backup withholding.
Any amount withheld from a payment to a Holder under the backup
withholding rules is allowable as a credit against such Holder's federal income
tax liability, provided that the required information is furnished to the
Internal Revenue Service. Certain Holders, including, among others,
corporations and foreign individuals who comply with certain certification
requirements described above under "Foreign Holders," are not subject to backup
withholding. Holders should consult their tax advisors as to their
qualification for exemption from backup withholding and the procedure for
obtaining such an exemption.
On October 6, 1997, the Treasury Department issued new regulations (the
"New Regulations") which make certain modifications to the withholding, backup
withholding and information reporting rules described above. The New
Regulations attempt to unify certification requirements and modify
147
<PAGE>
reliance standards. The New Regulations will generally be effective for
payments made after December 31, 2000, subject to certain transition rules.
Prospective investors are urged to consult their own tax advisors regarding the
New Regulations.
LIMITATION ON TRITEL PCS'S INTEREST DEDUCTIONS
The notes have a maturity date more than five years from the date of
issue, have a yield to maturity more than five percentage points higher than
the applicable Federal rate and will bear "significant OID." Thus, the notes
will be treated as "applicable high yield discount obligations" under the rules
of Sections 163(e) and 163(i) of the Code. Thus, Tritel PCS will not be able to
deduct any OID accruing with respect thereto until such interest is actually
paid and a portion of such OID will be disallowed altogether. To the extent
that the non-deductible portion of OID would have been treated as a dividend if
it had been distributed with respect to Tritel PCS's stock, it will be treated
as a dividend to corporate Holders of the notes for purposes of the rules
relating to the dividends received deduction. Except as described above,
treatment of the notes as applicable high yield discount obligations will not
affect the reporting of the OID as income by the Holders of the notes.
OTHER TAX CONSEQUENCES
In addition to the federal income tax considerations described above,
prospective purchasers of the notes should consider potential state, local,
income, franchise, personal property and other taxation in any state or
locality and the tax effect of ownership, sale, exchange, or retirement of the
notes in any state or locality. Prospective purchasers of the notes are advised
to consult their own tax advisors with respect to any state or local income,
franchise, personal property or other tax consequences arising out of their
ownership of the notes.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH PROSPECTIVE PURCHASER OF THE NOTES SHOULD CONSULT HIS OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO HIM OF THE NOTES, INCLUDING
THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR FOREIGN INCOME TAX LAWS
AND ANY RECENT OR PROSPECTIVE CHANGES IN APPLICABLE TAX LAWS.
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<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives registered notes for its own account
pursuant to the exchange offer, where its outstanding notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such registered notes. This prospectus, as it may be amended
or supplemented from time to time, may be used by a broker-dealer in connection
with resales of registered notes received in exchange for outstanding notes
where such outstanding notes were acquired as a result of market making or
other trading activities. Until , 1999 (90 days after the commencement of
the exchange offer), all dealers effecting transactions in the registered notes
may be required to deliver a prospectus.
Tritel PCS will not receive any proceeds from any sales of the registered
notes by participating broker-dealers. Registered notes received by
participating broker-dealers for their own account pursuant to the exchange
offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the registered notes or a combination of such methods of resale, at
market prices prevailing at the time of resale, at prices related to such
prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
participating broker-dealer that resells the registered notes, and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
for the exchange offer states that, by acknowledging that it will deliver, and
by delivering, a prospectus, a participating broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the expiration date, or until all
broker-dealers who exchange outstanding notes which were acquired as a result
of market-making activities for registered notes have sold all registered notes
held by them, we will promptly send additional copies of this prospectus and
any amendment or supplement to this prospectus to any broker-dealer that
requests such documents in the letter of transmittal. Tritel PCS has agreed to
pay all expenses incident to the exchange offer. Tritel PCS will indemnify the
holders of the registered notes, including any broker-dealers, against certain
liabilities, including liabilities under the Securities Act.
The registered notes will not be listed on any stock exchange. The notes
are designated for trading in The Portal Market.
LEGAL MATTERS
The validity of the registered notes will be passed upon for Tritel PCS by
Brown & Wood LLP, New York, New York. Certain other legal matters will be
passed upon for Tritel PCS and the guarantors of the notes by James H. Neeld,
IV, its general counsel, and by Tritel PCS's special FCC counsel, Lukas, Nace,
Gutierrez & Sachs, Washington, D.C.
EXPERTS
The consolidated financial statements of Tritel, Inc. and Predecessor
Companies as of December 31, 1997 and 1998, for each of the years in the
three-year period ended December 31, 1998 and for the period from July 27, 1995
(inception) to December 31, 1998, have been included herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.
149
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Independent Auditors' Report ........................................................ F-2
Consolidated Balance Sheets as of December 31, 1997 and 1998 and June 30, 1999
(unaudited) ........................................................................ F-3
Consolidated Statements of Operations for the years ended December 31, 1996, 1997 and
1998, the period from July 27, 1995 (inception) to December 31, 1998, the six month
periods ended June 30, 1998 and 1999 (unaudited) and the period from July 27, 1995
(inception) to June 30, 1999 (unaudited) ........................................... F-4
Consolidated Statements of Members' and Stockholders' Equity for the period from
July 27, 1995 (inception) to December 31, 1995, the years ended December 31, 1996,
1997 and 1998 and the six-month period ended June 30, 1999 (unaudited) ............. F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1997 and
1998, the period from July 27, 1995 (inception) to December 31, 1998, the six month
period ended June 30, 1999 (unaudited), the period from July 27, 1995 (inception) to
June 30, 1999 (unaudited) .......................................................... F-6
Notes to Consolidated Financial Statements .......................................... F-9
</TABLE>
In accordance with Securities and Exchange Commission Staff Accounting
Bulletin 53, the financial statements of Tritel, Inc. and Predecessor Company
are included herein. Tritel PCS, Inc. is a wholly-owned subsidiary of Tritel,
Inc. and Tritel, Inc. fully and unconditionally guarantees the Senior
Subordinated Discount Notes issued by Tritel PCS, Inc. Separate financial
statements of Tritel PCS, Inc. and Subsidiary Guarantors are not included.
However, condensed financial data for Tritel PCS, Inc. and Subsidiary
Guarantors is included in Note 17 to the financial statements. The Subsidiary
Guarantors are wholly-owned subsidiaries of Tritel, PCS, Inc. and their
guarantees are on a full, unconditional, joint and several basis with other
guarantor subsidiaries.
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Tritel, Inc.:
We have audited the accompanying consolidated balance sheets of Tritel, Inc.
and Predecessor Companies (development stage companies) (the Companies) as of
December 31, 1997 and 1998, and the related consolidated statements of
operations, members' and stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1998 and for the period from
July 27, 1995 (inception) to December 31, 1998. These consolidated financial
statements are the responsibility of the Companies' managements. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Tritel, Inc. and Predecessor Companies as of December 31, 1997 and 1998, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1998 and for the period from July 27,
1995 (inception) to December 31, 1998, in conformity with generally accepted
accounting principles.
Jackson, Mississippi KPMG Peat Marwick LLP
February 16, 1999
F-2
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1998 AND JUNE 30, 1999 (UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1997 1998 1999
ASSETS ----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets: ...................................................
Cash and cash equivalents ........................................ $ 1,763 846 390,305
Restricted cash .................................................. -- -- 2,796
Due from affiliates .............................................. 275 241 1,508
Prepaid expenses and other current assets ........................ 10 719 1,123
-------- --- -------
Total current assets ............................................ 2,048 1,806 395,732
Restricted cash ................................................... -- -- 5,161
Property and equipment, net ....................................... 13 13,816 60,686
FCC licensing costs ............................................... 99,425 71,466 158,893
Intangible assets, net of amortization of $1,753 in 1999 .......... -- -- 38,857
Deferred charges, net of amortization of $347 in 1997, $348 in 1998
and $775 in 1999 ................................................. 1,027 1,933 29,938
Note receivable ................................................... -- -- 7,550
Other assets ...................................................... -- -- 228
-------- ------ -------
Total assets .................................................... $102,513 89,021 697,045
======== ====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable .................................................... $ 5,000 22,405 --
Accounts payable, accrued expenses and interest .................. 3,425 10,506 7,345
-------- ------ -------
Total current liabilities ....................................... 8,425 32,911 7,345
-------- ------ -------
Non-current liabilities:
Long-term debt ................................................... 77,200 51,599 445,086
Note payable to related party .................................... 5,700 6,270 --
Accrued interest and dividends payable ........................... 2,426 224 4,347
Deferred credit -- vendor discount ............................... -- -- 15,000
Deferred income taxes ............................................ -- -- 28,064
-------- ------ -------
Total non-current liabilities ................................... 85,326 58,093 492,497
-------- ------ -------
Total liabilities ............................................... 93,751 91,004 499,842
-------- ------ -------
Series A 10% redeemable convertible preferred stock ............... -- -- 90,668
Adjustment to fair value .......................................... -- -- (21,559)
-------- ------ -------
Total Series A redeemable preferred stock ....................... -- -- 69,109
-------- ------ -------
Stockholders' equity:
Preferred stock, authorized 1,500,000 shares:
Series C, outstanding 184,233 shares at June 30, 1999 ........... -- -- 183,165
Subscription receivable for Series C preferred stock ............ -- -- (49,746)
Stock issuance costs ............................................ -- -- (8,507)
-------- ------ -------
Total Series C preferred stock ................................. -- -- 124,912
-------- ------ -------
Series D, outstanding 46,374 shares at June 30, 1999 ............ -- -- 46,374
Adjustment to fair value ........................................ -- -- (11,278)
-------- ------ -------
Total Series D preferred stock ................................. -- -- 35,096
-------- ------ -------
Net preferred stock ............................................ -- -- 160,008
-------- ------ -------
Common stock, 30 shares issued and outstanding at December 31,
1998 ............................................................. -- -- --
Common stock issued and outstanding at June 30, 1999 --
Class A Voting, 35,519 shares; Class C Non-Voting, 5,177 shares;
and Voting Preference, 9 shares ................................. -- -- --
Contributed capital -- Predecessor Companies ...................... 13,497 13,497 --
Deficit accumulated during the development stage .................. (4,735) (15,480) (31,914)
-------- ------- -------
Total stockholders' equity (deficit) ........................... 8,762 (1,983) 128,094
-------- ------- -------
Total liabilities and stockholders' equity ..................... $102,513 89,021 697,045
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998,
THE PERIOD FROM JULY 27, 1995 (INCEPTION) TO DECEMBER 31, 1998,
THE SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1999 (UNAUDITED)
AND THE PERIOD FROM JULY 27, 1995 (INCEPTION) TO JUNE 30, 1999 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-----------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Revenues ............................ $ -- -- --
-------- -- --
Operating expenses:
Plant expenses ..................... 4 104 1,939
General and administrative ......... 1,481 3,123 4,947
Sales and marketing ................ 5 28 452
Depreciation and amortization ...... 2 20 348
-------- ----- -----
1,492 3,275 7,686
-------- ----- -----
Operating loss ...................... (1,492) (3,275) (7,686)
Interest income ..................... 31 121 77
Financing cost ...................... -- -- --
Interest expense .................... -- -- (722)
-------- ------ ------
Loss before extraordinary item
and income taxes ................ (1,461) (3,154) (8,331)
Extraordinary item -
Loss on return of spectrum ......... -- -- (2,414)
-------- ------ ------
Loss before income taxes ......... (1,461) (3,154) (10,745)
Income tax benefit .................. -- -- --
-------- ------ -------
Net loss ......................... $ (1,461) (3,154) (10,745)
======== ====== =======
<CAPTION>
CUMULATIVE
AMOUNTS
SINCE SIX-MONTHS CUMULATIVE
INCEPTION ENDED AMOUNTS
AT JUNE 30, SINCE INCEPTION,
DECEMBER 31, ------------------------ AT JUNE 30,
1998 1998 1999 1999
-------------- ----------- ------------ -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues ............................ -- -- -- --
-- -- -- --
Operating expenses:
Plant expenses ..................... 2,047 111 3,946 5,993
General and administrative ......... 9,672 1,616 7,204 16,876
Sales and marketing ................ 485 20 2,724 3,209
Depreciation and amortization ...... 370 13 2,398 2,768
----- ----- ----- ------
12,574 1,760 16,272 28,846
------ ----- ------ ------
Operating loss ...................... (12,574) (1,760) (16,272) (28,846)
Interest income ..................... 230 27 5,332 5,562
Financing cost ...................... -- -- (2,230) (2,230)
Interest expense .................... (722) -- (5,104) (5,826)
------- ------ ------- -------
Loss before extraordinary item
and income taxes ................ (13,066) (1,733) (18,274) (31,340)
Extraordinary item -
Loss on return of spectrum ......... (2,414) -- -- (2,414)
------- ------ ------- -------
Loss before income taxes ......... (15,480) (1,733) (18,274) (33,754)
Income tax benefit .................. -- -- 6,036 6,036
------- ------ ------- -------
Net loss ......................... (15,480) (1,733) (12,238) (27,718)
======= ====== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED STATEMENTS OF MEMBERS' AND STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JULY 27, 1995 (INCEPTION) TO DECEMBER 31, 1995,
THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998 AND
THE SIX-MONTH PERIOD ENDED JUNE 30, 1999 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED PREFERRED
STOCK STOCK
PREFERRED ISSUANCE SUBSCRIPTION
STOCK COSTS RECEIVABLE
----------- ----------- --------------
<S> <C> <C> <C>
Balance at July 27, 1995 ................. $ -- -- --
Contributed capital, net of expenses of
$25 ..................................... -- -- --
Conversion of debt to members'
equity .................................. -- -- --
Net loss ................................. -- -- --
--------- -- --
Balance at December 31, 1995 ............. -- -- --
Contributed capital, net of expenses of
$40 ..................................... -- -- --
Conversion of debt to members'
equity .................................. -- -- --
Net loss ................................. -- -- --
--------- -- --
Balance at December 31, 1996 ............. -- -- --
Contributed capital, net of expenses of
$148..................................... -- -- --
Conversion of debt to members'
equity .................................. -- -- --
Net loss ................................. -- -- --
--------- -- --
Balance at December 31, 1997 ............. -- -- --
Net loss ................................. -- -- --
--------- -- --
Balance at December 31, 1998 ............. -- -- --
Unaudited:
Conversion of debt to members'
equity in Predecessor Company ......... -- -- --
Series C Preferred Stock issued to
Predecessor Company, including
distribution of assets and
liabilities ........................... 17,193 -- --
Series C Preferred Stock issued in
exchange for cash and receivable....... 163,370 -- (49,746)
Payment of preferred stock issuance
costs ................................. -- (8,507) --
Series C Preferred Stock issued to
Central Alabama in exchange for
net assets ............................ 2,602 -- --
Series D Preferred Stock issued to
AT&T Wireless in exchange for
licenses and other agreements ......... 46,374 -- --
Adjustment to fair value of Series D
Preferred Stock ....................... (11,278) -- --
Accrual of dividends on Series A
redeemable preferred stock ............. -- -- --
Accretion of discount on Series A
redeemable preferred stock ............ -- -- --
Net loss ................................ -- -- --
--------- ------ -------
Balance at June 30, 1999 ................ $ 218,261 (8,507) (49,746)
========= ====== =======
<CAPTION>
DEFICIT
ACCUMULATED MEMBERS'
DURING AND
COMMON CONTRIBUTED DEVELOPMENT STOCKHOLDERS'
STOCK CAPITAL STAGE EQUITY
-------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Balance at July 27, 1995 ................. -- -- -- --
Contributed capital, net of expenses of
$25 ..................................... -- 1,150 -- 1,150
Conversion of debt to members'
equity .................................. -- 489 -- 489
Net loss ................................. -- -- (120) (120)
-- ----- ---- -----
Balance at December 31, 1995 ............. -- 1,639 (120) 1,519
Contributed capital, net of expenses of
$40 ..................................... -- 3,910 -- 3,910
Conversion of debt to members'
equity .................................. -- 1,706 -- 1,706
Net loss ................................. -- -- (1,461) (1,461)
-- ----- ------ ------
Balance at December 31, 1996 ............. -- 7,255 (1,581) 5,674
Contributed capital, net of expenses of
$148..................................... -- 5,437 -- 5,437
Conversion of debt to members'
equity .................................. -- 805 -- 805
Net loss ................................. -- -- (3,154) (3,154)
-- ----- ------ ------
Balance at December 31, 1997 ............. -- 13,497 (4,735) 8,762
Net loss ................................. -- -- (10,745) (10,745)
-- ------ ------- -------
Balance at December 31, 1998 ............. -- 13,497 (15,480) (1,983)
Unaudited:
Conversion of debt to members'
equity in Predecessor Company ......... -- 8,976 -- 8,976
Series C Preferred Stock issued to
Predecessor Company, including
distribution of assets and
liabilities ........................... -- (22,473) 576 (4,704)
Series C Preferred Stock issued in
exchange for cash and receivable....... -- -- -- 113,624
Payment of preferred stock issuance
costs ................................. -- -- -- (8,507)
Series C Preferred Stock issued to
Central Alabama in exchange for
net assets ............................ -- -- -- 2,602
Series D Preferred Stock issued to
AT&T Wireless in exchange for
licenses and other agreements ......... -- -- -- 46,374
Adjustment to fair value of Series D
Preferred Stock ....................... -- -- -- (11,278)
Accrual of dividends on Series A
redeemable preferred stock ............. -- -- (4,347) (4,347)
Accretion of discount on Series A
redeemable preferred stock ............ -- -- (425) (425)
Net loss ................................ -- -- (12,238) (12,238)
-- ------- ------- -------
Balance at June 30, 1999 ................ -- -- (31,914) 128,094
== ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998,
THE PERIOD FROM JULY 27, 1995 (INCEPTION) TO DECEMBER 31, 1998,
THE SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1999 (UNAUDITED)
AND THE PERIOD FROM JULY 27, 1995 (INCEPTION) TO JUNE 30, 1999 (UANUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
----------------------------------------
1996 1997 1998
------------ -------------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss ............................... $ (1,461) (3,154) (10,745)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Loss on return of spectrum .......... -- -- 2,414
Depreciation and amortization ....... 2 20 348
Deferred income taxes ............... -- -- --
Changes in operating assets and
liabilities:
Due from affiliates ................ -- (275) 34
Accrued interest receivable ........ 1 (10) (14)
Other receivables .................. -- -- (168)
Prepaid expenses ................... -- -- (185)
Accounts payable and
accrued expenses ................. 340 45 (180)
Other liabilities .................. -- -- --
Due to affiliates .................. 426 (529) --
-------- ------ -------
Net cash used in operating
activities ...................... (692) (3,903) (8,496)
-------- ------ -------
Cash flows from investing activities:
Purchase of property and equipment (11) (6) (5,970)
Cash paid for organization costs ....... (34) (66) --
Deposit for FCC auctions ............... (5,000) -- --
Payment for FCC licenses ............... (3,549) (3,935) --
Refund of FCC deposit .................. 950 1,376 --
Purchase of trademark .................. -- -- --
Advance under note receivable .......... -- -- --
Capitalized interest on debt used to
obtain licenses ...................... (1,325) (415) (2,905)
Capitalized interest on network
construction ......................... -- -- --
Capitalized direct costs incurred to
obtain licenses ...................... (72) (6) --
-------- --------- -------
Net cash used in investing
activities ......................... (9,041) (3,052) (8,875)
-------- -------- -------
(continued)
<CAPTION>
CUMULATIVE CUMULATIVE
AMOUNTS SIX-MONTHS AMOUNTS
SINCE ENDED SINCE
INCEPTION, JUNE 30, INCEPTION,
AT DECEMBER 31, ------------------------- AT JUNE 30,
1998 1998 1999 1999
----------------- ------------- ----------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss ............................... (15,480) (1,733) (12,238) (27,718)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Loss on return of spectrum .......... 2,414 -- -- 2,414
Depreciation and amortization ....... 370 13 2,398 2,768
Deferred income taxes ............... -- -- (6,036) (6,036)
Changes in operating assets and
liabilities:
Due from affiliates ................ (241) 21 (190) (431)
Accrued interest receivable ........ (24) (7) (336) (360)
Other receivables .................. (168) -- (833) (1,001)
Prepaid expenses ................... (185) -- (589) (774)
Accounts payable and
accrued expenses ................. 271 654 3,171 3,442
Other liabilities .................. -- -- 237 237
Due to affiliates .................. -- -- -- --
------- -------- ------ -------
Net cash used in operating
activities ...................... (13,043) (1,052) (14,416) (27,459)
------- -------- ------ -------
Cash flows from investing activities:
Purchase of property and equipment (5,986) (11) (44,687) (50,673)
Cash paid for organization costs ....... (103) -- -- (103)
Deposit for FCC auctions ............... (9,500) -- -- (9,500)
Payment for FCC licenses ............... (7,485) -- -- (7,485)
Refund of FCC deposit .................. 2,326 -- -- 2,326
Purchase of trademark .................. -- -- (325) (325)
Advance under note receivable .......... -- -- (7,550) (7,550)
Capitalized interest on debt used to
obtain licenses ...................... (4,644) -- (1,625) (6,269)
Capitalized interest on network
construction ......................... -- -- (4,271) (4,271)
Capitalized direct costs incurred to
obtain licenses ...................... (99) -- -- (99)
------- -------- ------- -------
Net cash used in investing
activities ......................... (25,491) (11) (58,458) (83,949)
------- -------- ------- -------
(continued)
</TABLE>
F-6
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998,
THE PERIOD FROM JULY 27, 1995 (INCEPTION) TO DECEMBER 31, 1998,
THE SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1999 (UNAUDITED)
AND THE PERIOD FROM JULY 27, 1995 (INCEPTION) TO JUNE 30, 1999 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
----------------------------------
1996 1997 1998
--------- ----------- ------------
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from notes payable to
related parties ........................ 300 5,700 --
Proceeds from notes payable .............. 5,900 5,000 38,705
Proceeds from long-term debt ............. -- -- --
Proceeds from senior subordinated
discount notes ......................... -- -- --
Repayments of notes payable to
related parties ........................ (100) (300) --
Repayments of notes payable .............. (625) (5,900) (21,300)
Payment of preferred stock issuance
costs .................................. -- -- --
Payment of debt issuance costs and
other deferred charges ................. (20) (1,251) (951)
Proceeds from vendor discount ............ -- -- --
Issuance of preferred stock .............. -- -- --
Capital contributions, net of related
expenses ............................... 3,910 5,437 --
----- ------ -------
Net cash provided by (used in)
financing activities ................. 9,365 8,686 16,454
----- ------ -------
Net increase (decrease) in restricted
cash, cash and cash equivalents .......... (368) 1,731 (917)
Restricted cash and cash equivalents at
beginning of period ...................... 400 32 1,763
----- ------ -------
Restricted cash and cash equivalents at
end of period ............................ $ 32 1,763 846
======= ====== =======
(continued)
<CAPTION>
CUMULATIVE CUMULATIVE
AMOUNTS SIX-MONTHS AMOUNTS
SINCE ENDED SINCE
INCEPTION, JUNE 30, INCEPTION,
AT DECEMBER 31, ------------------------ AT JUNE 30,
1998 1998 1999 1999
----------------- ----------- ------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from financing activities:
Proceeds from notes payable to
related parties ........................ 9,100 -- -- 9,100
Proceeds from notes payable .............. 50,230 500 -- 50,230
Proceeds from long-term debt ............. -- -- 200,000 200,000
Proceeds from senior subordinated
discount notes ......................... -- -- 200,240 200,240
Repayments of notes payable to
related parties ........................ (400) -- -- (400)
Repayments of notes payable .............. (27,825) -- (22,100) (49,925)
Payment of preferred stock issuance
costs .................................. -- -- (8,507) (8,507)
Payment of debt issuance costs and
other deferred charges ................. (2,222) (641) (27,966) (30,188)
Proceeds from vendor discount ............ -- -- 15,000 15,000
Issuance of preferred stock .............. -- -- 113,623 113,623
Capital contributions, net of related
expenses ............................... 10,497 -- -- 10,497
------- ---- ------- -------
Net cash provided by (used in)
financing activities ................. 39,380 (141) 470,290 509,670
------- ---- ------- -------
Net increase (decrease) in restricted
cash, cash and cash equivalents .......... 846 (1,204) 397,416 398,262
Restricted cash and cash equivalents at
beginning of period ...................... -- 1,763 846 --
------- ------ ------- -------
Restricted cash and cash equivalents at
end of period ............................ 846 559 398,262 398,262
======= ====== ======= =======
(continued)
</TABLE>
F-7
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998,
THE PERIOD FROM JULY 27, 1995 (INCEPTION) TO DECEMBER 31, 1998,
THE SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1999 (UNAUDITED)
AND THE PERIOD FROM JULY 27, 1995 (INCEPTION) TO JUNE 30, 1999 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
CUMULATIVE CUMULATIVE
AMOUNTS SIX-MONTHS AMOUNTS
YEARS ENDED SINCE ENDED SINCE
DECEMBER 31, INCEPTION, JUNE 30, INCEPTION,
---------------------------- AT DECEMBER 31, -------------------- AT JUNE 30,
1996 1997 1998 1998 1998 1999 1999
---------- -------- -------- ----------------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Supplementary Information:
Cash paid for interest, net of
amounts capitalized.................. $ -- -- -- -- -- 5,104 5,104
======= ====== == ====== == ===== ======
Significant non-cash investing and
financing activities:
Long-term debt incurred to obtain
FCC licenses, net of discount ...... $53,259 23,116 -- 76,375 -- -- 76,375
======= ====== == ====== == == ======
Capitalized interest and discount
on debt used to obtain FCC
licenses ........................... $ 2,033 6,799 7,614 16,466 4,621 455 16,921
======= ====== ===== ====== ===== === ======
Deposits applied to purchase of
FCC licenses ....................... $ 4,500 5,000 -- 9,500 -- -- 9,500
======= ====== ===== ====== ===== === ======
Conversions of debt to equity ....... $ 1,706 805 -- 3,000 -- 8,976 11,976
======= ====== ===== ====== ===== ===== ======
Capital expenditures included in
accounts payable ................... $ -- -- 5,762 5,762 -- (5,762) --
======= ====== ===== ====== ===== ====== ======
Election of FCC disaggregation
option for return of spectrum:
Reduction in FCC licensing
costs ............................. $ -- -- 35,442 35,442 -- -- 35,442
======= ====== ====== ====== ===== ====== ======
Reduction in accrued interest
payable and long-term debt ........ $ -- -- 33,028 33,028 -- -- 33,028
======= ====== ====== ====== ===== ====== ======
Preferred stock issued
in exchange for assets
and liabilities .................... $ -- -- -- -- -- 123,575 123,575
======= ====== ====== ====== ===== ======= =======
Preferred stock issued
in exchange for stock
subscription receivable ............ $ -- -- -- -- -- 49,746 49,746
======= ====== ====== ====== ===== ======= =======
Distribution of assets
and liabilities to
predecessor company ................ $ -- -- -- -- (4,704) (4,704)
======= ====== ====== ====== ===== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements
F-8
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) ORGANIZATION AND PRINCIPLES OF CONSOLIDATION
Airwave Communications, LLC ("Airwave Communications") (formerly Mercury
PCS, LLC) and Digital PCS, LLC ("Digital PCS") (formerly Mercury PCS II,
LLC) were formed on July 27, 1995 and July 29, 1996, respectively, for
the principal purpose of acquiring for development Personal
Communications Services ("PCS") licenses in markets in the south-central
United States. Airwave Communications and Digital PCS are referred to
collectively as "the Predecessor Company" or "the Predecessor
Companies."
Tritel, Inc. ("Tritel") was formed on April 23, 1998 by the controlling
shareholders of Airwave Communications and Digital PCS for the purpose
of developing Personal Communications Services ("PCS") markets in the
south-central United States. Tritel's 1998 activities consisted of $1.5
million in capital expenditures and $32,000 in net loss. On January 7,
1999, the Predecessor Companies transferred substantially all of their
assets and liabilities at historical cost to Tritel in exchange for
18,262 shares of Series C Preferred Stock in Tritel. Tritel is
controlled by the controlling shareholders of the Predecessor Companies.
Tritel will continue the activities of the Predecessor Companies and,
for accounting purposes, this transaction was accounted for as a
reorganization of the Predecessor Company into a C corporation and a
name change to Tritel. Tritel and the Predecessor Company, together with
Tritel's subsidiaries, are referred to collectively as "the Company."
The Company has not commenced commercial PCS operations and is still in
the development stage. The Company continues to devote most of its
efforts to activities such as strategic and financial planning, raising
capital and constructing wireless telecommunications network facilities.
The consolidated accounts of the Company include its subsidiaries,
Tritel PCS, Inc.; Tritel A/B Holding Corp.; Tritel C/F Holding Corp.;
Tritel Communications, Inc.; Tritel Finance, Inc.; and others. All
significant intercompany accounts or balances have been eliminated in
consolidation.
Also on January 7, 1999, Tritel entered into the following transactions:
o AT&T Wireless PCS, Inc. and TWR Cellular, Inc. (collectively, "AT&T
Wireless") contributed PCS licenses to Tritel and entered into
agreements with Tritel for the use of the AT&T logo and other service
marks, and for roaming arrangements. In exchange for the contributed
assets, AT&T Wireless received 90,668 shares of Series A Preferred
Stock and 46,374 shares of Series D Preferred Stock in Tritel with a
stated value of $137,042,000. This transaction was accounted for as
an asset acquisition by Tritel and is further described in Note 19.
o Tritel acquired all of the assets and liabilities of Central Alabama
Partnership, LP 132 in exchange for 2,602 shares of Series C
Preferred Stock in Tritel with a stated value of $2,602,000. Assets,
principally PCS licenses, totaling $9,352,000 were acquired and
liabilities of $6,750,000 were assumed. This transaction was
accounted for as a purchase business combination.
o Tritel issued 14,130 shares of Series C Preferred Stock with a stated
value of $14,130,000 to the Predecessor Companies in exchange for
cash. Additionally, Tritel issued 149,239 shares of Series C
Preferred Stock with a stated value of $149,239,000 to certain
private investors in exchange for cash and stock subscriptions
receivable. These transactions are further described in Note 18.
F-9
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
o Tritel entered into a $550,000,000 bank financing facility as further
described in Note 20 for financing of the development and
construction of its wireless network.
The January 7, 1999 stock transactions described above are summarized as
follows:
<TABLE>
<CAPTION>
STATED CARRYING
SHARES VALUE AMOUNT
---------- ------------ ---------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Series A Preferred issued to AT&T Wireless ......................... 90,668 $ 90,668 $ 68,684
Series D Preferred issued to AT&T Wireless ......................... 46,374 46,374 35,096
------ -------- --------
Total to AT&T Wireless in exchange for contributed assets .......... 137,042 137,042 103,780
------- -------- --------
Series C Preferred issued to Airwave Communications ................ 14,427 14,427 10,973
Series C Preferred issued to Digital PCS ........................... 3,835 3,835 6,220
------- -------- --------
Total to Predecessor Companies in exchange for contributed assets... 18,262 18,262 17,193
------- -------- --------
Series C Preferred issued to Central Alabama Partnership ........... 2,602 2,602 2,602
Series C Preferred issued to Predecessor Companies for cash ........ 14,130 14,130 14,130
Series C Preferred issued to certain private investors ............. 149,239 149,239 149,239
------- -------- --------
Total .............................................................. 321,275 $321,275 $286,944
======= ======== ========
</TABLE>
(B) CASH AND CASH EQUIVALENTS
For purposes of financial statement classification, the Company
considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.
(C) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, less accumulated
depreciation. When assets are placed in service, depreciation is
calculated using the straight-line method over the estimated useful
lives of the respective assets, generally seven years for wireless
network assets and three years for information systems assets. Leasehold
improvements are amortized over the lease term. The Company capitalizes
interest on certain of its wireless network construction activities.
Routine expenditures for repairs and maintenance are charged to expense
as incurred.
(D) FCC LICENSING COSTS
Licensing costs are accounted for in accordance with industry standards
and include the discounted present value of license fees as described in
Note 5 and the direct costs incurred to obtain the licenses. For certain
licenses, licensing costs also include capitalized interest on the
related debt during the period of time necessary to build out the
wireless network.
The FCC grants licenses for terms of up to ten years, and generally
grants renewals if the licensee has complied with its license
obligations. The Company believes it will be able to
F-10
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
secure renewal of its PCS licenses. Amortization of such license costs,
which will begin for each geographic service area upon commencement of
service, will be over a period of 40 years.
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" in 1996. Adoption of the statement
did not have a material effect on the Company's financial statements at
the date of adoption. In accordance with the requirements of SFAS 121,
the Company evaluates the propriety of the carrying amounts of its FCC
licensing costs whenever current events or circumstances warrant such
review to determine whether such assets are impaired. There have been no
impairments through June 30, 1999.
(E) DEFERRED CHARGES
Debt issuance costs are deferred and amortized over the term of the
related debt. Direct costs of two purchase business combinations which
closed in January 1999 were deferred at December 31, 1998 and included
as part of the total costs of the acquisitions. Direct costs incurred
for an equity offering which closed in January 1999 were deferred and
will be offset against the proceeds of the offering. Direct costs
incurred for a proposed offering of senior discount notes were deferred
and will be amortized over the term of the related debt.
(F) INCOME TAXES
Because the Predecessor Company was a nontaxable entity, operating
results prior to January 7, 1999 were included in the income tax returns
of its members. Therefore, the accompanying consolidated financial
statements do not include any provision for income tax benefit for the
years ended December 31, 1996, 1997 and 1998 or any deferred income
taxes on any temporary differences in asset bases as of December 31,
1997 and 1998.
As of January 7, 1999, the Company accounts for income taxes in
accordance with Statement of Financial Accounting Standards No. 109,
which requires the use of the asset and liability method in accounting
for deferred taxes.
(G) USE OF ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. A significant estimate impacting the
preparation of the consolidated financial statements is the estimated
useful life of FCC licensing costs. Actual results could differ from
those estimates.
(H) RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 131, Disclosures about Segments of
an Enterprise and Related Information ("FAS 131"). FAS 131 requires that
a public business enterprise report financial and descriptive
information about its reportable operating segments. The statement
defines operating segments as components of enterprises about which
separate financial information is available that is evaluated regularly
by the chief operating decision maker in deciding how to allocate
resources and in assessing performance. The Company adopted SFAS 131 and
determined that there are no separate reportable segments, as defined by
the standard.
F-11
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("FAS 133"). FAS 133 establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial position
and measure those instruments at fair value. FAS 133 will significantly
change the accounting treatment of derivative instruments and, depending
upon the underlying risk management strategy, these accounting changes
could affect future earnings, assets, liabilities, and shareholders'
equity. The Company is closely monitoring the deliberations of the
FASB's derivative implementation task force. With the issuance of
Statement of Financial Accounting Standards No. 137, Accounting for
Derivative Instruments and Hedging Activities -- Deferral of the
Effective Date of FASB Statement No. 133, which delayed the effective
date of FAS 133, the Company will be required to adopt FAS 133 on
January 1, 2001. Presently, the Company has not yet quantified the
impact that the adoption will have on its consolidated financial
statements.
(I) INTERIM FINANCIAL STATEMENTS
The unaudited condensed consolidated financial statements of the Company
as of June 30, 1999 and for the six-month periods ended June 30, 1998
and 1999 have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements presented in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. In the
opinion of management, the condensed consolidated interim financial
statements include all adjustments, consisting of normal recurring
items, necessary to fairly present the results of operations, financial
position and cash flows for the periods presented. The results of
operations for an interim period are not necessarily indicative of the
results of operations that may be expected for the complete fiscal year.
(2) LIQUIDITY
As reflected in the accompanying consolidated financial statements, the
Company is a development stage company because it has not yet commenced
commercial PCS operations. The Company is expected to incur significant
expenses in advance of generating revenues and to realize significant
operating losses in its initial stages of operations. The buildout of the
Company's PCS network and the marketing and distribution of the Company's
PCS products and services will require substantial equity and/or debt and
there can be no assurance that the Company will be able to raise sufficient
capital for such purposes.
The planned high level of indebtedness could have a material adverse effect
on the Company, including the effect of such indebtedness on: (i) the
Company's ability to fund internally, or obtain additional debt or equity
financing in the future for capital expenditures, working capital, debt
service requirements, operating losses, acquisitions and other purposes;
(ii) the Company's ability to dedicate funds for the wireless network
buildout, operations or other purposes, due to the need to dedicate a
substantial portion of operating cash flow to fund interest payments; (iii)
the Company's flexibility in planning for, or reacting to, changes in its
business and market conditions; (iv) the Company's ability to compete with
less highly leveraged competitors; and (v) the Company's financial
vulnerability in the event of a downturn in its business or the economy.
F-12
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
As mentioned above, the Company entered into certain transactions in
January 1999 to fund a significant portion of the planned operating losses
and network buildout costs. Management of the Company believes that those
transactions will provide adequate funding for the planned expenditures in
the initial operations and buildout of the network. During May 1999, the
Company obtained high yield debt in amounts necessary to cover additional
planned cash needs. There can be no assurance that such funds will be
adequate to complete the buildout of the Company's PCS network. Under those
circumstances, the Company could be required to change its plans relating
to the buildout of the network.
(3) RESTRICTED CASH
On March 31, 1999, the Company entered into a deposit agreement with
Toronto Dominion (Texas), Inc., as administrative agent, on behalf of the
depository bank and the banks and other financial institutions who are a
party to the bank facility described in Note 20. Under the terms of the
agreement, the Company has placed on deposit $7,957,000 at June 30, 1999
with the depository bank, which will be used for the payment of interest
and/or commitment fees due under the bank facility.
(4) PROPERTY AND EQUIPMENT
Major categories of property and equipment are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- JUNE 30,
1997 1998 1999
--------- ---------- ------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Furniture and fixtures ....................... $17 1,779 3,695
Network construction and development ......... -- 11,416 45,117
Leasehold improvements ....................... -- 728 3,676
---- ------ ------
17 13,923 52,488
Less accumulated depreciation ................ (4) (107) (782)
Deposits on equipment ........................ -- -- 8,980
----- ------ ------
$13 13,816 60,686
===== ====== ======
</TABLE>
(5) FCC LICENSING COSTS
The Predecessor Company bid successfully for C-Block licenses with an
aggregate license fee of $70,989,000 (such amount is net of a 25% small
business discount) and such licenses were granted to the Predecessor
Company during 1996. The Predecessor Company also bid successfully for D-,
E- and F-Block licenses with an aggregate license fee of $35,727,000 (such
amount is net of a 25% small business discount) and such licenses were
granted to the Predecessor Company during 1997.
The FCC provided below market rate financing for a portion of the bid price
of the C- and F-Block licenses. Based on the Company's estimates of
borrowing costs for similar debt, the Company discounted the face amount of
the debt to yield a market rate and such discount was applied to reduce the
carrying amount of the licenses and the debt. Accordingly, the licenses
acquired during the years ended December 31, 1996 and 1997 were recorded at
$59,799,000 and $30,676,000, respectively.
F-13
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
During the years ended December 31, 1996, 1997 and 1998, the Company
capitalized interest of $3,358,000, $7,214,000 and $10,519,000,
respectively, relating to FCC debt. During the years ended December 31,
1996 and 1997, the Company incurred direct costs of $72,000 and $6,000,
respectively, to obtain the licenses. The Company did not incur any costs
to obtain licenses during 1998.
During July 1998, the Company took advantage of a reconsideration order by
the FCC allowing companies holding C-Block PCS licenses several options to
restructure their license holdings and associated obligations. The Company
elected the disaggregation option and returned one-half of the broadcast
spectrum originally acquired for each of the C-Block license areas. As a
result, the Company reduced the carrying amount of the related licenses by
one-half, or $35,442,000, and reduced the discounted debt and accrued
interest due to the FCC by $33,028,000. As a result of the disaggregation
election, the Company recognized an extraordinary loss of approximately
$2,414,000.
As mentioned above and in Note 19, AT&T Wireless contributed certain A- and
B-Block PCS licenses to the Company on January 7, 1999 as part of a
purchase business combination. The Company recorded such licenses at their
aggregate appraised value of $97,880,000 plus $635,000 related allocated
costs of the acquisition. Also, in the acquisition of Central Alabama
Partnership, LP 132, the Company acquired licenses with an estimated fair
value of $9,284,000, exclusive of $6,072,000 of debt to the FCC.
Additionally, in connection with the transactions which the Company closed
on January 7, 1999, licenses with a carrying amount, including capitalized
interest and costs, totaling $21,874,000 were retained by the Predecessor
Company (see Note 14). The assets and liabilities retained by the
Predecessor Company have been reflected in these financial statements as a
distribution to the Predecessor Company.
Each of the Company's licenses is subject to an FCC requirement that the
Company construct wireless network facilities offering coverage to certain
percentages of the population within certain time periods following the
grant of such licenses. Failure to comply with these requirements could
result in the revocation of the related licenses or the imposition of fines
on the Company by the FCC.
(6) NOTE RECEIVABLE
On March 1, 1999, the Company entered into agreements with AT&T Wireless,
Lafayette Communications Company L.L.C. ("Lafayette") and ABC Wireless
L.L.C. ("ABC") whereby the Company, AT&T Wireless and Lafayette would lend
$29,500,000 to ABC to fund its participation in the re-auction of FCC
licenses that were returned to the FCC by various companies under the July
1998 reconsideration order. The Company's portion of this loan was
$7,500,000 and was recorded as a note receivable at June 30, 1999.
Subsequent to closing of the agreements, ABC was the successful bidder for
licenses covering the Tritel markets with an aggregate purchase price of
$7,789,000. The Company has agreed to purchase these licenses for
$7,789,000 and expects to consummate that purchase during 1999. Under the
agreement, it will apply its $7,500,000 loan, together with additional cash
of $289,000, to pay the purchase price. If the licenses are not purchased
by March 1, 2004, the note will mature on that date. The note accrues
interest at 16% per year. There are no required payments of principal or
interest on the note until maturity. The note is secured by all assets of
ABC, including, if permitted by the FCC, the FCC licenses awarded in the
re-auction, and ranks pari passu with the notes to AT&T Wireless and
Lafayette.
F-14
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
(7) NOTES PAYABLE
At December 31, 1997, the Company had $5,000,000 payable under a
$15,000,000 loan agreement with a supplier. During 1998, this loan
agreement was increased to $28,500,000 and was replaced by a loan agreement
with a different supplier. The outstanding loan balance at December 31,
1998 was $22,100,000. The loan agreement was secured by a pledge of the
membership equity interests of certain members of Predecessor Company
management and the interest rate was 9%. Amounts outstanding under this
loan agreement were repaid in January 1999 when certain private investors
invested cash in the Company in exchange for convertible preferred stock.
At December 31, 1998, the Predecessor Company has available a $1,000,000
line of credit with a commercial bank, expiring July 27, 1999 bearing
interest at the bank's prime rate of interest plus 1% at December 31, 1998.
The amount outstanding on the line of credit was $305,000 at December 31,
1998. This line of credit relates specifically to licenses that were
retained by the Predecessor Company (see Note 14) and therefore the line
was retained by the Predecessor Company.
(8) FCC DEBT
The FCC provided below market rate financing for 90% of the bid price of
the C-Block PCS licenses and 80% of the bid price of the F-Block PCS
licenses. Such FCC debt is secured by all of the Company's rights and
interest in the licenses financed.
The debt incurred in September 1996 by the Company for the purchase of the
C-Block PCS licenses totaled $63,890,000 (undiscounted). The debt bears
interest at 7%; however, based on the Company's estimate of borrowing costs
for similar debt, a rate of 10% was used to determine the debt's discounted
present value of $52,700,000. As discussed in Note 5, the Company elected
to disaggregate and return one-half of the broadcast spectrum of the
C-block licenses. The FCC permitted such spectrum to be returned effective
as of the original purchase. As a result, the Company reduced the
discounted debt due to the FCC for such licenses by $27,410,000.
F-Block licenses were granted in August and November of 1997. The debt
incurred by the Company for the purchase of such licenses totaled
$15,492,000 (undiscounted) in August 1997 and $12,675,000 (undiscounted) in
November 1997. The debt bears interest at 6.125%, however; based on the
Company's estimate of borrowing costs for similar debt, a rate of 10% was
used to determine the debt's discounted present value of $12,700,000 and
$10,416,000 respectively.
In the acquisition of Central Alabama Partnership, LP 132 on January 7,
1999, the Company assumed debt of $6,072,000 payable to the FCC for the
licenses acquired.
Additionally, as described in Notes 5 and 14, certain licenses and the
related FCC debt for those licenses were retained by the Predecessor
Company. The discounted carrying amount of the debt for the licenses
retained by the Predecessor Company was $15,889,000.
As of December 31, 1998 and June 30, 1999, the following is a schedule of
future minimum principal payments of the Company's FCC debt due within five
years and thereafter:
F-15
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
<TABLE>
<CAPTION>
DECEMBER 31, 1998 JUNE 30, 1999
------------------------ -----------------------
(DOLLARS IN THOUSANDS) (UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
December 31, 1999 ............ $ -- June 30, 2000 .......... $ 443
December 31, 2000 ............ 2,494 June 30, 2001 .......... 974
December 31, 2001 ............ 2,975 June 30, 2002 .......... 1,035
December 31, 2002 ............ 3,162 June 30, 2003 .......... 5,296
December 31, 2003 ............ 10,535 June 30, 2004 .......... 10,010
Thereafter ................... 40,946 Thereafter ............. 29,717
-------- --------
60,112 47,475
Less unamortized discount (8,513) (6,045)
-------- --------
Total ....................... $ 51,599 $ 41,430
======== ========
</TABLE>
All the scheduled interest payments on the FCC debt were suspended for the
period from January 1997 through March 1998 by the FCC. Payments of such
suspended interest resumed in July 1998 with the total suspended interest
due in eight quarterly payments.
Interest accruing after March 1998 (the date interest resumed after the
interest suspension) on all FCC debt is required to be paid in quarterly
payments with the first payment due in July 1998. As of June 30, 1999, the
Company's suspended interest will be due in quarterly payments of $135,000
through April 30, 2000. The Company is required to make quarterly principal
and interest payments on the FCC debt as follows:
<TABLE>
<CAPTION>
QUARTERLY
PAYMENTS PAYMENTS PAYMENT
BEGIN END AMOUNT
-------------- --------------- -----------------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
C Block licenses ............................. January 2003 October 2006 $2,306
F Block licenses issued in August 1997 ....... January 2000 October 2007 340
F Block licenses issued in November 1997 ..... April 2000 December 2007 36
Licenses acquired with Central Alabama
acquisition ................................ January 2003 October 2006 438
</TABLE>
(9) NOTE PAYABLE TO RELATED PARTIES
In March 1997, the Predecessor Company entered into a loan agreement for a
$5,700,000 long-term note payable to Southern Farm Bureau Life Insurance
Company ("SFBLIC"). SFBLIC is a member of Mercury Southern, LLC, which was
a member of the Predecessor Company, and subsequently became an investor in
the Company. This note was secured by a pledge of the membership equity
interests of certain members of Predecessor Company management and interest
accrued annually at 10% on the anniversary date of the note. At December
31, 1998, the balance of the note was $6,270,000 as a result of the
capitalization of the first year's interest. The indebtedness under the
note was convertible into equity at the face amount at any time at the
option of SFBLIC, subject to FCC equity ownership limitations applicable to
entrepreneurial block license holders. The Predecessor Company and SFBLIC
subsequently negotiated a revised arrangement under which the amount due of
$6,270,000 plus accrued interest of $476,000 was not
F-16
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
paid but instead was converted into $8,976,000 of members' equity in the
Predecessor Company on January 7, 1999. The $2,230,000 preferred return to
the investor was accounted for as a financing cost during the period ended
June 30, 1999. The interest accrued at the contractual rate was capitalized
during the accrual period.
Subsequent to the conversion of debt into members' equity and as described
in Note 1(a), the Predecessor Company transferred certain assets and
liabilities to Tritel in exchange for preferred stock in Tritel.
(10) STOCKHOLDERS' EQUITY
The Predecessor Company was organized as a limited liability corporation
(LLC) and as such had no outstanding stock. Owners (members) actually held
a membership interest in the LLC. As a result, the investment of those
members in the Predecessor Company is reflected as contributed capital --
Predecessor Company in the accompanying balance sheet.
On January 7, 1999, the Company issued stock to the Predecessor Company as
well as other parties as described herein.
PREFERRED STOCK
Following is a summary of the preferred stock of the Company:
1,500,000 shares of authorized preferred stock, par value $.01 per share
(the "Preferred Stock"), 1,100,000 of which have been designated as
follows:
o 200,000 shares designated "Series A Convertible Preferred Stock" (the
"Series A Preferred Stock"), 10% redeemable convertible, $1,000
stated and liquidation value (See Note 22);
o 300,000 shares designated "Series B Convertible Preferred Stock" (the
"Series B Preferred Stock"), 10% cumulative, $1,000 stated and
liquidation value (See Note 22);
o 500,000 shares designated "Series C Convertible Preferred Stock" (the
"Series C Preferred Stock"), 6.5% cumulative convertible, $1,000
stated and liquidation value; and
o 100,000 shares designated "Series D Convertible Preferred Stock" (the
"Series D Preferred Stock"), 6.5% cumulative convertible, $1,000
stated and liquidation value.
Series C Preferred Stock
The Series C Preferred Stock (1) ranks junior to the Series A Preferred
Stock and the Series B Preferred Stock with respect to dividend rights and
rights on liquidation, dissolution or winding up, (2) ranks junior to the
Series D Preferred Stock with respect to rights on a statutory liquidation,
(3) ranks on a parity basis with the Series D Preferred Stock with respect
to rights on liquidation, dissolution or winding up, except a statutory
liquidation, (4) ranks on a parity basis with Series D Preferred Stock and
Common Stock with respect to dividend rights, and (5) ranks senior to the
Common Stock and any other series or class of the Company's common or
preferred stock, now or hereafter authorized, other than Series A Preferred
Stock, Series B Preferred Stock or Series D Preferred Stock, with respect
to rights on liquidation, dissolution and winding up.
The holders of Series C Preferred Stock are entitled to dividends in cash
or property when, as and if declared by the Board of Directors of Tritel.
Upon any liquidation, dissolution or winding up of Tritel, the holders of
Series C Preferred Stock are entitled to receive, after payment to any
stock ranking senior to the Series C Preferred Stock, a liquidation
preference equal to (1) the quotient of the aggregate paid-in-capital of
all Series C Preferred Stock held by a stockholder
F-17
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
divided by the total number of shares of Series C Preferred Stock held by
that stockholder plus (2) declared but unpaid dividends on the Series C
Preferred Stock, if any, plus (3) an amount equal to interest on the
invested amount at the rate of 61/2% per annum, compounded quarterly. The
holders of the Series C Preferred Stock have the right at any time to
convert each share of Series C Preferred Stock, and upon an initial public
offering meeting certain conditions (the "IPO Date"), each share of Series
C Preferred Stock will automatically convert, into shares of Class A Common
Stock of and, under certain circumstances, Class D Common Stock. The number
of shares the holder will receive upon conversion will be determined by
dividing the aforementioned liquidation preference by the conversion price
in effect at the time of conversion. The conversion price currently in
effect is $1,000. On all matters to be submitted to the stockholders of
Tritel, the holders of Series C Preferred Stock shall have the right to
vote on an as-converted basis as a single class with the holders of the
Common Stock. Additionally, the affirmative vote of the holders of a
majority of the Series C Preferred Stock is required to approve certain
matters. The Series C Preferred Stock is not redeemable.
The Company issued 18,262 shares of Series C Preferred Stock with a stated
value of $18,262,000 to the Predecessor Company on January 7, 1999 in
exchange for certain of its assets, liabilities and continuing operations.
The stock was recorded at the historical cost of the assets and liabilities
acquired from the Predecessor Company since, for accounting purposes, this
transaction was accounted for as a reorganization of the Predecessor
Company into a C corporation and a name change to Tritel.
The Company also issued 14,130 shares of Series C Preferred Stock with a
stated value of $14,130,000 to the Predecessor Company on January 7, 1999
in exchange for cash of $14,130,000. In the same transaction, the Company
also issued 149,239 shares of Series C Preferred Stock with a stated value
of $149,239,000 to investors on January 7, 1999 in exchange for cash and
subscriptions receivable. The stock was recorded at its stated value and
the costs associated with this transaction have been offset against equity.
Additionally, the Company issued 2,602 shares of Series C Preferred Stock
with a stated value of $2,602,000 to Central Alabama Partnership, LP 132 on
January 7, 1999 in exchange for its net assets. The stock was recorded at
its stated value and the assets and liabilities were recorded at estimated
fair values.
Series D Preferred Stock
The Series D Preferred Stock (1) ranks junior to the Series A Preferred
Stock and the Series B Preferred Stock with respect to dividend rights and
rights on liquidation, dissolution or winding up, (2) ranks senior to the
Series C Preferred Stock with respect to rights on a statutory liquidation,
(3) ranks on a parity basis with Series C Preferred Stock with respect to
rights on liquidation, dissolution and winding up, except a statutory
liquidation, (4) ranks on a parity basis with Series C Preferred Stock and
Common Stock with respect to dividend rights, and (5) ranks senior to the
Common Stock and any other series or class of Tritel's common or preferred
stock, now or hereafter authorized, other than Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock, with respect to
rights on liquidation, dissolution and winding up. Subject to the preceding
sentence , the Series D Preferred Stock is identical in all respects to the
Series C Preferred Stock, except:
o the Series D Preferred Stock is convertible into an equivalent number
of shares of Series C Preferred Stock at any time;
F-18
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
o the liquidation preference for Series D Preferred Stock equals $1,000
per share plus declared but unpaid dividends plus an amount equal to
interest on $1,000 at the rate of 61/2% per annum, compounded quarterly,
from the date of issuance of such share to and including the date of the
payment:
o the holders of Series D Preferred Stock do not have any voting rights,
other than those required by law or in certain circumstances; and
o shares of Series D Preferred Stock are not automatically convertible
upon an initial public offering of the Company's stock, but will be
renamed as "Senior Common Stock" on such date.
The Company issued 46,374 shares of Series D Preferred Stock with a stated
value of $46,374,000 to AT&T Wireless on January 7, 1999. The stock was
recorded at its stated value and a discount was recorded for the excess of
the stated value of the stock over the fair value of assets, net of
deferred income taxes, received from AT&T Wireless.
COMMON STOCK
Following is a summary of the common stock of the Company:
3,040,009 shares of common stock, par value $.01 per share (the "Common
Stock"), which have been designated as follows:
o 1,500,000 shares designated "Class A Voting Common Stock" (the "Class
A Common Stock"),
o 1,500,000 shares designated "Class B Non-Voting Common Stock" (the
"Class B Common Stock"),
o 10,000 shares designated "Class C Common Stock" (the "Class C Common
Stock"),
o 30,000 shares designated "Class D Common Stock" (the "Class D Common
Stock") and
o 9 shares designated "Voting Preference Common Stock" (the "Voting
Preference Common Stock")
The Common Stock of Tritel is divided into two groups, the "Non-Tracked
Common Stock," which is comprised of the Class A Common Stock, the Class B
Common Stock and the Voting Preference Common Stock, and the "Tracked
Common Stock," which is comprised of the Class C Common Stock and Class D
Common Stock. Each share of Common Stock is identical, and entitles the
holder thereof to the same rights, powers and privileges of stockholders
under Delaware law, except:
o dividends on the Tracked Common Stock track the assets and liabilities
of Tritel C/F Holding Corp., a subsidiary of Tritel;
o rights on liquidation, dissolution or winding up of Tritel of the
Tracked Common Stock track the assets and liabilities of Tritel C/F
Holding Corp.;
o the Class A Common Stock, together with the Series C Preferred Stock,
has 4,990,000 votes, the Class B Common Stock has no votes, the Class C
Common Stock has no votes, the Class D Common Stock has no votes and the
Voting Preference Common Stock has 5,010,000 votes, except that in any
matter requiring a separate class vote of any class of Common Stock or a
separate vote of two or more classes of Common Stock voting together as
a single class, for the purposes of such a class vote, each share of
Common Stock of such classes will be entitled to one vote per share;
o in the event the FCC indicates that the Class A Common Stock and the
Voting Preference Stock (1) may be voted as a single class on all
matters, (2) may be treated as a single class
F-19
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
for all quorum requirements and (3) may have one vote per share, then,
absent action by the Board of Directors and upon an affirmative vote of
662/3% or more of the Class A Common Stock, Tritel must seek consent
from the FCC to permit the Class A Common Stock and the Voting
Preference Common Stock to vote and act as a single class in the manner
described above;
o the holders of shares of Class B Common Stock shall be entitled to vote
as a separate class on any amendment, repeal or modification of any
provision of the restated certificate of Incorporation that adversely
affects the powers, preferences or special rights of the holders of the
Class B Common Stock;
o each share of Class B Common Stock may be converted, at any time at the
holder's option, into one share of Class A Common Stock;
o each share of Class A Common Stock may be converted, at any time at the
holder's option, into one share of Class B Common Stock; and
o in the event the FCC indicates that it will permit the conversion of
Tracked Common Stock into either Class A Common Stock or Class B Common
Stock, then, absent action by the Board of Directors and upon an
affirmative vote of 66 2/3% or more of the Class A Common Stock, such
conversion will be allowed by Tritel at the option of the holders of the
Tracked Common Stock.
On January 7, 1999, the Company issued 35,519 shares of Class A Common
Stock, 5,177 shares of Class C Common Stock and 9 shares of Voting
Preference Common Stock to certain members of management of the Company.
Management has determined the stock to have a nominal value based on a
recent appraisal of the Company's assets; therefore, no amounts have been
assigned to common stock in the accompanying balance sheet and no amounts
have been amortized into compensation expense for such shares.
(11) INCOME TAXES
On January 7, 1999 the Company recorded a deferred tax liability of
$34,100,000 primarily related to the difference in asset bases on the
assets acquired from AT&T Wireless.
Because the Predecessor Company was a nontaxable entity, the results
presented below relate solely to the six-month period ended June 30, 1999.
Components of income tax benefit for the six-month period ended June 30,
1999 are as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999
------------------------------------
CURRENT DEFERRED TOTAL
--------- ---------- -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Federal ............. $ -- (5,234) (5,234)
State ............... -- (802) (802)
-------- ------ ------
$ -- (6,036) (6,036)
======== ====== ======
</TABLE>
F-20
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
Actual tax expense differs from the "expected" tax benefit using the
federal corporate rate of 35% as follows:
<TABLE>
<CAPTION>
JUNE 30,
1999
-----------------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C>
Computed "expected" tax benefit ................................ $ (6,396)
Reduction (increase) resulting from:
State income taxes, net of federal income tax benefit ......... (594)
Nontaxable loss of Predecessor Company ........................ 954
---------
$ (6,036)
=========
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax liability at June 30, 1999 are as follows:
<TABLE>
<CAPTION>
JUNE 30,
1999
-----------------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C>
Deferred tax assets:
Net operating loss carryforward .................................. $ 4,138
Tax basis of capitalized start-up costs in excess of book basis .. 12,206
Discount accretion in excess of tax basis ........................ 1,306
--------
Total gross deferred tax assets ................................ 17,650
--------
Deferred tax liabilities:
Intangible assets book basis in excess of tax basis .............. 15,122
FCC licenses book basis in excess of tax basis ................... 20,212
Capitalized interest book basis in excess of tax basis ........... 7,694
Discount accretion book basis in excess of tax basis ............. 2,309
Other ............................................................ 377
--------
Total gross deferred tax liabilities ........................... 45,714
--------
Net deferred tax liability ..................................... $ 28,064
========
</TABLE>
At June 30, 1999, the Company has net operating loss carryforwards for
federal income tax purposes of $10,277,000 which are available to offset
future federal taxable income, if any, through 2019.
There was no valuation allowance for the gross deferred tax asset at June
30, 1999, principally due to the existence of a deferred tax liability
which was recorded upon the closing of the AT&T Wireless transaction on
January 7, 1999. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the period in
which those temporary differences become deductible. Management considered
the scheduled reversal of deferred tax liabilities in making this
assessment. Based upon anticipated future taxable income over the periods
in which the deferred tax assets are realizable, management believes it is
more likely than not the Company will realize the benefits of these
deferred tax assets.
F-21
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
(12) FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments is made pursuant to Financial Accounting Standards No. 107,
"Disclosures About Fair Value of Financial Instruments." Fair value
estimates are subject to inherent limitations. Estimates of fair value are
made at a specific point in time, based on relevant market information and
information about the financial instrument. The estimated fair values of
financial instruments are not necessarily indicative of amounts the Company
might realize in actual market transactions. Estimates of fair value are
subjective in nature and involve uncertainties and matters of significant
judgment and therefore cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
Note receivable: The carrying amount of note receivable is believed to
approximate fair value due to the imminent conversion of the principal
amount as described in Note 6.
Notes payable: The carrying amount of notes payable is believed to
approximate fair value due to the current nature of the liabilities.
Long-term debt: The carrying amount of long-term debt is believed to
approximate fair value because such debt was discounted to reflect a
market interest rate at inception and such discount is believed to be
approximate for valuation of this debt.
(13) RELATED PARTY TRANSACTIONS
During 1995, the Predecessor Company had a notes payable agreement with
Mercury Southern, LLC, a member of the Predecessor Company, whereby Mercury
Southern, LLC loaned the Predecessor Company $3,000,000. During 1995, 1996
and 1997, the notes payable converted to members' equity at the face amount
of the principal. As of December 31, 1997, this note was fully converted to
members' equity.
During 1996, the Predecessor Company had an agreement with Mercury
Southern, LLC under which it paid a management fee to Mercury Southern,
LLC. Management fees were $40,000 per month prior to the PCS auctions and,
thereafter, were three cents per month for each person living in a market
(Pops) for which the Company had purchased a PCS license. The population in
each market was determined in accordance with ordinary estimates and
methods used in the telecommunication industry. Total expenses under this
management agreement for 1996 were $730,000. This management agreement
terminated at the end of 1996.
During 1997 and 1998, the Company reimbursed MSM, Inc. ("MSM"), a company
owned by members of the Company's management, for actual expenses to cover
the salaries and employee benefits of MSM employees who were providing
services almost exclusively to the Company. The Company reimbursed MSM
$1,312,000 and $3,709,000 for such expenses in 1997 and 1998, respectively.
On January 7, 1999, after consummation of the transactions described
herein, the employees of MSM who were providing services to the Company
became employees of the Company.
Further, MSM sometimes paid invoices on behalf of the Company for expenses
directly attributable to the Company and was reimbursed from the Company
for such expenditures. For expenses shared by both MSM and the Company, MSM
paid the expenses and allocated a portion to the Company. The Company
reimbursed MSM $144,000 in 1996, $248,000 in 1997 and $325,000 in 1998 for
such costs incurred on the Company's behalf.
F-22
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
During April 1997, the Company advanced $249,000 on behalf of MSM to repay
a loan MSM had incurred from a third party. The balance due from MSM on
this advance was $247,000 at December 31, 1997 and 1998 and at June 30,
1999.
Also, Mercury Wireless Management, Inc. ("MWM"), a company owned by members
of the Company's management, reimburses the Company for expenses relating
to services performed by the Company's employees on behalf of MWM. Such
amounts totaled $17,000 for 1997 and $11,000 for 1998 and were included in
amounts due from affiliates at December 31, 1997 and 1998. The Company has
also entered into various leases to co-locate its equipment on certain
towers managed by MWM.
In 1999, Tritel entered into a management agreement with Tritel Management,
LLC, a company owned by members of the Company's management, under which
Tritel Management, LLC is responsible for the design and construction of
the network and operation of the Company, subject to the Company's control.
The Company will pay Tritel Management, LLC a fee of $10,000 annually for
five years under the terms of the agreement.
On January 7, 1999, the Company entered into a secured promissory note
agreement under which it agreed to lend up to $2,500,000 to the Predecessor
Company. Interest on advances under the loan agreement is 10% per year. The
interest will compound annually and interest and principal are due at
maturity of the note. The note is secured by the Predecessor Company's
ownership interest in the Company. Any proceeds from the sales of licenses
by the Predecessor Company, net of the repayment of any FCC debt, are
required to be applied to the note balance. If the note has not been repaid
within five years, it will be repaid through a reduction of the Predecessor
Company's interest in the Company based on a valuation of the Company's
stock at that time.
Additional related party transactions are described in note 9.
(14) ASSETS AND LIABILITIES RETAINED BY PREDECESSOR COMPANY
Certain assets and liabilities, with carrying amounts of $22,070,000 and
$17,367,000, respectively, principally for certain FCC licenses and related
FCC debt, which were retained by the Predecessor Company have been
reflected in these financial statements as a distribution to the
Predecessor Company. The Predecessor Company is holding such assets and
liabilities but is not currently developing the PCS markets. Of the assets
retained by the Predecessor Company, Tritel was granted an option to
acquire certain PCS licenses for Series C Preferred Stock with a face value
of approximately $3,000,000 and assumption of the related FCC debt of
approximately $12,000,000. During May 1999, Tritel notified the Predecessor
Company of its intent to exercise this option. Such licenses will be
transferred to Tritel after approval by the FCC. Tritel has committed to
grant an option to AT&T Wireless or its designee for the purchase of such
licenses.
(15) LEASES
The Company leases office space, equipment, and co-location tower space
under noncancelable operating leases. Expense under operating leases was
$3,000 and $334,000 for 1997 and 1998, respectively and was $14,000 and
$1,519,000 for the six month periods ended June 30, 1998 and 1999.
Management expects that in the normal course of business these leases will
be renewed or replaced by similar leases. The leases extend through 2008.
F-23
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
Future minimum lease payments under these leases at December 31, 1998 are
as follows:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
1999 .................... $1,134
2000 .................... 864
2001 .................... 742
2002 .................... 708
2003 .................... 582
Thereafter .............. 135
------
$4,165
======
</TABLE>
(16) COMMITMENTS AND CONTINGENCIES
In December 1998, the Company entered into an acquisition agreement with an
equipment vendor whereby the Company agreed to purchase a minimum of
$300,000,000 of equipment, software and certain engineering services over a
five-year period in connection with the construction of its wireless
telecommunications network. The Company agreed that the equipment vendor
would be the exclusive provider of such equipment during the term of the
agreement. As part of this agreement, the vendor advanced $15,000,000 to
the Company at the closing of the transactions described herein. The
$15,000,000 deferred credit will be accounted for as a reduction in the
cost of the equipment as the equipment is purchased.
During November 1996, High Plains Wireless, L.P. filed a protest with the
FCC against the Predecessor Company alleging, among other things, that
through the use of trailing numbers (i.e., the last three digits) in its
bids, the Predecessor Company was signaling market preferences and other
information to other bidders in violation of FCC rules. While the FCC was
investigating this specific claim, it issued all but nine of the D-, E- and
F-Block licenses awarded to the Predecessor Company in the January 1997
auctions. Subsequently, the FCC issued the remaining nine licenses to the
Predecessor Company in November 1997 and assessed the Predecessor Company a
$650,000 fine for apparent violations of FCC bidding rules in connection
with the Predecessor Company's bidding practices. In August 1998, the FCC
rescinded the $650,000 fine, finding that its rules were not sufficiently
clear as to be enforceable against the Company.
The United States Department of Justice ("DOJ") conducted an investigation
of the Predecessor Company and numerous other parties relating to this same
matter. While a suit was filed against the Predecessor Company in November
1998 by the DOJ, the suit was simultaneously settled pursuant to a consent
decree that imposed no penalties and made no finding of wrongdoing.
The Predecessor Company and certain members of the Company's management are
defendants in a lawsuit in which the plaintiffs allege that a member of the
Company's management knew confidential information about one of the
plaintiffs and that the Predecessor Company conspired to use the
information in the D-, E- and F-Block auctions in violation of pre-existing
contractual arrangements between the management member and one of the
plaintiffs. The suit seeks actual and punitive damages and seeks to convey
the F-Block licenses for Lubbock, Texas to the plaintiffs. Management
believes this case is without merit and intends to vigorously defend the
case.
Additionally, the Predecessor Company, certain members of the Company's
management and several companies related through common ownership are
defendants in a lawsuit in which the plaintiff has claimed wrongful
termination of employment, breach of contract, usurpation of corporate
opportunities, breach of fiduciary duties and other matters. The suit seeks
unspecified
F-24
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
actual and punitive damages plus attorneys' fees and court costs. Further,
the plaintiff seeks 5% of the portion of stock (equity) and FCC licenses of
the Predecessor Company owned by certain members of the Company's
management. Management is vigorously defending all claims in the suit and
believes that the Company's business prospects are not materially affected
by this matter and that adverse resolution of this matter would not have a
material adverse effect on the Company.
(17) SENIOR SUBORDINATED DISCOUNT NOTES
On May 11, 1999, Tritel PCS, Inc. ("Tritel PCS"), a wholly-owned subsidiary
of the Company, issued unsecured senior subordinated discount notes with a
principal amount at maturity of $372,000,000. Such notes were issued at a
discount from their principal amount at maturity for proceeds of $200.2
million. No interest will be paid or accrued on the notes prior to May 15,
2004. Thereafter, Tritel PCS will be required to pay interest semiannually
at 12 3/4% per annum beginning on November 15, 2004 until maturity of the
notes on May 15, 2009.
The notes are unconditionally guaranteed on a joint and several basis by
the Company and by Tritel Communications, Inc. and Tritel Finance, Inc.,
both of which are wholly-owned subsidiaries of Tritel PCS. The notes are
subordinated in right of payment to amounts outstanding under the Company's
$550 million senior bank facility ("Bank Facility") and to any future
subordinated indebtedness of Tritel PCS or the guarantors.
Tritel PCS entered into a registration rights agreement with the initial
purchasers of the notes whereby Tritel PCS agreed to file a registration
statement with the SEC to register the notes within 60 days after the issue
date of the notes.
The indenture governing the notes limit, among other things, the Company's
ability to incur additional indebtedness, pay dividends, sell or exchange
assets, repurchase its stock, or make investments.
The following condensed consolidating financial statements as of and for
the six-month period ended June 30, 1999 are presented for Tritel, Tritel
PCS, those subsidiaries of Tritel PCS who serve as guarantors and those
subsidiaries who do not serve as guarantors of the senior subordinated
discount notes.
F-25
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
TRITEL GUARANTOR
TRITEL, INC. PCS, INC. SUBSIDIARIES
-------------- ----------- --------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents ..................... $ 0 388,526 4,575
Other current assets .......................... 1,324 21 1,286
Intercompany receivables ...................... 695 75,071 5,401
--------- ------- -----
Total current assets ......................... 2,019 463,618 11,262
Restricted cash ................................ 0 5,161 0
Property and equipment, net .................... 0 0 60,686
Licenses and other intangibles ................. 38,857 0 0
Deferred charges ............................... 0 29,938 0
Notes receivable ............................... 0 7,500 50
Investment in subsidiaries ..................... 175,655 92,369 0
Other long-term assets ......................... 0 228 0
--------- ------- ------
Total assets ................................. $ 216,531 598,814 71,998
========= ======= ======
Current liabilities:
Accounts payable, accrued expenses and
other current liabilities .................... $ 0 1,103 5,183
Intercompany payables ......................... 823 3,390 75,071
--------- ------- ------
Total current liabilities .................... 823 4,493 80,254
Non-current liabilities:
Long-term debt ................................ 0 403,656 0
Accrued interest and dividends payable ........ 4,347 0 0
Deferred credit ............................... 0 15,000 0
Deferred income taxes ......................... 14,158 10 (5,504)
--------- ------- ------
Total liabilities ............................ 19,328 423,159 74,750
--------- ------- ------
Series A redeemable convertible preferred
stock ......................................... 90,668 0 0
Adjustment to fair value ....................... (21,559) 0 0
--------- ------- ------
69,109 0 0
--------- ------- ------
Stockholders' equity ........................... 128,094 175,655 (2,752)
--------- ------- ------
Total liabilities and equity ................. $ 216,531 598,814 71,998
========= ======= ======
<CAPTION>
NON-GUARANTOR
SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-------------- -------------- -------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents ..................... 0 0 393,101
Other current assets .......................... 0 0 2,631
Intercompany receivables ...................... 0 (81,167) 0
- ------- -------
Total current assets ......................... 0 (81,167) 395,732
Restricted cash ................................ 0 0 5,161
Property and equipment, net .................... 0 0 60,686
Licenses and other intangibles ................. 158,893 0 197,750
Deferred charges ............................... 0 0 29,938
Notes receivable ............................... 0 0 7,550
Investment in subsidiaries ..................... 0 (268,024) 0
Other long-term assets ......................... 0 0 228
------- -------- -------
Total assets ................................. 158,893 (349,191) 697,045
======= ======== =======
Current liabilities:
Accounts payable, accrued expenses and
other current liabilities .................... 1,059 0 7,345
Intercompany payables ......................... 1,883 (81,167) 0
------- -------- -------
Total current liabilities .................... 2,942 (81,167) 7,345
Non-current liabilities:
Long-term debt ................................ 41,430 0 445,086
Accrued interest and dividends payable ........ 0 0 4,347
Deferred credit ............................... 0 0 15,000
Deferred income taxes ......................... 19,400 0 28,064
------- -------- -------
Total liabilities ............................ 63,772 (81,167) 499,842
------- -------- -------
Series A redeemable convertible preferred
stock ......................................... 0 0 90,668
Adjustment to fair value ....................... 0 0 (21,559)
------- -------- -------
0 0 69,109
------- -------- -------
Stockholders' equity ........................... 95,121 (268,024) 128,094
------- -------- -------
Total liabilities and equity ................. 158,893 (349,191) 697,045
======= ======== =======
</TABLE>
F-26
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX-MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
TRITEL GUARANTOR
TRITEL, INC. PCS, INC. SUBSIDIARIES
-------------- ----------- --------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Revenues ................................... $ 0 0 0
-------- - -
Operating expenses:
Plant expenses ............................ 0 0 3,946
General and administrative ................ 2 44 7,156
Sales and marketing ....................... 0 0 2,724
Depreciation and amortization ............. 1,753 0 645
-------- -- -----
1,755 44 14,471
-------- -- ------
Operating loss ............................. (1,755) (44) (14,471)
Interest income ............................ 77 5,174 81
Financing cost ............................. 0 0 (2,230)
Interest expense ........................... 0 (5,104) 0
-------- ----- -------
Income (loss) before income taxes ......... (1,678) 26 (16,620)
Income tax benefit (expenses) .............. 542 (10) 5,504
-------- ------ -------
Net income (loss) .......................... $ (1,136) 16 (11,116)
======== ====== =======
<CAPTION>
NON-GUARANTOR
SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-------------- -------------- -------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Revenues ................................... 0 0 0
- ---- -
Operating expenses:
Plant expenses ............................ 0 0 3,946
General and administrative ................ 2 0 7,204
Sales and marketing ....................... 0 0 2,724
Depreciation and amortization ............. 0 0 2,398
- ---- -----
2 0 16,272
- ---- ------
Operating loss ............................. (2) 0 (16,272)
Interest income ............................ 0 0 5,332
Financing cost ............................. 0 0 (2,230)
Interest expense ........................... 0 0 (5,104)
--- ---- -------
Income (loss) before income taxes ......... (2) 0 (18,274)
Income tax benefit (expenses) .............. 0 0 6,036
--- ---- -------
Net income (loss) .......................... (2) 0 (12,238)
==== ==== =======
</TABLE>
F-27
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX-MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
TRITEL GUARANTOR
TRITEL, INC. PCS, INC. SUBSIDIARIES
-------------- ----------- --------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Net cash provided by (used in) operating
activities ........................................ $ (94) 880 (14,946)
---------- ----- -------
Cash flows from investing activities:
Capital expenditures .............................. 0 0 (44,687)
Purchase of a trademark ........................... (325) 0 0
Advance under notes receivable .................... 0 (7,500) (50)
Investment in subsidiaries ........................ (69,386) 69,386 0
Capitalized interest on debt used to obtain
licenses ......................................... 0 0 0
Capitalized interest on network construction....... 0 0 (4,271)
---------- ------ -------
Net cash provided by (used in) investing
activities ........................................ (69,711) 61,886 (49,008)
---------- ------ -------
Cash flows from financing activities:
Proceeds from long term debt ...................... 0 200,000 0
Proceeds from senior subordinated debt ............ 0 200,240 0
Repayments of notes payable ....................... (22,100) 0 0
Payment of debt issuance costs & other
deferred charges ................................. (22,198) (14,275) 0
Intercompany receivable/payable ................... 480 (70,044) 67,683
Proceeds from vendor discount ..................... 0 15,000 0
Issuance of preferred stock ....................... 113,623 0 0
---------- ------- -------
Net cash provided by financing activities .......... 69,805 330,921 67,683
---------- ------- -------
Net increase (decrease) in restricted cash, cash
and cash equivalents .............................. 0 393,687 3,729
Restricted cash, cash and cash equivalents at
beginning of period ............................... 0 0 846
---------- ------- -------
Restricted cash, cash and cash equivalents at
end of period ..................................... $ 0 393,687 4,575
========== ======= =======
<CAPTION>
NON-GUARANTOR
SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-------------- -------------- -------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Net cash provided by (used in) operating
activities ........................................ (256) 0 (14,406)
---- ----- ------
Cash flows from investing activities:
Capital expenditures .............................. 0 0 (44,687)
Purchase of a trademark ........................... 0 0 (325)
Advance under notes receivable .................... 0 0 (7,550)
Investment in subsidiaries ........................ 0 0 0
Capitalized interest on debt used to obtain
licenses ......................................... (1,625) 0 (1,625)
Capitalized interest on network construction....... 0 0 (4,271)
------ ----- -------
Net cash provided by (used in) investing
activities ........................................ (1,625) 0 (58,458)
------ ----- -------
Cash flows from financing activities:
Proceeds from long term debt ...................... 0 0 200,000
Proceeds from senior subordinated debt ............ 0 0 200,240
Repayments of notes payable ....................... 0 0 (22,100)
Payment of debt issuance costs & other
deferred charges ................................. 0 0 (36,473)
Intercompany receivable/payable ................... 1,881 0 0
Proceeds from vendor discount ..................... 0 0 15,000
Issuance of preferred stock ....................... 0 0 113,623
------ ----- -------
Net cash provided by financing activities .......... 1,881 0 470,290
------ ----- -------
Net increase (decrease) in restricted cash, cash
and cash equivalents .............................. 0 0 397,416
Restricted cash, cash and cash equivalents at
beginning of period ............................... 0 0 846
------ ----- -------
Restricted cash, cash and cash equivalents at
end of period ..................................... 0 0 398,262
====== ===== =======
</TABLE>
As of December 31, 1998, Tritel PCS held assets totaling $1.5 million and
the Predecessor Companies held assets totaling $87.5 million. Consolidating
schedules for those entities for 1998 and prior periods would provide no
meaningful data since the assets of the Predecessor Companies and Tritel,
Inc. have been distributed among the subsidiaries of Tritel, Inc. during
1999 and their ownership in prior periods, as well as the corporate
structure, does not correspond with the current circumstances.
(18) CASH EQUITY INVESTORS
On May 20, 1998, the Company, the Predecessor Company, AT&T Wireless,
certain institutional cash equity investors (the "Cash Equity Investors")
and certain members of management entered into the Securities Purchase
Agreement, which provided for the formation of the Tritel-AT&T Wireless
joint venture and related equity investments. On January 7, 1999, the
transactions contemplated by the Securities Purchase Agreement were closed
and the parties entered into numerous agreements as described throughout
these notes. Pursuant to these agreements, on January 7, 1999, the
Predecessor Company invested an additional $14,130,000 in Series C
Preferred Stock of Tritel, and the Cash Equity Investors purchased an
aggregate of $149,239,000
F-28
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
of Series C Preferred Stock of Tritel. Of the total Series C Preferred
Stock issued to the Predecessor Company and the Cash Equity Investors,
$113,623,000 was funded on January 7, 1999 and the remaining $49,746,000 is
due to be funded, under the Cash Equity Investors' irrevocable and
unconditional commitments, on September 30, 1999.
(19) TRANSACTION WITH AT&T WIRELESS
On May 20, 1998, the Predecessor Company and Tritel entered into a
Securities Purchase Agreement with AT&T Wireless and the other stockholders
of Tritel, whereby the Company agreed to construct a PCS network and
provide wireless services using the AT&T brand name in the south-central
United States.
On January 7, 1999, the parties closed the transactions contemplated in the
Securities Purchase Agreement. Under these agreements, Tritel and AT&T
Wireless and the other stockholders of Tritel consented that one or more of
Tritel's subsidiaries enter into certain agreements or conduct certain
operations on the condition that such subsidiaries at all times be direct
or indirect wholly-owned subsidiaries of Tritel. Tritel agreed that it
would cause such subsidiaries to perform the obligations and conduct such
operations required to be performed or conducted under those agreements.
At the closing, Tritel issued preferred stock to AT&T Wireless in exchange
for 20 MHz A- and B-Block PCS licenses which were assigned to the Company,
and for certain other agreements covering the Company's markets. The
estimated fair value of the FCC licenses was $97,880,000 with an estimated
useful life of 40 years.
The following table summarizes the transaction with AT&T Wireless:
<TABLE>
<S> <C>
Assets acquired from AT&T Wireless, at fair value:
PCS Licenses ......................................................... $ 97,880,000
License Agreement .................................................... 31,000,000
Roaming Agreement .................................................... 10,000,000
-------------
Gross Assets Acquired .............................................. 138,880,000
Deferred income tax liability assumed relating to above assets ........ (35,100,000)
-------------
Net Assets Acquired ................................................ $ 103,780,000
-------------
Series A Preferred stock issued to AT&T Wireless ...................... $ 68,684,000
Series D Preferred stock issued to AT&T Wireless ...................... 35,096,000
-------------
$ 103,780,000
=============
</TABLE>
The Series A and Series D Preferred Stock were recorded at a discount from
their stated value for the excess of the stated value of the stock over the
fair value of the net assets acquired. The Series A Preferred Stock issued
by the Company is further described in Note 22 and the Series D Preferred
Stock is further described in Note 10.
In connection with the closing of the AT&T Wireless transaction, the
Company entered into certain agreements, including the following:
(A) LICENSE AGREEMENT
Pursuant to a Network Membership License Agreement, dated January 7,
1999 (the "License Agreement"), between AT&T Corp. and the Company, AT&T
Wireless granted to the
F-29
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
Company a royalty-free, nontransferable, non-exclusive,
nonsublicensable, limited right, and license to use certain licensed
marks solely in connection with certain licensed activities. The
licensed marks include the logo containing AT&T and the 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 as defined in the License Agreement, of Company
communications services as defined in the License Agreement on
frequencies licensed to the Company for Commercial Mobile Radio Services
("CMRS") provided in accordance with the License 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.
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 Bank Facility (see Note 20)
and after the expiration of any applicable grace and cure periods under
the Bank Facility, such lenders may enforce the Company's rights under
the License Agreement and assign the License Agreement to any person
with AT&T Wireless's consent.
The term of the License Agreement is for five years and renews for an
additional five-year period if each party gives the other notice to
renew the Agreement. The License Agreement may be terminated by AT&T
Wireless 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 Wireless's quality
standards or if a change in control of the Company occurs. After the
initial five-year term, AT&T Wireless may also terminate the License
Agreement upon the occurrence of certain transactions described in the
Stockholders' Agreement.
The License Agreement, along with the exclusivity provisions of the
Stockholders' Agreement and the Resale Agreement, have an estimated fair
value of $31,000,000 and will be amortized on a straight-line basis over
the ten-year term of the agreement.
(B) ROAMING AGREEMENT
Pursuant to the Intercarrier Roamer Service Agreement, dated as of
January 7, 1999 (the "Roaming Agreement"), between AT&T Wireless, the
Company, and their affiliates, each party agrees to provide (each in its
capacity as serving provider, the "Serving Carrier") 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
F-30
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
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 Serving Carrier's service charges
for use per minute or partial minute for the first three years will be
at a fixed rate, and thereafter may be adjusted to a lower rate as the
parties may negotiate from time to time. Each Serving Carrier's toll
charges per minute of use for the first three years will be at a fixed
rate, and thereafter such other rates as the parties negotiate from time
to time.
The Roaming Agreement has a term of 20 years, unless terminated earlier
by a party due to the other party's uncured breach of any term of the
Roaming Agreement.
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 estimated fair value of the Roaming Agreement is $10,000,000, which
will be amortized on a straight-line basis over the 20-year term of the
agreement.
(C) STOCKHOLDERS' AGREEMENT
The Stockholders' Agreement expires on January 7, 2010. Certain
provisions expire upon an initial public offering.
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 and frequencies
licensed by the FCC ("Company Communications Services"), except AT&T
Wireless 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 in certain instances.
Additionally, with respect to the markets listed on the Roaming
Agreement, the Company and AT&T Wireless agree 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 Wireless may terminate its exclusivity
provisions.
Disqualifying Transactions
In the event of a merger, asset sale or consolidation, as defined,
involving AT&T Wireless and another person that derives annual revenues
in excess of $5,000,000,000, derives less than one third of its
aggregate revenues from wireless telecommunications, and owns FCC
licenses to offer mobile wireless telecommunications services to more
than 25% of the population within the Company's territory, AT&T Wireless
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.
F-31
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
Resale Agreement
Pursuant to the Stockholders' Agreement, the Company is required to
enter into a Resale Agreement at the request of AT&T Wireless. Under
this agreement, AT&T Wireless 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 Wireless.
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 Wireless may terminate the Resale Agreement
at any time for any reason on 90 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 Wireless 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 Wireless 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.
(20) BANK FACILITY
Subsequent to December 31, 1998, the Company entered into a loan agreement
(the "Bank Facility"), which provides for (i) a $100,000,000 senior
secured term loan (the "Term Loan A"), (ii) a $200,000,000 senior secured
term loan (the "Term Loan B") and (iii) a $250,000,000 senior secured
reducing revolving credit facility (the "Revolver"). Tritel PCS Inc.,
Toronto Dominion (Texas), Inc., as Administrative Agent, and certain banks
and other financial institutions are parties thereto.
F-32
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
The commitment to make loans under the Revolver automatically and
permanently reduces, beginning on December 31, 2002. Also, advances under
Term Loan A and Term Loan B are required to be repaid beginning on December
31, 2002, in consecutive quarterly installments. Following is a schedule of
the required reductions in the Revolver and the payments on the term loans:
<TABLE>
<CAPTION>
REPAYMENT DATES REVOLVER TERM LOAN A TERM LOAN B
- -------------------------------------- ---------- ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
December 31, 2002 .............. $ 6,250 $ 2,500 $ 2,000
March 31, 2003, June 30, 2003,
September 30, 2003 and
December 31, 2003 ............. 7,422 2,969 500
March 31, 2004, June 30, 2004,
September 30, 2004 and
December 31, 2004 ............. 11,328 4,531 500
March 31, 2005, June 30, 2005,
September 30, 2005 and
December 31, 2005 ............. 13,281 5,313 500
March 31, 2006, June 30, 2006,
September 30, 2006 and
December 31, 2006 ............. 16,015 6,406 500
March 31, 2007 and June 30, 2007 25,781 10,313 500
September 30, 2007 ............. -- -- 500
December 31, 2007 .............. -- -- 188,500
</TABLE>
Interest on the Revolver, Term Loan A and Term Loan B accrues, at the
Company's option, either at a LIBOR rate plus an applicable margin or the
higher of the issuing bank's prime rate and the Federal Funds Rate (as
defined in the Bank Facility) plus 0.5%, plus an applicable margin. The
Revolver and Term Loan A require an annual commitment fee ranging from
0.50% to 1.75% of the unused portion of the Bank Facility. Advances under
Term Loan A and funds under the Revolving Bank Facility are not available
to the Company until Term Loan B is fully drawn or becomes unavailable
pursuant to the terms of the Bank Facility.
The Bank Facility also requires the Company to purchase an interest rate
hedging contract covering an amount equal to at least 50% of the total
amount of the outstanding indebtedness of the Company (other than
indebtedness which bears interest at a fixed rate). Such interest rate
hedging contracts are further described in Note 23.
The Term Loans are required to be prepaid and commitments under the
Revolving Bank Facility reduced in an aggregate amount equal to 50% of
excess cash flow of each fiscal year commencing with the fiscal year ending
December 31, 2001; 100% of the net proceeds of asset sales, in excess of a
yearly threshold, outside the ordinary course of business or unused
insurance proceeds; and 50% of the net cash proceeds of issuances of equity
securities (other than in connection with the equity commitments referred
to in Note 18).
All obligations of the Company under the facilities are unconditionally and
irrevocably guaranteed (the "Bank Facility Guarantees") by Tritel Inc. and
all subsidiaries of Tritel PCS, Inc. The bank facilities and guarantees,
and any related hedging contracts provided by the lenders under the Bank
Facility, are secured by substantially all of the assets of Tritel PCS,
Inc. and certain subsidiaries of Tritel PCS, Inc., including a first
priority pledge of all of the capital stock
F-33
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
held by Tritel or any of its subsidiaries, but excluding the Company's PCS
licenses. The PCS licenses will be held by one or more single purpose
subsidiaries of the Company and, in the future if the Company is permitted
to pledge its PCS licenses, they will be pledged to secure the obligations
of the Company under the Bank Facility.
The Bank Facility contains covenants customary for similar facilities and
transactions, 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 Bank Facility
also contains covenants relating to the population covered by the Company's
network and number of customers, as well as customary representations,
warranties, indemnities, conditions precedent to borrowing, and events of
default.
Loans under the Bank 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 Bank Facility will constitute
senior debt.
The terms of the Bank Facility allow the Company to incur senior
subordinated debt with gross proceeds of not more than $250,000,000.
As of June 30, 1999, the Company has drawn $200,000,000 of advances under
Term Loan B.
(21) STOCK OPTION PLANS
In January 1999, the Company adopted a stock option plan and a stock option
plan for non-employee directors.
Tritel's 1999 Stock Option Plan (the "Stock Option Plan") authorizes the
grant of certain tax-advantaged stock options, nonqualified stock options
and stock appreciation rights for the purchase of an aggregate of up to
13,566 shares of common stock of Tritel. The Stock Option Plan benefits
qualified officers, employee directors and other key employees of, and
consultants to, Tritel and its subsidiaries in order to attract and retain
those persons and to provide those persons with appropriate incentives. The
Stock Option Plan also allows grants or sales of common stock to those
persons. The maximum term of any stock option to be granted under the Stock
Option Plan is ten years. Grants of options under the Stock Option Plan are
determined by the Board of Directors or a compensation committee designated
by the Board.
The exercise price of incentive stock options and nonqualified stock
options granted under the Stock Option Plan must not be less than the fair
market value of the common stock on the grant date. The Stock Option Plan
will terminate in 2009 unless extended by amendment.
During the period from January 7, 1999 to June 30, 1999, 11,395 restricted
shares were granted under the Stock Option Plan. Such shares will vest in
varying percentages, up to 80% vesting, over five years. The remaining 20%
will vest if the Company meets certain performance benchmarks for
development and construction of its wireless PCS network.
Tritel's 1999 Stock Option Plan for Non-employee Directors (the
"Non-employee Directors Plan") authorizes the grant of certain nonqualified
stock options for the purchase of an aggregate of up to 50,000 shares of
common stock of Tritel. The Non-employee Directors Plan benefits
non-employee directors of Tritel in order to attract and retain those
persons and to provide those persons with appropriate incentives. The
maximum term of any stock option to be granted under the Non-employee
Directors Plan is ten years. Grants of options under the Non-employee
Directors are determined by the Board of Directors.
F-34
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
The exercise price of nonqualified stock options granted under the
Non-employee Directors Plan must not be less than the fair market value of
the common stock on the grant date. The Non-employee Directors Plan will
terminate in 2009 unless extended by amendment.
As of June 30, 1999, no options were outstanding under the Non-employee
Directors Plan.
(22) REDEEMABLE PREFERRED STOCK
Following is a summary of the redeemable preferred stock of the Company:
Series A Preferred Stock
The Series A Preferred Stock, with respect to dividend rights and rights on
liquidation, dissolution or winding up, ranks on a parity basis with the
Series B Preferred Stock, and ranks senior to the Series C Preferred Stock,
the Series D Preferred Stock and the Common Stock. The holders of Series A
Preferred Stock are entitled to receive cumulative quarterly cash dividends
at the annual rate of 10% multiplied by the liquidation preference, which
is equal to $1,000 per share plus declared but unpaid dividends. Tritel may
elect to defer payment of any such dividends until the date on which the
42nd quarterly dividend payment is due, at which time, and not earlier, all
deferred payments must be made. Except as required by law or in certain
circumstances, the holders of the Series A Preferred Stock do not have any
voting rights. The Series A Preferred Stock is redeemable, in whole but not
in part, at the option of Tritel on or after January 15, 2009 and at the
option of the holders of the Series A Preferred Stock on or after January
15, 2019. Additionally, on or after January 15, 2007, AT&T Wireless, and
qualified transferees, have the right to convert each share of Series A
Preferred Stock into shares of Class A Common Stock. The number of shares
the holder will receive upon conversion will be the liquidation preference
per share divided by the market price of Class A Common Stock times the
number of shares of Series A Preferred Stock to be converted.
The Company issued 90,668 shares of Series A Preferred Stock with a stated
value of $90,668,000 to AT&T Wireless on January 7, 1999. The stock was
recorded at its stated value and a discount was recorded for the excess of
the stated value of the stock over the fair value of assets, net of
deferred income taxes, received from AT&T Wireless. The discount will be
accreted using the interest method, so that the carrying amount will equal
the redemption amount on January 15, 2019. Each periodic accretion to
increase the carrying amount of the stock will be offset by a charge to
accumulated deficit.
Series B Preferred Stock
The Series B Preferred Stock ranks on a parity basis with the Series A
Preferred Stock and is identical in all respects to the Series A Preferred
Stock, except:
o the Series B Preferred Stock is redeemable at any time at the option of
Tritel,
o the Series B Preferred Stock is not convertible into shares of any
other security issued by Tritel, and
o the Series B Preferred Stock may be issued by Tritel pursuant to an
exchange of capital stock.
No Series B Preferred Stock has been issued by the Company.
(23) INTEREST RATE SWAP AGREEMENTS
Interest rate swap agreements are entered into by the Company to manage
interest rate exposure. These are contractual agreements between
counterparties to exchange interest streams based on
F-35
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
notional principal amounts over a set period of time. Interest rate swap
agreements normally involve the exchange of fixed and floating rate
interest payment obligations without the exchange of the underlying
principal amounts. The notional or principal amount does not represent the
amount at risk, but is used only as a basis for determining the actual
interest cash flows to be exchanged related to the interest rate contracts.
Market risk, due to potential fluctuations in interest rates, is inherent
in swap agreements.
As of June 30, 1999, the Company was a party to interest rate swap
agreements with a total notional amount of $200 million. The agreements
establish a fixed effective rate of 9.05% on the current balance
outstanding under the Bank Facility through the earlier of March 31, 2002
or the date on which the Company achieves operating cash flow breakeven.
F-36
<PAGE>
The map on the opposite page is not intended to be an exact representation
of Tritel PCS's wireless service area.
<PAGE>
[inside back cover]
[map of Tritel PCS's wireless service footprint]
<PAGE>
[GRAPHIC OMITTED]
TRITEL PCS, INC.
OFFER TO EXCHANGE ITS 12 3/4%
SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 FOR ANY AND ALL OF ITS
OUTSTANDING 12 3/4% SENIOR SUBORDINATED
DISCOUNT NOTES DUE 2009
--------------------
PROSPECTUS
--------------------
, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "GCL") provides
as follows:
"(a) A corporation shall have the power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that the person is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by the person in connection with such action,
suit or proceeding if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the person's conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a manner
which the person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the person's conduct was
unlawful.
(b) A corporation shall have the power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred
by the person in connection with the defense or settlement of such action or
suit if the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, such person shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the present
or former director, officer, employee or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made with
respect to a person who is a director or officer at the time of such
determination, (1) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or (4)
by the stockholders.
II-1
<PAGE>
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by former directors and officers or other
employees and agents may be so paid upon such terms and conditions, if any, as
the corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so
that any person who is or was a director, officer, employee or agent for such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under this section with respect to the resulting or
surviving corporation as such person would have with respect to such
constituent corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees)."
Article 6 of Tritel PCS's Bylaws provides:
INDEMNIFICATION
"Indemnification. The Corporation shall, to the fullest extent permitted
by applicable law from time to time in effect, indemnify any and all persons
who may serve or who have served at any time
II-2
<PAGE>
as Directors or officers of the Corporation, or who at the request of the
Corporation may serve or at any time have served as Directors or officers of
another corporation (including subsidiaries of the Corporation) or of any
partnership, joint venture, trust or other enterprise, from and against any and
all of the expenses, liabilities or other matters referred to in or covered by
said law. Such indemnification shall continue as to a person who has ceased to
be a Director or officer and shall inure to the benefit of the heirs, executors
and administrators of such a person. The Corporation may also indemnify any and
all other persons whom it shall have power to indemnify under any applicable
law from time to time in effect to the extent authorized by the Board of
Directors and permitted by such law. The indemnification provided by this
Article shall not be deemed exclusive of any other rights to which any person
may be entitled under any provisions of the Certificate of Incorporation, other
Bylaw, agreement, vote of stockholders or disinterested Directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
Definition. For purposes of this Article, the term "Corporation" shall
include constituent corporations referred to in Subsection(h) of Section 145 of
the General Corporation Law (or any similar provision of applicable law at the
time in effect)."
The Amended and Restated Certificate of Incorporation of Tritel PCS also
limits the personal liability of directors to Tritel PCS and its stockholders
for monetary damages resulting from certain breaches of the directors'
fiduciary duties. The Amended and Restated Certificate of Incorporation of
Tritel PCS provides as follows:
"A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability (i) for any breach of the director's
duty of loyalty to the corporation and to its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which such director derived
any improper personal benefit."
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ---------- ----------------------------------------------------------------------------------------
<S> <C>
3.1+ Certificate of Incorporation of Tritel PCS, Inc., (f/k/a Tritel Holding Corp.) dated
May 29, 1998.
3.1.1+ Amendment to Certificate of Incorporation of Tritel PCS, Inc., dated April 16, 1999.
3.2+ Bylaws of Tritel PCS, Inc., dated May 29, 1998.
3.3+ Restated Certificate of Incorporation of Tritel, Inc., dated January 4, 1999.
3.4+ Bylaws of Tritel, Inc., dated April 23, 1998.
3.5+ Certificate of Incorporation of Tritel Communications, Inc., dated May 29, 1998.
3.6+ Bylaws of Tritel Communications, Inc., dated May 29, 1998.
3.7+ Certificate of Incorporation of Tritel Finance, Inc., dated May 29, 1998.
3.8+ Bylaws of Tritel Finance, Inc., dated May 29, 1998.
4.1+ Indenture, dated May 11, 1999 between Tritel PCS, Inc., its parent and certain of its
subsidiaries, and The Bank of New York, as trustee.
4.2+ Registration Rights Agreement, dated May 11, 1999.
4.3+ Form of Notes for 12 3/4% Senior Subordinated Discount Notes due 2009 originally issued
by Tritel PCS, Inc. on May 11, 1999 (included as exhibits A-1 and A-2 to Exhibit 4.1 of
this registration statement).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------
<S> <C>
4.4+ Form of Note for 12 3/4% Senior Subordinated Discount Notes due 2009 to be issued by
Tritel PCS, Inc. and registered under the Securities Act of 1933.
5.1 Opinion of Brown & Wood LLP.
10.1.1 Stockholders' Agreement by and among AT&T Wireless PCS Inc., Cash Equity
Investors, Management Stockholders, and Tritel, Inc. dated January 7, 1999.
10.1.2 First Amendment to Stockholders' Agreement dated August 27, 1999.
10.2 Investors Stockholders' Agreement by and among Tritel, Inc., Washington National
Insurance Company, United Presidential Life Insurance Company, Dresdner Kleinwort
Benson Private Equity Partners LP, Toronto Dominion Investments, Inc., Entergy
Wireless Corporation, General Electric Capital Corporation, Triune PCS, LLC, FCA
Venture Partners II, L.P., Clayton Associates LLC, Trillium PCS, LLC, Airwave
Communications, LLC, Digital PCS, LLC, and The Stockholders Named Herein dated
January 7, 1999.
10.3 AT&T Wireless Services Network Membership License Agreement between AT&T
Corp. and Tritel, Inc. dated January 7, 1999.
10.4 Intercarrier Roamer Service Agreement between AT&T Wireless Services, Inc. and
Tritel, Inc. dated January 7, 1999.
10.5 Amended and Restated Agreement between Telecorp Communications, Inc., Triton
PCS, Inc., Tritel Communications, Inc. and Affiliate License Co., L.L.C. dated April 16,
1999.
10.6 Form of Employment Agreement.
10.7 Tritel, Inc. 1999 Stock Option Plan, effective January 7, 1999.
10.8 Form of Restricted Stock Agreements pursuant to the Tritel, Inc. 1999 Stock Option
Plan.
10.9 Tritel Inc. 1999 Stock Option Plan for Nonemployee Directors, effective January 7, 1999.
10.10 Amended and Restated Loan Agreement among Tritel Holding Corp., Tritel, Inc., The
Financial Institutions Signatory Hereto, and Toronto Dominion (Texas), Inc. dated
March 31, 1999.
10.11 First Amendment to Amended and Restated Loan Agreement among Tritel Holding
Corp., Tritel, Inc., The Financial Institutions Signatory Hereto, and Toronto Dominion
(Texas), Inc. dated April 21, 1999.
10.12 Master Lease Agreement between Tritel Communications, Inc. and Crown
Communication Inc. dated October 30, 1998.
10.13 Master Lease Agreement between Signal One, LLC and Tritel Communications, Inc.
dated December 31, 1998.
10.14 Management Agreement between Tritel Management, LLC and Tritel, Inc. dated
January 1, 1999.
10.15 Master Antenna Site Lease No. D41 between Pinnacle Towers Inc. and Tritel
Communications, Inc. dated October 23, 1998.
10.16 Security Agreement between Mercury PCS LLC and the Federal Communications
Commission, dated September 17, 1996.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ---------- ------------------------------------------------------------------------------------------
<S> <C>
10.17 Installment Payment Plan Note made by Mercury PCS, LLC in favor of the Federal
Communications Commission in the amount of $42,525,211.95, dated October 9, 1996.
10.18 First Modification of Installment Payment Plan Note for Broadband PCS F Block by and
between Mercury PCS II, L.L.C. and the Federal Communications Commission, dated
July 2, 1998, effective as of July 31, 1998.
10.19 Letter Agreement by and between Tritel Communications, Inc. and Wireless Facilities,
Inc., dated July 28, 1998, referring to service agreements covering certain RF
Engineering Services applicable to certain FCC licenses currently owned or to be
acquired by Tritel.*
10.20 Letter Agreement by and between Tritel Communications, Inc. and H.S.I. GeoTrans
Wireless, dated July 2, 1998, referring to a service agreement covering certain Site
Acquisition Services applicable to certain FCC licenses owned or to be acquired by
Tritel.
10.21 Services Agreement by and between Tritel Communications, Inc. and Galaxy Personal
Communications Services, Inc., which is a wholly owned subsidiary of World Access,
Inc., dated as of June 1, 1998.
10.22 Services Agreement by and between Tritel Communications, Inc. and Galaxy Personal
Communications Services, Inc., which is a wholly-owned subsidiary of World Access,
Inc., dated as of August 27, 1998.
10.23 Agreement by and between BellSouth Telecommunications, Inc. and Tritel
Communications, Inc., effective as of March 16, 1999.
10.24 Agreement for Project and Construction Management Services between Tritel
Communications, Inc. and Tritel Finance, Inc. and Bechtel Corporation, dated
November 24, 1998.
10.25 Services Agreement by and between Tritel Communications, Inc. and Spectrasite
Communications, Inc., dated as of July 28, 1998.
10.26 Acquisition Agreement Ericsson CMS 8800 Cellular Mobile Telephone System by and
between Tritel Finance, Inc. and Tritel Communications, Inc. and Ericsson Inc., made
and effective as of December 30, 1998.
10.27 Securities Purchase Agreement by and among AT&T Wireless PCS Inc., TWR Cellular,
Inc., Cash Equity Investors, Mercury PCS, LLC, Mercury PCS II, LLC, Management
Stockholders and Tritel, Inc., dated as of May 20, 1998.
10.28 Closing Agreement by and among AT&T Wireless PCS, Inc., TWR Cellular, Inc., Cash
Equity Investors, Airwave Communications, LLC, Digital PCS, LLC, Management
Stockholders, Mercury Investor Indemnitors and Tritel, Inc., dated as of January 7, 1999.
10.29 Master Build To Suit And Lease Agreement between Tritel Communications, Inc., a
Delaware corporation and American Tower, L.P., a Delaware limited partnership.*
10.30 Master Build To Suit And Lease Agreement between Tritel Communications, Inc.
and SpectraSite Communications, Inc.*
10.31 Master Build To Suit Services And License Agreement between Tritel
Communications, Inc. and Crown Communication Inc.*
10.32 Master Build To Suit And Lease Agreement by and between Tritel
Communications, Inc. and SBA Towers, Inc.*
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- --------- --------------------------------------------------------------------------------------
<S> <C>
10.33 Master Lease Agreement between Tritel Communications, Inc. and BellSouth I.*
10.34 Master Lease Agreement between Tritel Communications, Inc. and BellSouth II.*
10.35 Consent to Exercise of Option between Tritel, Inc., AT&T Wireless PCS, Inc., TWR
Cellular, Inc. and Management Stockholders dated May 20, 1999.
10.36 License Purchase Agreement between Digital PCS, LLC and Tritel, Inc. dated as of
May 20, 1999.
12 Statement of Computation of Deficiency of Earnings to Fixed Charges.
21+ Subsidiaries of Tritel PCS, Inc.
23.1 Consent of Brown & Wood LLP (included in Exhibit 5.1 of this registration statement).
23.2 Consent of KPMG Peat Marwick LLP.
24+ Powers of Attorney (included on the signature page of the initial filing of this
registration statement).
25.1 Form T-1 Statement of Eligibility of The Bank of New York, as trustee.
27 Financial Data Schedule.
99.1+ Form of Letter of Transmittal.
99.2+ Form of Notice of Guaranteed Delivery.
99.3+ Form of Exchange Agent Agreement.
</TABLE>
- ----------
+ Previously filed.
* To be filed by amendment.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
and Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities and
Exchange Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant, pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by any such director, officer or
controlling person in connection with the securities being registered, the
registrant will submit, unless in the opinion of its counsel the matter has
been settled by controlling precedent, to a court of appropriate jurisdiction
the question of whether or not such indemnification is against Public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-6
<PAGE>
(c) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective. This exchange
offer, however, does not involve any acquisition, nor are any acquisitions with
respect to PSSA expected after the registration statement becomes effective.
The transaction covered by this registration statement only involves the
exchange of registered for unregistered securities.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this amendment to the registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, on September 9, 1999.
TRITEL PCS, INC.
By: /s/ E.B. Martin, Jr.
------------------------------------
Name: E.B. Martin, Jr.
Title: Executive Vice President,
Treasurer,
Chief Financial Officer and
Director
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the registration statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------- ----------------------------------------------- ------------------
<S> <C> <C>
*
- ------------------------- Chairman of the Board, Chief Executive Officer
William M. Mounger, II and President September 9, 1999
/s/ E.B. Martin, Jr. Executive Vice President, Treasurer, Chief
- ------------------------- Financial Officer and Director September 9, 1999
E.B. Martin, Jr.
* Senior Vice President -- Finance (Principal
- ------------------------- Accounting Officer) September 9, 1999
Karlen Turbeville
</TABLE>
* By: /s/ E.B. Martin, Jr.
----------------------------
E.B. Martin, Jr.
Attorney-in-Fact
II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- ---------- -------------------------------------------------------------------------------- -----
<S> <C> <C>
3.1+ Certificate of Incorporation of Tritel PCS, Inc., (f/k/a Tritel Holding Corp.)
dated May 29, 1998.
3.1.1+ Amendment to Certificate of Incorporation of Tritel PCS, Inc., dated April
16, 1999.
3.2+ Bylaws of Tritel PCS, Inc., dated May 29, 1998.
3.3+ Restated Certificate of Incorporation of Tritel, Inc., dated January 4, 1999.
3.4+ Bylaws of Tritel, Inc., dated April 23, 1998.
3.5+ Certificate of Incorporation of Tritel Communications, Inc., dated May 29,
1998.
3.6+ Bylaws of Tritel Communications, Inc., dated May 29, 1998.
3.7+ Certificate of Incorporation of Tritel Finance, Inc., dated May 29, 1998.
3.8+ Bylaws of Tritel Finance, Inc., dated May 29, 1998.
4.1+ Indenture, dated May 11, 1999 between Tritel PCS, Inc., its parent and certain
of its subsidiaries, and The Bank of New York, as trustee.
4.2+ Registration Rights Agreement, dated May 11, 1999.
4.3+ Form of Notes for 12 3/4% Senior Subordinated Discount Notes due 2009
originally issued by Tritel PCS, Inc. on May 11, 1999 (included as exhibits A-1
and A-2 to Exhibit 4.1 of this registration statement).
4.4+ Form of Note for 12 3/4% Senior Subordinated Discount Notes due 2009 to be
issued by Tritel PCS, Inc. and registered under the Securities Act of 1933.
5.1 Opinion of Brown & Wood LLP.
10.1.1 Stockholders' Agreement by and among AT&T Wireless PCS Inc., Cash
Equity Investors, Management Stockholders, and Tritel, Inc. dated January 7,
1999.
10.1.2 First Amendment to Stockholders' Agreement dated August 27, 1999.
10.2 Investors Stockholders' Agreement by and among Tritel, Inc., Washington
National Insurance Company, United Presidential Life Insurance Company,
Dresdner Kleinwort Benson Private Equity Partners LP, Toronto Dominion
Investments, Inc., Entergy Wireless Corporation, General Electric Capital
Corporation, Triune PCS, LLC, FCA Venture Partners II, L.P., Clayton
Associates LLC, Trillium PCS, LLC, Airwave Communications, LLC, Digital
PCS, LLC, and The Stockholders Named Herein dated January 7, 1999
10.3 AT&T Wireless Services Network Membership License Agreement between
AT&T Corp. and Tritel, Inc. dated January 7, 1999.
10.4 Intercarrier Roamer Service Agreement between AT&T Wireless Services,
Inc. and Tritel, Inc. dated January 7, 1999.
10.5 Amended and Restated Agreement between Telecorp Communications, Inc.,
Triton PCS, Inc., Tritel Communications, Inc. and Affiliate License Co.,
L.L.C. dated April 16, 1999.
10.6 Form of Employment Agreement.
10.7 Tritel, Inc. 1999 Stock Option Plan, effective January 7, 1999.
10.8 Form of Restricted Stock Agreements pursuant to the Tritel, Inc. 1999 Stock
Option Plan.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- --------- -------------------------------------------------------------------------------- -----
<S> <C> <C>
10.9 Tritel Inc. 1999 Stock Option Plan for Nonemployee Directors, effective
January 7, 1999.
10.10 Amended and Restated Loan Agreement among Tritel Holding Corp., Tritel,
Inc., The Financial Institutions Signatory Hereto, and Toronto Dominion
(Texas), Inc. dated March 31, 1999.
10.11 First Amendment to Amended and Restated Loan Agreement among Tritel
Holding Corp., Tritel, Inc., The Financial Institutions Signatory Hereto, and
Toronto Dominion (Texas), Inc. dated April 21, 1999.
10.12 Master Lease Agreement between Tritel Communications, Inc. and Crown
Communication Inc. dated October 30, 1998.
10.13 Master Lease Agreement between Signal One, LLC and Tritel
Communications, Inc. dated December 31, 1998.
10.14 Management Agreement between Tritel Management, LLC and Tritel, Inc.
dated January 1, 1999.
10.15 Master Antenna Site Lease No. D41 between Pinnacle Towers Inc. and Tritel
Communications, Inc. dated October 23, 1998.
10.16 Security Agreement between Mercury PCS LLC and the Federal
Communications Commission, dated September 17, 1996.
10.17 Installment Payment Plan Note made by Mercury PCS, LLC in favor of the
Federal Communications Commission in the amount of $42,525,211.95, dated
October 9, 1996.
10.18 First Modification of Installment Payment Plan Note for Broadband PCS F
Block by and between Mercury PCS II, L.L.C. and the Federal
Communications Commission, dated July 2, 1998, effective as of July 31, 1998.
10.19 Letter Agreement by and between Tritel Communications, Inc. and Wireless
Facilities, Inc., dated July 28, 1998, referring to service agreements covering
certain RF Engineering Services applicable to certain FCC licenses currently
owned or to be acquired by Tritel.*
10.20 Letter Agreement by and between Tritel Communications, Inc. and H.S.I.
GeoTrans Wireless, dated July 2, 1998, referring to a service agreement
covering certain Site Acquisition Services applicable to certain FCC licenses
owned or to be acquired by Tritel.
10.21 Services Agreement by and between Tritel Communications, Inc. and Galaxy
Personal Communications Services, Inc., which is a wholly owned subsidiary
of World Access, Inc., dated as of June 1, 1998.
10.22 Services Agreement by and between Tritel Communications, Inc. and Galaxy
Personal Communications Services, Inc., which is a wholly-owned subsidiary
of World Access, Inc., dated as of August 27, 1998.
10.23 Agreement by and between BellSouth Telecommunications, Inc. and Tritel
Communications, Inc., effective as of March 16, 1999.
10.24 Agreement for Project and Construction Management Services between Tritel
Communications, Inc. and Tritel Finance, Inc. and Bechtel Corporation, dated
November 24, 1998.
10.25 Services Agreement by and between Tritel Communications, Inc. and
Spectrasite Communications, Inc., dated as of July 28, 1998.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- ------------ --------------------------------------------------------------------------------- -----
<S> <C> <C>
10.26 Acquisition Agreement Ericsson CMS 8800 Cellular Mobile Telephone
System by and between Tritel Finance, Inc. and Tritel Communications, Inc.
and Ericsson Inc., made and effective as of December 30, 1998.
10.27 Securities Purchase Agreement by and among AT&T Wireless PCS Inc.,
TWR Cellular, Inc., Cash Equity Investors, Mercury PCS, LLC, Mercury PCS
II, LLC, Management Stockholders and Tritel, Inc., dated as of May 20, 1998.
10.28 Closing Agreement by and among AT&T Wireless PCS, Inc., TWR Cellular,
Inc., Cash Equity Investors, Airwave Communications, LLC, Digital PCS,
LLC, Management Stockholders, Mercury Investor Indemnitors and Tritel,
Inc., dated as of January 7, 1999.
10.29 Master Build To Suit And Lease Agreement between Tritel Communications,
Inc., a Delaware corporation and American Tower, L.P., a Delaware limited
partnership.*
10.30 Master Build To Suit And Lease Agreement between Tritel
Communications, Inc. and SpectraSite Communications, Inc.*
10.31 Master Build To Suit Services And License Agreement between Tritel
Communications, Inc. and Crown Communication Inc.*
10.32 Master Build To Suit And Lease Agreement by and between Tritel
Communications, Inc. and SBA Towers, Inc.*
10.33 Master Lease Agreement between Tritel Communications, Inc. and
BellSouth I.*
10.34 Master Lease Agreement between Tritel Communications, Inc. and
BellSouth II.*
10.35 Consent to Exercise of Option between Tritel, Inc., AT&T Wireless PCS, Inc.,
TWR Cellular, Inc. and Management Stockholders dated May 20, 1999.
10.36 License Purchase Agreement between Digital PCS, LLC and Tritel, Inc. dated
as of May 20, 1999.
12 Statement of Computation of Deficiency of Earnings to Fixed Charges.
21+ Subsidiaries of Tritel PCS, Inc.
23.1 Consent of Brown & Wood LLP (included in 5.1 of this registration
statement).
23.2 Consent of KPMG Peat Marwick LLP.
24+ Powers of Attorney (included on the signature page of the initial filing of this
registration statement).
25.1 Form T-1 Statement of Eligibility of The Bank of New York, as trustee.
27 Financial Data Schedule.
99.1+ Form of Letter of Transmittal.
99.2+ Form of Notice of Guaranteed Delivery.
99.3+ Form of Exchange Agent Agreement.
</TABLE>
- ----------
+ Previously Filed.
* To be filed by amendment.
<PAGE>
EXHIBIT 5.1
[Letterhead Of Brown & Wood LLP Appears Here]
September 9, 1999
Tritel PCS, Inc.
111 E. Capitol Street
Suite 500
Jackson, MS 39201
Re: Tritel PCS, Inc.
Registration Statement on
Form S-4 (File No. 333-82509)
-----------------------------
Ladies and Gentlemen:
We have acted as counsel to Tritel PCS, Inc., a Delaware corporation (the
"Company"), in connection with the registration of $372,000,000 aggregate
principal amount at maturity of 12 3/4% Senior Subordinated Discount Notes due
2009 (the "Exchange Notes") under the Securities Act of 1933, as amended (the
"Act"), by the "Company, and the related guarantees (the "Guarantees") of the
Exchange Notes issued by subsidiaries (the "Guarantors") of the Company on Form
S-4 filed with the Securities and Exchange Commission on July 8, 1999 (File No.
333-82509), as amended by Amendment No. 1 filed with the Commission on September
9, 1999 (collectively, the "Registration Statement"). The Exchange Notes will
be issued pursuant to an indenture (the "Indenture"), dated as of May 1, 1999,
among the Company, the Guarantors and The Bank of New York, as trustee (the
"Trustee"). The Exchange Notes will be issued in exchange for the Company's
outstanding 12 3/4% Senior Subordinated Discount Notes due 2009 (the "Old
Notes") on the terms set forth in the prospectus contained in the Registration
Statement and the Letter of Transmittal filed as an exhibit thereto.
<PAGE>
Tritel PCS, Inc.
September 7, 1999
Page 2
This opinion is being delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Act. Capitalized terms used but not
otherwise defined herein have the meaning ascribed to them in the Registration
Statement.
In our capacity as counsel in connection with such registration, we are
familiar with the proceedings taken by the Company and the Guarantors in
connection with the authorization of the Exchange Notes and the Guarantees and
proceedings proposed to be taken in connection with the issuance of the Exchange
Notes and the Guarantees, respectively, and for the purposes of this opinion,
have assumed such proceedings will be timely completed in the manner presently
proposed. In addition, we have also examined originals or copies, certified or
otherwise identified to our satisfaction, of such other documents and
instruments as we have deemed appropriate for the opinions contained herein. To
the extent we deemed appropriate, we have relied as to certain factual matters
on oral or written statements of officers or directors of the Company and the
Guarantors.
We have assumed the legal capacity of all natural persons, the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to us
as certified or photostatic copies and the authenticity of the originals of such
copies.
Based upon the foregoing, and subject to the other assumptions,
qualifications and limitations set forth herein, we are of the opinion that when
the Registration Statement, as finally amended (including all necessary
post-effective amendments) has become effective under the Act and upon issuance
thereof in the manner described in the Registration Statement:
<PAGE>
Tritel PCS, Inc.
September 7, 1999
Page 3
1. The Exchange Notes, when executed by the Company and authenticated by
the Trustee in the manner provided in the Indenture (assuming the due
authorization, execution and delivery of the Indenture by the Trustee)
in exchange for the Old Notes in accordance with the terms of the
Indenture, will be valid and binding obligations of the Company, and
will be entitled to the benefits of the Indenture.
2. Each of the Guarantees, when executed in accordance with the terms of
the Indenture and upon due execution by the Company and authentication
by the Trustee of the Exchange Notes in the manner provided in the
Indenture (assuming the due authorization, execution and delivery of
the Indenture by the Trustee) in exchange for the Old Notes in
accordance with the terms of the Indenture, will be valid and binding
obligations of the respective Guarantors, and will be entitled to the
benefits of the Indenture.
We are members of the Bar of the State of New York, and we express no
opinion as to the laws of any jurisdiction other than the laws of the State of
New York, the General Corporation Law of the State of Delaware and the federal
laws of the United States of America. We are not expressing any opinion with
respect to matters arising under or governed by the Communications Act, the 1996
Act, or the rules and regulations of the FCC promulgated thereunder.
We consent to the filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm contained under the heading "Legal
Matters." In giving this consent, we do not thereby admit that we are within the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission promulgated thereunder. The opinions
expressed herein are given as of the date hereof, and we undertake no obligation
to supplement this letter if any applicable laws change after the date hereof or
if we become aware of any facts that might change the opinions expressed herein
after the date hereof or for any other reason.
Very truly yours,
/s/ Brown & Wood LLP
<PAGE>
Exhibit 10.1.1
- --------------------------------------------------------------------------------
STOCKHOLDERS' AGREEMENT
by and among
AT&T WIRELESS PCS INC.,
CASH EQUITY INVESTORS,
MANAGEMENT STOCKHOLDERS,
and
TRITEL, INC.
dated as of January 7, 1999
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Certain Definitions.........................................................................2
2. Restated Certificate and Restated By-Laws..................................................13
3. Management of Company......................................................................13
3.1 Board of Directors.................................................................13
3.2 Removal; Filling of Vacancies......................................................15
3.3 Initial Directors..................................................................16
3.4 Compensation and Reimbursement.....................................................16
3.5 Business of the Company............................................................16
3.6 Required Votes.....................................................................16
3.7 Transactions between the Company and the Stockholders or their Affiliates..........18
3.8 Board Committees...................................................................18
3.9 Voting Agreements and Voting Trusts................................................18
3.10 Additional Capital Contributions...................................................18
3.11 Board Materials....................................................................19
4. Transfers of Shares........................................................................19
4.1 General............................................................................19
4.2 Right of First Offer...............................................................22
4.3 Rights of Inclusion................................................................23
4.4 Right of First Negotiation.........................................................25
4.5 Additional Conditions to Permitted Transfers.......................................26
4.6 Representations and Warranties.....................................................27
4.7 Stop-Transfer......................................................................27
5. Registration Rights........................................................................27
6. Disqualifying Transactions.................................................................40
6.1 Company Conversion Rights..........................................................40
6.2 Joint Marketing Right..............................................................41
7. Additional Rights and Covenants............................................................42
7.1 Financial Statements...............................................................42
7.2 Purchase Right.....................................................................42
7.3 Access.............................................................................43
7.4 Merger, Sale or Liquidation of the Company.........................................44
7.5 Wholly-Owned Subsidiaries..........................................................45
7.6 Amendments of the Restated Certificate and By-Laws.................................45
<PAGE>
7.7 Confidentiality....................................................................45
7.8 IPO Date...........................................................................46
7.9 AT&T Retained Licenses.............................................................46
7.10 Regulatory Cooperation.............................................................46
7.11 Permitted Transactions.............................................................47
7.12 Covenant of Holders of Class C Common Stock........................................47
7.13 Additional Florida POPs............................................................48
8. Operating Arrangements.....................................................................48
8.1 Construction of Company Systems....................................................48
8.2 Service Features...................................................................49
8.3 Quality Standards..................................................................49
8.4 No Change of Business..............................................................49
8.5 Preferred Provider.................................................................50
8.6 Exclusivity........................................................................51
8.7 Other Business; Duties; Etc........................................................52
8.8 Acknowledgments and Termination of Exclusivity.....................................53
8.9 Equipment, Discounts and Roaming...................................................53
8.10 Intentionally Omitted..............................................................54
8.11 Resale Agreements..................................................................54
8.12 Non-Solicitation...................................................................55
8.13 Co-Location........................................................................55
8.14 Billing............................................................................55
9. After-Acquired Shares; Recapitalization....................................................55
9.1 After Acquired Shares; Recapitalization............................................55
9.2 Amendment of Restated Certificate..................................................56
10. Share Certificates.........................................................................56
10.1 Restrictive Endorsements; Replacement Certificates.................................56
11. Equitable Relief...........................................................................57
12. Miscellaneous..............................................................................57
12.1 Notices............................................................................57
12.2 Entire Agreement; Amendment; Consents..............................................58
12.3 Term...............................................................................59
12.4 Survival...........................................................................60
12.5 Waiver.............................................................................61
12.6 Obligations Several................................................................61
12.7 Governing Law......................................................................61
12.8 Dispute Resolution.61
12.9 Benefit and Binding Effect; Severability...........................................64
12.10 Amendment of By-Laws...............................................................64
12.11 Authorized Agent of AT&T PCS.......................................................64
<PAGE>
12.12 FCC Approval.......................................................................64
12.13 Expenses...........................................................................64
12.14 Attorneys' Fees....................................................................64
12.15 Headings...........................................................................65
12.16 Counterparts.......................................................................65
</TABLE>
Schedules
Schedule I Cash Equity Investors
Schedule II Management Stockholders
Schedule III Equity Capitalization
Schedule IV Core Features
Schedule V Minimum Build-Out Plan
Schedule VI PCS Territory
Schedule VII Quality and Reporting Standards
Schedule VIII Initial Directors
Schedule IX Capital Budgets
Schedule X Voting Agreements
Schedule XI Critical Network Elements
Exhibits
Exhibit A Restated By-Laws
Exhibit B Restated Certificate
<PAGE>
- --------------------------------------------------------------------------------
STOCKHOLDERS' AGREEMENT
-----------------------
STOCKHOLDERS' AGREEMENT, dated as of January 7, 1999 (this
"Agreement"), by and among AT&T WIRELESS PCS INC., a Delaware corporation
(together with its Affiliated Successors, "AT&T PCS"), TWR CELLULAR, INC., a
Maryland corporation (together with its Affiliated Successors, "TWR Cellular"),
the investors listed on Schedule I) (individually, each a "Cash Equity Investor"
and, collectively, with any of its Affiliated Successors, the "Cash Equity
Investors"), MERCURY PCS, LLC, a Mississippi limited liability company ("Mercury
I"), Mercury PCS II, LLC, a Mississippi limited liability ("Mercury II"), the
individuals listed on Schedule II (individually, each a "Management Stockholder"
and, collectively, the "Management Stockholders"), and TRITEL, INC., a Delaware
corporation (the "Company"). Each of the foregoing Persons, together with all
other Persons who, in connection with a Transfer (as hereinafter defined) are
required to become a party to this Agreement (other than the Company), or with
the consent of the Board of Directors (as hereinafter defined) are issued shares
of Company Stock and are required as a condition of such issuance to become a
party to this Agreement, are sometimes referred to herein, individually, as a
"Stockholder" and, collectively, as the "Stockholders."
RECITALS
--------
WHEREAS, the authorized capital stock of the Company consists of: (a)
3,040,009 shares of common stock, par value $0.01 per share ("Common Stock"),
including (i) 1,500,000 shares of Class A Voting Common Stock, par value $0.01
per share ("Class A Voting Common Stock"), of which 35,518.76 shares are issued
and outstanding, (ii) 1,500,000 shares of Class B Non-Voting Common Stock, par
value $0.01 per share ("Class B Non-Voting Common Stock") of which no shares are
issued and outstanding (iii) 10,000 shares of Class C Common Stock, par value
$.01 per share ("Class C Common Stock"), of which 5,176.68 shares are issued and
outstanding, (iv) 30,000 shares of Class D Common Stock, par value $.01 per
share ("Class D Common Stock"), of which no shares are issued and outstanding,
and (v) nine shares designated as Voting Preference Stock, par value $0.01 per
share ("Voting Preference Stock"), all of which shares are issued and
outstanding; and (b) 1,500,000 shares of Preferred Stock, par value $0.01 per
share ("Preferred Stock"), including (i) 200,000 shares designated Series A
Convertible Preferred Stock, par value $0.01 per share ("Series A Preferred
Stock"), of which 90,668.33 shares are issued and outstanding, (ii) 300,000
shares designated Series B Preferred Stock, par value $0.01 per share ("Series B
Preferred Stock"), of which no shares are issued and outstanding, (iii) 500,000
shares designated Series C Convertible Preferred Stock, par value $0.01 per
share ("Series C Preferred Stock"), of which 184,233.35 shares are issued and
outstanding, and (iv) 100,000 shares designated Series D Convertible Preferred
Stock, par value $0.01 per share ("Series D Preferred Stock"), of which
46,374.10 shares are issued and outstanding; and
WHEREAS, the shares of Class A Voting Common Stock and Series C
Preferred Stock (on an as converted basis) as a class represent 49.9% of the
voting power of the Company and the shares of Voting Preference Stock as a class
represent 50.1% of the voting power of the Company; and
<PAGE>
WHEREAS, each Stockholder is the registered owner of the respective
shares of Class A Voting Common Stock, Class B Non-Voting Common Stock, Series A
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Class C
Common Stock, Class D Common Stock and Voting Preference Stock set forth
opposite its name on Schedule III; and
WHEREAS, the parties desire to enter into this Agreement in order to
provide for the management of the Company and to impose certain restrictions
with respect to the sale, transfer or other disposition of Common Stock on the
terms and conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the parties agree as follows:
1. Certain Definitions.
"Adopted Service Features" shall mean the Core Service Features and
additional service features that are adopted by the Company's PCS Systems in
accordance with the terms of Section 8.2.
"Advice" shall have the meaning set forth in Section 5(d)(xvii).
"Affiliate" shall mean, with respect to any Person other than a natural
person, any other Person that, either directly or indirectly through one or more
intermediaries, controls, or is controlled by or is under common control with
such Person and, with respect to any natural Person, any trust for the exclusive
benefit of such natural Person and/or any member of such natural Person's
Immediate Family in which such Person is the sole trustee thereof; provided,
however, for purposes of Section 8.6, "Affiliate" shall not include (x) Persons
who conduct business in the Territory in whom a Cash Equity Investor or any of
their respective Affiliates has made an investment or holds securities on the
date hereof in the ordinary course of their business, or any such Person who
conducts business in the Territory in whom a Cash Equity Investor or any of
their respective Affiliates makes an investment after the date hereof if such
Cash Equity Investor or Affiliate thereof controls such Person on a temporary
basis where reasonably necessary to protect its investment, or any person who
serves as an officer, director or is a partner of any such Person who is
affiliated with a Cash Equity Investor, or (y) The Toronto Dominion Bank. As
used in this Agreement, "control", "controlled" or "controlling" shall mean
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Affiliated Successor" shall mean, with respect to any Person, an
Affiliate thereof that is a transferee or a successor in interest to any or all
of such Person's Company Stock and that is required to become a party to this
Agreement in accordance with the terms hereof; provided, however, that, for
purposes of Section 4, with respect to any Cash Equity Investor, "Affiliated
Successor" shall also include partners, limited partners or members of a Cash
Equity Investor that are transferees of Series C Preferred Stock or Common Stock
pursuant to distributions in accordance with the partnership agreement or
operating agreement of such Cash Equity Investor.
"Arbitration Rules" shall have the meaning set forth in Section
12.8(d).
2
<PAGE>
"AT&T Licensee" shall mean any Person that owns FCC licenses to provide
Commercial Mobile Radio Service, which Person is authorized to provide any such
services using the phrase "Member, AT&T Wireless Services Network" or other
service marks of AT&T Corp.
"AT&T PCS" shall have the meaning set forth in the preamble.
"AT&T Contributed Licenses" shall have the meaning assigned to such
term in the Securities Purchase Agreement.
"AT&T Corp." shall mean AT&T Corp., a Delaware corporation.
"AT&T Retained Licenses" shall have the meaning assigned to such term
in the Securities Purchase Agreement.
"AWS" shall mean AT&T Wireless Services, Inc., a Delaware corporation.
"Beneficially Own" shall have the meaning set forth in Rule 13d-3 of
the Exchange Act.
"Board of Directors" shall mean the Board of Directors of the Company.
"BTA" shall mean a geographic area established by the Rand McNally 1992
Commercial Atlas & Marketing Guide, 123rd Edition, pp. 38-39, as modified by the
FCC to form the initial geographic area of license for the C, D, E and F blocks
of broadband PCS spectrum as defined in Section 24.202 of the FCC's rules.
"Business" shall mean the business of (a) owning, constructing and
operating systems to provide Company Communications Services on frequencies
licensed to the Company for Commercial Mobile Radio Services pursuant to the
AT&T Contributed Licenses, the Mercury Licenses, PCS Licenses acquired pursuant
to the Option Agreement, Permitted Florida MSAs and Permitted Cellular Licenses,
(b) providing to end-users and resellers, solely within the Territory, Company
Communications Services available on such systems, (c) providing in connection
with such Company Communications Services, solely within the Territory, the
Adopted Service Features and (subject to the immediately following sentence)
telecommunications services incidental or ancillary to such Company
Communications Services (including, by way of example, bundling additional
telecommunications services with Company Communications Services), and (d)
marketing and offering the services and features described in clauses (b) and
(c) within the Territory, including advertising such services and features using
broadcast and other media, so long as such advertising extends beyond the
Territory only when and to the extent necessary to reach customers and potential
customers in the Territory. The activities described in clauses (a) and (b)
shall be the indispensable requisite, and primary business, of the Company and,
to the extent the Company provides telecommunications services incidental or
ancillary thereto, the Company and its Subsidiaries shall be only the agent or
reseller for the provider thereof and shall not own or lease the facilities used
to provide such services, except that (i) the Company may own or lease
facilities that, in the aggregate, do not have a purchase price to the Company
and its Subsidiaries in excess of $10 million, and the Company may be a
facilities-based provider of services using such facilities, and (ii) after
completion of the Minimum Build-Out Plan and certification that Company Systems
meet the
3
<PAGE>
TDMA Quality Standards, the amount of $10 million set forth in clause (i) hereof
shall be increased to $100 million.
"Cash Equity Investors" shall have the meaning set forth in the
preamble.
"Cash Equity Loan" shall have the meaning assigned to such term in the
Securities Purchase Agreement.
"Cellular System" shall mean a cellular mobile radio telephone system
constructed and operated in a "metropolitan statistical area" as defined by the
FCC or a "rural service area" as defined by the FCC (or any successor
territorial designation or subdivision thereof authorized by the FCC)
exclusively using the 824 MH to 849 MH and the 869 MH3 to 894 MH3 frequencies
pursuant to a License therefor issued by the FCC.
"Cellular Territory" shall mean the geographic area in respect of which
the Company acquires Permitted Cellular Licenses or Permitted Florida RSAs.
"Class A Voting Common Stock" shall have the meaning set forth in the
first recital.
"Class B Non-Voting Common Stock" shall have the meaning set forth in
the first recital.
"Class C Common Stock" shall have the meaning set forth in the first
recital.
"Class D Common Stock" shall have the meaning set forth in the first
recital.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall have the meaning set forth in the first recital.
"Company" shall have the meaning set forth in the preamble.
"Company Asset Sale" shall have the meaning set forth in Section
7.4(a).
"Company Communications Services" shall mean mobile wireless
telecommunications services (including the transmission of voice, data, image or
other messages or content) provided solely within the Territory, initiated or
terminated using TDMA and frequencies licensed by the FCC, to or from subscriber
equipment that is capable of usage during routine movement throughout the area
covered by a cell site and routine handing-off between cell sites, and is either
intended for such usage or is temporarily fixed to a specific location on a
short-term basis (e.g., a bank of wireless telephones temporarily installed
during a special event of limited duration). Without limiting the foregoing,
Company Communications Services shall include wireless office services if such
services comply with this definition. Company Communications Services shall also
include the transmissions between the Company's cell sites and the Company's
switch or switches in the Territory, handing-off transmissions at the Company's
switch or switches for termination by other carriers, and receiving
transmissions to the Company's customers handed-off at the Company's switch or
switches, in each case for the purpose of facilitating Company Communications
Services described in the first sentence.
4
<PAGE>
"Company Merger" shall have the meaning set forth in Section 7.4(a).
"Company Sale Notice" shall have the meaning set forth in Section
6.2(a).
"Company Stock" shall mean the Series A Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock, the Voting Preference Stock, the
Class A Voting Common Stock, Class B Non-Voting Common Stock, the Class C Common
Stock and the Class D Common Stock.
"Company Systems" shall mean the systems owned and operated by the
Company and its Subsidiaries to provide Company Communications Services in the
Territory.
"Confidential Information" shall have the meaning assigned to such term
in Section 7.7(a).
"Core Service Features" shall mean the service features set forth on
Schedule IV.
"CPR" shall have the meaning set forth in Section 12.8(c).
"Demand Notice" shall have the meaning set forth in Section 5(a)(i).
"Demand Registration" shall have the meaning set forth in Section
5(a)(i).
"Demanding Stockholders" shall have the meaning set forth in Section
5(a)(i).
"Dispute" shall have the meaning set forth in Section 12.8(a).
"Disqualifying Transaction" shall mean a merger, consolidation, asset
acquisition or disposition, or other business combination involving AT&T Corp.
(or its Affiliates) and another Person, which other Person (together with its
Affiliates but before giving effect to such merger, consolidation, asset
acquisition or disposition or other business combination) (a) derives from
telecommunications businesses annual revenues in excess of five billion dollars
(based on its most recently ended fiscal year), (b) derives less than one-third
of its aggregate revenues from the provision of wireless telecommunications
(based on its most recently ended fiscal year for which such information is
available), (c) owns FCC Licenses to offer (and does offer) mobile wireless
telecommunications services (excluding for purposes of this clause (c) FCC
Licenses to offer enhanced special mobile radio services) serving more than 25%
of the POPs within the Territory, and (d) with respect to which AT&T PCS has
given written notice to the Company and the other Stockholders specifying that
such merger, consolidation, asset acquisition or disposition or other business
combination shall be a Disqualifying Transaction for purposes of this Agreement
and the transactions contemplated hereby.
"Employment Agreements" shall have the meaning assigned to such term in
the Securities Purchase Agreement.
"Equity Securities" shall have the meaning set forth in Section 7.2(a).
5
<PAGE>
"Escrowed Shares" shall have the meaning set forth in the Securities
Purchase Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"FAA" shall have the meaning set forth in Section 12.8(e).
"FCC" shall mean the Federal Communications Commission or similar
regulatory authority established in replacement thereof.
"FCC Determination Date" shall mean such date, or such reasonable
period of time as determined by the FCC in any regulation, rule, order or
policy, as of or after which the continued ownership of the Class C Common Stock
by a Stockholder which has suffered a Transfer Event will cause the Company to
compromise or forfeit any Material Benefits.
"Federal Arbitration Act" shall have the meaning set forth in Section
12.8(e).
"Final Order" shall mean an action or decision that has been granted by
the FCC as to which (i) no request for a stay or similar request is pending, no
stay is in effect, the action or decision has not been vacated, reversed, set
aside, annulled or suspended and any deadline for filing such request that may
be designated by statute or regulation has passed, (ii) no petition for
rehearing or reconsideration or application for review is pending and the time
for the filing of any such petition or application has passed, (iii) the FCC
does not have the action or decision under reconsideration on its own motion and
the time within which it may effect such reconsideration has passed, and (iv) no
appeal is pending including other administrative or judicial review, or in
effect and any deadline for filing any such appeal that may be designated by
statute or rule has passed.
"First Offer" shall have the meaning set forth in Section 4.2(a).
"First Offer Period" shall have the meaning set forth in Section
4.2(b).
"First Offeree" shall have the meaning set forth in Section 4.2(a).
"Governmental Authority" means a Federal, state or local court,
legislature, governmental agency (including, without limitation, the United
States Department of Justice), commission or regulatory or administrative
authority or instrumentality.
"Inclusion Event" shall have the meaning set forth in Section 4.3(a).
"Inclusion Event Offeree" shall have the meaning set forth in Section
4.3(a).
"Inclusion Event Purchaser" shall have the meaning set forth in Section
4.3(a).
"Inclusion Notice" shall have the meaning set forth in Section 4.3(a).
"Inclusion Stock" shall have the meaning set forth in Section 4.3(a).
"Indemnified Party" shall have the meaning set forth in Section
5(e)(v).
6
<PAGE>
"Indemnified Stockholder" shall have the meaning set forth in Section
5(e)(i).
"Indemnifying Party" shall have the meaning set forth in Section
5(e)(v).
"Immediate Family" shall mean an individual's spouse, children
(including adopted children), grandchildren, parents, grandparents, and
siblings.
"IPO Date" shall mean the first date on which (a) the Class A Voting
Common Stock shall have been registered pursuant to an effective Registration
Statement under the Securities Act, (b) the aggregate gross proceeds received by
the Company in connection with such Registration Statement(s) equals or exceeds
$20 million, and (c) the Class A Voting Common Stock shall be listed for trading
on the New York Stock Exchange or the American Stock Exchange or authorized for
trading on NASDAQ, including without limitation its National Market System.
"Issuance Notice" shall have the meaning set forth in Section 7.2(a).
"Joint Marketing Period" shall have the meaning set forth in Section
6.2(a).
"Kentucky RSAs" shall mean the Kentucky-4, Kentucky-5, Kentucky-6 and
Kentucky-8 Rural Service Areas.
"Law" shall mean applicable common law and any statute, ordinance, code
or other law, rule, permit, permit condition, regulation, order, decree,
technical or other standard, requirement or procedure enacted, adopted,
promulgated, applied or followed by any Governmental Authority.
"License" shall mean a license, permit, certificate of authority,
waiver, approval, certificate of public convenience and necessity, registration
or other authorization, consent or clearance to construct or operate a facility,
including any emissions, discharges or releases therefrom, or to transact an
activity or business, to construct a tower or to use an asset or process, in
each case issued or granted by a Governmental Authority.
"Liens" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest, right of first refusal or right of others
therein or encumbrance of any nature whatsoever in respect of such asset.
"Majority in Interest" shall mean, with respect to the Cash Equity
Investors, Persons that Beneficially Own, in the aggregate more than 50% of the
aggregate number of shares of Common Stock Beneficially Owned by all such
Persons.
"Majority of the Southeast Region" shall mean PCS Systems and Cellular
Systems owned by AT&T PCS and its Affiliates covering a majority of the POPs in
all such PCS Systems and Cellular Systems in the Southeast Region.
"Majority of the United States" shall mean PCS Systems and Cellular
Systems owned by AT&T PCS and its Affiliates covering a majority of the POPs in
all such PCS Systems and Cellular Systems in the United States.
7
<PAGE>
"Management Agreement" shall mean the Management Agreement, dated of
even date herewith, between the Company and Tritel Management, LLC, as the same
may be amended, modified or supplemented in accordance with the terms thereof.
"Management Stockholder" shall have the meaning set forth in the
preamble.
"Martin" shall mean E.B. Martin, Jr.
"Material Benefits" shall have the meaning set forth in Section 7.12.
"Mercury Investor" shall have the meaning set forth in the preamble.
"Mercury I" shall have the meaning set forth in the preamble.
"Mercury II" shall have the meaning set forth in the preamble.
"Mercury Licenses" shall have the meaning assigned to such term in the
Securities Purchase Agreement.
"Minimum Build-Out Plan" shall mean the build-out plan for the
Company's PCS Systems set forth on Schedule V hereto.
"Model Procedures" shall have the meaning set forth in Section 12.8(c).
"Mounger" shall mean William M. Mounger II.
"MTA" shall mean a geographic area established by the Rand McNally 1992
Commercial Atlas & Marketing Guide, 123rd Edition, pp. 38-39, as modified by the
FCC to form the initial geographic area of license for the A and B blocks of
broadband PCS spectrum as defined in Section 24.202 of the FCC's rules.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ" shall mean the National Association of Securities Dealers'
Automated Quotation System.
"Network Membership License Agreement" shall mean the Network
Membership License Agreement between the Company and AT&T Corp., dated of even
date herewith, as the same may be amended, modified or supplemented in
accordance with the terms thereof.
"Offer Notice" shall have the meaning set forth in Section 4.2(a).
"Offered Shares" shall have the meaning set forth in Section 4.2(a).
"Overlap Territory" shall mean that portion of the Territory in which a
Person or its Affiliates (other than AT&T PCS and its Affiliates) that is party
to a transaction meeting the description of a transaction set forth in clauses
(a), (b) and (c) of the definition of a Disqualifying Transaction owns, before
giving effect to such transaction, an FCC License to offer Commercial Mobile
Radio Services.
8
<PAGE>
"Option Agreement" has the meaning assigned to such term in the
Securities Purchase Agreement.
"PCS System" shall mean a mobile communication system constructed and
operated in a BTA or a MTA (or any successor territorial designations or
subdivision thereof authorized by the FCC) exclusively using the 1850 MHZ to
1910 MHZ and 1930 MHZ to 1990 MHZ frequencies, or portions thereof pursuant to a
License therefor issued by the FCC.
"PCS Territory" shall mean the territory described on hereto as such
territory may be expanded in accordance with Section 7.13(a).
"Permitted Cellular License" shall have the meaning assigned to such
term in Section 7.11(b).
"Permitted Consolidation Transaction" shall have the meaning set forth
in Section 7.11(a).
"Permitted Florida MSAs" shall have the meaning set forth in Section
7.13(b).
"Permitted Merger Participant" shall mean an AT&T Licensee (i) that
owns one or more FCC Licenses to provide Commercial Mobile Radio Services that
were acquired from AT&T PCS or its Affiliates in all or any part of the
Louisville, KY, Knoxville, TN, Memphis, TN, Little Rock, AK, Detroit, MI, St.
Louis, MO, Atlanta, GA, Boston, MA, Columbus, OH, Baltimore/Washington,
Richmond, VA, Charlotte, NC MTAs and (ii) on the date of acquisition from AT&T
PCS of any such FCC Licenses to provide Commercial Mobile Radio Service referred
to in clause (i) hereof, owned FCC Licenses covering at least 8 million POPs,
and in which AT&T PCS or its Affiliates has not disposed of more than one-half
of AT&T PCS' original equity interest therein.
"Permitted Non-CMRS License" shall have the meaning set forth in
Section 7.11(c).
"Person" shall mean an individual, corporation, partnership, limited
liability company, association, joint stock company, Governmental Authority,
business trust or other legal entity.
"Piggyback Notice" shall have the meaning set forth in Section 5(b)(i).
"Piggyback Registration" shall have the meaning set forth in Section
5(b)(i).
"POPs" shall mean, with respect to any licensed area, the residents of
such area based on the most recent publication by Equifax Marketing Decision
Systems, Inc.
"Prohibited Transferee" shall mean any Person that is one of the three
(excluding any Person excluded from this definition by reason of the proviso
hereto) largest carriers (other than AT&T Corp.) of telecommunications services
that as of the date hereof constitute interexchange services (based on revenue
derived from the provision of such telecommunications services within the entire
United States during the most recent fiscal year for which such information is
available) or an Affiliate thereof; provided, however, that such Person shall
not constitute a Prohibited Transferee if (a) a material portion of such
Person's business is also the business of
9
<PAGE>
providing wireless communications systems, and (b) TDMA is utilized in a
substantial majority of such Person's wireless communications systems.
"Prospectus" shall have the meaning set forth in Section 5(d)(i).
"Purchase Notice" shall have the meaning set forth in Section 4.2(b).
"Purchase Right" shall have the meaning set forth in Section 7.2(a).
"Qualified Holder" shall mean (a) any Stockholder or group of
Stockholders that Beneficially Owns (x) for purposes of Sections 7.3 and 7.8,
greater than 33 (% percent of the outstanding shares of Common Stock on a fully
diluted basis (as appropriately adjusted for stock splits, stock dividends and
the like), (y) for purposes of Section 5, shares of Class A Voting Common Stock
reasonably expected to, upon sale, result in aggregate gross proceeds of at
least $25 million, or (b) AT&T PCS and TWR Cellular for so long as AT&T PCS and
TWR Cellular Beneficially Own in the aggregate, greater than two-thirds of the
initial issuance to AT&T PCS and TWR Cellular of shares of Series A Preferred
Stock (as appropriately adjusted for stock splits, stock dividends and the
like).
"Registrable Securities" shall mean (a) the Class A Voting Common Stock
now owned or hereafter acquired by any Stockholder or issuable upon conversion
or exchange of any Equity Security, and (b) all Class A Voting Common Stock
issued or issuable upon conversion, exchange or exercise of any Equity Security
which is issued pursuant to a stock split, stock dividend or other similar
distribution or event with respect to Class A Voting Common Stock but with
respect to any Class A Voting Common Stock, only until such time as such Class A
Voting Common Stock (i) has been effectively registered under the Securities Act
and disposed of in accordance with the Registration Statement covering it, (ii)
has been sold to the public pursuant to Rule 144 (or any similar provision then
in force), (iii) shall otherwise have been transferred, a new certificate
evidencing such Class A Voting Common Stock without a legend restricting further
transfer shall have been delivered by the Company, and subsequent public
distribution of such Class A Voting Common Stock shall neither require
registration under the Securities Act nor qualification (or any similar filing)
under any state securities or "blue sky" law then in effect, or (iv) shall have
ceased to be issued and outstanding.
"Registration" shall have the meaning set forth in Section 5(d).
"Registration Expenses" shall have the meaning set forth in Section
5(g).
"Registration Statement" shall have the meaning set forth in Section
5(d)(i).
"Regulatory Problem" shall have the meaning assigned to such term in
the Securities Purchase Agreement.
"Related Agreements" shall mean each of the Network Membership License
Agreement, the Management Agreement, the Employment Agreements, the Resale
Agreement, the Option Agreement, the Old Mercury Note as defined in the
Securities Purchase Agreement (and the pledge agreement and other documents
referred to therein) and the Roaming Agreement.
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<PAGE>
"Representative" shall have the meaning set forth in Section 7.7(a).
"Resale Agreement" shall mean the Resale Agreement between the Company
and AWS or an Affiliate thereof, dated of even date herewith, as the same may be
amended, modified or supplemented in accordance with the terms thereof.
"Restated By-Laws" shall mean the Amended and Restated By-Laws of the
Company in the form of Exhibit A, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Restated Certificate" shall mean the Amended and Restated Certificate
of Incorporation of the Company, in the form of Exhibit B, as the same may be
amended, modified or supplemented in accordance with the terms thereof.
"Roaming Agreement" shall mean the Intercarrier Roamer Service
Agreement between the Company and AWS, dated of even date herewith, as the same
may be amended, modified or supplemented in accordance with the terms thereof.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act (or
any similar rule as may be in effect from time to time).
"Sale Notice" shall have the meaning set forth in Section 7.4(d).
"Sale Offer" shall have the meaning set forth in Section 7.4(d).
"Sale Transaction" shall have the meaning set forth in Section 7.4(c).
"SBIC" shall have the meaning assigned to such term in the Securities
Purchase Agreement.
"SBIC Holder" shall have the meaning assigned to such term in the
Securities Purchase Agreement.
"Section 6.2 Period" shall have the meaning set forth in Section 6.2.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement, dated as of May 20, 1998, among the Company, Mercury I, Mercury II,
and the other parties thereto.
"Seller" shall have the meaning set forth in Section 4.2(a).
"Selling Stockholder" shall have the meaning set forth in Section
4.3(a).
"Series A Preferred Directors" shall have the meaning set forth in
Section 3.1(c).
"Series A Preferred Stock" shall have the meaning set forth in the
first recital.
"Series B Preferred Stock" shall have the meaning set forth in the
first recital.
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<PAGE>
"Series C Preferred Stock" shall have the meaning set forth in the
first recital.
"Series D Preferred Stock" shall have the meaning set forth in the
first recital.
"Southeast Region" shall mean the geographic area comprising
Washington, D.C. and the States of Alabama, Florida, Georgia, Kentucky,
Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and
West Virginia.
"Stockholder" shall have the meaning set forth in the preamble.
"Subject Market" shall mean, with respect to any announcement by AT&T
PCS or its Affiliates of a transaction meeting the description of a transaction
set forth in clauses (a), (b) and (c) of the definition of a Disqualifying
Transaction, the PCS System owned and operated by AT&T PCS and its Affiliates in
the Atlanta, GA BTA.
"Subsidiary" shall mean, with respect to any Person, a corporation or
other entity of which 50% or more of the voting power of the voting equity
securities or equity interests is owned, directly or indirectly, by such Person.
"Substantial Company Breach" shall mean a material breach by the
Company or its Subsidiaries of their respective obligations under any of
Sections 8.1(a), 8.2, 8.3, or 8.5(a) of this Agreement, if and only if any such
material breach is not cured within 30 days of notice thereof from AT&T PCS to
the Company or, if such breach is not capable of being cured within such thirty
(30) day period, within one-hundred eighty (180) days of such notice, provided
the Company is using best efforts to cure such material breach as soon as
reasonably practicable.
"Sullivan" shall mean Jerry M. Sullivan, Jr.
"TDMA" shall mean the North American Time Division Multiple Access
standard set by the Cellular Telecommunications Industry Association, IS-54/136,
and any standard that is based upon, or is an upgrade from, or is a successor
to, such standard, if and only if such new or upgraded standard is (i) adopted
by AT&T PCS and its Affiliates in a Majority of the Southeast Region, (ii)
technologically compatible in all material respects with the standard then being
used in a Majority of the United States (including without limitation for the
purpose of facilitating roaming, hand-off and automatic call delivery between
systems), and the User Interface in PCS Systems using such new or upgraded
standard will not differ from the User Interface in a Majority of the United
States in a manner that would be material to customers, or (iii) is approved in
writing by AT&T PCS.
"TDMA Quality Standards" shall mean the quality standards applicable to
TDMA PCS Systems and Cellular Systems owned and operated by AT&T PCS and its
Affiliates in the Southeast Region, which, as currently in effect, are set forth
on Schedule VII, as the same may be amended from time to time, provided any such
amended standards shall become effective one hundred twenty (120) days after
notice thereof is given to the Company.
"TWR Cellular" shall have the meaning set forth in the preamble.
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"Territory" shall mean the PCS Territory and the Cellular Territory;
provided, however, that in the event that, after consummation of a Disqualifying
Transaction, AT&T PCS terminates its and its Affiliates' obligations under
Section 8.6 with respect to any Overlap Territory, the "Territory" shall exclude
the Overlap Territory solely for the purpose of determining the rights and
obligations of AT&T PCS and the Company hereunder.
"Transfer" shall have the meaning set forth in Section 4.1.
"Transfer Event" shall have the meaning set forth in Section 7.12.
"Unfunded Commitment" shall have the meaning assigned to such term in
the Securities Purchase Agreement.
"User Interface" shall mean the process, functional commands, and look
and feel by which a mobile wireless telecommunications service subscriber
operates and utilizes the mobile wireless telecommunications services and
service features provided by a PCS System, including the sequence and detail of
specific commands or service codes, the detailed operation and response of
subscriber equipment to the sequence of keys pressed to effect subscriber
equipment function, the response of subscriber equipment to the activation of
these keys or signals or data from the PCS System, the manner in which
information is displayed on the screen of subscriber equipment, and the use of
announcement tones and messages.
"Voting Preference Stock" shall have the meaning set forth in the first
recital.
Each definition or pronoun herein shall be deemed to refer to the singular,
plural, masculine, feminine or neuter as the context requires. Words such as
"herein," "hereinafter," "hereof," "hereto" and "hereunder" refer to this
Agreement as a whole, unless the context otherwise requires.
2. Restated Certificate and Restated By-Laws. The Restated Certificate
in effect as of the date hereof is in the form of Exhibit B hereto. The Restated
By-Laws of the Company in effect as of the date hereof are in the form of
Exhibit A hereto.
3. Management of Company.
3.1. Board of Directors. The Board of Directors shall consist of
thirteen (13) directors; provided, however, that the number of directors
constituting the Board of Directors shall be reduced in the circumstances set
forth in this Section 3.1. Each of the Stockholders hereby agrees that it will
vote all of the shares of Class A Voting Common Stock and Voting Preference
Stock Beneficially Owned or held of record by it (whether now owned or hereafter
acquired), in person or by proxy, to cause the election of directors and
thereafter the continuation in office of such directors as follows:
(a). three (3) individuals elected by holders of a Majority in
Interest of the Class A Voting Common Stock Beneficially Owned by the Cash
Equity Investors, in their sole discretion;
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(b) four (4) individuals elected by the holders of the Voting
Preference Stock so long as any such individual elected by such holders is an
officer of the Company, each of whom, in accordance with the Restated
Certificate, shall have that number of votes on all matters requiring the vote
or consent of the Board of Directors as shall be equal to a fraction, the
numerator of which is two (2) and the denominator of which is the number of such
individuals elected to the Board of Directors pursuant to this Section 3.1(b)
and then serving thereon;
(c) two (2) individuals (the "Series A Preferred Directors")
elected by AT&T PCS in its capacity as holder of Series A Preferred Stock so
long as it and TWR Cellular have the right to elect two (2) directors in
accordance with the Restated Certificate; and
(d) (i) until the date that holders of shares of Voting
Preference Stock shall vote as a class with holders of Class A Voting Common
Stock, (x) one (1) individual selected by the holders of the Voting Preference
Stock which individual shall be reasonably acceptable to holders of a Majority
in Interest of the Class A Voting Stock Beneficially Owned by the Cash Equity
Investors, and (y) three (3) individuals selected by the holders of the Voting
Preference Stock, which three (3) individuals shall be reasonably acceptable to
holders of a Majority in Interest of the Class A Voting Common Stock
Beneficially Owned by the Cash Equity Investors and AT&T PCS, in the reasonable
discretion of such Cash Equity Investors, on the one hand, and AT&T PCS, on the
other hand, each of whom, in accordance with the Restated Certificate, shall
have that number of votes on all matters requiring the vote or consent of the
Board of Directors as shall be equal to a fraction, the numerator of which is
three (3) and the denominator of which is the number of such individuals elected
to the Board of Directors pursuant to this Section 3.1(d)(i)(y) and then serving
thereon, and (ii) effective on the date that holders of shares of Voting
Preference Stock shall vote as a class with holders of Class A Voting Common
Stock, (x) one (1) individual selected by holders of a Majority in Interest of
the Common Stock held by the Cash Equity Investors, and (y) three (3)
individuals selected by holders of a Majority in Interest of the Common Stock
held by the Cash Equity Investors, which three (3) individuals shall be
acceptable to Mounger, Martin and Sullivan (in each case so long as he is an
officer of the Company), and AT&T PCS, in the discretion of Mounger, Martin and
Sullivan on the one hand, and AT&T PCS, on the other hand.
In the event that Mounger, Martin or Sullivan shall cease to be an officer of
the Company, or the Management Agreement shall cease to be in full force and
effect, such individuals shall resign (or the holders of the Voting Preference
Stock shall remove him) from the Board of Directors and the holders of the
Voting Preference Stock shall select a replacement or replacements who shall be
acceptable to a Majority in Interest of the Cash Equity Investors and AT&T PCS,
in each case in its sole discretion. In the event that AT&T PCS and TWR Cellular
shall cease to be entitled to elect the Series A Preferred Directors, such
directors shall resign (or the other directors or Stockholders shall remove
them) from the Board of Directors and the remaining directors shall take such
action so that the number of directors constituting the entire Board of
Directors shall be reduced accordingly. In the event that any Cash Equity
Investor that has an Unfunded Commitment shall fail to satisfy any such portion
of its Unfunded Commitments when due in accordance with Section 2.2 of the
Securities Purchase Agreement or Section 3.10 hereof, and such failure is not
cured by such Cash Equity Investor or another Cash Equity Investor within
thirty-five (35) days thereof, then, until such failure is cured, the member of
the Board of Directors who is designated by, or Affiliated with, such Cash
Equity Investor (whether as an
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employee, partner, member, stockholder or otherwise) shall resign from the Board
of Directors and the Person(s) who designated such member shall select an
individual acceptable to AT&T PCS in its sole discretion.
Any nomination or designation of directors and the acceptance
thereof pursuant to Section 3.1 shall be evidenced in writing.
Each Cash Equity Investor shall have the right, so long as it
Beneficially Owns shares of Series C Preferred Stock with an aggregate purchase
price of at least $10,000,000 to designate one (1) person who shall be entitled
to attend the Board of Directors Meeting as an observer, including meetings
during which the Company's annual budget is discussed and presented. Such
observer shall have the right to receive all of the Board of Directors materials
and shall also have the right to meet quarterly with the management of the
Company to consult on the business affairs of the Company. In addition, so long
as AT&T PCS and TWR Cellular have the right to designate two directors in
accordance with the Restated Certificate, up to two (2) AT&T PCS regional
directors (in regions overlapping with or in geographic proximity to the
Territory) shall have the right to attend each meeting of the Board of Directors
as an observer.
3.2 Removal; Filling of Vacancies. Except as set forth in Section
3.1, each Stockholder agrees it will not vote any shares of Voting Preference
Stock and/or Class A Voting Common Stock Beneficially Owned by such Stockholder,
and shall not permit any Affiliated Successor of such Stockholder holding any
Voting Preference Stock and/or Class A Voting Common Stock, to vote for the
removal without cause of any director designated by any other Stockholder in
accordance with Section 3.1. Any Stockholder or group of Stockholders who has
the right to designate any member(s) of the Board of Directors shall have the
right to replace any member(s) so designated by it (whether or not such member
is removed from the Board of Directors with or without cause or ceases to be a
member of the Board of Directors by reason of death, disability or for any other
reason) upon written notice to the other Stockholders, the Company and the
members of the Board of Directors which notice shall set forth the name of the
member(s) being replaced and the name of the new member(s); provided, however,
that if a director designated pursuant to (A) Section 3.1(d)(i)(x) is replaced
by the holders of Voting Preference Stock, the individual designated by the
holders of the Voting Preference Stock to replace such director must be
acceptable to the Cash Equity Investors in accordance with the terms of Section
3.1(d)(i)(x), (B) Section 3.1(d)(i)(y) is replaced by the holders of Voting
Preference Stock, the individual designated by the holders of Voting Preference
Stock to replace such director must be acceptable to the Cash Equity Investors
and AT&T PCS in accordance with the terms of Section 3.1(d)(i)(y), (C) Section
3.1 (d)(ii)(y) is replaced by the holders of a Majority in Interest of Common
Stock held by the Cash Equity Investors, the individual designated by the
holders of a Majority in Interest of Common Stock held by the Cash Equity
Investors to replace such director must be acceptable to Mounger, Martin and
Sullivan and AT&T PCS in accordance with the terms of Section 3.1(d)(ii)(y), and
(D) Section 3.1(b) is replaced by the holders of the Voting Preference Stock,
the officer designated by the holders of the Voting Preference Stock to replace
such director must be acceptable to holders of a Majority in Interest of the
Class A Common Stock Beneficially Owned by the Cash Equity Investors and AT&T
PCS in the reasonable discretion of such Cash Equity Investors, on the one hand,
and AT&T PCS, on the other hand. Each of the Stockholders agrees to vote, and to
cause its Affiliated Successors to vote, its shares of Voting Preference Stock
and/or Class A Voting
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Common Stock Beneficially Owned by such Stockholder or such Stockholder's
Affiliated Successor, or shall otherwise take any action as is necessary to
cause the election of any successor director designated by any Stockholder
pursuant to this Section 3.2. The holders of the Voting Preference Stock agree
that during the three (3) year period commencing on the date hereof they will
not (i) remove the individuals nominated by them pursuant to Sections
3.1(d)(i)(x) or 3.1(d)(i)(y), or (ii) nominate for election any individuals
other than the individuals initially selected by them and approved in accordance
with said Sections 3.1(d)(i)(x) or 3.1(d)(i)(y) (unless any such individual is
removed from the Board of Directors for cause), subject to the agreements of
such individuals to serve on the Board of Directors.
3.3 Initial Directors. In accordance with Section 228 of the
Delaware General Corporation Law and pursuant to the provisions of Section 3.1
of this Agreement, the Stockholders hereby consent to the election of and do
hereby elect in accordance with Section 3.1 hereof the persons designated in
Schedule VIII hereto as directors of the Company. Such persons shall hold office
until their successors are duly elected and qualified, except as otherwise
provided in this Agreement or the Restated Certificate or the Restated By-Laws.
3.4 Compensation and Reimbursement. The members of the Board of
Directors (other than the directors selected pursuant to Section 3.1(d)(i)(y) or
3.1(d)(ii)(y), as applicable) shall not be compensated for their services as a
director or as a member of any committee of the Board of Directors. The Board of
Directors shall determine the compensation payable, if any, to the directors
selected pursuant to Section 3.1(d)(i)(y) or 3.1(d)(ii)(y) for their services as
a director. The Company shall reimburse each member of the Board of Directors
for all out-of-pocket expenses reasonably incurred by such director in
connection with the performance of his service as a director or as a member of
any committee of the Board of Directors.
3.5 Business of the Company. The business and affairs of the Company
shall be conducted by the officers of the Company under the supervision of the
Board of Directors, substantially in accordance with operating and capital
expenditure budgets approved by the Board of Directors from time to time. The
Stockholders and the directors hereby approve the five (5) year build-out plan
for the Business and the capital budget for the first two (2) years of the
Business in the forms attached hereto as Schedule IX.
3.6 Required Votes. (a) All actions of the Board of Directors of the
Company shall require the vote of at least a majority of the entire Board of
Directors, unless otherwise required by Law, the Restated Certificate, the
Restated By-Laws or this Agreement.
(b) None of the following transactions or actions shall be
entered into or taken by the Company, unless (i) voted for or consented to by
the vote of at least three (3) of the five (5) directors designated pursuant to
Sections 3.1(a) and (c) and four (4) of the six (6) votes cast by directors
designated pursuant to Sections 3.1(b) and (d).
(i) The sale, transfer, assignment or other disposition of any
material portion of the assets of the Company or any of its Subsidiaries
other than in the ordinary course of business;
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(ii) The merger, combination or consolidation of the Company or
any of its Subsidiaries with or into any other entity, regardless of
whether the Company or any such Subsidiary is the surviving entity in any
such merger, combination or consolidation, the acquisition of any
businesses by the Corporation, the formation of any partnership or joint
venture involving the Company, or the liquidation, dissolution or winding
up of the Company or any of its Subsidiary;
(iii) Any offering or issuance of additional shares of Preferred
Stock, Voting Preference Stock or Common Stock of, or any other securities
or ownership interests in, the Company or any of its Subsidiaries,
including, without limitation, warrants, options or other rights
convertible or exchangeable into Preferred Stock, Voting Preference Stock
or Common Stock of, or other securities or ownership interests in, the
Company or any of its Subsidiaries except as contemplated by the Securities
Purchase Agreement or the declaration of any dividends thereon;
(iv) The repurchase by the Company of any Company Stock (other
than shares of Class A Voting Common Stock purchased from former employees
of the Company);
(v) The authorization or adoption of any amendment to the
Restated Certificate, Restated By-laws or any constituent document of the
Company or any of its Subsidiaries;
(vi) The hiring or termination of any executive officer of the
Company;
(vii) The approval of, or amendment to, any operating or capital
budget of the Company or any of its Subsidiaries;
(viii) The incurrence by the Company or any of its Subsidiaries,
whether directly or indirectly, of any indebtedness for borrowed money or
capital leases in any calendar quarter in excess of $1,000,000;
(ix) Any agreement or arrangement, written or oral, to pay any
director, officer, agent or employee of the Company or any of its
Subsidiaries $200,000 or more on an annual basis or any loan, lease,
contract or other transaction with any employee of the Company or any of
its Subsidiaries with an annual salary in excess of $200,000 or with any
director or officer of the Company or any member of any such Person's
Immediate Family;
(x) The making of, or commitment to make, any capital
expenditures involving a payment or liability in any one year of $1,000,000
or more in the aggregate by the Company or any of its Subsidiaries;
(xi) The initiation of any bankruptcy proceeding, dissolution or
liquidation of the Company or any of its Subsidiaries; and
(xii) The entering into any contract, agreement or understanding
to do any of the foregoing.
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Notwithstanding the foregoing, any amendment, modification, waiver
or termination of the Management Agreement or the Employment Agreements shall
require the affirmative vote or consent of a majority of the Board of Directors
(excluding Messrs. Mounger, Martin and Sullivan).
3.7 Transactions between the Company and the Stockholders or their
Affiliates. Except for this Agreement, the Securities Purchase Agreement and the
Related Agreements and the transactions contemplated hereby and thereby and any
other arms-length agreements or transactions entered into from time to time
between the Company and its Subsidiaries, on the one-hand, and AT&T PCS and its
Affiliates, on the other hand, no Stockholder or any Affiliate of any
Stockholder shall enter into any transaction with the Company or any Subsidiary
of the Company unless such transaction is approved by a majority of the
disinterested members of the Board of Directors. For purposes hereof, a director
shall be deemed to be disinterested with respect to any such transaction if such
director was not designated a director by the Stockholder that (or an Affiliate
of which) proposed to engage in such transaction with the Company or any
Subsidiary of the Company and such member is not an officer, director, partner,
employee, stockholder of, or consultant to, such Stockholder or any of its
Affiliates; provided, however, that for purposes of this Section 3.7 the
directors designated pursuant to Section 3.1(d)(ii)(y) shall not be deemed to
have been designated by the Cash Equity Investors, AT&T PCS or the holders of
the Voting Preference Stock.
3.8 Board Committees. If an executive committee of the Board of
Directors (or a committee of the Board of Directors having substantially the
same mandate and powers of such a committee) is established, one of the Series A
Preferred Directors, one of the directors selected by the Cash Equity Investors
pursuant to Section 3.1(a), and Mounger (so long as he is an officer of the
Company) shall each serve as a member of such committee (or such other committee
having substantially the same mandate and powers) and such other directors as
shall be designated by the Board of Directors.
3.9 Voting Agreements and Voting Trusts. Except as disclosed on
Schedule X or referred to in this Section 3.9, each Stockholder agrees that it
will not, directly or indirectly, deposit any of his or its shares of Series C
Preferred Stock, Series D Preferred Stock, Voting Preference Stock and/or Common
Stock in a voting trust or other similar arrangement or, except as expressly
provided herein, subject such shares to a voting agreement or other similar
arrangements. Each of AT&T PCS and TWR Cellular covenants and agrees that it
will not, directly or indirectly, enter into a voting or similar agreement with
any Transferee of shares of Series A Preferred Stock. Each holder of Voting
Preference Stock shall vote all shares of Voting Preference Stock owned by him
in accordance with the vote of holders of a majority of the shares of Voting
Preference Stock.
3.10 Additional Capital Contributions. In accordance with the
Securities Purchase Agreement, the Cash Equity Investors shall contribute to the
capital of the Company an aggregate additional amount equal to their Unfunded
Commitments, such contributions to be made by the Cash Equity Investors in the
amounts and on the dates specified on Schedule I thereto. In the event that the
Board of Directors determines in good faith that the Company requires all or any
portion of the Unfunded Commitment prior to the dates specified on such
Schedule, then upon notice given by the Company to the Cash Equity Investors,
the Cash Equity
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Investors shall contribute, pro rata in accordance with their ownership of
Series C Preferred Stock on the date hereof, the additional capital set forth in
such notice up to the amount, in the case of each such Cash Equity Investor, of
its Unfunded Commitment. Any such additional capital required to be contributed
by the Cash Equity Investors shall be contributed by the Cash Equity Investors
within twenty (20) business days of receipt of written notice from the Company.
3.11 Board Materials. Each Cash Equity Investor shall have the
right, so long as it continues to Beneficially Own the shares of Series C
Preferred Stock it Beneficially Owns on the date hereof, to request that the
Company send to it copies of all materials distributed to the Board of
Directors.
4. Transfers of Shares.
4.1 General.
(a) Each Stockholder agrees that at all times prior to the IPO
Date it shall not, directly or indirectly, transfer, sell, assign, pledge,
tender or otherwise grant, create or suffer to exist a Lien in or upon, give,
place in trust, or otherwise voluntarily or involuntarily (including transfers
by testamentary or intestate succession) dispose of by operation of law, offer
or otherwise (any such action being referred to herein as a "Transfer"), any of
the shares of Company Stock Beneficially Owned by such Stockholder as of the
date hereof or which may hereafter be acquired by such Stockholder, except that
(i) a Stockholder may Transfer shares of Series C Preferred Stock, Series D
Preferred Stock, Class A Voting Common Stock and Class B Non Voting Common Stock
to an Affiliated Successor, (ii) a Stockholder may Transfer shares of Class A
Voting Common Stock and Class B Non Voting Common Stock to any other Person
after complying first with Section 4.2 and next with Section 4.3, if applicable,
(iii) a Cash Equity Investor may Transfer shares of Series C Preferred Stock,
Class A Voting Common Stock and Class B Non Voting Common Stock to another Cash
Equity Investor, (iv) one or more Cash Equity Investors may transfer up to 1,000
shares (in the aggregate for all Cash Equity Investors) of Series C Preferred
Stock to the Management Stockholders, (v) a Management Stockholder may Transfer
shares of Class A Voting Common Stock to the Company, or (vi) Mercury I and
Mercury II may Transfer shares of Company Stock to Mercury Investors who become
Mercury Investor Indemnitors (as defined in the Securities Purchase Agreement)
in accordance with Section 6.10(b) of the Securities Purchase Agreement.
(b) Each Stockholder agrees that at all times on and after the
IPO Date it shall not, directly or indirectly, Transfer any of the shares of
Series D Preferred Stock, Class A Voting Common Stock or Class B Non Voting
Common Stock Beneficially Owned by such Stockholder as of the date hereof or
which may hereafter be acquired by such Stockholder except that (i) a Cash
Equity Investor may Transfer shares of Class A Voting Common Stock and Class B
Non Voting Common Stock to another Cash Equity Investor, (ii) Mercury I and
Mercury II may Transfer shares of Company Stock to Mercury Investors who become
Mercury Investor Indemnitors (as defined in the Securities Purchase Agreement)
in accordance with Section 6.10(b) of the Securities Purchase Agreement, and
(iii) a Stockholder may Transfer (x) shares of Series D Preferred Stock, Class A
Voting Common Stock and Class B Non Voting Common Stock to an Affiliated
Successor, and (y) shares of Class A Voting Common Stock and Class B Non Voting
Common Stock after complying first with Section 4.2 and next with Section
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4.3, if applicable, provided, however, a Stockholder shall not be required to
comply with Section 4.2 if such Stockholder first complies with the applicable
provisions of Section 4.4 in connection with Transfers of Class A Common Stock
(1) pursuant to a Registration of Common Stock under Section 5 which is an
underwritten offering and constitutes a bona fide distribution of such Common
Stock pursuant to such Registration, (2) pursuant to Rule 144, or (3) in any
single transaction or series of related transactions to one or more Persons
which results in the Transfer by such Stockholder (together with any other
Stockholder participating in such single transaction or series of related
transactions) of not more than ten percent (10%) of the Common Stock on a fully
diluted basis (excluding for such purposes the Series A Preferred Stock).
Notwithstanding the foregoing, in the event that after the IPO Date any shares
of Series C Preferred Stock shall continue to be outstanding, such outstanding
shares of Series C Preferred Stock shall be subject to the restrictions on
Transfer contained in this Article 4 that are then applicable to shares of
Common Stock Beneficially Owned by any Cash Equity Investor, as such
restrictions may change from time to time in accordance with this Article 4.
(c) Notwithstanding anything to the contrary contained in
Sections 4.1(a) or (b), prior to the (i) third anniversary of the date hereof,
each Stockholder agrees that it will not Transfer any shares of Series C
Preferred Stock, Series D Preferred Stock or Common Stock Beneficially Owned by
it as of the date hereof or which may hereafter be acquired by it to any Person,
except that (v) Mercury I and Mercury II may Transfer shares of Company Stock to
Mercury Investors who become Mercury Investor Indemnitors (as defined in the
Securities Purchase Agreement) in accordance with Section 6.10(b) of the
Securities Purchase Agreement, (w) a Stockholder may Transfer shares of Series C
Preferred Stock, Series D Preferred Stock, Class A Voting Common Stock and Class
B Non Voting Common Stock to an Affiliated Successor, (x) a Cash Equity Investor
may Transfer shares of Series C Preferred Stock, Class A Voting Common Stock and
Class B Non Voting Common Stock to another Cash Equity Investor, (y) one or more
Cash Equity Investors may transfer up to 1,000 shares (in the aggregate for all
Cash Equity Investors) of Series C Preferred Stock to the Management
Stockholders, or (z) a Management Stockholder may Transfer shares of Class A
Voting Common Stock to the Company, and (ii) fifth anniversary of the date
hereof, each Management Stockholder agrees that it will not Transfer any shares
of Class A Voting Common Stock Beneficially Owned by it as of the date hereof or
which may hereafter be acquired by it to any Person; provided, however, that (x)
on or after the later to occur of (I) the third anniversary of the date hereof,
and (II) the IPO Date, a Management Stockholder may Transfer up to 25% of the
shares of Class A Voting Common Stock held by such Management Stockholder on the
date hereof, plus any shares of Series C Preferred Stock purchased from a Cash
Equity Investor which shares may be Transferred notwithstanding the foregoing,
and (y) in the event the Management Agreement is terminated on or after the
later to occur of (I) the date that the Management Stockholders shall have
performed all of their obligations pursuant to Section 5(e) of the Management
Agreement, and (II) the third anniversary of the date hereof, a Management
Stockholder may Transfer all shares of Class A Voting Common Stock held by such
Management Stockholder free of any restrictions imposed on any such Transfer by
this Section 4.1(c). In addition, notwithstanding anything to the contrary
contained herein, the Management Stockholders shall not Transfer any shares of
Class A Voting Common Stock that shall not have ceased to be subject to
repurchase in accordance with the terms of any Employment Agreement between the
Company and such Management Stockholder.
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(d) Each of AT&T PCS and TWR Cellular agrees that it will not (i)
Transfer any shares of Series D Preferred Stock held by it to any Person other
than to an Affiliated Successor; provided, however, that nothing contained in
this Section 4.1(d) shall limit AT&T PCS' or TWR Cellular's right to Transfer in
accordance with the terms of this Agreement any shares of Series C Preferred
Stock or Common Stock issued upon conversion of any such shares of Series D
Preferred Stock. Prior to the IPO Date, each of AT&T PCS and TWR Cellular agrees
that it will not Transfer any shares of Series A Preferred Stock held by it
except that AT&T PCS and TWR Cellular may transfer Series A Preferred Stock (i)
to an Affiliated Successor, or (ii) to any other Person after complying with
Section 4.2; it being understood that on and after the IPO Date, AT&T PCS and
TWR Cellular may Transfer its shares of Series A Preferred Stock free from any
restrictions on Transfer of such shares under this Agreement.
(e) (i) Each of the holders of Class C Common Stock and Voting
Preference Stock agrees that it shall not Transfer any of the shares of Class C
Common Stock or Voting Preference Stock Beneficially Owned by it other than
pursuant to Section 5(e) of the Management Agreement.
(ii) Prior to the IPO Date, each Stockholder agrees that it will
not Transfer any shares of Class D Common Stock held by it except (I) to an
Affiliated Successor, (II) that Cash Equity Investors may Transfer shares
of Class D Common Stock to another Cash Equity Investor, (III) that Mercury
I and Mercury II may Transfer Escrowed Shares in accordance with Section
6.10(b) of the Securities Purchase Agreement or (IV) to any other Person
after complying with Section 4.2; it being understood that on and after the
IPO Date, each Stockholder may Transfer its shares of Class D Common Stock
free from any restrictions under this Section 4.1(e) on Transfer of such
shares under this Agreement. Notwithstanding anything to the contrary
contained in this Agreement, each Stockholder agrees that it will not
effect a Transfer of shares of Class D Common Stock to any Person if after
giving effect to such Transfer, such Person, together with its Affiliates
would Beneficially Own 25% or more of all of the issued and outstanding
shares of Class D Common Stock.
(f) Notwithstanding anything to the contrary contained in this
Section 4, (i) Section 4.1 shall not apply (x) to the pledge by certain of the
Cash Equity Investors to the Company of shares of Series C Preferred Stock and
Common Stock as security for their Unfunded Commitments, or to the lender under
the Cash Equity Loan Documents as security for their obligations to such lender
pursuant to the Cash Equity Loan Documents, (y) any other Lien granted by a
Stockholder with respect to any shares of Series C Preferred Stock and Common
Stock as security for any obligation of such Stockholder to the Company or the
lender under the Cash Equity Loan Documents, or to any Transfer of shares of
Series C Preferred Stock or Common Stock in connection with the exercise by the
Company or the lender under the Cash Equity Loan Documents of their respective
remedies pursuant to any such pledge agreements, or (z) any pledge by Mercury II
to Mercury I of any shares of Series C Preferred Stock and Common Stock and (ii)
a Cash Equity Investor that is a SBIC Holder that is required to dispose of its
investment in the Company by reason of a breach by the Company of Section 6.6(d)
of the Securities Purchase Agreement or a Regulatory Problem, may Transfer its
shares of Class C Preferred Stock or Common Stock without complying with the
terms of Section 4.3.
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4.2 Right of First Offer.
(a) If a Stockholder (each a "Seller") desires to Transfer any or
all of its shares of Preferred Stock or Common Stock (other than Voting
Preference Stock and Class C Common Stock which may only be transferred in
accordance with Section 4.1(e)(i) (collectively, the "Offered Shares"), such
Seller shall give written notice (the "Offer Notice") to the Company and to each
Stockholder entitled to become the First Offeree of such Offered Shares, as
determined below. Each Offer Notice shall describe in reasonable detail the
number of shares of each class of Offered Shares, the cash purchase price
requested and all other material terms and conditions of the proposed Transfer.
The Offer Notice shall constitute an irrevocable offer (a "First Offer") to sell
all (and not less than all) of the Offered Shares to the First Offeree(s) at a
cash price equal to the price contained in such Offer Notice and upon the same
terms as the terms contained in such Offer Notice. The First Offeree(s) shall
have the irrevocable right and option, exercisable as provided below, but not
the obligation, to accept the First Offer as to all (and not less than all) of
the Offered Shares. The "First Offeree(s)" shall be determined as follows:
(i) If the Seller is a Cash Equity Investor, AT&T PCS shall be
First Offeree;
(ii) If the Seller is AT&T PCS or TWR Cellular, each Cash Equity
Investor shall be the First Offeree; and
(iii) If the Seller is any Stockholder other than a Cash Equity
Investor, AT&T PCS shall be the First Offeree.
(b) The option provided for herein shall be exercisable by the
First Offeree(s) by giving written notice (a "Purchase Notice"), that the First
Offeree desires to purchase all (and not less than all) of such Offered Shares
from the Seller, to the Stockholders (other than the Seller) and the Company not
later than ten (10) business days (the "First Offer Period") after the date of
the Offer Notice. If the Cash Equity Investors are First Offerees and two or
more Cash Equity Investors notify the Seller of their desire to purchase all of
the Offered Shares, then each Cash Equity Investor shall acquire the proportion
of such Offered Shares as the number of shares of Company Stock owned by such
Cash Equity Investor bears to the total number of shares of Company Stock owned
by all Cash Equity Investors who elected to purchase all of the Offered Shares.
If Offered Shares are purchased by more than one purchaser, the purchase price
shall be allocated among the parties purchasing the shares on the basis of the
number of shares being so purchased. The purchase of the Offered Shares by the
First Offeree(s) shall be closed at the principal executive offices of the
Company on a date specified by the First Offeree(s) upon at least five (5)
business days' notice, that is within thirty (30) days after the expiration of
the First Offer Period; provided, however, that if such purchase is subject to
the consent of the FCC or any public service or public utilities commission, the
purchase of the Offered Shares shall be closed on the first business day after
all such consents shall have been obtained by Final Order.
(c) If the First Offeree(s) decline (which shall include the
failure to give timely notice of acceptance) to purchase all of the Offered
Shares subject to the First Offer within the First Offer Period, the Seller
shall have the right (for a period of ninety (90) days
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following the expiration of the First Offer Period) to consummate the sale of
the Offered Shares to any Person; provided, however, that the purchase price of
such Offered Shares payable by such Person must be at least equal to the cash
purchase price thereof set forth in the Offer Notice and all other terms and
conditions of any such sale shall not be more beneficial to such third party
than those contained in the Offer Notice. If any Offered Shares are not sold
pursuant to the provisions of this Section 4.2 prior to the expiration of the
ninety (90) day period specified in the immediately preceding sentence, such
Offered Shares shall become subject once again to the provisions and
restrictions hereof; provided, however, that if such purchase is subject to the
consent of the FCC or any public service or public utilities commission, the
purchase of the Offered Shares shall be closed on the first business day after
all such consents shall have been obtained by Final Order.
(d) The purchase price of any Offered Shares Transferred pursuant
to this Section 4.2 shall be payable in cash by certified bank check or by wire
transfer of immediately available funds.
(e) The provisions of this Section 4.2 shall not be applicable to
the repurchase by the Company of any shares of Class A Voting Common Stock
repurchased by the Company from an employee of the Company in connection with
such individual's termination of employment.
4.3 Rights of Inclusion.
(a) No Stockholder shall, directly or indirectly, Transfer, in
any single transaction or series of related transactions to one or more Persons
who are not Affiliated Successors of such Stockholder (each such Person an
"Inclusion Event Purchaser") shares of any series or class of Company Stock
(collectively, "Inclusion Stock") in circumstances in which, after giving effect
to such Transfer, whether acting alone or in concert with any other Stockholder
(such parties referred to herein as "Selling Stockholders") would result in such
Selling Stockholder(s) Transferring twenty-five percent (25%) or more of the
outstanding shares of any such class of Inclusion Stock (for purposes of this
Section 4.3, in the event that the Inclusion Stock is Series C Preferred Stock,
Series D Preferred Stock shall also be deemed to be Inclusion Stock and the
Series C Preferred Stock and Series D Preferred Stock shall be deemed to be one
class of Preferred Stock for purposes of this Section 4.3) outstanding on the
date of such proposed Transfer on a fully diluted basis (excluding for such
purposes the Series A Preferred Stock) (an "Inclusion Event"), unless the terms
and conditions of such sale to such Inclusion Event Purchaser shall include an
offer to AT&T PCS, the Cash Equity Investors and the Management Stockholders
other than the Selling Stockholder (each, an "Inclusion Event Offeree") to
Transfer to such Inclusion Event Purchasers up to that number of shares of any
class of Inclusion Stock then Beneficially Owned by each Inclusion Event Offeree
that bears the same proportion to the total number of shares of Inclusion Stock
at that time Beneficially Owned (without duplication) by each such Inclusion
Event Offeree as the number of shares of Inclusion Stock being Transferred by
the Selling Stockholders (including shares of Inclusion Stock theretofore
Transferred if in any applicable series of related transactions) bears to the
total number of shares of Inclusion Stock at the time Beneficially Owned
(without duplication) by the Selling Stockholders (including shares of Inclusion
Stock theretofore Transferred if in any applicable series of related
transactions). If the Selling Stockholders receive a bona fide offer
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from an Inclusion Event Purchaser to purchase shares of Inclusion Stock in
circumstances in which, after giving effect to such sale would result in an
Inclusion Event, and which offer such Selling Stockholders wish to accept, the
Selling Stockholders shall then cause the Inclusion Event Purchaser's offer to
be reduced to writing (which writing shall include an offer to purchase shares
of Inclusion Stock from each Inclusion Event Offeree according to the terms and
conditions set forth in this Section 4.3) and the Selling Stockholders shall
send written notice of the Inclusion Event Purchaser's offer (the "Inclusion
Notice") to each Inclusion Event Offeree, which Inclusion Notice shall specify
(i) the names of the Selling Stockholders, (ii) the names and addresses of the
proposed acquiring Person, (iii) the amount of shares proposed to be Transferred
and the price, form of consideration and other terms and conditions of such
Transfer (including, if in a series of related transactions, such information
with respect to shares of Inclusion Stock theretofore Transferred), (iv) that
the acquiring Person has been informed of the rights provided for in this
Section 4.3 and has agreed to purchase shares of Inclusion Stock in accordance
with the terms hereof, and (v) the date by which each other Selling Stockholder
may exercise its respective rights contained in this Section 4.3, which date
shall not be less than thirty (30) days after the giving of the Inclusion
Notice. The Inclusion Notice shall be accompanied by a true and correct copy of
the Inclusion Event Purchaser's offer. At any time within thirty (30) days after
receipt of the Inclusion Notice, each Inclusion Event Offeree may accept the
offer included in the Inclusion Notice for up to such number of shares of
Inclusion Stock as is determined in accordance with this Section 4.3, by
furnishing written notice of such acceptance to each Selling Stockholder, and
delivering, to an escrow agent (which shall be a bank or a law or accounting
firm designated by the Company), on behalf of the Selling Stockholders, the
certificate or certificates representing the shares of Inclusion Stock to be
sold pursuant to such offer by each Inclusion Event Offeree, duly endorsed in
blank, together with a limited power-of-attorney authorizing the escrow agent,
on behalf of the Inclusion Event Offeree, to sell the shares to be sold pursuant
to the terms of such Inclusion Event Purchaser's offer.
In the event that the Inclusion Event Purchaser does not agree to
purchase all of the shares of Inclusion Stock proposed to be sold by the Selling
Stockholders and the Inclusion Event Offerees, then each Selling Stockholder and
Inclusion Event Offeree shall have the right to sell to the Inclusion Event
Purchaser that number of shares of Inclusion Stock as shall be equal to (x) the
number of shares of Inclusion Stock which the Inclusion Event Purchaser has
agreed to purchase times (y) a fraction, the numerator of which is the number of
shares of Inclusion Stock Beneficially Owned (without duplication) by such
Selling Stockholder or Inclusion Event Offeree and the denominator of which is
the aggregate number of shares of Inclusion Stock Beneficially Owned (without
duplication) by all Selling Stockholders and Inclusion Event Offerees. If any
Inclusion Event Offeree desires to sell less than its proportionate amount of
shares of Inclusion Stock that it is entitled to sell pursuant to this Section
4.3, then the Selling Stockholders and the remaining Inclusion Event Offerees
shall have the right to sell to the Inclusion Event Purchaser an additional
amount of shares of Inclusion Stock as shall be equal to (x) the number of
shares of Inclusion Stock not being sold by any such Inclusion Event Purchasers
times (y) a fraction, the numerator of which is the number of shares of
Inclusion Stock owned such Selling Stockholder or remaining Inclusion Event
Offeree and the denominator of which is the aggregate number of shares of
Inclusion Stock Beneficially Owned (without duplication) by all Selling
Stockholders and remaining Inclusion Event Offerees. Such process shall be
repeated in series until all of the remaining Inclusion Event Offerees agree to
sell their remaining proportionate number of shares of Inclusion Stock.
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(b) The purchase from each Inclusion Event Offeree pursuant to
this Section 4.3 shall be on the same terms and conditions, including the price
per share received by the Selling Stockholders and stated in the Inclusion
Notice provided to each Inclusion Event Offeree. In the event that the Inclusion
Stock is Common Stock, each Inclusion Event Offeree shall be required, as a
condition of participating in such transaction, to convert its Preferred Stock
into Common Stock and Transfer Common Stock to the Inclusion Event Purchaser.
(c) Simultaneously with the consummation of the sale of the
shares of Inclusion Stock of the Selling Stockholders and each Inclusion Event
Offeree to the Inclusion Event Purchaser pursuant to the Inclusion Event
Purchaser's offer, the Selling Stockholders shall notify each Inclusion Event
Offeree and shall cause the purchaser to remit to each Inclusion Event Offeree
the total sales price of the shares of Inclusion Stock held by each Inclusion
Event Offeree sold pursuant thereto and shall furnish such other evidence of the
completion and time of completion of such sale and the terms thereof as may be
reasonably requested by each Inclusion Event Offeree.
(d) If within thirty (30) days after receipt of the Inclusion
Notice, an Inclusion Event Offeree has not accepted the offer contained in the
Inclusion Notice, such Inclusion Event Offeree shall be deemed to have waived
any and all rights with respect to the sale described in the Inclusion Notice
(but not with respect to any subsequent sale, to the extent this Section 4.3 is
applicable to such subsequent sale) and the Selling Stockholders shall have
sixty (60) days in which to sell not more than the number of shares of Inclusion
Stock described in the Inclusion Notice, on terms not more favorable to the
Selling Stockholders than were set forth in the Inclusion Notice; provided,
however, that if such purchase is subject to the consent of the FCC or any
public service or public utilities commission, the purchase of the Offered
Shares shall be closed on the first business day after all such consents shall
have been obtained by Final Order.
4.4 Right of First Negotiation. In the event that a Stockholder
desires to Transfer any shares of Common Stock or Series C Preferred Stock
following the IPO Date in a Transfer described in clause (y) of Section
4.1(b)(iii), such Stockholder shall give written notice thereof to AT&T PCS,
such notice to specify, among other things, the number of shares that such
Stockholder desires to sell. For the applicable first negotiation period
hereinafter set forth, AT&T PCS shall have the exclusive right to negotiate with
such Stockholder with respect to the purchase of such shares; it being
understood and agreed that such exclusive right shall not be deemed to be a
right of first offer or right of first refusal for the benefit of AT&T PCS and
such Stockholder shall have the right to reject any offer made by AT&T PCS
during such applicable first negotiation period. Upon the expiration of such
applicable first negotiation period, such Stockholder shall have the right (for
the applicable offer period hereinafter set forth with respect to each
applicable first negotiation period), following the expiration of such
applicable first negotiation period, to offer and sell such shares included in
such written notice on such terms and conditions as shall be acceptable to such
Stockholder in its sole discretion. If any of such shares included in such
written notice are not sold pursuant to the provisions of this Section 4.4 prior
to the expiration of the applicable offer period, such shares shall become
subject once again to the provision and restrictions hereof.
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If a Stockholder desires to Transfer shares of Common Stock (a)
pursuant to a Registration of Common Stock under Section 5 in an underwritten
offering that constitutes a bona fide distribution of such Common Stock pursuant
to such Registration, the applicable first negotiation period shall be ten (10)
days and the applicable offer period upon the expiration of such first
negotiation period shall be one hundred twenty (120) days, (b) pursuant to Rule
144, the applicable first negotiation period shall be three (3) hours (it being
understood and agreed that such Stockholder shall, in addition to giving written
notice of such proposed Transfer by facsimile, use commercially reasonable
efforts to contact AT&T PCS by telephone in accordance with Section 12.1) and
the applicable offer period upon the expiration of such first negotiation period
shall be five (5) business days, and (c) in any single transaction or series of
related transactions to one or more Persons which will result in the Transfer by
such Stockholder (together with any other Stockholder participating in such
single transaction or series of related transactions) of not more than ten
percent (10%) of the Common Stock on a fully diluted basis (excluding for such
purposes the Series A Preferred Stock), the applicable first negotiation period
shall be one (1) business day, so long as notice of such proposed Transfer is
given to AT&T PCS prior to 9:00 A.M. on the day prior to the date of such
proposed Transfer (it being understood and agreed that such Stockholder shall,
in addition to giving written notice of such proposed Transfer by facsimile, use
commercially reasonable efforts to contact AT&T PCS by telephone in accordance
with Section 12.1) and the applicable offer period upon the expiration of such
first negotiation period shall be ten (10) business days.
4.5 Additional Conditions to Permitted Transfers.
(a) As a condition to any Transfer to an Affiliated Successor or
any other Transfer permitted pursuant to Section 4.1, or any Transfer pursuant
to Section 4.2 or Section 4.3, each transferee that is not a party hereto shall,
prior to such Transfer, agree in writing to be bound by all of the provisions of
this Agreement applicable to the Stockholders (and shall thereby become a
Stockholder for all purposes of this Agreement). Any Transfer without compliance
with such provisions of this Agreement shall be null and void and such
transferee shall have no rights as a Stockholder of the Company. Any person to
which shares of Series C Preferred Stock are Transferred in connected with the
exercise of remedies by the lender under the Cash Equity Loan Documents, and any
direct or indirect transferee thereof, shall become a party to this Agreement,
be bound hereby and be subject to the rights and benefits of a Stockholder
provided herein.
(b) Notwithstanding anything to the contrary contained in this
Agreement, each Stockholder agrees that it will not effect a Transfer of shares
of Company Stock to a Prohibited Transferee; provided, however, that nothing
contained in this Section 4.5(b) shall be construed to prohibit a Transfer of
Common Stock by a Stockholder after the IPO Date pursuant to an underwritten
Registration or in accordance with the provisions of Rule 144. It shall be
deemed a breach of this Section 4.5(b) by a Stockholder Beneficially Owning more
than 10% of the Common Stock outstanding if any Prohibited Transferee shall
acquire, directly or indirectly, in a private sale Beneficial Ownership of more
than 33-1/3% of any class of equity securities or equity interest in, such
Stockholder.
(c) Subject to Sections 4.1 and 4.2, prior to the IPO Date, the
Cash Equity Investors, AT&T PCS and TWR Cellular may not Transfer shares of
Common Stock to
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any Person that is not an Affiliated Successor of such Stockholder or another
Cash Equity Investor unless after giving effect to such Transfer each of such
Stockholder and such Person shall after giving effect to such Transfer
Beneficially Own more than the lesser of (x) five percent (5%) of the Common
Stock, and (y) one-half of the Common Stock Beneficially Owned by the transferor
on the date hereof, upon such Transfer unless the Transfer by such Cash Equity
Investor, AT&T PCS or TWR Cellular is a Transfer of all of the shares of Common
Stock, as applicable, Beneficially Owned by it. Subject to Sections 4.1 and 4.2,
prior to the IPO Date, no Management Stockholder may effect more than one (1)
Transfer of its shares of Common Stock to a Person that is not an Affiliated
Successor of such Management Stockholder during any twelve (12) month period.
4.6 Representations and Warranties. A Stockholder purchasing shares
of Company Stock pursuant to Section 4.2 shall be entitled to receive
representations and warranties from the transferring Stockholder that such
Stockholder has the authority (corporate or otherwise) to sell such shares, is
the sole owner of such shares, and has good and valid title to such shares, free
and clear of any and all Liens (other than pursuant to this Agreement, the
Restated Certificate or any Related Agreement), and that the sale of such shares
does not violate any agreement to which it is a party or by which it is bound.
4.7 Stop-Transfer.
(a) The Company agrees not to effect any Transfer of shares of
Company Stock by any Stockholder whose proposed Transfer is subject to Sections
4.2, 4.3 or 4.4 until it has received evidence reasonably satisfactory to it
that the rights provided to any other Stockholders pursuant to such Sections, if
applicable to such Transfer, have been complied with and satisfied in all
respects. If any portion of such Stockholder's Unfunded Commitment shall remain
unpaid on the date of such proposed Transfer, then, as a condition of such
Transfer, such Person purchasing such Company Stock shall, or another Cash
Equity Investor may, execute an instrument in form satisfactory to the Company
agreeing to pay in full such Stockholder's Unfunded Commitment outstanding on
the date of such proposed Transfer, provided, however, that such Stockholder
shall not be released from its obligation in respect of such Unfunded
Commitment. No Transfer of any shares of Preferred Stock and/or Common Stock
shall be made except in compliance with all applicable securities laws. Any
Transfer made in violation of this Agreement shall be null and void.
(b) The Company agrees that it will not, without the prior
written consent of AT&T PCS, Transfer, issue or dispose of any Equity Securities
to a Prohibited Transferee except that purchases of Common Stock by a Prohibited
Transferee in connection with a Registration of Common Stock shall not
constitute a violation of this Section 4.7(b).
5. Registration Rights.
(a) Demand Registration Rights.
(i) Right to Demand Registration. From and after the ninety-first
(91st) day following the IPO Date (or such longer period as may be required
by the managing underwriters of the Company's initial public offering) and,
subject to Section
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4.1(d), each of (A) a Qualified Holder, and (B) Management Stockholders
that in the aggregate Beneficially Own at least 50.1% of the shares of
Class A Voting Common Stock then Beneficially Owned by the Management
Stockholders (each a " Demanding Stockholder" and, collectively, the
"Demanding Stockholders") shall have the right to make a written request to
the Company for registration with the Commission, under and in accordance
with the provisions of the Securities Act, of all or part of their
Registrable Securities pursuant to an underwritten offering (a "Demand
Registration"), which request shall specify the number of Registrable
Securities proposed to be sold by each Demanding Stockholder; provided,
however, that (x) the Company need not effect a Demand Registration unless
in the aggregate the sale of the Registrable Securities proposed to be sold
by the Demanding Stockholder shall reasonably be expected to result in
aggregate gross proceeds to such Demanding Stockholder of at least $10
million, and (y) if the Board of Directors determines that a Demand
Registration would interfere with any pending or contemplated material
acquisition, disposition, financing or other material transaction, the
Company may defer a Demand Registration (including by withdrawing any
Registration Statement filed in connection with a Demand Registration); so
long as that the aggregate of all such deferrals shall not exceed one
hundred twenty (120) days in any 360-day period. Demand Registration shall
not be deemed a Demand Registration hereunder until such Demand
Registration has been declared effective by the Commission (without
interference by any stop order, injunction or other order or requirement of
the Commission or other governmental agency, for any reason), and
maintained continuously effective for a period of at least three (3) months
or such shorter period when all Registrable Securities included therein
have been sold in accordance with such Demand Registration; provided,
however, that a Qualified Holder may, not more frequently than once in any
twelve (12) month period, request that the Demand Registration be a shelf
registration that is maintained continuously effective for a period of at
least six (6) months or such shorter period when all Registrable Securities
included therein have been sold in accordance with such Demand
Registration. A Demanding Stockholder may make a written request for a
Demand Registration in accordance with the foregoing in respect of Equity
Securities that it intends to convert into shares of Class A Voting Common
Stock upon the effectiveness of the Registration Statement prepared in
connection with such demand, and the Company shall fulfill its obligations
under this Section 5 in a manner that permits such Demanding Stockholder to
exercise its conversion rights in respect of such Equity Securities and
substantially contemporaneously sell the shares of Class A Voting Common
Stock issuable upon such conversion under such Registration Statement.
The Company will not be obligated to effect more than two (2) separate
Demand Registrations during any twelve (12) month period; provided, however,
that only one (1) request for a Demand Registration may be exercised by (i) AT&T
PCS and/or (ii) Management Stockholders that in the aggregate Beneficially Own
at least 50.1% of the shares of Class A Voting Common Stock then Beneficially
Owned by the Management Stockholders during any twelve (12) month period.
Within ten (10) days after receipt of the request for a Demand
Registration, the Company will send written notice (the "Demand Notice") of such
Registration request and its intention to comply therewith to all Stockholders
who are holders of Registrable Securities and,
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subject to Section 5(a)(ii), the Company will include in such Demand
Registration all Registrable Securities of such Stockholders with respect to
which the Company has received written requests for inclusion therein within
twenty (20) days after the last date such Demand Notice was deemed to have been
given pursuant to Section 12.1.
(ii) Priority on Demand Registration. If the managing
underwriter or underwriters advise the Company and the holders of the
Registrable Securities to be registered in writing that in its or their
opinion, the number of Registrable Securities proposed to be sold in
such Registration and any other securities of the Company requested or
proposed to be included in such Registration exceeds the number that
can be sold in such offering without (A) creating a substantial risk
that the proceeds or price per share to be derived from such
Registration will be reduced or that the number of Registrable
Securities to be registered is too large a number to be reasonably
sold, or (B) materially and adversely affecting such Registration in
any other respect, the Company will (x) include in such Registration
the aggregate number of Registrable Securities recommended by the
managing underwriter (the number of Registrable Securities to be
registered for each Stockholder to be reduced pro rata based on the
amount of Registrable Securities each of the Stockholders requested to
be included in such Registration), and (y) not allow any securities
other than Registrable Securities to be included in such Registration
unless all Registrable Securities requested to be included shall have
been included therein, and then only to the extent recommended by the
managing underwriter or determined by the Company after consultation
with an investment banker of nationally recognized standing
(notification of which number shall be given by the Company to the
holders of Registrable Securities).
(iii) Selection of Underwriters. The offering of such Registrable
Securities pursuant to such Demand Registration shall be in the form of an
underwritten offering. The Demanding Stockholder that initiated such Demand
Registration will select a managing underwriter or underwriters of
recognized national standing to administer the offering, which managing
underwriter or underwriters shall be reasonably acceptable to the Company.
(b) Piggyback Registration Rights.
(i) Right to Piggyback. If the Company proposes to register any
shares of Class A Voting Common Stock (or securities convertible into or
exchangeable for Class A Voting Common Stock) with the Commission under the
Securities Act (other than a Registration on Form S-4 or Form S-8, or any
successor forms), and the Registration form to be used may be used for the
Registration of the Registrable Securities (a "Piggyback Registration"),
the Company will give written notice (a " Piggyback Notice") to all
Stockholders, at least thirty (30) days prior to the anticipated filing
date, of its intention to effect such a Registration, which notice will
specify the proposed offering price (if determined at that time), the kind
and number of securities proposed to be registered, the distribution
arrangements and will, subject to Section 5(b)(ii), include in such
Piggyback Registration all Registrable Securities with respect to which the
Company has received written requests (which requests have not been
withdrawn) for inclusion therein within twenty (20) days after the last
date such
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Piggyback Notice was deemed to have been given pursuant to Section 12.1. If
at any time after giving the Piggyback Notice and prior to the effective
date of the Registration Statement filed in connection with such
Registration, the Company determines for any reason not to register or to
delay Registration, the Company may, at its election, give written notice
of such determination to each holder of Registrable Securities that has
requested inclusion of Registrable Securities in such Registration and (A)
in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
Registration, and (B) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities for the
same period as the delay in registering such other securities.
(ii) Priority on Piggyback Registrations. If the managing
underwriter or underwriters, if any, advise the Company and the holders of
Registrable Securities in writing that in its or their opinion, the number
or kind of securities proposed to be sold in such Registration (including
Registrable Securities to be included pursuant to Section 5(b)(i)) exceeds
the number that can be sold in such offering without (A) creating a
substantial risk that the proceeds or price per share the Company will
derive from such Registration will be reduced, or that the number of shares
to be registered is too large a number to be reasonably sold or (B)
materially and adversely affecting such Registration in any other respect,
without any reduction in the amount of securities the Company proposes to
issue and sell for its own account or in the amount of securities any other
security holder proposes to sell for its own account pursuant to a demand
Registration right, the number of Registrable Securities to be registered
for each Demanding Stockholder shall be reduced pro rata based on the
amount of Registrable Securities each of the Demanding Stockholders
requested to be included in such Registration, to the extent necessary to
reduce the number of Registrable Securities to be registered to the number
recommended by the managing underwriter or determined by the Company after
consultation with an investment banker of nationally recognized standing
(notification of which number shall be given by the Company to the holders
of Registrable Securities of such determination).
(c) Selection of Underwriters. Except as set forth in Section
5.1(a)(iii), the Company (by action of the Board of Directors) will select a
managing underwriter or underwriters to administer the offering, which managing
underwriter or underwriters will be of nationally recognized standing.
(d) Registration Procedures. With respect to any Demand Registration
or Piggyback Registration (each, a "Registration"), the Company shall, subject
to Sections 5(a)(i) and (5)(a)(ii) and Sections 5(b)(i) and 5(b)(ii), as
expeditiously as practicable:
(i) prepare and file with the Commission, as promptly as
reasonably practicable (but in no event more than forty-five (45) days)
after the receipt of the Registration requests under Sections 5(a) or 5(b),
a registration statement or registration statements (each, a "Registration
Statement") relating to the applicable Registration on any appropriate form
under the Securities Act, which form shall be available for the sale of the
Registrable Securities in accordance with the intended method or methods of
distribution thereof; cooperate and assist in any filings required to be
made with the
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NASD; and use its reasonable best efforts to cause such Registration
Statement to become and (to the extent provided herein) remain effective;
provided, however, that before filing a Registration Statement or
prospectus related thereto (a "Prospectus") or any amendments or
supplements thereto, the Company shall furnish to the holders of the
Registrable Securities covered by such Registration Statement and the
underwriters, if any, copies of all such documents proposed to be filed,
which documents will be subject to the reasonable review of such holders
and underwriters and their respective counsel, and the Company shall not
file any Registration Statement or amendment thereto or any Prospectus or
any supplement thereto to which the holders of a majority of the
Registrable Securities covered by such Registration Statement or the
underwriters, if any, shall reasonably object;
(ii) prepare and file with the Commission such amendments and
supplements to the Registration Statement as may be necessary to keep each
Registration Statement effective for three (3) months (six (6) months in
the case of any shelf registration requested by a Qualified Holder pursuant
to this Section 5) or such shorter period that will terminate when all
Registrable Securities covered by such Registration Statement have been
sold; cause each Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under
the Securities Act; and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set forth
in such Registration Statement or supplement to the Prospectus;
(iii) promptly notify the selling holders of Registrable
Securities and the managing underwriters, if any (and, if requested by any
such person or entity, confirm such advice in writing), (A) when the
Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (B) of any
request by the Commission for amendments or supplements to the Registration
Statement or the Prospectus or for additional information; (C) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for that
purpose; (D) if at any time the representations and warranties of the
Company contemplated by subsection (xiv) of this subsection (d) below cease
to be true and correct; (E) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale under the securities or blue sky laws of
any jurisdiction or the initiation or threatening of any proceeding for
such purpose; and (F) of the happening of any event which makes any
statement made in the Registration Statement, the Prospectus or any
document incorporated therein by reference untrue or which requires the
making of any changes in the Registration Statement, the Prospectus or any
document incorporated therein by reference in order to make the statements
therein not misleading;
(iv) use its reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of (I) the Registration Statement,
or (II) the qualification of
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the Registrable Securities for sale under the securities or blue sky laws
of any jurisdiction at the earliest possible time;
(v) if requested by the managing underwriter or underwriters or a
holder of Registrable Securities being sold in connection with an
underwritten offering, promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriters and
the holders of a majority of the Registrable Securities being sold agree
should be included therein relating to the plan of distribution with
respect to such Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being sold
to such underwriters, the purchase price being paid therefor by such
underwriters and any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as notified of the matters to be
incorporated in such Prospectus supplement or post-effective amendment;
(vi) furnish to each selling holder of Registrable Securities and
each managing underwriter, without charge, at least one signed copy of the
Registration Statement and any amendment thereto, including financial
statements and schedules, all documents incorporated therein by reference
and all exhibits (including those incorporated by reference);
(vii) deliver to each selling holder of Registrable Securities
and the underwriters, if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such selling holder of Registrable Securities
underwriters may reasonably request in order to facilitate the public sale
or other disposition of the securities owned by such selling holder;
(viii) prior to any public offering of Registrable Securities,
use its reasonable best efforts to register or qualify or cooperate with
the selling holders of Registrable Securities, the underwriters, if any,
and their respective counsel in connection with the Registration or
qualification of such Registrable Securities for offer and sale under the
securities or "blue sky" laws of such jurisdictions in the United States as
any seller or underwriter reasonably requests in writing, use its
reasonable best efforts to obtain all appropriate registrations, permits
and consents required in connection therewith, and do any and all other
acts or things reasonably necessary or advisable to enable the disposition
in such jurisdictions of the Registrable Securities covered by the
Registration Statement; provided, however, that the Company will not be
required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action that would subject it to
taxation or general service of process in any such jurisdiction where it is
not then so subject;
(ix) cooperate with the selling holders of Registrable Securities
and the managing underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold
and not bearing any restrictive legends and to be in such denominations and
registered in such names as the managing
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underwriters may request at least two (2) business days prior to any sale
of Registrable Securities to the underwriters;
(x) use its reasonable best efforts to cooperate with any selling
holder to cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities in the United States as may be
necessary to enable the seller or sellers thereof or the underwriters, if
any, to consummate the disposition of such Registrable Securities;
(xi) upon the occurrence of any event contemplated by subsection
(iii)(F) above, promptly prepare a supplement or post-effective amendment
to the Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(xii) cause all Registrable Securities covered by any
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed, or, if not so
listed, cause such Registrable Securities to be authorized for trading on
the NASDAQ National Market System if any similar securities issued by the
Company are then so authorized, if requested by the holders of a majority
of such Registrable Securities or the managing underwriters, if any;
(xiii) not later than the effective date of the applicable
Registration, provide a CUSIP number for all Registrable Securities;
(xiv) enter into such customary agreements (including in the case
of a Demand Registration that is an underwritten offering, an underwriting
agreement in customary form) and take all such other actions reasonably
required in connection therewith in order to expedite or facilitate the
disposition of such Registrable Securities and in such connection, whether
or not an underwriting agreement is entered into and whether or not the
Registration is an underwritten Registration, (A) make such representations
and warranties to the holders of such Registrable Securities and the
underwriters, if any, in form, substance and scope as are customarily made
by issuers to underwriters in primary underwritten offerings; (B) use
reasonable best efforts to obtain opinions of counsel to the Company and
updates thereof (which opinions of counsel shall be in form, scope and
substance reasonably satisfactory to the managing underwriters, if any, and
to the holders of a majority of the Registrable Securities being sold),
addressed to each selling holder and the underwriters, if any, covering the
matters customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such holders and
underwriters; (C) use reasonable best efforts to obtain "cold comfort"
letters and updates thereof from the Company's independent certified public
accountants addressed to the selling holders of Registrable Securities and
the underwriters, if any, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters by
underwriters in connection with primary underwritten offerings; and (D)
deliver such documents and certificates as may
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be reasonably requested by the holders of a majority of the Registrable
Securities being sold and the managing underwriters, if any, to evidence
compliance with subsection (xi) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into by
the Company. All the above in this Section 5(d)(xiv) shall be done at each
closing under each underwriting or similar agreement or as and to the
extent required thereunder;
(xv) make available for inspection by a representative of each
Demanding Stockholder, any underwriter participating in any disposition
pursuant to such Registration, and any attorney or accountant retained by
the sellers or underwriter, copies or extracts of all financial and other
records, pertinent corporate documents and properties of the Company as
shall be reasonably necessary, in the opinion of the holders' or
underwriter's counsel, to enable them to fulfill their due diligence
responsibilities; and cause the Company's officers, directors and employees
to supply all information reasonably requested by any such representative,
underwriter, attorney or accountant in connection with such Registration
Statement; provided, however, that the Company shall not be required to
comply with this paragraph (xv) unless such person executes confidentiality
agreements whereby such person agrees that any records, information or
documents that are designated by the Company in writing as confidential
shall be kept confidential by such Persons and used only in connection with
the proposed Registration unless disclosure of such records, information or
documents is required by court or administrative order or any regulatory
body having jurisdiction; and each seller of Registrable Securities agrees
that it will, upon learning that disclosure of such records, information or
documents is sought in a court of competent jurisdiction or by a
governmental agency, give notice to the Company and allow the Company, at
the Company's expense, to undertake appropriate action to prevent
disclosure of any records, information or documents deemed confidential;
provided further, however, notwithstanding any designation of
confidentiality by the Company, confidential information shall not include
information which (i) becomes generally available to the public other than
as a result of a disclosure by or on behalf of any such Person, or (ii)
becomes available to any such Person on a non-confidential basis from a
source other than the Company or its advisors, provided that such source is
not to such Person's knowledge bound by a confidentiality agreement with or
other obligations of secrecy to the Company or another party with respect
to such information;
(xvi) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make generally
available to its security holders, earnings statements satisfying the
provisions of Section 11(a) of the Securities Act, no later than forty-five
(45) days after the end of any twelve (12) month period (or ninety (90)
days, if such period is a fiscal year) (A) commencing at the end of any
fiscal quarter in which Registrable Securities are sold to underwriters in
a firm or best efforts underwritten offering, or (B) if not sold to
underwriters in such an offering, beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of the
Registration Statement, which statements shall cover said twelve (12) month
periods; and
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(xvii) promptly prior to the filing of any document that is to be
incorporated by reference into any Registration Statement or Prospectus
(after initial filing of the Registration Statement), provide copies of
such document to counsel to the selling holders of Registrable Securities
and to the managing underwriters, if any, make the Company's executive
officers and other representatives available for discussion of such
document and make such changes in such document prior to the filing thereof
as counsel for such selling holders or underwriters may reasonably request.
The Company may require each seller of Registrable Securities as to
which any Registration is being effected to furnish to the Company such
information regarding the proposed distribution of such securities as the
Company may from time to time reasonably request in writing. Each holder of
Registrable Securities agrees by acquisition of such Registrable Securities
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 5(d)(xi), such holder shall forthwith
discontinue disposition of Registrable Securities until such holder's receipt of
the copies of the supplemented or amended prospectus contemplated by Section
5(d)(xi), or until it is advised in writing (the "Advice") by the Company that
the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference in the
Prospectus; and, if so directed by the Company, such holder shall deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such seller's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company gives any such notice, the time periods regarding the maintenance of the
effectiveness of any Registration Statement in Sections 5(d)(ii) shall be
extended by the number of days during the period from and including the date of
the receipt of such notice pursuant to Section 5(d)(iii)(F) hereof to and
including the date when each seller of Registrable Securities covered by such
Registration Statement shall have received the copies of the supplemented or
amended prospectuses contemplated by Section 5(d)(xi) or the Advice.
(e) Indemnification.
(i) In the event of the Registration or qualification of any
Registrable Securities under the Securities Act or any other applicable
securities laws pursuant to the provisions of this Section 5, the Company agrees
to indemnify and hold harmless each Stockholder thereby offering such
Registrable Securities for sale (an "Indemnified Stockholder"), underwriter,
broker or dealer, if any, of such Registrable Securities, and each other person,
if any, who controls any such Indemnified Stockholder, underwriter, broker or
dealer within the meaning of the Securities Act or any other applicable
securities laws, from and against any and all losses, claims, damages, expenses
or liabilities (or actions in respect thereof), joint or several, to which such
Indemnified Stockholder, underwriter, broker or dealer or controlling person may
become subject under the Securities Act or any other applicable federal or state
securities laws or otherwise, insofar as such losses, claims, damages, expenses
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in any Registration Statement under which such Registrable Securities were
registered or qualified under the Securities Act or any other applicable
securities laws, any preliminary prospectus or final prospectus relating to such
Registrable Securities, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein
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<PAGE>
or necessary to make the statements therein not misleading, or any violation by
the Company of any rule or regulation under the Securities Act or any other
applicable federal or state securities laws applicable to the Company or
relating to any action or inaction required by the Company in connection with
any such Registration or qualification, and will reimburse each such Indemnified
Stockholder, underwriter, broker or dealer and each such controlling person for
any legal or other expenses reasonably incurred by such Indemnified Stockholder,
underwriter, broker or dealer or controlling person in connection with
investigating or defending any such loss, claim, damage, expense, liability or
action; provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage, expense or liability arises out
of or is based upon an untrue statement or omission contained in such
Registration Statement, such preliminary prospectus, such final prospectus or
such amendment or supplement thereto, made in reliance upon and in conformity
with written information furnished to the Company by such Indemnified
Stockholder, underwriter, broker, dealer or controlling person specifically and
expressly for use in the preparation thereof or by the failure of such
Indemnified Stockholder, underwriter, broker or dealer, or controlling person to
deliver a copy of the Registration Statement, such preliminary prospectus, such
final prospectus or such amendment or supplement thereto after the Company has
furnished such party with a sufficient number of copies of the same and such
party failed to deliver or otherwise provide a copy of the final prospectus to
the person asserting an untrue statement or omission or alleged untrue statement
or omission at or prior to the written confirmation of the sale of securities to
such person, if such statement or omission was in fact corrected in such final
prospectus.
(ii) In the case of an underwritten offering in which the Registration
Statement covers Registrable Securities, the Company agrees to enter into an
underwriting agreement in customary form and substance with such underwriters
and to indemnify the underwriters, their officers and directors, if any, and
each person, if any, who controls such underwriters within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act, to the same
extent as provided in the preceding paragraph with respect to the
indemnification of the holders of Registrable Securities; provided, however, the
Company shall not be required to indemnify any such underwriter, or any officer
or director of such underwriter or any person who controls such underwriter
within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act, to the extent that the loss, claim, damage, expense or liability
(or actions in respect thereof) for which indemnification is sought results from
such underwriter's failure to deliver or otherwise provide a copy of the final
prospectus to the person asserting an untrue statement or omission or alleged
untrue statement or omission at or prior to the written confirmation of the sale
of securities to such person, if such statement or omission was in fact
corrected in such final prospectus.
(iii) In the event of the Registration or qualification of any
Registrable Securities of the Stockholders under the Securities Act or any other
applicable federal or state securities laws for sale pursuant to the provisions
hereof, each Indemnified Stockholder agrees severally, and not jointly, to
indemnify and hold harmless the Company, each person who controls the Company
within the meaning of the Securities Act, and each officer and director of the
Company from and against any losses, claims, damages, expenses or liabilities
(or actions in respect thereof), joint or several, to which the Company, such
controlling person or any such officer or director may become subject under the
Securities Act or any other applicable securities laws or otherwise, insofar as
such losses, claims, damages, expenses or liabilities (or actions in
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<PAGE>
respect thereof) arise out of or are based upon any untrue statement of any
material fact contained in any Registration Statement under which such
Registrable Securities were registered or qualified under the Securities Act or
any other applicable securities laws, any preliminary prospectus or final
prospectus relating to such Registrable Securities, or any amendment or
supplement thereto, or arise out of or are based upon an untrue statement
therein or the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, which untrue
statement or omission was made therein in reliance upon and in conformity with
written information furnished to the Company by such Indemnified Stockholder
specifically and expressly for use in connection with the preparation thereof,
and will reimburse the Company, such controlling person and each such officer or
director for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
expense, liability or action; provided, however, an Indemnified Stockholder's
liability under this Section 5(e)(iii) shall not exceed the net proceeds
received by such Indemnified Stockholder with respect to the sale of any
Registrable Securities.
(iv) In the case of an underwritten offering of Registrable Securities,
each holder of a Registrable Security included in a Registration Statement shall
agree to enter into an underwriting agreement in customary form and substance
with such underwriters, and to indemnify such underwriters, their officers and
directors, if any, and each person, if any, who controls such underwriters
within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act, to the same extent as provided in the preceding paragraph with
respect to indemnification by such holder of the Company, but subject to the
same limitation as provided in Section 5(e)(ii) with respect to indemnification
by the Company of such underwriters, officers, directors and control persons.
(v) Promptly after receipt by a person entitled to indemnification
under this Section 5(e) (an "Indemnified Party") of notice of the commencement
of any action or claim relating to any Registration Statement filed under this
Section 5 as to which indemnity may be sought hereunder, such Indemnified Party
will, if a claim for indemnification hereunder in respect thereof is to be made
against any other party hereto (an "Indemnifying Party"), give written notice to
each such Indemnifying Party of the commencement of such action or claim, but
the omission to so notify each such Indemnifying Party will not relieve any such
Indemnifying Party from any liability which it may have to any Indemnified Party
otherwise than pursuant to the provisions of this Section 5(e) and shall also
not relieve any such Indemnifying Party of its obligations under this Section
5(e) except to the extent that any such Indemnifying Party is actually
prejudiced thereby. In case any such action is brought against an Indemnified
Party, and such Indemnified Party notifies an Indemnifying Party of the
commencement thereof, such Indemnifying Party will be entitled (at its own
expense) to participate in and, to the extent that it may wish, jointly with any
other Indemnifying Party similarly notified, to assume the defense, with counsel
reasonably satisfactory to such Indemnified Party, of such action and/or to
settle such action and, after notice from the Indemnifying Party to such
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party will not be liable to such Indemnified Party for any legal or
other expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof, other than the reasonable cost of investigation;
provided, however, that no Indemnifying Party shall consent to the entry of any
judgment or enter into any settlement agreement without the prior written
consent of the Indemnified Party unless such Indemnified Party is fully released
and discharged from any such liability, and no
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Indemnified Party shall consent to the entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
Indemnifying Party without the consent of each Indemnifying Party.
Notwithstanding the foregoing, the Indemnified Party shall have the right to
employ its own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless (a) the
employment of such counsel shall have been authorized in writing by the
Indemnifying Party in connection with the defense of such suit, action, claim or
proceeding; (b) the Indemnifying Party shall not have employed counsel
(reasonably satisfactory to the Indemnified Party) to take charge of the defense
of such action, suit, claim or proceeding; or (c) such Indemnified Party shall
have reasonably concluded, based upon the advice of counsel, that there may be
defenses available to it which are different from or additional to those
available to the Indemnifying Party which, if the Indemnifying Party and the
Indemnified Party were to be represented by the same counsel, could result in a
conflict of interest for such counsel or materially prejudice the prosecution of
the defenses available to such Indemnified Party. If any of the events specified
in clauses (a), (b) or (c) of the preceding sentence shall have occurred or
shall otherwise be applicable, then the fees and expenses of one counsel or firm
of counsel selected by a majority in interest of the indemnified parties (and
reasonably acceptable to the Indemnifying Party) shall be borne by the
Indemnifying Party. If, in any such case, the Indemnified Party employs separate
counsel, the Indemnifying Party shall not have the right to direct the defense
of such action, suit, claim or proceeding on behalf of the Indemnified Party and
the Indemnified Party shall assume such defense and/or settle such action;
provided, however, that an Indemnifying Party shall not be liable for the
settlement of any action, suit, claim or proceeding effected without its prior
written consent, which consent shall not be unreasonably withheld.
The provisions of this Section 5(e) shall be in addition to any
liability which any party may have to any other party and shall survive any
termination of this Agreement.
(f) Contribution. If for any reason the indemnification provided for
in Section 5(e)(i) or 5(e)(iii) is unavailable to an Indemnified Party as
contemplated therein, then the Indemnifying Party, in lieu of indemnification
shall contribute to the amount paid or payable by the Indemnified Party as a
result of such loss, claim, damage, expense or liability (or action in respect
thereof) in such proportion as is appropriate to reflect not only the relative
benefits received by the Indemnified Party and the Indemnifying Party, but also
the relative fault of the Indemnified Party and the Indemnifying Party, as well
as any other relevant equitable considerations, provided that no Stockholder
shall be required to contribute in an amount greater than the difference between
the net proceeds received by such Stockholder with respect to the sale of any
Registrable Securities and all amounts already contributed by such Stockholder
with respect to such claims, including amounts paid for any legal or other fees
or expenses incurred by such Stockholder. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of any such
fraudulent misrepresentation. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action.
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(g) Registration Expenses. Except as hereinafter provided, all
expenses incident to the Company's performance of or compliance with this
Section 5 will be borne by the Company, including, without limitation, all
Registration and filing fees under the Securities Act and the Exchange Act, the
fees and expenses of the counsel and accountants for the Company (including the
expenses of any "cold comfort" letters and special audits required by or
incident to the performance of such persons), all other costs and expenses of
the Company incident to the preparation, printing and filing under the
Securities Act of the Registration Statement (and all amendments and supplements
thereto), and furnishing copies thereof and of the Prospectus included therein,
all out-of-pocket expenses of underwriters customarily paid for by issuers to
the extent provided for in any underwriting agreement, the costs and expenses
incurred by the Company in connection with the qualification of the Registrable
Securities under the state securities or "blue sky" laws of various
jurisdictions, the costs and expenses associated with filings required to be
made with the NASD, the costs and expenses of listing the Registrable Securities
for trading on a national securities exchange or authorizing them for trading on
NASDAQ and all other costs and expenses incurred by the Company in connection
with any Registration hereunder. In addition, the Company shall pay or reimburse
the sellers of Registrable Securities the reasonable fees and expenses of one
attorney to such sellers incurred in connection with a registration
(collectively, with the expenses referred to in the immediately preceding
sentence, the "Registration Expenses"). Except as provided in the immediately
preceding sentence, each Stockholder shall bear the costs and expenses of any
underwriters' discounts and commissions, brokerage fees or transfer taxes
relating to the Registrable Securities sold by such Stockholder and the fees and
expenses of any attorneys, accountants or other representatives retained by the
Stockholder.
(h) Participation in Underwritten Registrations. No Stockholder may
participate in any underwritten Registration hereunder unless such Stockholder
(i) agrees to sell its Registrable Securities on the basis provided in any
customary and reasonable underwriting arrangements approved by the persons
entitled hereunder to select the underwriter, and (ii) accurately completes in a
timely manner and executes all questionnaires, powers of attorney, underwriting
agreements, indemnities and other documents customarily required under the terms
of such underwriting arrangements.
(i) Holdback Agreements.
(i) Each holder of Registrable Securities whose securities are included
in a Registration Statement agrees not to effect any public sale or distribution
of the issue being registered or a similar security of the Company, or any
securities convertible into or exchangeable or exercisable for such securities,
including a sale pursuant to Rule 144 or Rule 144A under the Securities Act,
during the fifteen (15) days prior to, and during the ninety (90)-day period (or
such longer period as requested by the managing underwriter or underwriters in
the case of an underwritten public offering) beginning on, the effective date of
such Registration Statement (except as part of such Registration), if and to the
extent requested by the managing underwriter or underwriters in an underwritten
public offering.
(ii) The Company agrees not to effect any public sale or distribution
of the issue being registered or a similar security of the Company, or any
securities convertible into or exchangeable or exercisable for such securities
(other than any such sale or distribution of such
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securities in connection with any merger or consolidation by the Company or any
Subsidiary or the acquisition by the Company or any Subsidiary of the capital
stock or substantially all of the assets of any other Person), during the
fifteen (15) days prior to, and during the ninety (90)-day period beginning on,
the effective date of each Demand Registration.
(j) Public Information Reporting. The Company hereby covenants
and agrees to and with the Stockholders that at all times following the IPO Date
it shall provide and file such financial and other information concerning the
Company as may from time to time be required by the Commission and any other
governmental authority having jurisdiction, so as to comply with all reporting
requirements under the Exchange Act, and shall, upon request, state in writing
that it has complied with all such requirements, and further agrees that, for so
long as (following the IPO Date) the Company is not subject to Section 13 or
15(d) of the Exchange Act, the Company shall comply in all respects with
paragraph (c)(2) of Rule 144.
6. Disqualifying Transactions.
6.1 Company Conversion Rights. In the event AT&T PCS terminates its
obligations under Section 8.6 pursuant to Section 8.8(c) with respect to any
Overlap Territory, the Company shall have the following rights which may be
exercised by the Company in its sole discretion during the sixty (60) day period
commencing on the date of such termination:
(a) (i) The Company shall have the right in accordance with the
Restated Certificate to cause AT&T PCS, TWR Cellular and any Section 4.9
Transferee (as defined in the Restated Certificate) to exchange either (A) all,
or (B) a proportionate number of shares of Series A Preferred Stock then owned
by AT&T PCS, TWR Cellular and each Section 4.9 Transferee equal to a fraction,
the numerator of which is the number of POPS in the Overlap Territory and the
denominator of which is the total number of POPS in the Territory, of the shares
of Series A Preferred Stock then owned by AT&T PCS, TWR Cellular and each
Section 4.9 Transferee for an equivalent number of shares of Series B Preferred
Stock determined in accordance with the Restated Certificate; and
(ii) The Company shall have the right in accordance with the
Restated Certificate to cause AT&T PCS, TWR Cellular and each Section 4.9
Transferee to exchange either (A) all or (B) a proportionate number equal
to a fraction, the numerator of which is the number of POPs in the Overlap
Territory, and the denominator of which is the total number of POPs in the
Territory, of the shares of Series D Preferred Stock and Common Stock
Beneficially Owned by AT&T PCS and TWR Cellular on the date hereof (or
shares of Common Stock into which such shares of Series D Preferred Stock
shall have been converted) and that AT&T PCS, TWR Cellular or a Section 4.9
Transferee continues to own on the date such right is exercised by the
Company for that number of shares of Series B Preferred Stock as shall be
equal to the aggregate purchase price paid by AT&T PCS and TWR Cellular for
all of such shares of Series D Preferred Stock and Common Stock that AT&T
PCS, TWR Cellular or such Section 4.9 Transferee then Beneficially Owns
(including any shares of Common Stock into which such Series D Preferred
Stock shall have been converted) divided by the liquidation preference of
the Series B Preferred Stock determined in accordance with the Restated
Certificate;
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provided, however, that (x) if the Company exercises its right under clause
(i)(A) of this Section 6.1(a) it shall be required to exercise its right under
clause (ii)(A) of this Section 6.1(a), and vice versa; and if the Company
exercises its right under clause (i)(B) of the Section 6.1(a) it shall be
required to exercise its right under clause (ii)(B) of this Section 6.1(a) and
vice versa, and (y) the provisions of this Section 6.1(a) shall not apply to any
Section 4.9 Transferee which is a Cash Equity Investor.
(b) The Company may redeem the shares of Series B Preferred Stock
at any time as provided in the Restated Certificate.
6.2 Joint Marketing Right. During the period commencing on the date
of announcement by AT&T PCS of a transaction meeting the description of a
transaction set forth in clauses (a), (b) and (c) of the definition of a
Disqualifying Transaction (unless AT&T PCS notifies the Company it has waived
its right to declare such transaction a Disqualifying Transaction in which
event, this Section 6.2 shall not be applicable to such transaction) and
terminating on the later of (x) six (6) months after the date of consummation of
such transaction, and (y) if applicable, the date by which AT&T PCS is required
under applicable law to dispose of any PCS System or Cellular System serving a
Subject Market (the "Section 6.2 Period"), the following provisions shall apply:
(a) If AT&T PCS proposes to sell, transfer or assign the Subject
Market to any Person which is not an Affiliate of AT&T PCS, AT&T PCS shall give
written notice (the "Company Sale Notice") to the Company and the Company shall
have the right, exercisable by written notice given within ten (10) days of
receipt of the Company Sale Notice, to elect to cause AT&T PCS to offer for sale
jointly with the Company for a period of ninety (90) days the Subject Market
covered by the Company Sale Notice together with all of the Territory included
in the MTA that includes the Subject Markets (the "Joint Marketing Period"). In
the event that AT&T PCS has granted similar rights to the rights set forth in
this Section 6.2 to any Permitted Merger Participant and the Subject Market is
also a "Subject Market" under the terms of any agreement between AT&T PCS and
such Permitted Merger Participant, the Company agrees that any territory of the
Permitted Merger Participant that is required under the terms of such agreement
to be offered for sale jointly with the Subject Market shall be offered for sale
jointly with such Subject Market and all of the Territory included in the MTA
that includes such Subject Market. During the Joint Marketing Period, AT&T PCS
shall not sell the Subject Market other than in a transaction that includes the
Subject Market and the Territory included in the MTA that includes the Subject
Market, provided, however, that neither AT&T PCS nor the Company shall be
obligated to enter into a transaction for the Subject Market and such Territory
other than on terms acceptable to each of them in their sole discretion. This
Section 6.2 shall cease to apply to the Subject Market upon the earlier of (x)
if the Company fails to make the joint marketing election with respect to the
Subject Market within the ten (10) day period referred to above, the expiration
of such ten (10) day period, or (y) if the Company makes the joint marketing
election with respect to the Subject Market, upon the expiration of the Joint
Marketing Period.
(b) Nothing contained in this Section 6.2 shall (x) be construed
to require AT&T PCS to deliver a Company Sale Notice with respect to the Subject
Market except during the Section 6.2 Period, (y) extend the obligation of AT&T
PCS set forth in this Section
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6.2 beyond the expiration of the Section 6.2 Period or (z) apply to any sale,
transfer or assignment of the Subject Market pursuant to an agreement executed
on any date not within the Section 6.2 Period.
(c) Nothing in this Agreement shall be construed to require AT&T
PCS to deliver the notice described in clause (d) of the definition of a
Disqualifying Transaction, including, without limitation, circumstances in which
AT&T PCS or its Affiliates enters into any transaction meeting the description
of a transaction set forth in clauses (a), (b) and (c) of the definition of a
Disqualifying Transaction.
7. Additional Rights and Covenants.
7.1 Financial Statements. The Company shall provide to each
Stockholder (a) within (x) seventy-five (75) days after the end of each fiscal
quarter (other than the fourth fiscal quarter) or such shorter periods as is
required pursuant to the terms of the Company's senior indebtedness, and (y)
thirty (30) days after the end of each month the unaudited consolidated balance
sheet of the Company and its Subsidiaries as at the end of such period and the
related unaudited consolidated statements of income, surplus and cash flows for
such period and year-to-date and (b) within one hundred twenty (120) days after
the end of each fiscal year, the audited consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year and the related
unaudited consolidated statements of income, surplus and cash flows for such
year. All financial statements and information provided pursuant to this Section
7.1 shall constitute Confidential Information under Section 7.7. The Company
shall also provide to AT&T PCS and each Cash Equity Investor copies of the
Company's operating and capital expenditure budgets within five (5) days after
any such operating and capital expenditure budget is adopted by the Board of
Directors and shall promptly provide AT&T PCS or any Cash Equity Investor any
other additional financial information that AT&T PCS or any such Cash Equity
Investor reasonably requests.
7.2 Purchase Right.
(a) If on or prior to the IPO Date the Company proposes to offer,
issue, sell or otherwise dispose of shares of any class or series of common
stock or Preferred Stock, or options, rights, warrants, conversion rights or
appreciation rights relating thereto, or any other type of equity security
(collectively, "Equity Securities") of the Company for cash to any Person,
including pursuant to an initial public offering, (x) the Company shall, prior
to any such offer, issuance, sale or other disposition, give written notice (an
"Issuance Notice") to each of the Stockholders setting forth the purchase price
of such Equity Securities (or, in the case of an initial public offering, the
anticipated price range), the type and aggregate number of Equity Securities or
rights to acquire Equity Securities to be so offered, issued, sold or otherwise
disposed of, the terms and conditions of such offer, issuance, sale or other
disposition, and the rights, powers and duties inhering in such additional
Equity Securities or rights to acquire Equity Securities, and (y) each
Stockholder shall have the right (the "Purchase Right") to acquire the
percentage of Equity Securities proposed to be offered, issued, sold or
otherwise disposed of equal to the number of shares of Class A Voting Common
Stock then Beneficially Owned by such Stockholder divided by the aggregate
number of shares of Class A Voting Common Stock outstanding immediately prior to
such offer, issuance, sale or other disposition of Equity
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Securities (including any shares of Class A Voting Common Stock Beneficially
Owned by such Stockholder); provided, however, that the terms and conditions of
this Section 7.2 shall not apply to any offer, issuance, sale or other
disposition of Equity Securities or rights to acquire Equity Securities to any
Person pursuant to a stock option or stock appreciation rights plan established
by the Company for the benefit of its employees, officers, directors, agents or
consultants, or otherwise granted to an employee of the Company in connection
with such person's employment by the Company. In the case of an offer, issuance
sale or other disposition of Equity Securities issued as part of a unit with
other debt, equity or other securities of the Company, the right of a
Stockholder to acquire such Equity Security shall be conditioned upon such
Stockholder's acquisition of such debt, equity or other securities included in
such unit.
(b) Each Stockholder may exercise such Purchase Right, in whole
or in part, on the terms and conditions and for the purchase price set forth in
the Issuance Notice, by giving to the Company notice to such effect, within
thirty (30) days after the giving of the Issuance Notice. In the case of an
initial public offering, the following conditions shall apply to the Purchase
Right set forth herein: (i) In the event that a Stockholder exercises such
Purchase Right, such Stockholder shall be obligated to exercise such right if
the public offering price is not greater than the highest price in the
anticipated range specified in the applicable notice, and (ii) in the event that
a Stockholder exercises such Purchase Right and the public offering price is
greater than the highest price in the anticipated range specified in the
applicable notice, such Stockholder shall have the right but not the obligation,
to exercise such right at such public offering price. After the expiration of
such thirty (30) day period, the Company shall have the right to offer, issue,
sell and otherwise dispose of any or all of the Equity Securities referred to in
the applicable Issuance Notice as to which no Purchase Right has been exercised
but only upon the terms and conditions, and for a purchase price not lower than
the purchase price set forth in the Issuance Notice; provided, however, that in
the case of an initial public offering, such right of the Company shall be the
right to offer, issue, sell and otherwise dispose of such Equity Securities at
any price. In the event of an initial public offering of Equity Securities at a
price more than 20% below such lowest price, AT&T PCS shall have the right,
exercisable at the time of pricing of such initial public offering, to exercise
such Purchase Right. If the Company does not offer, issue, sell or otherwise
dispose of the Equity Securities referred to in the applicable Issuance Notice
on the terms and conditions set forth in such Issuance Notice within one hundred
twenty (120) days after the expiration of such thirty (30) day period, then any
subsequent proposal by the Company to offer, issue, sell or otherwise dispose of
such Equity Securities shall be subject to this Section 7.2.
7.3 Access. The Company shall permit, and shall cause each of its
Subsidiaries to permit, upon reasonable notice, during normal business hours,
each Qualified Holder and its directors, officers, employees, attorneys,
accountants, representatives, consultants and other agents, at the sole expense
of such Qualified Holder, to (a) visit and inspect any of the properties and
facilities of the Company and its Subsidiaries, (b) examine and make copies of
and extracts from the corporate and financial records of the Company and its
Subsidiaries, (c) discuss the affairs, finances and accounts of the Company or
any such Subsidiary with any of its officers, directors and key employees and
its independent accountants, and (d) otherwise investigate the properties,
businesses and operations of the Company and its Subsidiaries, in each case as
such Qualified Holder reasonably deems necessary; provided, however, that each
Qualified Holder may exercise its rights pursuant to this Section 7.3 no more
than three times in
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any 12 month period. The Company shall, and shall cause each of its Subsidiaries
and the officers, directors and employees of the Company and its Subsidiaries
to, cooperate fully in connection with such inspection, examinations and
discussions. The presentation of a copy of this Agreement by any Qualified
Holder to the independent accountants of the Company or any of its Subsidiaries
shall constitute permission by the Company or such Subsidiary to its independent
accountants to participate in discussions with such Qualified Holder.
7.4 Merger, Sale or Liquidation of the Company.
(a) Except for transactions permitted pursuant to Section 7.11
and to the extent permitted in this Section 7.4, the Company shall not, and
shall not permit any of its Subsidiaries to, except with the prior written
consent of AT&T PCS or in accordance with Sections 7.4(b) and 7.4(c), effect (i)
any merger, combination or consolidation of the Company or such Subsidiary with
or into any other entity (regardless of whether the Company or such Subsidiary
is the surviving entity in any such transaction) (any such merger, combination
or consolidation is referred to as a "Company Merger"), (ii) any sale or
disposition of a substantial portion of its assets (a "Company Asset Sale"), or
(iii) the liquidation, dissolution or winding up of the Company or such
Subsidiary.
(b) The Company and its Subsidiaries may effect a Company Merger,
without the prior written consent of AT&T PCS, (i) in which the only constituent
corporations are two or more of the Company's wholly owned Subsidiaries, (ii) in
which the only constituent corporations are the Company and one or more of its
wholly owned Subsidiaries and the Company is the surviving corporation, or (iii)
between a Subsidiary of the Company and another entity for the purpose of
acquiring such other entity; provided, that (x) such transaction does not affect
the capital structure of the Company, except to the extent the Company issues
common stock to the stockholders of the other entity pursuant to the terms of
such Company Merger, (y) the surviving corporation is a direct or indirect
wholly owned Subsidiary of the Company, and (z) the consummation of such
transaction does not violate Section 8.1(a).
(c) The Company and its Subsidiaries may effect any of the
transactions described in clauses (i) or (ii) of Section 7.4(a) (a "Sale
Transaction"), without the prior written consent of AT&T PCS, if (a) such
transaction has no material effect on AT&T PCS' equity interest in the Company
(and the seniority thereof) or its rights under this Agreement, (b) the
Company's direct or indirect interest in its assets is unaffected by such
transaction in any material respect, and (c) such transaction is otherwise
equivalent in all material respects to AT&T PCS to the sale by each of the other
Stockholders of its equity interests in the Company for cash or marketable
securities; provided, that any such Sale Transaction shall nevertheless be
subject to a right of first offer in accordance with the provisions of Section
7. 4(d).
(d) Prior to entering into a Sale Transaction, the Company shall
give written notice (the "Sale Notice") to AT&T PCS. Each Sale Notice shall
describe in reasonable detail all material terms of the proposed Sale
Transaction. The Sale Notice shall constitute an irrevocable offer (a "Sale
Offer") to enter into the Sale Transaction with AT&T PCS on the terms set forth
in the Sale Notice. AT&T PCS shall have the irrevocable right and option, but
not the obligation, to accept the Sale Offer in whole but not in part by giving
written notice of its
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acceptance of such offer within thirty (30) days of the date the Sale Notice is
given. The Sale Transaction shall be closed at the principal executive offices
of the Company within thirty (30) days after the acceptance by AT&T PCS of the
Sale Offer; provided, however, that, if the Sale Transaction is subject to the
consent of the FCC or any public service or public utilities commission, the
Sale Transaction shall be closed on the fifth business day after all such
consents shall have been obtained by Final Order. If AT&T PCS declines (which
shall include the failure to give timely notice of acceptance) to accept the
Sale Offer, the Company shall have the right (for a period of ninety (90) days
following the expiration of the thirty (30) day acceptance period referred to
above) to close a Sale Transaction on the terms described in the Sale Offer
(except that the price must be at least 95% of the price set forth in the Sale
Offer); provided however that, if the consent of the FCC or any public service
or public utilities commission is required, the Sale Transaction may be closed
not later than the fifth business day after all such consents shall have been
obtained by Final Order. If, after giving a Sale Offer, the Company does not
close a Sale Transaction in accordance with the terms of the immediately
preceding sentence, the Company shall not effect any Sale Transaction without
giving another Sale Notice in accordance with this Section 7.4(d).
7.5 Wholly-Owned Subsidiaries. All of the Company's Subsidiaries
shall be direct or indirect wholly owned Subsidiaries of the Company, and the
Company shall not, and shall not permit any Subsidiary to, sell or issue,
transfer, encumber or otherwise dispose of any shares of capital stock of any of
the Company's Subsidiaries to any Person other than the Company and its direct
or indirect wholly owned Subsidiaries, except for a pledge of any such shares in
connection with the incurrence of indebtedness.
7.6 Amendments of the Restated Certificate and By-Laws. Prior to the
IPO Date, the Company shall not, without the prior written consent of AT&T PCS,
authorize or adopt any amendment, modification or repeal of any provision of the
Restated Certificate or the Restated By-Laws, unless such amendment is
consistent with the terms of this Agreement.
7.7 Confidentiality.
(a) Each party shall, and shall cause each of its Affiliates, and
its and their respective stockholders, members, managers, directors, officers,
employees and agents (collectively "Representatives") to, keep secret and retain
in strictest confidence any and all information relating to the Company or any
other party that is designated in writing by the party providing such
information or the Company as confidential ("Confidential Information") and
shall not disclose such information, and shall cause its Representatives not to
disclose such information, to anyone except such Affiliates, Representatives or
any other Person that agrees in writing to keep in confidence all such
information in accordance with the terms of this Section 7.7. Each party agrees
to use such information received from another party or the Company only in
connection with its ownership interest in the Company but not for any other
purpose. All such information furnished pursuant to this Agreement shall be
returned promptly to the party to whom it belongs upon request by such party.
(b) To the fullest extent permitted by law, if a party or any of
its Affiliates or Representatives breaches, or threatens to commit a breach of,
this Section 7.7, the party whose Confidential Information shall be disclosed,
or threatened to be disclosed, shall have
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the right and remedy to have this Section 7.7 specifically enforced by any court
having jurisdiction, it being acknowledged and agreed that money damages will
not provide an adequate remedy to such party. Nothing in this Section 7.7 shall
be construed to limit the right of any party to collect money damages in the
event of breach of this Section 7.7.
(c) Anything else in this Agreement notwithstanding, each party
shall have the right to disclose any information, including Confidential
Information of the other party or such other party's Affiliates, in any filing
with any regulatory agency, court or other authority or any disclosure to a
trustee of public debt of a party to the extent that the disclosing party
determines in good faith that it is required by Law, regulation or the terms of
such debt to do so; provided, however, that any such disclosure shall be as
limited in scope as possible and shall be made only after giving the other party
as much notice as practicable of such required disclosure and an opportunity to
contest such disclosure if possible.
7.8 IPO Date. In the event that the IPO Date shall not have occurred
on or prior to the fifth (5th) anniversary of the date hereof, the Company
shall, at the request of any Qualified Holder, as promptly as is reasonably
practicable after the date of such request, undertake a registration of Common
Stock pursuant to an effective Registration Statement that results in the
occurrence of the IPO Date; provided, however, that if the Board of Directors
determines that such registration would interfere with any pending or
contemplated material acquisition, disposition, financing or other material
transaction, the Company may defer such registration (including by withdrawing
any Registration Statement filed in connection with such registration); provided
that the aggregate of all such deferrals shall not exceed one hundred twenty
(120) days in any 360-day period. Any such registration shall be pursuant to an
underwritten offering. Each Stockholder agrees to cooperate in such
registration, including, without limitation, entering into customary holdback
agreements.
7.9 AT&T Retained Licenses. In the event that AT&T PCS desires to
Transfer all or any of the AT&T Retained Licenses in the Territory at any time
prior to the eighth anniversary of the date hereof, AT&T PCS shall give written
notice thereof to the Company at least thirty (30) days prior to entering into a
binding agreement to sell such AT&T Retained Licenses in the Territory such
notice to specify among other things, the AT&T Retained Licenses in the
Territory that it desires to sell. For a period of thirty (30) days after the
date such notice is given, the Company shall have the right to negotiate with
AT&T PCS with respect to the purchase of all, but not less than all, of such
AT&T Retained Licenses in the Territory; it being understood and agreed that
such right shall not be deemed to be a right of first offer or right of first
refusal for the benefit of the Company and AT&T PCS shall have the right to
reject any offer made by the Company during such thirty (30) day period. In the
event no binding agreement to sell all or any of such AT&T Retained Licenses in
the Territory is entered into prior to the expiration of the one hundred and
eighty (180) day period following the expiration of such (30) day period, such
Licenses shall become subject once again to the provision and restrictions
hereof.
7.10 Regulatory Cooperation. Each of the Stockholders severally
agrees to comply with the last sentence of Section 6.7 of the Securities
Purchase Agreement.
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7.11 Permitted Transactions. Notwithstanding the terms of Section
7.4(a) and 8.4(a):
(a) after completion of the Minimum Build-Out Plan and
certification that Company Systems meet the TDMA Quality Standards, the Company
and its Subsidiaries may effect a merger, combination of consolidation with or
into a Permitted Merger Participant or acquire all or substantially all of the
assets of a Permitted Merger Participant or sell all or substantially all of the
assets of the Company and its Subsidiaries to a Permitted Merger Participant
(any such transaction being referred to as a "Permitted Consolidation
Transaction"), so long as such transaction is approved by the Board of Directors
and the holders of the Company's capital stock to the extent such approval is
required pursuant to the Restated Certificate or applicable law;
(b) the Company may acquire FCC Licenses (each such License a
"Permitted Cellular License") authorizing the holder to provide in a specified
geographic area using specified frequencies in respect of which the Board of
Directors has determined that the acquisition of such License (and any other
assets being acquired together therewith) is a demonstrably superior alternative
to constructing a PCS System in the applicable area within the PCS Territory,
provided that, (i) a majority of the POPs included in the geographic area
covered by such License are within the PCS Territory, (ii) none of AT&T PCS, any
Affiliate thereof or any AT&T Licensee owns an interest in an FCC License to
provide Commercial Mobile Radio Service in such geographic area, and (iii) the
ownership of such License will not conflict with, or cause AT&T PCS, any
Affiliate thereof or any AT&T Licensee to be in violation or breach of any
agreement, instrument, Law or License applicable to or binding upon such Person
or its assets. Notwithstanding the foregoing, the Company shall not acquire any
Permitted Cellular License if the acquisition of such License would adversely
affect the Company's ability to satisfy its obligations under the first sentence
of Section 8.1(b); and
(c) The Company may acquire licenses issued by the FCC to provide
wireless services (other than FCC Licenses) (each such license a "Permitted
Non-CMRS License") authorizing the holder to provide in a specified geographic
area using specified frequencies in respect of which the Board of Directors has
determined that the acquisition of such Permitted Non-CMRS License (and any
other assets being acquired together therewith) is necessary or desirable to
constructing a PCS System in the applicable area within the PCS Territory,
provided that, (i) the POPs included in the geographic area covered by such
License are within the PCS Territory, (ii) none of AT&T PCS or any Affiliate
thereof owns an interest in a similar Permitted Non-CMRS License in such
geographic area, (iii) the ownership of such License will not conflict with, or
cause AT&T PCS or any Affiliate thereof to be in violation or breach of any
agreement, instrument, Law or License applicable to or binding upon such Person
or its assets, and (iv) the service to be provided by the Company using such
Permitted Non-CMRS License complies with the definition of Business.
Notwithstanding the foregoing, the Company shall not acquire any Permitted
Non-CMRS License if the acquisition of such License would adversely affect the
Company's ability to satisfy its obligations under the first sentence of Section
8.1(b).
7.12 Covenant of Holders of Class C Common Stock. (a) Each holder of
Class C Common Stock hereby covenants and agrees that, for so long as it is a
holder of any Class C
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Common Stock and for so long as required by FCC rules, it will maintain its
status as an "Institutional Investor", as such term is used in 47 CFR Section
24.720(h), and that it will give written notice to the Company within five (5)
days after such Stockholder becomes aware that it no longer maintains such
status for any reason (the "Transfer Event"). Upon the occurrence of a Transfer
Event with respect to any Stockholder under circumstances such that (i) the
failure of the Stockholder to maintain its status as an Institutional Investor
would compromise any of the material benefits the Company derives as a "Very
Small Business", as defined in 47 CFR ss. 24.720(b)(2) or from the Company's
eligibility to bid on frequency block "C" or "F" licenses, as specified in 47
CFR Section 24.709 or to be eligible to receive any of the rights specified in
47 CFR Sections 24.711, 24.712, 24.716 and 24.717 (collectively, the "Material
Benefits") and (ii) the Stockholder is unable to obtain a waiver from the FCC
regarding, or to cure, such Transfer Event or loss of Material Benefits, the
other holders of Class C Common Stock at the time shall have the right to
purchase any or all of such Stockholder's Class C Common Stock pursuant to the
terms hereof, or, if not so purchased by the other holders of Series C Common
Stock, by one or more Persons designated by the Company.
(b) Within fifteen (15) days of becoming aware that a Transfer
Event has occurred with respect to a Stockholder, the Company shall give the
other holders of Class C Common Stock notice of their right to purchase the
Stockholder's Class C Common Stock for the purchase price paid by such holder of
Class C Common Stock.
(c) Notwithstanding the foregoing, any Stockholder which suffers
a Transfer Event may, if to do so would avoid the loss of Material Benefits,
elect to convert all or part of its Class C Common Stock to another class of
Common Stock which the Company has authorized, or to waive in writing such
rights pertaining to its ownership of such stock as may be necessary to avoid
the loss of Material Benefits, which election shall be made no later than five
(5) days before the FCC Determination Date.
7.13 Additional Florida POPs. In the event that the PCS Licenses
that are subject to the Option Agreement are acquired by the Company, the "PCS
Territory" shall include the territory covered by such PCS Licenses. The Company
shall have the right to acquire the Pensacola, FL and Fort Walton Beach, FL MSAs
(the "Permitted Florida MSAs") so long as at least one (1) of the Series A
Preferred Directors shall have consented or voted in favor thereof.
8. Operating Arrangements.
8.1 Construction of Company Systems.
(a) The Company hereby agrees to construct, or cause its
Subsidiaries to construct, Company Systems covering the Territory on a schedule
no less rapid than is set forth in the Minimum Build-Out Plan. Company Systems
shall be technologically compatible in all material respects with systems being
used in a Majority of the Southeast Region (including without limitation for the
purpose of facilitating roaming and hand-off between systems), and will to the
extent technologically feasible implement the same User Interface as such
systems, with the intention that the User Interface in Company Systems will not
differ from the User Interface in a Majority of the Southeast Region in a manner
that would be material to customers.
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(b) The Company and AT&T PCS hereby agree that the Company shall
assume and be obligated to satisfy the construction requirements set forth in 47
CFR 24.203 with respect to the AT&T Retained Licenses in the Territory and the
AT&T Contributed Licenses. The Company and AT&T PCS agree from time to time at
the request of the Company or AT&T PCS, as applicable, to provide the other with
information concerning the status of construction of its PCS Systems to enable
such party to determine the level of compliance with such construction
requirements with respect to the AT&T Retained Licenses and AT&T Contributed
Licenses, as applicable.
(c) The Company will arrange for all necessary microwave
relocation in connection with the AT&T Contributed Licenses and pay, assume or
(if applicable) reimburse AT&T PCS or its Affiliates for any obligation to pay,
any reasonable costs incurred by it or AT&T PCS in connection with any such
microwave relocation, provided, that nothing contained herein shall require the
Company to pay any costs incurred in connection with microwave relocation in
connection with the AT&T Retained Licenses.
8.2 Service Features. Company Systems will offer the Core Service
Features. Company Systems will also offer, at the written request of AT&T PCS,
additional service features that AT&T PCS has notified the Company it will
provide in a Majority of the Southeast Region, unless the Board of Directors
reasonably determines that the provision of such additional features would be
financially detrimental to the Company. Unless the Board of Directors makes such
a determination, any such additional features shall be adopted within one
hundred twenty (120) days after the request by AT&T PCS. The Critical Network
Elements are set forth on Schedule XI.
8.3 Quality Standards. The Company shall use commercially reasonable
efforts to cause the Company Systems to comply with the TDMA Quality Standards.
Without limiting the foregoing, with respect to each material portion of a
Company System (such as a city) that the Company places in commercial service,
on or prior to the first anniversary of the date such material portion is placed
in commercial service, the Company shall cause each such material portion to
achieve a level of compliance with the TDMA Quality Standards equal to at least
the average level of compliance achieved by comparable PCS and Cellular Systems
owned and operated by AT&T PCS taking into account, among other things, the
relative stage of development thereof. In the event that the Company fails to
achieve such level of compliance, the Company shall not be deemed to be in
material breach of this provision if such non-compliance is cured within thirty
(30) days of notice thereof from AT&T PCS to the Company, or, if such breach is
not capable of being cured within such thirty (30) day period using commercially
reasonable efforts, within one hundred eighty (180) days of such notice,
provided the Company is using commercially reasonable efforts to cure such
material breach as soon as reasonably practicable.
8.4 No Change of Business.
(a) Subject to Section 7.11, the Company will not, and will not
permit any of its Subsidiaries to, without obtaining the prior written consent
of AT&T PCS, do any of the following: (i) conduct, directly or indirectly, any
business other than the Business, (ii) make any material change to the Minimum
Build-Out Plan in the Territory, or (iii) effect any
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transaction, agreement or arrangement which has or could reasonably be expected
to have the effect of materially impairing or materially limiting the ability of
(x) subscribers to Cellular Systems and PCS Systems in which AT&T PCS or its
Affiliates have an ownership interest to utilize the Company Systems for
roaming, or (y) AT&T PCS or its Affiliates to resell wireless service on the
Company Systems; it being understood that clause (i) shall not be deemed to
restrict the business of the Company in any Overlap Territory.
(b) During the period commencing on the date hereof through and
including the first anniversary of the date hereof, without obtaining the prior
written consent of each SBIC Holder, the Company will not, and will not permit
any of its Subsidiaries, to conduct, directly or indirectly, any business other
than the Business.
(c) If at any time during the term of this Agreement AT&T PCS and
its Affiliates determine to discontinue use of TDMA in a Majority of the United
States: (i) the Company will have the right to cease to use TDMA and may adopt
the new technology adopted by AT&T PCS and its Affiliates in a Majority of the
United States or implement any other alternative technology in Company Systems,
and, if it exercises such right, the definition of Company Systems shall be
automatically deemed to be modified by substituting a reference to such new or
alternative technology in lieu of the reference in such definition to TDMA, and
(ii) the obligations of AT&T PCS and its Affiliates pursuant to Section 8.6
shall terminate and be of no further force or effect, unless within sixty (60)
days of notice by AT&T PCS to the Company specifying that AT&T PCS and its
Affiliates have determined to discontinue use of TDMA in a Majority of the
United States, the Company agrees to implement in Company Systems on a
reasonable schedule the new technology adopted by AT&T PCS and its Affiliates in
a Majority of the United States. In the event AT&T PCS desires to test any
technology that is an alternative to TDMA in any PCS System or Cellular System
contiguous to the Territory, AT&T PCS hereby agrees to notify the Company at
least thirty (30) days before conducting such test and will conduct such tests
in a manner that does not have a material adverse effect on the Company.
8.5 Preferred Provider.
(a) The Company and its Subsidiaries shall not market, offer,
provide or resell interexchange services, except (i) interexchange services that
constitute Company Communication Services, and (ii) interexchange services
procured from AT&T Corp. or an Affiliate thereof designated by AT&T Corp. Such
interexchange services shall be provided by AT&T Corp. or such Affiliate at the
same rates as the rates charged by AT&T Corp. or such Affiliate to other
similarly situated carriers. It is anticipated that such services will be
provided by AT&T Corp. or such Affiliate pursuant to an agreement incorporating
such rates. Upon specific request of any customer, the Company may permit such
customer to utilize the interexchange services of another interexchange provider
(including the interexchange services of AT&T Corp. and its Affiliates),
provided, however, that neither the Company nor any Affiliate thereof will
accept any referral fee, commission, credit against its long distance bill, or
any other remuneration, directly or indirectly, from such other provider in
exchange for permitting its customers to utilize such other interexchange
provider. The Company covenants and agrees that neither it nor its Subsidiaries
will market, offer, promote or otherwise encourage its customers to utilize the
interexchange services of any Person other than the Company (such
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services having been procured as set forth above by the Company from AT&T Corp.
or an Affiliate thereof) or AT&T Corp. or an Affiliate thereof.
(b) With respect to services other than interexchange services,
when the Company or a Subsidiary does not itself develop, or is not permitted to
develop, one or more telecommunications services that are offered or provided in
connection with the conduct of its Business (including, by way of example, local
telephone services or voicemail), but instead procures such services, the
Company shall request in writing that AT&T PCS provide such services (directly
or through an Affiliate designated by it) and, provided, that AT&T PCS (or a
designated Affiliate) offers to provide such telecommunication services to the
Company on reasonably competitive terms, the Company or such Subsidiary shall
procure such services from AT&T PCS (or such Affiliate thereof).
8.6 Exclusivity.
(a) None of the Stockholders or their respective Affiliates will
provide or resell, or act as the agent for any Person offering, within the
Territory, Company Communications Services (when used in this Section 8.6,
solely with respect to the Management Stockholders and their Affiliates and the
Cash Equity and their respective Affiliates, the term "Company Communications
Services" shall include all mobile wireless telecommunications services,
initiated or terminated, using analog, CDMA, GSM, TDMA or any other technology)
except that, AT&T PCS and its Affiliates may (i) resell, or act as the Company's
agent for, Company Communications Services provided by the Company in accordance
with the Resale Agreement (or any other agreement between AT&T PCS and its
Affiliates, on the one hand, and the Company, on the other hand), including
bundling any such Company Communications Services with other telecommunications
services marketed, offered and provided or resold by such Person, (ii) provide
or resell wireless telecommunications services to or from specific locations
(such as buildings or office complexes), even if the subscriber equipment used
in connection with such service may be capable of routine movement within a
limited area (such as a building or office complex), and even if such subscriber
equipment may be capable of obtaining other telecommunications services beyond
such limited area (which other services may include routine movement beyond such
limited area) and hand-off between the service to such specific locations and
such other telecommunications services; provided, however, that if AT&T PCS or
any of its Affiliates sells such mobile wireless subscriber equipment such
equipment shall be capable of providing (but not necessarily on an exclusive
basis) Company Communications Services, (iii) resell Company Communications
Services provided by a Person other than the Company in any geographical area
within the Territory in which the Company has not placed a Company System into
commercial service (it being understood that in the event that AT&T PCS or any
of its Affiliates that is reselling Company Communication Services of a Person
other than the Company in a geographic area within the Territory at the time the
Company places a portion of a Company System including such geographic area into
commercial service, AT&T PCS or its Affiliates, as applicable, shall terminate
such resale arrangement with respect to such geographic areas within thirty (30)
days of the date such portion of a Company System is placed in commercial
service) and (iv) provide or resell, or act as the agent for any person
offering, Company Communications Services within the Kentucky RSAs pursuant to
the terms of the agreement in effect on the date hereof with PriCellular Inc.,
as such agreement may be amended, modified, supplemented or modified after the
date hereof or
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pursuant to a successor agreement entered into with respect to the subject
matter thereof. AT&T PCS agrees to provide the Company with not less than sixty
(60) days' prior notice of any resale activities described in clause (iii)
hereof, such notice to include a reasonable description of such resale
activities and to use dual band/dual mode phones, to the extent commercially
reasonable in connection with such resale activities. To the extent the "other
telecommunications services" referred to in clause (ii) of the first sentence of
this Section 8.6(a) constitute Company Communications Services, neither AT&T PCS
nor any of its Affiliates or any AT&T Licensee may provide or resell, or act as
agent for any Person offering, such "other telecommunications services" except
Company Communications Services provided by the Company in accordance with the
terms of clause (i) of the first sentence of this Section 8.6(a). Nothing herein
shall be construed to limit in any respect any advertising and promotional and
similar activities by AT&T PCS or its Affiliates or any Cash Equity Investor or
any of its Affiliates.
(b) With respect to the markets listed on Schedules 1 and 2 to
the Roaming Agreement, each of AT&T PCS and the Company shall, and shall cause
each of its Affiliates to, in its and such Affiliates' capacity as Home Carrier:
(i) program and direct its authorized dealers to program the subscriber
equipment provided by it or such authorized dealers to its customers, at the
time it is provided to such customers, (to the extent such programming is
technologically feasible) so that the Company or AT&T PCS, as the case may be,
and such Affiliates, in its and such Affiliates' capacity as Serving Carrier, is
the preferred provider of Service in the markets listed on such Schedules 1 and
2, and (ii) refrain, and direct its authorized dealers to refrain, from inducing
any of its customers to change or, except at such customer's request in the
event the quality of the Company's services do not meet industry standards,
changing the programming described in clause (i) above; provided, however, the
provisions of this Section 8.6(b) shall not apply to AT&T PCS and its Affiliates
in the Kentucky RSAs. For the purpose of this Section 8.6(b), the terms
"Affiliate," "Home Carrier" and "Serving Carrier" shall have the meanings
ascribed thereto in the Roaming Agreement.
8.7 Other Business; Duties; Etc. Except to the extent expressly set
forth in Section 8.6, AT&T PCS and TWR Cellular and each Cash Equity Investor
and any Person affiliated with AT&T PCS, TWR Cellular or a Cash Equity Investor
may engage in or possess an interest in other business ventures, and may engage
in any other activities, of every kind and description (whether or not
competitive with the business of the Company or otherwise affecting the
Company), independently or with others and shall owe no duty or liability to the
Company, the other Stockholders or their Affiliates in connection therewith.
None of the Company or the other Stockholders shall have any rights in or to
such independent ventures or the income or profits therefrom by virtue of this
Agreement or any of the Related Agreements. Without limiting the generality of
the foregoing, in the event that AT&T PCS, TWR Cellular or a Cash Equity
Investor or a Person affiliated with AT&T PCS, TWR Cellular or a Cash Equity
Investor develops inventions which are patentable or are otherwise trade secrets
relevant to the Business, AT&T PCS, TWR Cellular or such Cash Equity Investor or
affiliated Person shall nevertheless retain ownership of such invention and may
license it to the Company if the Company so desires and if mutually satisfactory
terms are agreed to. The Company shall also have the right to develop any
inventions related to the Business deemed desirable by it and to retain title to
such inventions. To the extent that, at law or in equity, AT&T PCS, TWR Cellular
or a Cash Equity Investor or any Person affiliated with AT&T PCS, TWR Cellular
or a Cash Equity Investor would have duties (including fiduciary duties) and
liabilities to the Company, or to the
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Stockholders, different from or in addition to those provided in this Section
8.7 and Section 8.6 with respect to the subject matter of such Sections, all
rights of the Company and the Stockholders arising out of such duties and
liabilities are hereby waived and no such Person shall be liable to the Company
or to any Stockholder for its good faith reliance on the provisions of this
Section 8.7.
8.8 Acknowledgments and Termination of Exclusivity.
(a) The Stockholders hereby expressly acknowledge that none of
the Stockholders would have been willing to enter into this Agreement or make
contributions to the capital of the Company, except for each other Stockholder's
and its Affiliates' willingness to enter into this Agreement (including without
limitation the provisions set forth in this Section 8) and the Related
Agreements.
(b) Without limiting the foregoing, and without limiting the
remedies that may be available to it at law or in equity, in the event of a
Substantial Company Breach, the obligations of AT&T PCS and its Affiliates
(including TWR Cellular) under Section 8.6 shall automatically terminate and be
of no further force or effect.
(c) Upon consummation of a Disqualifying Transaction, AT&T PCS
may, by notice to the Company, terminate its and its Affiliates' (including TWR
Cellular) obligations under Section 8.6 with respect to any Overlap Territory,
provided that the obligations of AT&T PCS and its Affiliates (including TWR
Cellular) pursuant to Section 8.6(b)(ii) shall continue in effect with respect
to the then existing customers of the PCS Systems and Cellular Systems owned and
operated by AT&T PCS and its Affiliates (including TWR Cellular) (and their
respective successors pursuant to the applicable Disqualifying Transaction)
before giving effect to such Disqualifying Transaction, so long as such
customers remain customers of such systems and such systems continue to be owned
or operated by AT&T PCS or its Affiliates (including TWR Cellular).
Notwithstanding the foregoing, in the event that the Company exercises its right
pursuant to Section 6.1 to convert all of the shares of Company Stock owned by
AT&T PCS and TWR Cellular into Series B Preferred Stock, the reference in this
Section 8.8(c) to the "Overlap Territory" shall be deemed to refer to the
Territory.
8.9 Equipment, Discounts and Roaming. AT&T PCS acknowledges and
agrees that, subject to the terms of Sections 8.1 and 8.5, the Company shall
have the sole discretion to select (a) the equipment vendor(s) for the
infrastructure to be constructed by the Company and (b) billing and other
vendors providing goods and services to the Company. If reasonably requested by
the Company, AT&T PCS agrees to use commercially reasonable efforts to assist
representatives of the Company in obtaining discounts from any AT&T PCS vendor
with whom the Company is negotiating for the purchase of any such subscriber or
infrastructure equipment. In addition, AT&T PCS agrees to use all commercially
reasonable efforts to enable the Company to become a party to the roaming
agreements between AT&T PCS and its Affiliates and operators of other Cellular
Systems and PCS Systems or, subject to the Company agreeing to the obligations
thereunder, entitled to the rights and benefits of AT&T PCS under such roaming
agreements. The two immediately preceding sentences shall not be construed to
require AT&T PCS or its Affiliates to take any action that AT&T PCS or such
Affiliate determines in its sole discretion to be adverse to its interests. AT&T
PCS may develop
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a roaming clearinghouse for AT&T Licensees, including the Company, pursuant to
which the Company's subscribers that are roaming on PCS or Cellular Systems with
which AT&T PCS or any of its Affiliates have entered into a roaming agreement
will be identified on such PCS or Cellular System as an AT&T PCS subscriber, and
settlement of roaming accounts for such Company subscribers would be effected
first between AT&T PCS and such PCS or Cellular System and then settled between
AT&T PCS and the Company. In the event AT&T PCS provides such roaming
clearinghouse to the Company, the per-subscriber handling charge to the Company
shall be commercially reasonable.
8.10 Intentionally Omitted.
8.11 Resale Agreements.
(a) From time to time, upon the request of AT&T PCS, the Company
shall enter into a Resale Agreement relating to the Territory, substantially in
the form of Exhibit C to the Securities Purchase Agreement, with AT&T PCS and
any of its Affiliates and, with respect to any geographic area within the
Territory, one other Person designated by AT&T PCS, provided such other Person
is licensed to provide telecommunications services in such geographic area under
the service marks used by AT&T Corp. and such other Person qualifies as a
reseller under any generally applicable standards the Company establishes for
its resellers from time to time and upon the request of AT&T PCS, the Company
shall enter into an agency agreement authorizing AT&T PCS and any of its
Affiliates and, with respect to any geographic area within the Territory, one
other Person designated by AT&T PCS, provided such other Person is licensed to
provide telecommunications services in such geographic area under the service
marks used by AT&T Corp. and such other Person qualifies as an agent under any
generally applicable standards the Company establishes for its agents from time
to time. Any such agency agreements shall provide that the Company shall pay the
agent a commission at the rate then generally offered to the Company's agents
and shall otherwise be on commercially reasonable terms. At no time shall there
be more than one Person (other than AT&T PCS and its Affiliates) designated by
AT&T PCS as a reseller or an agent with respect to any geographic area within
the Territory.
(b) It is the intention of the parties that, in light of AT&T's
PCS's equity interest in the Company and the other arrangements between AT&T PCS
and its Affiliates and the Company (including the roaming revenues anticipated
to be earned by the Company from subscribers of AT&T PCS and its Affiliates),
the rates, terms and conditions of Service (as defined in the Resale Agreement)
provided by the Company pursuant to the Resale Agreement or any other agreement
between AT&T PCS or such other reseller and the Company shall be at least as
favorable to AT&T PCS or such other reseller, taken as a whole, as the rates,
terms and conditions of Service, taken as a whole, provided by the Company to
any other Customer (as defined in the Resale Agreement) and, to the extent
permitted by applicable law, such rates, terms and conditions shall be superior
to those provided to any other Customer. Without limiting the foregoing, the
rate plans offered by the Company pursuant to any Resale Agreement shall be
designed to result in the average actual rate per minute paid by the Reseller
for Service being at least 25% below the weighted average actual rate per minute
billed by the Company to its subscribers for access and air time, but excluding
revenues for features, taxes, toll or other non-rate items. The Company and
Reseller shall negotiate commercially reasonable reductions to
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such resale rate based upon increased volume commitments (including roaming
charges incurred by subscribers of AT&T PCS and its Affiliates).
8.12 Non-Solicitation.
(a) AT&T PCS hereby covenants and agrees that from and after the
date hereof until six months after the date on which it shall cease to own any
Equity Securities that neither AT&T PCS nor its Affiliates (including TWR
Cellular) shall solicit for employment any employee of the Company; provided
however that, nothing contained in this Section 8.12(a) shall prevent AT&T PCS
or its Affiliates (including TWR Cellular) from engaging in a general
solicitation for employment that is not directed at employees of the Company.
(b) The Company hereby covenants and agrees that from and after
the date hereof until six months after the date on which AT&T PCS or its
Affiliates (including TWR Cellular) shall cease to own any Equity Securities
that neither the Company nor its Affiliates shall solicit for employment any
employee of the AT&T PCS or its Affiliates (including TWR Cellular); provided,
however that nothing contained in this Section 8.12(b) shall prevent the Company
or its Affiliates from engaging in a general solicitation for employment that is
not directed at employees of AT&T PCS and its Affiliates (including TWR
Cellular).
8.13 Co-Location. Except in any portion of the Territory as to which
the provisions of Section 8.6 shall have been terminated: (a) the Company agrees
to permit on commercially reasonable terms AT&T PCS and its Affiliates
(including TWR Cellular) to install, operate and maintain cell site equipment
owned or used by AT&T PCS and its Affiliates (including TWR Cellular) in their
respective businesses on the towers, buildings and other locations at which the
Company's cell site equipment is installed, operated and maintained, and (b)
AT&T PCS and its Affiliates (including TWR Cellular) agree to permit on
commercially reasonable terms the Company to install, operate and maintain cell
site equipment owned or used by the Company in its business on the towers,
buildings and other locations at which AT&T PCS and its Affiliates' (including
TWR Cellular) cell site equipment is installed, operated and maintained.
8.14 Billing. The Company hereby covenants and agrees that the
Company's billing system and software will conform to the "MABEL" format.
9. After-Acquired Shares; Recapitalization.
9.1 After Acquired Shares; Recapitalization.
(a) All of the provisions of this Agreement shall apply to all of
the shares of Equity Securities now owned or hereafter issued or transferred to
a Stockholder or to his, her or its Affiliated Successors in consequence of any
additional issuance, purchase, exchange or reclassification of shares of Equity
Securities, corporate reorganization, or any other form of recapitalization, or
consolidation, or merger, or share split, or share dividend, or which are
acquired by a Stockholder or its Affiliated Successors in any other manner.
(b) Whenever the number of outstanding shares of Equity
Securities is changed by reason of a stock dividend or a subdivision or
combination of shares effected by a
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reclassification of shares, each specified number of shares referred to in this
Agreement shall be adjusted accordingly.
9.2 Amendment of Restated Certificate. Whenever the number of shares
of authorized Common Stock is not sufficient in order to issue shares of Common
Stock upon conversion of Preferred Stock in accordance with the Restated
Certificate, (i) the Company shall promptly amend the Restated Certificate in
order to authorize a sufficient number of shares of Common Stock, and (ii) each
Stockholder agrees to vote its shares of Preferred Stock and Common Stock in
favor of such amendment.
10. Share Certificates.
10.1 Restrictive Endorsements; Replacement Certificates. Each
certificate representing the shares of Equity Securities now or hereafter held
by a Stockholder (including any such certificate delivered upon conversion of
the Preferred Stock) or delivered in substitution or exchange for any of the
foregoing certificates shall be stamped with legends in substantially the
following form:
(a) "The shares represented by this Certificate are subject to a
Stockholders' Agreement dated as of January 7, 1999, a copy of which is on file
at the offices of the Company and will be furnished by the Company to the holder
hereof upon written request. Such Stockholders' Agreement provides, among other
things, for the granting of certain restrictions on the sale, transfer, pledge,
hypothecation or other disposition of the shares represented by this
Certificate, and that under certain circumstances, the holder hereof may be
required to sell the shares represented by this Certificate. By acceptance of
this Certificate, each holder hereof agrees to be bound by the provisions of
such Stockholders' Agreement. The Company reserves the rights to refuse to
transfer the shares represented by this Certificate unless and until the
conditions to transfer set forth in such Stockholders' Agreement have been
fulfilled"; and
(b) "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."
Each Stockholder agrees that he, she or it will deliver all
certificates for shares of Equity Securities owned by him, her or it to the
Company for the purpose of affixing such legends thereto.
(c) Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of any certificate
representing shares of Equity Securities subject to this Agreement and of a bond
or other indemnity reasonably satisfactory to the Company, and upon
reimbursement to the Company of all reasonable expenses incident
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thereto, and upon surrender of such certificate, if mutilated, the Company will
make and deliver a new certificate of like tenor in lieu of such lost, stolen,
destroyed or mutilated certificate.
11. Equitable Relief. The parties hereto agree and declare that legal
remedies may be inadequate to enforce the provisions of this Agreement and that,
in addition to being entitled to exercise all of the rights provided herein or
in the Restated Certificate or granted by law, including recovery of damages,
equitable relief, including specific performance and injunctive relief, may be
used to enforce the provisions of this Agreement.
12. Miscellaneous.
12.1 Notices. All notices or other communications hereunder shall be
in writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by facsimile transmission, or by registered or
certified mail (return receipt requested), postage prepaid, with an
acknowledgment of receipt signed by the addressee or an authorized
representative thereof, addressed as follows (or to such other address for a
party as shall be specified by like notice; provided that notice of a change of
address shall be effective only upon receipt thereof:
If to AT&T PCS or TWR Cellular:
c/o AT&T Wireless Services, Inc.
5000 Carillon Point
Kirkland, Washington 98033
Attention: William W. Hague
Telephone: (425) 828-8461
Facsimile: (425) 828-8451
With a copy to:
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920
Attention: Corporate Secretary
Telephone:
Facsimile: (908) 953-4657
and
Friedman Kaplan & Seiler LLP
875 Third Avenue, 8th Floor
New York, New York 10022
Attention: Daniel M. Taitz
Telephone: (212) 833-1109
Facsimile: (212) 355-6401
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and
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, New York 10112
Attention: Gregg S. Lerner, Esq.
Telephone: (212) 698-7705
Facsimile: (212) 698-7825
If to a Cash Equity Investor, to its address set forth on
Schedule I:
With a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Mark S. Wojciechowski, Esq.
Telephone: (212) 506-2525
Facsimile: (212) 262-1910
If to a Management Stockholder or to the Company:
Tritel, Inc. (or in the case of a Management
Stockholder, c/o Tritel, Inc.)
1080 River Oaks Drive
Suite B-100
Jackson, MS 39208
Telephone: (601) 936-0893
Facsimile: (601) 936-6045
With a copy to:
Young Williams, Henderson & Fuselier, P.A.
2000 Deposit Guaranty Plaza
Jackson, MS 39201
Attention: James H. Neeld IV, Esq.
Telephone: (601) 360-9021
Facsimile: (601) 355-6136
With a copy to each other party sent to the addresses set forth in
this Section 12.1.
12.2 Entire Agreement; Amendment; Consents.
(a) This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof.
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(b) No change or modification of this Agreement shall be valid,
binding or enforceable unless the same shall be in writing and signed by the
Company and the Beneficial Owners of a majority of the shares of Class A Voting
Common Stock, including AT&T PCS, 66 K% of the Class A Voting Common Stock
Beneficially Owned by the Cash Equity Investors, and 66-2/3% of the Class A
Voting Common Stock Beneficially Owned by the Management Stockholders; provided,
however, that in the event any party hereto shall cease to own any shares of
Equity Securities such party hereto shall cease to be a party to this Agreement
and the rights and obligations of such party hereunder shall terminate, except
to the extent otherwise provided in Section 4.7(a) with respect to any Unfunded
Commitment.
(c) Whenever in this Agreement the consent or approval of a
Stockholder is required, except as expressly provided herein, such consent or
approval may be given or withheld in the sole and absolute discretion of each
Stockholder.
12.3 Term.
(a) Subject to Sections 12.3(b), 12.3(c) and 12.4, this Agreement
shall terminate upon the earliest to occur of any of the following events:
(i) The consent in writing of all of the parties hereto; or
(ii) The expiration of eleven (11) years from the date of
execution and delivery of this Agreement; or
(iii) One Stockholder shall Beneficially Own all of the Class A
Voting Common Stock.
(b) Notwithstanding anything contained herein to the contrary,
(i) the provisions of Sections 3.2, 3.3, 3.4, 3.5, 3.11, 4.1(a), 4.5 (other than
Section 4.5(b)), 7.1, 7.2 and 7.6 shall terminate on the earlier to occur of a
termination pursuant to Section 12.3(a) and the IPO Date, (ii) the provisions of
Sections 3 and 4 shall terminate on the earlier to occur of a termination
pursuant to Section 12.3(a) and the expiration of ten (10) years from the date
hereof, (iii) the provisions of Section 3.1(d)(i)(y) (relating to AT&T PCS'
right to approve the directors selected by the holders of the Voting Preference
Stock pursuant to Section 3.1(d)(i)(y)) and the provision of Section 3.1(d)
relating to the right of AT&T PCS to approve any replacement for Messrs.
Mounger, Martin and Sullivan to the Board of Directors, Section 3.1(d)(ii)(y)
(relating to AT&T PCS' right to approve the directors selected by the holders of
the Majority in Interest of the Common Stock held by the Cash Equity Investors
and any replacement thereof to the Board of Directors) 4.7(b), 7.4, 7.6 and
8.4(a), shall terminate, and neither the Company nor any Stockholder shall be
required to obtain AT&T PCS's prior written consent as required under such
Sections, on the earlier to occur of (i) a termination pursuant to Section
12.3(a) and (ii) (x) with respect to the period prior to the eighth anniversary
of the date hereof, the date on which AT&T PCS and TWR Cellular shall cease to
Beneficially Own, in the aggregate, more than two-thirds of the number of shares
of Series A Preferred Stock that AT&T PCS and TWR Cellular Beneficially Owns on
the date hereof and (y) with respect to the period after the eighth anniversary
of the date hereof on which AT&T PCS and TWR Cellular shall cease to
Beneficially Own more than two-thirds of the number of shares of Class A Voting
Common
59
<PAGE>
Stock that AT&T PCS and TWR Cellular Beneficially Owns on such eighth
anniversary date, (iv) the provisions of Section 3.1 shall terminate on the
later to occur of (x) the date that the holders of shares of Voting Preference
Stock shall vote as a class with holders of Class A Voting Common Stock, and (y)
the date after the IPO Date; and (v) the provisions of 3.6 shall terminate on
the date that the holders of shares of Voting Preference Stock shall vote as a
class with holders of Class A Voting Common Stock.
(c) (i) Notwithstanding anything contained herein to the
contrary, in the event the Cash Equity Investors shall Beneficially Own in the
aggregate less than (I) one-half but more than one-quarter of the number of
shares of Common Stock Beneficially Owned in the aggregate by the Cash Equity
Investors on the date hereof, the number of directors the Cash Equity Investors
shall be permitted to designate under Section 3.1(a) shall be reduced to one, or
(II) one-quarter of the number of shares of Common Stock Beneficially Owned in
the aggregate by the Cash Equity Investors on the date hereof, the provisions of
Section 3.1(a) and the provisions of Section 3.1(d)(i) (relating to the Cash
Equity Investors' right to approve the directors selected by the holders of the
Voting Preference Stock), Section 3.1(d)(ii) (relating to the Cash Equity
Investors' right to designate four (4) directors upon the events stated in
Section 3.1(d)(ii)), the right to approve any director that replaces Messrs.
Mounger, Martin and Sullivan on the Board of Directors and the right to
designate any director to replace any director designated by the Cash Equity
Investors on the Board of Directors shall terminate, and neither the Company nor
any Stockholder shall be required to obtain the Cash Equity Investors' prior
written consent as required under such Sections. In the event the number of
directors the Cash Equity Investors are entitled to designate is reduced
pursuant to Section 12.3(c)(i)(I), two (2) of the directors designated by the
Cash Equity Investors under Section 3.1(a) shall resign (or the other directors
or Stockholders shall remove them from the Board of Directors) and the remaining
directors shall take such action so that the number of directors constituting
the entire Board of Directors shall be reduced accordingly. In the event the
provisions of Section 3.1(a) and 3.1(d) are terminated (as to the rights of the
Cash Equity Investors) pursuant to Section 12.3(c)(i)(II), the directors
designated by the Cash Equity Investors pursuant to Section 3.1(a) and the
director designated pursuant to Section 3.1(d)(i)(x) or Section 3.1(d)(ii)(x),
as applicable, shall resign (or the other directors or Stockholders shall remove
them from the Board of Directors) and the remaining directors shall take such
action so that the number of directors constituting the entire Board of
Directors shall be reduced to eight (8) individuals. In the event such
provisions are so terminated the holders of the Voting Preference Stock, in the
event the Voting Preference Stock is outstanding, or Mounger, Martin and
Sullivan (for so long as each individual is an officer of the Company), in the
event Section 3.1(d)(ii) is in effect, shall thereafter have the right to
designate three (3) individuals to the Board of Directors provided each such
individual is acceptable to AT&T PCS (so long as AT&T PCS and TWR Cellular
continue to Beneficially Own, in the aggregate, more than two-thirds of the
Common Stock Beneficially Owned by AT&T PCS and TWR Cellular, in the aggregate,
on the date hereof). For all purposes of this Agreement, all references in this
Agreement to directors designated pursuant to Section 3.1(d)(i) and (ii), as
applicable, shall thereafter be deemed to refer to the three (3) directors
designated pursuant to the immediately preceding sentence.
12.4 Survival. Nothing contained in Section 12.3 shall impair any
rights or obligations of any party hereto arising prior to the time of the
termination of this Agreement, or which may arise by an event causing the
termination of this Agreement. The provisions of
60
<PAGE>
Section 5 shall survive any termination of this Agreement pursuant to Section
12.3 and shall continue in full force and effect until the twentieth anniversary
of the date hereof. The provisions of Section 7.7 and Article 12 shall survive
the termination of this Agreement.
12.5 Waiver. No failure or delay on the part of any Stockholder in
exercising any right, power or privilege hereunder, nor any course of dealing
between the Company and any Stockholder shall operate as a waiver thereof nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude the simultaneous or later exercise of any other right, power or
privilege. The rights and remedies herein expressly provided are cumulative and
not exclusive of any rights and remedies which any Stockholder would otherwise
have. No notice to or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Stockholders or any of
them to take any other or further action in any circumstances without notice or
demand.
12.6 Obligations Several. The obligations of each Stockholder under
this Agreement shall be several with respect to each such Stockholder.
12.7 Governing Law. This Agreement shall be governed and construed
in accordance with the law of the State of Delaware.
12.8 Dispute Resolution.
(a) The parties shall use and strictly adhere to the following
dispute resolution processes, except as otherwise expressly provided in this
Section 12.8, to resolve any and all disputes, controversies or claims, whether
based on contract, tort, statute, fraud, misrepresentation or any other legal or
equitable theory (hereinafter, "Dispute(s)"), arising out of or relating to this
Agreement (and any prior agreement this Agreement supersedes), including without
limitation, its making, termination, non-renewal, its alleged breach and the
subject matter of this Agreement (e.g., products or services furnished hereunder
or those related to those furnished):
(b) The parties shall first attempt to settle each Dispute
through good faith negotiations. The aggrieved party shall initiate such
negotiations by giving the other party(ies) written notice of the existence and
nature of the Dispute. The other party(ies) shall in a writing to the aggrieved
party acknowledge such notice of Dispute within ten (10) business days. Such
acknowledgment may also set forth any Dispute that the acknowledging party
desires to have resolved in accordance with this Section.
(c) Thereafter, if any Dispute is not resolved by the parties
through negotiation within thirty (30) calendar days of the date of the notice
of acknowledgment, either party may terminate informal negotiations with respect
to that Dispute and request that the Dispute be submitted to non-binding
mediation. Any mediation of a Dispute under this Section shall be conducted by
the CPR Institute for Dispute Resolution ("CPR") in accordance with the then
current CPR "Model Mediation Procedure for Business Disputes" ("Model
Procedures") and the procedures specified in this Section to the extent that
they conflict with, modify or add to such Model Procedures. Any demand for
initiation of mediation of a Dispute must be given in
61
<PAGE>
writing to both the other party(ies) involved and to the CPR and must set forth
the nature of the Dispute. Each party to the mediation shall bear its own
expenses with respect to mediation and the parties shall share equally the fees
and expenses of the CPR and the mediator. The failure by a party to timely pay
its share of the mediation fees and expenses of the CPR and the mediator shall
be a bar to arbitration under Section 12.8(d) of that party's Dispute(s). Any
mediation under this Section shall be conducted within the State of New York at
a site selected by the mediator that is reasonably convenient to the parties.
Each party shall be represented in the mediation by representatives having final
settlement authority with respect to the Dispute(s). All information and
documents disclosed in mediation by any party shall remain private and
confidential to the disclosing party and may not be disclosed by any party
outside the mediation. No privilege or right with respect to any information or
document disclosed in mediation shall be waived or lost by such disclosure.
(d) Any Dispute not finally resolved after negotiation and
mediation in accordance with Section 12.8(b) and 12.8(c) shall, upon the written
demand of any involved party delivered to the other party(ies) and the CPR, be
finally resolved through binding arbitration in accordance with the then current
CPR "Non-Administered Arbitration Rules" ("Arbitration Rules") and the
procedures specified in this Section to the extent that they conflict with,
modify or add to such Arbitration Rules. Any Dispute of any other party not
finally resolved after negotiation and mediation pursuant to this Section may be
made a part of the arbitration demanded by another party, provided that the
written notice of demand for arbitration of that Dispute is received by the CPR
before selection of an arbitrator by the CPR. Any demand for arbitration of a
Dispute received by the CPR after the selection of the arbitrator must be
resolved through a separate arbitration proceeding in accordance with this
Section. Each party shall bear its own expenses with respect to arbitration and
the parties shall share equally the fees and expenses of the CPR and the
arbitrator. Unless otherwise mutually agreed by the parties in writing, the
arbitration shall be conducted by one (1) neutral arbitrator. The arbitration
shall be conducted in the State of New York at a site selected by the arbitrator
that is reasonably convenient to the parties. The arbitrator shall be bound by
and strictly enforce the terms of the Agreement and may not limit, expand, or
otherwise modify the terms of this Agreement. The arbitrator shall make a good
faith effort to apply applicable law, but an arbitration decision and award
shall not be subject to review because of errors of law. The arbitrator shall
have the sole authority to resolve issues of the arbitrability of any Dispute,
including the applicability or running of any statute of limitation. The
arbitrator shall not have power to award damages in connection with any Dispute
in excess of actual compensatory damages or to award punitive damages and each
party irrevocably waives any claim thereto. The arbitrator shall not have the
power to order pre-hearing discovery of documents or the taking of depositions.
The arbitrator may compel, to the extent provided by the FAA, attendance of
witnesses and the production of documents at the hearing. The arbitrator's
decision and award shall be made and delivered to the parties within six (6)
months of selection of the arbitrator by the CPR and judgment on the award by
the arbitrator may be entered by any court having jurisdiction thereof.
(e) This Section shall be interpreted, governed by and enforced
in accordance with the United States Arbitration Act, 9 U.S.C. Sections 1-14
(the "Federal Arbitration Act" or "FAA"). The laws of the State of Delaware,
except those pertaining to choice of law, arbitration of disputes and those
pertaining to the time limits for bringing an action that conflict with the
terms of this Dispute Resolution provision, shall govern all other
62
<PAGE>
substantive matters pertaining to the interpretation and enforcement of the
other terms of this Agreement with respect to any Dispute. Any party to a
Dispute, which is the subject of a notice initiating the Dispute resolution
procedures under this Section, may seek a temporary injunction in any state or
federal court of competent jurisdiction to the limited extent necessary to
preserve the status quo during the pendency of final resolution of a Dispute in
accordance with this Section. If court proceedings to stay litigation of a
Dispute or compel arbitration of a Dispute are necessary, the party who
unsuccessfully opposes such proceedings shall pay all associated costs,
expenses, and attorneys' fees that the other party reasonably incurs in
connection with such court proceedings. An order to pay such costs, expenses and
attorney fees shall become part of any decision and award of the arbitrator of
the Dispute. An arbitrator appointed pursuant to Section 12.8(d) to resolve a
Dispute may also issue such injunctive orders and shall have the power to modify
or dissolve the injunctive order of any court to the extent it pertains to the
Dispute which the arbitrator has been selected to finally resolve. The parties,
their representatives, other participants, and the mediator and arbitrator shall
hold the existence, content, and result of the mediation and arbitration of a
Dispute in confidence except to the limited extent necessary to enforce a final
settlement agreement or to obtain and secure enforcement of or a judgment on an
arbitration decision and award.
(f) The statute(s) of limitation applicable to any Dispute shall
be tolled upon initiation of the Dispute resolution procedures under this
Section and shall remain tolled until the Dispute is resolved by mediation or
arbitration under this Section. Tolling shall cease if the aggrieved party with
a Dispute does not initiate mediation within sixty (60) calendar days after good
faith negotiations are terminated by any party and, after mediation of a
Dispute, if the aggrieved party with a Dispute does not initiate a demand for
arbitration within sixty (60) calendar days after mediation is terminated.
However, any Dispute is forever barred that has not expressly been made the
subject of the written notice required under Section 12.8(b) above within 365
days after the date the Party asserting the Dispute first knows or should have
known of the existence of the acts or omissions that give rise to such Dispute.
(g) Unless the parties mutually agree in writing, Disputes
relating to trademarks (including service marks), patents and copyrights shall
not be resolved in accordance with the Dispute resolution procedures set forth
in this Section and shall be resolved as otherwise provided in this Agreement.
(h) The Company and each of the Stockholders hereby irrevocably
consents to the exclusive jurisdiction of the state or federal courts in the
State of New York, and all state or federal courts competent to hear appeals
therefrom, over any actions which may be commenced against any of them under or
in connection with this Agreement. The Company and each Stockholder hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which any of them may now or hereafter have to the laying of venue of
any such dispute brought in such court or any defense of inconvenient forum for
the maintenance of such dispute in the Southern District of New York and New
York County. The Company and each Stockholder hereby agree that a judgment in
any such dispute may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. The Company and each Stockholder hereby
consent to process being served by any party to this Agreement in any actions by
the transmittal of a copy thereof in accordance with the provisions of Section
12.1.
63
<PAGE>
12.9 Benefit and Binding Effect; Severability. This Agreement shall
be binding upon and shall inure to the benefit of the Company, its successors
and assigns, and each of the Stockholders and their respective executors,
administrators and personal representatives and heirs and permitted assigns. If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any law or public policy or any listing requirement
applicable to the Common Stock, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto affected by such determination in any material respect shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the provisions hereof are given effect as originally contemplated to the
greatest extent possible.
12.10 Amendment of By-Laws. The Stockholders agree that the terms of
this Agreement shall supersede any inconsistent provision that is contained in
the Restated By-Laws and, to the extent required by Delaware law or the Restated
By-Laws, this Agreement shall be deemed to constitute a written action taken by
the Stockholders of the Company and shall be deemed an amendment of the Restated
By-Laws.
12.11 Authorized Agent of AT&T PCS. AT&T PCS hereby authorizes
Wireless PCS, Inc. as its agent, with full power to execute, in the name of and
on behalf of AT&T PCS, the Related Agreements to which AT&T PCS is a party and
any and all other documents that AT&T PCS is required to execute and deliver,
and to give and receive all notices, requests, consents, amendments, demands and
other communications to or from AT&T PCS, hereunder or thereunder. Each party
hereto (other than AT&T PCS) shall be entitled to rely on the full power and
authority of Wireless PCS, Inc. to act on behalf of AT&T PCS in accordance with
this Section 12.11. Nothing contained in this Section 12.11 shall relieve AT&T
PCS from complying with its obligations under this Agreement or any of the
Related Agreements to which it is a party.
12.12 FCC Approval. Notwithstanding anything contained in this
Agreement to the contrary, no transaction or action contemplated herein shall be
consummated and no interests or rights transferred, converted or exchanged prior
to receiving FCC approval with respect thereto to the extent such approval is
necessary.
12.13 Expenses. The Company shall pay the reasonable fees and expenses
of counsel to the Stockholders incurred in connection with the preparation,
negotiation and execution of this Agreement and of any amendment or modification
hereof. Except as provided in Sections 5(g) and 12.14, all other attorneys' fees
incurred by the Stockholders in connection with this Agreement (including,
without limitation, in the preparation of notices (and responses thereto) and
consents) shall be borne by the Stockholder(s) incurring such fees.
12.14 Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
64
<PAGE>
12.15 Headings. The captions in this Agreement are for convenience
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
12.16 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
65
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed or consent this
Agreement to be executed by its duly authorized officers as of the date first
written above.
AT&T WIRELESS PCS INC.
By:
----------------------------------
Name:
Title:
TWR CELLULAR, INC.
By:
----------------------------------
Name:
Title:
TRITEL, INC.
By:
----------------------------------
Name:
Title:
66
<PAGE>
CASH EQUITY INVESTORS:
TORONTO DOMINION INVESTMENTS, INC.
By:
----------------------------------
Name: Martha L. Gariepy
Title: Vice President
ENTERGY WIRELESS COMPANY
By:
----------------------------------
Name: Gary S. Fuqua
Title: President and Chief Executive
Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By:
----------------------------------
Name: Molly Fergusson
Title: Managing Director
67
<PAGE>
WASHINGTON NATIONAL INSURANCE COMPANY
By:
--------------------------------------
Name:
Title:
UNITED PRESIDENTIAL LIFE INSURANCE COMPANY
By:
--------------------------------------
Name:
Title:
68
<PAGE>
DRESDNER KLEINWORT BENSON PRIVATE
EQUITY PARTNERS LP
BY: DRESDNER KLEINWORT BENSON PRIVATE
EQUITY MANAGERS LLC, AS ITS GENERAL
PARTNER
By:
-----------------------------------
Name: Alexander P. Coleman
Title: Authorized Signatory
69
<PAGE>
TRIUNE PCS, LLC, A DELAWARE LIMITED
LIABILITY COMPANY
BY: OAK TREE, LLC, A DELAWARE LIMITED
LIABILITY COMPANY
TITLE: MANAGER
BY: TRIUNE INC., A DELAWARE CORPORATION
TITLE: MANAGER
By:
----------------------------------
Name: Kevin Shepherd
Title: President
70
<PAGE>
FCA VENTURE PARTNERS II, L.P.
BY: CLAYTON-DC VENTURE CAPITAL GROUP, LLC,
ITS GENERAL PARTNER
By:
Name: D. Robert Crants, III
Title: Manager
CLAYTON ASSOCIATES, LLC
BY:________________________________,
ITS MANAGING MEMBER
By:
-----------------------------------
Name:
Title:
71
<PAGE>
AIRWAVE COMMUNICATIONS, LLC (F/K/A
MERCURY PCS, LLC)
By: MSM, Inc., its Manager
By:
----------------------------------
Name: E.B. Martin, Jr.
Title: Vice President
DIGITAL PCS, LLC (F/K/A MERCURY PCS
II, LLC)
By: MSM, Inc., its Manager
By:
----------------------------------
Name: E.B. Martin, Jr.
Title: Vice President
72
<PAGE>
THE MANUFACTURERS' LIFE INSURANCE
COMPANY (U.S.A.)
By:
-------------------------------------
Name:
Title:
73
<PAGE>
TRILLIUM PCS, LLC
By:
-----------------------------------
Name: William M. Mounger, II
Title: Manager
74
<PAGE>
MANAGEMENT STOCKHOLDERS:
-----------------------------------
William M. Mounger, II
-----------------------------------
E.B. Martin, Jr.
-----------------------------------
Jerry M. Sullivan, Jr.
75
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE I
CASH EQUITY INVESTORS
---------------------
<TABLE>
<CAPTION>
SECOND
AGGREGATE INITIAL CASH FUNDING
CASH EQUITY INVESTORS COMMITMENT CONTRIBUTION 9/30/99
- --------------------- ---------- ------------ -------
<S> <C> <C> <C>
Washington National Insurance Company $25,000,000 $16,666,667 $8,333,333
United Presidential Life Insurance Company 25,000,000 16,666,667 8,333,333
Trillium PCS, LLC 2,000,000 1,333,333 666,667
Dresdner Kleinwort Benson Private Equity Partners LP 30,000,000 20,000,000 10,000,000
Entergy Wireless Corporation 20,000,000 13,333,333 6,666,667
Triune, Inc. 24,139,040 16,092,694 8,046,346
Toronto Dominion Investments, Inc. 5,000,000 3,333,333 1,666,667
General Electric Capital Corporation 2,500,000 1,666,667 833,333
The Manufacturers' Life Insurance Company (U.S.A.) 10,000,000 6,666,667 3,333,333
FCA Venture Partners II, LP 5,500,000 3,666,667 1,833,333
Clayton Associates, LLC 100,000 66,667 33,333
Digital PCS, LLC 2,976,401 2,976,401 -0-
- --------------------------------------------------------------------------------------------------
Airwave Communications, LLC 11,163,079 11,163,079 -0-
---------- ----------
TOTAL 163,369,520 113,623,175 49,746,345
</TABLE>
<PAGE>
SCHEDULE II
MANAGEMENT STOCKHOLDERS
-----------------------
William M. Mounger II
E.B. Martin, Jr.
Jerry M. Sullivan, Jr.
William Arnett
<PAGE>
SCHEDULE III
EQUITY CAPITALIZATION
---------------------
(See Attached)
<PAGE>
SCHEDULE IV
CORE FEATURES
Below is a list and description of the Core Features that Licensee agrees to
implement in accordance with Section 8.2 of this Agreement. These definitions
are functional descriptions of the Core Features, and the parties agree that
such Core Features shall be implemented using the Critical Network Elements
identified in Schedule XI hereto. Licensee further agrees to implement
additional features in accordance with Section 8.2 of this Agreement.
1. CALL DELIVERY
This capability permits a PCS customer to receive incoming calls to his or
her phone while in his or her home market or while roaming in any part of the
Licensee's Wireless Network or the AWS Wireless Network (together, the "Mobile
Wireless Network").
2. ROAMING - DO NOT DISTURB
This capability permits a PCS customer, who would normally receive all
incoming calls while visiting a Mobile Switching Center that is part of the
Mobile Wireless Network, to temporarily inhibit the delivery of such calls.
Activating this capability has no impact on the PCS customer's ability to
originate calls or on the PCS customer's ability to receive calls via the roamer
access ports.
3. CALL FORWARDING
A. CALL FORWARDING IMMEDIATE
This capability permits a PCS customer to send all incoming calls destined
for the PCS customer's PCS phone to another phone number specified by the
PCS customer. Activating this capability has no impact on the PCS customer's
ability to originate calls. When this capability is activated, calls are
forwarded regardless of whether the PCS customer is located within his or
her local market or whether the customer is roaming outside of such local
market.
B. CALL FORWARDING BUSY
This capability permits a PCS customer to send all incoming calls destined
for his or her PCS phone to another phone number specified by the PCS
customer when the PCS customer is engaged in a call.
C. CALL FORWARDING NO ANSWER
This capability permits a PCS customer to send all incoming calls destined
for his or her PCS phone to another phone number specified by the PCS
customer when the PCS
<PAGE>
customer does not answer or when the PCS customer's PCS phone does not
respond to a page.
4. CALL WAITING
This capability permits a PCS customer to receive incoming calls even though
a call may already be in progress.
5. VOICEMAIL
This capability forwards those PCS customer's incoming calls which are not
answered by the PCS customer, and for which no other explicit treatment has been
activated (for example, those described in items above), to a voice storage and
retrieval system. This capability also permits a PCS customer to subsequently
retrieve messages from the PCS customer's voice mail box.
6. THREE WAY CALLING
This capability permits a PCS customer to add a third party to an active two
party call.
7. MESSAGE WAITING INDICATOR
This capability is an enhancement to PCS voice mail, and provides the PCS
customer with the current status of the number of unheard voice mail messages
waiting in his or her PCS voice mail box.
8. CALLING NUMBER IDENTIFICATION
This capability identifies for the PCS customer either the telephone number
or the stored name (in the PCS phone) of the person who is calling. It also
permits a PCS customer to inhibit the ability of a person to whom the PCS
customer is placing a call from identifying either the telephone number or the
name of such PCS customer who is placing the call.
9. WIRELESS OFFICE SERVICE (WOS)
A. PCS/PBX INTERWORKING
This capability permits WOS customers to have just one published number that
delivers all incoming calls to both the PCS and PBX phone.
B. PRIVATE NUMBER PLAN
This capability permits a defined group of customers to call defined private
network extensions by using an abbreviated unique dialing pattern (four
digit dialing).
C. PRIVATE NETWORKS
This capability permits a WOS customer to have his or her own private or
semiprivate PCS system.
2
<PAGE>
D. LOCATION ID
This capability permits the PCS customer to identify the nature of the
system (private, public, or residential) that the PCS customer is using, by
displaying the system's name on the PCS phone.
10. SLEEP MODE
This capability permits an IS 136 PCS phone to operate in a power saving
mode when camping on an IS 136 system, thereby allowing the battery standby time
to increase.
11. PCS MESSAGING
This capability will permit a caller to deliver both numeric and
alphanumeric messages of up to eighty characters to an IS 136 PCS phone. If the
PCS customer to whom the message has been delivered has his or her phone off or
is not in the IS 136 coverage area, then messages are stored for future
delivery.
MessageFlash software permits alphanumeric messages to be sent from a
computer via a standard modem to the customer.
E-Mail messaging teleservice allowing an IS-136 phone to have an E-Mail
address.
12. AUTHENTICATION
This capability allows for the validation of the IS-136 phone's identity.
Text Dispatch Service permits people to call an operator (provided by or on
behalf of the Company) and dictate a message which can then be converted to an
alphanumeric message and delivered to the customer.
Cut Through Paging permits people to send a numeric message while listening
to the customer's voicemail greeting.
3
<PAGE>
SCHEDULE V
MINIMUM BUILD-OUT PLAN
----------------------
BUILDOUT SCHEDULE-YEAR 1
------------------------
ATLANTA MTA
- -----------
Cities: Chattanooga, Tennessee
Cleveland, Tennessee
Dalton, Georgia
Interstates/State Highways:
Portion of I-75 South from Chattanooga
Portion of I-75 North from Chattanooga
Portion of I-24 West from Chattanooga
Portion of I-59 South from Chattanooga
BIRMINGHAM MTA
- --------------
Cities: Huntsville, Alabama
Decatur, Alabama
Interstates/State Highways:
Portion of I-65 South from Decatur
Portion of I-65 North from Decatur
MEMPHIS/JACKSON MTA
- -------------------
Cities: Jackson, Mississippi
Vicksburg, Mississippi
Interstates/State Highways:
Portion of I-20 West from Jackson
Portion of I-20 East from Jackson
Portion of I-55 South from Jackson
Portion of I-55 North from Jackson
Portion of Highway 49 South from Jackson
KNOXVILLE MTA
- -------------
Cities: Knoxville, Tennessee
<PAGE>
Interstates/State Highways:
Portion of I-40 West from Knoxville
Portion of I-40 East from Knoxville
Portion of I-75 North from Knoxville
NASHVILLE MTA
- -------------
Cities: Nashville, Tennessee
Interstates/State Highways:
Portion of I-40 East from Nashville,
Portion of I-40 West from Nashville
Portion of I-24 East from Nashville
Portion of I-24 West from Nashville
Portion of I-65 North from Nashville
Portion of I-65 South from Nashville
The buildout of the above referenced cities, interstates and state highways
represents the deployment of a wireless service network which will be
capable of providing a radio frequency signal level sufficient to adequately
service an estimated 2,954,700 pops within the license area. The estimated
pops recited hereinabove for the buildout during year 1 represents 21.7% of
the estimated total pops contained under the terms of this agreement.
BUILDOUT SCHEDULE - YEAR 2
--------------------------
BIRMINGHAM MTA
- --------------
Cities: Birmingham, Alabama
Montgomery, Alabama
Tuscaloosa, Alabama
Anniston, Alabama
Interstates/State Highways:
Portion of I-20 East from Birmingham
Portion of I-20 West from Birmingham
Portion of Highway 280 East from Birmingham
Portion of I-59 North from Birmingham
Portion of I-65 South from Montgomery
Portion of I-65 North from Montgomery
Portion of Highway 231 South from Montgomery
Portion of Highway 80 West from Montgomery
Portion of I-20 East from Tuscaloosa
Portion of I-20 West from Tuscaloosa
Portion of I-20 East from Anniston
Portion of I-20 West from Anniston
2
<PAGE>
LOUISVILLE MTA
- --------------
Cities: Louisville, Kentucky
Lexington, Kentucky
Interstates/State Highways:
Portion of I-64 East from Louisville
Portion of I-64 West from Louisville
Portion of I-65 South from Louisville
Portion of I-65 North from Louisville
Portion of I-71 North from Louisville
Portion of I-75 North from Lexington
Portion of I-75 South from Lexington
Portion of I-64 East from Lexington
Portion of I-64 West from Lexington
MEMPHIS/JACKSON MTA
- -------------------
Cities: Hattiesburg, Mississippi
Meridian, Mississippi
Tupelo, Mississippi
Interstates/State Highways:
Portion of Highway 49 North from Hattiesburg
Portion of Highway 49 South from Hattiesburg
Portion of Highway 98 East from Hattiesburg
Portion of I-59 South from Hattiesburg
Portion of I-59 North from Hattiesburg
Portion of I-20 East from Meridian
Portion of I-20 West from Meridian
Portion of I-59 South from Meridian
NASHVILLE MTA
- -------------
Cities: Clarksville, Tennessee
Hopkinsville, Kentucky
Interstates/State Highways:
Portion of I-24 East from Clarksville
Portion of I-24 West from Clarksville
NEW ORLEANS MTA
- ---------------
Cities: Mobile, Alabama
3
<PAGE>
Interstates/State Highways:
Portion of I-65 North from Mobile
Portion of I-10 East from Mobile
Portion of I-10 West from Mobile
Portion of Highway 98 West from Mobile
The buildout of the above referenced cities, interstates and state highways
represents the deployment of a wireless service network which will be
capable of providing a radio frequency signal level sufficient to adequately
service an estimated 3,882,900 pops within the license area. The estimated
pops recited hereinabove for the buildout during year 2 represents 28.6% of
the estimated total pops contained under the terms of this agreement.
The estimated pops recited herein for the buildout for years 1 and 2 will
constitute an estimated aggregate total of 6,837,600 pops within the license
area at the completion of the year 2 buildout or 50.3% of the estimated
total pops contained under the terms of this agreement.
4
<PAGE>
BUILDOUT SCHEDULE - YEAR 3
--------------------------
BIRMINGHAM MTA
- --------------
Cities: Gadsden, Alabama
Dothan, Alabama
Florence, Alabama
Interstates/State Highways:
Portion of I-59 North from Gadsden
Portion of I-59 South from Gadsden
Portion of Highway 231 North from Dothan
LOUISVILLE MTA
- --------------
Cities: Owensboro, Kentucky
Bowling Green, Kentucky
Glasgow, Kentucky
Madisonville, Kentucky
Corbin, Kentucky
Interstates/State Highways:
Portion of Audubon Parkway West from Owensboro
Portion of Western Kentucky Parkway East from
Madisonville
Portion of Pennyrile Parkway North from
Madisonville
Portion of Pennyrile Parkway South from
Madisonville
Portion of I-65 North from Elizabethtown
Portion of I-65 South from Elizabethtown
Portion of I-75 North from Corbin
Portion of I-75 South from Corbin
NASHVILLE MTA
- -------------
Cities: Cookeville, Tennessee
Columbia, Tennessee
Interstates/State Highways:
Portion of I-40 East from Cookeville
Portion of I-40 West from Cookeville
Portion of I-65 North from Columbia
Portion of I-65 South from Columbia
5
<PAGE>
MEMPHIS/JACKSON MTA
- -------------------
Cities: Columbus, Mississippi
Starkville, Mississippi
Greenville, Mississippi
Greenwood, Mississippi
Interstates/State Highways:
Portion of Highway 82 East from Columbus
Portion of Highway 82 West from Columbus
Portion of Highway 82 East from Starkville
NEW ORLEANS MTA
- ---------------
Cities: Gulfport, Mississippi
Biloxi, Mississippi
Pascagoula, Mississippi
Brookhaven, Mississippi
McComb, Mississippi
Laurel, Mississippi
Interstates/State Highways:
Portion of Highway 49 North from Gulfport
Portion of I-10 West from Gulfport
Portion of I-10 East from Gulfport
Portion of I-10 West from Biloxi
Portion of I-10 East from Biloxi
Portion of I-10 West from Pascagoula
Portion of I-10 East from Pascagoula
Portion of I-55 North from Brookhaven
Portion of I-55 South from Brookhaven
Portion of I-55 North from McComb
Portion of I-55 South from McComb
Portion of I-59 North from Laurel
Portion of I-59 South from Laurel
The buildout of the above referenced cities, interstates and state highways
represents the deployment of a wireless service network which will be
capable of providing a radio frequency signal level sufficient to adequately
service an estimated 1,484,700 pops within the license area. The estimated
pops recited hereinabove for the buildout during year 3 represents 10.9% of
the estimated total pops contained under the terms of this agreement.
The estimated pops recited herein for the buildout for years 1, 2 and 3 will
constitute an estimated aggregate total of 8,322,300 pops within the license
area at the completion of
6
<PAGE>
the year 3 buildout or 61.2% of the estimated total pops contained under the
terms of this agreement.
BUILDOUT SCHEDULE - YEAR 4
--------------------------
Cities: Corinth, Mississippi
Natchez, Mississippi
Rome, Georgia
Selma, Alabama
Demopilis, Alabama
Opelika, Alabama
Auburn, Alabama
LaGrange, Georgia
Interstates/State Highways:
Additional portions of all interstates and highways listed under years 1 and
2 buildout.
The buildout of the above referenced cities, interstates and state highways,
and expansion of existing cities listed in the buildout for years 1 through
3, represents the deployment of a wireless service network which will be
capable of providing a radio frequency signal level sufficient to adequately
service an estimated 1,196,670 pops within the license area. The estimated
pops recited hereinabove for the buildout during year 4 represents 8.8% of
the estimated total pops contained under the terms of this agreement.
The estimated pops recited herein for the buildout for years 1, 2, 3 and 4
will constitute an estimated aggregate total of 9,518,970 pops within the
license area at the completion of the year 4 buildout or 70.0% of the
estimated total pops contained under the terms of this agreement.
BUILDOUT SCHEDULE - YEAR 5
--------------------------
Cities: The buildout for year 5 will encompass expansion of all cities, where
applicable, launched in the buildout for years 1 through 4.
Interstates/State Highways:
Additional portions of all interstates and highways listed under year 3
buildout.
The buildout of the above referenced cities, interstates and state
highways, and expansion of existing cities listed in the buildout for
years 1 through 4, represents the deployment of a wireless service
network which will be capable of providing a radio frequency signal
level sufficient to adequately service an estimated 1,359,853 pops
within the license area. The estimated pops recited hereinabove for the
buildout during year 5 represents 10% of the estimated total pops
contained under the terms of this agreement.
7
<PAGE>
The estimated pops recited herein for the buildout for years 1, 2, 3, 4
and 5 will constitute an estimated aggregate total of 10,878,823 pops within the
license area at the completion of the year 5 buildout or 80.0% of the estimated
total pops contained under the terms of this agreement.
8
<PAGE>
SCHEDULE VI
PCS TERRITORY
-------------
I. From Atlanta MTA BTA Market Designator
---------------- ---------------------
Carroll County, GA (1)
Haralson County, GA **
Opelika-Auburn, AL 334
Chattanooga, TN 076
Cleveland, TN 085
Dalton, GA 102
LaGrange, GA 237
Rome, GA 384
II. From Knoxville MTA
--------------------------------
Knoxville, TN 232
III. From Louisville-Lexington-Evansville MTA
----------------------------------------
Louisville, KY 263
Lexington, KY 252
Bowling Green-Glasgow, KY 052
Owensboro, KY 338
Corbin, KY 098
Somerset, KY 423
Madisonville, KY 273
IV. From Memphis-Jackson MTA
------------------------
Montgomery County, TN (2)
Jackson, MS 210
Tupelo-Corinth, MS 449
Greenville-Greenwood, MS 175
Meridian, MS 292
Columbus-Starkville, MS 094
Natchez, MS 315
Vicksburg, MS 455
V. From Nashville MTA
------------------
Nashville, TN 314
Clarksville, TN-Hopkinsville, KY 083
Cookeville, TN 096
- --------
(1) Carrol County and Haralson County are both located within the Atlanta
BTA (B024).
(2) Montgomery County is located within the Memphis BTA (B290).
<PAGE>
VI. From Birmingham MTA
-------------------
Anniston, AL 017
Birmingham, AL 044
Decatur, AL 108
Dothan-Enterprise, AL 115
Florence, AL 146
Gladsden, AL 158
Huntsville, AL 198
Montgomery, AL 305
Selma, AL 415
Tuscaloosa, AL 450
VII. From New Orleans MTA
---------------------
Biloxi-Gulfport-Pascagoula, MS 042
Hattiesburg, MS 186
Laurel, MS 246
McComb-Brookhaven, MS
Mobile, AL 302
2
<PAGE>
SCHEDULE VII
TDMA QUALITY STANDARDS
QUALITY AND REPORTING STANDARDS
GENERAL OVERVIEW
This Schedule VII sets out the Network and Reporting Standards with which the
Company ("Licensee") shall comply pursuant to Section 8.3 of this Agreement.
These Standards set out the network performance metrics and the process by which
such metrics will be established, measured and reported. All metrics which
represent a defined standard of quality for acceptable network operations have,
or will have, specific targets which the Licensee must comply with in accordance
with the following network standards
I. NETWORK STANDARDS
There are three categories of Network Standards: network quality (the "Network
Quality Category"); system performance (the "System Performance Category"); and
audio quality (the "Audio Quality Category") (each hereafter referred to
generally as a "Category"). For each Category of Network Standards, specific
metrics have been identified to measure performance in each such Category. The
detailed description of how to measure and interpret the metrics for each
Category is set out in the following AWS documents (each referred to generally
as a "Network Standards Document"):
o NETWORK QUALITY CATEGORY: Document ES-4034, Revision 1.1, dated July 30,
1997 entitled "Network Quality Scorecard User Guide" (as referred to as the
"Network Quality Standards Document"). This document is a collection of key
network performance and traffic indicators (metrics) that are measured and
reported on a regular basis. Included in this category, Licensee shall
perform the ANS Consistency Test, as attached to this Schedule VII.
o SYSTEM PERFORMANCE CATEGORY: OSS draft document, Revision 0.7, dated June
17, 1997 entitled "Key Metrics for System Performance Document" (as
referred to as the "System Performance Standards Document"). This document
identifies the network-wide key metrics for Ericsson and Lucent switching
systems, as well as cell sites, which will provide a high level assessment
of the system.
o AUDIO QUALITY CATEGORY: Document PP-4027E, Revision 1.1, dated May 30, 1996
entitled "Audio Quality Measurement (AQM)" (as referred to as the "Audio
Quality Standards Document"). This document provides the basis for
assessing the quality of RF transmission by describing the standards for
performing audio quality measurements and the reporting of their results.
AWS measures the metrics for the Audio Quality Category using the "Radio
Quality Scorecard". The Radio Quality Scorecard is comprised of performance
statistics derived from driving the PCS system using the Buzzard tool or a
tool with similar measurement and reporting capability.
<PAGE>
These Network Standards Documents are collectively attached to this Schedule VII
which, subject to the terms and conditions of this Agreement including, without
limitation, this Schedule VII, is hereby incorporated into and forms a part of
this Agreement. In the event of any inconsistency between any part of a Network
Standards Document and the provisions of this Schedule VII, the provisions of
this Schedule VII shall govern.
Notwithstanding anything else in this Agreement including, without limitation,
this Schedule VII, the parties acknowledge and confirm that the Network
Standards Documents represent the standards and metrics currently identified by
AWS as applicable to each Category. Target values for key quality related
metrics are contained herein and Licensee agrees to comply with the specific
metric target values as specified in Schedule VII.
In addition, the parties acknowledge and confirm that the Network Standards
Documents are subject to revision and the Licensee shall comply with subsequent
revisions to these Network Standards Documents, as well as with Call Center
Quality Standards which will constitute an additional Category once they are
formally implemented, in accordance with Section 8.2 of this Agreement.
Set out below is a brief description of each Category of Network Standard and
the currently established metrics for each such Category.
II. TARGETS FOR NETWORK STANDARDS
Licensee shall meet the following targets for key metrics which represent
overall network and system quality. These targets are subject to revision and
shall be implemented in accordance with Section 8.2 of this Agreement.
o % Established Calls: The percentage of call attempts to and from a mobile
phone that result in a successful voice channel assignment. The target goal
for this metric is 93%.
o % Dropped Calls: The percentage of established calls, as defined below,
which terminate abnormally. The target, goal for this metric is a drop call
rate of 1.7% or less.
o % Handoff Failures: The target goal for this metric is a handoff failure
rate of 1.5%.
o Failures per Erlang: The ratio of failed calls to carried traffic, where
failed calls are measured utilizing switch counters for originating and
terminating traffic, and carried traffic is measured in erlangs. The target
goal for this metric is 1.68
o Switch Outage Time: The amount of time (in minutes) in a month when
subscribers are impacted by a cellular switch outage. Target for this
metric is 10 minutes per switch per year, with all ten minutes occurring
the maintenance window between 12:00 am and 5:00 am.
o % Blocking - Cell Routes: Percentage of time all cellular traffic channels
(voice paths in a trunk group) are unavailable within a given measurement
interval. Target for this metric is 5%.
2
<PAGE>
o % Blocking - Network Routes: Percentage of time all network traffic
channels are unavailable within the measurement interval. Target for this
metric is 5%.
o ANS Consistency Test: The percentage of successful ANS feature deliveries,
based on the following sequence: feature activation/deactivation (when
applicable), test call, correct response, and call termination. The target
goal for this metric is 96% for all ANS features. This target metric
includes feature delivery failures due to call processing failures (i.e.
call delivery, call origination, handoff failures, or dropped calls. These
failures are estimated to be approximately 4%.)
III. REPORTING STANDARDS
Licensee agrees to comply with the reporting requirements as specified in the
Network Standards Documents and as specified below:
o Except as specified Audio Quality Network Standards, Licensee will submit
the metric reports required pursuant to this Schedule VII (the "Results")
to AWS no less than quarterly.
o With respect to Audio Quality Network Standards, Licensee shall only submit
quarterly Results for markets with 10,000 or more subscribers; for markets
with less than 10,000 subscribers, Licensee shall only submit Results on a
semi-annual basis.
o Licensee shall submit all Results by the fifteenth day of the month
following the end of the applicable reporting period.
o Licensee will report the Results to AWS on an aggregated national basis;
the aggregated national Results will reflect the distribution of the metric
measured across Licensee's Territory. Licensee may also be required to
provide a breakdown, by market, of any metric.
IV. CUSTOMER SERVICE STANDARDS
Promptly following the execution of this Agreement, Licensee and AWS shall
negotiate in good faith the applicable customer service standards, with a goal
of reaching agreement thereon by April 1, 1999.
3
<PAGE>
SCHEDULE VIII
INITIAL DIRECTORS
-----------------
See Attached
<PAGE>
SCHEDULE IX
CAPITAL BUDGETS
---------------
See Attached
<PAGE>
SCHEDULE X
VOTING AGREEMENTS
-----------------
See Folder 4
<PAGE>
SCHEDULE XI
CRITICAL NETWORK ELEMENTS
-------------------------
This Schedule sets out the Equipment which comprises the Critical Network
Elements.
The Critical Network Elements consist of the following: Mobile Switching Center,
Service Control Point, Message Center and Voice Mail System. Below is a basic
description of these Critical Network Elements. The Company shall have the right
to substitute for the equipment described below alternative equipment so long as
such alternative equipment provides substantially the same User Interface.
1. MOBILE SWITCHING CENTER (INCLUDING BASE STATIONS)
The Mobile Switching Centers consist of Ericsson's AXE1O and Lucent's
Autoplex platform. Each of these products are required to support: ISUP; IS41B+
(origination request message); Global Title routing; and EIA 553, IS54B and
IS136 air interface protocols. The current application software is AS1OO for
Ericsson's AXE1O and APXEC 8.0 for Lucent's Autoplex platform.
2. SERVICE CONTROL POINT (SCP)
The SCP is based on a Tandem Himalaya K1OOO/2000 series platform running the
Tandem realtime operating system known as "Non-Stop Kernel" and support the
software applications commonly known as: Home Location Register, Private Dialing
Service and Authentication Center. The current commercial software revision is
A20 bundle which consists of NSK D30, SCP 1.09.15, HLR 2.02, AC2.00 and PDS
1.001.
3. MESSAGE CENTER (MC)
Hewlett Packard 1/70 runs the Telepath Short Message Center (SMSC)
application software provided by Aldiscon Inc. Current revision of Telepath SMSC
is release 2.0.
4. VOICE MAIL SYSTEM (VMS)
The voice mail system is based on the Octel Communications Corporation's
Sierra platform. The current software release is Voice Information Services
(VIS) 1.01.
2
<PAGE>
EXHIBIT A
RESTATED BY-LAWS
----------------
See Folder 48
<PAGE>
EXHIBIT B
RESTATED CERTIFICATE
--------------------
See Folder 47
<PAGE>
EXHIBIT 10.1.2
AMENDMENT NO. 1
TO
STOCKHOLDERS' AGREEMENT
AMENDMENT NO. 1 TO STOCKHOLDERS' AGREEMENT ("Amendment No.1") dated as
of August 27, 1999, by and among AT&T WIRELESS PCS INC., a Delaware corporation
(together with its Affiliated Successors (as hereinafter defined), "AT&T PCS"),
TWR CELLULAR, INC., a Maryland corporation, the investors listed under the
heading "Cash Equity Investors" on the signature pages hereto, the individuals
listed under the heading "Management Stockholders" on the signature pages hereto
and TRITEL, INC., a Delaware corporation (the "Company"). Certain capitalized
terms used herein and not otherwise defined have the meaning assigned to such
term in the Stockholders' Agreement referred to below.
WHEREAS, each of the parties hereto (other than the Company) are
stockholders of the Company;
WHEREAS, the parties hereto are parties to that certain Stockholders'
Agreement, dated as of January 7, 1999 (the "Stockholders' Agreement"), pursuant
to which, among other things, the parties hereto entered into certain agreements
relating to the PCS Territory;
WHEREAS, pursuant to the Option Agreement the Company has an option to
acquire the PCS Licenses referred to on Schedule I thereto (the "Option
Licenses"), and the Company wishes to exercise such option;
WHEREAS, pursuant to the terms of the Company's Stockholders Agreement,
dated as of January 7, 1999, among the parties hereto and the other stockholders
of the Company referred to therein, the Company is required to obtain the
consent of AT&T PCS and TWR Cellular, Inc., a Maryland corporation and an
affiliate of AT&T PCS ("TWR"), to the Company's exercise of such option, and the
Company wishes to obtain such consent;
WHEREAS, AT&T PCS and TWR wish to grant such consent pursuant to a
Consent, dated the date hereof, provided, among other things, that the parties
to the Stockholders Agreement (other than AT&T PCS and TWR) enter into this
Amendment, and such Persons wish to enter into this Amendment; and
WHEREAS, the Company and AT&T PCS and TWR desire that the Stockholders'
Agreement be amended to provide that, except with the prior written consent of
AT&T PCS (i) the term "PCS Territory" as used in the Stockholders' Agreement
excludes the territory (the "Option Territory") covered by the Option Licenses,
and (ii) each of the Company
<PAGE>
and its Subsidiaries shall only engage in specified permitted activities
relating to the Option Licenses or the Option Territory;
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Amendments. Section 7.13 is hereby amended by deleting it in its
entirety and replacing it with the following:
Section 7.13 Option Licenses. (a) Notwithstanding any other
provision of this Stockholders Agreement, except with the prior
written consent of AT&T PCS, the PCS Territory shall not include
the geographic area covered by the PCS Licenses (the "Option
Licenses")acquired by the Company pursuant to the Option
Agreement. By way of amplification and not limitation of the
foregoing, the Company and the Stockholders acknowledge and agree
that, unless and until such consent of AT&T PCS is hereafter
obtained, the term "Company Communications Services" shall not
include any mobile wireless telecommunications services or any
other telecommunications services provided using the Option
Licenses, and the term "Business" shall not include owning,
constructing or operating systems to provide Company
Communications Services (or any other telecommunications systems)
on frequencies licensed to the Company for Commercial Mobile Radio
Services pursuant to the Option Licenses.
(b) The Company further agrees that, except with the prior written
consent of AT&T PCS, it shall not (and it shall not permit its
Subsidiaries to) construct any telecommunications systems with
respect to the Option Licenses or take any other actions in
respect of, or incur or pay any costs or expenses relating to, the
Option Licenses or the territory covered by the Option Licenses
(the "Option Territory"), except that the Company and its
Subsidiaries may: (i) perform its obligations under and consummate
the transactions contemplated in the Option Agreement and the
License Purchase Agreement annexed thereto; (ii) take actions
reasonably required to maintain ownership of the Option Licenses
(other than any applicable FCC build-out requirements relating to
the Option Territory), including paying when due interest on and
principal of the existing indebtedness to the U.S. Department of
Treasury related to the Option Licenses; and (iii) if it
determines to do so in the future, dispose of the Option Licenses,
and, in the case of (i), (ii) and (iii), pay any reasonable
out-of-pocket costs related thereto.
2. Severability of Provisions. Any provision of this Amendment No. 1
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
-2-
<PAGE>
3. Agreements to Remain in Full Force and Effect. This Amendment No. 1
shall be deemed to be an amendment to the Stockholders' Agreement. All
references to the Stockholders' Agreement in any other agreements or documents
shall on and after the date hereof be deemed to refer to the Stockholders'
Agreement as amended hereby. Except as amended hereby, the Stockholders'
Agreement shall remain in full force and effect and is hereby ratified, adopted
and confirmed in all respects.
4. Heading. The headings in this Amendment No. 1 are inserted for
convenience and identification only and are not intended to describe, interpret,
define or limit the scope, extent or intent of this Amendment No. 1 or any
provision thereof.
5. Counterparts. This Amendment No. 1 may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same Agreement.
6. Governing Law. This Amendment No. 1 shall be governed and construed
in accordance with the laws of the State of Delaware.
[signature pages follow]
-3-
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed or consent this
Agreement to be executed by its duly authorized officers as of the date first
written above.
AT&T WIRELESS PCS INC.
By:
---------------------------------
Name:
Title:
TWR CELLULAR, INC.
By:
---------------------------------
Name:
Title:
TRITEL, INC.
By:
---------------------------------
Name:
Title:
CASH EQUITY INVESTORS:
TORONTO DOMINION INVESTMENTS, INC.
By:
---------------------------------
Name: Martha L. Gariepy
Title: Vice President
ENTERGY WIRELESS COMPANY
By:
---------------------------------
Name: Gary S. Fuqua
Title: President and Chief
Executive Officer
<PAGE>
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
---------------------------------
Name: Molly Fergusson
Title: Managing Director
WASHINGTON NATIONAL INSURANCE
COMPANY
By:
---------------------------------
Name:
Title:
UNITED PRESIDENTIAL LIFE INSURANCE
COMPANY
By:
---------------------------------
Name:
Title:
DRESDNER KLEINWORT BENSON
PRIVATE EQUITY PARTNERS LP
BY: DRESDNER KLEINWORT BENSON
PRIVATE EQUITY MANAGERS LLC, AS
ITS GENERAL PARTNER
By:
-----------------------------
Name: Alexander P. Coleman
Title: Authorized Signatory
<PAGE>
TRIUNE PCS, LLC, A DELAWARE LIMITED
LIABILITY COMPANY
BY: OAK TREE, LLC, A DELAWARE
LIMITED LIABILITY COMPANY
TITLE: MANAGER
BY: TRIUNE INC., A DELAWARE
CORPORATION TITLE: MANAGER
By:
-----------------------------
Name: Kevin Shepherd
Title: President
FCA VENTURE PARTNERS II, L.P.
BY: CLAYTON-DC VENTURE CAPITAL
GROUP, LLC, ITS GENERAL PARTNER
By:
-----------------------------
Name: D. Robert Crants, III
Title: Manager
CLAYTON ASSOCIATES, LLC
BY: ,
--------------------------------
ITS MANAGING MEMBER
By:
------------------------------
Name:
Title:
<PAGE>
AIRWAVE COMMUNICATIONS, LLC (F/K/A
MERCURY PCS, LLC)
By: MSM, Inc., its Manager
By:
-----------------------------
Name: E.B. Martin, Jr.
Title: Vice President
DIGITAL PCS, LLC (F/K/A MERCURY
PCS II, LLC)
By: MSM, Inc., its Manager
By:
-----------------------------
Name: E.B. Martin, Jr.
Title: Vice President
THE MANUFACTURERS' LIFE INSURANCE
COMPANY (U.S.A.)
By:
---------------------------------
Name:
Title:
TRILLIUM PCS, LLC
By:
---------------------------------
Name: William M. Mounger, II
Title: Manager
<PAGE>
MANAGEMENT STOCKHOLDERS:
------------------------------------
William M. Mounger, II
------------------------------------
E.B. Martin, Jr.
------------------------------------
Jerry M. Sullivan, Jr.
<PAGE>
Exhibit 10.2
- --------------------------------------------------------------------------------
INVESTORS STOCKHOLDERS' AGREEMENT
by and among
TRITEL, INC.,
WASHINGTON NATIONAL INSURANCE COMPANY,
UNITED PRESIDENTIAL LIFE INSURANCE COMPANY,
DRESDNER KLEINWORT BENSON PRIVATE EQUITY PARTNERS LP,
TORONTO DOMINION INVESTMENTS, INC.,
ENTERGY WIRELESS CORPORATION,
GENERAL ELECTRIC CAPITAL CORPORATION,
TRIUNE PCS, LLC,
FCA VENTURE PARTNERS II, L.P.,
CLAYTON ASSOCIATES LLC,
TRILLIUM PCS, LLC
AIRWAVE COMMUNICATIONS, LLC
DIGITAL PCS, LLC
and
THE STOCKHOLDERS NAMED HEREIN
dated as of January 7, 1999
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
1. Certain Definitions..............................................2
2. Management of Company; Certain Voting Requirements...............2
2.1. Board of Directors......................................2
2.2. Removal; Filling of Vacancies...........................3
2.3. Election of Initial Board of Directors..................3
2.4. Board Committees........................................3
2.5. Reduction of Unfunded Commitment........................3
3. Transfers of Shares..............................................4
3.1. General.................................................4
3.2. Right of First Offer....................................4
3.3. Tag Along Rights........................................5
3.4. Drag-Along Rights.......................................7
4. Unfunded Commitment; Additional Capital Contributions............8
5. Purchase Rights.................................................10
5.1. Right to Exercise Purchase Rights......................10
6. After-Acquired Shares; Recapitalization.........................10
6.1. After-Acquired Shares; Recapitalization................10
7. Equitable Relief................................................10
7.1. Equitable Relief.......................................10
8. Miscellaneous.........................................................11
8.1. Notices................................................11
8.2. Entire Agreement; Amendment; Consents..................11
8.3. Term...................................................11
8.4. Obligations Several....................................11
8.5. Governing Law..........................................11
8.6. Jurisdiction...........................................11
8.7. Benefit and Binding Effect; Severability...............12
8.8. Headings...............................................12
8.9. Counterparts...........................................12
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Schedules
Schedule I Cash Equity Investors
Schedule II Stock Ownership
Schedule III Initial Director Nominees
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INVESTORS STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, dated as of January 7, 1999 (this
"Agreement"), by and among, MERCURY PCS CORPORATION, a Delaware corporation (the
"Company"), WASHINGTON NATIONAL INSURANCE COMPANY, an Illinois corporation
("WNIC"), UNITED PRESIDENTIAL LIFE INSURANCE COMPANY, an Indiana corporation
("Presidential"; WNIC and Presidential are hereinafter referred to collectively
as "Conseco"), DRESDNER KLEINWORT BENSON PRIVATE EQUITY PARTNERS LP, a Delaware
limited partnership ("Dresdner"), TORONTO DOMINION INVESTMENTS, INC., a Delaware
corporation ("TD"), ENTERGY WIRELESS CORPORATION, a Delaware corporation
("Entergy"), GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("GE
Capital"), TRIUNE PCS, LLC, a Delaware limited liability company ("Triune"), FCA
VENTURE PARTNERS II, L.P., a Delaware limited partnership ("FCA"), CLAYTON
ASSOCIATES LLC, a Tennessee limited liability company ("Clayton"), TRILLIUM PCS,
LLC., a Mississippi limited liability company ("Trillium"), AIRWAVE
COMMUNICATIONS, LLC, a Mississippi limited liability company ("Airwave"),
DIGITAL PCS, LLC, a Mississippi limited liability company ("Digital"), THE
MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.), a Michigan corporation ("MF"),
(individually, each a "Cash Equity Investor" and, collectively with Conseco,
Dresdner, TD, Entergy, GE Capital, Triune, FCA and Clayton, Trillium, Airwave,
Digital, MF and any of their respective Affiliated Successors who become a
Stockholder and a party to this Agreement in accordance with the terms hereof,
the "Cash Equity Investors"). Each of the foregoing Cash Equity Investors are
sometimes referred to herein, individually, as a "Stockholder" and,
collectively, as the "Stockholders."
RECITALS
WHEREAS, the Cash Equity Investors, the Company and the other
Stockholders named therein are party to that certain Stockholders Agreement,
dated the date hereof (as amended from time to time, in accordance with its
terms, the "Company Stockholder Agreement") pursuant to which the Cash Equity
Investors and the other parties thereto have agreed to provide for the
management of the Company and to impose certain restrictions with respect to the
sale, transfer or other disposition of Company Stock on the terms set forth
therein; and
WHEREAS, each Stockholder is the registered owner of the respective
shares of Common Stock of the Company (the "Common Stock") and Series C
Preferred Stock set forth opposite its name on Schedule II; and
WHEREAS, the parties hereto desire to enter into this Agreement in
order to impose certain further restrictions with respect to the sale, transfer
or other disposition of Company Stock and to provide for certain rights with
respect to the management of the Company on the terms and conditions hereinafter
set forth;
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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. Certain Definitions.
Capitalized terms not otherwise defined herein shall have the meanings
set forth in the Company Stockholder Agreement.
Each definition or pronoun herein shall be deemed to refer to the
singular, plural, masculine, feminine or neuter as the context requires. Words
such as "herein," "hereinafter," "hereof," "hereto" and "hereunder" refer to
this Agreement as a whole, unless the context otherwise requires.
2. Management of Company; Certain Voting Requirements.
2.1. Board of Directors. (a) Each of the Cash Equity Investors hereby
agrees, so long as such Stockholder continues to hold any shares of Series C
Preferred Stock or Common Stock, in exercising its rights under Section 3 of the
Company Stockholder Agreement, that it will vote or cause to be voted all of the
shares of its Series C Preferred Stock or Common Stock owned or held of record
by it (whether now owned or hereafter acquired), in person or by proxy, to cause
the selection of directors, the election of directors and thereafter the
continuation in office of the following persons as members of the Board of
Directors as follows:
(i) one (1) individual to be designated by Conseco (or its
Affiliated Successors) (the "Conseco Designee") who shall initially be
Andrew Hubregsen;
(ii) one (1) individual to be designated by Dresdner (or its
Affiliated Successors) (the "Dresdner Designee") who shall initially be
Alex P. Coleman;
(iii) one (1) individual to be designated by Entergy (or its
Affiliated Successors) (the "Entergy Designee") who shall initially be
Gary S. Fuqua; and
(iv) with respect to any individual selected pursuant to Section
3.1(d) of the Company Stockholder Agreement, such individual shall be
deemed acceptable to holders of a "Majority in Interest of the Class A
Voting Stock Beneficially Owned by the Cash Equity Investors" in
accordance with such Section 3.1(d) only in the event such individual
has been approved by "Two-Thirds in Interest of the Cash Equity
Investors" (as defined below).
(b) Any nomination or designation of directors and the acceptance
thereof pursuant to this Section 2.1 shall be evidenced in writing.
(c) If the right of the Cash Equity Investors to nominate directors
under the Company Stockholder Agreement is reduced to the right to nominate one
director pursuant to Section
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12.3(c) therein, such right shall be exercisable by Two-Thirds In Interest of
the Cash Equity Investors.
(d) For purposes of this Agreement, "Two-Thirds in Interest of the Cash
Equity Investors" shall mean the Cash Equity Investors owning two-thirds of the
outstanding shares of Common Stock and/or Series C Preferred Stock (on an
as-converted basis) held by all Cash Equity Investors.
2.2. Removal; Filling of Vacancies. Except as set forth in Section 2.1,
each Cash Equity Investor agrees it will not vote any shares of Series C
Preferred Stock and/or Common Stock owned or controlled by such Cash Equity
Investor for the removal without cause of any director designated by any other
Cash Equity Investor in accordance with Section 2.1, except at the request of
such other Cash Equity Investor. Any successor director to the director
designated by Conseco, Dresdner or Entergy (a "Designating CEI") shall be
designated by the applicable Designating CEI, provided, however, in the event
(i) that the aggregate number of shares of Series C Preferred Stock and/or
Common Stock (on an as-converted basis) owned or controlled by such Designating
CEI or its Affiliated Successors is less than fifty percent of the Series C
Preferred Stock and/or Common Stock (on an as-converted basis) owned or
controlled by such Designating CEI on the date hereof (after adjustment for
stock dividends, splits, combinations and the like) or (ii) on any date of
determination, such Designating CEI has sold, transferred or otherwise disposed
of one-third or more of the shares of Series C Preferred Stock and/or Common
Stock owned or controlled by such Designating CEI on the date hereof and as a
result of such sale, transfer or other dispositions the CEI Ownership Percentage
(as defined below) of such Designating CEI is not one of the three highest CEI
Ownership Percentages, the successor director shall be selected by Two-Thirds in
Interest of the Cash Equity Investors. For purposes of this Agreement, "CEI
Ownership Percentage" shall mean the percentage obtained by dividing the number
of shares of Common Stock and/or Series C Preferred Stock (on an as-converted
basis) held by the applicable Cash Equity Investor and its Affiliated Successors
by the total number of shares of Common Stock and/or Series C Preferred Stock
held by all Cash Equity Investors. Notwithstanding the foregoing, if a
Designating CEI defaults on its Unfunded Commitment, the Cash Equity Investor
who has the largest CEI Ownership Percentage of the Cash Equity Investors other
than the Designating CEI's after giving effect to such defaults shall become a
Designating CEI for purposes of Section 2.1(a) and this Section 2.2.
2.3. Election of Initial Board of Directors. The Cash Equity Investors
hereby consent to the nomination of the persons designated on Schedule III
hereto to be directors of the Company pursuant to the Company Stockholder
Agreement.
2.4. Board Committees. The initial member of the executive committee of
the Board of Directors appointed in accordance with Section 3.1(a) of the
Company Stockholder Agreement shall be an individual nominated by Conseco
provided, however, in the event Two-Thirds in Interest of the Cash Equity
Investors elect to replace such member, such member shall be an individual
nominated by Two-Thirds in Interest of the Cash Equity Investors. If the Cash
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Equity Investors have the right to appoint a member of any other committee of
the Board of Directors, such member shall be selected by Two-Thirds in Interest
of the Cash Equity Investors.
2.5. Reduction of Unfunded Commitment. In connection with a proposed
initial public offering of the Company's Common Stock, the Cash Equity Investors
may request that the Company reduce the Unfunded Commitment of the Cash Equity
Investors upon the divestiture to the Company of a number of shares of Company
Stock having a value (based upon the initial public offering price of the Common
Stock) equal to the amount by which the Unfunded Commitment is to be reduced;
provided, that such proposal has been approved by Two-Thirds in Interest of the
Cash Equity Investors and AT&T Wireless PCS Inc.
3. Transfers of Shares.
3.1. General. Each Stockholder agrees that it shall not, directly or
indirectly, Transfer Company Stock held by such Stockholder as of the date
hereof or which may hereafter be acquired by such Stockholder except in
accordance with the Company Stockholder Agreement and as set forth in this
Article 3. Each Stockholder further agrees that it shall not, directly or
indirectly, Transfer Company Stock held by such Stockholder as of the date
hereof or which may hereafter be acquired by such Stockholder to a Disallowed
Transferee (as such term is defined in that certain Network Membership License
Agreement, dated the date hereof, between AT&T Corp. and the Company) except in
connection with a sale of capital stock of the Company held by the parties
hereto holding 66% of the shares of the Common Stock of the Company on a
fully-diluted basis (assuming conversion of all Company Stock which is
convertible into Common Stock, such fully diluted Common Stock referred to
herein as "Common Stock Owned") owned by such parties at the time of the
proposed sale. Each Stockholder agrees to cause each of its Affiliated
Successors to become a party to and become bound by this Agreement (and shall
thereby become a Stockholder for all purposes of this Agreement) prior to any
transfer of Company Stock.
3.2. Right of First Offer. (a) If a Cash Equity Investor (each a "CEI
Seller") desires to Transfer any or all of its shares of Company Stock
(collectively, the "Offered Shares"), other than a Transfer to an Affiliate or
an Affiliated Successor, such CEI Seller shall give written notice (the "CEI
Offer Notice") to each Cash Equity Investor. Each CEI Offer Notice shall
describe in reasonable detail the number of shares of each class of Offered
Shares, the cash purchase price requested and all other material terms and
conditions of the proposed Transfer. The CEI Offer Notice shall constitute an
irrevocable offer (a "First Offer") to sell all (but not less than all) of the
Offered Shares to the Cash Equity Investors (in the aggregate) at a cash price
equal to the price contained in such CEI Offer Notice and upon the same terms as
the terms contained in such Offer Notice. The Cash Equity Investors shall have
the irrevocable right and option exercisable as provided below, but not the
obligations, to accept the First Offer as to the Offered Shares.
(b) If the Cash Equity Investors have a right of First Offer pursuant
to clause (a) Cash Equity Investors shall exercise their right of First Offer by
giving a Purchase Notice to the CEI
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Seller, the other Cash Equity Investors and the Company not later than
twenty-five (25) days (the "Cash Equity First Offer Period") after the date of
the Offer Notice. If the Cash Equity Investors notify the Seller of their desire
to purchase less than all of the Offered Shares, the Company shall deliver
notice to all Cash Equity Investors who have notified the CEI Seller and the
Company of their desire to purchase Offered Shares (the "Purchasing Cash Equity
Investors") within twenty-nine (29) days after the Offer Notice, and the
Purchasing Cash Equity Investors shall have the right to purchase any excess
Offered Shares which other Cash Equity Investors do not desire to purchase by
written notice to the Seller and the Company so that each Purchasing Cash Equity
Investor shall have the right to acquire the proportion of such excess Offered
Shares as the number of shares of Company Stock owned by such Purchasing Cash
Equity Investor bears to the total number of shares of Company Stock owned by
all Purchasing Cash Equity Investors; provided that the CEI Seller will not be
obligated to sell any Offered Shares to the Purchasing Cash Equity Investors
unless the Purchasing Cash Equity Investors in the aggregate, agree to purchase
all (but not less than all) of the Offered Shares.
(c) The purchase of the Offered Shares by the Purchasing Cash Equity
Investors shall be closed at the principal executive offices of the Company on a
date specified by the Purchasing Cash Equity Investors at least five (5)
business days' notice, that is within thirty (30) days after the expiration of
the Cash Equity First Offer Period; provided, however, that if such purchase is
subject to the consent of the FCC or any public service or public utilities
commission, the purchase of the Offered Shares shall be closed on the first
business day after all such consents shall have been obtained by Final Order.
The purchase price of any Offered Shares Transferred pursuant to this Section
3.2 shall be payable in cash by certified bank check or by wire transfer of
immediately available funds.
3.3. Tag Along Rights.
(a) No Stockholder shall, directly or indirectly, Transfer, in any
single transaction or series or related transactions to one or more Persons who
are not Affiliates or Affiliated Successors of such Stockholder (a "CEI
Inclusion Event Purchaser") shares of any class of Inclusion Stock in
circumstances in which, after giving effect to such Transfer, whether acting
alone or in concert with any other Stockholder (such parties referred to herein
as "Selling Stockholders") would result in such Selling Stockholder(s)
Transferring, (x) ten percent (10%) or more of the outstanding shares of
Inclusion Stock Beneficially Owned by such Selling Stockholder to a Person who
is a party, or an Affiliated Successor of a party, to the Company Stockholder
Agreement or (y) ten percent (10%) or more of the outstanding shares of
Inclusion Stock outstanding on the date of such proposed Transfer on a fully
diluted basis to a Person who is not a party, or an Affiliated Successor to a
party, to the Company Stockholder Agreement, but, in either case, not more than
twenty-five percent (25%) of the outstanding shares of Inclusion Stock
outstanding on the date of such proposed Transfer on a fully diluted basis (a
"Tag Along Event"), unless the terms and conditions of such sale to such CEI
Inclusion Event Purchaser shall include an offer to the Cash Equity Investors
other than the Selling Stockholder (each, a "Tag Along Offeree") to Transfer to
such CEI Inclusion Event Purchasers up to that number of shares of any class of
Inclusion Stock then Beneficially Owned by each Tag Along Offeree that bears
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the same proportion to the total number of shares of Inclusion Stock at that
time Beneficially Owned (without duplication) by each such Tag Along Offeree as
the number of shares of Inclusion Stock being Transferred by the Selling
Stockholders (including shares of Inclusion Stock theretofore Transferred if in
any applicable series of related transactions) bears to the total number of
shares of Inclusion Stock at the time Beneficially Owned (without duplication)
by the Selling Stockholders (including shares of Inclusion Stock theretofore
Transferred if in any applicable series of related transactions). If the Selling
Stockholders receive a bona fide offer from an Inclusion Event Purchaser to
purchase shares of Inclusion Stock in circumstances in which, after giving
effect to such sale would result in a Tag Along Event, and which offer such
Selling Stockholders wish to accept, the Selling Stockholders shall then cause
the Inclusion Event Purchaser's offer to be reduced to writing (which writing
shall include an offer to purchase shares of Inclusion Stock from each Tag Along
Offeree according to the terms and conditions set forth in this Section 3.3) and
the Selling Stockholders shall send written notice of the CEI Inclusion Event
Purchaser's offer (the "Tag Along Notice") to each Tag Along Offeree, which Tag
Along Notice shall specify (i) the names of the Selling Stockholders, (ii) the
names and addresses of the proposed acquiring Person, (iii) the amount of shares
proposed to be Transferred and the price, form of consideration and other terms
and conditions of such Transfer (including, if in a series of related
transactions, such information with respect to shares of Inclusion Stock
theretofore Transferred), (iv) that the acquiring Person has been informed of
the rights provided for in this Section 3.3 and has agreed to purchase shares of
Inclusion Stock in accordance with the terms hereof, and (v) the date by which
each other Selling Stockholder may exercise its respective rights contained in
this Section 3.3, which date shall not be less than thirty (30) days after the
giving of the Tag Along Notice. The Tag Along Notice shall be accompanied by a
true and correct copy of the CEI Inclusion Event Purchaser's offer. At any time
within thirty (30) days after receipt of the Tag Along Notice, each Tag Along
Offeree may accept the offer included in the Tag Along Notice for up to such
number of shares of Inclusion Stock as is determined in accordance with this
Section 3.3, by furnishing written notice of such acceptance to each Selling
Stockholder, and delivering, to an escrow agent (which shall be a bank or a law
or accounting firm designated by the Company), on behalf of the Selling
Stockholders, the certificate or certificates representing the shares of
Inclusion Stock to be sold pursuant to such offer by each Tag Along Offeree,
duly endorsed in blank, together with a limited power-of-attorney authorizing
the escrow agent, on behalf of the Tag Along Offeree, to sell the shares to be
sold pursuant to the terms of such CEI Inclusion Event Purchaser's offer.
In the event that the CEI Inclusion Event Purchaser does not agree to
purchase all of the shares of Inclusion Stock proposed to be sold by the Selling
Stockholders and the Tag Along Offerees, then each Selling Stockholder and Tag
Along Offeree shall have the right to sell to the CEI Inclusion Event Purchaser
that number of shares of Inclusion Stock as shall be equal to (x) the number of
shares of Inclusion Stock which the Inclusion Event Purchaser has agreed to
purchase times (y) a fraction, the numerator of which is the number of shares of
Inclusion Stock Beneficially Owned (without duplication) by such Selling
Stockholder or Tag Along Offeree and the denominator of which is the aggregate
number of shares of Inclusion Stock Beneficially Owned (without duplication) by
all Selling Stockholders and Tag Along Offerees. If any Tag Along Offeree
desires to sell less than its proportionate amount of shares of Inclusion Stock
that
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it is entitled to sell pursuant to this Section 3.3, then the Selling
Stockholders and the remaining Tag Along Offerees shall have the right to sell
to the CEI Inclusion Event Purchaser an additional amount of shares of Inclusion
Stock as shall be equal to (x) the number of shares of Inclusion Stock not being
sold by any such Inclusion Event Purchasers times (y) a fraction, the numerator
of which is the number of shares of Inclusion Stock owned such Selling
Stockholder or remaining Tag Along Offeree and the denominator of which is the
aggregate number of shares of Inclusion Stock Beneficially Owned (without
duplication) by all Selling Stockholders and remaining Tag Along Offerees. Such
process shall be repeated in series until all of the remaining Tag Along
Offerees agree to sell their remaining proportionate number of shares of
Inclusion Stock.
(b) The purchase from each Tag Along Offeree pursuant to this Section
3.3 shall be on the same terms and conditions, including the price per share
received by the Selling Stockholders and stated in the Tag Along Notice provided
to each Tag Along Offeree. In the event that the Inclusion Stock is Common
Stock, all Tag Along Offerees shall be required, as a condition of participating
in such transaction, to Transfer Common Stock to the CEI Inclusion Event
Purchaser. In the event that the Tag Along Offerees elect to sell their pro rata
share of Series C Preferred Stock or Common Stock pursuant to this Section 3.3
the CEI Inclusion Event Purchaser shall be required to purchase both Series C
Preferred Stock and Common Stock, the purchase price allocable to holders of
Series C Preferred Stock, on the one hand, and to holders of Common Stock, on
the other hand, shall be determined by an independent committee of the Board of
Directors selected from among those directors who were not designated by any
Selling Stockholders or Tag Along Offerees, it being understood that the
directors selected pursuant to Section 2.1(c) shall be deemed independent for
such purposes.
(c) Simultaneously with the consummation of the sale of the shares of
Inclusion Stock of the Selling Stockholders and each Tag Along Offeree to the
CEI Inclusion Event Purchaser pursuant to the Inclusion Event Purchaser's offer,
the Selling Stockholders shall notify each Tag Along Offeree and shall cause the
Inclusion Event Purchaser to remit to each Tag Along Offeree the total sales
price of the shares of Inclusion Stock by each Tag Along Offeree sold pursuant
thereto and shall furnish such other evidence of the completion and time of
completion of such sale and the terms thereof as may be reasonably requested by
each Tag Along Offeree.
(d) If within thirty (30) days after receipt of the Tag Along Notice,
Tag Along Offeree has not accepted the offer contained in the Tag Along Notice,
such Tag Along Offeree shall be deemed to have waived any and all rights with
respect to the sale described in the Tag Along Notice (but not with respect to
any subsequent sale, to the extent this Section 3.3 is applicable to such
subsequent sale) and the Selling Stockholders shall have sixty (60) days in
which to sell not more than the number of shares of Inclusion Stock described in
the Tag Along Notice, on terms not more favorable to the Selling Stockholders
than were set forth in the Tag Along Notice; provided, however, that if such
purchase is subject to the consent of the FCC or any public service or public
utilities commission, the purchase of the Offered Shares shall be closed on the
first business day after all such consents shall have been obtained by Final
Order.
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3.4. Drag-Along Rights. (a) If at any time, (i) any two Cash Equity
Investors, each holding Series C Preferred Stock and Common Stock with a
purchase price of no less than $20 million (a "Twenty Million Investor") at the
time of the proposed sale or (ii) holders of 50% or more of the Common Stock
Owned by the Cash Equity Investors at the time of the proposed sale, provided
that so long as any Twenty Million Investor exists, at least one Twenty Million
Investor is included in such group of Cash Equity Investors, proposes in a
single transaction or series of transactions to Transfer Company Stock, (each
member of the group, a "Selling Investor"), in a bona fide arm's-length
transaction to a third party in which the same price per share shall be payable
in respect of all shares of any class of the Common Stock Owned, then, upon the
written request of such Selling Investors, each other Cash Equity Investor shall
be obligated to, and shall, if so requested by such third party (a) sell,
transfer and deliver or cause to be sold, transferred and delivered to such
third party, up to all shares of Common Stock Owned by them at the same price
per share (irrespective of class) and on the same terms as are applicable to the
Selling Investors, and (b) if approval of the transaction is required of the
stockholders of the Company, vote his, her or its shares of Series C Preferred
Stock and Common Stock in favor thereof and, in the event such sale or transfer
is in connection with a merger or consolidation, each Cash Equity Investor shall
waive any dissenters' rights, appraisal rights or similar rights in connection
with such merger or consolidation.
(b) The obligation of each Cash Equity Investor to sell shares of
capital stock pursuant to clause (a) shall be conditioned upon the following:
(i) the maximum liability with respect to indemnification granted by each
selling Cash Equity Investor to the purchaser in such sale shall not exceed the
proceeds of the sale to such Cash Equity Investor, (ii) any such liability with
respect to indemnification shall be a several (and not joint and several)
obligation of each selling Cash Equity Investor and (iii) the value of the
consideration received by each Cash Equity Investor pursuant to such sale shall
be equal to or greater than the purchase price of such Cash Equity Investor's
Company Stock included in the transaction plus a return of twenty percent,
compounded annually.
4. Unfunded Commitment; Additional Capital Contributions. (a) In the
event any Cash Equity Investor (a "Defaulting Cash Equity Investor") fails to
satisfy any portion of its Unfunded Commitment pursuant to Section 2.2 of the
Securities Purchase Agreement (a "Payment Default"), the Company shall give
prompt written notice, but no later than one (1) business day following such
default (a "Default Notice"), to each Cash Equity Investor other than the
Defaulting Cash Equity Investor (each a "Non-Defaulting Cash Equity Investor")
of the amount of such Payment Default (the "Default Amount"). In the event the
Defaulting Cash Equity Investor has failed to cure such Payment Default, within
five (5) days of the Payment Default, each Non-Defaulting Cash Equity Investor
may, acting on its own or in conjunction with one or more of the other
Non-Defaulting Cash Equity Investors (each a "Participating Cash Equity
Investor"), agree to fund all or any portion of such Payment Default by
providing written notice to the Company (a "Payment Notice") no later than 12:00
Noon (New York time) twenty (20) days following the date on which the Default
Notice is delivered (the "Notice Period") and the Company shall thereafter
provide each Participating Cash Equity Investor with copies of such Payment
Notice or Payment Notices; provided, however, that if the aggregate amount
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agreed to be funded by the Participating Cash Equity Investors shall exceed the
Payment Default, then the amount to be funded by each such Participating Cash
Equity Investor shall be divided amongst the Participating Cash Equity Investors
pro rata in accordance with the shares of Common Stock Owned by the
Participating Cash Equity Investors; provided, further, however, that if the
aggregate amount agreed to be funded by the Participating Cash Equity Investors
shall be less than the Payment Default (a "Payment Default Shortfall"), the
Company shall give prompt written notice, but no later than one (1) business day
following the end of the Payment Notice Period, of such Payment Default
Shortfall (a "Payment Default Shortfall Notice") to all Non-Defaulting Cash
Equity Investors and all such Non-Defaulting Cash Equity Investors may agree to
fund the Payment Default Shortfall by providing written notice to the Company
within five (5) days of delivery of the Payment Notice and payment shall be made
in accordance with the preceding two provisos.
(b) In the event any Cash Equity Investor (a "Defaulting Ericsson
Investor") fails to pay any amount due and payable pursuant to the Ericsson
Documents (as defined in the Securities Purchase Agreement) (a "Ericsson Payment
Default"), the Company shall give prompt written notice, but no later than one
(1) business day following such default (a "Ericsson Default Notice"), to each
Cash Equity Investor other than the Defaulting Ericsson Investor (each a
"Non-Defaulting Party") of the amount of such Ericsson Payment Default (the
"Ericsson Default Amount"). In the event the Defaulting Ericsson Investor has
failed to cure such Ericsson Payment Default, within two (2) days of the
Ericsson Payment Default, each Non-Defaulting Party may, acting on its own or in
conjunction with one or more of the other Non-Defaulting Parties (each a
"Participating Party"), agree to fund all or any portion of such Ericsson
Payment Default by providing written notice to the Company (a "Ericsson Payment
Notice") and funding such Ericsson Default Amount to Ericsson ("Ericsson") no
later than 12:00 Noon (New York time) four (4) days following the date on which
the Ericsson Default Notice is delivered (the "Ericsson Payment Notice Period")
and the Company shall thereafter provide each Participating Party with copies of
such Ericsson Payment Notice or Ericsson Payment Notices; provided, however,
that if the aggregate amount agreed to be funded by the Participating Parties
shall exceed the Ericsson Payment Default, then the amount to be funded by each
such Participating Party shall be divided amongst the Participating Parties pro
rata in accordance with the shares of Common Stock Owned by the Participating
Parties; provided, further, however, that if the aggregate amount agreed to be
funded by the Participating Parties shall be less than the Ericsson Payment
Default (a "Ericsson Default Shortfall"), the Company shall give prompt written
notice, but no later than one (1) business day following the end of the Ericsson
Payment Notice Period, of such Ericsson Payment Default Shortfall (a "Ericsson
Payment Default Shortfall Notice") to AT&T Wireless PCS, Inc. ("AT&T") and AT&T
may fund the Ericsson Payment Default Shortfall by providing written notice to
the Company and funding such Ericsson Default Shortfall to Ericsson within two
(2) days of delivery of the Ericsson Payment Default Shortfall Notice.
(c) Upon payment of the Default Amount (or any portion thereof), each
Participating Cash Equity Investor (i) shall be deemed to be the record and
beneficial owner of that number of shares of Common Stock Owned by the
Defaulting Cash Equity Investor equal to the total
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number of shares of Common Stock acquired in respect of such Defaulting Cash
Equity Investor's Commitment pursuant to the Securities Purchase Agreement
multiplied by a fraction the numerator of which is the amount equal to the
amount paid by such Participating Cash Equity Investor pursuant to this Section
4 and the denominator of which is the Default Amount, and (ii) shall become
obligated to the Company pursuant to Section 2.2 of the Securities Purchase
Agreement with respect to the remaining Unfunded Commitment, if any, of the
Defaulting Cash Equity Investor in an amount equal to the product of the amount
of such remaining Unfunded Commitment multiplied by the percentage of the
Unfunded Commitment the Defaulting Cash Equity Investor failed to satisfy which
such Participating Cash Equity Investor funded pursuant to this Section 4.
(d) Upon payment of the Ericsson Default Amount (or any portion
thereof), each Participating Party and/or AT&T (if applicable) shall be deemed
to be the record and beneficial owner of that number of shares of Common Stock
Owned by the Defaulting Ericsson Investor equal to the aggregate number of
shares of Common Stock Owned by the Defaulting Ericsson Investor and subject to
a pledge to Ericsson pursuant to the Ericsson Documents multiplied by a
fraction, the numerator of which is the amount paid by such Participating Party,
or AT&T, as applicable, pursuant to this Section 4, and the denominator of which
is the Ericsson Default Amount.
5. Purchase Rights.
5.1. Right to Exercise Purchase Rights. If Equity Securities are issued
by the Company pursuant to Section 7.2 of the Company Stockholder Agreement,
then, notwithstanding the notice provisions in Section 7.2 of the Company
Stockholder Agreement, each Cash Equity Investor may exercise such Purchase
Right, in whole or in part, on the terms and conditions and for the purchase
price set forth in the Issuance Notice, by giving to the Company notice to such
effect, within twenty-five (25) days after the giving of the Issuance Notice
pursuant to the Company Stockholder Agreement. If Cash Equity Investors give
notice to exercise Purchase Rights (each, a "Purchase Right Cash Equity
Investor") with respect to less than the entire percentage of Equity Securities
proposed to be offered, issued, sold or otherwise disposed of equal to the
number of shares of Common Stock then Beneficially Owned by all Cash Equity
Investors divided by the aggregate number of shares of Common Stock outstanding
immediately prior to such offer, issuance, sale or disposition of Equity
Securities (the "Purchase Right Shares"), then the Purchase Right Cash Equity
Investors shall have the right by written notice to the Company within
twenty-nine (29) days after the giving of the Issuance Notice to acquire the
excess Purchase Right Shares in such proportion as such excess Purchase Right
Shares bears to the number of shares of Common Stock Owned by such Purchase
Right Cash Equity Investor immediately prior to such offer of Equity Securities
by the Company.
6. After-Acquired Shares; Recapitalization.
6.1. After-Acquired Shares; Recapitalization. (a) All of the provisions
of this Agreement shall apply to all of the shares of Equity Securities now
owned or hereafter issued or
10
<PAGE>
transferred to a Stockholder or to his, her or its Affiliates in consequence of
any additional issuance, purchase, exchange or reclassification of shares of
Equity Securities, corporate reorganization, or any other form of
recapitalization, or consolidation, or merger, or share split, or share
dividend, or which are acquired by a Stockholder or its Affiliate in any other
manner.
(b) Whenever the number of outstanding shares of Equity Securities is
changed by reason of a stock dividend or a subdivision or combination of shares
effected by a reclassification of shares, each specified number of shares
referred to in this Agreement shall be adjusted accordingly.
7. Equitable Relief.
7.1. Equitable Relief. The parties hereto agree and declare that legal
remedies may be inadequate to enforce the provisions of this Agreement and that,
in addition to being entitled to exercise all of the rights provided herein or
in the Restated Certificate or granted by law, including recovery of damages,
equitable relief, including specific performance and injunctive relief, may be
used to enforce the provisions of this Agreement.
8. Miscellaneous.
8.1. Notices. All notices or other communications hereunder shall be in
writing and shall be given in the manner prescribed in the Company Stockholder
Agreement.
8.2. Entire Agreement; Amendment; Consents. (a) This Agreement and the
Company Stockholder Agreement constitute the entire agreement among the parties
with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof. The Stockholders agree that
the terms of this Agreement shall supersede any inconsistent provision contained
in the Company Stockholder Agreement.
(b) No change or modification of this Agreement shall be valid, binding
or enforceable unless the same shall be in writing and signed by Stockholders
holding 66% of all shares of Common Stock Owned by all Cash Equity Investors;
provided, however, that no change or modification to this Agreement which
adversely affects the rights of any Stockholder (as compared with its effect on
any similarly-situated Stockholder) or the Company shall be valid, binding and
enforceable unless the same shall be in writing and signed by such Stockholder
or the Company. In the event any party hereto shall cease to own any shares of
Equity Securities such party hereto shall cease to be a party to this Agreement
and the rights and obligations of such party hereunder shall terminate.
(c) Whenever in this Agreement the consent or approval of a Stockholder
is required, except as expressly provided herein, such consent or approval may
be given or withheld in the sole and absolute discretion of each Stockholder.
11
<PAGE>
(d) Whenever the Company Stockholder Agreement is amended in accordance
with its terms, the Stockholders hereto agree to enter into such amendments to
this Agreement necessary to effectuate the intent of this Agreement. The
Stockholder shall not enter into any such amendment the effect of which
adversely effects the rights of any Stockholder hereto without the consent of
such Stockholder.
8.3. Term. This Agreement shall terminate upon the termination of the
Company Stockholder Agreement.
8.4. Obligations Several. The obligations of each Stockholder under
this Agreement shall be several with respect to each such Stockholder.
8.5. Governing Law. This Agreement shall be governed and construed in
accordance with the law of the State of Delaware.
8.6. Jurisdiction. (a) The Company and each of the Stockholders hereby
irrevocably consents to the exclusive jurisdiction of the state or federal
courts in the State of New York, and all state or federal courts competent to
hear appeals therefrom, over any actions which may be commenced against any of
them under or in connection with this Agreement. The Company and each
Stockholder hereby irrevocably waive, to the fullest extent permitted by
applicable law, any objection which any of them may now or hereafter have to the
laying of venue of any such dispute brought in such court or any defense of
inconvenient forum for the maintenance of such dispute in the Southern District
of New York and New York County. The Company and each Stockholder hereby agree
that a judgment in any such dispute may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. The Company and
each Stockholder hereby consent to process being served by any party to this
Agreement in any actions by the transmittal of a copy thereof in accordance with
the provisions of Section 8.1.
8.7. Benefit and Binding Effect; Severability. This Agreement shall be
binding upon and shall inure to the benefit of the Company (solely with respect
to Sections 3.2, 3.3 and 4), its successors and assigns, and each of the
Stockholders and their respective executors, administrators and personal
representatives and heirs and permitted assigns. Any person to which shares of
Series C Preferred Stock are Transferred in connection with the exercise of
remedies by the lender under the Cash Equity Loan Documents, and any direct or
indirect transferee thereof, shall become a party to this Agreement, be bound
hereby and be subject to the rights and benefits of a Stockholder provided
herein. If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any law or public policy or any listing
requirement applicable to the Common Stock, all other terms and provisions of
this Agreement shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto affected by such determination in any
material respect shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner in order that the provisions hereof are given effect as
originally contemplated to the greatest extent possible.
12
<PAGE>
8.8. Headings. The captions in this Agreement are for convenience only
and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
8.9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
13
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed or consent this
Agreement to be executed by its duly authorized officers as of the date first
written above.
TRITEL, INC.
By:
Name:
Title:
S-1
<PAGE>
CASH EQUITY INVESTORS:
TORONTO DOMINION INVESTMENTS,
INC.
By:
Name: Martha L. Gariepy
Title: Vice President
ENTERGY WIRELESS CORPORATION
By:
Name: Gary Fuqua
Title: President and Chief Executive
Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By:
Name: Molly Fergusson
Title: Managing Director
S-2
<PAGE>
WASHINGTON NATIONAL INSURANCE
COMPANY
By:
Name:
Title:
UNITED PRESIDENTIAL LIFE INSURANCE COMPANY
By:
Name:
Title:
DRESDNER KLEINWORT BENSON PRIVATE EQUITY
PARTNERS LP
BY: DRESDNER KLEINWORT BENSON PRIVATE
EQUITY MANAGERS LLC, AS ITS
GENERAL PARTNER
By:
Name: Alexander P. Coleman
Title: Authorized Signatory
TRIUNE PCS, LLC, A DELAWARE LIMITED
LIABILITY COMPANY
BY: OAK TREE, LLC, A DELAWARE LIMITED
LIABILITY COMPANY
TITLE: MANAGER
BY: TRIUNE INC., A DELAWARE CORPORATION
TITLE: MANAGER
By:
Name: Kevin Shepherd
Title: President
S-3
<PAGE>
FCA VENTURE PARTNERS II, L.P.
BY: CLAYTON-DC VENTURE CAPITAL GROUP, LLC,
ITS GENERAL PARTNER
By:
Name: D. Robert Crants
Title: Manager
CLAYTON ASSOCIATES LLC
By:
Name: Bill F. Cook
Title: President
THE MANUFACTURERS' LIFE INSURANCE
COMPANY (U.S.A.)
By:
Name:
Title:
S-4
<PAGE>
TRILLIUM PCS, LLC
By:
Name:
Title:
AIRWAVE COMMUNICATIONS, LLC (F/K/A
MERCURY PCS, LLC)
By: MSM, Inc., its Manager
By:
Name: E.B. Martin, Jr.
Title: Vice President
DIGITAL PCS, LLC (F/K/A MERCURY
PCS II, LLC)
By: MSM, Inc., its Manager
By:
Name: E.B. Martin, Jr.
Title: Vice President
S-5
<PAGE>
With respect to Section 4 only:
AT&T WIRELESS PCS, INC.
By:
Name:
Title:
S-6
<PAGE>
SCHEDULE I
CASH EQUITY INVESTORS
WASHINGTON NATIONAL INSURANCE COMPANY
UNITED PRESIDENTIAL LIFE INSURANCE COMPANY
11825 North Pennsylvania Street
Carmel, IN 46032-4911
Attention: John J. Sabl
Facsimile: 317-817-6327
TRILLIUM PCS, LLC
AIRWAVE COMMUNICATIONS, LLC
DIGITAL PCS, LLC
1410 Livingston Lane
Jackson, MS 39213-8003
Attention: William M. Mounger, II
Facsimile: 601-362-2664
DRESDNER KLEINWORT BENSON PRIVATE EQUITY
MANAGERS LLC
75 Wall Street, 24th Floor
New York, NY 10005-2889
Attention: Alexander P. Coleman
Facsimile: 212-429-3139
ENTERGY WIRELESS CORPORATION
Three Financial Centre
900 South Shackelford, Suite 210
Little Rock, AR 72211
Attention: Stephen T. Refsell
Facsimile: 501-954-5003
TRIUNE PCS, LLC
4770 Baseline Road, Suite 380
Boulder, CO 80303
Attention: Kevin Shepherd
Facsimile: 303-499-6255
S-7
<PAGE>
TORONTO DOMINION INVESTMENTS, INC.
31 W. 52nd Street
New York, NY 10019
Attention: Steve Reinstadtler
Facsimile: 212-974-8429
With copy to:
TORONTO DOMINION INVESTMENTS, INC.
909 Fannin, Suite 1700
Houston, TX 77010
Attention: Martha Gariepy
Facsimile: 713-652-2647
GE CAPITAL SERVICES STRUCTURED FINANCE GROUP
120 Long Ridge Road, 3rd Floor
Stamford, CT 06927-4000
Attention: Mark De Cruccio
Facsimile: 203-357-6868
FCA VENTURE PARTNERS II, LP
CLAYTON ASSOCIATES, LLC
10 Burton Hills Blvd., Suite 120
Nashville, TN 37215
Attention: Joel Goldberg
Facsimile: 615-263-0234
THE MANUFACTURERS' LIFE INSURANCE COMPANY (U.S.A.)
73 Tremont Street, Suite 1300
Boston, MA 02108-3915
Attention: David Alpert
Facsimile: 617-854-4340
S-8
<PAGE>
SCHEDULE II
STOCK OWNERSHIP
[SEE ATTACHED CAP TABLE]
S-9
<PAGE>
SCHEDULE III
INITIAL DIRECTOR NOMINEES
[SEE ATTACHED]
S-10
<PAGE>
Exhibit 10.3
================================================================================
AT&T WIRELESS SERVICES
NETWORK MEMBERSHIP LICENSE AGREEMENT
between
AT&T CORP.
and
TRITEL, INC.
Dated as of January 7, 1999
================================================================================
<PAGE>
AT&T WIRELESS SERVICES
NETWORK MEMBERSHIP LICENSE AGREEMENT
NETWORK MEMBERSHIP LICENSE AGREEMENT (the "Agreement") dated as of
January 7, 1999, by and between AT&T Corp., a New York corporation, with offices
located at 32 Avenue of the Americas, New York, New York 10013, for itself and
its affiliated companies, including AT&T Wireless Services, Inc. (collectively
"Licensor"), and Tritel, Inc., a Delaware corporation, with offices located at
1410 Livingston Lane, Jackson, Mississippi 39213-8003 ("Licensee"). Certain
capitalized terms used herein are defined in Section 1.
WHEREAS, Licensor has, for many years, used and Licensor desires that
Licensee use, the AT&T Service Marks, and Licensor desires that Licensee use the
Licensed Marks, in connection with Telecommunications Services;
WHEREAS, Licensee, an Affiliate of Licensor and the other stockholders
of Licensee are parties to that certain Stockholders Agreement, dated as of the
date hereof (as the same may be amended, modified or supplemented in accordance
with the terms thereof, the "Stockholders Agreement;" capitalized terms defined
therein and not otherwise defined herein being used herein as therein defined)
and the execution and delivery of the Stockholders Agreement and the other
agreements contemplated therein is a condition to Licensee entering into this
Agreement;
WHEREAS, Licensee wishes to use the Licensed Marks in a limited manner
in the Licensed Territory in connection with the Licensed Activities; and
WHEREAS, Licensor is willing to license and allow Licensee to use the
Licensed Marks under the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Definitions. As used herein, the following terms shall have the
meanings set forth below:
"Affiliate": A Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with the
Person specified.
"Approval": The granting by all appropriate Regulatory Authorities of
all necessary licenses, permits, approvals, authorizations and clearances for
this Agreement and the registration or recording of this Agreement as required
by all Regulatory Authorities.
"Approved Licensee Marks": As defined in Section 4.1.
"AT&T Service Marks": The service marks and trademarks AT&T, and AT&T
with a fanciful globe design.
<PAGE>
"Authorized Dealers": Any distributor or other agent of Licensee
authorized to market, advertise or otherwise offer, on behalf of Licensee, any
Licensed Services under the Licensed Marks in the Licensed Territory.
"Bankruptcy": With respect to a Person, means (i) the filing by such
Person of a voluntary petition seeking liquidation, dissolution, reorganization,
rearrangement or readjustment, in any form, of its debts under Title 11 of the
United States Code (or corresponding provisions of future laws) or any other
bankruptcy or insolvency law, or such Person's filing an answer consenting to,
or acquiescing in any such petition; (ii) the making by such Person of any
assignment for the benefit of its creditors, or the admission by such Person in
writing of its inability to pay its debts as they mature; (iii) the expiration
of 60 days after the filing of an involuntary petition under Title 11 of the
United States Code (or corresponding provisions of future laws), an application
for the appointment of a receiver for the assets of such Person, or an
involuntary petition seeking liquidation, dissolution, reorganization,
rearrangement or readjustment of its debts or similar relief under any
bankruptcy or insolvency law, provided that the same shall not have been
vacated, set aside or stayed within such 60 day period; or (iv) the entry of an
order for relief against such Person under Title 11 of the United States
Bankruptcy Code.
"Change of Control": Any transaction or event, whether voluntary or
involuntary, that results in, or as a consequence of which, any of the following
events shall occur, except as a result of a sale, transfer or other disposition
by Licensor or any of its Affiliates: (i) any Person, excluding any Person that
is an owner of shares of capital stock of Licensee on the date hereof or that
acquires shares of Voting Preference Common Stock and Tracked Common Stock
pursuant to the terms of the Management Agreement or the Lenders (as defined in
Section 3.1(b)) or any Person to whom the Lenders, with the consent of Licensor,
assign this Agreement, shall acquire, directly or indirectly, Beneficial
Ownership (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) of (x) more than 50% of the voting stock of Licensee, or (y) more than
33-1/3% of the voting stock of Licensee, unless the Persons owning capital stock
of Licensee on the date hereof (together with any Person that acquires Voting
Preference Common Stock and Tracked Common Stock of Licensee pursuant to the
terms of the Management Agreement) collectively own a percentage of such voting
stock that is higher than such Person; (ii) any Disallowed Transferee shall
acquire, directly or indirectly, Beneficial Ownership of more than 15% of the
voting stock of Licensee; provided that, for purposes of this Agreement,
purchases of Licensee's capital stock made by third parties in the open market
shall not be deemed to be acquisitions of Licensee's capital stock by Disallowed
Transferees; or (iii) a proxy contest for the election of directors of Licensee
results in the persons constituting the Board of Directors of Licensee
immediately prior to the initiation of such proxy contest ceasing to constitute
a majority of the Board of Directors upon the conclusion of such proxy contest.
"Company Communications Services": Mobile wireless telecommunications
services (including the transmission of voice, data, image or other messages or
content) provided solely within the Licensed Territory, initiated or terminated
using TDMA and frequencies licensed by the FCC, to or from subscriber equipment
that is capable of usage during routine movement throughout the area covered by
a cell site and routine handing-off between cell sites, and is either intended
for such usage or is temporarily fixed to a specific location on a short-term
basis (e.g., a bank of wireless telephones temporarily installed during a
special event of limited
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<PAGE>
duration). Without limiting the foregoing, Company Communications Services shall
include wireless office services if such services comply with this definition.
Company Communications Services shall also include the transmissions between
Licensee's cell sites and Licensee's switch or switches in the Licensed
Territory, handing-off transmissions at Licensee's switch or switches for
termination by other carriers, and receiving transmissions to Licensee's
customers handed-off at Licensee's switch or switches.
"Company Systems": The systems operated by Licensee to provide Company
Communications Services in the Licensed Territory.
"Control": For purposes of the definitions of "Affiliate" and "Change
of Control", the term "control" (including the terms "controlling," "controlled
by", and "under common control with") of a Person means the possession, direct
or indirect, of the power to (i) vote 50% or more of the voting securities of
such Person or (ii) direct or cause the direction of the management and policies
of such Person, whether by contract or otherwise.
"Disallowed Transferee": Any Prohibited Transferee, or any Regional
Bell Operating Companies, Microsoft, GTE, SNET or any of their respective
Affiliates, successors or assigns.
"FCC": The Federal Communications Commission and any successor
governmental authority.
"Licensed Activities": Each of the following activities: (a) the
provision to end-users and resellers, solely within the Licensed Territory, of
Company Communications Services on frequencies licensed to Licensee for
Commercial Mobile Radio Services pursuant to the AT&T Contributed Licenses, the
Mercury Licenses, the Alabama Licenses, the Florida Cellular Licenses, PCS
Licenses acquired pursuant to the Option Agreement and the Permitted Cellular
Licenses, and the provision in connection with such Company Communications
Services of Adopted Service Features (as defined in the Stockholders Agreement),
and (b) marketing and offering the services and features described in clause (a)
within the Licensed Territory, including advertising such services and features
using broadcast and other media, so long as such advertising extends beyond the
Licensed Territory only when and to the extent necessary to reach end-users and
potential end-users in the Licensed Territory.
"Licensed Logo": The logo containing the AT&T and globe design, as such
logo may be modified or replaced pursuant to Section 4.3, and the expression
"Member, AT&T Wireless Services Network," as set forth in Schedule A attached
hereto. Registrations and pending applications covering the Licensed Logo in the
United States are set forth in Schedule B1 attached hereto. The listing of goods
or services in the specification of any of these registrations or applications
which are outside the scope of services authorized under this Agreement shall
not be construed as inclusion of such goods or services in the license granted
by this Agreement; it being understood that the only services authorized under
this Agreement are as expressly set forth in this Agreement.
-3-
<PAGE>
"Licensed Marks": Collectively, the Licensed Logo, the Licensed Phrase,
the Licensed Trade Dress, and any additional Marks that may be licensed
hereunder pursuant to Section 4.3 or 4.4.
"Licensed Phrase": The expression "Member, AT&T Wireless Services
Network" or the expression "[Licensee] is a member of the AT&T Wireless Services
Network" and the form of such expression as it may be modified or replaced
pursuant to Section 4.3 or 4.4.
"Licensed Services": The services described in clause (a) of the
definition of the term "Licensed Activities."
"Licensed Territory": The Territory (as defined in the Stockholders
Agreement). The Licensed Territory as of the date hereof is comprised of those
geographic areas set forth in Schedule C.
"Licensed Trade Dress": The general image or appearance of the
marketing of services performed under the Licensed Logo, including without
limitation, the colors, designs, sizing configurations, publication formats and
the like as set forth in Schedule B attached hereto and as such trade dress may
be modified or replaced pursuant to Section 4.3, and such other trade dress as
may be added thereto or substituted therefor in accordance with Section 4.3 or
4.4.
"Licensee": As defined in the preamble.
"Licensor": As defined in the preamble.
"Mark": Any name, brand, mark, trademark, service mark, sound mark,
trade dress, trade name, business name, slogan, or other indicia of origin.
"Marketing Materials": Any and all materials, whether written, oral,
visual or in any other medium, used by Licensee or its Authorized Dealers to
market, advertise or otherwise offer any Licensed Services under the Licensed
Marks.
"Non-Renewal Request": As defined in Section 11.1(a).
"Person": Any individual, corporation, partnership, firm, joint
venture, limited liability company, limited liability partnership, association,
joint-stock company, trust, estate, incorporated or unincorporated organization,
governmental or regulatory body, or other entity.
"Quality Control Representatives": Representatives of Licensor
appointed in accordance with Section 7 .
"Quality Standards": The TDMA Quality Standards and the Guidelines for
Use of the Licensed Logo and Licensed Phrase set forth in Schedules D and E to
this Agreement.
"Regulatory Authority": Any regulatory, administrative or governmental
entity, authority or agency, including without limitation, the FCC and the
Export Licensing Office of the U.S. Department of Commerce.
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<PAGE>
"Renewal Notice": As defined in Section 11.1(a).
"Renewal Request": As defined in Section 11.1(a).
"Significant Breach by Licensee": As defined in Section 11.2 .
"Stockholders Agreement": As defined in the second recital.
"Successor": With respect to any party, any successor, transferee or
assignee, including without limitation, any receiver, debtor in possession,
trustee, conservator or similar Person with respect to such party or such
party's assets.
"TDMA Quality Standards": The quality standards applicable to TDMA PCS
Systems and Cellular Systems (as such terms are defined in the Stockholders
Agreement) owned and operated by Licensor's Affiliates in the Central and
Southwest Region, which, as currently in effect, are set forth on Schedule D, as
the same may be amended from time to time, provided any such amended standards
shall become effective one hundred twenty (120) days after notice thereof is
given to Licensee.
"Telecommunications Service": Any service providing the transmission of
voice, data, image or other messages or content, by radio or by aid of wire,
cable or other means now known or later developed between the points of origin
and reception of such transmission, or by means of any combination of the
foregoing.
2. Grant of License, Etc.
2.1 Grant of License. Subject to the terms and conditions of this
Agreement, Licensor hereby grants to Licensee a royalty free, non-transferable,
non-sublicensable, non-exclusive limited right and license to use the Licensed
Marks in the Licensed Territory, solely in connection with Licensed Activities.
2.2 No Other Services or Products. The Licensed Marks may not be used
by Licensee in connection with any service, except as expressly set forth in
this Agreement, or any product, except as expressly permitted by the terms of
Section 2.4. Specifically, but not by way of limitation, this Agreement does not
grant Licensee the right to use the Licensed Marks in connection with (a) the
manufacture or distribution of any products other than the distribution of
mobile phones to the extent expressly permitted by the terms of Section 2.4, or
(b) any Telecommunications Services, including, but not limited to long distance
services, other than Licensed Services. Accordingly, this Agreement does not
grant any license, authorization or permission to Licensee to appear on an equal
access ballot, or in any other fashion, as a long distance provider using the
Licensed Marks, or to use the Licensed Marks in connection with the reselling of
long distance or local service or any other service. Licensee shall identify to
Licensee's customers that Licensor is their long distance carrier and refer to
Licensor by its Marks and trade dress. This Agreement does not grant Licensee
the right to use any AT&T Service Mark or any other Mark of Licensor in any
manner, except as part of the Licensed Logo, Licensed Phrase and Licensed Trade
Dress as specifically set forth in this Agreement, or in the manner specifically
set forth in Sections 2.4, 4.1, 4.3 and 4.4.
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<PAGE>
2.3 Exclusivity. Licensor (on behalf of itself and its Affiliates)
shall not grant to any Person (other than a Subsidiary of Licensor) a right or
license to provide or resell, or act as agent for any Person offering, Company
Communications Services under the Licensed Marks except to any Person that (i)
resells, or acts as Licensee's agent for, Company Communications Services
provided by Licensee, including bundling any such Company Communications
Services with other Telecommunications Services marketed, offered and provided
or resold by such Person pursuant to an agreement between such Person and
Licensor or its Affiliates (in its capacity as reseller or agent) or Licensee,
or (ii) provides or resells wireless Telecommunications Services to or from
specific locations (such as buildings or office complexes), even if the
subscriber equipment used in connection with such service may be capable of
routine movement within a limited area (such as a building or office complex),
and even if such subscriber equipment may be capable of obtaining other
telecommunications services beyond such limited area (which other services may
include routine movement beyond such limited area) and hand-off between the
service to such specific location and such other telecommunications services. To
the extent the "other telecommunications services" referred to in clause (ii) of
the immediately preceding sentence constitute Company Communications Services,
Licensor (on behalf of itself and its Affiliates) shall not grant to any Person
a right or license to provide or resell such "other telecommunications services"
under the Licensed Marks, except in accordance with the terms of clause (i) of
the immediately preceding sentence. Nothing herein shall be construed to affect
the obligations of AT&T Wireless PCS Inc. and its Affiliates set forth in
Section 8.6 of the Stockholders Agreement.
2.4 Use of Licensed Marks on Mobile Phones. In connection with its
marketing, offering and provision of Licensed Services, Licensee may offer and
distribute to end-users mobile phones branded with the same Marks of Licensor,
and in the same manner, as the mobile phones distributed by or on behalf of
Licensor and its Affiliates, provided that (I) such mobile phones (a) are
purchased from Licensor or its Affiliates, (b) are identical to mobile phones
offered and distributed by Licensor and its Affiliates and are purchased from
the same manufacturer (or its authorized dealers), or (c) are manufactured and
distributed by a manufacturer authorized by Licensor to manufacture mobile
phones branded with such Marks (or its authorized dealers), and (II) Licensee
complies in all material respects with Licensor's Minimum Advertised Price
program, as such program shall be amended, modified or supplemented by Licensor
from time to time.
3. Agreement Personal.
3.1 Personal to Licensee.
(a) In recognition of the unique nature of the relationship between
Licensor and Licensee, the fact that Licensor would not be willing to enter into
an agreement such as this Agreement with any other party in any other
circumstances, and the unique nature of Licensee (including without limitation,
the fact that Licensee is partially owned by Licensor's Affiliate, AT&T Wireless
PCS Inc.), the parties agree that the rights, obligations and benefits of this
Agreement shall be personal to Licensee, and Licensor shall not be required to
accept performance from, or render performance to an entity other than Licensee
or even to Licensee itself in the event of a Change of Control of Licensee.
Pursuant to 11 U.S.C. ss. 365(c)(1)(A) (as it may be amended from time to time,
and including any successor to such provision), in the
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event of the Bankruptcy of Licensee, this Agreement may not be assigned or
assumed by Licensee (or any Successor) and Licensor shall be excused from
rendering performance to, or accepting performance from, Licensee or any
Successor.
(b) Notwithstanding the foregoing, this Agreement may be assigned to
the lenders (the "Lenders") named in the $550 million Credit Agreement (the
"Credit Agreement") dated the date hereof entered into between Licensee and the
Lenders, and, after a default under the Credit Agreement and the expiration of
any applicable grace and cure periods thereunder, the Lenders may enforce
Licensee's rights hereunder and the Lenders may assign this Agreement to any
Person with the consent of Licensor.
3.2 Licensee Acknowledgment. Licensee acknowledges and agrees that it
understands it may have, or, in the future, may elect to enter into, agreements
with Licensor's Affiliates and that neither the execution or continuation nor
the renewal of any of these agreements will have any effect on this Agreement
and Licensee may choose to contract, or not, with Licensor's Affiliates as it
deems appropriate.
4. Use of Licensed Marks and Other Marks.
4.1 Approved Licensee Marks. Licensee shall have the right from time to
time during the term hereof to create and use its own Marks, together with the
Licensed Marks, in connection with the Licensed Activities; provided that
Licensee provides Licensor with prior written notice of its desire to use any
such Marks owned by Licensee and Licensor approves Licensee's proposed use of
such Marks (which approval shall not be unreasonably withheld, delayed or
conditioned). Licensor shall use commercially reasonable efforts to approve or
disapprove any Marks proposed to be used by Licensee within 30 days of its
receipt of a written request for such approval. If Licensee has not received a
response from Licensor by the end of such 30-day period, Licensee shall have the
right to send a second written request for such approval to Licensor that states
expressly that, if Licensee does not receive a response from Licensor within 30
days after Licensor's receipt of such second request, Licensor shall be deemed
to have approved Licensee's proposed Mark or Marks. If Licensee does not receive
such response by the end of such second 30-day period, Licensor shall be deemed
to have approved such proposed Mark or Marks. Marks approved by Licensor in
accordance with this Section 4.1 shall be sometimes referred to herein as
"Approved Licensee Marks."
4.2 Marks To Be Used. Licensee shall conduct all Licensed Activities
solely under the Approved Licensee Marks, together with the Licensed Marks, all
in accordance with guidelines set forth on Schedule E.
4.3 Modification of Licensed Marks. In the event Licensor modifies or
replaces any of the Licensed Marks as they are used in any portion of Licensor's
business, and if Licensor requests Licensee to adopt and use any such modified
or replaced Licensed Marks, Licensee will adopt and use such modified or
replaced Licensed Marks and, in such event, such modified or replaced Licensed
Marks shall be considered the Licensed Marks contemplated by this Agreement;
provided that in such event, Licensee shall be granted a 180-day period during
which to phase-out its use of the superseded forms of the Licensed Marks, as
applicable, and
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during such 180-day period Licensee shall have the right to use its existing
inventory of Marketing Materials bearing the superseded forms of the Licensed
Marks, as applicable.
4.4 Use of Additional Marks at Licensor's Request. Licensor may, from
time to time, request Licensee to adopt and use a Mark or Marks of Licensor, in
addition to the then existing Licensed Marks in connection with the Licensed
Activities. Such additional Mark or Marks shall be licensed hereunder on the
same terms as the then existing Licensed Marks and Licensee shall within a
reasonable time, but in any event within one hundred eighty (180) days, comply
with Licensor's request by adopting and using such additional Mark or Marks;
provided that during such 180-day period Licensee shall have the right to use
its existing inventory of Marketing Materials that do not contain the additional
Mark or Marks.
5. Retention of Rights. Except as otherwise expressly provided in
Section 2, nothing in this Agreement shall be deemed or construed to limit in
any way Licensor's rights in and to the AT&T Service Marks and the Licensed
Marks, including without limitation:
(a) all rights of ownership in and to the AT&T Service Marks and the
Licensed Marks, including the right to license or transfer the same; and
(b) the unimpaired right to use the AT&T Service Marks and the Licensed
Marks in connection with marketing, offering or providing any products or
services (including, without limitation Licensed Services) whether within or
without the Licensed Territory.
6. System Requirements. The terms of Sections 8.1(a), 8.2, 8.3, and
8.5(a) of the Stockholders Agreement are hereby incorporated herein by reference
with the same effect as if set forth herein in their entirety and Licensee shall
comply with its obligations therein.
7. Quality Control.
7.1 General. Licensee acknowledges that the services and activities
covered by this Agreement must be of sufficiently high quality as to provide
maximum enhancement to and protection of the Licensed Marks and the good will
they symbolize. Licensee further acknowledges that the maintenance of high
quality services is of the essence of this Agreement, as is the use of the
Licensed Marks in connection therewith, and that it will utilize only Marketing
Materials which enhance (and do not disparage or place in disrepute) Licensor,
its businesses or its business reputation, and enhance (and do not adversely
affect or detract from) Licensor's good will and will use the Licensed Marks in
ways (but only in ways) which will so enhance Licensor's business reputation and
good will.
7.2 Quality Standards. Licensee shall use commercially reasonable
efforts to cause the Company Systems to comply with the TDMA Quality Standards.
Without limiting the foregoing, with respect to each material portion of a
Company System (such as a city) that Licensee places in commercial service, on
or prior to the first anniversary of the date such material portion is placed in
commercial service, Licensee shall cause each such material portion to achieve a
level of compliance with the TDMA Quality Standards equal to at least the
average level of compliance achieved by comparable PCS and Cellular Systems
owned and operated by AT&T PCS taking into account, among other things, the
relative stage of development thereof.
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Licensee shall also comply with the Guidelines for Use of the Licensed
Logo and Licensed Phrase as set forth in Schedule E to this Agreement, and which
shall be considered part of the Quality Standards.
7.3 Quality Service Reviews; Right of Inspection. Licensor shall have
the right to designate from time to time, one or more Quality Control
Representatives, who shall have the right at any time, upon fifteen (15) days
notice to Licensee, to conduct during regular business hours an inspection,
test, survey and review of Licensee's facilities and the facilities of
Licensee's Authorized Dealers, if any, and otherwise to determine compliance
with the Quality Standards (each, an "Inspection"); provided that Licensor shall
use all commercially reasonable efforts to ensure that such Inspections shall
not unreasonably interfere with Licensee's conduct of its business; and provided
further that Licensor shall not be permitted to conduct more than two (2)
Inspections during each 12-month period of the term of this Agreement unless
Licensor reasonably believes that Licensee is not in compliance with the Quality
Standards, in which case Licensor shall be permitted to conduct Inspections from
time to time until Licensee has been determined to be in compliance. Licensee
agrees to collect, maintain and furnish to the Quality Control Representatives:
(i) all performance data relating to Licensee's Licensed Services reasonably
requested by the Quality Control Representatives and representative samples of
Marketing Materials that are marketed or provided under the Licensed Marks for
Inspections to assure conformance of the Licensed Services and the Marketing
Materials with the Quality Standards; and (ii) all performance data in its
control reasonably requested by the Quality Control Representatives relating to
the conformance of Licensed Services with the Quality Standards. Any such data
provided to Licensor shall be treated confidentially in accordance with Section
18. Licensor may independently conduct continuous customer satisfaction and
other surveys to determine if Licensee is meeting the Quality Standards.
Licensee shall cooperate with Licensor fully in the distribution and conduct of
such surveys so long as such cooperation shall not unreasonably interfere with
the conduct of Licensee's business. If Licensee learns that it is not complying
with the Quality Standards in any material respect, it shall notify Licensor,
and the provisions of Section 8 shall apply to such noncompliance.
7.4 Authorized Dealers. Licensee shall provide to Licensor within 10
days after the expiration of each calendar quarter during the term of this
Agreement a list of all Authorized Dealers. Licensor shall have the right,
exercisable in its reasonable discretion, to give Licensee written notice
requiring Licensee to terminate any Authorized Dealer that Licensor reasonably
believes is not in compliance with the Quality Standards (after notice of such
non-compliance and a reasonable opportunity to cure has been granted to such
Authorized Dealer) effective no later than 30 days from the date such written
notice is given by Licensor to Licensee. All Authorized Dealers shall be bound
by Licensor's Quality Standards and by Licensee's obligations under this
Agreement. A breach by any such Authorized Dealer of this Agreement shall be
deemed a breach of this Agreement by Licensee; provided that Licensee's
termination of such breaching Authorized Dealer shall be deemed to cure any such
breach.
7.5 Sponsorship. Licensee shall not use the Licensed Marks to sponsor,
endorse, or claim affiliation with any event, meeting, charitable endeavor or
any other undertaking (each, an "Event") without the express written permission
of Licensor; provided however that, the categories of Events described on
Schedule F attached hereto shall be deemed pre-approved by Licensor and Licensee
shall not be required to seek permission from Licensor to
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sponsor, endorse or claim affiliation with such Events using the Licensed Marks.
Notwithstanding the foregoing, Licensor reserves the right to deny permission to
any event and to amend Schedule F. In the event that Licensee desires to
sponsor, endorse or claim affiliation with an Event not described on Schedule F,
Licensee shall provide Licensor with at least twenty (20) business days prior
written notice of such Event in reasonable detail and Licensor shall be deemed
to have granted Licensee permission to sponsor, endorse or claim affiliation
with such Event if a denial of permission is not received by Licensee by the
date or time specified in such notice. Any breach of this provision reasonably
determined to have a material adverse effect on Licensor or the Licensed Marks
shall be deemed a Significant Breach by Licensee (in no event less than ten
business days after receipt of the notice).
7.6 Universal Wireless Consortium. Licensee shall, throughout the term
of this Agreement, and any renewals or extensions thereof, be a member of the
Universal Wireless Consortium.
8. Remedies for Noncompliance With Quality Standards.
8.1 Cure Period. If Licensor becomes aware that Licensee or its
Authorized Dealers, if any, are not complying with any Quality Standards in any
material respect, and notifies Licensee in writing thereof, setting forth, in
reasonable detail, a written description of the noncompliance and any
suggestions for curing such noncompliance, then Licensee shall cure such
noncompliance as soon as is practicable but in any event within thirty (30) days
thereafter or, in the case of noncompliance with the TDMA Quality Standards, if
such breach is not capable of being cured on commercially reasonable terms
within such thirty (30) day period, within one-hundred eighty (180) days of such
notice, provided that Licensee is using commercially reasonable efforts to cure
such material breach as soon as reasonably practicable. In the event that the
non-compliance with the Quality Standards is being caused by an Authorized
Dealer, Licensee's termination of such Authorized Dealer shall be deemed to cure
such non-compliance. If such non-compliance with the Quality Standards continues
beyond the applicable cure period described above, Licensee shall then: (i)
cease any Licensed Activities under the Licensed Marks in the Licensed Territory
until it can comply with the Quality Standards; and (ii) at Licensor's election,
be deemed to be in breach of this Agreement.
8.2 Potential Injury to Persons or Property. Notwithstanding the
foregoing, in the event that Licensor reasonably determines that any
noncompliance creates a material threat of personal injury or injury to property
of any third party, upon written notice thereof by Licensor to Licensee,
Licensee shall cure such non-compliance as soon as practicable but in any event
within thirty (30) days after receiving such notice. If the non-compliance
continues beyond such cure period, Licensee shall either cease any Licensed
Activities under the Licensed Marks in the Licensed Territory until it can
comply with the Quality Standards, or be deemed to be in breach of this
Agreement.
9. Protection of Licensed Marks.
9.1 Ownership and Rights. Licensee admits the validity of, and agrees
not to challenge the ownership or validity of the Licensed Marks. Licensee
acknowledges that it will not obtain any ownership interest in the Licensed
Marks or any other right or entitlement to
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continued use of them, regardless of how long this Agreement remains in effect
and regardless of any reason or lack of reason for the termination thereof by
Licensor; provided that by making this acknowledgment Licensee is not waiving,
and does not intend to waive, any contractual rights hereunder or its remedies
upon a breach hereof by Licensor. Licensee shall not disparage, dilute or
adversely affect the validity of the Licensed Marks. Licensee agrees that any
and all good will and other rights that may be acquired by the use of the
Licensed Marks by Licensee shall inure to the sole benefit of Licensor, except a
security interest granted to the Lenders in accordance with the terms of the
Credit Agreement. Licensee will not grant or attempt to grant a security
interest in the Licensed Marks or this Agreement, or to record any such security
interest in the United States Patent and Trademark Office or elsewhere, against
any trademark application or registration belonging to Licensor. Licensee agrees
to execute all documents reasonably requested by Licensor to effect registration
of, maintenance and renewal of the Licensed Marks. For purposes of this
Agreement, Licensee shall be considered a "related company" under the U.S.
Trademark Act, 15 U.S.C. ss. 1051 et seq.
9.2 Similar Marks. Licensee further agrees not to register in any
country any Mark resembling or confusingly similar to the Licensed Marks or the
AT&T Service Marks, or which dilutes the Licensed Marks or the AT&T Service
Marks, and not to use the Licensed Marks or the AT&T Service Marks or any part
thereof as part of its corporate name, nor use (except in accordance with
Section 4.1) any Mark confusingly similar, deceptive or misleading with respect
to the Licensed Marks or the AT&T Service Marks or which dilutes the Licensed
Marks or the AT&T Service Marks. Licensee further agrees not to use or register
in any country any Mark similar to the Licensed Marks or the AT&T Service Marks,
or which dilutes the Licensed Marks or the AT&T Service Marks. If any
application for registration is, or has been filed in any country by Licensee
which relates to any Mark which, in the sole opinion of Licensor, is confusingly
similar, deceptive or misleading with respect to the Licensed Marks or the AT&T
Service Marks, or which dilutes the Licensed Marks or the AT&T Service Marks,
Licensee shall, at Licensor's sole discretion, immediately abandon any such
application or registration or assign it (free and clear of any Liens, and for
consideration of $1.00) to Licensor. If Licensee uses any Mark which, in the
sole opinion of Licensor, is confusingly similar, deceptive or misleading with
respect to the Licensed Marks or the AT&T Service Marks, or which dilutes the
Licensed Marks or the AT&T Service Marks, or if Licensee uses the Licensed Marks
or the AT&T Service Marks in connection with any product, or in connection with
any service not specifically authorized hereunder, Licensee shall, immediately
upon receiving written request from Licensor, permanently cease such use.
Notwithstanding anything to the contrary contained in this Section 9.2, Licensee
shall have the right to use and register the Approved Licensee Marks that are
used together with the Licensed Marks in accordance with the terms of this
Agreement and the Approved Licensee Marks shall not be deemed by Licensor to
resemble or to be confusingly similar to the Licensed Marks.
9.3 Infringement. In the event that either party learns of any
infringement or threatened infringement of the Licensed Marks, or any unfair
competition, passing-off or dilution with respect to the Licensed Marks, or any
third party alleges or claims that any of the Licensed Marks are liable to cause
deception or confusion to the public, or is liable to dilute or infringe any
right of such third party (each such event, an "Infringement"), such party shall
promptly notify the other party or its authorized representative giving
particulars thereof, and Licensee shall provide necessary information and
reasonable assistance to Licensor or its authorized
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representatives in the event that Licensor decides that proceedings should be
commenced or defended. For purposes of this Agreement, Licensee shall be deemed
to have "learned" of an Infringement when either (i) the General Manager of one
of Licensee's operating subsidiaries or divisions or (ii) an executive officer
of Licensee obtains actual knowledge of the Infringement. Licensor shall have
exclusive control of any litigation, opposition, cancellation or related legal
proceedings. The decision whether to bring, defend, maintain or settle any such
proceedings shall be at the exclusive option and expense of Licensor, and all
recoveries shall belong exclusively to Licensor. Licensee will not initiate any
such litigation, opposition, cancellation or related legal proceedings in its
own name but, at Licensor's request, agrees to be joined as a party in any
action taken by Licensor to enforce its rights in the Licensed Marks or the AT&T
Service Marks; provided that Licensor shall reimburse Licensee for all
reasonable out-of-pocket costs and expenses incurred by Licensee, its Affiliates
and authorized representatives (and their respective directors, officers,
stockholder, employees and agents) in connection with their participation in
such action. Nothing in this Agreement shall require, or be deemed to require
Licensor to enforce the Licensed Marks or the AT&T Service Marks against others.
9.4 Compliance With Laws. In the performance of this Agreement,
Licensee shall comply in all material respects with all applicable laws and
regulations and administrative orders, including those laws and regulations
particularly pertaining to the proper use and designation of Marks in the
Licensed Territory. Should Licensee be or become aware of any applicable laws or
regulations which are inconsistent with the provisions of this Agreement,
Licensee shall promptly notify Licensor of such inconsistency. In such event,
Licensor may, at its option, either waive the performance of such inconsistent
provisions, or negotiate with Licensee to make changes in such provisions to
comply with applicable laws and regulations, it being understood that the
parties intend that any such changes shall preserve to the extent reasonably
practicable the parties' respective benefits under this Agreement.
10. No Sublicensing. Licensee shall not: (i) assign, license, transfer,
dispose or relinquish any of its rights or obligations hereunder (whether by
merger, consolidation, sale, operation of law or otherwise) other than as
contemplated by Section 3.1(b); or (ii) grant or purport to grant any sublicense
in respect of the Licensed Marks; provided that Licensee's Authorized Dealers
and Subsidiaries shall have the right to use the Licensed Marks in accordance
with the Quality Standards in connection with Licensed Activities. Any such
purported assignment, license, transfer, disposition, relinquishment or
sublicense shall be void and of no effect.
11. Term and Termination.
11.1 Term.
(a) This Agreement shall commence on the date hereof and shall be in
effect for five (5) years following such date, unless terminated earlier
pursuant to this Section 11. Neither party has a right or obligation to renew
this Agreement beyond the initial term; provided, however, that if each party
gives written notice (a "Renewal Notice") to the other party of an election to
renew not less than ninety (90) days prior to the end of the initial term, then,
and only then, shall this Agreement renew for an additional five (5) year term.
During the ten (10) day period commencing one hundred twenty (120) days prior to
the end of the initial term, either
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party may give written notice (a "Renewal Request") to the other party
requesting that such other party give a Renewal Notice. No later than ninety
(90) days prior to the end of the initial term, the recipient of a Renewal
Request shall give to the requesting party either, in its sole discretion: (i) a
Renewal Notice or (ii) a written notice (a "Non-Renewal Notice") stating it is
not electing to renew the term of this Agreement. Any recipient of a Renewal
Request that fails to send either a Renewal Notice or a Non-Renewal Notice in
accordance with the immediately preceding sentence shall be deemed to have given
a Renewal Notice. In the event either party fails to give a Renewal Notice or,
in response to a Renewal Request, gives a Non-Renewal Notice, such party shall
be presumed to have good cause for non-renewal either due to an action or
failure to act by the other party or due to circumstances related to the party
who did not provide the notice. In the event that AT&T Wireless PCS Inc. shall
convert any shares of Series A Preferred Stock of Licensee into Common Stock of
Licensee (as such terms are defined in the Stockholders Agreement), the term of
this Agreement shall expire on the later of (x) two (2) years from the Series A
Conversion Date (as such term is defined in Licensee's Restated Certificate of
Incorporation), and (y) the then existing expiration date of this Agreement.
(b) Notwithstanding anything to the contrary contained in this Section
11.1, this Agreement may be terminated by Licensor upon written notice to
Licensee at any time following the later to occur of (x) the termination by AT&T
Wireless PCS Inc. of its obligations under Section 8.6 of the Stockholders
Agreement pursuant to Section 8.8(c) of the Stockholders Agreement, and (y) the
second anniversary of the date Licensor (or an affiliate of Licensor) gives
written notice to Licensee that it has entered into a letter of intent or
binding agreement to engage in a Disqualifying Transaction (as defined in the
Stockholders Agreement); provided, however, that in no event shall Licensor have
the right to terminate this Agreement as of a date prior to the fifth
anniversary of the date hereof; provided further however that, in the event that
this Agreement is terminated pursuant to this Section 11.1(b) and Licensee does
not exercise its right pursuant to Section 6.1 of the Stockholders Agreement to
convert all of the shares of Company Stock (as defined in the Stockholders
Agreement) owned by AT&T Wireless PCS Inc. into Series B Preferred Stock (as
defined in the Stockholders Agreement), the termination shall only apply to the
portion of the Territory that constitutes the "Overlap Territory" (as defined in
the Stockholders Agreement) and this Agreement shall remain in full force and
effect with respect to the remainder of the Territory.
11.2 Breach by Licensee. Licensor may terminate this Agreement at any
time in the event of a Significant Breach by Licensee. A "Significant Breach by
Licensee" shall mean, after exhaustion of any applicable cure periods set forth
in this Agreement, any of the following:
(a) Licensee's use of any Mark (including the Licensed Marks and the
AT&T Service Marks) contrary to the provisions of this Agreement, or the use by
an Authorized Dealer of any Mark (including the Licensed Marks and the AT&T
Service Marks) contrary to the provisions of this Agreement, including a
violation by Licensee of Section 4.2, in each case which continues for more than
30 days after written notice thereof has been given to Licensee;
(b) Subject to the provisions of Section 8.1, Licensee's use of the
Licensed Marks in connection with any Marketing Materials, or the offering,
marketing or provision of
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any Licensed Services, or the conduct of any Licensed Activities or any other
aspect of its business conducted by it, which fail to meet the Quality Standards
in any material respect;
(c) Licensee's refusing or neglecting a request by Licensor pursuant to
Section 7.3 for access to Licensee's facilities or Marketing Materials, which
refusal or neglect continues for more than five business days after written
notice thereof is given to Licensee;
(d) Licensee's licensing, assigning, transferring, disposing of or
relinquishing (or purporting to license, assign, transfer, dispose of or
relinquish) any of the rights granted in this Agreement to others, except as
permitted by Section 10;
(e) Licensee's failure to maintain the Quality Standards and other
information furnished under this Agreement in confidence pursuant to Section 18,
or failing to restrict the transmission of information, products and commodities
as required by Section 18;
(f) The occurrence of a Change of Control of Licensee;
(g) Licensee's loss, for any reason whatsoever, of its rights to hold,
directly or indirectly, the FCC licenses for Company Communications Services in
the Licensed Territory or to provide the Company Communications Services under
such licenses, unless (i) such loss results, directly or indirectly, from the
actions or inactions of Licensor or its Affiliates or (ii) such loss relates to
less than 5% of the Pops in the Licensed Territory;
(h) The Bankruptcy of Licensee;
(i) Licensee's failure in any material respect to obtain Licensor's
permission as provided in, or any other material breach of the provisions of,
Section 7.5; or
(j) Any Substantial Company Breach.
11.3 Termination Obligations. In the event this Agreement terminates
pursuant to this Section 11:
(a) Licensee shall immediately cease use of the Licensed Marks upon
notice of termination, except that Licensee shall have the right to continue to
use the Licensed Marks (including without limitation, Licensee's then existing
inventory of Marketing Materials bearing the Licensed Marks) to the extent such
use is otherwise in accordance with the provisions of this Agreement, for a
period of up to ninety (90) days following such termination; and
(b) Licensee shall have no further rights under this Agreement, except
as provided in Section 11.5.
11.4 No Waiver of Rights. In addition to any other provision of this
Section 11, each party will retain all rights to any other remedy it may have at
law or equity for any breach by the other of this Agreement.
11.5 Survival. Sections 11.3(a), 12.1, 17 and 18 shall survive any
expiration or termination of this Agreement.
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12. Indemnity.
12.1 Licensor shall defend, indemnify and hold Licensee and its
authorized representatives (including the Authorized Dealers), and their
respective directors, officers, stockholders, employees and agents, harmless
against all claims, suits, proceedings, costs, damages, losses and expenses
(including reasonable attorneys' fees) and judgments incurred, claimed or
sustained by Licensee or such persons arising out of: (i) claims by third
parties that Licensee's use of the Licensed Marks in accordance with this
Agreement constitutes trademark, service mark or trade dress infringement (or
infringement of any other intellectual property or other proprietary right owned
by a third party), dilution, unfair competition, misappropriation or
false/misleading advertising; (ii) any third party claims as to the lack of
validity or enforceability of (A) the registrations of the Licensed Marks or (B)
Licensor's ownership rights in the Licensed Marks; and (iii) any lack of
validity or enforceability of this Agreement caused by Licensor. Subject to
Licensor's indemnification obligations in the previous sentence, Licensee shall
defend, indemnify and hold Licensor, its Affiliates and authorized
representatives, and their respective directors, officers, stockholders,
employees and agents, harmless against all claims, suits, proceedings, costs,
damages and judgments incurred, claimed or sustained by third parties, whether
for personal injury or otherwise, arising out of Licensee's or any Authorized
Dealer's marketing, sale, or use of services under the Licensed Marks and shall
indemnify Licensor and the foregoing persons for all damages, losses, costs and
expenses (including reasonable attorneys' fees) arising out of such use, sale or
marketing and also for any improper or unauthorized use of the Licensed Marks or
any use of its own Marks. Licensee shall also defend, indemnify and hold
Licensor, its Affiliates and authorized representatives, and their respective
directors, officers, stockholders, employees and agents, harmless against all
claims, suits, proceedings, costs, damages, losses and expenses (including
reasonable attorneys' fees) and judgments incurred, claimed or sustained by
Licensor or such persons arising out of: (i) any third party claims as to the
lack of validity or enforceability of (x) the registrations (if any) of the
Approved Licensee Marks or (y) Licensee's ownership rights in the Approved
Licensee Marks; and (ii) any lack of validity or enforceability of this
Agreement caused by Licensee.
12.2 Licensee shall maintain, at its own expense, in full force and
effect at all times during which Licensed Services bearing the Licensed Marks
are being sold, with a responsible insurance carrier acceptable to Licensor, at
least a Two Million Five Hundred Thousand Dollar ($2,500,000.00) products
liability insurance policy with respect to the Licensed Services offered under
the Licensed Marks. This insurance shall be primary to any of Licensor's
coverage, shall name Licensor as an insured party, shall be for the benefit of
Licensor and Licensee and shall provide for at least ten (10) days' prior
written notice to Licensor and Licensee of the cancellation or any substantial
modification of the policy. This insurance may be obtained for Licensor by
Licensee in conjunction with a policy which covers services and/or products
other than the services covered under this Agreement.
12.3 Licensee shall from time to time, upon reasonable request by
Licensor, promptly furnish or cause to be furnished to Licensor, evidence in
form and substance satisfactory to Licensor, of the maintenance of the insurance
required by Section 12.2, including without limitation, originals or copies of
policies, certificates of insurance (with applicable riders and endorsements)
and proof of premium payments.
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13. Consent of Licensor. Except where another standard is expressly
provided for herein, whenever reference is made to Licensor's consent or
approval in this Agreement, such consent or approval may be granted or withheld
in Licensor's sole discretion and, if granted, may be done so conditionally or
unconditionally; provided, however, that such standard shall not be interpreted
by Licensor as justifying arbitrary rejection, but will connote a reasonable
application of judgment, taking into consideration Licensor's licensing
practices and customs in telecommunications licensing transactions.
14. Notices and Demands. All notices, requests, demands or other
communications required by, or otherwise with respect to this Agreement shall be
in writing and shall be deemed to have been duly given to any party when
delivered personally (by courier service or otherwise), against receipt, when
delivered by telecopy and confirmed by return telecopy, or when actually
received when mailed by registered first-class mail, postage prepaid and return
receipt requested in each case to the applicable addresses set forth below:
If to Licensee:
Tritel, Inc.
1080 River Oaks Drive
Suite B-100
Jackson, MI 39208
Attn: Chief Executive Officer
Telephone: (601) 936-0893
Facsimile: (601) 936-6045
If to Licensor:
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attention: General Counsel
Fax No.: (908) 953-8360
With a copies to:
AT&T Corp.
131 Morristown Road
Basking Ridge, New Jersey 07920-1650
Attention: Frank L. Politano, General Attorney
Fax No.: (908) 204-8537
AT&T Corp.
131 Morristown Road
Basking Ridge, NJ 07920
Attention: Corporate Secretary
Fax No.: (908) 953-4657
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AT&T Wireless Services Inc.
5000 Carillon Point
Kirkland, Washington 98033
Attention: William W. Hague
Fax No.: (425) 827-4500
or to such other address as such party shall have designated by notice so given
to each other party.
15. Compliance With Law. Subject to the provisions of Section 9.4,
nothing in this Agreement shall be construed to prevent Licensor or Licensee
from complying fully with all applicable laws and regulations, whether now or
hereafter in effect.
16. Governmental Licenses, Permits and Approvals. Licensee, at its
expense, shall be responsible for obtaining and maintaining all licenses,
permits and approvals which are required by all Regulatory Authorities with
respect to this Agreement, and to comply with any requirements of such
Regulatory Authorities for the registration or recording of this Agreement.
Licensee shall furnish to Licensor written evidence from such Regulatory
Authorities of any such licenses, permits, clearances, authorizations,
approvals, registration or recording.
17. Applicable Law; Jurisdiction. The construction, performance and
interpretation of this Agreement shall be governed by the U.S. Trademark Act, 15
U.S.C. 1051 et seq., and the internal, substantive laws of the State of New
York, without regard to its principles of conflicts of law; provided that if the
foregoing laws should be modified during the term hereof in such a way as to
adversely affect the original intent of the parties, the parties will negotiate
in good faith to amend this Agreement to effectuate their original intent as
closely as possible. Except as otherwise provided herein, Licensor and Licensee
hereby irrevocably submit to the exclusive jurisdiction of the United States
District Court for the Southern District of New York, or absent subject matter
jurisdiction in that court, the state courts of the State of New York located in
New York County for all actions, suits or proceedings arising in connection with
this Agreement, and agree that any such action, suit or proceeding shall be
brought only in such courts (and waive any objection based on forum non
conveniens or any other objection to venue therein). Licensee and Licensor
hereby waive any right to a trial by jury.
18. Confidentiality of Information and Use Restriction. The Quality
Standards and other technical information furnished to Licensee under this
Agreement and other confidential and proprietary information, know-how and trade
secrets of Licensor that are disclosed or otherwise provided to Licensee in
connection with this Agreement, shall remain the property of Licensor, and shall
be returned to Licensor upon request and upon termination of this Agreement.
Unless such information was previously known to Licensee free of any obligation
to keep it confidential, or has been or is subsequently made public (a) by any
person other than Licensee and Licensor is not attempting to limit further
dissemination of such information, (b) by Licensor, or (c) by Licensee, as
required by law (including securities laws) or to enforce its rights under this
Agreement, it shall be held in confidence, and shall be used only for the
purposes of this Agreement. All confidential and proprietary information,
know-how and trade secrets of Licensee that are disclosed or otherwise provided
to Licensor hereunder (including without limitation, during any Inspection)
(collectively, "Licensee Information") shall remain the
-17-
<PAGE>
property of Licensee and shall be returned to Licensee upon request and upon
termination of this Agreement. Unless such Licensee Information was previously
known to Licensor free of any obligation to keep it confidential, or has been or
is subsequently made public (a) by any person other than Licensor and Licensee
is not attempting to limit further dissemination of such information, (b) by
Licensee, or (c) by Licensor, as required by law (including securities law) or
to enforce its rights under this Agreement, it shall be held in confidence and
shall be used only for purposes of this Agreement.
19. Miscellaneous.
19.1 Name, Captions. The name assigned this Agreement and the section
captions used herein are for convenience of reference only and shall not affect
the interpretation or construction hereof.
19.2 Entire Agreement. The provisions of this Agreement contain the
entire agreement between the parties relating to use by Licensee of the Licensed
Marks, and supersede all prior agreements and understandings relating to the
subject matter hereof. This Agreement shall be interpreted to achieve the
objectives and intent of the parties as set forth in the text and factual
recitals of the Agreement. It is specifically agreed that no evidence of
discussions during the negotiation of the Agreement, or drafts written or
exchanged, may be used in connection with the interpretation or construction of
this Agreement. No rights are granted to use the Licensed Marks or any other
marks or trade dress except as specifically set forth in this Agreement. In the
event of any conflict between the provisions of this Agreement and provisions in
any other agreement involving Licensee, the provisions of this Agreement shall
prevail. This Agreement is not a franchise under federal or state law, does not
create a partnership or joint venture, and shall not be deemed to constitute an
assignment of any rights of Licensor to Licensee. Licensee is an independent
contractor, not an agent or employee of Licensor, and Licensor is not liable for
any acts or omissions by Licensee.
19.3 Amendments, Waivers. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified except by an instrument in writing
signed by the party against whom enforcement is sought.
19.4 Specific Performance. The parties acknowledge that money damages
are not an adequate remedy for violations of this Agreement and that any party
may, in its sole discretion, apply to the court set forth in paragraph 17 for
specific performance, or injunctive, or such other relief as such court may deem
just and proper, in order to enforce this Agreement or prevent any violation
hereof, and to the extent permitted by applicable law, each party waives any
objection to the imposition of such relief.
19.5 Remedies Cumulative. All rights, powers and remedies provided
under this Agreement, or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
-18-
<PAGE>
19.6 No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement, or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
19.7 No Third Party Beneficiaries. Except with respect to the persons
entitled to indemnification under Section 12.1, this Agreement is not intended
to be for the benefit of, and shall not be enforceable by any person or entity
who or which is not a party hereto.
19.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all the
parties hereto.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in duplicate originals by its duly authorized representatives as of the
date first stated above.
AT&T CORP.
By
---------------------------------
Name:
Title:
TRITEL, INC.
By
---------------------------------
Name:
Title:
-19-
<PAGE>
SCHEDULE A
----------
LICENSED LOGO
-------------
See Attached
<PAGE>
SCHEDULE B
----------
LICENSED TRADE DRESS
--------------------
1. The overall configurations of the AT&T and globe design corporate signature
as set forth more fully in the AT&T document Corporate Identity Program:
Graphic Standards Manual ("Graphic Standards Manual") provided to the
Licensee, and solely as expressed in the Licensed Logo set forth in
Schedules A and E.
2. The acceptable color applications of the AT&T and globe design corporate
signature as set forth in the Graphic Standards Manual, and solely as
expressed in the Licensed Logo set forth in Schedules A and E.
3. The acceptable graphic techniques relating to the AT&T and globe design
corporate signature as set forth in the Graphic Standards Manual, and
solely as expressed in the Licensed Logo set forth in Schedules A and E.
4. The acceptable applications of the AT&T globe design corporate signature as
set forth in Schedule E.
5. Nothing in this Schedule shall restrict or limit AT&T's claim to trade
dress rights in or protection of AT&T's Trade Dress.
<PAGE>
SCHEDULE B1
-----------
UNITED STATES SERVICE MARK REGISTRATIONS OR APPLICATIONS
- --------------------------------------------------------
<TABLE>
<CAPTION>
Registration No. Registration Date
Mark (Application No.) (Application Date) Services
---- ----------------- ------------------ --------
<S> <C> <C> <C>
AT&T and Globe 75/378,611 October 24, 1997 Telecommunication services,
namely, the moblie wireless
electronic transmission of voice,
data, paging and facsimile
services; electronic voice and
data messaging services, namely,
the recording, storage, and
subsequent wireless transmission
of voice and data messages from
and to mobile wireless telephones
</TABLE>
<PAGE>
SCHEDULE C
----------
INITIAL LICENSED TERRITORY *
----------------------------
I. From Atlanta MTA BTA Market Designator
---------------- ---------------------
Carroll County, GA (1)
Haralson County, GA (2)
Opelika-Auburn, AL 334
Chattanooga, TN 076
Cleveland, TN 085
Dalton, GA 102
LaGrange, GA 237
Rome, GA 384
II. From Knoxville MTA
------------------
Knoxville, TN 232
III. From Louisville-Lexington-Evansville MTA
----------------------------------------
Louisville, KY 263
Lexington, KY 252
Bowling Green-Glasgow, KY 052
Owensboro, KY 338
Corbin, KY 098
Somerset, KY 423
Madisonville, KY 273
IV. From Memphis-Jackson MTA
------------------------
Montgomery County, MS (2)
Jackson, MS 210
Tupelo-Corinth, MS 449
Greenville-Greenwood, MS 175
Meridian, MS 292
Columbus-Starkville, MS 094
Natchez, MS 315
Vicksburg, MS 455
- -------------
* The Initial Licensed Territory is more particularly described in the FCC
applications filed in connection with the transfer of FCC PCS Licenses to the
Licensee.
1 Carrol County and Haralson County are both located within the Atlanta BTA
(B024).
2 Montgomery County is located within the Memphis BTA (B290).
<PAGE>
V. From Nashville MTA
-------------------
Nashville, TN 314
Clarksville, TN-Hopkinsville, KY 083
Cookeville, TN 096
VI. From Birmingham MTA
-------------------
Anniston, AL 017
Birmingham, AL 044
Decatur, AL 108
Dothan-Enterprise, AL 115
Florence, AL 146
Gladsden, AL 158
Huntsville, AL 198
Montgomery, AL 305
Selma, AL 415
Tuscaloosa, AL 450
VII. From New Orleans MTA
--------------------
Biloxi-Gulfport-Pascagoula, MS 042
Hattiesburg, MS 186
Laurel, MS 246
McComb-Brookhaven, MS 269
Mobile, AL 302
<PAGE>
SCHEDULE D
----------
TDMA QUALITY STANDARDS
----------------------
QUALITY AND REPORTING STANDARDS
-------------------------------
GENERAL OVERVIEW
This Schedule D sets out the Network and Reporting Standards with which Licensee
shall comply pursuant to Section 7.2 of this Agreement. These Standards set out
the network performance metrics and the process by which such metrics will be
established, measured and reported. All metrics which represent a defined
standard of quality for acceptable network operations have, or will have,
specific targets which Licensee must comply with in accordance with the
following network standards.
I. NETWORK STANDARDS
There are three categories of Network Standards: network quality (the "Network
Quality Category"); system performance (the "System Performance Category"); and
audio quality (the "Audio Quality Category") (each hereafter referred to
generally as a "Category"). For each Category of Network Standards, specific
metrics have been identified to measure performance in each such Category. The
detailed description of how to measure and interpret the metrics for each
Category is set out in the following AWS documents (each referred to generally
as a "Network Standards Document"):
o NETWORK QUALITY CATEGORY: Document ES-4034, Revision 1.1, dated July 30,
1997 entitled "Network Quality Scorecard User Guide" (as referred to as the
"Network Quality Standards Document"). This document is a collection of key
network performance and traffic indicators (metrics) that are measured and
reported on a regular basis. Included in this category, Licensee shall
perform the ANS Consistency Test, as attached to this Schedule D.
o SYSTEM PERFORMANCE CATEGORY: OSS draft document, Revision 0.7, dated June
17, 1997 entitled "Key Metrics for System Performance Document" (as referred
to as the "System Performance Standards Document"). This document identifies
the network-wide key metrics for Ericsson and Lucent switching systems, as
well as cell sites, which will provide a high level assessment of the
system.
o AUDIO QUALITY CATEGORY: Document PP-4027E, Revision 1.1, dated May 30, 1996
entitled "Audio Quality Measurement (AQM)" (as referred to as the "Audio
Quality Standards Document"). This document provides the basis for assessing
the quality of RF transmission by describing the standards for performing
audio quality measurements and the reporting of their results. AWS measures
the metrics for the Audio Quality Category using the "Radio Quality
Scorecard". The Radio Quality Scorecard is comprised of performance
statistics derived from driving the PCS system using the Buzzard tool or a
tool with similar measurement and reporting capability.
<PAGE>
These Network Standards Documents are subject to the terms and conditions of
this Agreement including, without limitation, this Schedule D, hereby
incorporated into and forms a part of this Agreement. In the event of any
inconsistency between any part of a Network Standards Document and the
provisions of this Schedule D, the provisions of this Schedule D shall govern.
Notwithstanding anything else in this Agreement including, without limitation,
this Schedule D, the parties acknowledge and confirm that the Network Standards
Documents represent the standards and metrics currently identified by AWS as
applicable to each Category. Target values for key quality related metrics are
contained herein and Licensee agrees to comply with the specific metric target
values as specified in this Schedule D.
In addition, the parties acknowledge and confirm that the Network Standards
Documents are subject to revision and Licensee shall comply with subsequent
revisions to these Network Standards Documents, as well as with Call Center
Quality Standards which will constitute an additional Category once they are
formally implemented, in accordance with Section 8.2 of this Agreement.
Set out below is a brief description of each Category of Network Standard and
the currently established metrics for each such Category.
II. TARGETS FOR NETWORK STANDARDS
Licensee shall meet the following targets for key metrics which represent
overall network and system quality. These targets are subject to revision and
shall be implemented in accordance with Section 8.2 of this Agreement.
o % ESTABLISHED CALLS: The percentage of call attempts to and from a mobile
phone that result in a successful voice channel assignment. The target goal
for this metric is 93%.
o % DROPPED CALLS: The percentage of established calls, as defined below,
which terminate abnormally. The target goal for this metric is a drop call
rate of 1.7% or less.
o % HANDOFF FAILURES: The target goal for this metric is a handoff failure
rate of 1.5%.
o FAILURES PER ERLANG: The ratio of failed calls to carried traffic, where
failed calls are measured utilizing switch counters for originating and
terminating traffic, and carried traffic is measured in erlangs. The target
goal for this metric is 1.68
o SWITCH OUTAGE TIME: The amount of time (in minutes) in a month when
subscribers are impacted by a cellular switch outage. Target for this metric
is 10 minutes per switch per year, with all ten minutes occurring in the
maintenance window between 12:00 am and 5:00 am.
o % BLOCKING - CELL ROUTES: Percentage of time all cellular traffic channels
(voice paths in a trunk group) are unavailable within a given measurement
interval. Target for this metric is 5%.
<PAGE>
o % BLOCKING - NETWORK ROUTES: Percentage of time all network traffic channels
are unavailable within the measurement interval. Target for this metric is
5%.
o ANS CONSISTENCY TEST: The percentage of successful ANS feature deliveries,
based on the following sequence: feature activation/deactivation (when
applicable), test call, correct response, and call termination. The target
goal for this metric is 96% for all ANS features. This target metric
includes feature delivery failures due to call processing failures (i.e.
call delivery, call origination, handoff failures, or dropped calls. These
failures are estimated to be approximately 4%.)
III. REPORTING STANDARDS
Licensee agrees to comply with the reporting requirements as specified in the
Network Standards Documents and as specified below:
o Except as specified Audio Quality Network Standards, Licensee will submit
the metric reports required pursuant to this Schedule D (the "Results") to
AWS no less than quarterly.
o With respect to Audio Quality Network Standards, Licensee shall only submit
quarterly Results for markets with 10,000 or more subscribers; for markets
with less than 10,000 subscribers, Licensee shall only submit Results on a
semi-annual basis.
o Licensee shall submit all Results by the fifteenth day of the month
following the end of the applicable reporting period.
o Licensee will report the Results to AWS on an aggregated national basis; the
aggregated national Results will reflect the distribution of the metric
measured across Licensee's Territory. Licensee may also be required to
provide a breakdown, by market, of any metric.
IV. CUSTOMER SERVICE STANDARDS
Promptly following the execution of this Agreement, AWS and Licensee shall
negotiate in good faith the applicable customer service standards, with a goal
of reaching agreement thereon by April 1, 1999.
<PAGE>
AT&T Brand Values
Marketing, Advertising & Promotion Guidelines
The Licensed Logo as set forth in Schedules A and E should not be placed on any
content relating to or containing any of the following, unless it has redeeming
social value:
o Illegal activities
o Content which demeans, ridicules or attacks an individual or group on
the basis of age, color, national origin, race, religion, sex. secular
orientation, or handicap
o Pornographic, obscene or sexually explicit suggestive material or
content
o Material targeted to children, which is deemed to be obscene, vulgar or
pornographic
o Tobacco and/or alcoholic beverages
o Firearms/Ammunition/Fireworks
o Gambling
o Contraceptives
o Violence
o Vulgar/obscene language
o Solicitation of funds
<PAGE>
SCHEDULE E
----------
GUIDELINES FOR USE OF THE LICENSED LOGO
AND LICENSED PHRASE
-------------------
AT&T welcomes Members of the AT&T Wireless Services Network (Member) to use the
enclosed icon ("icon") and the expression "Member, AT&T Wireless Services
Network" (the "expression") for their advertising and promotion needs.
There are only a few requirements to follow:
o The icon or the expression may never be used in connection with services or
products that are not provided or approved by AT&T in accordance with the
Network Membership License Agreement.
o Only authorized Members of the AT&T Wireless Services Network marketing AT&T
services under a written Network Membership License Agreement may use the
icon and the expression.
o The authorized member's identity or logo must be at least 3 times the
overall size of the icon; provided, however, for stationery and business
cards the authorized members identity or logo must be at least 2 times the
overall size of the icon.
o Use of the icon or expression must never give the impression that the member
is a part of AT&T.
o There must be a reference in the authorized member's advertising body copy,
to the extent that it refers to the nature, character or quality of AT&T's
service or network, that states the value, quality, and reliability of
AT&T's services and network.
o The icon must be used only as illustrated and specified in this document. Do
not alter the design in any way.
o The expression may not appear in type size or style that is larger or more
prominent than the largest or most prominent type size or style of
surrounding or accompanying text or body copy.
o Any misuse of the icon or the expression or misrepresentation of the AT&T
Member relationship may result in termination of permission to use the icon
and the expressions cancellation of agreements between Member and AT&T,
and/or additional legal action.
For questions regarding the use of these materials please contact the AT&T
Corporate Identity Office, (973) 564-4942.
Permission to use the icon or the expression may not be granted to any
telecommunications aggregator or reseller.
<PAGE>
For additional copies of this document call AT&T Corporate Identity at (973)
564-4942 or e-mail [email protected].
<PAGE>
The "icon" on disk
Always reproduce the icon so that it appears with a solid white or black field.
See Illustrations.
There are two versions of the icon on the disk. One is for larger size
reproduction (i.e., advertisements) and one is for smaller sizes (i.e.,
stationery). It is important to use the correct one because failing to do so
will result in poor legibility.
Versions AW, AB, AWC and ABC are for larger than P in height. Versions BW, BB,
BWC and BBC are for 1" and smaller.
Legal Information:
1. Permission to use the icon and expression will not be granted to any
telecommunications aggregator or reseller.
2. Permission to use the icon and expression must be contained in a written
Network Membership License Agreement between AT&T and the entity using the
icon and expression.
3. The user of the icon and expression must abide by all terms and conditions
outlined in this document.
4. The icon or expression may never be used in connection with products or
services not provided by the representative through or approved by AT&T.
With respect to a specific AT&T service, a person or entity is a Member
of the AT&T Wireless Network for that specific service under these guidelines if
(1) the person or entity has executed a written contract with AT&T that
expressly grants that status for that service; and (2) the contract is in effect
and grants the right to use. in accordance with these guidelines and such other
limitations as are contained in the contract, AT&T's logo, signature and
trademarks as expressed in the icon and expression in connection with the
marketing, sale, or provision of that specific product or service. The written
contract may not alter these guidelines or grant more rights to use AT&T's logo,
signature and trademarks than are expressly set forth in these guidelines.
Furthermore, the authorization to use the AT&T logo, signature and trademarks
under these guidelines for a specific service does not allow use of the AT&T
logo, signature and trademarks tor any other product or service.
Subscription to an AT&T tariffed service does not make the subscriber a
Member of the AT&T Wireless Services Network.
<PAGE>
SCHEDULE F
----------
PERMITTED EVENTS
----------------
1. Local community events, such as school athletic and cultural events or other
athletic events (e.g. corporate golf or tennis outings).
2. Local events held in conjunction with regionally or nationally recognized
organizations, such as Rotary International, Exchange Club, Heart
Association, Red Cross, Make-A-Wish Foundation etc.
3. Events in support of major charitable institutions such as Children's
Hospitals, Ronald McDonald Foundation, March of Dimes and so on.
4. Local trade shows, Chamber of Commerce events, educational business
seminars.
5. Licensee or authorized dealer store grand openings and kiosk sampling.
<PAGE>
Table of Contents
Page
----
1. Definitions.........................................................1
2. Grant of License, Etc...............................................5
2.1 Grant of License...........................................5
2.2 No Other Services or Products..............................5
2.3 Exclusivity................................................6
2.4 Use of Licensed Marks on Mobile Phones.....................6
3. Agreement Personal..................................................6
3.1 Personal to Licensee.......................................6
3.2 Licensee Acknowledgment....................................7
4. Use of Licensed Marks and Other Marks...............................7
4.1 Approved Licensee Marks....................................7
4.2 Marks To Be Used...........................................7
4.3 Modification of Licensed Marks.............................7
4.4 Use of Additional Marks at Licensor's Request..............8
5. Retention of Rights.................................................8
6. System Requirements.................................................8
7. Quality Control.....................................................8
7.1 General....................................................8
7.2 Quality Standards..........................................8
7.3 Quality Service Reviews; Right of Inspection...............9
7.4 Authorized Dealers.........................................9
7.5 Sponsorship................................................9
7.6 Universal Wireless Consortium.............................10
8. Remedies for Noncompliance With Quality Standards..................10
8.1 Cure Period...............................................10
8.2 Potential Injury to Persons or Property...................10
9. Protection of Licensed Marks.......................................10
9.1 Ownership and Rights......................................10
9.2 Similar Marks.............................................11
9.3 Infringement..............................................11
9.4 Compliance With Laws......................................12
10. No Sublicensing....................................................12
11. Term and Termination...............................................12
11.1 Term......................................................12
(i)
<PAGE>
11.2 Breach by Licensee........................................13
11.3 Termination Obligations...................................14
11.4 No Waiver of Rights.......................................14
11.5 Survival..................................................14
12. Indemnity..........................................................15
13. Consent of Licensor................................................16
14. Notices and Demands................................................16
15. Compliance With Law................................................17
16. Governmental Licenses, Permits and Approvals.......................17
17. Applicable Law; Jurisdiction.......................................17
18. Confidentiality of Information and Use Restriction.................17
19. Miscellaneous......................................................18
19.1 Name, Captions............................................18
19.2 Entire Agreement..........................................18
19.3 Amendments, Waivers.......................................18
19.4 Specific Performance......................................18
19.5 Remedies Cumulative.......................................18
19.6 No Waiver.................................................19
19.7 No Third Party Beneficiaries..............................19
19.8 Counterparts..............................................19
Schedules
Schedule A -- Licensed Logo
Schedule B -- Licensed Trade Dress
Schedule B1 -- United States Service Mark Registrations or Applications
Schedule C -- Initial Licensed Territory
Schedule D -- Quality Control Standards
Schedule E -- Guidelines for Use of the Licensed Logo and Licensed Phrase
Schedule F -- Permitted Events
(ii)
<PAGE>
Exhibit 10.4
INTERCARRIER ROAMER SERVICE AGREEMENT
-------------------------------------
THIS INTERCARRIER ROAMER SERVICE AGREEMENT (the "Agreement" ) is dated
as of the 7th day of January, 1999 (the "Effective Date") by and between AT&T
Wireless Services, Inc., on behalf of itself and its Affiliates (individually
and collectively, "AWS") for the markets listed on Schedule 1 hereto, and
Tritel, Inc., on behalf of itself and its Affiliates listed in Schedule 2 hereto
(individually and collectively, "Tritel") for the markets listed on Schedule 3.
AWS and Tritel are sometimes referred to, individually, as a "Party" and
together as "Parties."
R E C I T A L
-------------
WHEREAS, each of AWS and Tritel desires to make arrangements to
facilitate the provision of voice and voice-related mobile wireless
radiotelephone service to its Customers through the wireless radiotelephone
facilities of the other Party in a manner providing a common look and feel and
the appearance of seamlessness between the Parties' facilities, in accordance
with the terms of this Agreement; and
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein set forth and intending to be legally bound hereby, the Parties
do hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
As used in this Agreement, the terms below shall have the following
meanings:
Additional Features means the Features that are neither Core Features
nor Future Core Features but that are offered by a Party to its Customers in its
Home Service Area.
Adopted Features means the Core Features and the Future Core Features.
Affiliate means, with respect to a Party, any facilities-based CMRS
operating company that (a) is controlled by or under common control with the
Party, (b) is an entity in which the Party has at least fifty percent (50%)
voting interest, (c) shares switching facilities with the Party, (d) is managed
by the Party, or (e) is providing Service utilizing CMRS spectrum it has
acquired from a Party.
Approved CIBERNET Negative File Guidelines means the negative file
guidelines appearing in the CIBER Record in effect from time to time.
AT&T Wireless means AT&T Wireless Services, Inc., individually.
<PAGE>
Authentication means a process of determining whether a Roamer is an
Authorized Roamer by using an algorithmic calculation and comparison prior to
the Serving Carrier providing Service.
Authorized Receipt Point or ARP means the location or address of the
Party designated by the Home Carrier as the delivery point for its CIBER records
and authorized agent for performing CIBER edits.
Authorized Roamer means a Roamer using equipment and an assigned
telephone number with the NPA/NXX combinations listed in accordance with Article
VI below for whom the Serving Carrier has not received a negative notification
in accordance with the provisions of this Agreement.
AWS has the meaning set forth in the first paragraph of this Agreement.
AWS System means the facilities owned and/or operated by AWS with which
it provides Service anywhere within the United States.
BTA means a geographic area designated by the FCC as a Basic Trading
Area in which a PCS System may be operated, as described more specifically in 47
CFR 24.202 of the FCC rules and regulations.
Cellular System means a wireless communication system that is operated
pursuant to authority granted by the FCC under 47 CFR Part 22.
CIBER means Cellular Intercarrier Billing Exchange Record.
CIBER Record means the publication prepared by CIBERNET Corporation, a
wholly-owned subsidiary of the Cellular Telecommunications Industry Association,
as a service to the wireless communications industry. Unless specifically
provided otherwise in this Agreement, all words and phrases defined in the CIBER
Record shall have the meaning herein that they have therein.
Clearinghouse means that entity which provides for the exchange of
CIBER records and performs industry accepted CIBER edits, including edits to
verify Industry Negative File information.
CMRS means any Commercial Mobile Radio Service as authorized by the
FCC.
Core Features means the Features that, as of the Effective Date, AWS
and Tritel have hereby agreed are necessary to implement to create a common look
and feel and seamless subscriber service between the AWS System and the Mercury
System, as evidenced by their listing in Schedule E-1 to Exhibit E attached
hereto.
Customer means an end-user of Service with which a Party has entered
into an agreement to provide such Service, regardless of whether such Service is
to be provided through the facilities of such Party.
2
<PAGE>
Default has the meaning set forth in Section 13.1.
Effective Date has the meaning set forth in the first paragraph of this
Agreement.
ESN means the Electronic Serial Number that is encoded in a wireless
telephone set by the manufacturer and which is broadcast by such telephone.
Equipment means phones, handsets, transmitters, terminals, control
equipment and switches and other hardware and software required or useful to use
Service, including phones and handsets Customers use in connection with Service.
FCC means the Federal Communications Commission and any successor
agency or authority.
Features means voice and voice-related features and services available
from a Party through its mobile wireless telecommunication system.
Future Core Features means the Features that are either listed on
Schedule E-2 to Exhibit E or are agreed upon in the future by the Parties
pursuant to Section 10.3.2 as necessary to maintain a common look and feel, and
seamless subscriber service, between the AWS System and the Mercury System, and
which the Parties agree will be supported by both of their Systems, on the terms
and conditions of this Agreement, in the same manner as the Core Features.
General Availability means the date upon which the technology and
products that comprise any Future Core Features are commercially available from
the vendors of such technology and product(s), and such Feature has successfully
completed and passed the first application in the System of the Party seeking to
implement such features and is ready for live commercial deployment.
Home Carrier means a Party who is providing Service to its registered
Customers in a geographic area where it holds a license or permit to construct
and operate a mobile wireless radiotelephone system and station.
Home Service Area means the geographic area in which a Home Carrier is
licensed to provide Service.
Implementation Plan has the meaning set forth in Section 10.4.
Industry Negative File means the negative file maintained by the
authorized Clearinghouses in accordance with approved CIBERNET Negative File
Guidelines.
Mercury Service Area means the geographic area in which Tritel and
those of its Affiliates now or hereafter listed on Schedule 2 provide Service.
Mercury System means the facilities owned and/or operated by Tritel
with which it provides Service anywhere within the Mercury Service Area.
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MIN means the "Mobile Identification Number" which is assigned by a
Home Carrier to each of its registered Customers.
MOU means a minute of usage, with any portion thereof being rounded up
to the next full minute.
MSA means a geographic area designated by the FCC as a Metropolitan
Service Area in which a Cellular System may be operated, as described more
specifically in 47 CFR 22.909 of the FCC rules and regulations.
MTA means a geographic area designated by the FCC as a Major Trading
Area in which a PCS System may be operated, as described more specifically in 47
CFR 24.202 of the FCC rules and regulations.
NPA/NXX combinations means the six-digit numerical combinations
assigned by regulatory authorities to identify the area code and telephone
number prefix for Service.
PCS System means a wireless communication system that is operated
pursuant to authority granted by the FCC under 47 CFR Part 24.
Parties and Party have the meanings set forth in the first paragraph of
this Agreement.
Roamer means a Customer of one Party who seeks Service from the other
Party within the geographic area served by the other Party, regardless of
whether Service also is offered in that area by the Party whose Customer is
seeking Service.
RSA means a geographic area designated by the FCC as a Rural Service
Area in which a Cellular System may be operated, as described more specifically
in 47 CFR 22.909 of the FCC rules and regulations.
Service means telecommunications service for the transmission and
reception of voice and voice-related features provided by means of radio
frequencies that are or may be licensed, permitted or authorized now or in the
future by the FCC for use by a Cellular System or a PCS System, and in respect
of which service the user equipment is capable of and intended for usage during
routine movement, including halts at unspecified points, at more than one
location throughout a wide area public or private wireless network. Unless
otherwise specifically agreed by the Parties, Service shall include personal
base station services but, by way of example and without limitation, does not
include fixed wireless services, two-way messaging wireless services (NBPCS),
video broadcasting wireless services, television services (whether cable,
broadcast or direct broadcast satellite), broadcast radio services, interactive
informational or transactional content services such as on-line content network
services, Internet based services, satellite based communications services, and
air to ground communications services.
Serving Carrier means a Party who provides Service for registered
Customers of another Party while such Customers are in the geographic area where
the Serving Carrier, directly or through subsidiaries, provides Service.
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TDMA means the present and future North American Time Division Multiple
Access standard which is set by the Telecommunications Industry Association
(which at the Effective Date is IS-136), which is the essential radio frequency
technical method for digital wireless telephone operations upon which the
Service and equipment related thereto are designed to operate.
Tritel has the meaning set forth in the first paragraph of this
Agreement.
User Interface means the process, functional commands, and look and
feel by which a Customer operates and utilizes the Adopted Features, including
the sequence and detail of specific commands or service codes, the detailed
operation and response of Equipment to the sequence of keys pressed to effect
subscriber Equipment functions, and the response of subscriber Equipment to the
activation of these keys, or in response to signals or data from either the
Mercury System or the AWS System. Furthermore and for greater certainty, such
definition shall include without limitation, the manner in which information is
displayed on the screen of a phone used for Adopted Features, announcement tones
or messages occur, and service or feature codes that must be dialed. The origins
of the information presented to the user may be the user Equipment, or the AWS
System or the Mercury System, or both.
ARTICLE II
PROVISION OF SERVICE
--------------------
2.1 Each Party shall provide, to any Authorized Roamer who so requests,
in accordance with its own ordinary requirements, restrictions, practices, and
tariffs, if applicable, and with the terms and conditions of this Agreement, any
and all types of Service that such Party provides to its own Customers within
its Service Area; provided that, no Party shall be required to provide features
other than Core Features and Future Core Features. At a minimum, such Service
shall include voice communications capability, as well as any other types of
Service required by this Agreement, including without limitation Article X
hereof.
2.2 Notwithstanding anything in this Agreement to the contrary, a
Serving Carrier may suspend or terminate Service to an Authorized Roamer in
accordance with the terms of its own ordinary requirements, restrictions,
practices, and tariffs, if any, but such suspension or termination shall not
affect the rights and obligations of the Parties for Service furnished hereunder
prior to such termination or suspension.
2.3 In connection with its Service to Roamers, no Serving Carrier shall
use recorded announcements or other inducements for an Authorized Roamer to
discontinue the Service of its Home Carrier or, unless otherwise authorized
herein, Roamer's use of a Serving Carrier's system.
2.4 In the event that an operating entity becomes an Affiliate of a
Party after the date of this Agreement, such Party may add such operating entity
to Schedule 1 or Schedule 2, as the case may be, upon written notice to the
other Party, at which time (a) the Customers of such entity shall be entitled to
Service as Roamers from the other Party on the terms and conditions of this
Agreement and (b) such operating entity shall provide Service to Customers of
the other
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Party who are Authorized Roamers, although the other Party is not obligated to
request such Service or to require its Customers to request such Service.
2.5 Tritel shall maintain a membership in the North American Cellular
Network throughout the term of this Agreement.
ARTICLE III
RELATED SERVICES
----------------
3.1 Tritel and its Affiliates listed in Schedule 2 shall not market,
offer, provide, or resell interexchange services, except (i) interexchange
services that constitute Company Communication Services (as defined in the
Company's Stockholders Agreement dated as of the date hereof) and (ii)
interexchange services procured from AT&T Corp. or an Affiliate thereof
designated by AT&T Corp. Such interexchange services shall be provided by AT&T
Corp. or such Affiliate at the same rates as the rates charged by AT&T Corp. or
such Affiliate to other similarly situated carriers. It is anticipated that such
services will be provided by AT&T Corp. or such Affiliate pursuant to an
agreement incorporating such rates.
3.2 AWS and Tritel agree that Tritel shall participate in AWS's
National Account Program ("NAP"). A copy of AWS's standard NAP agreement, has
been provided to Tritel. Promptly following the execution of this Agreement, AWS
and Tritel shall negotiate in good faith the terms of such agreement, with the
goal of executing the agreement by April 1, 1999.
ARTICLE IV
CUSTOMER SERVICE
----------------
4.1 Throughout the Mercury Service Area, Tritel will provide customer
service meeting or exceeding the standards set forth on Exhibit A.
4.2 The Parties agree to work together in good faith to develop the
means by which a Serving Carrier can route to a Customer's Home Carrier a 611
customer service call received from a Customer of the other Party while roaming
on the Serving Carrier's System. Upon and subject to the development of such
technology, the Parties to implement such technology to the extent commercially
feasible.
ARTICLE V
CHARGES
-------
5.1 Each Home Carrier, whose Customers (including the Customers of its
resellers) receive service from a Serving Carrier as Authorized Roamers under
this Agreement, shall pay to the Serving Carrier who provided such service 100%
of the Serving Carrier's charges for CMRS and one hundred percent (100%) of the
toll charges pursuant to Exhibit C. The amount of the
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charges for the use of each Serving Carrier's Service are set forth in Exhibit C
attached to this Agreement.
ARTICLE VI
EXCHANGE OF INFORMATION
-----------------------
6.1 Exhibit D to this Agreement is a list furnished by the respective
Parties of the valid NPA/NXX combinations used by their respective Customers.
These combinations shall be accepted by the other Party. Each NPA/NXX
combination is and shall be within the entire line range (0000-9999), or a
specified portion thereof. The minimum line range to be exchanged by the Parties
shall be 1,000 line numbers. Each Party shall be responsible for all billings
otherwise properly made under this Agreement to any number listed by such Party
within the range or ranges specified by it in Exhibit D. Additions, deletions,
or changes to NPA/NXX combinations and line number range(s) for the Home
Carrier's Customers may be made upon at least fifteen (15) days prior written
notice to the Serving Carrier. Such notice shall be in the form attached as
Exhibit D to this Agreement and shall include the requested effective date for
the addition, deletion or change. The provisions of this Section 6.1 are subject
to the provisions of Section 3.3 with respect to the specific NPA/NXXs addressed
in that Section.
6.2 Each Party shall provide to the other Party a list of MINs (from
among those within the NPA/NXX combination(s) identified pursuant to Section 6.1
hereof) and ESNs (of the telephones to which the other Party is not authorized
to provide Service pursuant to this Agreement), which shall be entered into the
Industry Negative File. The approved CIBERNET Negative File Guidelines, as
amended from time to time, shall be the governing criteria for the Parties.
Thereafter, from time to time, as agreed by the Parties, each Party shall notify
each other Party of all additions to, and deletions from, these lists for the
Customers of that particular Party. Such notifications shall be made during
normal business hours of the Party being notified by facsimile or by telephone
with a written confirmation and shall be effective one (1) hour after receipt.
6.3 Each Party hereby agrees to indemnify the other Party, together
with its partners and any and all of their officers, directors, employees,
agents and/or affiliates, against, and hold them harmless from, any and all
claims, suits, demands, losses and expenses, including reasonable attorneys'
fees and disbursements, which may result in any way whatsoever from the
indemnified Party's denial of Roamer or local Service to any NPA/NXX and MIN
combination which has been listed by the indemnifying Party as not being
authorized to receive Service.
6.4 Customers from the lists as referred to in Section 6.2 hereof, but
in all such cases, such purging or deletion must be done in accordance with the
approved CIBERNET Negative File Guidelines. If purging or deletion of numbers is
done prior to the time periods established by such Guidelines, or through
procedures not otherwise set forth, in the approved CIBERNET Negative File
Guidelines, the Party implementing the purge or deletion will assume financial
liability for any charges incurred by those numbers. All purges or deletions
made pursuant to this Section 6.4 shall be given through the Parties and shall
be in the form mutually agreed upon
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by the Parties and effective as of the time established by the approved CIBERNET
Negative File Guidelines (unless otherwise modified by mutual agreement of the
Parties.)
6.5 Upon the implementation of wireless number portability in any
portion of either the AWS System or the Mercury System, the Parties shall
cooperate in establishing an alternative method for exchanging ESN, MIN, and
NPA/NXX information required to permit roaming by the other Party's Customers in
their respective systems.
ARTICLE VII
FRAUD
-----
7.1 The Parties will cooperate and, as necessary, supplement this
Agreement in order to minimize fraudulent or other unauthorized use of their
systems. If any Party reasonably decides that, in its sole judgment, despite due
diligence and cooperation pursuant to the preceding sentence, fraudulent or
other unauthorized use has reached an unacceptable level of financial loss and
is not readily remediable, such Party may suspend the use of applicable NPA/NXX
combinations, in whole or in part, pursuant to the terms of this Agreement.
7.2 Each Party shall take reasonable actions to control fraudulent
Roamer usage, including without limitation using a positive
validation/verification ("PV") system provided by a mutually agreed upon
validation/verification service under which the ESN, MIN and/or NPA/NXX used in
a call in the Serving Carrier's system is compared against a list of Authorized
Roamers. The Parties shall work together in good faith to implement a PV system
and enhancements thereto or alternative systems as they shall agree in the
future. The Home Carrier shall have no responsibility or liability for calls
completed by a Serving Carrier without obtaining positive
validation/verification as required herein. If the Serving Carrier provides
pre-call validation of the Home Carrier's Customers, the Home Carrier agrees to
implement Negative File Suppression at the Clearinghouse and the CIBERNET
Negative File Guidelines and procedures do not apply.
7.3 In addition to other procedures set forth in this Agreement, a Home
Carrier may notify a Serving Carrier by facsimile, with written confirmation,
that certain NPA/NXX combinations are not to receive Service. Any calls
completed using such NPA/NXX combinations made one full business day or more
after such notice has been given shall be the sole responsibility of the Serving
Carrier, and the Home Carrier shall not be charged any amount for such calls.
7.4 Each Serving Carrier shall use commercially reasonable efforts to
provide each Home Carrier with real-time visibility of call detail records
delivered through a network compatible with AWS's network. Such information
shall be delivered within one hour of the applicable call. In the event that the
Serving Carrier provides such a real-time visibility system, the Serving Carrier
shall not be liable in any event for a temporary failure of the system unless
the Serving Carrier has been notified of such failure by the Home Carrier and
the Serving Carrier does not take commercially reasonable steps to remedy the
failure. If the Serving Carrier has been so notified and has failed to take such
commercially reasonable steps, the Serving Carrier
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shall be liable for all unauthorized usage attributed to Home Carrier's
subscribers during the period from the time Serving Carrier was notified of the
problem to the time that the problem has been resolved to the reasonable
satisfaction of the Home Carrier.
7.5 For purposes of notification under this Article VII, the following
addresses and facsimile numbers shall be used:
If to AWS: AT&T Wireless Services, Inc.
5000 Carillon Point
Kirkland, WA 98033
Attn: Billing and ICS Operations
Tel. No. 425-827-4500
Fax No. 425-828-1390
If to Tritel: Tritel, Inc.
1080 River Oaks Drive
Suite B-100
Jackson, MS 39208
Attn: Chief Executive Officer
Tel. No. 601-936-0893
Fax No. 601-936-6045
Each Party may change the names, addresses and numbers set forth above
by providing notice to the other Party as provided in Article XVI below.
ARTICLE VIII
BILLING
-------
8.1 Each Home Carrier shall be responsible for billing to, and
collecting from, its own Customers all charges that are incurred by such
Customers as a result of service provided to them as Authorized Roamers by the
Serving Carrier. The Home Carrier shall also be responsible for billing its
Customers for, and remitting to, the Federal Government all federal excise tax
that may be due in connection with the service being billed by it to its
Customers. While the Serving Carrier will be responsible for the computation and
remittance of all state and local taxes, each Home Carrier shall be liable to
the Serving Carrier for all such state and local taxes remitted by the Serving
Carrier, for Authorized Roamers regardless of whether these amounts are paid to
the Home Carrier by its Customers.
8.2 Each Serving Carrier who provides Service to an Authorized Roamer
pursuant to this Agreement shall forward Roamer billing information, within five
business days of the call date, in accordance with the procedures and standards
set forth in the CIBER Record to the Home Carrier's Authorized Receipt Point.
CIBER Type 50 and CIBER Type 70 records shall not be accepted without mutual
signed agreement and if such mutual agreement is reached it will be attached to
this Agreement. Any future revisions of the CIBER Record or additional record
types must be mutually agreed upon before implementation. In the event the
parties use the
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CIBERNET Net Settlement Program, or alternative settlement program such
information must be in a format in compliance with the CIBER Record requirements
or agreed upon format.
8.3 Where the Authorized Roamer billing information required to be
provided by the Serving Carrier in accordance with Section 8.2 above is not in
accordance with the CIBER Record, the Home Carrier may return a record to the
Serving Carrier as provided in the CIBER Record. Returning the defective record
will be in accordance with CIBER Record established procedures. The Serving
Carrier may correct the defective record and return it to the Home Carrier for
billing, provided that the time period from the date of the Service call at
issue to the receipt of the corrected record does not exceed sixty (60) days.
8.4 No credit for insufficient data or defective records shall be
permitted except as provided in Section 8.3 above, unless mutually agreed upon
by both Parties.
8.5 Each Home Carrier may at its discretion perform any necessary edits
at its Clearinghouse on incollect or outcollect call records to ensure
compliance with the terms of this Agreement.
ARTICLE IX
SETTLEMENT
----------
9.1 Each Party will settle its accounts with the other Parties on the
basis of billing information received as described in this Article IX. In the
event both Parties use a net financial settlement procedure, the Parties shall
not submit a paper invoice but will make payments in accordance with such net
financial settlement procedures provided that the Parties may submit call
records for payment that relate to calls made more than sixty (60) days from the
date of the call if such call was the subject of a dispute or investigation
regarding fraudulent or unauthorized use.
9.2 If an incorrect roaming rate is charged by the Serving Carrier to
the Home Carrier, the Serving Carrier shall refund all amounts in excess of the
contract rate back to the Home carrier within forty five days of notification by
the Home Carrier. Each carrier shall have ninety (90) days from the end of the
settlement period to invoice for amounts in excess of the contract rate. The
Home Carrier will send a collection letter within sixty (60) days of the invoice
date, within ninety (90) days of the invoice date, and within one hundred (120)
days of the invoice date. If the invoice remains unpaid after one hundred twenty
(120) days from the original invoice date, the Home Carrier may withhold the
amounts from the CIBERNET Net Settlement Program or alternative settlement
program.
9.3 In the event that either Party does not use a net financial
settlement procedure, the billing and payment for charges incurred under this
Agreement shall be as set forth below.
9.3.1 The parties shall determine amounts owed to each other for
Service provided to Roamers in one-month periods with the end of such period
beginning on the sixteenth of each calendar month and ending on the fifteenth of
the following month in which Service is provided. The end of this Period shall
be referred to as "Close of Billing."
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9.3.2 The Parties shall send each other an invoice for Services
used under this Agreement within fifteen (15) days after the Close of Billing.
9.3.3 Each invoice shall contain the following information.
a. Billing period used by Serving Carrier
b. Batch sequence number
c. Serving and Home Carrier System Identification Number
d. Air Service charges
e. Total toll charges (both intrastate and interstate)
f. All other charges and credits
g. Total taxes
h. Total charges
9.3.4 Payment on such invoices shall be made in the form of a check
or a wire transfer which must be received by the invoicing party within thirty
(30) days from the date of the invoice. Late payments shall be charged with a
late payment fee of one and one half percent (1.5%) of the outstanding balance
for each thirty-day period (or portion thereof) that such payments are late.
9.3.5 Each Party may offset the amount owed to the other Party
under this Agreement and a single payment of the balance to the Party entitled
to receive such balance shall be made.
ARTICLE X
INTEROPERABILITY
----------------
10.1 The Parties agree that their respective obligations under this
Agreement related to the interoperability of their Systems shall be construed in
accordance with the following general principles:
10.1.1 The Parties agree, confirm and acknowledge that one of their
primary objectives in entering into this Agreement is to promote the
establishment and operation throughout the United States of a mobile wireless
service that is TDMA-based and that will appear to their respective subscribers
as a single Mobile Wireless System with a common User Interface pertaining to
the Adopted Features, and that they intend to achieve such purpose and objective
as set forth in, and subject to the terms and conditions of, this Agreement.
10.1.2 The Parties agree that each of their respective obligations,
duties, rights and entitlements pursuant to this Agreement shall be interpreted,
to the extent such interpretation is required to resolve any dispute or
uncertainty concerning this Agreement, in a manner that is reasonably consistent
with, and which reasonably supports, the purpose and objective of this Agreement
as set out in Section 10.1.1.
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10.1.3 The Parties agree that they each shall, in good faith, work
together, cooperate, and use the rights that they each have granted the other
under this Agreement for the purposes set out in Section 10.1.1 and on the terms
and conditions of this Agreement.
10.2 The Parties each acknowledge and confirm that their digital
standard for their respective Systems is currently (as of the Effective Date)
TDMA. In addition, Tritel shall maintain its commitment to TDMA as Tritel's
digital standard for the Mercury System for so long as, and to the extent that,
AWS maintains its commitment to TDMA as AWS's digital standard. AWS agrees that
in the event it may exercise its discretion to no longer remain committed to
TDMA as its digital standard, it shall inform Tritel of that decision by no
later than six months prior to the implementation of any non-compatible
interface. Upon the implementation of any such non-compatible interface, Section
2.5 of this Agreement shall immediately terminate.
10.3 Each of the Parties agrees that it shall operate and support
its TDMA-based System, to the extent and in substantially all of the geographic
area in which installed, to ensure that the other Party's Customers can use the
Adopted Features when roaming on the Serving Carrier's System in the same manner
that such Customers use such Adopted Features on the Home Carrier's System.
10.3.1 Each Party shall, at its own expense and from the date that
operation of its TDMA-based System commences, implement the Core Features.
10.3.2 Each Party shall, at its own expense, implement those Future
Core Features listed on Schedule E-2 to Exhibit E in accordance with the
schedule set forth in Schedule E-2. Each Party shall, at its own expense,
implement such additional Future Core Features that are agreed upon by the
Parties within one (1) year after the General Availability of such Future Core
Features, provided that, and subject to such Party's determination, in its sole
and absolute discretion, that such implementation is both financially feasible
and economically viable, and consistent with such Party's objective of
maximizing its financial performance. In the event that a Party opts not to
adopt a Future Core Feature in accordance with this Section 10.3.1, it shall
promptly notify the other Party of that decision. Future Core Features shall be
implemented in accordance with this Section in the areas specified for each
respective Party in Section 10.3.1.
10.3.3 Each Party shall have the right, in its sole discretion to
adopt and implement (at such Party's own expense) Additional Features upon
reasonable prior written notice to the other Party, but the other Party shall
have no obligation to support any Additional Features.
10.3.4 Tritel shall comply with the network Standards with respect
to the Core Features and Future Core Features that are set out in Schedule E-3
to Exhibit E attached hereto.
10.3.5 In addition to and without affecting the standards
established pursuant to Article IV, the Customer service Standards with which
the Parties shall comply with respect to the Core Features and Future Core
Features shall be subject to the mutual agreement of both of
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AWS and Tritel. Tritel and AWS agree that they shall, promptly after the
Effective Date, negotiate such Standards in good faith.
10.4 In order to facilitate performance by each of the Parties of their
obligations under this Article X, the Parties agree to exchange and share
information with each other as follows, except that nothing contained herein
shall be construed to require a Party to exchange information that the Party
considers confidential or proprietary:
10.4.1 Subject to Article XVII of this Agreement, the Parties shall
provide each other, on a reasonably prompt basis, with all information and
materials that either has a right to disclose that is necessary to meet the
interoperability standards set forth in this Article X, including without
limitation the following information:
System Engineering:
Minimum Standards for Systems
Features:
Capability description of present Core Features and other Features
o User Interface (codes)
o Implementation procedures
o Roaming requirements
o Feature functionality design documents
Research and Development:
o operational test results
o operational defects and bugs
o remedial/back-up plans
o operational, functional and technical specifications
o all related documentation
o systems integration
10.4.2 Each Party agrees that it shall, in performing its
obligations to provide the other Party with information in accordance with
Section 10.4, act reasonably, and in good faith toward the other Party.
10.4.3 Nothing contained herein is intended or should be construed
to constitute the transfer or grant by one Party to the other of any ownership,
license, or other rights of or to any trade secret, know-how, or other
intellectual property by one Party to the other.
10.5 Each Party shall provide for automatic call delivery for Customers
of the other Party who are Roamers in such Party's system. To this end, each
Party shall continuously provide the hardware, software and transmission
facilities required for such call delivery either directly between the systems
of the Parties or indirectly through a separate network of wireless
communications carriers. The hardware, software and transmission facilities
provided by each
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Party hereunder shall at all times be operated and maintained to provide the
most efficient level of service that is technically feasible and commercially
reasonable to minimize transmission errors and Service interruptions.
10.6 To the extent that each Home Carrier's Customers may use the
system of a Serving Carrier, the Parties shall provide for automatic call
hand-off between such Home and Serving Carrier's systems. To this end, each
Party shall continuously provide the hardware, software and transmission
facilities required for such call hand-off either directly between the systems
of such Home and Serving Carrier or indirectly through a separate network of
wireless communications carriers. The hardware, software and transmission
facilities provided by each Party hereunder shall at all times be operated and
maintained to provide the most efficient level of service that is technically
feasible and commercially reasonable to minimize transmission errors and Service
interruption.
10.7 The Parties will work together to evaluate the economic advantage
of various switch linking options to interconnect and facilitate networking of
the Parties' respective Systems as required by this Agreement. Should the
Parties agree to install and maintain linking facilities, the cost of the
linking facilities shall be allocated pursuant to the following provisions:
10.7.1 AWS and Tritel will each pay one-half of the equipment costs
for the establishment of microwave facilities to link the Parties' respective
Systems for the purposes of automatic call delivery and automatic call hand-off.
Each Party is solely responsible for the costs of preparing its own facilities
for the System link.
10.7.2 Equipment costs for the establishment of a landline link
(T-1) to link the Parties' respective Systems together for these purposes shall
be split between the Parties as follows:
(a) AWS and Tritel shall each pay one-half of the cost for the
installation, use, modification, or discontinuance of the linking facilities.
Each party is solely responsible for all costs to prepare its own facilities for
the link between the Systems.
(b) For ease of administration, AWS will order and be the
customer of record ("COR") for such facilities. Tritel will reimburse AWS
monthly for its share of the recurring costs of such facilities. The COR shall
be responsible for invoicing the other Party for its share of the costs, with
payment due within 30 days of receipt of the invoice.
10.7.3 .7.3 The Parties agree that this Section 10.7 relates only
to those costs necessary to establish the referenced facilities. This section is
not applicable to the allocation of costs with respect to the provision of
service for each Parties Customers.
10.8 The Parties acknowledge that they do not currently have the
technical systems in place to allocate charges for cellular service provided by
a Carrier when a Customer's call is handed off from one System to another. The
Parties agree that the revenues and costs for a call belong to the Party whose
System operates the originating Cell Site (the "Bill and Keep System").
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10.9 Neither of the Parties will be liable for nonperformance or
defective performance of its obligations under this Article X to the extent and
for such periods of time as such nonperformance or defective performance is due
to reasons outside such Party's control, including, without limitation, acts of
God, war, acts of any governmental authority, riots, revolutions, fire, floods,
explosions, sabotage, nuclear incidents, lightning, weather, earthquakes,
storms, sinkholes, epidemics, strikes, or delays of suppliers or subcontractors
for the same causes. Neither Party shall be required to settle any labor dispute
in any manner which is deemed by that Party to be less than totally
advantageous, in that Party's sole discretion.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
------------------------------
11.1 AWS hereby represents and warrants to Tritel that:
11.1.1 AT&T Wireless is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware. AT&T
Wireless has all requisite power and authority to execute and deliver this
Agreement and to cause this Agreement to be the binding obligation, to the
extent provided herein, of those of its Affiliates listed on Schedule 1 or added
to Schedule 1 hereafter in accordance with Section 2.4.
11.1.2 This Agreement is the legal, valid, and binding obligation
of AT&T Wireless, enforceable against AT&T Wireless in accordance with its
terms, except that such enforceability may be subject to (a) bankruptcy,
insolvency, reorganization, moratorium, or other similar laws now or hereafter
in effect relating to creditors' rights generally and (b) equitable principles
of law and the discretion of any court or arbitral body before which any related
proceeding may be brought.
11.1.3 The execution, delivery, and performance of this Agreement
by AT&T Wireless does not and will not conflict with or result in a material
default, suspension, or termination of any agreement, contract, obligation,
license, or authorization with or granted by any third party or governmental
body.
11.2 Tritel hereby represents and warrants to AWS that:
11.2.1 Tritel is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware. Tritel has all
requisite power and authority to execute and deliver this Agreement and to cause
this Agreement to be the binding obligation, to the extent provided herein, of
those of its Affiliates listed on Schedule 2 or added to Schedule 2 hereafter in
accordance with Section 2.4.
11.2.2 This Agreement is the legal, valid, and binding obligation
of Tritel, enforceable against Tritel in accordance with its terms, except that
such enforceability may be subject to (a) bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or hereafter in effect
relating to creditors' rights generally and (b) equitable principles of law and
the discretion of any court or arbitral body before which any related proceeding
may be brought.
15
<PAGE>
11.2.3 The execution, delivery, and performance of this Agreement
by Tritel does not and will not conflict with or result in a material default,
suspension, or termination of any agreement, contract, obligation, license, or
authorization with or granted by any third party or governmental body.
ARTICLE XII
TERM, TERMINATION AND SUSPENSION OF AGREEMENT
---------------------------------------------
12.1 This Agreement shall have a term commencing on the Effective Date
and continuing for a period of twenty (20) years. Thereafter, this Agreement
shall continue in force on a month-to-month basis unless either party terminates
the Agreement by written notice to the other party given at least 90 days prior
to the date of termination. Otherwise, this Agreement may be terminated or
suspended only as provided in this Article XII.
12.2 This Agreement may be terminated or suspended by either Party
immediately upon written notice to the other of a Default by the other Party. In
addition, either Party may suspend this Agreement immediately upon written
notice to the other Party pursuant to Section 13.1.1 of the existence of a
breach of this Agreement which materially affects the Service being provided to
Customers of the non-breaching Party. While any suspension is in effect, the
obligations of the Parties shall be only those that survive termination and to
work together to resolve as expeditiously as possible any difficulty that
resulted in a suspension. At such time as the Party originally giving notice of
suspension concludes that the problem causing the suspension has been resolved,
that Party shall give to the other written notice to this effect. This Agreement
shall resume in full effect within five (5) business days after the Parties have
mutually agreed that the problem has been resolved.
12.3 The Parties shall cooperate to limit the extent and effect of any
suspension of this Agreement to what is reasonably required to address only the
cause of such suspension. In such event, the notifying Party shall defend,
indemnify and hold harmless the other Party and the other Party's officers,
directors, employees, agents and representatives from any claims by any person
or entity relating to such suspension of Service.
12.4 In the event that a Party transfers control of an Affiliate listed
in Schedule 1 or Schedule 2, as the case may be, the Party shall provide at
least four months' prior written notice to the other Party and upon such
transfer such Affiliate shall be deleted from the appropriate Schedule, but
doing so will not relieve a Party of its obligations under Section 14.1.
12.5 The termination or suspension of this Agreement shall not affect
the rights and liabilities of the Parties under this Agreement with respect to
all Authorized Roamer charges incurred prior to the effective date of such
termination or suspension.
16
<PAGE>
ARTICLE XIII
DEFAULT
-------
13.1 A Party will be in "Default" under this Agreement upon the
occurrence of any of the following events:
13.1.1 Material breach of any material term of this Agreement, if
such breach shall continue for thirty (30) days after receipt of written notice
thereof from the nonbreaching Party;
13.1.2 Voluntary liquidation or dissolution or the approval by the
board of directors or stockholders of a Party of any plan or arrangement for the
voluntary liquidation or dissolution of the Party;
13.1.3 A final order by the FCC revoking or denying renewal of CMRS
licenses or permits granted to such Party which, individually or in the
aggregate, are material to the business of such Party; or
13.1.4 Such Party (i) filing pursuant to a statute of the United
States or of any state, a petition for bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee for all or a
portion of such Party's property, (ii) has filed against it, pursuant to a
statute of the United States or of any state, a petition for bankruptcy or
insolvency or for reorganization or for the appointment of a receiver or trustee
for all or a portion of such Party's property, provided that within sixty (60)
days after the filing of any such petition such Party fails to obtain a
discharge thereof, or (iii) making an assignment for the benefit of creditors or
petitioning for, or voluntarily entering into, an arrangement of similar nature,
and provided that such filing, petition, or appointment is still continuing.
13.2 All claims and disputes relating in any way to the performance,
interpretation, validity, or breach of this Agreement, including but not limited
to a claim based on or arising from an alleged tort, shall be resolved as
provided in this Section 13.2. It is the intent of the Parties that any
disagreements be resolved amicably to the greatest extent possible.
13.2.1 If a disagreement cannot be resolved by the representatives
of the Parties with day-to-day responsibility for this Agreement, such matter
shall be referred to an executive officer of each of the Parties. The executive
officers shall conduct face-to-face negotiations at a neutral location or such
other location as shall be mutually agreed upon. If these representatives are
unable to resolve the dispute within ten business days after either Party
requests the involvement of the executive officers, then either Party may, but
is not required to, refer the matter to mediation or arbitration, as applicable
in accordance with Sections 13.2.2 and 13.2.3.
13.2.2 In any case where the amount claimed or at issue is One
Million Dollars ($1,000,000) or more and the Parties are unsuccessful in
resolving the disagreement, the Parties agree to submit the disagreement to
non-binding mediation upon written notification by either Party. The Parties
shall mutually select an independent mediator experienced in telecommunications
system disputes. The specific format for the mediation shall be left to the
discretion of the mediator. If mediation does not result in resolution of the
disagreement within
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thirty days of the initial request for mediation, then either Party may, but is
not required to, refer the matter to arbitration.
13.2.3 Any disagreement not finally resolved in accordance with the
foregoing provisions of this Section 13.2 shall, upon written notice by either
Party to the other, be resolved by final and binding arbitration. Subject to
this Section 13.2.3, such arbitration shall be conducted through, and in
accordance with the rules of, JAMS/Endispute. A single neutral arbitrator shall
decide all disputes. Each Party shall bear its own expenses with respect to the
arbitration, except that the costs of arbitration proceeding itself, including
the fees and expenses of the arbitrator, shall be shared equally by the Parties.
The arbitration shall take place in a neutral location selected by the
arbitrator. The arbitrator may permit discovery to the full extent permitted by
the Federal Rules of Civil Procedure or to such lesser extent as the arbitrator
determines is reasonable. The arbitrator shall be bound by and strictly enforce
the terms of this Agreement. The arbitrator shall make a good faith effort to
apply applicable law, but an arbitration decision and award shall not be subject
to review because of errors of law. The arbitrator shall have the sole authority
to resolve issues of the arbitrability of any disagreement, including the
applicability or running of any applicable statute of limitation. The arbitrator
shall not have power to award damages in connection with any dispute in excess
of actual compensatory damages nor to award punitive damages nor any damages
that are excluded under this Agreement and each party irrevocably waives any
claim thereto. The award of any arbitration shall be final, conclusive and
binding on the Parties. Judgment on the award may be entered in any court having
jurisdiction over the Party against which the award was made. Nothing contained
in this Section 13.2.3 shall be deemed to prevent either party from seeking any
interim equitable relief, such as a preliminary injunction or temporary
restraining order, pending the results of the arbitration. The United States
Arbitration Act and federal arbitration law shall govern the interpretation,
enforcement, and proceedings pursuant to the arbitration clause in this
Agreement.
ARTICLE XIV
SUCCESSORS AND ASSIGNS
14.1 Neither Party may, directly or indirectly, sell, assign, transfer,
or convey its interest in this Agreement or any of its rights or obligations
hereunder, including any assignment or transfer occurring by operation of law,
without the written consent of both Parties, except that (i) either Party may
assign or delegate this Agreement or any of its rights or obligations hereunder
to an Affiliate of such Party without the consent of the other Party, but such
assignment or delegation will not relieve the Party of any of its obligations
hereunder and (ii) in the event that a Party sells, assigns or transfers control
of any System or portion thereof operated by the Party, including any Affiliate
listed on Schedule 1 or 2, it shall be a condition to such transfer that the
transferee assumes this Agreement insofar, and only insofar, as it relates to
the operation of the transferred System or portion thereof and the transferee
shall have no right to extend the provisions of this Agreement to any other
operations of the transferee.
14.2 No person other than a Party to this Agreement shall acquire any
rights hereunder as a third-party beneficiary or otherwise by virtue of this
Agreement.
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<PAGE>
ARTICLE XV
NO PARTNERSHIP OR AGENCY RELATIONSHIP IS CREATED
------------------------------------------------
Nothing contained in this Agreement shall constitute the Parties as
partners with one another or render any Party liable for any debts or
obligations of any other Party, nor shall any Party hereby be constituted the
agent of the other Party.
ARTICLE XVI
NOTICES AND AUTHORIZED REPRESENTATIVES
--------------------------------------
Unless otherwise provided herein, any notice, request, instruction or
other document to be given hereunder by any Party to the other shall be in
writing and delivered by hand delivery, certified mail (postage prepaid, return
receipt requested), telex, facsimile, or overnight air delivery service, as
follows:
If to AWS, to: AT&T Wireless Services, Inc.
5000 Carillon Point
Kirkland, WA 98033
Attn: Intercarrier Services
with a copy to: AT&T Wireless Services, Inc.
5000 Carillon Point
Kirkland, WA 98033
Attn: Legal Department
If to Tritel, to: Tritel, Inc.
1080 River Oaks Drive
Suite B-100
Jackson, MS 39208
Attn: Chief Executive Officer
Copy to: Cheryl McCullouch
Tel. No. 601-936-0893
Fax No. 601-936-6045
or such other address as any Party may from time to time furnish to the other
Party by a notice given in accordance with the terms of this Section. All such
notices and communications shall be deemed to have been duly given at the time
delivered by hand, if personally delivered; three business days after being
deposited in the mail, if mailed; when receipt is confirmed, if by facsimile and
received by 3:00 p.m. local time on any business day and otherwise on the next
business day; and the next business day if sent by overnight air delivery
service.
19
<PAGE>
ARTICLE XVII
CONFIDENTIALITY
---------------
17.1 Each Party shall, and shall cause each of its Affiliates and each
of its and their employees, agents, and contractors, to keep confidential and
not use for any purpose except as contemplated by this Agreement, any and all
information and know-how provided to it by the other Party which is identified
in writing as confidential ("Confidential Information"). Identification of
information as confidential shall, in the case of information delivered in
tangible form, appear on at least the face or first page of such information
and, in the case of information communicated verbally, be given verbally
contemporaneously with the delivery of the information and confirmed in writing
within five business days thereafter. Notwithstanding the foregoing, the
following information shall be treated as Confidential Information without any
further identification as such: (i) The terms, but not including the mere
existence, of this Agreement; and (ii) all information exchanged pursuant to
Article VI.
Notwithstanding Section 17.1, a Party shall have no obligation to keep
confidential any information that (a) was rightly in the receiving Party's
possession before receipt from the disclosing Party, (b) is or becomes a matter
of public knowledge without violation of this Agreement by the receiving Party,
(c) is rightfully received by the receiving Party from a third party rightfully
in possession of, and with a right to make an unrestricted disclosure of such
information, (d) is disclosed by the disclosing Party to a third party without
imposing a duty of confidentiality on the third party, or is independently
developed by the receiving Party without the use of any Confidential
Information. In addition, a Party may disclose any Confidential Information to
the extent required by applicable law or regulation or by order of a court or
governmental agency; provided, that prior to disclosure the Party shall use all
reasonable efforts to notify the other Party of such pending disclosure and
shall provide any reasonable assistance requested by the other Party to maintain
the confidentiality of the information.
17.2 The Parties agree that a Party will not have an adequate remedy at
law in the event of a disclosure or threatened disclosure of Confidential
Information in violation of this Article XVII. Accordingly, in such event, in
addition to any other remedies available at law or in equity, a Party shall be
entitled to specific enforcement of this Article XVII and to other injunctive
and equitable remedies against such breach without the posting of any bond.
17.3 The obligations under this Article XVII shall survive the
termination of this Agreement for a period of three years.
ARTICLE XVIII
MISCELLANEOUS
-------------
18.1 The Parties agree to comply with, conform to, and abide by all
applicable and valid laws, regulations, rules and orders of all governmental
agencies and authorities, and agree that this Agreement is subject to such laws,
regulations, rules and orders. All references in this Agreement to such laws,
regulations, rules and orders include any successor provision. If any
20
<PAGE>
amendment to or replacement of the same materially alters the benefits, rights,
and duties of the Parties hereunder, the Parties agree to negotiate in good
faith an amendment to this Agreement to restore the respective positions of the
Parties to substantially the same point as existed prior to such amendment or
replacement.
18.2 The Parties agree to use their respective best, diligent, and good
faith efforts to fulfill all of their obligations under this Agreement. The
Parties recognize, however, that to effectuate all the purposes of this
Agreement, it may be necessary either to enter into future agreements or to
amend this Agreement, or both. In that event, the Parties agree to negotiate
with each other in good faith.
18.3 This Agreement constitutes the full and complete agreement of the
Parties with respect to the subject matter hereof. Any prior agreements among
the Parties with respect to this subject matter are hereby superseded. This
Agreement may not be amended, except by the written consent of the Parties.
Waiver of any breach of any provision of the Agreement must be in writing signed
by the Party waiving such breach or provision and such waiver shall not be
deemed to be a waiver of any preceding or succeeding breach of the same or any
other provision. The failure of a Party to insist upon strict performance of any
provision of this Agreement or any obligation under this Agreement shall not be
a waiver of such Party's right to demand strict compliance therewith in the
future.
18.4 The headings in this Agreement are inserted for convenience and
identification only and are not intended to describe, interpret, define or limit
the scope, extent or intent of this Agreement or any provision thereof.
18.5 This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same Agreement.
18.6 This Agreement shall be construed in accordance with the internal
laws of the State of Delaware without reference to the choice of law principles,
except as subject to the United States Arbitration Act and the Federal
Communications Act.
18.7 Except for claims by third parties which fall within the scope of
a Party's indemnification obligations, neither Party shall be liable to the
other Party for any special, indirect or consequential damages.
18.8 The Parties agree that they will not use the name, service marks
or trademarks of the other party or any of its Affiliates in any advertising,
publicity releases or sales presentations, without such Party's written consent.
Neither Party is licensed hereunder to conduct business under any logo,
trademark, service or trade name (or any derivative thereof) of the other Party.
18.9 No Party shall make any public statement or issue any press
release concerning the terms of this Agreement except as necessary to comply
with requirements of any law, regulation, or the order or judgment of a court or
tribunal of competent jurisdiction. If any such public statement or release is
so required, and AWS and Tritel mutually agree to such statement or release, the
Party making such disclosure shall consult with the other Party prior to making
such statement or release and the Party shall use all reasonable efforts, act in
good faith, to agree upon a text for such statement or release which is
satisfactory to AWS and Tritel. Nothing
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<PAGE>
contained herein is intended to limit the ability of the Parties to make
statements regarding the availability to such Party's Customers of the Services
to be provided hereunder by the other Party or that such other Party is the
provider of such Services.
EXECUTED as of the date first written above.
AT&T WIRELESS SERVICES, INC. TRITEL, INC.
By By
---------------------------- ----------------------------
Name Name
--------------------------- ---------------------------
Title Title
--------------------------- ---------------------------
22
<PAGE>
SCHEDULE 1
AT&T MARKETS
[See attached]
<PAGE>
SCHEDULE 2
AFFILIATES OF TRITEL, INC.
TRITEL HOLDING CORP., a Delaware corporation
TRITEL FINANCE, INC., a Delaware corporation
Tritel Communications, Inc., a Delaware corporation
TRITEL C/F HOLDING CORP., a Delaware corporation
AIRCOM PCS, INC., an Alabama corporation
QUINCOM, INC., an Alabama corporation
DIGICOM, INC., a Delaware corporation
DIGICALL, INC., a Delaware corporation
TRITEL A/B HOLDING CORP., a Delaware corporation
NEXCOM, INC., a Delaware corporation
CLEARCALL, INC., a Delaware corporation
GLOBAL PCS, INC., a Delaware corporation
CLEARWAVE, INC., a Delaware corporation
DIGINET PCS, INC., a Delaware corporation
<PAGE>
SCHEDULE 3
TRITEL MARKETS
[See Attached]
<PAGE>
EXHIBIT A
CUSTOMER SERVICE
Promptly following the execution of this Agreement, AWS and Tritel shall
negotiate in good faith the applicable customer service standards, with a goal
of reaching agreement thereon by April 1, 1999.
<PAGE>
EXHIBIT B
[intentionally left blank]
<PAGE>
EXHIBIT C
SERVICE CHARGES
SERVICE RATES:
- --------------
Airtime:
--------
1st - 3rd Yr: [Confidential Treatment Requested] per minute or partial minute
4th - 20th Yr: The Average [Confidential Treatment Requested] per minute,
whichever is less.
Toll:
-----
[Confidential Treatment Requested] per minute for interLATA or such other
reciprocal lower rate as the Parties negotiate from time to time in light of
cost adjustments and the actual toll charges charged by AWS to its customers for
such calls; provided, however, that, in no event shall the per minute interLATA
rate paid to a Party be less than the per minute rate paid by it to an
unaffiliated third party for interLATA service, plus [Confidential Treatment
Requested].
[Confidential Treatment Requested] per minute for intraLATA or such other
reciprocal lower rate as the Parties negotiate from time to time in light of
cost adjustments and the actual toll charges charged by AWS to its customers for
such calls; provided, however, that, in no event shall the per minute intraLATA
rate paid to a Party be less than the per minute rate paid by it to an
unaffiliated third party for intraLATA service, plus [Confidential Treatment
Requested].
Rate Reductions:
----------------
After the expiration of the first three years, and each annual anniversary
thereafter, the Parties shall negotiate in good faith roaming rates which are
reasonably competitive with comparable telecommunications providers and the
actual charges by AWS to its customers for such roaming calls. At no time shall
the toll or airtime rates be increased.
TAXES:
- ------
Amount charged Serving Carrier by applicable taxing authority.
Miscellaneous:
--------------
Service rates are charged in full minute increments with each partial minute
rounded to the next full minute. Neither Party shall be charged for incomplete
calls, busy calls, feature activations, 611, #611 or interconnect fees.
No later than thirty (30) days prior to each anniversary date of this Agreement,
each Party shall review the Service rates it offers to similarly-situated
facilities-based wireless carriers ("Other Carriers") under similar Intercarrier
Roamer Service Agreements. In the event that a Party charges such an Other
Carrier a lower Service rate than it charges the other Party under this
Agreement, then the Service rates set forth in this Agreement shall be amended
by the Parties to include the lower rate, effective upon the anniversary date
after which the rate review was made.
<PAGE>
Definitions:
------------
"Average Home Rate" means the average AWS revenues from access and airtime
divided by the applicable AWS minutes of use.
<PAGE>
EXHIBIT D
TECHNICAL DATA
METHODS AND PROCEDURES
The following information is furnished by___________ to __________
pursuant to Section 6.1 of the Intercarrier Roamer Service Agreement between
AT&T Wireless Services, Inc. and _____________________, by __________________:
- --------------------------------------------------------------------------------
NPA/NXX LINE RANGE SID/BID CITY START DATE END DATE
- --------------------------------------------------------------------------------
By:_________________________
Title:________________________
Issue Date:___________________
The effective date shall be
- ----------------------------
<PAGE>
EXHIBIT E
INTEROPERABILITY STANDARDS
<PAGE>
Schedule E-1
Core Features
-------------
Below is a list and description of the Core Features to be implemented in
accordance with this Agreement. These definitions are functional descriptions of
the Core Features that shall be implemented.
1. CALL DELIVERY
This capability permits a customer to receive incoming calls to his or her
phone while in his or her home market or while roaming in any part of the
Parties' respective Systems (together, the "Mobile Wireless System").
2. ROAMING - DO NOT DISTURB
This capability permits a Customer, who would normally receive all incoming
calls while visiting a mobile switching center that is part of the Mobile
Wireless System, to temporarily inhibit the delivery of such calls. Activating
this capability has no impact on the Customer's ability to originate calls or on
the Customer's ability to receive calls via the roamer access ports.
3. CALL FORWARDING
A. CALL FORWARDING IMMEDIATE
This capability permits a Customer to send all incoming calls destined for
the Customer's phone to another phone number specified by the Customer.
Activating this capability has no impact on the Customer's ability to
originate calls. When this capability is activated, calls are forwarded
regardless of whether the Customer is located within his or her local market
or whether the customer is roaming outside of such local market.
B. CALL FORWARDING BUSY
This capability permits a Customer to send all incoming calls destined for
his or her phone to another phone number specified by the Customer when the
Customer is engaged in a call.
C. CALL FORWARDING NO ANSWER
This capability permits a Customer to send all incoming calls destined for
his or her phone to another phone number specified by the Customer when the
Customer does not answer or when the Customer's phone does not respond to a
page.
4. CALL WAITING
This capability permits a Customer to receive incoming calls even though a
call may already be in progress.
<PAGE>
5. VOICEMAIL
This capability forwards those Customer's incoming calls which are not
answered by the Customer, and for which no other explicit treatment has been
activated (for example, those described in item 3, above), to a voice storage
and retrieval system. This capability also permits a Customer to subsequently
retrieve messages from the Customer's voice mail box.
6. THREE WAY CALLING
This capability permits a Customer to add a third party to an active two
party call.
7. MESSAGE WAITING INDICATOR
This capability is an enhancement to voice mail, and provides the Customer
with the current status and the number of unheard voice mail messages waiting in
his or her voice mail box.
8. CALLING NUMBER IDENTIFICATION
This capability identifies for the Customer either the telephone number or
the stored name (in the phone) of the person who is calling. It also permits a
Customer to inhibit the ability of a person to whom the Customer is placing a
call from identifying either the telephone number or the name of such Customer
who is placing the call.
9. WIRELESS OFFICE SERVICE (WOS)
A. WIRELESS/PBX INTERWORKING
This capability permits WOS customers to have just one published number that
delivers all incoming calls to both the wireless and PBX phone.
B. PRIVATE NUMBER PLAN
This capability permits a defined group of customers to call defined private
network extensions by using an abbreviated unique dialing pattern (four
digit dialing).
C. PRIVATE NETWORKS
This capability permits a WOS customer to have his or her own private or
semiprivate wireless system.
D. LOCATION ID
This capability permits the Customer to identify the nature of the system
(private, public, or residential) that the Customer is using by displaying
the system's name on the phone.
<PAGE>
10. SLEEP MODE
This capability permits an IS 136 phone to operate in a power saving mode
when camping on an IS 136 system, thereby allowing the battery standby time to
increase.
11. MESSAGING
This capability will permit a caller to deliver both numeric and
alphanumeric messages of up to eighty characters to an IS 136 phone. If the
Customer to whom the message has been delivered has his or her phone off or is
not in the IS 136 coverage area, then messages are stored for future delivery.
Text Dispatch Service permits people to call an operator and dictate a
message which can then be converted to an alphanumeric message and delivered to
the customer.
Cut Through Paging permits people to send a numeric message while listening
to the customer's voicemail greeting.
E-mail messaging teleservice allowing an IS-136 phone to have an e-mail
address.
12. AUTHENTICATION
This capability allows for the validation of the IS-136 phone's identity.
<PAGE>
Schedule E-2
Future Core Features
--------------------
None
<PAGE>
Schedule E-3
Performance Standards
GENERAL OVERVIEW
This Schedule sets out the Network and Reporting Standards established pursuant
to Section 10.3.4. These Standards set out the network performance metrics and
the process by which such metrics will be established, measured and reported.
All metrics which represent a defined standard of quality for acceptable network
operations have, or will have, specific targets.
I. NETWORK STANDARDS
There are three categories of Network Standards: network quality (the `Network
Quality Category'); system performance (the `System Performance Category'); and
audio quality (the "Audio Quality Category') (each hereafter referred to
generally as a "Category'). For each Category of Network Standards, specific
metrics have been identified to measure performance in each such Category. The
detailed description of how to measure and interpret the metrics for each
Category is set out in the following AWS documents (each referred to generally
as a "Network Standards Document"), copies of which have been furnished to
licensee:
NETWORK QUALITY CATEGORY: Document ES-4034, Revision 1.1 dated July 30,
1997 entitled "Network Quality Scorecard User Guide" (as referred
to as the "Network Quality Standards Document"). This document is
a collection of key network performance and traffic indicators
(metrics) that are measured and reported on a regular basis.
Network Quality Category standards also shall include satisfaction
of the ANS Consistency Test attached to this Schedule E-3.
SYSTEM PERFORMANCE CATEGORY: OSS draft document, Revision 0.7, dated
June 17, 1997 entitled "Key Metrics for System Performance
Document" (as referred to as the "System Performance Standards
Document"). This document identifies the network-wide key metrics
for Ericsson and Lucent switching systems, as well as cell sites,
which will provide a high level assessment of the system.
AUDIOQUALITY CATEGORY: Document PP-4027E, Revision 1.1, dated May 30,
1996 entitled "Audio Quality Measurement (AQM)" (as referred to as
the "Audio Quality Standards Document"). This document provides
the basis for assessing the quality of RF transmission by
describing the standards for performing audio quality measurements
and the reporting of their results. AWS measures the metrics for
the Audio Quality Category using the "Radio Quality Scorecard".
The Radio Quality Scorecard is comprised of performance statistics
derived from driving the system using the Buzzard tool.
These Network Standards Documents are, subject to the terms and conditions of
this Agreement including, without limitation, this Schedule E-3, hereby
incorporated into and form a part of this Agreement. In the event of any
inconsistency between any part of a Network Standards Document and the
provisions of this Schedule E-3, the provisions of this Schedule E-3 shall
govern.
2
<PAGE>
Notwithstanding anything else in this Agreement including, without limitation,
this Schedule E-3, the parties acknowledge and confirm that the Network
Standards Documents represent the standards and metrics currently identified by
AWS as applicable to each Category. Target values for key quality related
metrics are contained herein and must be met.
In addition, the parties acknowledge and confirm that the Network Standards
Documents are subject to revision and such subsequent revisions to these Network
Standards Documents, as well as the Call Center Quality Standards, will
constitute an additional Category once they are formally implemented to be
complied with, in accordance with this Agreement.
Set out below is a brief description of each Category of Network Standard and
the currently established metrics for each such Category.
II. TARGETS FOR NETWORK STANDARDS
The following targets are the minimum acceptable levels that apply to key
metrics which represent overall network and system quality. These targets are
subject to revision and shall be implemented in accordance with this Agreement.
% ESTABLISHED CALLS: The percentage of call attempts to and from a
mobile phone that result in a successful voice channel assignment.
The target goal for this metric is 93%.
% DROPPED CALLS: The percentage of established calls, as defined below,
which terminate abnormally. The target goal for this metric is a
drop call rate of 1.7 % or less.
% HANDOFF FAILURES: The target goal for this metric is a handoff
failure rate of 1.5%.
FAILURES PER ERLANG: The ratio of failed calls to carried traffic,
where failed calls are measured utilizing switch counters for
originating and terminating traffic, and carried traffic is
measured in erlangs. The target goal for this metric is 1.68
SWITCH OUTAGE TIME: The amount of time (in minutes) in a month when
subscribers are impacted by a cellular switch outage. Target for
this metric is 10 minutes per switch per year, with all ten
minutes occurring the maintenance window between 12:00 am and 5:00
am.
% BLOCKING - CELL ROUTES: Percentage of time all cellular traffic
channels (voice paths in a trunk group) are unavailable within a
given measurement interval. Target for this metric is 5%.
% BLOCKING - NETWORK ROUTES: Percentage of time all network traffic
channels are unavailable within the measurement interval. Target
for this metric is 5%.
ANS CONSISTENCY TEST: The percentage of successful ANS feature
deliveries, based on the following sequence: feature
activation/deactivation (when applicable), test call, correct
response, and call termination. The target goal for this metric is
96% for all
<PAGE>
ANS features. This target metric includes feature delivery
failures due to call processing failures (i.e. call delivery, call
origination, handoff failures, or dropped calls. These failures
are estimated to be approximately 4%.)
III. REPORTING STANDARDS
Reports shall be submitted as specified in the Network Standards Documents and
as specified below:
Except as specified herein, the metric reports of Audio Quality Network
Standards required in this Schedule E-3 (the "Results") will be
submitted to AWS no less than quarterly or as otherwise specified
in the Network Standards Documents.
Reports of Results for Audio Quality Network Standards will be
submitted quarterly for markets with 10,000 or more subscribers;
for markets with less than 10,000 subscribers, Results need only
be reported on a semi-annual basis.
All reports of Results shall be submitted by the fifteenth day of the
month following the end of the applicable reporting period.
Results will be reported to AWS on an aggregated national basis; the
aggregated national Results will reflect the distribution of the
metric measured across the territory on which the report is based.
AWS also may require a breakdown, by market, of any metric.
With respect to the timing of the requirement for compliance with any
additional metric targets that are specified or revised target
goals, such requirements will be implemented as part of this
Schedule E-3 once they are formally adopted for internal use by
AWS. The parties agree to meet promptly after their effective date
to discuss the implementation of these additional specific targets
and metric specifications.
3
<PAGE>
AMENDED AND RESTATED AGREEMENT
This AGREEMENT is entered into as of the 16th day of April, 1999, by
and among Telecorp Communications, Inc., a Delaware corporation, with a
principal place of business at 1010 North Glebe Road, 8th Floor, Arlington,
Virginia 22201 ("TELECORP"), Triton PCS, Inc., a Delaware corporation, with a
principal place of business at 375 Technology Drive, Malvern, Pennsylvania 19355
("TRITON"), Tritel Communications, Inc., a Delaware corporation, with a
principal place of business at 1080 River Oaks Drive, Suite B-100, Jackson.,
Mississippi 39208 ("TRITEL") and Affiliate License Co., L.L.C. a Delaware
limited liability company, with a place of business at 1010 N. Glebe Road, 8th
Floor, Arlington, Virginia 22201 ("Holding Company").
WHEREAS, TRITON, TRITEL and TELECORP have individually been licensed by
AT&T Corp., through individual Network Membership License Agreements ("AT&T
License"), to use certain AT&T service marks ("The Licensed AT&T Marks") in
connection with telecommunications services;
WHEREAS, the parties desire to use the marks SUNCOM, SUNCOM WIRELESS
and other SUNCOM- and SUN-formative marks (collectively, "the SUNCOM Marks") in
connection with telecommunications services and in connection with The Licensed
AT&T Marks, all in such a way that each party's licensed territory will not
overlap with another party's licensed territory;
WHEREAS, TRITON and TELECORP entered an Agreement with each other on
December 21, 1998 ("the December 21, 1998 Agreement"), in which they stated
their intent to expand that Agreement to include TRITEL, assuming that TRITEL
satisfied certain conditions enunciated therein;
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<PAGE>
WHEREAS, TRITEL having satisfied such conditions, the parties wish to
restate and amend the December 21, 1998 Agreement between TRITON and TELECORP as
set forth herein;
WHEREAS, TRITON filed U.S. Trademark Application Ser. No. 75/531,537, on
August 13, 1998, for the mark SUNCOMM, for wireless telecommunications services;
U.S. Trademark Application Ser. No. 75/548,866, on September 4, 1998, for the
mark SUNCOM for wireless telecommunications services; U.S. Trademark Application
Ser. No. 75/563,055, on October 2, 1998, for the mark SUNCOM WIRELESS and
Design, for wireless telecommunications services; U.S. Trademark Application
Ser. No. 75/550,276, on September 9, 1998, for the mark SUN WIRELESS, for
wireless telecommunication services; U.S. Trademark Application Ser. No.
75/568,694, on December 11, 1998, for the mark EVERYTHING UNDER THE SUN, for
wireless telecommunication services; U.S. Trademark Application Ser. No.
75/590,913, on December 2, 1998, for the mark SUNCOM PLUS, for wireless
telecommunication services; U.S. Trademark Application Ser. No. 75/591,452, on
December 2, 1998, for the mark SUNSURE, for wireless telecommunication services;
U.S. Trademark Application Ser. No. 75/591,455, on December 2, 1998, for mark
SUNCOM CONNECT, for wireless telecommunication services; U.S. Trademark
Application Ser. No. 75/591,456, on December 2, 1998, for the mark SUNCALL ONE,
for wireless telecommunication services; U.S. Trademark Application Ser. No.
75/591,457, on December 2, 1998, for the mark SUNCOM PRE-PAY, for wireless
telecommunication services; U.S. Trademark Application Ser. No. 75/591,488, on
December 2, 1998, for the mark SUNBOND, for wireless telecommunication services;
U.S. Trademark Application Ser. No. 75/595,868, on December 8, 1998, for the
mark SUNCOM TECHFUND, for wireless telecommunication services; U.S. Trademark
Application Ser. No. 75/626,826, on
2
<PAGE>
January 28, 1999, for the mark SUNCOM FLAT RATE, for wireless telecommunication
services; and an application filed on March 3, 1999 (serial number not yet
assigned), for the mark SUNCOM and Design, for wireless telecommunication
services (collectively "TRITON's Applications");
WHEREAS, on April 16, 1999, TRITON became the owner-by-assignment of
all right, title and interest in and to the SUNCOM-formative marks and names, as
well as the goodwill pertaining thereto, as previously owned by SunCom
Telecommunications, Inc. (collectively, "the SunCom Telecommunications Marks,"
which are a wholly-encompassed subset of the SUNCOM Marks defined above);
WHEREAS, TRITON, TELECORP and TRITEL have formed a new entity, the
Holding Company, to be owned solely by TRITON, TELECORP and TRITEL, to own,
register, and maintain the SUNCOM Marks and to license the SUNCOM Marks to
TRITON, TELECORP and TRITEL on the terms stated herein;
WHEREAS, TRITON has agreed to transfer all right, title and interest in
and to the SunCom Telecommunications Marks and, upon initiation of bona fide use
in commerce, the marks covered by TRITON's Applications and TRITON's
Applications themselves, as well as the goodwill pertaining to all of the
foregoing, to the Holding Company;
WHEREAS, the parties desire to use and allow each other to use the
SUNCOM Marks for telecommunications services on the terms stated herein and on
terms consistent with each party's AT&T License; and
3
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises and undertakings
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the parties agree
as follows:
1. TRITON, TELECORP and TRITEL shall maintain the Holding Company to own
and register the SUNCOM Marks for telecommunications and related services. The
Holding Company shall be comprised of TRITON, TELECORP and TRITEL, who shall
each appoint a representative to serve on the Board of Directors of the Holding
Company. The removal of Directors and the filling of Director vacancies shall be
done in accordance with the Holding Company's Operating Agreement. Meetings of
the Board of Directors shall be held at locations and as frequently as
established in the Holding Company's Operating Agreement. All actions of the
Holding Company shall require the unanimous consent of the Board of Directors.
2. The Holding Company shall grant and hereby grants to TRITON, TELECORP
and TRITEL, and to no other entity, a royalty-bearing, transferrable license to
use the SUNCOM Marks, including without limitation the SunCom Telecommunications
Marks transferred pursuant to paragraph 3 by TRITON, on the terms and conditions
stated herein, under the quality control standards established under the AT&T
License and under such further and reasonable quality control standards approved
by the Board of Directors of the Holding Company ("Alliance Quality Standards"),
for a term to be established by the Holding Company, and in contemplation of
only those royalties necessary to establish, support, and maintain the Holding
Company, to maintain trademarks owned by the Holding Company, to defend against
all challenges involving the Holding Company's trademarks, and to reimburse
expenses of the parties for market research, creative, legal and other expenses
associated with the SUNCOM Marks owned by the Holding Company. Said license
shall be supplemented from time to time with additional terms and
4
<PAGE>
conditions that the parties deem appropriate. The terms and conditions of each
party's license shall be substantially identical to the terms and conditions of
each other party's licenses and no party shall be granted a license on terms and
conditions materially less favorable than any other party or non-party entity.
Notwithstanding any of the foregoing, the parties agree that the Board of
Directors of the Holding Company shall be empowered to grant royalty-bearing
licenses to additional non-party entities on terms and conditions agreeable to
the Board of Directors. Within 10 days following the execution of this
Agreement, TRITEL and TELECORP shall each pay to the Holding Company $325,000.00
as royalty payments for the use of the SunCom Telecommunications Marks. Within
five (5) business days following receipt of those payments, the Holding Company
shall pay said $650,000 to TRITON.
3. In consideration of $650,000.00, and the right to use the marks as
provided in paragraph 2, above, TRITON hereby assigns all right, title and
interest in and to the SunCom Telecommunications Marks, including all of the
goodwill pertaining thereto, to the Holding Company. TRITON also acknowledges
that it grants to TELECORP effective as of the date of the December 21, 1998
Agreement, and grants to TRITEL as of January 7, 1999, and grants to the Holding
Company as of the date hereof, separate perpetual, royalty-free licenses to use
the marks covered by TRITON's Applications, under such reasonable quality
control standards as are established under each of TELECORP's and TRITEL's AT&T
License, respectively.
4. TRITON represents and warrants that Amendments to Allege Use have been
filed at the U.S. Patent and Trademark Office in connection with the pending
TRITON's Applications for the following marks: SUNCOM, EVERYTHING UNDER THE SUN,
and SUNSURE. TRITON hereby assigns to the Holding Company all right, title and
interest in and to the marks covered by those three applications, and in and to
the mark SUNCOM and Design as identified
5
<PAGE>
in the application for registration filed by TRITON on March 3, 1999, together
with all of the goodwill and the applications for registration related thereto.
Within 10 days following the execution of this Agreement, TRITON agrees to
expressly abandon U.S. Trademark Application Ser. No. 75/531,537, for the mark
SUNCOMM, as filed by TRITON on August 13, 1998. TRITON further agrees that, with
regard to the remainder of TRITON's Applications not addressed above in this
paragraph 4 ("Remaining Marks"), TRITON shall, within 30 days following first
use in commerce of any of the Remaining Marks by any of the parties, file with
the U.S. Patent and Trademark Office Amendments to Allege Use in connection with
each of TRITON's Applications in which an applied-for Remaining Mark has been
used in commerce, and, 10 days thereafter, assign to the Holding Company all
right, title and interest in and to each of the Remaining Marks, together with
all of the goodwill and the applications for registration related thereto. Upon
the expiration of one year from the execution of this Agreement, TRITON agrees
to expressly abandon those of TRITON's Applications for which no party has
commenced use in commerce of an applied-for Remaining Mark.
5. Subject to the provisions of paragraphs 12 and 13 below, each party
agrees that it shall use the SUNCOM Marks solely in connection with the marks
licensed for use pursuant to each party's AT&T License. Each party further
agrees that it shall avoid use of the SUNCOM Marks in a way that is prohibited
pursuant to the AT&T License or is otherwise reasonably objectionable to AT&T
under the AT&T License, and each party further agrees that it shall use the
SUNCOM Marks under the quality control standards established in the AT&T License
and under such further reasonable quality control standards that may be
established by the Board of Directors of the Holding Company.
6
<PAGE>
6. Except as otherwise expressly provided by this Agreement or by the
license contemplated and granted hereunder, each party agrees that it will not
use any trademark, service mark, trade name, insignia, logo or other designation
that is confusingly similar to, or a colorable imitation of, any of the SUNCOM
Marks. The provisions of this paragraph shall survive termination of this
Agreement, as well as termination of a party's license hereunder.
7. Each party agrees that it shall use reasonable efforts to avoid use of
the SUNCOM Marks in a manner that may be deemed immoral, deceptive, or
scandalous, or otherwise such that the use of the SUNCOM Marks or a composite
mark of which SUNCOM is a part, would be unregistrable under 15 U.S.C. ss. 1052.
The parties further agree that, as required by the Holding Company, they will
use reasonable efforts to use appropriate symbols (i.e., TM, SM, or (R), as
appropriate) in connection with the SUNCOM Marks.
8. Each party agrees that the goodwill developed through its use of the
SUNCOM Marks under this Agreement and under the license contemplated hereunder
shall inure to the Licensor, Holding Company.
9. Each party agrees that it will cooperate with reasonable requests from
the Holding Company for actions reasonably necessary to secure and maintain
Holding Company's rights in and to the SUNCOM Marks and Holding Company's
registration and attempts to register same. Each party further agrees that it
will not attack, and will not cause an attack to be taken, against Holding
Company's exclusive right, title and interest in and to the SUNCOM Marks, nor
will any party challenge or cause a challenge to be taken against the validity
of the SUNCOM Marks or any resulting registrations thereof. The provisions of
this paragraph shall survive termination of this Agreement, as well as
termination of a party's license contemplated hereunder.
7
<PAGE>
10. Each party agrees that it shall comply with all applicable laws and
regulations of governmental bodies or agencies in its performance under this
Agreement and in its performance under the license contemplated and granted
hereunder.
11. Each party agrees that the territory in which it can use the SUNCOM
Marks ("Territory") is limited to the territory granted to each party by AT&T
under the AT&T License. The parties further agree that each party may expand its
Territory ("Expanded Territory") to geographic areas in which (1) that party has
secured all necessary governmental and other licenses to operate and offer the
telecommunications services rendered under the SUNCOM Marks; (2) that party is
permitted to use the marks licensed by AT&T under that party's AT&T License; and
(3) no other party has already begun to use any of the SUNCOM Marks, pursuant to
the terms of this Agreement, in the Expanded Territory, unless such other party
consents to the proposed use in the Expanded Territory.
12. Except to the extent that all parties agree in writing otherwise,
whenever a party's ("Terminated Party") AT&T License is terminated because of
that party's breach of a material term of its AT&T License, or if a party shall
otherwise violate a material term of this Agreement, the parties agree that the
Terminated Party's right to use the SUNCOM Marks shall also immediately
terminate, and the Terminated Party shall immediately cease and desist use of
the SUNCOM Marks. If TRITON, TELECORP and TRITEL become Terminated Parties, the
parties shall endeavor, through the Holding Company, to establish new terms and
conditions for use of the SUNCOM Marks such that the SUNCOM Marks shall not be
deemed abandoned.
13. Notwithstanding the provisions of paragraphs 11 and 12, the parties
agree that a Terminated Party shall be permitted to continue to use the SUNCOM
Marks so long as (1) such
8
<PAGE>
continued use does not affect or limit any other party's ability to use or to
continue to use the SUNCOM Marks, and (2) the Terminated Party uses its best
efforts to establish a new AT&T License. If, after a reasonable time, which
reasonableness shall be judged by the non-Terminated Parties, the Terminated
Party is unable to re-secure an AT&T License, the Terminated Party shall be
permitted to use the SUNCOM Marks anywhere except within the non-Terminated
Parties' licensed Territory and only so long as the Terminated Party continues
to meet the Alliance Quality Standards, with the understanding that the Alliance
Quality Standards may not change after the effective date of termination of the
AT&T License unless the changed limitations also apply to non-Terminated Parties
and are in no way unique to or tied in any other way to the terms of an AT&T
License, and with the additional understanding that upon a party becoming
terminated and being unable to resecure an AT&T License as contemplated in this
paragraph 13, the non-Terminated Parties' Territories shall, for purposes of
this Agreement, no longer be restricted by the geographic scope of their
respective AT&T Licenses as otherwise provided in paragraph 11. Notwithstanding
the foregoing, the Terminated Party shall cease use of the SUNCOM Marks in the
event that a non-Terminated Party is enjoined in a final judgment from using the
SUNCOM Marks because of the Terminated Party's continued use of the SUNCOM
Marks.
14. The parties agree that they will cooperate with each other and with the
Holding Company in challenging any infringements of the SUNCOM Marks and in
defending against charges of trademark infringement. Such cooperation shall
include providing prompt notice to all other parties and to the Holding Company
of all uses of any of the SUNCOM Marks which may create a likelihood of
confusion with the use of any of the SUNCOM Marks by the parties or the Holding
Company or which are otherwise inconsistent with the terms of, or the parties'
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<PAGE>
intentions under, this Agreement. The parties shall fund efforts to challenge
infringements and to defend against charges of infringement, on a pro rata
basis, through the Holding Company, and upon such ocher terms agreed to by the
Board of Directors.
15. The parties agree that, upon approval by all parties to this Agreement
and consistent with the parties' obligations under each party's AT&T License,
the Holding Company can permit a party to expand its Territory or otherwise
deviate from the terms and conditions stated herein. Said approval from the
Holding Company shall be in writing, and a copy of said written approval shall
be provided to every other party.
16. To the extent that there are disagreements among the parties about the
interpretation or effect of this Agreement, the decision of the Board of
Directors of the Holding Company shall control the resolution of such disputes.
This Agreement shall be interpreted according to the laws of Delaware.
17. Each party agrees that it shall not sublicense any rights granted
hereunder. The parties also agree, however, that the license contemplated
hereunder shall inure to the benefit of the parties' successors-in-interest,
unless prohibited under the AT&T License.
18. The parties agree that they shall share in the costs, on terms and
conditions to be established by the Holding Company, related to advertising and
other promotional efforts that are undertaken for the benefit of, and with the
knowledge and consent of, multiple parties.
19. The parties agree that the Board of Directors of the Holding Company
shall be empowered to establish guidelines and resolve difficulties in relation
to operational issues, including but not limited to, internet addresses,
telephone contact numbers, misdirected inquiries
10
<PAGE>
and customer care calls and other issues related to ensuring that the public is
able to efficiently contact a party intended to be contacted.
20. The parties agree that whenever notice is required or permitted to be
provided under this Agreement, said notice shall be deemed effective when
delivered, via overnight courier, to the following persons:
TeleCorp: TeleCorp Communications, Inc.
General Counsel
1010 North Glebe Road
8th Floor
Arlington, Virginia 22201
With a copy to:
Robert W. Zelnick, Esq.
McDermott, Will & Emery
600 13th Street, N.W.
Washington, DC 20005
Triton: Triton PCS Inc.
375 Technology Drive
Malvern, PA 19355
With a copy to:
Jay R. Goldstein, Esq.
Kleinbard, Bell & Brecker, L.L.P.
1900 Market Street, Suite 700
Philadelphia, PA 19103
Tritel: James H. Neeld, IV, Esq.
Tritel Communications, Inc.
1080 River Oaks Drive, Suite B-100
Jackson, MS 39208
With a copy to:
Shannon T. Vale, Esq.
Arnold, White & Durkee
600 Congress Ave.
Suite 1900
Austin, TX 78701
11
<PAGE>
Notice to the Holding Company shall be effective when notice is delivered to
each of the parties, as provided above.
21. The parties agree that they shall cooperate with each other to produce
a joint press release, reasonably acceptable to all parties, to announce the
launch of products and services offered or to be offered under any of the SUNCOM
Marks.
IN WITNESS WHEREOF, the parties hereto hereby execute this Agreement by their
authorized representatives as of the date first set forth above.
TELECORP COMMUNICATIONS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
TRITON PCS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
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<PAGE>
TRITON COMMUNICATIONS, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
AFFILIATE LICENSE CO., L.L.C.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
13
<PAGE>
Exhibit 10.6
FORM OF EMPLOYMENT AGREEMENT
----------------------------
EMPLOYMENT AGREEMENT, dated as of January __, 1999, by and between
TRITEL, INC., a Delaware corporation (the "Company"), and _____________
("Executive"). Capitalized terms used herein but not otherwise defined herein
shall have the meanings given to such terms in the Stockholders Agreement of the
Company, dated of even date herewith (the "Stockholders Agreement").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to employ Executive and to enter into an
agreement embodying the terms of such employment (the "Agreement");
WHEREAS, Executive desires to accept such employment and enter into
such Agreement;
WHEREAS, ____________ and Executive (collectively, the "Senior
Executives") own all of the ownership interests in Tritel Management, LLC, a
Mississippi limited liability company ("Manager");
WHEREAS, the Senior Executives have caused the Manager to enter into a
Management Agreement with the Company, dated of even date herewith (the
"Management Agreement"), pursuant to which the Manager has agreed, among other
things, to manage the business of the Company;
WHEREAS, pursuant to Section 3.2(e) of the Securities Purchase
Agreement, dated as of May 20, 1998 (the "Securities Purchase Agreement"),
Executive has become the record and beneficial owner of ______ shares of the
Company's Class A Voting Common Stock, par value $.01 per share ("Class A Common
Stock") and ________ shares of the Company's Class C Common Stock, par value
$.01 per share (the "Class C Common Stock"; collectively, the "Restricted
Shares");
WHEREAS, in order to induce the Purchasers referred to in the
Securities Purchase Agreement to purchase the securities issued by the Company
thereunder, Executive desires to grant to the Company the repurchase rights with
respect to the Restricted Shares as referred to in Section 7; and
WHEREAS, the Company desires to accept the grant of such repurchase
rights.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company and Executive, intending to be legally bound, hereby
agree as follows:
<PAGE>
Employment.
-----------
Agreement to Employ. Upon the terms and subject to the conditions of
this Agreement, the Company hereby employs Executive, and Executive hereby
accepts employment by the Company.
Employment Period. The term of Executive's employment shall be for a
period of five (5) years commencing on the date hereof (the "Commencement Date")
and continuing until January 1, 2004 (the "Expiration Date") unless this
Agreement shall have been earlier terminated in accordance with Section 5 (the
"Employment Period").
Position and Duties.
--------------------
During the Employment Period, Executive shall serve as Chairman of
the Board and Chief Executive Officer of the Company and be responsible for the
duties set forth on Schedule I, reporting directly to the Board of Directors.
During the Employment Period, except as set forth herein, Executive shall devote
his entire business time to the services required of him hereunder, except for
vacation time, personal time and reasonable periods of absence due to sickness,
personal injury or other disability. Nothing contained herein shall preclude
Executive from devoting reasonable periods of time to (i) the activities
described on Schedule II; (ii) serving on a board of directors of a charitable,
trade or other similar organization; or (iii) serving on other boards of
directors with the consent of the Board of Directors (excluding the Senior
Executives who are members of the Company's Board of Directors), in each such
case, so long as such activities do not interfere with the performance of
Executive's duties hereunder.
Compensation.
-------------
Base Salary. The Company shall pay Executive an annual salary of
_________. Upon the first anniversary hereof, and annually thereafter, the
Compensation Committee of the Board of Directors shall review Executive's base
salary in light of the performance of Executive and the Company, and may, in its
discretion, increase (but not decrease) such base salary by an amount it
determines to be appropriate. Executive's annual base salary payable hereunder,
as it may be increased from time to time, is referred to herein as "Base
Salary". The Company shall pay Executive his Base Salary in equal monthly
installments, or in such other installments as the parties may mutually agree.
Annual Bonus. For each calendar year or part thereof during the
Employment Period, Executive shall be eligible to receive an annual bonus (an
"Annual Bonus") equal to up to _____ of his Base Salary based upon the
achievement of certain objectives determined by the Compensation Committee of
the Board of Directors for such calendar year, payable within thirty (30) days
after certification of the Company's financial statements for such year.
Benefits, Perquisites and Expenses.
-----------------------------------
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<PAGE>
Benefit Plans. During the Employment Period, Executive shall be
eligible to participate in any welfare benefit plan sponsored or maintained by
the Company, including, without limitation, any group life, hospitalization,
medical, dental, health, accident or disability insurance or similar plan or
program of the Company, in each case, whether now existing or established
hereafter, to the extent that Executive is eligible to participate in any such
plan under the generally applicable provisions thereof.
Perquisites. Executive shall be entitled to up to four weeks paid
vacation annually in accordance with the Company's policies and practices.
Executive shall also be entitled to receive such perquisites as are generally
provided to other senior officers of the Company in accordance with the policies
and practices of the Company.
Business Expenses. The Company shall pay or reimburse Executive for all
reasonable expenses incurred or paid by Executive in performance of Executive's
duties hereunder, upon presentation of expense statements or vouchers and such
other information as the Company may reasonably require.
Indemnification. The Company shall, to the maximum extent permitted by
applicable law, the Company's certificate of incorporation or its bylaws,
indemnify Executive and hold Executive harmless from and against any claim, loss
or cause of action arising from or out of Executive's performance as an officer,
director or employee of the Company or any of its subsidiaries or in any other
capacity, including serving as a fiduciary, in which Executive serves at the
request of the Company. If any claim is asserted hereunder for which Executive
reasonably believes in good faith he is entitled to be indemnified, the Company
shall pay Executive's reasonable legal expenses (or cause such expenses to be
paid), as may be required but no less frequently than on a quarterly basis,
provided that Executive shall reimburse the Company for such amounts, plus
simple interest thereon at the 90-day United States Treasury Bill rate as in
effect from time to time, compounded annually, if Executive shall be found by a
final, non-appealable order of a court of competent jurisdiction not to be
entitled to indemnification. The indemnification obligations of the Company in
this paragraph shall survive any termination of this Agreement.
Directors and Officers Liability Insurance. The Company has obtained,
and shall use all commercially reasonable efforts to maintain, directors and
officers liability insurance coverage covering Executive in amounts customary
for similarly situated companies in the telecommunications industry.
Termination of Employment.
--------------------------
Early Termination of the Employment Period. This Agreement may be
terminated in any of the following manners:
Executive may, upon 30 days' prior written notice to the Company,
voluntarily terminate employment with the Company at any time at the sole
discretion of Executive (a "Voluntary Termination");
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<PAGE>
Executive may, upon written notice to the Company, terminate employment
with the Company at any time for "Good Reason" (as defined in Section 5(g)) it
being agreed that any such termination, although effected by Executive shall not
constitute a Voluntary Termination;
Executive's employment may, upon written notice to Executive, be
terminated by the Company at any time for Cause (as defined in Section 5(f));
This Agreement shall terminate automatically upon Executive's death;
The Company may, upon written notice to Executive, terminate this
Agreement upon Executive's Disability. As used herein, the term "Disability"
shall mean a determination that Executive suffers from illness or other physical
or mental impairment that prevents Executive from substantially performing his
duties for a period of 90 days during any six-month period during the Employment
Period or for 180 days during any 12-month period during the Employment Period.
The determination of whether (and, if appropriate, when) a Disability has
occurred shall be made by a majority of the Board of Directors of the Company
(excluding the Senior Executives that are directors of the Company);
The Company may terminate this Agreement immediately in the event of a
material breach of the Management Agreement by Manager (as determined by a
majority vote of the Board of Directors (excluding the Senior Executives that
are directors of the Company)), which has not been cured within thirty (30) days
following notice thereof from the Company, or the failure of the Company to meet
any of the objectives set forth on Schedule III-A to this Agreement; or
The Company may terminate this Agreement immediately in the event of
the failure of the Company to meet any of the objectives set forth in Schedule
III-B to this Agreement.
Benefits Payable Upon Termination.
----------------------------------
Following the end of the Employment Period pursuant to any manner
described in Section 5(a) or for any other reason, the Company shall pay to
Executive (or, in the event of his death, his surviving spouse, if any, or his
estate): (A) any Base Salary earned, but unpaid, for services rendered to the
Company on or prior to the date on which the Employment Period ended, and (B)
amounts which are vested or which Executive is otherwise entitled to receive
under the terms of or in accordance with any plan, policy, practice or program
of, or any contract or agreement with, the Company at or subsequent to the date
the Employment Period ends without regard to the performance by Executive of
further services or the resolution of a contingency.
Following the end of the Employment Period other than pursuant to a
termination described in Sections 5(a)(i), (iii) or (vii) (in respect of which
Executive shall not be entitled to any payments under this Section 5(b)(ii)),
Executive shall be entitled to receive the lesser of (x) his Base Salary, and
(y) the balance of his Base Salary through the Expiration Date. In the event
that the Employment Period shall end pursuant to a termination by Executive
pursuant to Section
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5(a)(ii) or a termination by the Company pursuant to Section 5(a)(vi), the
Executive shall also be entitled to receive the Annual Bonus (if earned in
accordance with Section 3(b) of this Agreement). The amount of the Annual Bonus
shall be determined as follows: (I) In the event that the date of termination is
on or prior to June 30 of any applicable calendar year, the amount of the Annual
Bonus shall be equal to a pro rata portion (based upon the actual number of days
during such calendar year that this Agreement shall have been in effect) of the
Annual Bonus payable in respect of such year (determined based upon the
achievement by the Company of the objectives for all of such calendar year).
(II) In the event that the date of termination is after June 30 of any
applicable calendar year, the amount of the Annual Bonus shall be equal to the
Annual Bonus payable in respect of such year (determined based upon the
achievement by the Company of the objectives for all of such calendar year).
Timing of Payments.
-------------------
Amounts payable pursuant to Section 5(b)(i)(A) and, except as provided
below upon termination of the Management Agreement, payments of Base Salary
pursuant to Section 5(b)(ii) shall be payable monthly in monthly installments in
arrears commencing on the last day of the month following the end of the
Employment Period. In the event that Executive's employment shall be terminated
pursuant to Section 5(a)(ii) or (vi), the Annual Bonus payable pursuant to
Section 5(b)(ii) shall, except as provided below upon termination of the
Management Agreement, be paid 30 days after the certification of the Company's
financial statements for such year. In the event that the Management Agreement
is terminated concurrently with the termination of this Agreement (A) the Annual
Bonus (if earned in accordance with Section 3(b) of this Agreement) shall be
payable on the later to occur of (x) 30 days after the certification of the
Company's financial statements for such year, and (y) the last day of the month
after which (a) a New Provider (as defined in the Management Agreement) shall be
retained by the Company in accordance with Section 5(e)(i)of the Management
Agreement, and (b) the Senior Executives shall have nominated a Successor
Control Group (as defined in the Management Agreement) acceptable to the Board
of Directors in its sole discretion (excluding the Senior Executives that are
directors of the Company) in accordance with Section 5(e)(ii) of the Management
Agreement, and (B) the Base Salary payable pursuant to Section 5(b)(ii) shall be
payable monthly in monthly installments on the last day of the month after which
(I) a New Provider shall be retained by the Company in accordance with Section
5(e)(i) of the Management Agreement and (II) the Senior Executives shall have
nominated a Successor Control Group reasonably acceptable to the Board of
Directors in its sole discretion (excluding the Senior Executives that are
directors of the Company) in accordance with Section 5(e)(ii) of the Management
Agreement.
Vested benefits referred to in clause (B) of Section 5(b)(i) shall be
payable in accordance with the terms of the plan, policy, practice, program,
contract or agreement under which such benefits have accrued.
The Company shall be entitled to set off against the amounts payable to
the Executive following the termination of this Agreement pursuant to Section
5(b)(ii), any amounts earned by
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<PAGE>
either Executive in other employment after the termination of this Agreement;
provided, however, that Executive shall not be required, as a condition to the
receipt of such payment pursuant to Section 5(b)(ii), to seek such other
employment.
Continuing Obligations. After receipt of written notice of termination,
but prior to the effective date of such termination, Executive shall continue to
perform his duties under this Agreement unless specifically instructed to
discontinue such performance. In the event of termination, Executive and the
Company shall remain liable for their respective obligations accrued under this
Agreement prior to the effective date of termination.
Definition of Cause. For purposes of this Agreement, "Cause" means
only:
Executive's indictment or conviction of a felony;
Fraud, misappropriation or embezzlement by Executive against the
Company or any subsidiary or affiliate of the Company; or
Executive's willful misconduct or gross negligence in connection with
his employment hereunder which has materially adversely affected the Company,
monetarily or otherwise, as determined by a majority vote of the Board of
Directors of the Company (excluding Executive and other Company executives that
are directors of the Company).
Definition of Good Reason. For purposes of this Agreement "Good Reason"
means any of the following:
The Company fails to make any payment when due pursuant to Section 3
within thirty (30) days following Executive's written notice to the Company of
such failure;
A material breach of this Agreement by the Company (other than a
payment default) which has not been cured within thirty (30) days following
notice thereof from the Company;
Executive is demoted or removed from his/her respective offices or
there is a material diminishment of Executive's responsibilities, duties or
status which diminishment is not rescinded within 30 days after the date of
receipt by the Board of Directors of the Company of Executive's written notice
referring to this provision and describing such diminishment; or
The Company relocates its principal offices without Executive's consent
to a location more than 50 miles from the principal offices of the Company in
Jackson, Mississippi.
Noncompetition and Confidentiality.
-----------------------------------
Noncompetition. During the Employment Period and for one year
thereafter, Executive shall not, without the consent of the Company, assist or
become associated with any person or entity, whether as a principal, partner,
employee, consultant or shareholder (other than as a holder of not in excess of
5% of the outstanding voting shares of any publicly traded company)
6
<PAGE>
that is actively engaged in the business of providing mobile wireless
telecommunications services in the Territory (as defined in the Company's
Stockholders' Agreement); provided, however, that in the event the Employment
Period is terminated (x) by Executive pursuant to Section 5(a)(ii) or by the
Company pursuant to Section 5(a)(vi) Executive shall have no obligations
pursuant to this Section 6(a), and (y) by the Company pursuant to Section
5(a)(vii) such one-year period shall be three (3) months, subject to the right
of the Company, upon written notice given to Executive, to extend such three (3)
month period on a month-to-month basis for up to an additional nine (9) month
period on the condition that the Company pays to Executive his Base Salary
during such three (3) month period and for any such additional period that the
Company elects to extend Executive's obligations pursuant to this Section 6(a).
Confidentiality. Without the prior written consent of the Company,
except to the extent required by an order of a court having competent
jurisdiction or under subpoena from a governmental body or agency, Executive
shall not disclose any trade secrets, customer lists, drawings, designs,
information regarding product development, marketing plans, sales plans,
manufacturing plans, management organization (including data and other
information relating to members of the Board of Directors and management),
operating policies and manuals, business plans, financial records, packaging
design or other financial, commercial, business or technical information
relating to the Company or any of its subsidiaries or affiliates (collectively,
"Confidential Information"), to any third person, unless such Confidential
Information has been previously disclosed to the public by the Company or is in
the public domain (other than by reason of Executive's breach of this Paragraph
6(b)), except that Executive may disclose Confidential Information to the extent
advisable in his sole discretion in connection with (i) the performance of
Executive's duties hereunder, or (ii) the issuance of Company securities, or
(iii) obtaining financing for the Company, or (iv) the enforcement of
Executive's rights under this Agreement, or (v) any disclosures that may be
required by law, including securities laws.
Inventions. Executive hereby sells, transfers and assigns to the
Company all of the right, title and interest of Executive in and to all
inventions, ideas, disclosures and improvements, whether patented or unpatented,
and copyrightable material, made or conceived by Executive, solely or jointly,
or in whole or in part, during the Employment Term which (i) relate to methods,
apparatus, designs, products, processes or devices sold, leased, used or under
construction or development by the Company or any subsidiary or affiliate or
(ii) otherwise relate to or pertain to the business, functions or operations of
the Company or any subsidiary or affiliate, or (iii) arise (wholly or partly)
from the efforts of Executive during the Employment Period. Executive shall
communicate promptly and disclose to the Company, in such form as the Company
reasonably requests, all information, details and data pertaining to the
aforementioned inventions, ideas, disclosures and improvements; and, whether
during the Employment Period or thereafter, Executive shall execute and deliver
to the Company (at the Company's sole cost and expense) such formal transfers
and assignments and such other papers and documents as may be required of
Executive to permit the Company to file and prosecute the patent applications
and, as to copyrightable material, to obtain copyright thereon.
7
<PAGE>
Company Property. Promptly following Executive's termination of
employment, Executive shall return to the Company all property of the Company,
and all copies thereof in Executive's possession or under his control, and all
tangible embodiments of Confidential Information in Executive's possession in
whatever media such Confidential Information is maintained.
Non-Solicitation of Employees. During the Employment Period and for one
year thereafter, Executive will not directly or indirectly induce any employee
of the Company or any of its subsidiaries or affiliates to terminate employment
with such entity, and will not directly or indirectly, either individually or as
owner, agent, employee, consultant or otherwise, employ or offer employment to
any person who is or was employed by the Company or a subsidiary thereof, unless
such person shall have ceased to be employed by such entity for a period of at
least six months; provided, however, that nothing contained in this Agreement
shall prevent Executive from engaging in a general solicitation for employment
that is not directed at employees of the Company or any of its subsidiaries or
affiliates.
Injunctive Relief with Respect to Covenants. Executive acknowledges and
agrees that the covenants and obligations of Executive with respect to
noncompetition, inventions, confidentiality and Company property contained in
this Section 6 relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants and obligations will cause the
Company irreparable injury for which adequate remedies are not available at law.
Therefore, Executive agrees that the Company shall be entitled to an injunction,
restraining order, or such other equitable relief as a court of competent
jurisdiction may deem necessary or appropriate to restrain Executive from
committing any violation of the covenants and obligations contained in this
Paragraph 6. These injunctive remedies are cumulative and are in addition to any
other rights and remedies the Company may have at law or in equity.
Vesting and Repurchase of Unvested Shares, Etc.
-----------------------------------------------
General. Executive by his acceptance of the Restricted Share
certificates bearing the legend set forth in paragraph (e) below, agrees that
the Restricted Shares shall be subject to repurchase by the Company at the
Repurchase Price in accordance with the terms of this Section 7. As used in this
Section 7, the following terms have the following meanings:
"Automatic Repurchase Event" means (v) the consummation of a Company
Merger after giving effect to which the Cash Equity Investors set forth in the
Securities Purchase Agreement, in the aggregate, shall beneficially own on a
Fully Diluted Basis less than 33% of the capital stock or other equity interests
in the surviving entity, (w) the consummation of a Company Sale, (x) the
termination of Executive's employment pursuant to this Agreement or any
agreement supplementing, amending or extending this Agreement, (y) if and only
if the IPO Date (as defined in the Stockholder Agreement) has theretofore
occurred, the seven (7) year anniversary of the date hereof, and (z) if and only
if the IPO Date has not occurred prior to the seven (7) year anniversary of the
date hereof, the IPO Date.
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<PAGE>
"Base Price" means the initial purchase price per share of the
Company's Series C Preferred Common Stock, $.01 par value, paid by a Cash Equity
Investor on the date hereof (including the Unfunded Commitment) appropriately
adjusted for stock splits, stock dividends and similar changes in capitalization
(but excluding changes in the liquidation preference of the Preferred Stock of
the Company in accordance with the Restated Certificate).
"Base Shares" means ______ shares of Class A Common Stock and ________
shares of Class C Common Stock.
"Equity Kicker Shares" means a number of Restricted Shares equal to
_________ shares of Class A Common Stock.
"Fully Diluted Basis" means, with respect to the shares of Common Stock
outstanding, all of the shares of Common Stock then outstanding (regardless of
whether subject to repurchase), plus (without duplication) all the shares of
Common Stock issuable upon the exercise of outstanding options or convertible
securities (excluding the Company's Series A Preferred Stock, $.01 par value);
provided, that for the purpose of calculating the number of shares of Common
Stock outstanding on a Fully Diluted Basis in order to determine whether the
Internal Rate of Return pursuant to Section 7(b)(ii) equals (A) more than 25%
but less than 35%, none of the Equity Kicker Shares shall be deemed to be
outstanding, and (B) more than 35%, one-half of the Equity Kicker Shares shall
be deemed to be outstanding.
"Market Price" means in the case of (I) an Automatic Repurchase Event
(A) specified in clause (v) or (w) of the definition thereof, the per share
consideration paid or payable to the holders of Common Stock in connection with
such event, (B) specified in clause (x) of the definition thereof if the IPO
Date shall not have occurred prior to the date of termination, (1) the fair
market value of all of the assets of the Company and its Subsidiaries at the
time of any calculation of such value, less (a) any expenses which would be
incurred solely in connection with the disposition of such assets, (b) the
aggregate amount of all liabilities of the Company and (c) the aggregate
redemption price of all outstanding shares of all series of Preferred Stock of
the Company, all as determined in good faith by the Board of Directors
(excluding any Senior Executive that is a director of the Company), divided by
(2) the number of shares of Common Stock outstanding on a Fully Diluted Basis;
provided, however, if the number of Base Shares or Equity Kicker Shares being
repurchased by the Company from the Senior Executives on the date of
determination of Market Price exceeds .5% of the Common Stock on a Fully Diluted
Basis, such determination shall be determined by an investment banking firm
selected by the Board of Directors of the Company and reasonably acceptable to
the Executive, (C) specified in clause (x) of the definition thereof if the IPO
Date shall have occurred on or prior to the date of termination, the average
closing price of the Class A Common Stock during the ten (10) trading days prior
to such date of termination, (D) specified in clause (y) of the definition
thereof, the average closing price of the Class A Common Stock during the ten
(10) trading days prior to such seventh (7th) anniversary of the date hereof, or
(E) specified in clause (z) of the definition thereof, the per share offering
price of the Class A Common Stock issued in connection with the public offering
occurring on the IPO Date, or (II) a Trigger Date (A) which is on the IPO Date,
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<PAGE>
the per share offering price of the Class A Common Stock issued in connection
with the public offering occurring on the IPO Date, or (B) which is after the
IPO Date, the average closing price of share of Class A Common Stock during the
ten (10) trading days prior to such Trigger Date.
"Non-Released Base Shares" means the number of shares of Class A Common
Stock initially issued to Executive as Base Shares less the aggregate number of
Executive's Base Shares that have (x) become Triggered Shares, or (y) been
repurchased by the Company.
"Non-Released Equity Kicker Shares" the number of shares of Class A
Common Stock initially issued to Executive as Equity Kicker Shares less the
aggregate number of Executive's Equity Kicker Shares that have (x) become
Triggered Shares, or (y) been repurchased by the Company.
"Repurchase Price" means $.01 per share.
"Trigger Date" means the date of delivery to the Company by Executive
of a Trigger Notice that refers to Base Shares and/or Equity Kicker Shares.
"Trigger Notice" means a notice given by Executive with respect to a
specified number of Base Shares or Equity Kicker Shares to determine the number
of Triggered Shares.
"Trigger Shares" means Restricted Shares set forth in a Trigger Notice
and not repurchased in connection with such notice pursuant to this Section 7;
provided, however, that Base Shares that are not so repurchased shall, to the
extent applicable, continue to be subject to vesting in accordance with Schedule
IV annexed hereto.
Repurchase of Base Shares and Equity Kicker Shares.
---------------------------------------------------
Repurchase of Base Shares upon Automatic Repurchase Event. Upon an
Automatic Repurchase Event, Executive shall sell to the Company, and the Company
shall purchase from Executive, the aggregate of (I) all Base Shares that shall
not have vested in accordance with Schedule IV, plus (II) a number of Base
Shares equal to the number of Non-Released Base Shares beneficially owned by
Executive multiplied by a fraction, the numerator of which is the Base Price and
the denominator of which is the Market Price on the date of such event, plus
(III) the number of Restricted Shares subject to repurchase pursuant to Sections
7(b)(iv).
Repurchase of Equity Kicker Shares upon Automatic Repurchase Event.
Upon an Automatic Repurchase Event specified in clause (x) of the definition
thereof occurring prior to the IPO Date with respect to Executive, Executive
shall sell to the Company, and the Company shall purchase from Executive, all
Equity Kicker Shares. Upon any Automatic Repurchase Event other than an event
specified in clause (x) of the definition thereof occurring prior to the IPO
Date with respect to Executive, Executive shall sell to the Company, and the
Company shall purchase from Executive, the aggregate of (I) the percentage of
Executive's Non-Released Equity Kicker Shares set forth opposite the Internal
Rate of Return realized by the Cash Equity Investors as set forth on the chart
below as of the date of the Automatic Repurchase Event:
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Internal Rate of Return Percentage of Non-Released
Realized by Cash Equity Equity Kicker Shares to be
Investors Repurchased
----------------------- --------------------------
Less than 25%
25% or more but less than 35%
35% or more
, plus (II) a number of Non-Released Equity Kicker Shares beneficially owned by
Executive (less any Equity Kicker Shares, if any, repurchased pursuant to clause
(I) hereof) multiplied by a fraction, the numerator of which is the Base Price
and the denominator of which is the Market Price on the date of such event, plus
(III) the number of Restricted Shares subject to repurchase pursuant to Sections
7(b)(iv) that are not repurchased pursuant to clause (i) above.
For the purpose of this Section 7, the Cash Equity Investors will be deemed to
have "realized an Internal Rate of Return" of any percentage specified, as of
any date, when (i) the aggregate amount of all distributions (but not including
proceeds from sales of Common Stock) actually made in respect of the Cash Equity
Investors' Common Stock, plus an amount equal to interest thereon at the rate of
10% per annum, compounded annually, from the date each such distribution is made
to and including the date of the calculation, plus the product of the Market
Price multiplied by the number of shares of Common Stock beneficially owned by
the Cash Equity Investors on the date hereof (as adjusted for stock splits,
stock dividends and similar changes in capitalization), is equal to (ii) the
aggregate amount of all capital contributions made by the Cash Equity Investors,
plus an amount equal to interest thereon at such percentage per annum,
compounded annually, from the date each such capital contribution is made to and
including such date of calculation.
Repurchase of Base Shares or Equity Kicker Shares on Trigger Date.
------------------------------------------------------------------
On any Trigger Date Executive may elect, by delivery of a Trigger
Notice with respect to a specified number of Base Shares and/or Equity Kicker
Shares to determine the number of Triggered Shares. Within 20 days of the giving
of a Trigger Notice the Company shall repurchase from Executive, and Executive
shall sell to the Company for the Repurchase Price, (x) in the case of Base
Shares, a number of Base Shares specified in the Trigger Notice multiplied by a
fraction of the numerator of which is the Base Price and the denominator of
which Market Price on the date of such notice and (y) in the case of Equity
Kicker Shares (I) first, a percentage of the number of such Equity Kicker Shares
specified in the Trigger Notice set forth opposite the Internal Rate of Return
(determined as specified in clause (ii) above) realized by the Cash Equity
Investors as set forth on the chart below in connection with the Trigger Notice
as of the Trigger Date:
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Internal Rate of Return Percentage of Non-Released
Realized by Cash Equity Equity Kicker Shares to be
Investors Repurchased
----------------------- --------------------------
Less than 25%
25% or more but less than 35%
35% or more
, plus (II) a number of Executive's Equity Kicker Shares (less any Equity Kicker
Shares, if any, repurchased pursuant to clause I above) multiplied by a
fraction, the numerator of which is the Base Price and the denominator of which
is the Market Price on the date of such notice.
Each Trigger Notice shall be with respect to at least (x) 20% of the
Base Shares initially issued to Executive, or (y) at least 50% of the Equity
Kicker Shares initially issued to Executive. A Trigger Notice may be delivered
(x) not less than twenty (20) Business Days (as such term is defined in the
Stockholders Agreement) prior to the IPO Date if the Trigger Date is the IPO
Date, or (y) any Business Day occurring during the ten (10) Business Day period
commencing ten (10) Business Days following the Company's public announcement of
its earnings for the (i) then most recently completed fiscal year, and (ii) the
six-month period ended June 30 of each fiscal year. No more than one Trigger
Notice may be delivered by Executive within any twelve (12) month period. No
Trigger Notice may be delivered by Executive prior to the IPO Date. Executive
may only deliver a Trigger Notice with respect to Equity Kicker Shares after a
Trigger Notice with respect to all Base Shares beneficially owned by such holder
shall have been delivered to the Company.
In connection with any such repurchases of Base Shares, the Base Shares
to be repurchased by the Company shall proportionately reduce the number of Base
Shares initially issued to Executive and allocable to each Vesting Date Event
set forth on Schedule IV.
Additional Repurchase Rights of the Company.
--------------------------------------------
Anything to the contrary contained herein notwithstanding, in the event
this Agreement is terminated by the Company pursuant to Section 5(a)(iii),
Executive shall sell to the Company, and the Company shall repurchase from
Executive, all of the Restricted Shares (whether or not vested).
In the event that the Management Agreement is terminated and the
Manager does not approve a "New Provider" (as such term is defined in the
Management Agreement) within five (5) business days of notice of such New
Provider's nomination by the Board of Directors, in accordance with Section
5(e)(i) of the Management Agreement, then for each successive thirty (30) day
period or portion thereof following such five (5) business day period that a New
Provider shall not have been approved by the Manager, Executive shall sell to
the Company 50% of the Restricted Shares then owned by Executive (after giving
effect to all other repurchases pursuant to this Section 7).
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In the event that Executive and the other Senior Executives do not
nominate a Successor Control Group reasonably acceptable to the Board of
Directors of the Company in its sole discretion (excluding the Senior Executives
that are directors of the Company) in accordance with such Section 5(e)(ii) of
the Management Agreement within the five (5) business day period set forth in
the first sentence of Section 5(e)(ii) of the Management Agreement, then for
each successive 30 day period or portion thereof that Executive and the other
Senior Executives shall not have nominated a Successor Control Group reasonably
acceptable to the Board of Directors of the Company in its sole discretion
(excluding the Senior Executives that are directors of the Company), the
Executive shall sell to the Company after the expiration of each 30 day period,
in addition to and after giving effect to all other repurchases by the Company
of Restricted Shares pursuant to this Section 7 (including Section 7(b)(iv)(B)),
an additional 50% of the Restricted Shares then owned by Executive.
Purchase Price; Closing of Repurchase; Assignment of Repurchase Right.
Any repurchase pursuant to this Section 7 shall be for the Repurchase Price. The
closing of a purchase and sale of Repurchased Shares shall take place on a date
mutually agreed by Executive and the Company, but in no event later than 20 days
after (i) the date that employment of Executive shall have terminated or, in the
case of a repurchase pursuant to Sections 7(b)(iv), the end of any 30-day period
referred to in Section 7(b)(iv), or (ii) in the case of Automatic Repurchase
Event other than termination of employment of Executive, the occurrence of the
applicable event, or (iii) the date of a Trigger Notice (except that in
connection with a Trigger Notice given with respect to the IPO Date, the closing
shall take place on the IPO Date). At such closing, the Company shall deliver to
the Executive a check in the amount of the aggregate Repurchase Price and, upon
delivery thereof, the Company shall become the legal and beneficial owner of the
Restricted Shares and all rights and interests therein or relating thereto, and
the Company shall have the right to retain and transfer to its own name such
shares being repurchased by the Company. Whenever the Company shall have the
right to repurchase Restricted Shares hereunder, the Company may designate and
assign one or more employees, officers, directors or shareholders of the Company
or other persons or organizations to exercise all or a party of the Company's
repurchase rights under this Agreement and purchase all or a part of such
Shares.
Escrow of Shares. The Certificate(s) representing all Restricted Shares
shall be held by the Secretary of the Company as escrow holder (the "Escrow
Holder"), along with a stock power executed by the Executive in blank. The
Escrow Holder is hereby directed to permit transfer of such shares only in
accordance with this Agreement and the Stockholders Agreement. In the event
further instructions are desired by the Escrow Holder, he shall be entitled to
rely upon written directions of the Board of Directors of the Company (excluding
any Senior Executive that is a director of the Company). The Escrow Holder shall
have no liability for any act or omission hereunder while acting in good faith
in the exercise of his own judgment. The Company agrees to indemnify and hold
Escrow Holder free and harmless from and against any and all losses, costs,
damages, liabilities or expenses, including counsel fees to which Escrow Holder
may be put or which he may incur by reason of or in connection with the escrow
arrangement hereunder. If the Company or any assignee repurchases any of the
Restricted Shares pursuant to this Section 7, the Escrow Holder, upon receipt of
written notice of such
13
<PAGE>
repurchase from the proposed transferee, shall take all steps necessary to
accomplish such repurchase. From time to time, upon Executive's request, Escrow
Holder shall: (i) cancel the certificate(s) held by the Escrow Holder and
representing Restricted Shares, (ii) cause new certificate(s) to be issued
representing the number of Restricted Shares no longer subject to repurchase
pursuant to paragraphs (i), (ii) and (iii) of Section 7(b), which certificate(s)
the Escrow Holder shall deliver to Executive, and (iii) cause new certificate(s)
to be issued representing the balance of the Restricted Shares, which
certificate(s) shall be held in escrow by the Escrow Holder in accordance with
the provisions of this Section 7(d). Subject to the terms hereof, Executive
shall have all the rights of stockholder with respect to the Restricted Shares
while they are held in escrow, including without limitation, the right to vote
the Restricted Shares and receive any cash dividends declared thereon. If, from
time to time during the term of the Company's repurchase right, there is (i) any
stock dividend, stock split or other change in the Restricted Shares, or (ii)
any merger or sale of all or substantially all of the assets or other
acquisition of the Company, any and all new, substituted or additional
securities to which such Executive is entitled by reason of his ownership of the
Restricted Shares shall be immediately subject to this escrow, deposited with
the Escrow Holder and included thereafter as "Restricted Shares" for purposes of
this Agreement and the Company's repurchase right.
Legends. The share certificates evidencing the Restricted Shares shall
be endorsed with the following legend (in addition to any legend required to be
placed thereon by applicable federal or state securities laws or the Company's
Stockholders Agreement):
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A
MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN AFFILIATE OF
THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY, WHICH PROVIDES, AMONG OTHER
THINGS, FOR THE REPURCHASE BY THE COMPANY OF THE SHARES
REPRESENTED BY THIS CERTIFICATE.
No Conflict With Prior Agreements; Due Authorization.
-----------------------------------------------------
Executive represents to the Company that neither Executive's execution
of this Agreement or commencement of employment hereunder nor the performance of
Executive's duties hereunder conflicts with any contractual commitment on
Executive's part to any third party. The Company represents to Executive that it
is fully authorized and empowered by action of the Company's Board of Directors
to enter into this Agreement and that performance of its obligations under this
Agreement will not violate any agreement between it and any other person, firm
or other entity.
Nothing herein shall be construed to require Executive to use or
disclose any information that he is prohibited from using or disclosing as a
result of legal or contractual obligations.
Miscellaneous.
--------------
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Survival. Sections 4(d), 5, 6, 7 and 9 shall survive the termination
hereof.
Binding Effect. This Agreement shall be binding on the Company and any
person or entity which succeeds to the interest of the Company (regardless of
whether such succession occurs by operation of law) by reason of the sale of all
or a portion the Company's stock, a merger, consolidation, or reorganization
involving the Company or a sale of the assets of the business of the Company (or
portion thereof) in which Executive performs a majority of his services. This
Agreement shall also inure to the benefit of Executive's heirs, executors,
administrators and legal representatives.
Assignment. Except as provided under Section 9(b), neither this
Agreement nor any of the rights or obligations hereunder shall be assigned or
delegated by any party hereto without the prior written consent of the other
party, except that the Company may delegate to any of its direct or indirect
wholly owned subsidiaries its obligations to provide compensation and benefits
hereunder, provided no such delegation shall relieve the Company of its
obligations hereunder.
Entire Agreement. This Agreement, together with the Schedules attached
hereto, constitutes the entire agreement between the parties hereto with respect
to the matters referred to herein, and no other agreement, oral or otherwise,
shall be binding between the parties unless it is in writing and signed by the
party against whom enforcement is sought. There are no promises,
representations, inducements or statements between the parties other than those
that are expressly contained herein. Executive acknowledges that he is entering
into this Agreement of his own free will and accord, and with no duress, that he
has been represented and fully advised by competent counsel in entering into
this Agreement, that he has read it and that he understands it and its legal
consequences. No parol or other evidence may be admitted to alter, modify or
construe this Agreement, which may be altered, modified or amended only by a
writing signed by the parties hereto.
Severability; Reformation. In the event that one or more of the
provisions of this Agreement shall become invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event that any
of Sections 6(a), (b) or (c) is not enforceable in accordance with its terms,
Executive and the Company agree that such Section shall be reformed to make such
Section enforceable in a manner which provides the Company the maximum rights
permitted at law.
Waiver. Waiver by any party hereto of any breach or default by the
other party of any of the terms of this Agreement shall not operate as a waiver
of any other breach or default, whether similar to or different from the breach
or default waived. No waiver of any provision of this Agreement shall be implied
from any course of dealing between the parties hereto or from any failure by
either party hereto to assert its or his rights hereunder on any occasion or
series of occasions.
Notices. Any notice required or desired to be delivered under this
Agreement shall be in writing and shall be delivered personally against receipt,
by courier service or by registered mail, return receipt requested, and shall be
effective upon actual receipt by the party to which such
15
<PAGE>
notice shall be directed, and shall be addressed as follows (or to such other
address as the party entitled to notice shall hereafter designate in accordance
with the terms hereof):
If to the Company, to the attention of its Board of
Directors at the Company's principal executive
offices.
If to Executive:
Headings. Headings to paragraphs in this Agreement are for the
convenience of the parties only and are not intended to be part of or to affect
the meaning or interpretation hereof.
Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
Withholding. Any payments provided for herein shall be reduced by any
amounts required to be withheld by the Company from time to time under
applicable Federal, State or local income or employment tax laws or similar
statutes or other provisions of law then in effect.
Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
Resolution of Disputes. All disputes, controversies and claims arising
in connection with this Agreement that are not settled by agreement between the
parties shall be finally settled under the Commercial Arbitration Rules of the
American Arbitration Association ("AAA") in effect from time to time. A single
arbitrator shall be appointed by agreement between the parties or, failing such
agreement, by AAA. The arbitrator may grant any remedy that (s)he deems just and
equitable within the scope of this Agreement, including specific performance.
The award of the arbitrator shall be final and binding and judgment thereon may
be entered in any court having jurisdiction. The costs and expenses (including
reasonable attorney's fees) of the prevailing party shall be borne and paid by
the party that the arbitrator determines is the non-prevailing party.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and Executive has hereunto set his hand
as of the day and year first above written.
TRITEL, INC.
By:
-----------------------------------
Name:
Title:
EXECUTIVE:
--------------------------------------
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SCHEDULE I
----------
Duties
------
18
<PAGE>
SCHEDULE II
Permitted Activities
--------------------
19
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SCHEDULE III-A
Objectives
----------
[TO BE ESTABLISHED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS]
20
<PAGE>
SCHEDULE III-B
Objectives
----------
21
<PAGE>
SCHEDULE IV
-----------
Vesting Schedule
----------------
Vesting Date Event Percent of Base Shares
------------------ -----------------------
Commencement Date
Second Anniversary
Third Anniversary
Fourth Anniversary
Fifth Anniversary
Completion of Year 1 and Year 2 of
Minimum Build-Out Plan
Completion of Year 3 of Minimum Build-
Out Plan
Total 100%
Base Shares that are shares of Class C Common Stock shall vest prior to the
vesting of any shares of Class A Common Stock.
Accelerated Vesting
- -------------------
o Upon termination of the Employment Agreement by the Company pursuant to
Section 5(a)(vii) of this Agreement, the Base Shares that would have vested
on the immediately following Anniversary Date of such termination shall
vest.
o Upon termination of the Employment Agreement on or prior to the third
anniversary of the date hereof by the Company pursuant to Section 5(a)(vi)
of this Agreement or by Executive pursuant to Section 5(a)(ii) of this
Agreement, an additional number of Base Shares shall vest such that 75% of
the Base Shares shall have vested.
o Upon termination of the Employment Agreement after the third anniversary of
the date hereof by the Company pursuant to Section 5(a)(vi) of this
Agreement or by Executive pursuant to Section 5(a)(ii) of this Agreement,
100% of the Base Shares shall vest.
o Upon termination of the Employment Agreement by reason of a Company Merger
or Company Sale, all Base Shares shall immediately vest.
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<PAGE>
Exhibit 10.7
TRITEL, INC.
1999 STOCK OPTION PLAN
1. PURPOSE. The purpose of this Plan is to attract and retain qualified
officers, directors and other key employees of, and consultants to, Tritel, Inc.
(the "Company") and its Subsidiaries and to provide such persons with
appropriate incentives. The Company has adopted the Plan effective as of January
7, 1999, and unless extended by amendment in accordance with the terms of the
Plan, no Option Rights, Appreciation Rights, Restricted Shares or Deferred
Shares will be granted hereunder after the tenth anniversary of such effective
date.
2. DEFINITIONS. As used in this Plan,
"APPRECIATION RIGHT" means a right granted pursuant to Section 5 of
this Plan, including a Free-standing Appreciation Right and a Tandem
Appreciation Right.
"BASE PRICE" means the price to be used as the basis for determining
the Spread upon the exercise of a Free-standing Appreciation Right.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMITTEE" means the Compensation Committee of the Board of Directors,
as described in Section 13(a) of this Plan, or, in the absence of a Compensation
Committee, the full Board.
"COMMON SHARES" means (i) shares of the Class A Common Stock, par value
$.01 per share, of the Company and (ii) any security into which Common Shares
may be converted by reason of any transaction or event of the type referred to
in Section 9 of this Plan.
"DATE OF GRANT" means the date specified by the Committee on which a
grant of Option Rights or Appreciation Rights or a grant or sale of Restricted
Shares or Deferred Shares shall become effective, which shall not be earlier
than the date on which the Committee takes action with respect thereto.
"DEFERRAL PERIOD" means the period of time during which Deferred Shares
are subject to deferral limitations under Section 7 of this Plan.
"DEFERRED SHARES" means an award pursuant to Section 7 of this Plan of
the right to receive Common Shares at the end of a specified Deferral Period.
"FREE-STANDING APPRECIATION RIGHT" means an Appreciation Right granted
pursuant to Section 5 of this Plan that is not granted in tandem with an Option
Right or similar right.
<PAGE>
"INCENTIVE STOCK OPTION" means an Option Right that is intended to
qualify as an "incentive stock option" under Section 422 of the Code or any
successor provision thereto.
"MARKET VALUE PER SHARE" means the fair market value of the Common
Shares as determined by the Committee from time to time.
"NONQUALIFIED OPTION" means an Option Right that is not intended to
qualify as an Incentive Stock Option.
"OPTIONEE" means the person so designated in an agreement evidencing an
outstanding Option Right.
"OPTION PRICE" means the purchase price payable upon the exercise of an
Option Right.
"OPTION RIGHT" means the right to purchase Common Shares from the
Company upon the exercise of a Nonqualified Option or an Incentive Stock Option
granted pursuant to Section 4 of this Plan.
"PARTICIPANT" means a person who is selected by the Committee to
receive benefits under this Plan and (i) is at that time an officer, director or
other key employee of, or a consultant to, the Company or any Subsidiary or (ii)
has agreed to commence serving in any such capacity.
"RELOAD OPTION RIGHTS" means additional Option Rights automatically
granted to an Optionee upon the exercise of Option Rights pursuant to Section
4(f) of this Plan.
"RESTRICTED SHARES" means Common Shares granted or sold pursuant to
Section 6 of this Plan as to which neither the substantial risk of forfeiture
nor the restriction on transfer referred to in Section 6 hereof has expired.
"RULE 16b-3" means Rule 16b-3, as promulgated and amended from time to
time by the Securities and Exchange Commission under the Securities Exchange Act
of 1934, or any successor rule to the same effect.
"SPREAD" means, in the case of a Free-standing Appreciation Right, the
amount by which the Market Value per Share on the date when the Appreciation
Right is exercised exceeds the Base Price specified therein or, in the case of a
Tandem Appreciation Right, the amount by which the Market Value per Share on the
date when the Appreciation Right is exercised exceeds the Option Price specified
in the related Option Right.
"SUBSIDIARY" means a corporation, partnership, joint venture,
unincorporated association or other entity in which the Company has a direct or
indirect ownership or other equity interest; provided, however, that for
purposes of determining whether any person may be a Participant for purposes of
any grant of Incentive Stock Options, "Subsidiary" means any corporation in
which the Company owns or controls directly or indirectly more than 50% of the
total combined voting power represented by all classes of stock issued by such
corporation at the time of the grant.
2
<PAGE>
"TANDEM APPRECIATION RIGHT" means an Appreciation Right granted
pursuant to Section 5 of this Plan that is granted in tandem with an Option
Right or any similar right granted under any other plan of the Company.
"10% SHAREHOLDER" means an individual who, at the time an Option Right
is granted, owns stock possessing more than 10% of the total combined voting
power of all classes of stock issued by the Company or by any parent or
subsidiary corporation, within the meaning of Section 422(b)(6) of the Code or
any successor provision thereto.
3. SHARES AVAILABLE UNDER THE PLAN.
(a) Subject to adjustment as provided in Section 9 of this Plan, the
number of Common Shares which may be (i) issued or transferred upon the exercise
of Option Rights or Appreciation Rights, or (ii) awarded as Restricted Shares
and released from substantial risk of forfeiture thereof or Deferred Shares,
shall not in the aggregate exceed 13,566 Common Shares, which may be Common
Shares of original issuance or Common Shares held in treasury or a combination
thereof. For the purposes of this Section 3(a):
(i) Upon payment in cash of the benefit provided by any award
granted under this Plan, any Common Shares that were covered by that
award shall again be available for issuance or transfer hereunder; and
(ii) Upon the full or partial payment of any Option Price by the
transfer to the Company of Common Shares or upon satisfaction of tax
withholding obligations in connection with any such exercise or any
other payment made or benefit realized under this Plan by the transfer
or relinquishment of Common Shares, there shall be deemed to have been
issued or transferred under this Plan only the net number of Common
Shares actually issued or transferred by the Company less the number of
Common Shares so transferred or relinquished.
(b) Notwithstanding anything in Section 3(a) hereof, or elsewhere in
this Plan, to the contrary, the aggregate number of Common Shares actually
issued or transferred by the Company upon the exercise of the Incentive Stock
Options shall not exceed the total number of Common Shares first specified in
Section 3(a) hereof.
(c) Notwithstanding any other provision of this Plan to the
contrary, no Participant shall be granted Option Rights and Appreciation Rights,
in the aggregate, for more than 2,800 Common Shares during any calendar year,
subject to adjustment as provided in Section 9 of this Plan.
(d) Notwithstanding any other provision of this Plan to the contrary,
no Participant shall be granted Deferred Shares, in the aggregate, for more than
2,800 Common Shares during any calendar year, subject to adjustment as provided
in Section 9 of this Plan.
4. OPTION RIGHTS. The Committee may from time to time authorize grants
to Participants of options to purchase Common Shares upon such terms and
conditions as the Committee may determine in accordance with the following
provisions:
3
<PAGE>
(a) Each grant shall specify the number of Common Shares to which it
pertains.
(b) Each grant shall specify an Option Price per Common Share, which
may not be less than the Market Value per Share on the Date of Grant. In the
case of any grant of Incentive Stock Options to a 10% Shareholder, such Option
Price per Common Share may not be less than 110% of the Market Value per Share
on the Date of Grant.
(c) Each grant shall specify the form of consideration to be paid in
satisfaction of the Option Price and the manner of payment of such
consideration, which may include (i) cash in the form of currency or check or
other cash equivalent acceptable to the Company, (ii) nonforfeitable,
unrestricted Common Shares, which are already owned by the Optionee, (iii) any
other legal consideration that the Committee may deem appropriate, including
without limitation any form of consideration authorized under Section 4(d)
below, on such basis as the Committee may determine in accordance with this Plan
and (iv) any combination of the foregoing.
(d) Any grant of a Nonqualified Option may provide that payment of
the Option Price may also be made in whole or in part in the form of Restricted
Shares or other Common Shares that are subject to a risk of forfeiture or
restrictions on transfer. Unless otherwise determined by the Committee on or
after the Date of Grant, whenever any Option Price is paid in whole or in part
by means of any of the forms of consideration specified in this Section 4(d),
the Common Shares received by the Optionee upon the exercise of the Nonqualified
Option shall be subject to the same risks of forfeiture or restrictions on
transfer as those that applied to the consideration surrendered by the Optionee;
provided, however, that such risks of forfeiture and restrictions on transfer
shall apply only to the same number of Common Shares received by the Optionee as
applied to the forfeitable or restricted Common Shares surrendered by the
Optionee.
(e) Any grant may, if there is then a public market for the Common
Shares, provide for deferred payment of the Option Price from the proceeds of
sale through a broker of some or all of the Common Shares to which the exercise
relates.
(f) Any grant may provide for the automatic grant to the Optionee of
Reload Option Rights upon the exercise of Option Rights, including Reload Option
Rights, for Common Shares or any other noncash consideration authorized under
Sections 4(c) and (d) above; provided, however, that the term of any Reload
Option Right shall not extend beyond the term of the Option Right originally
exercised.
(g) Successive grants may be made to the same Optionee regardless of
whether any Option Rights previously granted to the Optionee remain unexercised.
(h) Each grant shall specify the period or periods of continuous
employment, or continuous engagement of the consulting services, of the Optionee
by the Company or any Subsidiary that are necessary and/or the individual or
aggregate performance criteria that must be satisfied before the Option Rights
or installments thereof shall become exercisable, and any grant may provide for
the earlier exercise of the Option Rights in the event of a change in control of
the Company or other similar transaction or event. Notwithstanding the
foregoing, in the case of any grant of Incentive Stock Options, the aggregate
Market Value per Share on the Date of Grant of the
4
<PAGE>
Common Shares subject to such Incentive Stock Options (and all other incentive
stock options granted by the Company or any parent or subsidiary corporation)
that are exercisable for the first time by the Optionee during any calendar year
shall not exceed $100,000.
(i) Option Rights granted pursuant to this Section 4 may be
Nonqualified Options or Incentive Stock Options or combinations thereof.
(j) Any grant of an Option Right may provide for the payment to the
Optionee of dividend equivalents thereon in cash or Common Shares on a current,
deferred or contingent basis, or the Committee may provide that any dividend
equivalents shall be credited against the Option Price.
(k) No Option Right granted pursuant to this Section 4 may be
exercised more than 10 years from the Date of Grant. In the case of any
Incentive Stock Option granted to a 10% Shareholder, such Incentive Stock Option
may not be exercised more than five years from the Date of Grant.
(l) Each grant shall be evidenced by an agreement, which shall be
executed on behalf of the Company by any designated officer thereof and
delivered to and accepted by the Optionee and shall contain such terms and
provisions as the Committee may determine consistent with this Plan.
5. APPRECIATION RIGHTS. The Committee may also authorize grants to
Participants of Appreciation Rights. An Appreciation Right shall be a right of
the Participant to receive from the Company an amount, which shall be determined
by the Committee and shall be expressed as a percentage (not exceeding 100%) of
the Spread at the time of the exercise of an Appreciation Right. Any grant of
Appreciation Rights under this Plan shall be upon such terms and conditions as
the Committee may determine in accordance with the following provisions:
(a) Any grant may specify that the amount payable upon the exercise
of an Appreciation Right may be paid by the Company in cash, Common Shares or
any combination thereof and may (i) either grant to the Participant or reserve
to the Committee the right to elect among those alternatives or (ii) preclude
the right of the Participant to receive and the Company to issue Common Shares
or other equity securities in lieu of cash.
(b) Any grant may specify that the amount payable upon the exercise
of an Appreciation Right shall not exceed a maximum specified by the Committee
on the Date of Grant.
(c) Each grant shall specify (i) the period or periods of continuous
employment, or continuous engagement of the consulting services, of the Optionee
by the Company or any Subsidiary that are necessary and/or the individual or
aggregate performance criteria that must be satisfied before the Appreciation
Rights or installments thereof shall become exercisable and (ii) permissible
dates or periods on or during which Appreciation Rights shall be exercisable.
(d) Any grant may specify that an Appreciation Right may be
exercised only in the event of a change in control of the Company or other
similar transaction or event.
5
<PAGE>
(e) Any grant may provide for the payment to the Participant of
dividend equivalents thereon in cash or Common Shares on a current, deferred or
contingent basis.
(f) Each grant shall be evidenced by an agreement, which shall be
executed on behalf of the Company by any designated officer thereof and
delivered to and accepted by the Optionee and shall describe the subject
Appreciation Rights, identify any related Option Rights, state that the
Appreciation Rights are subject to all of the terms and conditions of this Plan
and contain such other terms and provisions as the Committee may determine
consistent with this Plan.
(g) Regarding Tandem Appreciation Rights only: Each grant shall
provide that a Tandem Appreciation Right may be exercised only (i) at a time
when the related Option Right (or any similar right granted under any other plan
of the Company) is also exercisable and the Spread is positive and (ii) by
surrender of the related Option Right (or such other right) for cancellation.
(h) Regarding Free-standing Appreciation Rights only:
(i) Each grant shall specify in respect of each Free-standing
Appreciation Right a Base Price per Common Share, which shall be equal
to or greater than the Market Value per Share on the Date of Grant;
(ii) Successive grants may be made to the same Participant
regardless of whether any Free-standing Appreciation Rights previously
granted to the Participant remain unexercised; and
(iii) No Free-standing Appreciation Right granted under this
Plan may be exercised more than 10 years from the Date of Grant.
6. RESTRICTED SHARES. The Committee may also authorize grants or sales
to Participants of Restricted Shares upon such terms and conditions as the
Committee may determine in accordance with the following provisions:
(a) Each grant or sale shall constitute an immediate transfer of the
ownership of Common Shares to the Participant in consideration of the
performance of services, entitling such Participant to dividend, voting and
other ownership rights, subject to the substantial risk of forfeiture and
restrictions on transfer hereinafter referred to.
(b) Each grant or sale may be made without additional consideration
from the Participant or in consideration of a payment by the Participant that is
less than the Market Value per Share on the Date of Grant.
(c) Each grant or sale shall provide that the Restricted Shares
covered thereby shall be subject to a "substantial risk of forfeiture" within
the meaning of Section 83 of the Code for a period to be determined by the
Committee on the Date of Grant, and any grant or sale may provide for the
earlier termination of such period in the event of a change in control of the
Company or other similar transaction or event.
6
<PAGE>
(d) Each grant or sale shall provide that, during the period for
which such substantial risk of forfeiture is to continue, the transferability of
the Restricted Shares shall be prohibited or restricted in the manner and to the
extent prescribed by the Committee on the Date of Grant. Such restrictions may
include without limitation rights of repurchase or first refusal in the Company
or provisions subjecting the Restricted Shares to a continuing substantial risk
of forfeiture in the hands of any transferee.
(e) Any grant or sale may require that any or all dividends or other
distributions paid on the Restricted Shares during the period of such
restrictions be automatically sequestered and reinvested on an immediate or
deferred basis in additional Common Shares, which may be subject to the same
restrictions as the underlying award or such other restrictions as the Committee
may determine.
(f) Each grant or sale shall be evidenced by an agreement, which
shall be executed on behalf of the Company by any designated officer thereof and
delivered to and accepted by the Participant and shall contain such terms and
provisions as the Committee may determine consistent with this Plan. Unless
otherwise directed by the Committee, all certificates representing Restricted
Shares, together with a stock power that shall be endorsed in blank by the
Participant with respect to the Restricted Shares, shall be held in custody by
the Company until all restrictions thereon lapse.
7. DEFERRED SHARES. The Committee may also authorize grants or sales of
Deferred Shares to Participants upon such terms and conditions as the Committee
may determine in accordance with the following provisions:
(a) Each grant or sale shall constitute the agreement by the Company
to issue or transfer Common Shares to the Participant in the future in
consideration of the performance of services, subject to the fulfillment during
the Deferral Period of such conditions as the Committee may specify.
(b) Each grant or sale may be made without additional consideration
from the Participant or in consideration of a payment by the Participant that is
less than the Market Value per Share on the Date of Grant.
(c) Each grant or sale shall provide that the Deferred Shares
covered thereby shall be subject to a Deferral Period, which shall be fixed by
the Committee on the Date of Grant, and any grant or sale may provide for the
earlier termination of the Deferral Period in the event of a change in control
of the Company or other similar transaction or event.
(d) During the Deferral Period, the Participant shall not have any
right to transfer any rights under the subject award, shall not have any rights
of ownership in the Deferred Shares and shall not have any right to vote the
Deferred Shares, but the Committee may on or after the Date of Grant authorize
the payment of dividend equivalents on the Deferred Shares in cash or additional
Common Shares on a current, deferred or contingent basis.
(e) Each grant or sale shall be evidenced by an agreement, which
shall be executed on behalf of the Company by any designated officer thereof and
delivered to and accepted
7
<PAGE>
by the Participant and shall contain such terms and provisions as the Committee
may determine consistent with this Plan.
8. TRANSFERABILITY.
(a) No Option Right or Appreciation Right granted under this Plan
may be transferred by a Participant, except (i) by will or the laws of descent
and distribution, (ii) to one or more members of the Participant's immediate
family, or (iii) to a trust established for the benefit of the Participant
and/or one or more members of the Participant's immediate family. Option Rights
and Appreciation Rights granted under this Plan may not be exercised during a
Participant's lifetime except by (i) the Participant, (ii) a transferee of the
Participant described in the preceding sentence, or (iii) in the event of the
legal incapacity of the Participant or any such transferee, by the guardian or
legal representative of the Participant or such transferee (as applicable)
acting in a fiduciary capacity on behalf thereof under state law and court
supervision.
(b) Any grant made under this Plan may provide that all or any part
of the Common Shares that are to be issued or transferred by the Company upon
the exercise of Option Rights or Appreciation Rights or upon the termination of
the Deferral Period applicable to Deferred Shares, or are no longer subject to
the substantial risk of forfeiture and restrictions on transfer referred to in
Section 6 of this Plan, shall be subject to further restrictions upon transfer.
9. ADJUSTMENTS.
(a) The Committee may make or provide for such adjustments in the
number of Common Shares covered by outstanding Option Rights, Appreciation
Rights and Deferred Shares granted hereunder, the Option Prices per Common Share
or Base Prices per Common Share applicable to any such Option Rights and
Appreciation Rights, and the kind of shares (including shares of another issuer)
covered thereby, as the Committee may in good faith determine to be equitably
required in order to prevent dilution or expansion of the rights of Participants
that otherwise would result from (i) any stock dividend, stock split,
combination of shares, recapitalization or similar change in the capital
structure of the Company or (ii) any merger, consolidation, spin-off, spin-out,
split-off, split-up, reorganization, partial or complete liquidation or other
distribution of assets, issuance of warrants or other rights to purchase
securities or any other corporate transaction or event having an effect similar
to any of the foregoing. In the event of any such transaction or event, the
Committee may provide in substitution for any or all outstanding awards under
this Plan such alternative consideration as it may in good faith determine to be
equitable under the circumstances and may require in connection therewith the
surrender of all awards so replaced. Moreover, the Committee may on or after the
Date of Grant provide in the agreement evidencing any award under this Plan that
the holder of the award may elect to receive an equivalent award in respect of
securities of the surviving entity of any merger, consolidation or other
transaction or event having a similar effect, or the Committee may provide that
the holder will automatically be entitled to receive such an equivalent award.
The Committee may also make or provide for such adjustments in the maximum
numbers of Common Shares specified in Section 3 of this Plan as the Committee
may in good faith determine to be appropriate in order to reflect any
transaction or event described in this Section 9.
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<PAGE>
(b) If another corporation is merged into the Company or the Company
otherwise acquires another corporation, the Committee may elect to assume under
this Plan any or all outstanding stock options or other awards granted by such
corporation under any stock option or other plan adopted by it prior to such
acquisition. Such assumptions shall be on such terms and conditions as the
Committee may determine; provided, however, that the awards as so assumed do not
contain any terms, conditions or rights that are inconsistent with the terms of
this Plan. Unless otherwise determined by the Committee, such awards shall not
be taken into account for purposes of the limitations contained in Section 3 of
this Plan.
10. FRACTIONAL SHARES. The Company shall not be required to issue any
fractional Common Shares pursuant to this Plan. The Committee may provide for
the elimination of fractions or for the settlement thereof in cash.
11. WITHHOLDING TAXES. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under this Plan, and
the amounts available to the Company for the withholding are insufficient, it
shall be a condition to the receipt of any such payment or the realization of
any such benefit that the Participant or such other person make arrangements
satisfactory to the Company for payment of the balance of any taxes required to
be withheld. At the discretion of the Committee, any such arrangements may
without limitation include voluntary or mandatory relinquishment of a portion of
any such payment or benefit or the surrender of outstanding Common Shares. The
Company and any Participant or such other person may also make similar
arrangements with respect to the payment of any taxes with respect to which
withholding is not required.
12. CERTAIN TERMINATIONS OF EMPLOYMENT OR CONSULTING SERVICES,
HARDSHIP, AND APPROVED LEAVES OF ABSENCE. Notwithstanding any other provision of
this Plan to the contrary, in the event of termination of employment or
consulting services by reason of death, disability, normal retirement, early
retirement with the consent of the Company, termination of employment or
consulting services to enter public or military service with the consent of the
Company or leave of absence approved by the Company, or in the event of hardship
or other special circumstances, of a Participant who holds an Option Right or
Appreciation Right that is not immediately and fully exercisable, any Restricted
Shares as to which the substantial risk of forfeiture or the prohibition or
restriction on transfer has not lapsed, any Deferred Shares as to which the
Deferral Period is not complete, or any Common Shares that are subject to any
transfer restriction pursuant to Section 8(b) of this Plan, the Committee may
take any action that it deems to be equitable under the circumstances or in the
best interests of the Company, including without limitation waiving or modifying
any limitation or requirement with respect to any award under this Plan.
13. ADMINISTRATION OF THE PLAN.
(a) This Plan shall be administered by the Compensation Committee of
the Board, which shall be composed of not less than two members of the Board,
or, in the absence of a Compensation Committee, by the full Board. At any time
that awards under the Plan are subject to Rule 16b-3, each member of the
Compensation Committee shall be a "non-employee director" within the meaning of
such Rule. In addition, at any time that the Company is subject to Section
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<PAGE>
162(m) of the Code, each member of the Compensation Committee shall be an
"outside director" within the meaning of such Section. A majority of the
Committee shall constitute a quorum, and the acts of the members of the
Committee who are present at any meeting thereof at which a quorum is present,
or acts unanimously approved by the members of the Committee in writing, shall
be the acts of the Committee.
(b) The interpretation and construction by the Committee of any
provision of this Plan or any agreement, notification or document evidencing the
grant of Option Rights, Appreciation Rights, Restricted Shares or Deferred
Shares, and any determination by the Committee pursuant to any provision of this
Plan or any such agreement, notification or document, shall be final and
conclusive. No member of the Committee shall be liable for any such action taken
or determination made in good faith.
14. AMENDMENTS AND OTHER MATTERS.
(a) This Plan may be amended from time to time by the Committee;
provided, however, that except as expressly authorized by this Plan, no such
amendment shall cause this Plan to cease to satisfy any applicable condition of
Rule 16b-3 or cause any award under the Plan to cease to qualify for any
applicable exception under Section 162(m) of the Code, without the further
approval of the stockholders of the Company.
(b) With the concurrence of the affected Participant, the Committee
may cancel any agreement evidencing Option Rights or any other award granted
under this Plan. In the event of any such cancellation, the Committee may
authorize the granting of new Option Rights or other awards hereunder, which may
or may not cover the same number of Common Shares as had been covered by the
cancelled Option Rights or other award, at such Option Price, in such manner and
subject to such other terms, conditions and discretion as would have been
permitted under this Plan had the cancelled Option Rights or other award not
been granted.
(c) The Committee may condition the grant of any award or
combination of awards authorized under this Plan on the surrender or deferral by
the Participant of his or her right to receive a cash bonus or other
compensation otherwise payable by the Company or a Subsidiary to the
Participant.
(d) This Plan shall not confer upon any Participant any right with
respect to continuance of employment or other service with the Company or any
Subsidiary and shall not interfere in any way with any right that the Company or
any Subsidiary would otherwise have to terminate any Participant's employment or
other service at any time.
(e) To the extent that any provision of this Plan would prevent any
Option Right that was intended to qualify as an Incentive Stock Option from so
qualifying, any such provision shall be null and void with respect to any such
Option Right; provided, however, that any such provision shall remain in effect
with respect to other Option Rights, and there shall be no further effect on any
provision of this Plan.
(f) Any award that may be made pursuant to an amendment to this Plan
that shall have been adopted without the approval of the stockholders of the
Company shall be null and
10
<PAGE>
void if it is subsequently determined that such approval was required under the
terms of the Plan or applicable law.
(g) Unless otherwise determined by the Committee, this Plan is
intended to comply with Rule 16b-3 at all times that awards hereunder are
subject to such Rule.
<PAGE>
Exhibit 10.8
FORM OF RESTRICTED STOCK AGREEMENT
(Non-Assignable)
____________ Shares
Regarding Class A Common Stock of
TRITEL, INC.
Issued Pursuant to the
Tritel, Inc. 1999 Stock Option Plan
THIS CERTIFIES that effective January __, 1999, [name] ______________
is granted the right to purchase [number of shares] ____________ restricted but
fully paid and non-assessable shares of the Class A Common Stock of Tritel, Inc.
pursuant to the Tritel, Inc. 1999 Stock Option Plan, upon and subject to the
following terms and conditions and the terms and conditions of the Plan:
1. Subscription for Restricted Shares. Grantee hereby purchases from
the Company, and the Company hereby sells to Grantee, the Restricted Shares for
a cash subscription price of $.01 per share.
2. Definitions. Capitalized terms not otherwise defined herein shall
have the meanings ascribed to them in the Plan. The following terms have the
following meanings:
"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.
"Automatic Repurchase Event" means (v) the consummation of a Company
Merger after giving effect to which the Cash Equity Investors, in the aggregate,
shall beneficially own on a Fully Diluted Basis less than 33% of the capital
stock or other equity interests in the surviving entity, (w) the consummation of
a Company Asset Sale, (x) the termination of Grantee's employment, (y) if and
only if the IPO Date has theretofore occurred, the seventh (7th) anniversary of
the Date of Grant, and (z) if and only if the IPO Date has not occurred prior to
the seventh (7th) anniversary of the date hereof, the IPO Date.
"Base Price" means ONE THOUSAND AND NO/100 U.S. DOLLARS (U.S.$1,000.00)
per share appropriately adjusted for stock splits, stock dividends and similar
changes in
<PAGE>
capitalization (but excluding changes in the liquidation preference of the
Preferred Stock of the Company in accordance with the Restated Certificate).
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means a day on which banks and foreign exchange markets
are open for the transaction of business required for this Agreement, and the
agreements to which this Agreement refers, in New York, New York as relevant to
the determination to be made or the action to be taken.
"Cause" means only:
(i) Grantee's indictment for or conviction of a felony,
(ii) Fraud, misappropriation or embezzlement by Grantee against the
Company or any subsidiary or affiliate of the Company,
(iii) Grantee's willful misconduct or gross negligence in connection
with his employment which has materially adversely affected the Company,
monetarily or otherwise, as determined by a majority vote of the Board of
Directors of the Company, or
(iv) Any other act, omission or circumstance which otherwise provides
the Company the right to terminate Grantee's employment for "Cause" as defined
under Grantee's Employment Agreement, if any, with the Company or any Subsidiary
of the Company or under applicable law.
"Class A Common Stock" means those shares of the Company's Common Stock
designated as Class A Voting Common Stock.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means the Compensation Committee of the Board of Directors,
as described in Section 13(a) of the Plan, or, in the absence of a Compensation
Committee, the full Board of Directors.
"Company" means Tritel, Inc., a Delaware corporation.
"Company Asset Sale" means any sale or disposition of all or
substantially all of the Company's assets but excludes any pledges, encumbrances
or security interests that may be granted by the Company.
"Company Merger" means any merger, combination or consolidation of the
Company or any of its Subsidiaries with or into any other entity (regardless of
whether the Company or such Subsidiary is the surviving entity in any such
transaction).
"Company Stock" means any series or class of the Company's Common or
Preferred Stock.
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<PAGE>
"Date of Grant" means the effective date of this Agreement.
"Disability" means any physical or mental illness, injury or condition
that would qualify the Grantee for benefits under any long-term disability
benefit plan maintained by the Company or any Affiliate and applicable to
Grantee.
"Employment Agreement" means, collectively, that certain written
employment agreement between the Company and Grantee and that certain letter
agreement concerning compensation and other matters between the Company and
Grantee, as the same may be amended, modified or supplemented in accordance with
the terms thereof.
"Escrow Holder" means the Secretary of the Company.
"Fully Diluted Basis" means, with respect to the shares of Common Stock
outstanding, all of the shares of Common Stock then outstanding (regardless of
whether subject to repurchase), plus (without duplication) all the shares of
Common Stock issuable upon the exercise of outstanding options or convertible
securities (excluding the Company's Series A Preferred Stock, par value $.01 per
share).
"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.
"Grantee" means the person whose name appears above in the first
paragraph of this Agreement.
"Investors Stockholders' Agreement" means that certain Investors
Stockholders' Agreement, by and among the Company and certain other partners as
the same may be amended, modified or supplemented in accordance with the terms
thereof.
"IPO Date" means the first date on which (a) the Class A Common Stock
shall have been registered pursuant to an effective registration statement
("Registration Statement") under the Securities Act, (b) the aggregate gross
proceeds received by the Company in connection with such Registration
Statement(s) equals or exceeds $20,000,000, and (c) the Class A Common Stock
shall be listed for trading on the New York Stock Exchange or the American Stock
Exchange or authorized for trading on NASDAQ, including without limitation its
National Market System.
"Market Price" means in the case of (I) an Automatic Repurchase Event:
(A) specified in clause (v) or (w) of the definition thereof, the
per share consideration paid or payable to the holders of Class A Common Stock
in connection with such event,
(B) specified in clause (x) of the definition thereof if the IPO
Date shall not have occurred prior to the date of termination, the fair market
value per share of Class A Common Stock as determined in good faith by the Board
of Directors,
3
<PAGE>
(C) specified in clause (x) of the definition thereof if the IPO
Date shall have occurred on or prior to the date of termination, the average
closing price of the Class A Common Stock during the ten (10) trading days prior
to such date of termination,
(D) specified in clause (y) of the definition thereof, the average
closing price of the Class A Common Stock during the ten (10) trading days prior
to such seventh (7th) anniversary of the date hereof, or
(E) specified in clause (z) of the definition thereof, the per share
offering price of the Class A Common Stock issued in connection with the public
offering occurring on the IPO Date, or
(II) a Trigger Date:
(A) which is on the IPO Date, the per share offering price of the
Class A Common Stock issued in connection with the public offering occurring on
the IPO Date, or
(B) which is after the IPO Date, the average closing price of share
of Class A Common Stock during the ten (10) trading days prior to such Trigger
Date.
"NASDAQ" means the National Association of Securities Dealers'
Automated Quotation System.
"Non-Released Restricted Shares" means the number of shares of Class A
Common Stock initially issued to Grantee as Restricted Shares less the aggregate
number of Grantee's Restricted Shares that have (x) become Trigger Shares, or
(y) been repurchased by the Company.
"Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization or other legal entity.
"Plan" means the Company's 1999 Stock Option Plan, as the same may be
amended, modified or supplemented in accordance with the terms thereof.
"Preferred Stock" means the Company's preferred stock, par value $.01
per share.
"Repurchase Price" means $.01 per share.
"Restated Certificate" means the Amended and Restated Certificate of
Incorporation of the Company.
"Restricted Shares" means the [number] __________________ shares of
Class A Common Stock granted and subscribed for hereunder.
"Securities Act" means the Securities Act of 1933, as amended.
4
<PAGE>
"Securities Purchase Agreement" means the Securities Purchase Agreement
by and among the Company and certain other parties, dated as of May 20, 1998, as
the same may be amended, modified or supplemented in accordance with the terms
thereof.
"Stockholders" means those Persons who are issued shares of Company
Stock and are a party to the Stockholders' Agreement.
"Stockholders' Agreement" means the Stockholders' Agreement by and
among the Company and certain other parties, as the same may be amended,
modified or supplemented in accordance with the terms thereof.
"Trigger Date" means the date of delivery to the Company by Grantee of
a Trigger Notice.
"Trigger Notice" means a notice given by Grantee with respect to a
specified number of Restricted Shares to determine the number of Trigger Shares.
"Trigger Shares" means Restricted Shares set forth in a Trigger Notice
and not repurchased in connection with such notice pursuant to Section 3;
provided, however, that Restricted Shares that are not so repurchased shall, to
the extent applicable, continue to be subject to vesting in accordance with the
Vesting Schedule annexed hereto.
3. Vesting, Transfer and Repurchase of Unvested Shares, Etc.
a. General. The Restricted Shares shall be subject to repurchase by
the Company at the Repurchase Price in accordance with the terms of this Section
3.
b. Repurchase of Restricted Shares upon Automatic Repurchase Event.
Upon an Automatic Repurchase Event, Grantee shall sell to the Company, and the
Company shall purchase from Grantee, the aggregate of :
i. all Restricted Shares that shall not have vested (or are
stated to be subject to repurchase) in accordance with the Vesting Schedule
annexed hereto, plus
ii. a number of Restricted Shares equal to the number of
Non-Released Restricted Shares beneficially owned by Grantee multiplied by a
fraction, the numerator of which is the Base Price and the denominator of which
is the Market Price on the date of such event.
c. Repurchase of Restricted Shares on Trigger Date. On any Trigger
Date Executive may elect, by delivery of a Trigger Notice with respect to the
number of Restricted Shares to determine the number of Trigger Shares. Within 20
days of the giving of a Trigger Notice the Company shall repurchase from Grantor
and Grantee shall sell to the Company for the Repurchase Price a number of
Restricted Shares specified in the Trigger Notice multiplied by a fraction, the
numerator of which is the Base Price and the denominator of which is the Market
Price on the date of such notice. Each Trigger Notice shall be with respect to
at least 20% of the Restricted Shares initially issued to Grantee. A Trigger
Notice may be delivered only as follows: (x) not less than twenty (20) Business
Days prior to the IPO Date if
5
<PAGE>
the Trigger Date is the IPO Date, or (y) following the IPO Date, annually, no
later than the eleventh Business Day following the Company's public announcement
of its earnings for the six (6) month period ended June 30 of each fiscal year.
d. Vesting Schedule. In connection with any such repurchases of
Restricted Shares, the Restricted Shares to be repurchased by the Company shall
proportionately reduce the number of Restricted Shares initially issued to
Grantee and allocable to each Vesting Date or Event set forth on the Vesting
Schedule annexed hereto.
e. Purchase Price; Closing of Repurchase, Assignment of Repurchase
Right. Any repurchase pursuant to this Section 3 shall be for the Repurchase
Price. The closing of a purchase and sale of repurchased shares shall take place
on a date mutually agreed by Grantee and the Company, but in no event later than
twenty (20) days after (i) the date that employment of Grantee shall have
terminated or (ii) in the case of an Automatic Repurchase Event other than
termination of employment of Grantee, the occurrence of the applicable event or
(iii) the date of a Trigger Notice (except that in connection with a Trigger
Notice given with respect to the IPO Date, the closing shall take place on the
IPO Date). At such closing, the Company shall deliver to the Grantee a check in
the amount of the aggregate Repurchase Price and, upon delivery thereof, the
Company shall become the legal and beneficial owner of the Restricted Shares so
sold and all rights and interests therein or relating thereto, and the Company
shall have the right to retain and transfer to its own name such shares being
repurchased by the Company.
4. Escrow of Shares. The certificate(s) representing all Restricted
Shares shall be held by the Escrow Holder, along with a stock power executed by
the Grantee in blank. Grantee directs the Company to deliver all certificates
representing Restricted Shares to the Escrow Holder. The Escrow Holder is hereby
directed to permit transfer of such shares only in accordance with this
Agreement, the Stockholders Agreement and the Investors Stockholders' Agreement.
In the event further instructions are desired by the Escrow Holder, he shall be
entitled to rely upon written directions of the Board of Directors of the
Company. The Escrow Holder shall have no liability for any act or omission
hereunder while acting in good faith in the exercise of his own judgment. The
Company agrees to indemnify and hold Escrow Holder free and harmless from and
against any and all losses, costs, damages, liabilities or expenses, including
counsel fees to which Escrow Holder may be put or which he may incur by reason
of or in connection with the escrow arrangement hereunder. If the Company or any
assignee repurchases any of the Restricted Shares pursuant to Section 3, the
Escrow Holder, upon receipt of written notice of such repurchase from the
proposed transferee, shall take all steps necessary to accomplish such
repurchase. From time to time, upon Grantee's request, Escrow Holder shall: (i)
cancel the certificate(s) held by the Escrow Holder and representing Restricted
Shares, (ii) cause new certificate(s) to be issued representing the number of
Restricted Shares no longer subject to repurchase pursuant to Section 3, which
certificate(s) the Escrow Holder shall deliver to Grantee and (iii) cause new
certificate(s) to be issued representing the balance of the Restricted Shares,
which certificate(s) shall be held in escrow by the Escrow Holder in accordance
with the provisions of this Section 4. Subject to the terms hereof, Grantee
shall have all the rights of stockholder with respect to the Restricted Shares
while they are held in escrow, including without limitation, the right to vote
the Restricted Shares and receive any cash dividends declared thereon. If, from
time to time during the term of the Company's repurchase
6
<PAGE>
right, there is (i) any stock dividend, stock split or other change in the
Restricted Shares, or (ii) any merger or sale of all or substantially all of the
assets or other acquisition of the Company, any and all new, substituted or
additional securities to which such Grantee is entitled by reason of his
ownership of the Restricted Shares shall be immediately subject to this escrow,
deposited with the Escrow Holder and included thereafter as Restricted Shares
for purposes of this Agreement and the Company's repurchase right.
5. Legends. The share certificates evidencing the Restricted Shares
shall be endorsed with any and all legends required to be placed thereon under
Section 7(b) hereof, applicable federal or state securities laws or the
Stockholders' Agreement and the Investors Stockholders' Agreement.
6. Compliance With Law. The Company and Grantee will make reasonable
efforts to comply with all applicable securities laws. In addition,
notwithstanding any provision of this agreement to the contrary, the Restricted
Shares will not become vested at any time that such vesting would result in a
violation of any such law.
7. Investment Representations; Registration.
a. Grantee represents and warrants that:
(i) Grantee is acquiring the Restricted Shares 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).
(ii) Grantee is not relying on and acknowledges that no
representation is being made by the Company or any of its officers, employees,
Affiliates, agents or representatives, 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.
(iii) In deciding to purchase the Restricted Shares, Grantee has
relied exclusively on the investigations made by Grantee and Grantee's
representatives and Grantee's and such representatives' knowledge of the
industry in which the Company proposes to operate.
b. Grantee agrees that all Restricted Shares shall only be sold
following registration under the Securities Act or pursuant to an exemption
therefrom.
c. The Company may affix a legend to the certificates
representing unregistered shares of Class A Common Stock issued pursuant to this
Agreement to the effect that such shares have not been registered under the
Securities Act and may only be sold or transferred upon registration or pursuant
to an exemption therefrom.
d. Except as may be provided under the Stockholders' Agreement,
the Company shall have no obligation to register under the Securities Act any
shares of Class A Common Stock or any other securities issued pursuant to this
Agreement.
7
<PAGE>
8. Applicability of Other Instruments. The Restricted Shares are
issued, and this Agreement is entered into, pursuant to and subject to all of
the terms and conditions of the Plan, the terms and conditions of which are
hereby incorporated as though set forth at length, and the receipt of a copy of
which the Grantee hereby acknowledges by his receipt of this Agreement. A
determination of the Committee of the Board of Directors of the Company under
the Plan as to any questions which may arise with respect to the interpretation
of the provisions of this Agreement and of the Plan shall be final. The
Committee may authorize and establish such rules, regulations and revisions
thereof not inconsistent with the provisions of the Plan, as it may deem
advisable. In addition, Grantee hereby acknowledges receipt of a copy of, and by
executing this Agreement, joins in and is bound by the terms of, the
Stockholders' Agreement and the Investors Stockholders' Agreement as a party
thereto, effective upon the execution hereof.
9. Severability. In the event that one or more of the provisions of
this Agreement may be invalidated for any reason by a court, any provision so
invalidated will be deemed to be separable from the other provisions hereof, and
the remaining provisions hereof will continue to be valid and fully enforceable.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Mississippi 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 Mississippi and of the United States of America located
in Hinds County, Mississippi (the "Mississippi Courts") for any litigation
arising out of or relating to this Agreement, waive any objection to the laying
of venue of any such litigation in the Mississippi Courts and agrees not to
plead or claim in any Mississippi Court that such litigation brought therein has
been brought in an inconvenient forum.
8
<PAGE>
WITNESS the seal of the Company and the signature of its duly
authorized officer.
Dated: ____________, ____
TRITEL, INC.
By: _________________________
Name: ______________________
Title: _____________________
ACKNOWLEDGED AND AGREED:
By: ________________________________
Name: __________________________
9
<PAGE>
VESTING SCHEDULE
---------------------------------------------------------------------------
VESTING DATE OR EVENT PERCENT OF RESTRICTED
---------------------------------------------------------------------------
Date of Grant *%
---------------------------------------------------------------------------
First Anniversary of the Date of Grant *%
---------------------------------------------------------------------------
Second Anniversary of the Date of Grant *%
---------------------------------------------------------------------------
Third Anniversary of the Date of Grant *%
---------------------------------------------------------------------------
Fourth Anniversary of the Date of Grant *%
---------------------------------------------------------------------------
Fifth Anniversary of the Date of Grant *%
---------------------------------------------------------------------------
Completion of _____ 10%
---------------------------------------------------------------------------
Completion of _____ 10%
---------------------------------------------------------------------------
Accelerated Vesting
o Upon termination of Grantee's employment by reason of a Company Merger
or a Company Asset Sale, 100% of the Restricted Shares shall vest.
o Upon termination of Grantee's employment for any reason all Restricted
Shares that have not yet become vested shall be repurchased in
accordance with Section 3.
** To be determined in granting directors resolution.
<PAGE>
Exhibit 10.9
TRITEL, INC.
1999 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
1. PURPOSE. The purpose of this Plan is to attract and retain qualified
individuals to serve as non-employee members of the Board of Directors of
Tritel, Inc. (the "Company") and to provide such persons with appropriate
incentives. The Company has adopted the Plan effective as of January 7, 1999,
subject to the approval of the Company's stockholders, and unless extended by
amendment in accordance with the terms of the Plan, no Option Rights will be
granted hereunder after the tenth anniversary of such effective date.
2. DEFINITIONS. As used in this Plan,
"BOARD" means the Board of Directors of the Company.
"CHANGE IN CONTROL" means a change in control of the Company, which
will be deemed to have occurred after the effective date of this Plan if:
(i) any "person" as such term is used in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof except that such term shall not include (A) the Company
or any of its subsidiaries, (B) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
affiliates, (C) an underwriter temporarily holding securities pursuant
to an offering of such securities, (D) any corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of Common Shares, or (E) any person
or group as used in Rule 13d-1(b) under the Exchange Act, is or becomes
the Beneficial Owner, as such term is defined in Rule 13d-3 under the
Exchange Act, directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such person any
securities acquired directly from the Company or its affiliates other
than in connection with the acquisition by the Company or its
affiliates of a business) representing 50% or more of the combined
voting power of the Company's then outstanding securities.
(ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board,
and any new director (other than (A) a director designated by a person
who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii), or (iv) of this definition
or (B) a director whose initial assumption of office is in connection
with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of
directors of the Company) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or
<PAGE>
whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(iii) there is consummated a merger or consolidation
of the Company or any direct or indirect subsidiary of the Company with
any other corporation, other than (A) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof) in combination with the
ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any subsidiary of the Company,
at least 75% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no person (as defined above) is or
becomes the beneficial owner, directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by such
person any securities acquired directly from the Company or its
affiliates other than in connection with the acquisition by the Company
or its affiliates of a business) representing 25% or more of the
combined voting power of the Company's then outstanding securities; or
(iv) the stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets (or any transaction
having a similar effect) other than a sale or disposition by the
Company of all or substantially all of the Company's assets to an
entity, at least 75% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company
immediately prior to such sale.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMON SHARES" means (i) shares of the Class A Common Stock, par value
$.01 per share, of the Company and (ii) any security into which Common Shares
may be converted by reason of any transaction or event of the type referred to
in Section 6 of this Plan.
"DATE OF GRANT" means the date specified by the Board on which a grant
of Option Rights shall become effective, which shall not be earlier than the
date on which the Board takes action with respect thereto.
"DISABILITY" means any physical or mental illness, injury or condition
that would qualify a Participant for benefits under any long-term disability
benefit plan maintained by the Company or any Subsidiary and applicable to such
Participant (or, if the Participant is not eligible for any such plan, to senior
executive officers of the Company).
2
<PAGE>
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
"MARKET VALUE PER SHARE" means the fair market value of the Common
Shares as determined by the Board from time to time.
"OPTION PRICE" means the purchase price payable upon the exercise of an
Option Right.
"OPTION RIGHT" means the right to purchase Common Shares from the
Company upon the exercise of a nonqualified stock option granted pursuant to
Section 4 of this Plan.
"PARTICIPANT" means an individual who, at the time of any automatic
award of Option Rights pursuant to Section 4 below, is a member of the Board and
both a "non-employee director" within the meaning of Rule 16b-3 and an "outside
director" within the meaning of Section 162(m) of the Code.
"RULE 16B-3" means Rule 16b-3, as promulgated and amended from time to
time by the Securities and Exchange Commission under the Exchange Act, or any
successor rule to the same effect.
"SUBSIDIARY" means a corporation, partnership, joint venture,
unincorporated association or other entity in which the Company has a direct or
indirect ownership or other equity interest.
3. SHARES AVAILABLE UNDER THE PLAN.
(a) Subject to adjustment as provided in Section 6 of this
Plan, the number of Common Shares which may be issued or transferred upon the
exercise of Option Rights shall not in the aggregate exceed 50,000 Common
Shares, which may be Common Shares of original issuance or Common Shares held in
treasury or a combination thereof. For the purposes of this Section 3(a):
(i) Upon payment in cash of the benefit provided by
any award granted under this Plan, any Common Shares that were covered
by that award shall again be available for issuance or transfer
hereunder; and
(ii) Upon the full or partial payment of any Option
Price by the transfer to the Company of Common Shares or upon
satisfaction of tax withholding obligations in connection with any such
exercise or any other payment made or benefit realized under this Plan
by the transfer or relinquishment of Common Shares, there shall be
deemed to have been issued or transferred under this Plan only the net
number of Common Shares actually issued or transferred by the Company
less the number of Common Shares so transferred or relinquished.
4. OPTION RIGHTS. Subject to adjustment as provided in Section 6 of
this Plan, the Board may grant to each Participant Option Rights to purchase
Common Shares upon such terms and conditions as the Board shall determine in
accordance with the following provisions:
3
<PAGE>
(a) Each grant shall specify an Option Price per Common Share,
which shall equal the Market Value per Share on the Date of Grant.
(b) Each grant shall specify the form of consideration to be
paid in satisfaction of the Option Price and the manner of payment of such
consideration, which consist of (i) cash in the form of currency or check or
other cash equivalent acceptable to the Company, (ii) nonforfeitable,
unrestricted Common Shares, which are already owned by the Participant and (iii)
any combination of the foregoing.
(c) Any grant shall, if there is then a public market for the
Common Shares, provide for deferred payment of the Option Price from the
proceeds of sale through a broker of some or all of the Common Shares to which
the exercise relates.
(d) Successive grants may be made to the same Participant
regardless of whether any Option Rights previously granted to the Participant
remain unexercised.
(e) Each grant shall specify that the Option Rights awarded
thereby shall become exercisable in full upon the earliest to occur of (i) the
10th anniversary of the Date of Grant, (ii) the date of the Participant's death
or Disability, and (iii) the effective date of a Change in Control, provided, in
each case, that the Participant remains in continuous service with the Company
until such date.
(f) Option Rights granted pursuant to this Section 4 shall be
nonqualified stock options.
(g) No Option Right granted pursuant to this Section 4 may be
exercised more than 10 years from the Date of Grant.
(h) Each grant shall be evidenced by an agreement, which shall
be executed on behalf of the Company by any designated officer thereof and
delivered to and accepted by the Participant and shall contain such terms and
provisions as the Board may determine consistent with this Plan.
5. TRANSFERABILITY. No Option Right granted under this Plan may be
transferred by a Participant, except (i) by will or the laws of descent and
distribution, (ii) to one or more members of the Participant's immediate family,
or (iii) to a trust established for the benefit of the Participant and/or one or
more members of the Participant's immediate family. Option Rights granted under
this Plan may not be exercised during a Participant's lifetime except by (i) the
Participant, (ii) a transferee of the Participant described in the preceding
sentence, or (iii) in the event of the legal incapacity of the Participant or
any such transferee, by the guardian or legal representative of the Participant
or such transferee (as applicable) acting in a fiduciary capacity on behalf
thereof under state law and court supervision.
4
<PAGE>
6. ADJUSTMENTS.
(a) The Board may make or provide for such adjustments in the
number of Common Shares covered by outstanding Option Rights granted hereunder,
the Option Prices per Common Share applicable to any such Option Rights, and the
kind of shares (including shares of another issuer) covered thereby, as the
Board may in good faith determine to be equitably required in order to prevent
dilution or expansion of the rights of Participants that otherwise would result
from (i) any stock dividend, stock split, combination of shares,
recapitalization or similar change in the capital structure of the Company or
(ii) any merger, consolidation, spin-off, spin-out, split-off, split-up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of warrants or other rights to purchase securities or any other
corporate transaction or event having an effect similar to any of the foregoing.
In the event of any such transaction or event, the Board may provide in
substitution for any or all outstanding awards under this Plan such alternative
consideration as it may in good faith determine to be equitable under the
circumstances and may require in connection therewith the surrender of all
awards so replaced. Moreover, the Board may on or after the Date of Grant
provide in the agreement evidencing any award under this Plan that the holder of
the award may elect to receive an equivalent award in respect of securities of
the surviving entity of any merger, consolidation or other transaction or event
having a similar effect, or the Board may provide that the holder will
automatically be entitled to receive such an equivalent award. The Board may
also make or provide for such adjustments in the maximum numbers of Common
Shares specified in Section 3 of this Plan as the Board may in good faith
determine to be appropriate in order to reflect any transaction or event
described in this Section 6.
(b) If another corporation is merged into the Company or the
Company otherwise acquires another corporation, the Board may elect to assume
under this Plan any or all outstanding stock options or other awards granted by
such corporation under any stock option or other plan adopted by it prior to
such acquisition. Such assumptions shall be on such terms and conditions as the
Board may determine; provided, however, that the awards as so assumed do not
contain any terms, conditions or rights that are inconsistent with the terms of
this Plan. Unless otherwise determined by the Board, such awards shall not be
taken into account for purposes of the limitations contained in Section 3 of
this Plan.
7. FRACTIONAL SHARES. The Company shall not be required to issue any
fractional Common Shares pursuant to this Plan. The Board may provide for the
elimination of fractions or for the settlement thereof in cash.
8. WITHHOLDING TAXES. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under this Plan, and
the amounts available to the Company for the withholding are insufficient, it
shall be a condition to the receipt of any such payment or the realization of
any such benefit that the Participant or such other person make arrangements
satisfactory to the Company for payment of the balance of any taxes required to
be withheld. At the discretion of the Board, any such arrangements may without
limitation include voluntary or mandatory relinquishment of a portion of any
such payment or benefit or the surrender of
5
<PAGE>
outstanding Common Shares. The Company and any Participant or such other person
may also make similar arrangements with respect to the payment of any taxes with
respect to which withholding is not required.
9. ADMINISTRATION OF THE PLAN.
(a) This Plan shall be administered by the Board. A majority
of the Board shall constitute a quorum, and the acts of the members of the Board
who are present at any meeting thereof at which a quorum is present, or acts
unanimously approved by the members of the Board in writing, shall be the acts
of the Board.
(b) The interpretation and construction by the Board of any
provision of this Plan or any agreement, notification or document evidencing the
grant of Option Rights, and any determination by the Board pursuant to any
provision of this Plan or any such agreement, notification or document, shall be
final and conclusive. No member of the Board shall be liable for any such action
taken or determination made in good faith.
10. AMENDMENTS AND OTHER MATTERS.
(a) This Plan may be amended from time to time by the Board;
provided, however, that except as expressly authorized by this Plan, no such
amendment shall cause this Plan to cease to satisfy any applicable condition of
Rule 16b-3 without the further approval of the stockholders of the Company.
(b) With the concurrence of the affected Participant, the
Board may cancel any agreement evidencing Option Rights or any other award
granted under this Plan. In the event of any such cancellation, the Board may
authorize the granting of new Option Rights or other awards hereunder, which may
or may not cover the same number of Common Shares as had been covered by the
cancelled Option Rights or other award, at such Option Price, in such manner and
subject to such other terms, conditions and discretion as would have been
permitted under this Plan had the cancelled Option Rights or other award not
been granted.
(c) This Plan shall not confer upon any Participant any right
with respect to continuance of service with the Board, the Company or any
Subsidiary and shall not interfere in any way with any right that the Company,
its stockholders or any Subsidiary would otherwise have to terminate any
Participant's service at any time.
(e) Any award that may be made pursuant to an amendment to
this Plan that shall have been adopted without the approval of the stockholders
of the Company shall be null and void if it is subsequently determined that such
approval was required under the terms of the Plan or applicable law.
(f) Unless otherwise determined by the Board, this Plan is
intended to comply with Rule 16b-3 at all times that awards hereunder are
subject to such Rule.
6
<PAGE>
Exhibit 10.10
AMENDED AND RESTATED
LOAN AGREEMENT
DATED AS OF MARCH 31, 1999
BY AND AMONG
TRITEL HOLDING CORP.,
AS BORROWER;
TRITEL, INC.,
AS PARENT;
THE FINANCIAL INSTITUTIONS SIGNATORY HERETO,
AS LENDERS,
AND
TORONTO DOMINION (TEXAS), INC.,
AS ADMINISTRATIVE AGENT FOR THE LENDERS
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
ATLANTA, GEORGIA
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1 Definitions..............................................2
Section 1.1 Defined Terms............................................2
Section 1.2 Interpretation..........................................27
ARTICLE 2 Credit Facilities and Letters of Credit.................27
Section 2.1 Commitments and Letters of Credit.......................27
Section 2.2 Manner of Borrower and Disbursement.....................28
Section 2.3 Interest................................................31
Section 2.4 Fees....................................................33
Section 2.5 Mandatory Commitment Reductions.........................34
Section 2.6 Voluntary Commitment Reductions.........................36
Section 2.7 Prepayments and Repayments..............................37
Section 2.8 Prepayment Fee..........................................40
Section 2.9 Notes; Loan Accounts....................................40
Section 2.10 Manner of Payment.......................................41
Section 2.11 Reimbursement...........................................42
Section 2.12 Pro Rata Treatment......................................43
Section 2.13 Capital Adequacy........................................43
Section 2.14 Lender Tax Forms........................................44
Section 2.15 Letters of Credit.......................................45
ARTICLE 3 Conditions Precedent....................................50
Section 3.1 Conditions Precedent to Effectiveness of Agreement......50
Section 3.2 Conditions Precedent to Each Advance....................52
Section 3.3 Conditions Precedent to Issuance of Letters of Credit...53
ARTICLE 4 Representations and Warranties..........................54
Section 4.1 Representations and Warranties..........................54
Section 4.2 Survival of Representations and Warranties..............61
ARTICLE 5 General Covenants.......................................62
Section 5.1 Preservation of Existence and Similar Matters...........62
Section 5.2 Business; Compliance with Applicable Law................62
Section 5.3 Maintenance of Properties...............................62
Section 5.4 Accounting Methods and Financial Records................63
Section 5.5 Insurance...............................................63
Section 5.6 Payment of Taxes and Claims.............................64
Section 5.7 Compliance with ERISA...................................64
Section 5.8 Visits and Inspections..................................66
Section 5.9 Payment of Indebtedness; Loans..........................66
Section 5.10 Use of Proceeds.........................................66
Section 5.11 Indemnity...............................................66
Section 5.12 Interest Rate Hedging...................................67
Section 5.13 Covenants Regarding Formation of Subsidiaries
and Acquisitions........................................67
Section 5.14 Payment of Wages........................................68
Section 5.15 Further Assurances......................................68
Section 5.16 License Subs............................................69
Section 5.17 Business of the Parent; Immediate Contributions
to the Borrower.........................................69
Section 5.18 Year 2000 Compliance....................................69
(i)
<PAGE>
Section 5.19 Bidding Company Documentation...........................69
Section 5.20 The Bid Equity Commitments..............................70
ARTICLE 6 Information Covenants...................................70
Section 6.1 Quarterly Financial Statements and Information..........70
Section 6.2 Annual Financial Statements and Information.............71
Section 6.3 Performance Certificates................................71
Section 6.4 Copies of Other Reports.................................72
Section 6.5 Notice of Litigation and Other Matters..................73
ARTICLE 7 Negative Covenants......................................74
Section 7.1 Indebtedness of the Parent, the Borrower and
the Borrower's Subsidiaries.............................74
Section 7.2 Limitation on Liens.....................................75
Section 7.3 Amendment and Waiver....................................75
Section 7.4 Liquidation, Merger or Disposition of Assets............76
Section 7.5 Limitation on Guaranties................................76
Section 7.6 Investments and Acquisitions............................77
Section 7.7 Limitation on Distributions.............................79
Section 7.8 Senior Debt Capitalization Ratio........................79
Section 7.9 Total Debt Capitalization Ratio.........................79
Section 7.10 Minimum Required Covered POPs...........................79
Section 7.11 Minimum Subscribers.....................................80
Section 7.12 Aggregate Service Revenue...............................81
Section 7.13 Maximum Capital Expenditures............................81
Section 7.14 Total Leverage Ratio....................................82
Section 7.15 Senior Leverage Ratio...................................83
Section 7.16 Fixed Charges Coverage Ratio............................83
Section 7.17 Interest Coverage Ratio.................................84
Section 7.18 Affiliate Transactions..................................84
Section 7.19 Real Estate.............................................84
Section 7.20 ERISA Liabilities.......................................85
Section 7.21 No Limitation on Upstream Dividends by Subsidiaries.....85
ARTICLE 8 Default.................................................85
Section 8.1 Events of Default.......................................85
Section 8.2 Remedies................................................88
Section 8.3 Payments Subsequent to Declaration of Event
of Default..............................................91
ARTICLE 9 The Administrative Agent................................91
Section 9.1 Appointment and Authorization...........................91
Section 9.2 Interest Holders........................................91
Section 9.3 Consultation with Counsel...............................92
Section 9.4 Documents...............................................92
Section 9.5 Administrative Agent and Affiliates.....................92
Section 9.6 Responsibility of the Administrative Agent and
the Issuing Bank........................................92
Section 9.7 Security Documents......................................93
Section 9.8 Action by the Administrative Agent and the
Issuing Bank............................................93
Section 9.9 Notice of Default or Event of Default...................93
Section 9.10 Responsibility Disclaimed...............................94
Section 9.11 Indemnification.........................................94
Section 9.12 Credit Decision.........................................95
(ii)
<PAGE>
Section 9.13 Successor Administrative Agent or Issuing Bank..........95
Section 9.14 Collateral Actions......................................96
Section 9.15 Delegation of Duties....................................96
ARTICLE 10 Change in Circumstances Affecting Eurodollar Advances...96
Section 10.1 Eurodollar Basis Determination Inadequate or Unfair.....96
Section 10.2 Illegality..............................................96
Section 10.3 Increased Costs.........................................97
Section 10.4 Effect On Other Advances................................98
Section 10.5 Claims for Increased Costs and Taxes....................99
ARTICLE 11 Miscellaneous...........................................99
Section 11.1 Notices.................................................99
Section 11.2 Expenses...............................................101
Section 11.3 Waivers................................................101
Section 11.4 Set-Off................................................102
Section 11.5 Assignment.............................................102
Section 11.6 Accounting Principles..................................105
Section 11.7 Counterparts...........................................106
Section 11.8 Governing Law..........................................106
Section 11.9 Severability...........................................106
Section 11.10 Interest...............................................106
Section 11.11 Table of Contents and Headings.........................107
Section 11.12 Amendment and Waiver...................................107
Section 11.13 Entire Agreement.......................................108
Section 11.14 Other Relationships....................................108
Section 11.15 Directly or Indirectly.................................108
Section 11.16 Reliance on and Survival of Various Provisions.........108
Section 11.17 Senior Debt............................................109
Section 11.18 Obligations Several....................................109
Section 11.19 Confidentiality........................................109
ARTICLE 12 Waiver of Jury Trial...................................109
Section 12.1 Waiver of Jury Trial...................................109
(iii)
<PAGE>
EXHIBITS
Exhibit A - Form of Borrower's Pledge Agreement
Exhibit B - Form of Borrower's Security Agreement
Exhibit C-1 - Form of Revolving Loan Note
Exhibit C-2 - Form of Term Loan A Note
Exhibit C-3 - Form of Term Loan B Note
Exhibit D - Form of Certificate of Financial Condition
Exhibit E - Form of Performance Certificate
Exhibit F - Form of Request for Advance
Exhibit G - Form of Use of Proceeds Letter
Exhibit H - Form of Borrower's Loan Certificate
Exhibit I - Form of Subsidiary Loan Certificate
Exhibit J - Form of Subsidiary Security Agreement
Exhibit K - Form of Subsidiary Guaranty
Exhibit L - Form of Subsidiary Pledge Agreement
Exhibit M - Form of Assignment and Assumption Agreement
Exhibit N - Form of Parent Pledge Agreement
Exhibit O - Form of Request for Issuance of Letter of Credit
Exhibit P - Form of Parent Guaranty
SCHEDULES
Schedule 1 - Licenses and License Subs
Schedule 2 - Subsidiaries
Schedule 3 - Exceptions to Representations and Warranties
Schedule 4 - Litigation
Schedule 5 - Agreements with Affiliates
Schedule 6 - Indebtedness
Schedule 7 - Liens
Schedule 8 - Insurance
Schedule 9 - Commitment Ratios and Notice Addresses
(iv)
<PAGE>
AMENDED AND RESTATED
LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT is entered into as of this
31st day of March, 1999 by and among TRITEL, INC., a Delaware corporation (the
"Parent"), TRITEL HOLDING CORP., a Delaware corporation (the "Borrower"), THE
FINANCIAL INSTITUTIONS SIGNATORY HERETO (the "Lenders"), and TORONTO DOMINION
(TEXAS), INC., as administrative agent (the "Administrative Agent") for itself
and on behalf of the Lenders and the Issuing Bank (as defined below),
W I T N E S S E T H:
WHEREAS, the Parent, the Borrower, the Administrative Agent and certain
of the Lenders are all parties to that certain Loan Agreement dated as of
January 7, 1999 (the "Prior Loan Agreement"); and
WHEREAS, the Parent and the Borrower have requested that the
Administrative Agent and the Lenders consent to certain amendments to the Prior
Loan Agreement, as more fully set forth in this Amended and Restated Loan
Agreement; and
WHEREAS, the Administrative Agent and the Lenders have agreed to amend
and restate the Prior Loan Agreement in its entirety subject to the conditions
and on the terms set forth herein; and
WHEREAS, the Parent and the Borrower acknowledge and agree that the
Security Interest (as defined in the Prior Loan Agreement) granted to the
Administrative Agent, for itself and on behalf of the Lenders pursuant to the
Prior Loan Agreement and the Loan Documents (as defined in the Prior Loan
Agreement) executed in connection therewith shall remain outstanding and in full
force and effect in accordance with the Prior Loan Agreement and shall continue
to secure the Obligations (as defined herein); and
WHEREAS, the Parent and the Borrower acknowledge and agree that (i) the
Obligations (as defined herein) represent, among other things, the amendment,
restatement, renewal, extension, consolidation and modification of the
Obligations (as defined in the Prior Loan Agreement) arising in connection with
the Prior Loan Agreement and the other Loan Documents (as defined in the Prior
Loan Agreement) executed in connection therewith; (ii) the parties hereto intend
that the Security Documents (as defined in the Prior Loan Agreement) executed in
connection with the Prior Loan Agreement and the collateral pledged thereunder
shall secure, without interruption or impairment of any kind, all existing
Indebtedness under the Prior Loan Agreement and the other Loan Documents (as
defined in the Prior Loan Agreement) executed in connection therewith as so
amended, restated, restructured, renewed, extended, consolidated and modified
hereunder, together with all other Obligations hereunder; (iii) all Liens
evidenced by the Security Documents (as defined in the Prior Loan Agreement)
executed in connection with
<PAGE>
the Prior Loan Agreement are hereby ratified, confirmed and continued; and (iv)
the Loan Documents (as defined herein) are intended to restate, renew, extend,
consolidate, amend and modify the Prior Loan Agreement and the other Loan
Documents (as defined in the Prior Loan Agreement) executed in connection
therewith; and
WHEREAS, the parties hereto intend that (i) the provisions of the Prior
Loan Agreement and the other Loan Documents (as defined in the Prior Loan
Agreement) executed in connection therewith, to the extent restated, renewed,
extended, consolidated, amended and modified hereby, are hereby superseded and
replaced by the provisions hereof and of the Loan Documents (as defined herein):
and (ii) the Notes (as hereinafter defined) amend, renew, extend, modify,
replace, are substituted for and supersede in their entirety, but do not
extinguish the indebtedness arising under, the promissory notes issued pursuant
to the Prior Loan Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, the
parties hereby agree as follows:
ARTICLE 1 Definitions
Section 1.1 Defined Terms
For the purposes of this Agreement:
"Acquisition" shall mean (whether by purchase, lease, exchange,
issuance of stock or other equity or debt securities, merger, reorganization or
any other method) (i) any acquisition by the Borrower or any of its Subsidiaries
of any other Person, which Person shall then become consolidated with the
Borrower or any such Subsidiary in accordance with GAAP or (ii) any acquisition
by the Borrower or any of its Subsidiaries of all or any substantial part of the
assets of any other Person.
"Administrative Agent" shall mean Toronto Dominion (Texas), Inc., in
its capacity as Administrative Agent for the Lenders and the Issuing Bank, or
any successor Administrative Agent appointed pursuant to Section 9.13 hereof.
"Administrative Agent's Office" shall mean the office of the
Administrative Agent located at 909 Fannin, Suite 1700, Houston, Texas 77010, or
such other office as may be designated pursuant to the provisions of Section
11.1 hereof.
"Advance" shall mean amounts advanced by the Lenders to the Borrower
pursuant to Article 2 hereof on the occasion of any borrowing and having the
same Interest Rate Basis and Interest Period; and "Advances" shall mean more
than one Advance.
2
<PAGE>
"Affected Lender" shall have the meaning ascribed thereto in Section
10.5 hereof.
"Affiliate" shall mean, with respect to a Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such first Person. For purposes of this definition, "control" when used with
respect to any Person includes, without limitation, the direct or indirect
beneficial ownership of more than ten percent (10%) of the voting securities or
voting equity of such Person or the power to direct or cause the direction of
the management and policies of such Person whether by contract or otherwise.
"Affiliated Successor" shall mean any Person which is an "Affiliated
Successor" as defined in the Stockholders Agreement and as permitted under
Sections 4.1(c) and (d) of the Stockholders Agreement.
"Agreement" shall mean this Amended and Restated Loan Agreement,
together with all Exhibits and Schedules hereto.
"Agreement Date" shall mean the date as of which this Agreement is
dated.
"Aggregate Bid License Purchase Price" shall mean the sum of Bid
License Purchase Prices for all Bid Licenses purchased, or committed to be
purchased, by the Borrower or any of the Borrower's Subsidiaries from the
Bidding Company pursuant to the Bidding Company Documentation.
"Aggregate Service Revenue" shall mean, for any period, all service
revenues, including, without limitation, subscriber revenues, toll revenues,
roaming revenues, wholesale service revenues and long-distance revenues, of the
Borrower and its Subsidiaries for such period.
"Annualized Operating Cash Flow" shall mean the product of (a)
Operating Cash Flow for the most recently completed two (2) fiscal quarter
period times (b) two (2).
"Applicable Law" shall mean, in respect of any Person, all provisions
of constitutions, statutes, rules, regulations and orders of governmental bodies
or regulatory agencies applicable to such Person, including, without limiting
the foregoing, the Licenses, the Communications Act and all Environmental Laws,
and all orders, decisions, judgments and decrees of all courts and arbitrators
in proceedings or actions to which the Person in question is a party or by which
it is bound.
"Applicable Margin" shall mean the interest rate margin applicable to
Base Rate Advances and Eurodollar Advances, as the case may be, in each case
determined in accordance with Section 2.3(f) hereof.
"Applicable Prepayment Fee" shall mean that fee payable upon the
prepayment of any portion of Term Loan B, calculated based upon a percentage of
the amount of such payment, in accordance with Section 2.8 hereof.
3
<PAGE>
"Approved Fund" shall mean, with respect to any Lender that is a fund
that invests in commercial loans, any other fund that invests in commercial
loans and is managed or advised by the same investment advisor as such Lender or
by an Affiliate of such investment advisor.
"Arranging Agents" shall mean, collectively, TD Securities (USA) Inc.,
Barclays Bank PLC and NationsBanc Montgomery Securities LLC, in their capacity
as Arranging Agents; and "Arranging Agent" shall mean any one of the foregoing
Arranging Agents.
"Assignment of Rights" shall mean that certain Assignment of Rights
dated as of January 7, 1999 by and between the Parent and the Administrative
Agent.
"AT&T" shall mean AT&T Wireless PCS Inc., a Delaware corporation.
"Auction" shall mean the re-auction for the sale of certain PCS
Licenses in the C-Block, D-Block, E-Block and F-Block conducted by the FCC as
set forth in parts 1 and 24 of Title 47 of the Code of Federal Regulations
commencing on or about March 23, 1999.
"Authorized Signatory" shall mean such senior personnel of a Person as
may be duly authorized and designated in writing by such Person to execute
documents, agreements and instruments on behalf of such Person.
"Available Letter of Credit Commitment" shall mean, at any time, the
lesser of (a)(i) $10,000,000.00, minus (ii) all Letter of Credit Obligations
then outstanding, and (b) the Available Revolving Loan Commitment, but in no
event may the Available Letter of Credit Commitment be less than $0.00.
"Available Revolving Loan Commitment" shall mean, as of any date, the
difference between (a) the Revolving Loan Commitment in effect on such date and
(b) the sum of (i) the Revolving Loans then outstanding and (ii) the aggregate
amount of all Letter of Credit Obligations then outstanding.
"Available Term Loan A Commitment" shall mean, as of any date, the
difference between (a) the Term Loan A Commitment on such date and (b) the Term
Loan A then outstanding.
"Base Rate" shall mean, at any time, the greater of: (a) the rate of
interest adopted by The Toronto-Dominion Bank, New York Branch as its reference
rate for the determination of interest rates for loans of varying maturities in
United States dollars to United States residents of varying degrees of
creditworthiness and being quoted at such time by such bank as its "prime rate"
or "base rate"; or (b) the sum of (i) the Federal Funds Rate and (ii) one-half
of one percent (0.50%) per annum. The Base Rate is not necessarily the lowest
rate of interest charged to borrowers of The Toronto-Dominion Bank, New York
Branch.
"Base Rate Advance" shall mean an Advance which the Borrower requests
to be made as
4
<PAGE>
a Base Rate Advance or is reborrowed as a Base Rate Advance, in accordance with
the provisions of Section 2.2(b) hereof, and which shall be in a principal
amount of at least $1,000,000, and in an integral multiple of $500,000.
"Base Rate Basis" shall mean a simple interest rate equal to the sum of
(a) the Base Rate and (b) the Applicable Margin. The Base Rate Basis shall be
adjusted automatically as of the opening of business on the Business Day of each
change in the Base Rate to account for such change, and shall also be changed to
reflect changes in the Applicable Margin in accordance with Section 2.3(f)
hereof.
"Bidding Company" shall mean ABC Wireless Corp. L.L.C., a Delaware
limited liability company formed by Jerry Vento, Tom Sullivan and Scott Anderson
for purposes of bidding in the Auction.
"Bidding Company Documentation" shall mean, collectively, the Deposit
Loan Note, that certain Business Plan and Bidding Arrangements agreement, that
certain Security Agreement securing the obligations of the Bidding Company under
the Deposit Loan Note, that certain Guaranty and Pledge Agreement by the members
of the Bidding Company securing the obligations of the Bidding Company under the
Deposit Loan Note, that certain Closing Agreement and all such other agreements,
instruments and other writings in connection therewith or otherwise evidencing
an agreement by and among the Borrower, the Bidding Company and any other
Persons parties to any of the foregoing concerning the Auction and/or the Bid
Licenses; in each case, which shall be in form and substance reasonably
satisfactory to the Administrative Agent.
"Bid Equity Commitments" shall mean the aggregate sum of (a)
irrevocable binding but unfunded commitments to purchase additional Capital
Stock of the Parent (other than commitments required to be contributed to the
Parent pursuant to the Securities Purchase Agreement) by Persons (i) owning
Capital Stock of the Parent or (ii) otherwise reasonably acceptable to the
Administrative Agent and (b) irrevocable but unfunded commitments to make
unsecured subordinated loans to the Parent by Persons (i) owning Capital Stock
of the Parent or (ii) otherwise reasonably acceptable to the Administrative
Agent; in either case, which shall be used to fund a portion of the aggregate
Bid License Purchase Price and which shall be on terms and conditions and in
form and substance reasonably satisfactory to the Administrative Agent.
"Bid Equity Commitments Documentation" shall mean, collectively, all
documents, agreements, instruments and other writings evidencing the Bid Equity
Commitments, which shall be in form and substance reasonably satisfactory to the
Administrative Agent.
"Bid Licenses" shall mean, collectively, those certain PCS Licenses in
the C-Block and F-Block available for purchase at the Auction covering the
geographic area for which the Borrower or its Subsidiaries have, as of March 1,
1999, Licenses to provide wireless communications services.
5
<PAGE>
"Bid License Purchase Price" shall mean, with respect to each Bid
License purchased, or committed to be purchased, by the Borrower and/or one or
more of the Borrower's Subsidiaries pursuant to the Bidding Company
Documentation the aggregate total purchase price paid, or committed to be paid,
for such Bid Licenses.
"Board of Directors" shall mean, when used with reference to the
Borrower, the board of directors of the Borrower.
"Borrower" shall mean Tritel Holding Corp., a Delaware corporation and
a wholly-owned subsidiary of the Parent.
"Borrower's Pledge Agreements" shall mean, collectively, that certain
Borrower's Pledge Agreement dated as of January 7, 1999 between the Borrower and
the Administrative Agent, or any other similar agreement, each substantially in
the form of Exhibit A attached hereto.
"Borrower's Security Agreements" shall mean, collectively, that certain
Borrower's Security Agreement dated as of January 7, 1999 between the Borrower
and the Administrative Agent, or any other similar agreement, each substantially
in the form of Exhibit B attached hereto.
"BTA" shall mean a Basic Trading Area, as defined in 47 C.F.R
(section) 24.202.
"Business Day" shall mean a day on which banks and foreign exchange
markets are open for the transaction of business required for this Agreement in
New York, New York and, with respect to any Eurodollar Advance, London, England,
as relevant to the determination to be made or the action to be taken.
"Capital Expenditures" shall mean, in respect of any Person,
expenditures for the purchase of tangible assets of long-term use which would be
required to be capitalized on the balance sheet of such Person in accordance
with GAAP.
"Capital Stock" shall mean, as applied to any Person, any capital stock
of such Person, regardless of class or designation, and all warrants, options,
purchase rights, conversion or exchange rights, voting rights, calls or claims
of any character with respect thereto.
"Capitalized Lease Obligation" shall mean that portion of any
obligation of a Person as lessee under a lease (or other similar arrangement)
which at the time would be required to be capitalized on the balance sheet of
such lessee in accordance with GAAP.
"Cash Equivalents" shall mean investments in (i) certificates of
deposit and other interest bearing deposits or accounts (including, without
limitation, money market accounts) with United States commercial banks
(including, without limitation, United States branches of foreign banks) having,
or whose parent corporation has, a combined capital and surplus of at least
$500,000,000, which mature within one (1) year from the date of investment, (ii)
obligations
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issued or unconditionally guaranteed by the United States government, or issued
by an agency thereof and backed by the full faith and credit of the United
States government, which obligations mature within one (1)year from the date of
investment, (iii) direct obligations issued by any United States state or
political subdivision thereof, which mature within one (1) year from the date of
investment and have the highest rating obtainable from Standard & Poor's
Corporation or Moody's Investors Service on the date of investment or (iv)
commercial paper which has the highest rating obtainable from Standard & Poor's
Ratings Group, a division of McGraw Hill, Inc., or any successor, or Moody's
Investors Service, or any successor, on the date of investment.
"Cellular System" shall mean, as applied to any Person, a wireless
communication or PCS system constructed and operated in a BTA or MTA of such
Person, and shall include any cellular mobile radio telephone system, microwave
system or paging system operated in connection with (and in the same general
service area as) any of the foregoing systems.
"Certificate of Financial Condition" shall mean a certificate
substantially in the form of Exhibit D attached hereto signed by the chief
financial officer of the Borrower, together with any schedules, exhibits or
annexes appended thereto.
"Change of Control Event" shall mean the occurrence or existence of any
of the following: (a) any sale or other disposition by AT&T or TWR Cellular,
Inc. of any shares of Capital Stock of the Parent prior to January 7, 2002, such
that after giving effect thereto AT&T and TWR Cellular, Inc., collectively,
shall fail to own at least fifteen percent (15%) of the Capital Stock of the
Parent, other than any such sale or other disposition to an Affiliated
Successor; (b) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the Securities and Exchange
Commission thereunder as in effect on the date hereof) other than the Parent,
Persons owing Capital Stock of the Parent on January 7, 1999 or any Affiliated
Successor, of Capital Stock representing more than twenty (20%) of the aggregate
ordinary voting power represented by the issued and outstanding Capital Stock of
either the Borrower or the Parent; (c) occupation of a majority of the seats
(other than vacant seats) on the board of directors of either the Parent or the
Borrower, by Persons who were not (i) nominated by the board of directors of the
Parent (in the case of the Parent's board) or the Borrower (in the case of the
Borrower's board), (ii) appointed by directors so nominated, or (iii) in the
case of the Parent, appointed by shareholders of the Parent who are or were
shareholders (or an Affiliated Successor of any such shareholder) of the Parent
on January 7, 1999; or (d) the acquisition of direct or indirect control of the
Borrower or the Parent by any Person (and its Affiliated Successors) owning
Capital Stock of the Parent on January 7, 1999. Notwithstanding the foregoing,
none of the following shall constitute a "Change of Control": (A) the sale by
AT&T or TWR Cellular, Inc. of all or any of its Capital Stock of the Borrower
subsequent to January 7, 2002; (B) the public sale by the Parent of newly issued
Capital Stock in a public offering; and (C) the dilution of AT&T's and TWR
Cellular, Inc.'s collective percentage of Capital Stock of the Parent as a
result of an issuance of Capital Stock by the Borrower.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1985 and
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any amendments thereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean any property of any kind constituting
collateral for the Obligations under any of the Loan Documents.
"Commitments" shall mean, collectively, the Revolving Loan Commitment,
the Term Loan A Commitment and the Term Loan B Commitment; and "Commitment"
shall mean any one of the foregoing Commitments.
"Commitment Ratio" shall mean, with respect to any Lender for any
Commitment, the percentage equivalent of the ratio which such Lender's portion
of such Commitment bears to the aggregate amount of such Commitment (as each may
be adjusted from time to time as provided herein); and "Commitment Ratios" shall
mean, with respect to any Commitment, the Commitment Ratios of all of the
Lenders with respect to such Commitment. As of the Agreement Date, the
Commitment Ratios of the Lenders party to this Agreement are as set forth on
Schedule 9 attached hereto.
"Committed Equity" shall mean, collectively, the irrevocable binding
but unfunded commitments to purchase Capital Stock of the Parent pursuant to the
Securities Purchase Agreement.
"Communications Act" shall mean the Communications Act of 1934, and any
similar or successor federal statute, and the rules and regulations of the FCC
thereunder, all as the same may be in effect from time to time.
"Competitor of the Borrower" shall mean any Person primarily engaged in
the business of building, owning and operating a wireless communications network
covering POPs primarily throughout the south-central United States.
"Contributed Equity" shall mean, at any time or for any period, the
aggregate amount which shall have been received by the Parent prior to such time
or during such period as consideration for the issuance of Capital Stock of the
Parent and which is thereafter contributed to the Borrower, all as calculated in
accordance with GAAP.
"Covered POPs" shall mean, as of any date, the aggregate number of POPs
within each geographic area for which facilities owned or operated by the
Borrower or its Subsidiaries that provide service to such geographic area have
achieved substantial completion.
"Debt Service" shall mean, for any period, the amount of all principal
paid and Interest Expense of the Borrower and its Subsidiaries on a consolidated
basis in respect of Indebtedness for Money Borrowed of the Borrower and its
Subsidiaries (other than voluntary principal payments of the Revolving Loans or
the Term Loan A which are not required to be accompanied
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by an identical reduction in the Revolving Loan Commitment or the Term Loan A
Commitment).
"Default" shall mean any Event of Default, and any of the events
specified in Section 8.1, regardless of whether there shall have occurred any
passage of time or giving of notice, or both, that would be necessary in order
to constitute such event an Event of Default.
"Defaulting Lender" shall have the meaning ascribed thereto in Section
2.2(e)(iv) hereof.
"Default Rate" shall mean a simple per annum interest rate equal to the
sum of (a) the Base Rate, (b) the Applicable Margin then applicable to Base Rate
Advances, and (c) two percent (2%).
"Deposit" shall mean the deposit of $7,500,000 by the Bidding Company
in an escrow account with the FCC in connection with Auction funded by the
Deposit Loan.
"Deposit Loan" shall mean the loan from the Borrower to the Bidding
Company evidenced by the Deposit Loan Note.
"Deposit Loan Note" shall mean that certain Promissory Note, dated as
of March 1, 1999, in the original principal amount of $7,500,000 made by the
Bidding Company in favor of the Borrower, and any extensions, renewals or
amendments to, or replacements of, the foregoing.
"Disqualifying Transaction" shall have the meaning ascribed thereto in
the Stockholders Agreement.
"Employee Pension Plan" shall mean any Plan which is (a) maintained by
the Borrower, any of its Subsidiaries or any ERISA Affiliate and (b) subject to
Part 3 of Title I of ERISA.
"Environmental Laws" shall mean, collectively, all applicable federal,
state or local laws, statutes, rules, regulations or ordinances, codes, common
law, consent agreements, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder relating to public health, safety or
the pollution or protection of the environment, including, without limitation,
those relating to releases, discharges, emissions, spills, leaching, or
disposals to air, water, land or ground water, to the withdrawal or use of
ground water, to the use, handling or disposal of polychlorinated biphenyls,
asbestos or urea formaldehyde, to the treatment, storage, disposal or management
of hazardous substances (including, without limitation, petroleum, crude oil or
any fraction thereof, or other hydrocarbons), pollutants or contaminants, to
exposure to toxic, hazardous or other controlled, prohibited, or regulated
substances, including, without limitation, any such provisions under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 United StatesC. (section) 9601 et seq.), or the Resource
Conservation and Recovery Act of 1976, as amended (42 United StatesC. (section)
6901 et seq.).
"Ericsson" shall mean Ericsson, Inc.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as in effect from time to time.
"ERISA Affiliate" shall mean any Person, including, without limitation,
any Subsidiary or Affiliate of the Borrower, that is a member of any group of
organizations (within the meaning of Code Sections 414(b), (c), (m) or (o)) of
which the Borrower is a member.
"Eurodollar Advance" shall mean an Advance which the Borrower requests
to be made as a Eurodollar Advance or which is reborrowed as a Eurodollar
Advance, in accordance with the provisions of Section 2.2 hereof, and which
shall be in a principal amount of at least $1,000,000 and in an integral
multiple of $500,000.
"Eurodollar Basis" shall mean a simple per annum interest rate (rounded
upward, if necessary, to the nearest onehundredth of one percent (0.01%)) equal
to the sum of (a) the quotient of (i) the Eurodollar Rate divided by (ii) one
(1) minus the Eurodollar Reserve Percentage, if any, stated as a decimal, and
(b) the Applicable Margin. The Eurodollar Basis shall apply to Interest Periods
of one (1), two (2), three (3), six (6), nine (9) and twelve (12) months, and,
once determined, shall remain unchanged during the applicable Interest Period,
except for changes to reflect adjustments in the Eurodollar Reserve Percentage
and the Applicable Margin as adjusted pursuant to Section 2.3(f) hereof. The
Eurodollar Basis for any Eurodollar Advance shall be adjusted as of the date of
any change in the Eurodollar Reserve Percentage. The Borrower may not elect an
Interest Period in excess of six (6) months unless the Administrative Agent has
notified the Borrower that each of the Lenders (in such Lender's discretion) has
funds available to it for such Lender's portion of the proposed Advance which
are not required for other purposes, and that such funds are available to each
Lender at a rate (exclusive of reserves and other adjustments) at or below the
Eurodollar Rate for such proposed Advance and Interest Period.
"Eurodollar Rate" shall mean, for any Interest Period, the average of
the interest rates per annum at which deposits in United States Dollars for such
Interest Period are offered to The Toronto-Dominion Bank, New York Branch in the
Eurodollar market appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in dollars at approximately 11:00
a.m. (London, England time) two (2) Business Days before the first day of such
Interest Period, in an amount approximately equal to the principal amount of,
and for a length of time approximately equal to the Interest Period for, the
Eurodollar Advance sought by the Borrower. In the event that such rate is not
available at such time for any reason, then the "Eurodollar Rate" with respect
to such Eurodollar Advance for such Interest Period shall be the rate of
interest per annum at which dollar deposits in the aggregate principal amount of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds to prime banks in the London interbank market at approximately 11:00 a.m.
(London, England time) two (2) Business Days prior to the commencement of such
Interest Period.
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"Eurodollar Reserve Percentage" shall mean the percentage which is in
effect from time to time under Regulation D of the Board of Governors of the
Federal Reserve System, as such regulation may be amended from time to time, as
the maximum reserve requirement applicable with respect to Eurocurrency
Liabilities (as that term is defined in Regulation D), whether or not any Lender
has any such Eurocurrency Liabilities subject to such reserve requirement at
that time.
"Event of Default" shall mean any of the events specified in Section
8.1, provided that any requirement for notice or lapse of time has been
satisfied without the event being corrected.
"Excess Cash Flow" shall mean, as of the end of any fiscal year of the
Borrower based on the audited financial statements provided under Section 6.2
hereof for such fiscal year, the excess, if any, without duplication, of (a) sum
of (i) Operating Cash Flow for such fiscal year, and (ii) any negative change in
the Borrower's working capital account during such fiscal year, minus (b) the
sum of the following: (i) Capital Expenditures by the Borrower and its
Subsidiaries during such fiscal year; (ii) Debt Service for such fiscal year;
(iii) cash taxes paid by the Borrower and its Subsidiaries during such fiscal
year; (iv) Restricted Payments or Restricted Purchases made during such fiscal
year; and (v) any positive change in the Borrower's working capital account
during such fiscal year; in each case, as determined in accordance with GAAP.
"Excluded Taxes" shall mean, with respect to the Administrative Agent
or any Lender, (a) income or franchise Taxes imposed on (or measured by) its Net
Income by the United States of America, or by the jurisdiction under the laws of
which such recipient is organized or in which its principal office is located
or, in the case of any Lender, in which its applicable lending office is located
or any governmental authority of or in any of the foregoing (including, without
limitation, minimum Taxes and Taxes computed under alternative methods, the
principal one of which is based on or measured by net income), (b) any branch
profits Taxes imposed by the United States of America or any similar Tax imposed
by any other jurisdiction in which the Borrower is located or the Administrative
Agent or a Lender, as applicable, is organized or any governmental authority of
or in any of the foregoing, (c) in the case of a Lender that is not organized
under the laws of the United States, any State thereof or the District of
Columbia (a "Foreign Lender"), any withholding Tax that is in effect and would
apply to a payment to such Foreign Lender at the time such Foreign Lender
becomes a party to this Agreement (or designates a new lending office), (d) any
Taxes to the extent imposed by reason of a Lender or the Administrative Agent,
as applicable, engaging in activities in the jurisdiction imposing the Tax that
are unrelated to the transactions contemplated hereby and (e) any Tax that would
not have been imposed but for the failure of a Lender or the Administrative
Agent, as applicable, to comply with the certification requirements described in
Section 2.14.
"FCC" shall mean the Federal Communications Commission, or any other
similar or successor agency of the federal government administering the
Communications Act.
"FCC Indebtedness" shall mean any Indebtedness of the Borrower, its
Subsidiaries or the Parent owed to the United States Treasury Department that is
incurred in connection with the
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acquisition of any License.
"Federal Funds Rate" shall mean, as of any date, the weighted average
of the rates on overnight federal funds transactions with the members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three (3) federal
funds brokers of recognized standing selected by the Administrative Agent.
"Fixed Charges" shall mean, for the Borrower and its Subsidiaries, on a
consolidated basis, as of any date, the sum of: (a) Debt Service; (b) cash taxes
paid by the Borrower and its Subsidiaries; (c) Capital Expenditures (excluding
assets purchased with the proceeds of obsolete, worn out or no longer useful
assets as permitted by Section 7.4(a) hereof) by the Borrower and its
Subsidiaries; and (d) Restricted Payments and Restricted Purchases made; in each
case for the most recently completed four (4) fiscal quarter period then ended,
and in each case as calculated in accordance with GAAP.
"Fixed Charges Coverage Ratio" shall mean, as of any date of
determination, the ratio of (a) Annualized Operating Cash Flow to (b) Fixed
Charges.
"Foreign Lender" shall have the meaning ascribed thereto in the
definition of "Excluded Taxes" set forth in Section 1.1 hereof.
"Funded Debt" shall mean, as of the date of determination, the
aggregate amount of all Indebtedness for Money Borrowed of the Parent, the
Borrower and the Borrower's Subsidiaries which by its terms (a) matures more
than one (1) year after the date of determination or (b) matures within one (1)
year from the date of determination, but which is renewable or extendable at the
option of the applicable obligor to a date more than one (1) year from the date
of determination; in either case, including, without limitation, the Revolving
Loans.
"GAAP" shall mean, as in effect from time to time in the United States,
generally accepted accounting principles, consistently applied.
"Give-back Licenses" shall mean any License voluntarily terminated,
surrendered or otherwise cancelled by the Borrower or any of its Subsidiaries,
provided that, in connection with any such termination, surrender or other
cancellation, (a) the Borrower represents and warrants to the Administrative
Agent, the Lenders and the Issuing Bank that such termination, surrender or
other cancellation could not reasonably be expected to have a Materially Adverse
Effect, (b) the Borrower provides revised financial projections reflecting and
such other information relating to such termination, surrender or other
cancellation as may be reasonably requested by the Administrative Agent, and (c)
the Required Lenders shall consent in writing to such termination, surrender or
other cancellation, such consent not to be unreasonably withheld.
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"Go-Positive Date" shall mean the date on which the Borrower's
Operating Cash Flow shall become greater than zero dollars ($0.00).
"Guaranty" or "Guaranteed," as applied to an obligation, shall mean and
include (a) a guaranty, direct or indirect, in any manner, of all or any part of
such obligation and (b) any agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of nonperformance) of all or any
part of such obligation, including, without limiting the foregoing, any
reimbursement obligations as to amounts drawn down by beneficiaries of
outstanding letters of credit or capital call requirements.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Persons under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capitalized Lease Obligations of such Person,
(i) all obligations, contingent or otherwise, of such Person as an account party
in respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
"Indebtedness for Money Borrowed" shall mean, with respect to any
Person, Indebtedness for money borrowed and Indebtedness represented by notes
payable and drafts accepted representing extensions of credit, all obligations
evidenced by bonds, debentures, notes or other similar instruments, all
Indebtedness upon which interest charges are customarily paid, all Capitalized
Lease Obligations, all reimbursement obligations with respect to outstanding
letters of credit, all Indebtedness issued or assumed as full or partial payment
for property or services (other than trade payables arising in the ordinary
course of business, but only if and so long as such accounts are payable on
customary trade terms), whether or not any such notes, drafts, obligations or
Indebtedness represent Indebtedness for money borrowed, and, without
duplication, Guaranties of any of the foregoing. For purposes of this
definition, interest which is accrued but not paid on the scheduled due date for
such interest shall be deemed Indebtedness for Money Borrowed.
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"Indemnitee" shall have the meaning ascribed thereto in Section 5.11
hereof.
"Interest Coverage Ratio" shall mean, as of any date of determination,
the ratio of (a) Annualized Operating Cash Flow to (b) Interest Expense for the
most recently completed four (4) fiscal quarter period.
"Interest Expense" shall mean, for any period, all cash interest paid
(including imputed interest with respect to Capitalized Lease Obligations) with
respect to the Indebtedness for Money Borrowed of the Borrower and its
Subsidiaries on a consolidated basis during such period pursuant to the terms of
such Indebtedness for Money Borrowed, together with all fees paid in respect of
such Indebtedness for Money Borrowed during such period (but specifically
excluding fees paid during previous periods but amortized during the current
period in accordance with GAAP), calculated in accordance with GAAP.
"Interest Period" shall mean, (a) in connection with any Base Rate
Advance, the period beginning on the date such Advance is made and ending on the
earlier of the last day of the calendar quarter in which such Advance is made
and the day such Advance is paid, provided, however, that if a Base Rate Advance
is made on the last day of any calendar quarter, it shall have an Interest
Period ending on, and its Payment Date shall be, the last day of the following
calendar quarter, and (b) in connection with any Eurodollar Advance, the term of
such Advance selected by the Borrower or otherwise determined in accordance with
this Agreement. Notwithstanding the foregoing, (i) any applicable Interest
Period which would otherwise end on a day which is not a Business Day shall be
extended to the next succeeding Business Day unless, with respect to Eurodollar
Advances only, such Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Business Day, (ii) any
applicable Interest Period, with respect to Eurodollar Advances only, which
begins on a day for which there is no numerically corresponding day in the
calendar month during which such Interest Period is to end shall (subject to
clause (i) above) end on the last day of such calendar month, and (iii) no
Interest Period shall extend beyond the Maturity Date, or such earlier date on
which the Borrower has any repayment obligations under Section 2.5 or 2.7
hereof. Interest shall be due and payable with respect to any Advance as
provided in Section 2.3 hereof.
"Interest Rate Basis" shall mean the Base Rate Basis or the Eurodollar
Basis, as appropriate.
"Interest Rate Hedge Agreements" shall mean the obligations of any
Person pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall also include, without limitation, interest rate swaps,
caps, floors, collars and similar arrangements.
"Issuing Bank" shall mean The Toronto-Dominion Bank, Houston Agency, as
issuer of
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the Letters of Credit.
"known to the Borrower" or "to the knowledge of the Borrower" shall
mean known by or reasonably should have been known by the executive officers of
the Borrower (which shall include, without limitation, the chairman/president,
the chief executive officer, the chief financial officer, the chief operating
officer, the treasurer, the secretary and any in-house general counsel).
"Lenders" shall mean those financial institutions whose names appear as
"Lenders" on the signature pages to this Agreement, together with any assignees
thereof pursuant to Section 11.5 hereof; and "Lender" shall mean any one of the
foregoing Lenders.
"Letter of Credit Obligations" shall mean, at any time, the sum of (a)
an amount equal to the aggregate undrawn and unexpired amount (including the
amount to which any such Letter of Credit can be reinstated pursuant to the
terms hereof) of the then outstanding Letters of Credit and (b) an amount equal
to the aggregate drawn, but unreimbursed drawings on any Letters of Credit.
"Letter of Credit Reserve Account" shall mean any account maintained by
the Administrative Agent for the benefit of the Issuing Bank, the Administrative
Agent and the Lenders the proceeds of which shall be applied as provided in
Section 8.2(a) hereof.
"Letters of Credit" shall mean Standby Letters of Credit issued by the
Issuing Bank on behalf of the Borrower from time to time in accordance with the
terms hereof.
"Licenses" shall mean any broadband PCS license issued by the FCC in
connection with the operation of a Cellular System granted and held by the
Borrower or any of its Subsidiaries, all of which are listed as of the Agreement
Date on Schedule 1 hereto.
"License Subs" shall mean, collectively, NexCom, Inc., Clearcall, Inc.,
Global PCS, Inc., Clearwave, Inc., DigiNet PCS, Inc., DigiCom, Inc. and
DigiCall, Inc., each a Delaware corporation, and AirCom PCS, Inc. and QuinCom,
Inc., each an Alabama corporation and any other wholly-owned Subsidiary of the
Borrower designated as a License Sub by notice to the Administrative Agent, in
each case, the Capital Stock of which is pledged to the Administrative Agent
pursuant to a Borrower's Pledge Agreement or a Subsidiary Pledge Agreement, as
appropriate; and "License Sub" shall mean any one of the foregoing License Subs.
"Lien" shall mean, with respect to any property, any mortgage, lien,
pledge, negative pledge or other agreement not to pledge, assignment, charge,
security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment or other encumbrance of any kind in respect of such
property, whether created by statute, contract, the common law or otherwise, and
whether or not choate, vested or perfected.
"Loan Documents" shall mean this Agreement, the Notes, the Security
Documents, all fee letters, all Requests for Advance, all Requests for Letters
of Credit, all Letters of Credit, all
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Interest Rate Hedge Agreements between the Borrower or any Subsidiary, on the
one hand, and the Administrative Agent, the Lenders, or any of their Affiliates,
on the other hand, and all other documents and agreements executed or delivered
in connection with or contemplated by this Agreement.
"Loans" shall mean, collectively, the amounts advanced by the Lenders
to the Borrower under the Commitments, not to exceed the aggregate amount of the
Commitments, and evidenced by the Notes.
"Management Agreement" shall mean the Management Agreement by and
between the Parent and Tritel Management, LLC in the form attached as Exhibit A
to the Securities Purchase Agreement.
"Margin Stock" shall have meaning ascribed thereto in Section 4.1(n)
hereof.
"Materially Adverse Effect" shall mean any material adverse effect upon
any of the following: (a) the business, assets, liabilities, financial
condition, results of operations, properties, or business prospects of the
Borrower and its Subsidiaries taken as a whole; (b) the binding nature, validity
or enforceability of this Agreement or any of the Notes; or (c) the ability of
the Borrower and its Subsidiaries taken as a whole to perform the payment
obligations or other material obligations under this Agreement or any other Loan
Document; in each case, when taken together with other such acts, omissions,
situations, statuses, events or undertakings; provided, however, that on or
after the date which is five (5) years from January 7, 1999, neither (x) the
nonrenewal of the Network License Agreement by AT&T Corp. nor (y) the
termination of the Network License Agreement by AT&T Corp. in accordance with
its terms as a result of a Disqualifying Transaction shall in and of itself be a
Materially Adverse Effect.
"Maturity Date" shall mean (a) the Revolving Loan Maturity Date, the
Term Loan A Maturity Date or the Term Loan B Maturity Date, as appropriate, or
(b) such earlier date as payment of the Obligations shall be due (whether by
acceleration, reduction of the Commitments to zero, or otherwise).
"Multiemployer Plan" shall mean a multiemployer pension plan as defined
in Section 3(37) of ERISA to which the Borrower, any of its Subsidiaries or any
ERISA Affiliate is or has been required to contribute subsequent to September
25, 1980.
"MTA" shall mean a Major Trading Area as defined in 47 C.F.R.
(section) 24.202.
"Necessary Authorizations" shall mean, collectively, all approvals and
licenses from, and all filings and registrations with, any governmental or other
regulatory authority, including, without limiting the foregoing, the Licenses
and all approvals, licenses, filings and registrations under the Communications
Act.
"Net Income" shall mean, for the Borrower and its Subsidiaries on a
consolidated basis
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for any period, net income determined in accordance with GAAP.
"Net Proceeds (Asset Sales)" shall mean, with respect to any sale or
other disposition of assets by any Person, the difference between (a) the
aggregate amount of cash or Cash Equivalents received (including by way of sale
or discounting of a note, installment receivable or other receivable, but
excluding any other consideration received in the form of assumption by the
acquiree of Indebtedness for Money Borrowed or other obligations relating to
such properties or assets or received in any other noncash form) therefrom by
such Person, and (b) the sum of (i) all legal, title and recording tax expenses,
commissions and other fees and expenses incurred and all federal, state,
provincial, foreign and local taxes required to be accrued as a liability as a
consequence of such asset sale or other disposition, (ii) all payments made by
such Person or its Subsidiaries on any Indebtedness for Money Borrowed which is
secured by the assets subject to such asset sale or other disposition in
accordance with the terms of any Lien upon or with respect to such assets or
which must by the terms of such Lien, or in order to obtain a necessary consent
to such asset sale or other disposition or by Applicable Law, be repaid out of
the proceeds from such asset sale or other disposition, and (iii) a reasonable
reserve for the after-tax costs of any indemnification payments (fixed or
contingent) attributable to the seller's indemnities to the purchaser undertaken
by the Borrower or any of its Subsidiaries in connection with such asset sale or
other disposition.
"Net Proceeds (Capital Sales)" shall mean, with respect to any sale,
issuance or other disposition of any Indebtedness or any Capital Stock of the
Borrower or the Borrower's Subsidiaries by the Borrower or the Borrower's
Subsidiaries after January 7, 1999, the difference between (1) the aggregate
amount of cash or Cash Equivalents received in connection with the sale,
issuance or other disposition of such Indebtedness or such Capital Stock, and
(2) the aggregate amount of any reasonable and customary transaction costs
incurred in connection therewith, including, without limitation, all fees and
expenses of attorneys, accountants and other consultants, all underwriting or
placement agent fees, and fees and expenses of any trustee, registrar or
transfer agent.
"Network License Agreement" shall mean the Network Membership License
Agreement, dated the date hereof, by and between AT&T Corp. and the Parent.
"Non-U.S. Lender" shall have the meaning ascribed thereto in Section
2.9(a) hereof.
"Notes" shall mean, collectively, the Revolving Loan Notes, the Term
Loan A Notes and the Term Loan B Notes, and any other promissory notes issued by
the Borrower to evidence the Loans, and any extensions, renewals or amendments
to, or replacements of, the foregoing.
"Obligations" shall mean all payment and performance obligations of
every kind, nature and description of the Borrower, its Subsidiaries, and any
other obligors to the Lenders, the Administrative Agent or the Issuing Bank, or
any of them, under this Agreement and the other Loan Documents (including,
without limitation, any interest, fees and other charges on the Loans or
otherwise under the Loan Documents that would accrue but for the filing of a
bankruptcy
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action with respect to the Borrower or any of its Subsidiaries, whether or not
such claim is allowed in such bankruptcy action and including Obligations to the
Administrative Agent, any of the Lenders, or the Issuing Bank, or any of their
Affiliates, under any Interest Rate Hedge Agreements) as they may be amended
from time to time, or as a result of making the Loans, whether such obligations
are direct or indirect, absolute or contingent, due or not due, contractual or
tortious, liquidated or unliquidated, arising by operation of law or otherwise,
now existing or hereafter arising.
"Operating Cash Flow" shall mean, with respect to the Borrower and its
Subsidiaries on a consolidated basis for any fiscal quarter, the sum of (a) Net
Income for such quarter (after eliminating any extraordinary gains and losses),
and (b) to the extent deducted in determining Net Income, the sum of the
following for such period: (i) depreciation and amortization expense, (ii)
Interest Expense, (iii) tax expense and (iv) other non-cash charges, in each
case all as determined in accordance with GAAP. For purposes of determining each
of the Total Leverage Ratio and the Senior Leverage Ratio, if the Borrower or
any of its Subsidiaries acquires (or disposes of) Cellular Systems during a
fiscal period, "Operating Cash Flow" for that period shall be determined as if
the Cellular Systems so acquired (or disposed of) had been acquired (or disposed
of) on the first day of such fiscal period, and the operating results of any
acquired Cellular System for that portion of any fiscal period in which such
Cellular System was not owned by the Borrower or any of its Subsidiaries shall
be determined by reference to financial information prepared by the prior owners
thereof, subject to such adjustments as the Administrative Agent may require;
provided, however, that no material adjustments may be made without consent of
the Required Lenders.
"Ownership Interests" shall mean, with respect to any Person, the
Capital Stock, partnership interests, membership interests or other instruments
or securities evidencing ownership of such Person.
"Parent" shall mean Tritel, Inc., a Delaware corporation and the parent
company of the Borrower.
"Parent Guaranty Agreement" shall mean that certain Parent Guaranty
Agreement dated as of January 7, 1999 by and between the Parent and the
Administrative Agent, for itself and the Lenders, in substantially the form of
Exhibit P attached hereto.
"Parent Pledge Agreement" shall mean that certain Parent Pledge
Agreement dated as of January 7, 1999 by and between the Parent and the
Administrative Agent, for itself and the Lenders, in substantially the form of
Exhibit N attached hereto.
"Payment Date" shall mean the last day of any Interest Period.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PCS" shall mean a personal communications service, as defined in 47
C.F.R. (section) 24.5.
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"PCS Documents" shall mean the Securities Purchase Agreement and each
of the documents that is an exhibit schedule or other attachment thereto
(including, without limitation, the Network License Agreement, the Management
Agreement, the Resale Agreement (upon execution and delivery thereof), the
Stockholders' Agreement, and the Roaming Agreement).
"Performance Certificate" shall mean a certificate, substantially in
the form of Exhibit E attached hereto, signed by an Authorized Signatory of the
Borrower, together with any schedules, exhibits or annexes attached thereto
delivered pursuant to Section 6.3 hereof.
"Permitted Liens" shall mean, as applied to any Person:
(a) Any Lien in favor of the Administrative Agent or any Lender
given to secure the Obligations;
(b) (i) Liens on real estate or other property for taxes,
assessments, governmental charges or levies not yet delinquent and (ii) Liens
for taxes, assessments, judgments, governmental charges or levies or claims the
non-payment of which is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves have been set aside on such Person's
books, but only so long as no foreclosure, distraint, sale or similar
proceedings have been commenced with respect thereto;
(c) Liens of carriers, warehousemen, mechanics, laborers and
materialmen incurred in the ordinary course of business for sums not yet overdue
by more than thirty (30) days or being diligently contested in good faith, if
reserves or appropriate provisions shall have been made therefor;
(d) Liens incurred in the ordinary course of business in
connection with worker's compensation and unemployment insurance, social
security obligations, assessments or government charges which are not overdue
more than sixty (60) days;
(e) Restrictions on the transfer of the Licenses or assets of the
Borrower or its Subsidiaries imposed by any of the Licenses as presently in
effect, by the Communications Act, including any rules or regulations
thereunder, or by comparable state legislation;
(f) Easements, rights-of-way, and other similar encumbrances on
the use of real property which do not materially interfere with the ordinary
conduct of the business of such Person or the use of such property;
(g) Liens reflected by Uniform Commercial Code financing
statements filed in respect of Capitalized Lease Obligations permitted pursuant
to Section 7.1(f) hereof and true leases of the Borrower or any of its
Subsidiaries;
(h) Deposits to secure the performance of bids, trade contracts,
leases,
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statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business;
(i) Liens of attachments, judgments or awards in respect of
judgments that do not constitute an Event of Default under Section 8.1(h);
(j) Liens existing on the Agreement Date as set forth on Schedule
7 attached hereto;
(k) Liens on goods (and the documents of title related thereto)
the purchase price of which is financed by a documentary letter of credit issued
for the account of the Borrower or its Subsidiaries, provided that such Lien
secures only the obligations of the Borrower or such Subsidiaries in respect of
such letter of credit; and
(l) Liens securing Indebtedness permitted pursuant to Section
7.1(i) hereof, provided that such Liens only attach to the Licenses financed by
the FCC Indebtedness.
"Person" shall mean an individual, corporation, limited liability
company, association, partnership, joint venture, trust or estate, an
unincorporated organization, a government or any agency or political subdivision
thereof, or any other entity.
"Plan" shall mean an employee benefit plan within the meaning of
Section 3(3) of ERISA or any other employee benefit plan maintained for
employees of any Person or any affiliate of such Person.
"POPs" shall mean, as of any calculation date, with respect to any BTA
or MTA, the population of such BTA or MTA as such number is set forth in the
most recent PCS Atlas and Data Guide published by Paul Kagan Associates, Inc..
"Pre-receivership Period" shall mean the time period beginning on the
date of the first possession of the Cellular Systems by the Administrative Agent
(or the Lenders) and ending upon the earlier of (i) the taking of possession of
the systems by a receiver appointed by a court of competent jurisdiction or (ii)
the taking of possession of the systems by a trustee or by the Borrower as
debtor-in-possession following the entry of an order for relief in a case of the
Borrower pending under the United States Bankruptcy Code.
"Qualified Vendors" shall mean, collectively, Ericsson, Lucent
Technologies Inc. or any Affiliate of either of the foregoing Persons; and
"Qualified Vendor" shall mean any of the foregoing Qualified Vendors.
"Qualified Vendor Agreement" shall mean, collectively, (a) that certain
Acquisition Agreement between Tritel Communications, Inc. and Tritel Finance,
Inc., each a Delaware corporation, on the one hand, and Ericsson, on the other
hand, dated as of December 30, 1998 and (b) any other purchase agreement between
the Borrower and/or one or more of its
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Subsidiaries, on the one hand, and a Qualified Vendor, on the other hand, in
each case, pursuant to which the Borrower and/or such Subsidiaries shall acquire
from Ericsson and/or such Qualified Vendor, as applicable, cellular equipment
and ancillary services required for the initial buildout of its or their
Cellular Systems, and which shall be in form and substance reasonably
satisfactory to the Administrative Agent.
"Register" shall have the meaning ascribed thereto in Section 11.5(g)
hereof.
"Registered Noteholder" shall mean each Non-U.S. Lender that holds a
Registered Note pursuant to Section 2.9(a) hereof or registers its Loans
pursuant to Section 11.5(g) hereof.
"Registered Notes" shall mean those certain Notes that have been issued
in registered form in accordance with Sections 2.9(a) and 11.5(g) hereof and
each of which bears the following legend: "This is a Registered Note, and this
Registered Note and the Loans evidenced hereby may be assigned or otherwise
transferred in whole or in part only by registration of such assignment or
transfer on the Register and in compliance with all other requirements provided
for in the Loan Agreement."
"Regulations" shall have the meaning ascribed thereto in Section 4.1(n)
hereof.
"Replacement Lender" shall have the meaning ascribed thereto in Section
10.5 hereof.
"Reportable Event" shall mean, with respect to any Employee Pension
Plan, an event described in Section 4043(b) of ERISA.
"Request for Advance" shall mean a certificate designated as a "Request
for Advance," signed by an Authorized Signatory of the Borrower requesting an
Advance hereunder, which shall be in substantially the form of Exhibit F
attached hereto, and shall, among other things, (i) specify the Commitment under
which such Advance is to be made, the date of the Advance, which shall be a
Business Day, the amount of the Advance, the type of Advance (Eurodollar or Base
Rate), and, with respect to Eurodollar Advances, the Interest Period selected by
the Borrower, (ii) state that there shall not exist a Default or Event of
Default as of the date of such Advance and after giving effect thereto and (iii)
provide calculations demonstrating compliance with Sections 7.8, 7.9, 7.10,
7.11, 7.12, 7.13, 7.14, 7.15, 7.16 and 7.17 hereof, after giving effect to the
proposed Advance, and the Applicable Margin related thereto.
"Request for Issuance of Letter of Credit" shall mean any certificate
signed by an Authorized Signatory of the Borrower requesting that the Issuing
Bank issue a Letter of Credit hereunder, which certificate shall be in
substantially the form of Exhibit O attached hereto and shall, among other
things, state (a) the stated amount of the Letter of Credit, (b) the effective
date for the issuance of the Letter of Credit (which shall be a Business Day),
(c) the date on which the Letter of Credit is to expire (which shall be a
Business Day), (d) the Person for whose benefit such Letter of Credit is to be
issued, (e) that the requirements of Section 3.3 hereof have been satisfied, and
(f) other relevant terms of such Letter of Credit.
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"Required Lenders" shall mean, collectively, Lenders the total of whose
Commitment Ratios equals or exceeds fifty-one percent (51%) of the Commitment
Ratios of all Lenders entitled to vote hereunder.
"Resale Agreement" shall mean, when executed and delivered, the Resale
Agreement by and between AT&T and the Parent in substantially the form of
Exhibit D to the Securities Purchase Agreement.
"Restricted Payment" shall mean (a) any direct or indirect
distribution, dividend or other payment to any Person (other than to the
Borrower or a Subsidiary of the Borrower) on account of any general or limited
partnership interest in, or shares of Capital Stock or other securities of, the
Borrower or any of its Subsidiaries (other than dividends payable solely in the
Capital Stock of such Person and stock splits), including, without limitation,
any direct or indirect distribution, dividend or other payment to any Person
(other than to the Borrower or a Subsidiary of the Borrower) on account of any
warrants or other rights or options to acquire shares of Capital Stock of the
Borrower or any of its Subsidiaries, (b) any payment of principal of, or
interest on, or payment into a sinking fund for the retirement of, or any
defeasance of Subordinated Debt, or (c) any management, consulting or similar
fees, or any interest thereon, payable by the Borrower or any of its
Subsidiaries to any of their respective Affiliates (other than such fees and
interest payable to the Borrower or any of its Subsidiaries).
"Restricted Purchase" shall mean any payment (including, without
limitation, any sinking fund payment, prepayment or installment payment) on
account of the purchase, redemption, defeasance or other acquisition or
retirement of any general or limited partnership interest in, or shares of
Capital Stock of or other securities or Subordinated Debt or other Ownership
Interests of the Borrower or any of it's Subsidiaries, including, without
limitation, any warrants or other rights or options to acquire shares of Capital
Stock or other Ownership Interests of the Borrower or of any of its Subsidiaries
or any loan, advance, release or forgiveness of Indebtedness by the Borrower or
any of its Subsidiaries to any partner, shareholder or Affiliate (other than to
the Borrower or any of its Subsidiaries) of any such Person.
"Revolving Loan Commitment" shall mean the several obligations of the
Lenders to advance in an aggregate amount of up to $250,000,000 at any one time
outstanding, in accordance with their respective Commitment Ratios, to the
Borrower prior to the Revolving Loan Maturity Date pursuant to the terms hereof
and as such obligations may be reduced from time to time pursuant to the terms
hereof.
"Revolving Loan Maturity Date" shall mean June 30, 2007, or such
earlier date as payment of the remaining outstanding principal amount of the
Revolving Loans or of all remaining outstanding Obligations shall be due
(whether by acceleration or otherwise).
"Revolving Loan Notes" shall mean, collectively, those certain
revolving promissory notes in an aggregate original principal amount of the
Revolving Loan Commitment, and issued
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to each of the Lenders by the Borrower with respect to the Revolving Loan
Commitment, each one substantially in the form of Exhibit C-1 attached hereto,
and any extensions, renewal or amendments to, or replacements of, the foregoing.
"Revolving Loans" shall mean, collectively, the amounts advanced by the
Lenders to the Borrower under the Revolving Loan Commitment, not to exceed the
amount of the Revolving Loan Commitment, and evidenced by the Revolving Loan
Notes.
"Roaming Agreement" shall mean the Intercarrier Roamer Service
Agreement by and between AT&T Wireless Services, Inc. and the Borrower in
substantially the form attached as Exhibit F to the Securities Purchase
Agreement.
"Securities Purchase Agreement" shall mean that certain Securities
Purchase Agreement between AT&T, TWR Cellular, Inc., the Cash Equity Investors
(as defined therein) parties thereto, Mercury PCS, LLC, Mercury PCS II, LLC, the
Management Stockholders party thereto and the Parent dated May 20, 1998, as
amended by that certain Closing Agreement dated January 7, 1999.
"Security Documents" shall mean the Borrower's Pledge Agreements, the
Borrower's Security Agreements, the Subsidiary Guaranties, the Subsidiary Pledge
Agreements, the Subsidiary Security Agreements, the Parent Pledge Agreement any
other agreement or instrument providing Collateral for the Obligations whether
now or hereafter in existence, any filings, instruments, agreements,
certificates, stock powers and documents related thereto or to this Agreement,
and any confirmations of any of the foregoing and providing the Administrative
Agent, for the benefit of itself and the Lenders, with Collateral for the
Obligations.
"Security Interest" shall mean all Liens in favor of the Administrative
Agent, for the benefit of itself and the Lenders, created hereunder or under any
of the Security Documents to secure the Obligations.
"Senior Debt" shall mean, as of any date, the excess, if any, of (a)
Total Debt minus (b) Subordinated Debt.
"Senior Debt Capitalization Ratio" shall mean, as of any date, the
ratio of (a) Senior Debt outstanding on such date to (b) Total Capital on such
date.
"Senior Leverage Ratio" shall mean, as of any date, the ratio of (a)
Senior Debt on such date to (b) Annualized Operating Cash Flow.
"Standby Letter of Credit" shall mean a letter of credit issued to
support obligations of the Borrower.
"Stockholders' Agreement" shall mean that Stockholders' Agreement by
and among AT&T, the Borrower, the Cash Equity Investors (as defined therein) and
the Management
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Stockholders (as defined therein), as stockholders, dated as of January 7, 1999.
"Subordinated Debt" shall mean high yield subordinated debt issued by
the Borrower or the Parent having a maturity date that is not earlier than the
date which is six (6) months subsequent to December 31, 2007, and which is
otherwise on terms reasonably acceptable to the Required Lenders, and the
Indebtedness represented thereby and refinancings of such Indebtedness, provided
that (a) any such refinancing Indebtedness (i) shall not have a greater
outstanding principal amount, an earlier maturity date, or a decreased weighted
average life than the Subordinated Debt refinanced and (ii) shall be
subordinated to the Indebtedness created under the Loan Documents to at least
the extent of, and shall otherwise be issued on terms no less favorable to the
Lenders than, the Subordinated Debt refinanced, and (b) the proceeds of such
refinancing Indebtedness shall be used solely to repay the Subordinated Debt
refinanced thereby and any fees and expenses incurred in connection therewith.
"Subordinated Debt Documents" shall mean the indenture under which the
Subordinated Debt, if any, is issued and all other instruments, agreements and
other documents evidencing or governing the Subordinated Debt, if any, or
providing for any guarantee or other right in respect thereof.
"Subscribers" shall mean, as of any date, all customers receiving
broadband PCS services from the Borrower or its Subsidiaries none of the
subscriber payments (other than those being contested in good faith by such
customer) of which are more than sixty (60) days past due (or past due for more
than such shorter period of time as the Borrower may have established for
accounting or credit policy purposes for treating a customer as not being in
good standing).
"Subsidiary" shall mean, as applied to any Person, (a) any corporation
of which more than fifty percent (50%) of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect a majority
of its board of directors, regardless of the existence at the time of a right of
the holders of any class or classes of securities of such corporation to
exercise such voting power by reason of the happening of any contingency, or any
partnership of which more than fifty percent (50%) of the outstanding
partnership interests, is at the time owned directly or indirectly by such
Person, or by one or more Subsidiaries of such Person, or by such Person and one
or more Subsidiaries of such Person, or (b) any other entity which is directly
or indirectly controlled or capable of being controlled by such Person, or by
one or more Subsidiaries of such Person, or by such Person and one or more
Subsidiaries of such Person. Subsidiaries of the Borrower as of the Agreement
Date are set forth on Schedule 2 attached hereto, except as otherwise noted
thereon.
"Subsidiary Guaranties" shall mean, collectively, those certain
Subsidiary Guaranties dated as of January 7, 1999, in favor of the
Administrative Agent and the Lenders given by each Subsidiary of the Borrower,
including, without limitation, each License Sub, and shall include any similar
agreements, each substantially in the form of Exhibit K attached hereto.
"Subsidiary Pledge Agreements" shall mean, collectively, those certain
Subsidiary Pledge
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Agreements between each Subsidiary of the Borrower, including, without
limitation, each License Sub, having one or more of its own Subsidiaries, on the
one hand, and the Administrative Agent, on the other hand, or any similar
agreements, each substantially in the form of Exhibit L attached hereto.
"Subsidiary Security Agreements" shall mean, collectively, those
certain Subsidiary Security Agreements dated as of January 7, 1999, among each
of its Subsidiaries, including, without limitation, each License Sub, and the
Administrative Agent, and shall include any similar agreements, each
substantially in the form of Exhibit J attached hereto.
"Surplus Subordinated Debt" shall mean, as of any date of
determination, the aggregate principal amount of Subordinated Debt issued on or
before December 31, 1999, minus $125,000,000.
"Taxes" shall have the meaning ascribed thereto in Section 2.10(b)
hereof.
"Term Loan A" shall mean the amounts advanced by the Lenders to the
Borrower under the Term Loan A Commitment and evidenced by the Term Loan A
Notes.
"Term Loan A Commitment" shall mean the several obligations of the
Lenders to advance to the Borrower prior to the Term Loan A Draw Termination
Date $100,000,000, in accordance with their respective Commitment Ratios
pursuant to the terms hereof.
"Term Loan A Draw Termination Date" shall mean that date which is six
(6) months from the Agreement Date.
"Term Loan A Maturity Date" shall mean June 30, 2007, or such earlier
date as payment of the remaining outstanding principal amount of the Term Loan A
or of all remaining outstanding Obligations shall be due (whether by
acceleration or otherwise).
"Term Loan A Notes" shall mean, collectively, those certain term
promissory notes in the aggregate original principal amount of $100,000,000 and
one (1) issued to each of the Lenders having a Term Loan A Commitment by the
Borrower, each one substantially in the form of Exhibit C-2 attached hereto, and
any extensions, modifications, renewals or replacements of, or amendments to,
any of the foregoing.
"Term Loan B" shall mean the amounts advanced by the Lenders to the
Borrower under the Term Loan B Commitment and evidenced by the Term Loan B
Notes.
"Term Loan B Commitment" shall mean the several obligations of the
Lenders to advance to the Borrower $200,000,000, in accordance with their
respective Commitment Ratios pursuant to the terms hereof.
"Term Loan B Maturity Date" shall mean December 31, 2007, or such
earlier date as
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payment of the remaining outstanding principal amount of the Term Loan B or of
all remaining outstanding Obligations shall be due (whether by acceleration or
otherwise).
"Term Loan B Notes" shall mean, collectively, those certain term
promissory notes in the aggregate original principal amount of $200,000,000 and
one (1) issued to each of the Lenders having a Term Loan B Commitment by the
Borrower, each one substantially in the form of Exhibit C-3 attached hereto, and
any extensions, modifications, renewals or replacements of, or amendments to,
any of the foregoing.
"Total Capital" shall mean, as of any date, the sum, without
duplication, of (a) Funded Debt outstanding on such date, (b) Contributed Equity
on such date, and (c) Committed Equity on such date, in each case, as calculated
in accordance with GAAP.
"Total Debt" shall mean, as of any date, for the Parent, the Borrower
and the Borrower's Subsidiaries, on a consolidated basis, the excess, if any,
of, without duplication, (a) the sum of (i) the Obligations, (ii) the
Subordinated Debt, and (iii) all other Indebtedness for Money Borrowed of the
Parent, the Borrower and the Borrower's Subsidiaries, minus (b) cash on hand.
"Total Debt Capitalization Ratio" shall mean, as of any date the ratio
of (a) Total Debt outstanding on such date to (b) Total Capital on such date.
"Total Leverage Ratio" shall mean, as of any date, the ratio of (a)
Total Debt outstanding on such date to (b) Annualized Operating Cash Flow.
"Total POPs" shall mean, as of any date, the aggregate number of POPs
within all geographic areas for which the Borrower or any of its Subsidiaries
holds a License to provide broadband PCS services.
"Tower Sale/Leaseback Transaction" shall mean any arrangement, direct
or indirect, entered into by the Borrower or any of its Subsidiaries, on the one
hand, and any third party, on the other hand, pursuant to which the Borrower or
such Subsidiary shall sell or transfer any tower or towers, whether now owned or
hereafter acquired, and shall then or thereafter rent or lease as lessee such
tower or towers or any part thereof which the Borrower or such Subsidiary
intends to use for substantially the same purpose or purposes as the tower or
towers sold or transferred.
"Upstream Dividends" shall have the meaning ascribed thereto in Section
7.21 hereof.
"Use of Proceeds Letters" shall mean those certain Use of Proceeds
Letters, substantially in the form of Exhibit G attached hereto, to be delivered
to the Administrative Agent and the Lenders on the date of any Advance
hereunder.
"Voting Stock" shall mean, with respect to a corporation, all classes
of Capital Stock of such corporation then outstanding and normally entitled to
vote in the election of directors.
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"Year 2000 Compliant" shall have the meaning ascribed thereto in
Section 4.1(y) hereof.
"Year 2000 Problem" shall have the meaning ascribed thereto in Section
4.1(y) hereof.
Section 1.2 Interpretation. Each definition of an agreement,
instrument or other document in this Article 1 shall, unless otherwise
specified, include such agreement as modified, amended, restated or supplemented
from time to time in accordance herewith, and except where the context otherwise
requires, the singular shall include the plural and vice versa. Except where
otherwise specifically restricted, reference to a party to this Agreement or any
other Loan Document includes that party and its successors and assigns. All
capitalized terms used herein which are defined in Article 9 of the Uniform
Commercial Code in effect in the State of New York on the date hereof and which
are not otherwise defined herein shall have the same meanings herein as set
forth therein.
ARTICLE 2 Credit Facilities and Letters of Credit
Section 2.1 Commitments and Letters of Credit.
(a) Revolving Loan Commitment. The Lenders who issued a Revolving Loan
Commitment, agree, severally, in accordance with their respective Commitment
Ratios, and not jointly, upon the terms and subject to the conditions of this
Agreement, to lend and relend to the Borrower from time to time, prior to the
Revolving Loan Maturity Date amounts which do not exceed, in the aggregate, at
the time of any Advance under the Revolving Loan Commitment the Available
Revolving Loan Commitment as then in effect; provided, however, that the
Borrower may only request Advances under the Revolving Loan Commitment after the
Term Loan A Commitment has been drawn in full. Notwithstanding the foregoing,
the Borrower may request Advances under the Revolving Loan Commitment prior to
the Revolving Loan Maturity Date in an aggregate principal amount not to exceed,
and for the sole purpose of making, the Deposit Loan. Subject to the terms and
conditions hereof, Advances under the Revolving Loan Commitment may be repaid
and reborrowed from time to time on a revolving basis.
(b) Term Loan A Commitment. The Lenders who issued a Term Loan A
Commitment, agree , severally, in accordance with their respective Commitment
Ratios, and not jointly, upon the terms and subject to the conditions of this
Agreement, to lend to the Borrower in multiple installments prior to the Term
Loan A Draw Termination Date an amount not to exceed the Term Loan A Commitment.
Subject to the terms and conditions hereof, Advances under the Term Loan A
Commitment may be repaid and reborrowed to effect a change in the Interest Rate
Basis or Interest Periods relating thereto; provided, however, that the Borrower
may only request Advances under the Term Loan A Commitment after the Term Loan B
Commitment has been drawn in full; and provided further, however, that there
shall be no increase in the principal amount outstanding under the Term Loan A
Commitment after the Term Loan A Draw
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<PAGE>
Termination Date.
(c) Term Loan B Commitment. The Lenders who have issued a Term Loan B
Commitment agree, severally, in accordance with their respective Commitment
Ratios, and not jointly, upon the terms and subject to the conditions of this
Agreement, to lend to the Borrower on the Agreement Date an amount not to exceed
$150,000,000. The Lenders who issued a "Term Loan B Commitment" under, and as
defined in, the Prior Loan Agreement have previously lent to the Borrower the
amount in the aggregate of $50,000,000 of which $50,000,000 is outstanding on
the Agreement Date. The Borrower hereby acknowledges that all "Obligations" in
respect of "Advances" outstanding under the "Term Loan B Commitment" (as such
terms are defined in the Prior Loan Agreement) shall be deemed to have been made
to the Borrower as Advances under the Term Loan B Commitment hereunder and shall
constitute a portion of the Obligations. Subject to the terms and conditions
hereof, Advances under the Term Loan B Commitment may be repaid and reborrowed
to effect a change in the Interest Rate Basis or Interest Periods relating
thereto; provided, however, that there shall be no increase in the principal
amount outstanding under the Term Loan B Commitment.
(d) The Letters of Credit. Subject to the terms and conditions of this
Agreement, the Issuing Bank agrees to issue Letters of Credit for the account of
the Borrower pursuant to Section 2.15 hereof in an aggregate amount at the time
of issuance of any Letter of Credit hereunder not to exceed the Available Letter
of Credit Commitment then in effect.
Section 2.2 Manner of Borrowing and Disbursement.
(a) Choice of Interest Rate, Etc. Any Advance shall, at the option of
the Borrower, be made as a Base Rate Advance or a Eurodollar Advance; provided,
however, that at such time as there shall have occurred and be continuing an
Event of Default hereunder, the Borrower shall not have the right to receive a
Eurodollar Advance. Any notice given to the Administrative Agent in connection
with a requested Advance hereunder shall be given to the Administrative Agent
prior to 11:00 a.m. (Ne York, New York time) in order for such Business Day to
count toward the minimum number of Business Days required.
(b) Base Rate Advances.
(i) Advances. The Borrower shall give the Administrative Agent
irrevocable prior written notice prior to 11:00 a.m. (New York, New York time)
on the date of any requested Base Rate Advance in the form of a Request for
Advance, or telephonic notice followed immediately by a Request for Advance;
provided, however, that the Borrower's failure to confirm any telephonic notice
with a Request for Advance shall not invalidate any notice so given if acted
upon by the Administrative Agent. Upon receipt of such notice from the Borrower,
the Administrative Agent shall promptly notify each Lender by telephone or
telecopy of the contents thereof.
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<PAGE>
(ii) Repayments and Reborrowings. The Borrower may repay or prepay
a Base Rate Advance without regard to its Payment Date and, (A) upon irrevocable
prior written notice prior to 11:00 a.m. (New York, New York time) on the date
of any requested repayment and reborrowing, or telephonic notice followed
immediately by a written notice, reborrow all or a portion of the principal
amount thereof as a Base Rate Advance, (B) upon at least three (3) Business
Days' irrevocable prior written notice, or telephonic notice followed
immediately by a written notice, reborrow all or a portion of the principal
thereof as one or more Eurodollar Advances, or (C) not reborrow all or any
portion of such Base Rate Advance; provided, however, that the Borrower's
failure to confirm any telephonic notice with a written notice shall not
invalidate any notice so given if acted upon by the Administrative Agent. On the
date indicated by the Borrower, such Base Rate Advance shall be so repaid and,
as applicable, reborrowed. The failure to give timely notice hereunder with
respect to the Payment Date of any Base Rate Advance shall be deemed a request
for a Base Rate Advance.
(c) Eurodollar Advances.
(i) Advances. Upon request of the Borrower, the Administrative
Agent, whose determination shall be conclusive, shall determine the available
Eurodollar Bases and shall notify the Borrower of such Eurodollar Bases. The
Borrower shall give the Administrative Agent in the case of Eurodollar Advances
at least three (3) Business Days' irrevocable prior written notice in the form
of a Request for Advance, or telephonic notice followed immediately by a Request
for Advance; provided, however, that the Borrower's failure to confirm any
telephonic notice with a Request for Advance shall not invalidate any notice so
given if acted upon by the Administrative Agent. Upon receipt of such notice
from the Borrower, the Administrative Agent shall promptly notify each Lender by
telephone or telecopy of the contents thereof.
(ii) Repayments and Reborrowings. At least three (3) Business Days
prior to the Payment Date for each Eurodollar Advance, the Borrower shall give
the Administrative Agent written notice, or telephonic notice followed
immediately by written notice, specifying whether all or a portion of such
Eurodollar Advance (A) is to be repaid and then reborrowed in whole or in part
as one or more Eurodollar Advances, (B) is to be repaid and then reborrowed in
whole or in part as a Base Rate Advance or (C) is to be repaid and not
reborrowed; provided, however, that the Borrower's failure to confirm any
telephonic notice with a written notice shall not invalidate any notice so given
if acted upon by the Administrative Agent. The failure to give such notice shall
preclude the Borrower from reborrowing such Advance as a Eurodollar Advance on
its Payment Date and shall be deemed a request for a Base Rate Advance. Upon
such Payment Date such Eurodollar Advance will, subject to the provisions
hereof, be so repaid and, as applicable, reborrowed.
(d) Notification of Lenders. Upon receipt of a Request for Advance, or
a notice from the Borrower with respect to any outstanding Advance prior to the
Payment Date for such Advance, the Administrative Agent shall promptly notify
each Lender by telephone or telecopy of the contents thereof and the amount of
such Lender's portion of the Advance. Each
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<PAGE>
Lender shall, not later than 12:00 noon (New York, New York time) on the date of
borrowing specified in such notice, make available to the Administrative Agent
at the Administrative Agent's Office, or at such account as the Administrative
Agent shall designate, the amount of its portion of any Advance which represents
an additional borrowing hereunder in immediately available funds.
(e) Disbursement.
(i) Prior to 2:00 p.m. (New York, New York time) on the date of an
Advance hereunder, the Administrative Agent shall, subject to the satisfaction
of the conditions set forth in Article 3 hereof, disburse the amounts made
available to the Administrative Agent by the Lenders in like funds by (a)
transferring the amounts so made available by wire transfer pursuant to the
Borrower's instructions or (b) in the absence of such instructions, crediting
the amounts so made available to the account of the Borrower maintained with the
Administrative Agent.
(ii) Unless the Administrative Agent shall have received notice
from a Lender prior to 12:00 noon (New York, New York time) on the date of any
Advance that such Lender will not make available to the Administrative Agent
such Lender's ratable portion of such Advance, the Administrative Agent may
assume that such Lender has made or will make such portion available to the
Administrative Agent on the date of such Advance and the Administrative Agent
may in its sole discretion and in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If and to the extent the
Lender does not make such ratable portion available to the Administrative Agent,
such Lender agrees to repay to the Administrative Agent on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent, at the Federal Funds Rate.
(iii) If such Lender shall repay to the Administrative Agent such
corresponding amount, such amount so repaid shall constitute such Lender's
portion of the applicable Advance for purposes of this Agreement. If such Lender
does not repay such corresponding amount immediately upon the Administrative
Agent's demand therefor, the Administrative Agent shall notify the Borrower and
the Borrower shall immediately pay such corresponding amount to the
Administrative Agent, with interest at the Federal Funds Rate. The failure of
any Lender to fund its portion of any Advance shall not relieve any other Lender
of its obligation, if any, hereunder to fund its respective portion of the
Advance on the date of such borrowing, but no Lender shall be responsible for
any such failure of any other Lender.
(iv) In the event that, at any time when the Borrower is not in
Default and has otherwise satisfied each of the conditions in Section 3.2
hereof, a Lender for any reason fails or refuses to fund its portion of such
Advance (any such Lender being a "Defaulting Lender"), then, until such time as
such Defaulting Lender has funded its portion of such Advance (which late
funding shall not absolve such Lender from any liability it may have to the
Borrower), or all other Lenders have received payment in full from the Borrower
(whether by
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<PAGE>
repayment or prepayment) or otherwise of the principal and interest due in
respect of such Advance, such Defaulting Lender shall not have the right (A) to
vote regarding any issue on which voting is required or advisable under this
Agreement or any other Loan Document, and such Defaulting Lender's portion of
the Loans shall not be counted as outstanding for purposes of determining
"Required Lenders" hereunder, or (B) to receive payments of principal, interest
or fees from the Borrower, the Administrative Agent or the other Lenders in
respect of its portion of the Loans.
Section 2.3 Interest.
(a) On Base Rate Advances. Interest on each Base Rate Advance shall be
computed on the basis of a year of three hundred sixty-five (365)/ three hundred
sixty-six (366) days for the actual number of days elapsed and shall be payable
at the Base Rate Basis for such Advance, in arrears on the applicable Payment
Date. Interest on Base Rate Advances then outstanding shall also be due and
payable on the Maturity Date.
(b) On Eurodollar Advances. Interest on each Eurodollar Advance shall
be computed on the basis of a three hundred sixty (360) day year for the actual
number of days elapsed and shall be payable at the Eurodollar Basis for such
Advance, in arrears on the applicable Payment Date, and, in addition, if the
Interest Period for a Eurodollar Advance exceeds three (3) months, interest on
such Eurodollar Advance shall also be due and payable in arrears on every
three-month anniversary of the beginning of such Interest Period. Interest on
Eurodollar Advances then outstanding shall also be due and payable on the
Maturity Date.
(c) Interest if no Notice of Selection of Interest Rate Basis. If the
Borrower fails to give the Administrative Agent timely notice of its selection
of a Eurodollar Basis, or if for any reason a determination of a Eurodollar
Basis for any Advance is not timely concluded, the Base Rate Basis shall apply
to such Advance.
(d) Interest Upon Default. Immediately upon the occurrence of an Event
of Default described in Section 8.1(b) hereunder as a result of the failure of
the Borrower to make any payment specified therein when due, the unpaid amount
of any such payment (to the extent permitted by Applicable Law) shall bear
interest at the Default Rate. Such interest shall be payable by the Borrower on
demand by the Required Lenders and shall accrue from the occurrence of such
Event of Default until the earlier of (i) waiver or cure of the applicable Event
of Default, (ii) agreement by the Required Lenders (or, if applicable to the
underlying Event of Default, all of the Lenders) to rescind the charging of
interest at the Default Rate or (iii) payment in full of the unpaid amount of
any such payment.
(e) Eurodollar Advance Contracts. At no time may the number of
outstanding Eurodollar Advances hereunder exceed in the aggregate ten (10).
(f) Applicable Margin.
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<PAGE>
(i) Revolving Loan Commitment and Term Loan A Commitment. From the
Agreement Date through and including the earlier to occur of (A) the Go-Positive
Date and (B) the third (3rd) anniversary of the Agreement Date, the Applicable
Margin for any Advance under the Revolving Loan Commitment or the Term Loan A
Commitment shall be, (1) for Base Rate Advances, two and three-quarters of one
percent (2.750%), and (2) for Eurodollar Advances, three and three-quarters of
one percent (3.750%). In the event that the third (3rd) anniversary of the
Agreement Date shall occur prior to the Go-Positive Date, then from the third
(3rd) anniversary of the Agreement Date through and including the Go-Positive
Date, the Applicable Margin for any Advance under the Revolving Loan Commitment
or the Term Loan A Commitment shall be, (A) for Base Rate Advances, two percent
(2.000%), and (B) for Eurodollar Advances, three percent (3.000%). At all times
after the Go-Positive Date, the Applicable Margin shall be determined by the
Administrative Agent with respect to any Advance under the Revolving Loan
Commitment or the Term Loan A Commitment based upon the Total Leverage Ratio as
of the end of the fiscal quarter most recently ended, effective as of the third
(3rd) Business Day after the financial statements referred to in Section 6.1 or
6.2 hereof, as the case may be, are furnished to the Administrative Agent for
such fiscal quarter, as follows:
<TABLE>
<CAPTION>
Base Rate Advance Eurodollar Advance
Total Leverage Ratio Applicable Margin Applicable Margin
-------------------- ----------------- -----------------
<S> <C> <C>
Greater than 10.0:1 1.875% 2.875%
Less than or equal to 10.0:1.0, but greater than 8.0:1.0 1.750% 2.750%
Less than or equal to 8.0:1.0, but greater than 7.0:1.0 1.500% 2.500%
Less than or equal to 7.0:1.0, but greater than 6.0:1.0 1.250% 2.250%
Less than or equal to 6.0:1.0, but greater than 5.0:1.0 1.000% 2.000%
Less than or equal to 5.0:1.0 0.750% 1.750%
</TABLE>
Notwithstanding the foregoing, if the Borrower shall fail to timely
deliver to the Administrative Agent the financial statements required for the
calculation of the Total Leverage Ratio for any fiscal quarter, then commencing
with the Business Day after the date such financial statements were due and
continuing through the third (3rd) Business Day following the date of delivery
thereof, the Total Leverage Ratio for such period shall be conclusively presumed
to be, and the Applicable Margin for any Advance under the Revolving Loan
Commitment or the Term Loan A Commitment shall be calculated based upon, the
highest Total Leverage Ratio level listed in the table set forth above in this
Section 2.3(f)(i).
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<PAGE>
(ii) Term Loan B Commitment. The Applicable Margin for any Advance
under the Term Loan B Commitment shall be, (A) from the Agreement Date through
and including the earlier to occur of (1) the Go-Positive Date and (2) the third
(3rd) anniversary of the Agreement Date, (a) for Base Rate Advances, three and
one-half of one percent (3.500%), and (b) for Eurodollar Advances, four and
one-half of one percent (4.500%), and (B) at all times after the earlier to
occur of (1) the Go- Positive Date or (2) the third (3rd) anniversary of the
Agreement Date, (a) for Base Rate Advances, two and three-quarters of one
percent (2.750%), and (b) for Eurodollar Advances, three and three-quarters of
one percent (3.750%).
Section 2.4 Fees.
(a) Commitment Fees. The Borrower agrees to pay each of the Lenders, in
accordance with their respective Commitment Ratios for the applicable
Commitment, a commitment fee on the Available Revolving Loan Commitment and the
Available Term Loan A Commitment for each day from the Agreement Date until, (1)
with respect to the Revolving Loan Commitment, the Revolving Loan Maturity Date,
and (2) with respect to the Term Loan A Commitment, the Term Loan A Draw
Termination Date, equal to the product of (A) an amount equal to the sum of the
Available Revolving Loan Commitment and the Available Term Loan A Commitment on
such date, and (B) the applicable rate per annum set forth below based upon the
ratio of the total Available Revolving Loan Commitments and Available Term Loan
A Commitments to the total Revolving Loan Commitments and Term Loan A
Commitments on such date:
<TABLE>
<CAPTION>
Available Revolving Loan Commitments and
Available Term Loan A Commitments as a Percentage
of the Total Revolving Commitments and Term Loan
A Commitment Commitment Fee Rate Per Annum
------------ -----------------------------
<S> <C>
Greater than or equal to sixty-six and
two-thirds percent (66-2/3%) 1.75%
Greater than or equal to fifty percent (50%),
but less than sixty-six and two-thirds
percent (66-2/3%) 1.00%
Less than fifty percent (50%) 0.50%
</TABLE>
Such commitment fees shall be computed on the basis of a year of three
hundred sixty-five (365)/three hundred sixty-six (366) days for the actual
number of days elapsed, shall be payable quarterly in arrears on the last
Business Day of each calendar quarter, and shall be fully earned when due and
non-refundable when paid. A final payment of all commitment fees then payable
shall also be due and payable on, (i) with respect to the Revolving Loan
Commitment,
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<PAGE>
the Revolving Loan Maturity Date and, (ii) with respect to the Term
Loan A Commitment, the Term Loan A Draw Termination Date.
(b) Letter of Credit Fees.
(i) The Borrower shall pay to the Issuing Bank a fee on the
undrawn face amount of any outstanding Letters of Credit from the date of
issuance through the expiration date of each such Letter of Credit at a rate
of one-eighth of one percent (0.125%) per annum, which fee shall be computed
on the basis of a year of 365/366 days for the actual number of days
elapsed, and shall be payable quarterly in arrears on the last Business Day
of each calendar quarter and shall be fully earned when due and
non-refundable when paid. A final payment of all letter of credit fees shall
also be due and payable on the Revolving Loan Maturity Date.
(ii) The Borrower shall also pay to the Administrative Agent on
behalf of the Lenders in accordance with their respective Commitment Ratios,
a fee on the undrawn face amount of any outstanding Letters of Credit for
each day from the date of issuance thereof through the expiration date for
each such Letter of Credit at a rate per annum equal to the Applicable
Margin for Eurodollar Advances as set forth in Section 2.3(f)(i) hereof.
Such letter of credit fee shall be computed on the basis of a year of
365/366 days for the actual number of days elapsed and shall be payable
quarterly in arrears for each quarter on the last Business Day of each
calendar quarter and shall be fully earned when due and non-refundable when
paid. A final payment of all letter of credit fees shall also be due and
payable on the Revolving Loan Maturity Date. The letter of credit fee set
forth in this Section 2.4(b)(ii) shall be subject to increase and decrease
on the dates and in the amounts set forth in Section 2.3(f) hereof in the
same manner as the adjustment of the Applicable Margin with respect to
Eurodollar Advances that are Revolving Loans.
Section 2.5 Mandatory Revolving Loan Commitment Reductions
(a) Scheduled Reductions under Revolving Loan Commitment. Commencing
December 31, 2002, and on the last day of each calendar quarter ending during
the periods set forth below, the Revolving Loan Commitment as of December 30,
2002 shall be automatically and permanently reduced by the percentage amount set
forth below for the dates indicated:
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<PAGE>
<TABLE>
<CAPTION>
Percentage of Revolving
Loan Commitment as of
Scheduled Reduction Dates December 30, 2002
------------------------- -----------------
<S> <C>
December 31, 2002 2.50000%
March 31, 2003, June 30, 2003,
September 30, 2003 and December 31, 2003 2.96875%
March 31, 2004, June 30, 2004,
September 30, 2004 and December 31, 2004 4.53125%
March 31, 2005, June 30, 2005,
September 30, 2005 and December 31, 2005 5.31250%
March 31, 2006, June 30, 2006
September 30, 2006 and December 31, 2006 6.40625%
March 31, 2007 and the Revolving Loan Maturity Date 10.31250%
</TABLE>
(b) Reduction From Excess Cash Flow. The Revolving Loan Commitment
shall be automatically and permanently reduced by an amount equal to the
repayment of Revolving Loans required under Section 2.7(b)(iv) hereof; provided,
however, that if there is no Term Loan A or Term Loan B then outstanding, then
the Revolving Loan Commitment shall be reduced by an amount equal to the Excess
Cash Flow, regardless of any repayment of the Revolving Loans. Reductions to the
Revolving Loan Commitment under this Section 2.5(b) shall be applied to the
reductions set forth in Section 2.5(a) hereof pro rata across the reductions set
forth therein.
(c) Reduction From Permitted Asset Sales. The Revolving Loan Commitment
shall be automatically and permanently reduced by an amount equal to the
repayment of Revolving Loans required under Section 2.7(b)(iii) hereof;
provided, however, that if there is no Term Loan A or Term Loan B then
outstanding, the Revolving Loan Commitment shall be reduced by an amount equal
to the Net Proceeds (Asset Sales), regardless of any repayment of the Revolving
Loans. Reductions to the Revolving Loan Commitment under this Section 2.5(c)
shall be applied to the reductions set forth in Section 2.5(a) hereof pro rata
across the reductions set forth therein.
(d) Reduction From Sale of Capital Stock and Debt Instruments. The
Revolving Loan Commitment shall be automatically and permanently reduced by an
amount equal to the repayment of Revolving Loans required under Section
2.7(b)(v) hereof; provided, however, that if there is no Term Loan A or Term
Loan B then outstanding, then the Revolving Loan Commitment shall be reduced by
an amount equal to the Net Proceeds (Capital Sales), regardless of any repayment
of the Revolving Loans. Reductions to the Revolving Loan
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<PAGE>
Commitment under this Section 2.5(d) shall be applied to the reductions set
forth in Section 2.5(a) hereof pro rata across the reductions set forth therein.
Section 2.6 Voluntary Commitment Reductions. The Borrower shall have
the right, at any time and from time to time after the Agreement Date, but prior
to, (a) with respect to the Revolving Loan Commitment, the Revolving Loan
Maturity Date, and (b) with respect to the Term Loan A Commitment, the Term Loan
A Draw Termination Date, upon at least three (3) Business Days' prior written
notice to the Administrative Agent, without premium or penalty, to cancel or
reduce permanently all or a portion of the Revolving Loan Commitment and the
Term Loan A Commitment pro rata on the basis of the respective Commitment Ratios
of the Lenders applicable to the Revolving Loan Commitment and the Term Loan A
Commitment, respectively; provided, however, that any such partial reduction
shall be made in an amount not less than $2,000,000 and in an integral multiple
of $1,000,000. As of the date of cancellation or reduction set forth in such
notice, the Revolving Loan Commitment and the Term Loan A Commitment, as
applicable, shall be permanently reduced to the amount stated in such notice for
all purposes herein, and the Borrower shall pay to the Administrative Agent for
the Lenders the amount necessary to reduce the principal amount of the Loans
then outstanding under Revolving Loan Commitment and the Term Loan A Commitment,
or take such other action as may be necessary to repay, cancel or otherwise
discharge the Letter of Credit Obligations, as applicable, to not more than the
amount of Revolving Loan Commitment and the Term Loan A Commitment, as
applicable, as so reduced, together with accrued interest on the amount so
prepaid and commitment fees accrued through the date of the reduction with
respect to the amount reduced. Reductions to the Revolving Loan Commitment under
this Section 2.6 shall be applied to the reductions set forth in Section 2.5(a)
hereof pro rata across the reductions set forth therein.
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<PAGE>
Section 2.7 Prepayments and Repayments.
(a) Prepayment. The principal amount of any Base Rate Advance may be
prepaid in full or ratably in part at any time, without premium or penalty
(other than any Applicable Prepayment Fee required to be paid pursuant to
Section 2.8 hereof) and without regard to the Payment Date for such Advance.
Eurodollar Advances may be prepaid prior to the applicable Payment Date, upon
two (2) Business Days' prior written notice, or telephonic notice followed
immediately by written notice, to the Administrative Agent; provided, however,
that the Borrower shall pay any Applicable Prepayment Fee required to be paid
pursuant to Section 2.8 hereof and shall reimburse the Lenders and the
Administrative Agent, on the earlier of demand by the applicable Lender or the
Maturity Date, for any loss or out-of-pocket expense incurred by any Lender or
the Administrative Agent in connection with such prepayment, as set forth in
Section 2.11 hereof; provided further, however, that the Borrower's failure to
confirm any telephonic notice with a written notice shall not invalidate any
notice so given if acted upon by the Administrative Agent. Any prepayment
hereunder shall be in an amount not less than $2,000,000 and in an integral
multiple of $1,000,000. Revolving Loans prepaid pursuant to this Section 2.7 (a)
may be reborrowed, subject to the terms and conditions hereof. Amounts prepaid
shall be paid together with accrued interest on the amount so prepaid accrued
through the date of such repayment.
(b) Repayments. The Borrower shall repay the Loans as follows:
(i) Scheduled Repayments of Term Loan A and Term Loan B.
Commencing December 31, 2002, the principal balance of each of Term Loan A
and Term Loan B outstanding on December 30, 2002 shall be repaid in
consecutive quarterly installments on March 31st, June 30th, September 30th,
and December 31st of each year until paid in full in such amounts and on
such dates as set forth below:
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<PAGE>
<TABLE>
<CAPTION>
Percentage of Principal of Percentage of Principal of
Term Loan A Outstanding Term Loan B Outstanding
on December 30, 2002 Due on on December 30, 2002 Due on
Repayment Dates Each Repayment Date Each Repayment Date
--------------- ------------------- -------------------
<S> <C> <C>
December 31, 2002 2.50000% 1.000%
March 31, 2003, June 30,
2003, September 30, 2003
and December 31, 2003 2.96875% 0.250%
March 31, 2004, June 30,
2004, September 30, 2004
and December 31, 2004 4.53125% 0.250%
March 31, 2005, June 30,
2005, September 30, 2005
and December 31, 2005 5.31250% 0.250%
March 31, 2006, June 30,
2006, September 30, 2006
and December 31, 2006 6.40625% 0.250%
March 31, 2007 10.31250% 0.250%
Term Loan A Maturity Date 10.31250% Not Applicable
June 30, 2007 and
September 30, 2007 Not Applicable 0.250%
Term Loan B Maturity Date Not Applicable 94.250%
</TABLE>
(ii) Revolving Loans in Excess of Revolving Loan Commitment. If,
at any time, the sum of the Revolving Loans and the Letter of Credit
Obligations shall exceed the Revolving Loan Commitment, the Borrower shall,
on such date and subject to Section 2.11 hereof, make a repayment of the
principal amount of the Revolving Loans, together with any accrued interest
with respect thereto, and/or repay, cancel or otherwise discharge the Letter
of Credit Obligations in an aggregate amount equal to such excess.
(iii) Permitted Asset Sales. On the Business Day following the
date of receipt
38
<PAGE>
by the Borrower or any of its Subsidiaries of any Net Proceeds (Asset Sales)
(other than in connection with a disposition of assets permitted under
Section 7.4(a) hereof), the Loans shall be repaid in an amount equal to, in
the aggregate, all such Net Proceeds (Asset Sales). The amount of the Net
Proceeds (Asset Sales) required to be repaid under this Section 2.7(b)(iii)
shall be applied to the Loans on a pro rata basis among the Term Loan A, the
Term Loan B and the Revolving Loans then outstanding. Accrued interest on
the principal amount of the Loans being prepaid pursuant to this Section
2.7(b)(iii) to the date of such prepayment will be paid by the Borrower
concurrently with such principal prepayment.
(iv) Excess Cash Flow. On or prior to April 15, 2002, and on or
prior to each April 15th thereafter during the term of this Agreement, the
Loans shall be repaid in an amount equal to, in the aggregate, fifty percent
(50%) of Excess Cash Flow for the fiscal year ended on the immediately
preceding December 31st. The amount of the Excess Cash Flow required to be
repaid under this Section 2.7(b)(iv) shall be applied to the Loans on a pro
rata basis among the Term Loan A, the Term Loan B and the Revolving Loans
then outstanding. Accrued interest on the principal amount of the Loans
being prepaid pursuant to this Section 2.7(b)(iv) to the date of such
prepayment will be paid by the Borrower concurrently with such principal
prepayment.
(v) Sale of Capital Stock and Debt Instruments. On the Business
Day following the date of receipt by the Borrower or any of the Borrower's
Subsidiaries of any Net Proceeds (Capital Sales), the Loans shall be repaid
in an amount equal to, in the aggregate, (a) with respect to any sale or
issuance of any Capital Stock or other Ownership Interests by the Borrower
or any of the Borrower's Subsidiaries after the Agreement Date ((i) other
than pursuant to the sale, issuance or other disposition of any Capital
Stock or other Ownership Interests to: (A) the Parent, the Borrower or any
Subsidiary of the Borrower; (B) any employee benefit plan or restricted
stock plan maintained or established by the Parent or the Borrower; or (C)
any Person pursuant to Section 5.20 hereof and (ii) excluding Committed
Equity as of the Agreement Date) fifty percent (50%) of the Net Proceeds
(Capital Sales) related thereto, and (b) with respect to any Indebtedness
issued by the Borrower or any of the Borrower's Subsidiaries after the
Agreement Date (other than Indebtedness permitted under Section 7.1 hereof),
one hundred percent (100%) of the Net Proceeds (Capital Sales) related
thereto. The amount of the Net Proceeds (Capital Sales) required to be
repaid under this Section 2.7(b)(v) shall be applied to the Loans on a pro
rata basis among the Term Loan A, the Term Loan B and the Revolving Loans
then outstanding. Accrued interest on the principal amount of the Loans
being prepaid pursuant to this Section 2.7(b)(v) to the date of such
prepayment will be paid by the Borrower concurrently with such principal
prepayment.
(vi) Pro Rata Application. In addition to the foregoing, (a) any
repayment of the Loans required under Section 2.7(b)(iii), (iv) or (v)
hereof shall be applied, (1) with respect to the Term Loan A and Term Loan
B, pro rata across the maturities set forth in Section 2.7(b)(i) hereof and,
(2) with respect to the Revolving Loans, pro rata across the
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reductions set forth in Section 2.5(a) hereof, and (b) any repayment of the
Revolving Loans required under Section 2.7(b)(ii) hereof shall be applied
pro rata across the reductions set forth in Section 2.5(a) hereof.
(vii) Term Loan B Election Not to Receive Repayment.
Notwithstanding any of the foregoing, with respect to any repayment of Term
Loan B required under Section 2.7(b)(iii), (iv) or (v) hereof, any Lender
having a Term Loan B Commitment may elect not to receive such repayment to
the extent that Term Loan A is outstanding (after giving effect to any
repayment of Term Loan A required under Section 2.7(b)(iii), (iv) or (v) at
such time). In the event that a Lender having a Term Loan B Commitment makes
the election not to receive a repayment of Term Loan B set forth in the
immediately preceding sentence, the aggregate amount of the affected
repayment elected not to be received by such Lender shall be applied to Term
Loan A pro rata across the reductions set forth in Section 2.7(b)(i) hereof
applicable to Term Loan A.
(vii) Maturity Date. In addition to the foregoing, a final payment
of all Obligations then outstanding shall be due and payable on the Maturity
Date.
Section 2.8 Prepayment Fee. Any prepayment of Term Loan B made pursuant to
Section 2.7(a) hereof made on or before December 31, 2001 shall be accompanied
by the Applicable Prepayment Fee, which shall be an amount equal to the product
of (a) the amount of such prepayment and (b) Applicable Prepayment Fee
percentage set forth below for the period during which such prepayment is made:
<TABLE>
<CAPTION>
Applicable Prepayment
Payment Date Occurs On or Between: Fee percentage
---------------------------------- --------------
<S> <C>
Agreement Date through December 31, 1999 3.00%
January 1, 2000 through December 31, 2000 2.00%
January 1, 2001 through December 31, 2001 1.00%
</TABLE>
Section 2.9 Notes; Loan Accounts.
(a) The Loans shall be repayable in accordance with the terms and
provisions set forth herein and shall be evidenced by the Notes. One (1)
Revolving Loan Note, one (1) Term Loan A Note and one (1) Term Loan B Note shall
be payable to the order of each Lender for such Commitment, in accordance with
such Lender's respective Commitment Ratio for the applicable Commitment. The
Notes shall be issued by the Borrower to the Lenders and shall be duly executed
and delivered by one (1) or more Authorized Signatories. Any Lender (i) which is
not a United States Person (a "Non-U.S. Lender") and (ii) which would become
completely exempt from withholding of United States federal income taxes in
respect of payment of any obligations due to such Lender hereunder or under the
Notes or any other Loan Document
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relating to any of its Loans if such Loans were in registered form for United
States federal income tax purposes may request the Borrower (through the
Administrative Agent), and the Borrower agrees thereupon, at the cost and
expense of such Lender, to register such Loans as provided in Section 11.5(g)
hereof and to issue to such Lender Notes evidencing such Loans as Registered
Notes or to exchange Notes evidencing such Loans for new Registered Notes, as
applicable. Registered Notes may not be exchanged for Notes that are not in
registered form.
(b) Each Lender may open and maintain on its books in the name of the
Borrower a loan account with respect to its portion of the Loans and interest
thereon. Each Lender which opens such a loan account shall debit such loan
account for the principal amount of its portion of each Advance made by it and
accrued interest thereon, and shall credit such loan account for each payment on
account of principal of or interest on its Loans. The records of a Lender with
respect to the loan account maintained by it shall be prima facie evidence of
its portion of the Loans and accrued interest thereon absent manifest error, but
the failure of any Lender to make any such notations or any error or mistake in
such notations shall not affect the Borrower's repayment obligations with
respect to such Loans.
Section 2.10 Manner of Payment.
(a) Each payment (including, without limitation, any prepayment) by the
Borrower on account of the principal of or interest on the Loans, commitment
fees and any other amount owed to the Lenders or the Administrative Agent or any
of them under this Agreement, the Notes or any other Loan Document shall be made
not later than 1:00 p.m. (New York, New York time) on the date specified for
payment under this Agreement to the Administrative Agent at the Administrative
Agent's Office, for the account of the Lenders or the Administrative Agent, as
the case may be, in lawful money of the United States of America in immediately
available funds. Any payment received by the Administrative Agent after 1:00
p.m. (New York, New York time) shall be deemed received on the next Business
Day. Receipt by the Administrative Agent of any payment intended for any Lender
or Lenders hereunder prior to 1:00 p.m. (New York, New York time) on any
Business Day shall be deemed to constitute receipt by such Lender or Lenders on
such Business Day. In the case of a payment for the account of a Lender, the
Administrative Agent will promptly thereafter distribute the amount so received
in like funds to such Lender. If the Administrative Agent shall not have
received any payment from the Borrower as and when due, the Administrative Agent
will promptly notify the Lenders accordingly. In the event that the
Administrative Agent shall fail to make distribution to any Lender as required
under this Section 2.10, the Administrative Agent agrees to pay such Lender
interest from the date such payment was due until paid at the Federal Funds
Rate.
(b) The Borrower agrees to pay principal, interest, fees and all other
amounts due hereunder or under the Notes without set-off or counterclaim or any
deduction whatsoever and free and clear of all taxes, levies and withholding
(other than Excluded Taxes, collectively, "Taxes"). Subject to the compliance by
the Administrative Agent and each Lender with the provisions of Section 2.14
hereof, if the Borrower is required by Applicable Law to deduct any Taxes from
or in respect of any sum payable to the Administrative Agent or any Lender
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hereunder, under any Note or under any other Loan Document: (i) the sum payable
hereunder or thereunder, as applicable, shall be increased to the extent
necessary to provide that, after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.10(b)),
the Administrative Agent or such Lender, as applicable, receives an amount equal
to the sum it would have received had no such deductions been made; (ii) the
Borrower shall make such deductions from such sums payable hereunder or
thereunder, as applicable, and pay the amount so deducted to the relevant taxing
authority as required by Applicable Law; and (iii) the Borrower shall provide
the Administrative Agent or such Lender, as applicable, with evidence
satisfactory to the Administrative Agent or such Lender, as applicable, that
such deducted amounts have been paid to the relevant taxing authority.
(c) Prior to the declaration of an Event of Default under Section 8.2
hereof, if some but less than all amounts due from the Borrower are received by
the Administrative Agent with respect to the Obligations, the Administrative
Agent shall distribute such amounts in the following order of priority, all in
accordance where applicable with the respective Commitment Ratios of the Lenders
for the applicable Commitment: (i) to the payment of any fees or expenses then
due and payable to the Administrative Agent and the Lenders, or any of them;
(ii) to the payment of interest then due and payable on the Loans; (iii) to the
payment of all other amounts not otherwise referred to in this Section 2.10(c)
then due and payable to the Administrative Agent and the Lenders, or any of
them, hereunder or under the Notes or any other Loan Document; (iv) to the
payment of principal then due and payable on the Loans made under each of the
Term Loan A Commitment and the Term Loan B Commitment; and (v) t the payment of
principal then due and payable on the Loans made under the Revolving Loan
Commitment.
(d) Subject to any contrary provisions in the definition of Interest
Period, if any payment under this Agreement or any of the other Loan Documents
is specified to be made on a day which is not a Business Day, it shall be made
on the next Business Day, and such extension of time shall in such case be
included in computing interest and fees, if any, in connection with such
payment.
Section 2.11 Reimbursement.
(a) Whenever any Lender shall sustain or incur any losses or
out-of-pocket expenses in connection with (i) failure by the Borrower to borrow
any Eurodollar Advance after having given notice of its intention to borrow in
accordance with Section 2.2(c) hereof (whether by reason of the Borrower's
election not to proceed or the non-fulfillment of any of the conditions set
forth in Article 3 hereof) or (ii) prepayment (or failure to prepay after giving
notice thereof) of any Eurodollar Advance in whole or in part for any reason,
the Borrower agrees to pay to such Lender, upon the earlier of ten (10) days
after such Lender's demand or the Maturity Date, as appropriate, an amount
sufficient to compensate such Lender for all such losses and out-of-pocket
expenses other than any lost margin on the Loans. Such Lender's good faith
determination of the amount of such losses or out-of-pocket expenses, as set
forth in writing and accompanied by calculations in reasonable detail
demonstrating the basis for its demand, shall be conclusively correct absent
manifest error.
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(b) Losses subject to reimbursement hereunder shall include, without
limiting the generality of the foregoing, expenses incurred by any Lender or any
participant of such Lender permitted hereunder in connection with the
re-employment of funds prepaid, paid, repaid, not borrowed, or not paid, as the
case may be, and will be payable as a result of acceleration of the Obligations.
Section 2.12 Pro Rata Treatment.
(a) Advances. Each Advance from the Lenders under any Commitment shall
be made pro rata on the basis of the respective Commitment Ratios of the Lenders
applicable to the particular Commitment.
(b) Payments. Except as provided in each of Section 2.2(e) and Article
10 hereof, each payment and prepayment of principal of the Loans and each
payment of interest on the Loans, shall be made to the Lenders pro rata on the
basis of their respective unpaid principal amounts outstanding under the Notes
immediately prior to such payment or prepayment. If any Lender shall obtain any
payment (whether involuntary, through the exercise of any right of set-off, or
otherwise) on account of the Loans in excess of its ratable share of the Loans
under its Commitment Ratio, such Lender shall forthwith purchase from the other
Lenders such participations in the portion of the Loans made by them as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery. The Borrower agrees
that any Lender so purchasing a participation from another Lender pursuant to
this Section 2.12(b) may, to the fullest extent permitted by law, exercise all
its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
Section 2.13 Capital Adequacy. If after the date hereof, the adoption
of any Applicable Law regarding the capital adequacy of Lenders or Lender
holding companies, or any change in Applicable Law (adopted after the Agreement
Date) or any change in the interpretation or administration thereof (adopted
after the Agreement Date) by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by such Lender with any directive regarding capital adequacy (whether
or not having the force of law) of any such governmental authority, central bank
or comparable agency (issued after the Agreement Date), has or would have the
effect of reducing the rate of return on any Lender's or any Lender's holding
company's capital as a consequence of its obligations hereunder with respect to
the Loans and the Commitments to a level below that which it could have achieved
but for such adoption, change or compliance (taking into consideration such
Lender's policies with respect to capital adequacy immediately before such
adoption, change or compliance and assuming that such Lender's capital was fully
utilized prior to such adoption, change or compliance) by an amount reasonably
deemed by such Lender to be material, then,
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upon the earlier of ten (10) days after demand by such Lender or the Maturity
Date, the Borrower shall promptly pay to such Lender such additional amounts as
shall be sufficient to compensate such Lender for such reduced return, together
with interest on such amount from the tenth (10th) day after the date of demand
or the Maturity Date until payment in full thereof at the Default Rate.
Notwithstanding the foregoing, the Borrower shall only be obligated to
compensate such Lender for any amount under this subsection arising or occurring
during (i) in the case of each such request for compensation, any time or period
commencing not more than ninety (90) days prior to the date on which such Lender
submits such request and (ii) any other time or period during which, because of
the unannounced retroactive application of such law, regulation, interpretation,
request or directive, such Lender could not have known that the resulting
reduction in return might arise. A certificate of such Lender setting forth the
amount to be paid to such Lender by the Borrower as a result of any event
referred to in this paragraph and supporting calculations in reasonable detail
shall be presumptively correct absent manifest error.
Section 2.14 Lender Tax Forms. On or prior to the Agreement Date, and
prior to the date on which any Person becomes a Lender hereunder, and from time
to time thereafter if required by Applicable Law due to a change in
circumstances or if reasonably requested by the Borrower or the Administrative
Agent (unless such Lender is unable to do so by reasons of change in Applicable
Law), each Lender organized under the laws of a jurisdiction outside the United
States shall provide the Administrative Agent and the Borrower with (i) an
accurate and duly completed United States Internal Revenue Service Form 4224 or
Form 1001, as the case may be, and Form W-8 or Form W-9, as the case may be, or
other applicable or successor form, certificate or document prescribed by the
United States Internal Revenue Service certifying as to such Lender's
entitlement to full exemption from United States withholding tax with respect to
all payments to be made to such Lender hereunder or under any Note or other Loan
Document, or, (ii) in the case of a Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (A) an accurate
and duly completed United States Internal Revenue Service Form W-8, or other
applicable or successor form, certificate or document prescribed by the United
States Internal Revenue Service certifying to such Lender's foreign status and
(B) a certificate certifying to such Lender's entitlement to a complete
exemption from United States withholding tax with respect to all payments
hereunder or under any Note or other Loan Document. In the event that the
Borrower withholds a portion of any payment hereunder or under any Note or other
Loan Document in accordance with this Section 2.14, the Borrower shall provide
evidence that such taxes of any nature whatsoever in respect of this Agreement,
any Loan or any Note or other Loan Document shall have been paid to the
appropriate taxing authorities by delivery to the Lender on whose account such
payment was made of the official tax receipts or notarized copies of such
receipts within thirty (30) days after payment of such tax. If the Borrower
fails to make any such payment when due, the Borrower shall indemnify the
Lenders for any incremental taxes, interest or penalties that may become payable
by any Lender as a result of any such failure. For any period with respect to
which a Lender has failed to provide the Borrower with the appropriate form
described above (other than if such failure is due to a change in Applicable Law
occurring subsequent to the date on which a form originally was required to be
provided), such Lender shall not be entitled to indemnification
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with respect to withholding taxes imposed by the United States and the Borrower
shall be allowed to deduct from payments to such Lender hereunder and under any
Note or other Loan Document, the amount of any such withholding taxes paid by
the Borrower.
Section 2.15 Letters of Credit.
(a) Subject to the terms and conditions hereof, the Issuing Bank, on
behalf of the Lenders, and in reliance on the agreements of the Lenders set
forth in subsection (c) of this Section 2.15, hereby agrees to issue one (1) or
more Letters of Credit up to an aggregate face amount equal to the Available
Letter of Credit Commitment; provided, however, that the Issuing Bank shall not
issue any Letter of Credit unless the conditions precedent to the issuance
thereof set forth in Sections 3.1 and 3.3 hereof have been satisfied, and shall
have no obligation to issue any Letter of Credit if any Default then exists or
would be caused thereby or if, after giving effect to such issuance, the
Available Revolving Loan Commitment would be less than zero; and provided
further, however, that at no time shall the total Letter of Credit Obligations
outstanding hereunder exceed $10,000,000.00. Each Letter of Credit shall (1) be
denominated in U.S. dollars and (2) expire no later than the earlier to occur of
(A) five (5) Business Days prior to the Revolving Loan Maturity Date and (B) one
(1) year after its date of issuance.
(b) The Borrower may from time to time request that the Issuing Bank
issue a Letter of Credit. The Borrower shall execute and deliver to the
Administrative Agent and the Issuing Bank a Request for Issuance of Letter of
Credit for each Letter of Credit to be issued by the Issuing Bank, not later
than 12:00 noon (New York, New York time) on the fifth (5th) Business Day
preceding the date on which the requested Letter of Credit is to be issued, or
such shorter notice as may be acceptable to the Issuing Bank and the
Administrative Agent. Upon receipt of any such Request for Issuance of Letter of
Credit, subject to satisfaction of all conditions precedent thereto as set forth
in Section 3.3 hereof, the Issuing Bank shall process such Request for Issuance
of Letter of Credit and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby. The Issuing Bank shall, upon request, furnish a copy of such Letter of
Credit to any Lender following the issuance thereof.
(c) Each Lender irrevocably authorizes the Issuing Bank to issue,
reconfirm, reissue and extend each Letter of Credit in accordance with the terms
of this Agreement. The Issuing Bank hereby sells, and each other Lender hereby
purchases, on a continuing basis, a participation and an undivided interest in
(A) the obligations of the Issuing Bank to honor any draws under the Letters of
Credit issued pursuant to this Agreement and (B) the Indebtedness of the
Borrower to the Issuing Bank under this Agreement relating to each Letter of
Credit and any reimbursement or indemnification agreement relating to each
Letter of Credit, such participation being in the amount of such Lender's pro
rata share of such obligations and Indebtedness based on such Lender's
Commitment Ratio.
(d) Upon receipt of a draw certificate from the beneficiary of a Letter
of
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Credit, the Issuing Bank shall promptly notify the Administrative Agent and
the Administrative Agent shall notify the Borrower and each Lender, by telephone
or telecopy, of the amount of the requested draw and, in the case of each
Lender, such Lender's portion of such draw amount as calculated in accordance
with its Commitment Ratio.
(e) The Borrower hereby agrees to immediately reimburse the Issuing
Bank for amounts paid by the Issuing Bank in respect of draws under a Letter of
Credit issued at the Borrower's request. In order to facilitate such repayment,
the Borrower hereby irrevocably requests the Lenders, and the Lenders hereby
severally agree, on the terms and conditions of this Agreement (other than as
provided in Article 2 hereof with respect to the amounts of, the timing of
requests for, and the repayment of Advances hereunder and in Article 3 hereof
with respect to conditions precedent to Advances hereunder), with respect to any
drawing under a Letter of Credit prior to the occurrence of an event described
in clause (f) or (g) of Section 8.1 hereof, to make an Advance (which Advance
may be a Eurodollar Advance if the Borrower so requests in a timely manner or
may be converted to a Eurodollar Advance as provided in this Agreement) to the
Borrower under the Revolving Loan Commitment on each day on which a draw is made
under any Letter of Credit and in the amount of such draw, and to pay the
proceeds of such Advance directly to the Issuing Bank to reimburse the Issuing
Bank for the amount paid by it upon such draw. Each Lender shall pay its share
of such Advance by paying its portion of such Advance to the Administrative
Agent in accordance with Section 2.2(e) hereof and its Commitment Ratio, without
reduction for any set-off or counterclaim of any nature whatsoever and
regardless of whether any Default (other than with respect to an event described
in clauses (f) or (g) of Section 8.1 hereof) then exists or would be caused
thereby. If at any time that any Letters of Credit are outstanding, any of the
events described in clause (f) or (g) of Section 8.1 hereof shall have occurred
and be continuing, then each Lender shall, automatically upon the occurrence of
any such event and without any action on the part of the Issuing Bank, the
Borrower, the Administrative Agent or the Lenders, or any of them, be deemed to
have purchased an undivided participation in the face amount of all Letters of
Credit then outstanding in an amount equal to such Lender's Commitment Ratio
times the face amount of all Letters of Credit then outstanding, and each Lender
shall, notwithstanding such Event of Default, upon a drawing under any Letter of
Credit, immediately pay to the Administrative Agent for the account of the
Issuing Bank, in immediately available funds, the amount of such Lender's
participation (and the Issuing Bank shall deliver to such Lender a loan
participation certificate dated the date of the occurrence of such event and in
the amount of such Lender's Commitment Ratio times the face amount of all
Letters of Credit then outstanding). The obligation of each Lender to make
payments to the Administrative Agent, for the account of the Issuing Bank, in
accordance with this Section 2.15 shall be absolute and unconditional and no
Lender shall be relieved of its obligations to make such payments by reason of
non-compliance by any other Person with the terms of the Letter of Credit or for
any other reason other than the gross negligence or willful misconduct of the
Issuing Bank, as determined by a final order of a court of competent
jurisdiction. The Administrative Agent shall promptly remit to the Issuing Bank
the amounts so received from the Lenders. Any overdue amounts payable by the
Lenders to the Issuing Bank in respect of a draw under any Letter of Credit
shall bear interest, payable on demand, at the Federal Funds rate, plus one
percent (1%).
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(f) The Borrower agrees to reimburse the Lenders for any Advances made
pursuant to draws under any Letter of Credit, and each payment by the Borrower
in respect of its obligation to reimburse the Lenders under this Section 2.15
shall be made on the date of such Advance in lawful money of the United States
of America in immediately available funds. Any overdue amounts payable by the
Borrower under this Section 2.15 shall bear interest, payable on the earlier of
demand or the Revolving Loan Maturity Date, for each day from and including the
date payment thereof was due to, but excluding, the date of actual payment, at
the Default Rate.
(g) The Borrower agrees that any action taken or omitted to be taken by
the Issuing Bank in connection with any Letter of Credit, except for such
actions or omissions as shall constitute gross negligence or willful misconduct
on the part of the Issuing Bank as determined by a final order of a court of
competent jurisdiction, shall be binding on the Borrower as between the Borrower
and the Issuing Bank, and shall not result in any liability of the Issuing Bank
to the Borrower. The obligation of the Borrower to reimburse the Lenders for
Advances made to reimburse the Issuing Bank for draws under the Letter of Credit
shall be absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances whatsoever,
including, without limitation, the following circumstances:
(i) Any lack of validity or enforceability of any Loan Document;
(ii) Any amendment or waiver of or consent to any departure from
any or all of the Loan Documents;
(iii) Any improper use which may be made of any Letter of Credit
or any improper acts or omissions of any beneficiary or transferee of any Letter
of Credit in connection therewith other than to the extent such use, action or
omission is the result of the gross negligence or willful misconduct of the
Issuing Bank as determined by a final order of a court of competent
jurisdiction;
(iv) The existence of any claim, set-off, defense or any right
which the Borrower may have at any time against any beneficiary or any
transferee of any Letter of Credit (or Persons for whom any such beneficiary or
any such transferee may be acting) or any Lender (other than the defense of
payment to such Lender in accordance with the terms of this Agreement) or any
other Person, whether in connection with any Letter of Credit, any transaction
contemplated by any Letter of Credit, this Agreement, any other Loan Document or
any unrelated transaction;
(v) Any statement or any other documents presented under any
Letter of Credit proving to be insufficient, forged, fraudulent or invalid in
any respect or any statement therein being untrue or inaccurate in any respect
whatsoever, provided that such payment shall not have constituted gross
negligence or willful misconduct of the Issuing Bank as determined by a final
order of a court of competent jurisdiction;
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(vi) The insolvency of any Person issuing any documents in
connection with any Letter of Credit;
(vii) Any breach of any agreement between the Borrower and any
beneficiary or transferee of any Letter of Credit, except to the extent such
breach results from the gross negligence or willful misconduct of the Issuing
Bank as determined by a final order of a court of competent jurisdiction;
(viii) Any irregularity in the transaction with respect to which
any Letter of Credit is issued, including any fraud by the beneficiary or any
transferee of such Letter of Credit, but excluding any irregularity resulting
from the gross negligence or willful misconduct of the Issuing Bank as
determined by a final order of a court of competent jurisdiction;
(ix) Any errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, wireless or
otherwise, whether or not they are in code, provided that the same shall not be
the result of the gross negligence or willful misconduct of the Issuing Bank as
determined by a final order of a court of competent jurisdiction;
(x) Any act, error, neglect or default, omission, insolvency or
failure of business of any of the correspondents of the Issuing Bank, provided
that the same shall not have constituted the gross negligence or willful
misconduct of the Issuing Bank as determined by a final order of a court of
competent jurisdiction;
(xi) Any other circumstances arising from causes beyond the
control of the Issuing Bank;
(xii) Payment by the Issuing Bank under any Letter of Credit
against presentation of a sight draft or a certificate which does not comply
with the terms of such Letter of Credit, provided that such payment shall not
have constituted gross negligence or willful misconduct of the Issuing Bank as
determined by a final order of a court of competent jurisdiction; and
(xiii) Any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, provided that such other circumstances or
happenings shall not have been the result of gross negligence or willful
misconduct of the Issuing Bank or any Lender, as determined by a final order of
a court of competent jurisdiction.
(h) If any change in Applicable Law (adopted after the Agreement Date),
any change in the interpretation or administration thereof (adopted after the
Agreement Date), or any change in compliance with Applicable Law by the Issuing
Bank or any Lender as a result of any official request or directive of any
governmental authority, central bank or comparable agency (whether or not having
the force of law) (issued after the Agreement Date) shall (i) impose,
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modify or deem applicable any reserve (including, without limitation, any
imposed by the Board of Governors of the Federal Reserve System), special
deposit, capital adequacy, assessment or other requirements or conditions
against letters of credit issued by the Issuing Bank or against participations
by any other Lender in the Letters of Credit or (ii) impose on the Issuing Bank
or any other Lender any other condition regarding any Letter of Credit or any
participation therein, and the result of any of the foregoing in the reasonable
determination of the Issuing Bank or such Lender, as the case may be, is to
increase the cost to the Issuing Bank or such Lender of issuing or maintaining
any Letter of Credit or purchasing or maintaining any participation therein, as
the case may be, by an amount (which amount shall be reasonably determined)
deemed by the Issuing Bank or such Lender to be material, then, within ten (10)
days after demand by the Issuing Bank or such Lender, the Borrower shall
promptly pay the Issuing Bank or such Lender, as the case may be, such
additional amount or amounts as shall be sufficient to compensate the Issuing
Bank or such Lender for such increased costs, together with interest on such
amount from the tenth (10th) day after the date of demand, until payment in full
thereof at the Default Rate. A certificate of the Issuing Bank or such Lender
setting forth the amount, and in reasonable detail the basis for the Issuing
Bank or such Lender's determination of such amount, to be paid to the Issuing
Bank or such Lender by the Borrower as a result of any event referred to in this
paragraph shall be presumptively correct.
(i) Each Lender shall be responsible (to the extent not reimbursed by
the Borrower) for its pro rata share (based on such Lender's Commitment Ratio)
of any and all reasonable out-of-pocket costs, expenses (including, without
limitation, reasonable legal fees) and disbursements which may be incurred or
made by the Issuing Bank in connection with the collection of any amounts due
under, the administration of, or the presentation or enforcement of any rights
conferred by any Letter of Credit, the Borrower's or any guarantor's obligations
to reimburse or otherwise, except that no Lender shall be liable to the Issuing
Bank for any portion of such out-of-pocket costs, expenses (including, without
limitation, reasonable legal fees) and disbursements from the gross negligence
or willful misconduct of the Issuing Bank, as determined by a final,
non-appealable judicial order of a court of competent jurisdiction. In the event
the Borrower shall fail to pay such expenses of the Issuing Bank within ten (10)
days after demand for payment by the Issuing Bank, each Lender shall thereupon
pay to the Issuing Bank its pro rata share (based on such Lender's Commitment
Ratio) of such expenses within five (5) days from the date of the Issuing Bank's
notice to the Lenders of the Borrower's failure to pay; provided, however, that
if the Borrower or any guarantor shall thereafter pay such expense, the Issuing
Bank will repay to each Lender the amounts received from such Lender hereunder.
(j) The Borrower agrees that each Base Rate Advance by the Lenders to
reimburse the Issuing Bank for draws under any Letter of Credit, shall, for all
purposes hereunder, be deemed to be a Base Rate Advance under the Revolving Loan
Commitment to the Borrower and shall be payable and bear interest in accordance
with all other Loans to the Borrower.
(k) The Borrower will indemnify and hold harmless the Administrative
Agent, the Issuing Bank and each other Lender and each of their respective
employees, representatives,
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officers and directors from and against any and all claims, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including, without
limitation, reasonable attorneys' fees, but excluding taxes) which may be
imposed on, incurred by or asserted against the Administrative Agent, the
Issuing Bank or any such other Lender in any way relating to or arising out of
the issuance of a Letter of Credit; provided, however, that the Borrower shall
not be liable to the Administrative Agent, the Issuing Bank or any such Lender
for any portion of such claims, liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements
resulting from the gross negligence or willful misconduct of the Administrative
Agent, the Issuing Bank or such Lender, as the case may be, as determined by a
final order of a court of competent jurisdiction. This Section 2.15(k) shall
survive termination of this Agreement.
(l) The Issuing Bank may resign as Issuing Bank upon sixty (60) days'
prior written notice to the Administrative Agent, the Lenders and the Borrower.
If the Issuing Bank shall resign as Issuing Bank under this Agreement, then the
Borrower shall appoint from among the Lenders a successor issuer of Letters of
Credit, whereupon such successor issuer shall succeed to the rights, powers and
duties of the Issuing Bank, and the term "Issuing Bank" shall mean such
successor issuer effective upon such appointment. At the time such resignation
shall become effective, the Borrower shall pay to the resigning Issuing Bank all
accrued and unpaid fees pursuant to Section 2.4(b)(i) hereof. The acceptance of
any appointment as the Issuing Bank hereunder by a successor Lender shall be
evidenced by an agreement entered into by such successor, in a form satisfactory
to the Borrower and the Administrative Agent and, from and after the effective
date of such agreement, such successor Lender shall have all the rights and
obligations of the previous Issuing Bank under this Agreement and the other Loan
Documents. After the resignation of the Issuing Bank hereunder, the resigning
Issuing Bank shall remain a party hereto and shall continue to have all the
rights and obligations of an Issuing Bank under this Agreement and the other
Loan Documents with respect to Letters of Credit issued by it prior to such
resignation, but shall not be required to issue additional Letters of Credit.
After any retiring Issuing Bank's resignation as Issuing Bank, the provisions of
this Agreement relating to the Issuing Bank shall inure to its benefit as to any
actions taken or omitted to be taken by it (i) while it was Issuing Bank under
this Agreement or (ii) at any time with respect to Letters of Credit issued by
such Issuing Bank.
ARTICLE 3 Conditions Precedent
Section 3.1 Conditions Precedent to Effectiveness of Agreement. The
obligation of the Lenders to undertake the Commitments and the effectiveness of
this Agreement are subject to the prior or contemporaneous fulfillment of each
of the following conditions:
(a) The Administrative Agent and the Lenders shall have received, in
form
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and substance satisfactory to them, each of the following:
(i) this Agreement duly executed;
(ii) duly executed Notes;
(iii) duly executed confirmations of the Loan Documents (as
defined in the Prior Loan Agreement) by the Borrower, the Parent and the
Borrower's Subsidiaries, including confirmation of: (A) Borrower's Pledge
Agreement, (B) Borrower's Security Agreement, (C) Subsidiary Pledge Agreements,
(D) Subsidiary Security Agreements, (E) Subsidiary Guaranties, (F) Parent Pledge
Agreement, (G) Parent Guaranty Agreement, (H) Assignment of Rights, and (I) loan
certificate for each of the Parent, the Borrower and each Subsidiary of the
Borrower (including all License Subs);
(iv) legal opinions of (w) Brown & Wood LLP, special New York
counsel to the Parent, the Borrower and its Subsidiaries, (x) Young, Williams,
Henderson and Fuselier, P.A., local counsel to the Parent, the Borrower and its
Subsidiaries, (y) Vinson & Elkins, special Texas counsel to the Parent, the
Borrower and its Subsidiaries, and (z) Lukas, Nace, Gutierrez & Sachs, special
FCC counsel to the Parent, the Borrower and its Subsidiaries, each addressed to
each of the Lenders and the Administrative Agent, and dated as of the Agreement
Date;
(v) copies of insurance binders or certificates covering the
assets of the Borrower and its Subsidiaries and otherwise meeting the
requirements of this Agreement;
(vi) duly executed Certificate of Financial Condition for the
Borrower and its Subsidiaries on a consolidated basis, given by the chief
financial officer of the Borrower, and such other information pertaining to the
capital and corporate structure of the Borrower or any of its Subsidiaries as
the Administrative Agent or the Lenders shall request;
(vii) lien and judgment search results with respect to the
Borrower;
(viii) delivery to the Administrative Agent of all possessory
collateral, including, without limitation, any pledged notes or pledged stock;
(ix) duly executed Performance Certificate for the Borrower and
its Subsidiaries;
(x) duly executed Master Assignment and Assumption Agreement in
respect of the Prior Loan Agreement; and
(xi) all such other documents as the Administrative Agent or any
Lender may reasonably request, certified by an appropriate governmental official
or an Authorized Signatory if so requested.
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(b) The Administrative Agent and the Lenders shall have received
evidence satisfactory to them that all Necessary Authorizations, including,
without limitation, all necessary consents to the closing of this Agreement and
the other Loan Documents, have been obtained or made, are in full force and
effect and are not subject to any pending or, to the knowledge of the Borrower,
threatened reversal or cancellation, and the Administrative Agent and the
Lenders shall have received a certificate of an Authorized Signatory so stating.
(c) The Borrower shall have certified to the Administrative Agent and
the Lenders that each of the representations and warranties in Article 4 hereof
and each other Loan Document are true and correct as of the Agreement Date and
that no Default or Event of Default then exists or is continuing.
(d) There shall not exist as of the Agreement Date, any action, suit,
proceeding or investigation pending against, or, to the knowledge of the
Borrower, threatened against or in any manner relating adversely to, the
Borrower, any of its Subsidiaries, any of their respective properties or the
transactions contemplated hereby, in each case, which reasonably could be
expected to have a Materially Adverse Effect.
(e) The Borrower has entered into (i) supply contracts with Qualified
Vendors for the build out of the Borrower's Cellular System and the acquisition
of related equipment, and, to the extent material, such contracts shall be
reasonably satisfactory to the Lenders and (ii) such other agreements with third
parties as may be reasonably necessary to the conduct of its proposed operations
in accordance with its business plan.
Section 3.2 Conditions Precedent to Each Advance. The obligation of the
Lenders to make each Advance which, if funded, would increase the aggregate
principal amount of Loans outstanding after the Agreement Date, is subject to
the fulfillment of each of the following conditions immediately prior to or
contemporaneously with such Advance:
(a) All of the representations and warranties of the Borrower under
this Agreement and the other Loan Documents (including, without limitation, all
representations and warranties with respect to the Borrower's Subsidiaries),
which, pursuant to Section 4.2 hereof, are made at and as of the time of such
Advance (except to the extent previously fulfilled in accordance with the terms
hereof and to the extent relating specifically to a specific prior date), shall
be true and correct at such time in all material respects, both before and after
giving effect to the application of the proceeds of such Advance, and after
giving effect to any updates to information provided to the Lenders in
accordance with the terms of such representations and warranties, and no Default
hereunder shall then exist or be caused thereby;
(b) The Administrative Agent and the Lenders shall have received a
certificate of the Borrower stating that there is no Default or Event of
Default, both before and after giving effect to the proposed Advance of the
Loans hereunder;
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(c) The Administrative Agent shall have received a duly executed
Request for Advance, a Use of Proceeds Letter and a Performance Certificate;
(d) If such Advance is in connection with an Acquisition, each of the
Administrative Agent and the Lenders shall have received all such other
certificates, reports, statements, opinions of counsel or other documents as the
Administrative Agent or any Lender may reasonably request; and
(e) With respect to any Advance in any way relating to any Acquisition
or the formation of any Subsidiary which is permitted hereunder, the
Administrative Agent and the Lenders shall have received such documents and
instruments, if any, relating to the Acquisition, or the formation of such new
Subsidiary, as are described in Sections 5.13 and 7.6 hereof or otherwise
required herein.
The acceptance of proceeds of any Advance which would increase the aggregate
principal amount of Loans outstanding shall be deemed to be a representation and
warranty by the Borrower as to compliance with this Section 3.2 on the date any
such Loan is made.
Section 3.3 Conditions Precedent to Issuance of Letters of Credit. The
obligation of the Issuing Bank to issue each Letter of Credit hereunder is
subject to the fulfillment of each of the following conditions immediately prior
to or contemporaneously with such issuance:
(a) All of the representations and warranties under this Agreement and
the other Loan Documents (including, without limitation, all representations and
warranties with respect to the Borrower's Subsidiaries), which, pursuant to
Section 4.2 hereof, are made at and as of the time of the issuance of such
Letter of Credit (except to the extent previously fulfilled in accordance with
the terms hereof and to the extent relating specifically to a specific prior
date), shall be true and correct at such time in all material respects, both
before and after giving effect to the issuance of such Letter of Credit, and
after giving effect to any updates to information provided to the Lenders in
accordance with the terms of such representations and warranties;
(b) There shall not exist, on the date of the issuance of such Letter
of Credit and after giving effect thereto, a Default hereunder and the
Administrative Agent shall have received a Request for Issuance of a Letter of
Credit so certifying; and
(c) Each of the Administrative Agent, the Issuing Bank and each of the
Lenders shall have received all such other certificates, reports, statements or
other documents as any of them may reasonably request.
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ARTICLE 4 Representations and Warranties
Section 4.1 Representations and Warranties. The Parent and the Borrower
hereby represent and warrant, upon the Agreement Date, and at all times
thereafter as required pursuant to the terms hereof, in favor of the
Administrative Agent and each Lender that:
(a) Organization; Ownership; Power; Qualification. Each of the Borrower
and the Parent is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation. Each of the Borrower
and the Parent has the corporate power and authority to own its properties and
to carry on its business as now being conducted. Each Subsidiary of the Borrower
is a corporation, partnership or limited liability company duly organized,
validly existing and in good standing under the laws of the state of its
incorporation or formation, as the case may be, and has the corporate, limited
liability company or partnership power and authority, as the case may be, to own
its properties and to carry on its business as now being conducted. The Parent
has no Subsidiaries other than the Borrower and its Subsidiaries. The Borrower,
each of its Subsidiaries and the Parent are duly qualified, in good standing and
authorized to do business in each jurisdiction in which the character of their
respective properties or the nature of their respective businesses requires such
qualification or authorization, except to the extent a failure to do so could
not reasonably be expected to have a Materially Adverse Effect.
(b) Authorization; Enforceability. The Borrower has the corporate power
and has taken all necessary corporate action to authorize it to borrow
hereunder, and each of the Borrower and the Parent has the corporate power and
has taken all necessary corporate action to execute, deliver and perform this
Agreement and each of the other Loan Documents to which it is a party in
accordance with their respective terms and to consummate the transactions
contemplated hereby and thereby. This Agreement has been duly executed and
delivered by the Borrower and the Parent and is, and each of the other Loan
Documents to which the Borrower and the Parent is party is, a legal, valid and
binding obligation of the Borrower or the Parent, as applicable, enforceable
against the Borrower or the Parent, as applicable, in accordance with its terms,
subject to the following qualifications: (i) an order of specific performance
and an injunction are discretionary remedies and, in particular, may not be
available where damages are considered an adequate remedy at law and (ii)
applicable bankruptcy, insolvency, liquidation, reorganization, reconstruction
and other similar laws affecting enforcement of creditors' rights generally
(insofar as any such law relates to the bankruptcy, insolvency or similar event
of the Borrower and the Parent).
(c) Subsidiaries: Authorization; Enforceability. The Borrower's
Subsidiaries and the Borrower's direct and indirect ownership thereof as of the
Agreement Date are as set forth on Schedule 2 attached hereto, and to the extent
such Subsidiaries are corporations, the Borrower has the unrestricted right to
vote the issued and outstanding shares of its Subsidiaries
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shown thereon and such shares of such Subsidiaries have been duly authorized and
issued and are fully paid and nonassessable. Each Subsidiary of the Borrower has
the corporate, partnership or limited liability company power and has taken all
necessary corporate, partnership or limited liability company action to
authorize it to execute, deliver and perform each of the Loan Documents to which
it is a party in accordance with their respective terms and to consummate the
transactions contemplated by this Agreement and by such Loan Documents. Each of
the Loan Documents to which any Subsidiary of the Borrower is party is a legal,
valid and binding obligation of such Subsidiary enforceable against such
Subsidiary in accordance with its terms, subject to the following
qualifications: (i) an order of specific performance and an injunction are
discretionary remedies and, in particular, may not be available where damages
are considered an adequate remedy at law and (ii) applicable bankruptcy,
insolvency, liquidation, reorganization, reconstruction and other similar laws
affecting enforcement of creditors' rights generally (insofar as any such law
relates to the bankruptcy, insolvency or similar event of any such Subsidiary).
Except as set forth on Schedule 2 attached hereto, the Borrower's ownership
interest in each of its Subsidiaries represents a direct or indirect controlling
interest of such Subsidiary for purposes of directing or causing the direction
of the management and policies of each Subsidiary.
(d) Compliance with Other Loan Documents and Contemplated Transactions.
The execution, delivery and performance, in accordance with their respective
terms, by the Parent and the Borrower of this Agreement and the Notes, and by
the Parent, the Borrower and the Borrower's Subsidiaries of each of the other
Loan Documents to which they are respectively party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (i) require
any consent or approval, governmental or otherwise, not already obtained, (ii)
violate any Applicable Law respecting the Parent, the Borrower or any Subsidiary
of the Borrower, (iii) conflict with, result in a breach of, or constitute a
default under the certificate or articles of incorporation or certificate of
formation, or by-laws, limited partnership agreement or operating agreement,
each as amended, as the case may be, of the Parent, the Borrower or of any
Subsidiary of the Borrower, or (iv) conflict with, result in a breach of, or
constitute a default under any material indenture, agreement, or other
instrument, including, without limitation, the Licenses, to which the Parent,
the Borrower or any of the Borrower's Subsidiaries is a party or by which any of
them or their respective properties may be bound, or (v) result in or require
the creation or imposition of any Lien upon or with respect to any property now
owned or hereafter acquired by the Parent, the Borrower or any of the Borrower's
Subsidiaries, except for Permitted Liens.
(e) Business. The Borrower, together with its Subsidiaries, is engaged
in the business of building, owning and operating a wireless communications
network covering POPs primarily throughout the south-central United States and
other related businesses.
(f) Licenses Except as set forth on Schedule 1 attached hereto, the
Licenses have been duly issued, are in full force and effect (excluding the
Give-back Licenses) and, as of the Agreement Date, are held by a License Sub as
set forth on Schedule 1 attached hereto. The Parent, the Borrower and the
Borrower's Subsidiaries are in compliance in all material respects with all of
the provisions thereof. Except as set forth on Schedule 1, neither any License
nor any
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Necessary Authorization is the subject of any pending or, to the best of the
Parent's and the Borrower's knowledge, threatened revocation, which could
reasonably be expected to have a Materially Adverse Effect.
(g) Compliance with Applicable Law. The Parent, the Borrower and the
Borrower's Subsidiaries are in compliance with all Applicable Law except to the
extent that any noncompliance could not reasonably be expected to have a
Materially Adverse Effect.
(h) Title to Assets. The Parent, the Borrower and the Borrower's
Subsidiaries have good, legal and marketable title to, or a valid leasehold
interest in, all the Parent's, the Borrower's and such Subsidiaries' material
assets, respectively. None of the properties or assets of the Parent, the
Borrower or any of the Borrower's Subsidiaries is subject to any Liens, except
for Permitted Liens. Except for financing statements evidencing Permitted Liens,
no financing statement under the Uniform Commercial Code as in effect in any
jurisdiction and no other filing which names the Parent, the Borrower or any of
the Borrower's Subsidiaries as debtor or which covers or purports to cover any
of the assets of the Parent, the Borrower or any of the Borrower's Subsidiaries
is currently effective and on file in any state or other jurisdiction, and none
of the Parent, the Borrower or any of the Borrower's Subsidiaries has signed any
such financing statement or filing or any security agreement authorizing any
secured party thereunder to file any such financing statement or filing.
(i) Litigation. There is no action, suit, proceeding or investigation
pending against, or, to the best of the Parent's or the Borrower's knowledge,
threatened against or in any other manner relating materially adversely to, the
Parent, the Borrower or any of the Borrower's Subsidiaries or, any of their
respective properties, including, without limitation, the Licenses, in any court
or before any arbitrator of any kind or before or by any governmental body
(including, without limitation, the FCC), except as set forth on Schedule 4
attached hereto (as such schedule may be updated with the consent of the
Required Lenders from time to time) or which could reasonably be expected to
have a Materially Adverse Effect. No such action, suit, proceeding or
investigation (i) calls into question the validity of this Agreement or any
other Loan Document or (ii) individually or collectively involves the
possibility of any judgment or liability not fully covered by insurance which,
if determined adversely to the Parent, the Borrower or any of the Borrower's
Subsidiaries, could reasonably be expected to have a Materially Adverse Effect.
(j) Taxes. All federal, state and other income and other material tax
returns of the Parent, the Borrower and each of the Borrower's Subsidiaries
required by law to be filed have been duly filed and all federal, state and
other taxes, including, without limitation, withholding taxes, assessments and
other governmental charges or levies required to be paid by the Parent, the
Borrower or any of the Borrower's Subsidiaries or imposed upon the Parent, the
Borrower or any of the Borrower's Subsidiaries or any of their respective
properties, income, profits or assets, which are due and payable, have been
paid, except any such taxes (i) (x) the payment of which the Parent, the
Borrower or any of the Borrower's Subsidiaries is diligently contesting in good
faith by appropriate proceedings, (y) for which adequate reserves have been
provided on the books of the Parent, the Borrower or the Subsidiary of the
Borrower involved
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and (z) as to which no Lien other than a Permitted Lien has attached or (ii)
which may result from audits not yet conducted. The charges, accruals and
reserves on the books of the Parent, the Borrower and each of the Borrower's
Subsidiaries, as applicable, in respect of taxes are, in the judgment of the
Parent and the Borrower, adequate.
(k) Financial Statements. The Parent and the Borrower have furnished or
caused to be furnished to the Administrative Agent and the Lenders unaudited pro
forma consolidated balance sheets of the Borrower, the Subsidiaries of the
Borrower and the Parent , dated as of September 30, 1998, which, together with
other financial statements furnished to the Lenders subsequent to the Agreement
Date have been prepared in accordance with GAAP and present fairly in all
material respects the financial position of the Parent, the Borrower and the
Borrower's Subsidiaries on a consolidated and consolidating basis, as the case
may be, on and as at such dates and the results of operations for the periods
then ended (subject, in the case of unaudited financial statements, to normal
year-end and audit adjustments). None of the Parent, the Borrower or any of the
Borrower's Subsidiaries has any material liabilities, contingent or otherwise,
other than as disclosed in the financial statements most recently delivered on
the Agreement Date or pursuant to Section 6.1 or 6.2 hereof, and there are no
material unrealized losses of the Parent, the Borrower or any of the Borrower's
Subsidiaries and no material anticipated losses of the Parent, the Borrower or
any of the Borrower's Subsidiaries other than those which have been previously
disclosed in writing to the Administrative Agent and the Lenders and identified
as such.
(l) No Material Adverse Change. Since September 30, 1998, there has
occurred no event, condition, action, omission, status, situation or other
change which has had or which could reasonably be expected to have a Materially
Adverse Effect.
(m) ERISA. The Borrower and each of its Subsidiaries and each of their
respective Plans are in compliance with ERISA and the Code, except to the extent
a failure to do so could not reasonably be expected to have a Materially Adverse
Effect, and neither the Borrower nor any of its ERISA Affiliates, including its
Subsidiaries, has incurred any accumulated funding deficiency with respect to
any such Plan within the meaning of ERISA or the Code. The Borrower, each of its
Subsidiaries, and each other ERISA Affiliate have complied with all requirements
of COBRA, except to the extent a failure to do so could not reasonably be
expected to have a Materially Adverse Effect. Neither the Borrower nor any of
its Subsidiaries has made any promises of retirement or other benefits to
employees, except as set forth in the Plans, in written agreements with such
employees, or in the Borrower's employee handbook and memoranda to employees.
Neither the Borrower nor any of its ERISA Affiliates, including its
Subsidiaries, has incurred any material liability to PBGC in connection with any
such Plan. The assets of each such Plan which is subject to Title IV of ERISA
are sufficient to provide the benefits under such Plan, the payment of which
PBGC would guarantee if such Plan were terminated, and such assets are also
sufficient to provide all other "benefit liabilities" (within the meaning of
Section 4041 of ERISA) due under the Plan upon termination. No Reportable Event
has occurred and is continuing with respect to any such Plan. No such Plan or
trust created thereunder, or party in interest (as defined in Section 3(14) of
ERISA), or any fiduciary (as
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defined in Section 3(21) of ERISA), has engaged in a "prohibited transaction"
(as such term is defined in Section 406 of ERISA or Section 4975 of the Code)
which would subject such Plan or any other Plan of the Borrower or any of its
Subsidiaries, any trust created thereunder, or any such party in interest or
fiduciary, or any party dealing with any such Plan or any such trust, to the tax
or penalty on "prohibited transactions" imposed by Section 502 of ERISA or
Section 4975 of the Code. Neither the Borrower nor any of its ERISA Affiliates,
including its Subsidiaries, is or has been obligated to make any payment to a
Multiemployer Plan.
(n) Compliance with Regulations T, U and X. Neither the Borrower nor
any of its Subsidiaries is engaged principally in, or has as one of its
important activities, the business of extending credit for the purpose of
purchasing or carrying, and neither the Borrower nor any of its Subsidiaries
owns or presently intends to acquire, any "margin security" or "margin stock"
(herein called "margin stock") as defined in Regulations T, U, and X (12 C.F.R.
Parts 220, 221 and 224) of the Board of Governors of the Federal Reserve System
(the "Regulations"). None of the proceeds of the Loans will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin stock or for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of the
Regulations. Neither the Borrower, its Subsidiaries, nor any bank acting on
their behalf has taken, caused to be authorized or taken, or will take any
action which might cause this Agreement or the Notes to violate the Regulations
or any other regulation of the Board of Governors of the Federal Reserve System
or to violate the applicable provisions of the Securities Exchange Act of 1934,
in each case as now in effect or as the same may hereafter be in effect. If so
requested by any Lender, the Borrower and its Subsidiaries will furnish such
Lender with (i) a statement or statements in conformity with the requirements of
Federal Reserve Form U-1 referred to in Regulation U of said Board of Governors
and (ii) other documents evidencing its compliance with the margin regulations,
including, without limitation, an opinion of counsel in form and substance
satisfactory to such Lender. Neither the making of the Loans nor the use of
proceeds thereof will violate, or be inconsistent with, the provisions of the
Regulations.
(o) Investment Company Act. None of the Parent, the Borrower or any of
the Borrower's Subsidiaries is required to register under the provisions of the
Investment Company Act of 1940, as amended, and neither the entering into or
performance by the Parent, the Borrower and the Borrower's Subsidiaries of this
Agreement and the Loan Documents nor the issuance of the Notes violates any
provision of such Act or requires any consent, approval or authorization of or
registration with, the Securities and Exchange Commission or any other
governmental or public body or authority pursuant to any provisions of such Act.
(p) Governmental Regulation. None of the Parent, the Borrower or any of
the Borrower's Subsidiaries is required to obtain any consent, approval,
authorization, permit or license which has not already been obtained from, or
effect any filing or registration which has not already been effected with, any
federal, state or local regulatory authority in connection with the execution
and delivery of this Agreement or any other Loan Document (other than filings
required to be made under the Security Documents), in either case which if not
obtained or made
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would have a Materially Adverse Effect. None of the Parent, the Borrower or any
of the Borrower's Subsidiaries is required to obtain any consent, approval,
authorization, permit or license which has not already been obtained from, or
effect any filing or registration which has not already been effected with, any
federal, state or local regulatory authority in connection with the performance,
in accordance with their respective terms, of this Agreement or any other Loan
Document (other than filings required to be made under the Security Documents),
in either case which if not obtained or made would have a Materially Adverse
Effect.
(q) Absence of Default, etc. The Parent, the Borrower and the
Borrower's Subsidiaries are in compliance in all respects with all of the
provisions of their respective certificates or articles of incorporation,
organization or formation and by-laws, partnership agreements and operating
agreements, as the case may be, and no action, event, condition or situation has
occurred or failed to occur (including, without limitation, any matter which
could create a Default hereunder by cross- default) which has not been remedied
or waived, the occurrence or non-occurrence of which constitutes, (i) a Default
or (ii) a material default by the Parent, the Borrower or any of the Borrower's
Subsidiaries, or an action, event, condition or situation giving rise to any put
right or other prepayment right of any holder of Indebtedness, under any
indenture, agreement or other instrument relating to Indebtedness of the Parent,
the Borrower or any of the Borrower's Subsidiaries (other than as set forth on
Schedule 3 attached hereto), or a default under any License (which Default could
reasonably be expected to result in an Event of Default under Section 8.1(l)
hereof), or a default under any judgment, decree or order to which the Parent,
the Borrower or any of the Borrower's Subsidiaries is a party or by which the
Parent, the Borrower or any of the Borrower's Subsidiaries or any of their
respective properties may be bound or affected, except to the extent any of the
foregoing in this (ii) could not reasonably be expected to have a Materially
Adverse Effect. None of the Parent, the Borrower or any of the Borrower's
Subsidiaries is a party to or bound by any contract or agreement continuing
after the Agreement Date, or bound by any Applicable Law, the performance of
which or the compliance with which, as applicable, could reasonably be expected
to have a Materially Adverse Effect or could reasonably be expected to result in
the loss of any License (other than any Give-back License) issued by the FCC.
(r) Accuracy and Completeness of Information. All material information,
reports, and other papers relating to the Parent, the Borrower or any of the
Borrower's Subsidiaries furnished by or on behalf of the Parent, the Borrower or
any of the Borrower's Subsidiaries to the Administrative Agent or the Lenders
were, at the time furnished, true, complete and correct in all material respects
to the extent necessary to give the Administrative Agent and the Lenders true
and accurate knowledge of the subject matter thereof in light of the
circumstances under which they were made; provided that, with respect to
projected financial information, the Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time. No fact or situation is currently known to the Parent or
the Borrower which has had or which could reasonably be expected to have a
Materially Adverse Effect.
(s) Insurance. As of the Agreement Date Schedule 8 sets forth a
description
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of all insurance maintained by or on behalf of the Parent, the Borrower and the
Borrower's Subsidiaries as of the Agreement Date. As of the Agreement Date, all
premiums in respect of such insurance have been paid.
(t) Labor Matters. As of the Agreement Date, there are no strikes,
lockouts or slowdowns against the Borrower or any Subsidiary pending or, to the
knowledge of the Borrower, threatened. With such exceptions as could not
reasonably be expected to result in a Materially Adverse Effect, (i) the hours
worked by and payments made to employees of the Borrower and the Subsidiaries
have not been in violation of the Fair Labor Standards Act or any other
applicable Federal, state, local or foreign law dealing with such matters and
(ii) all payments due from the Borrower or any Subsidiary, or for which any
claim may be made against the Borrower or any Subsidiary, on account of wages
and employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of the Borrower or such Subsidiary.
(u) Priority. The Security Interest is a valid and perfected first
priority security interest in the Collateral in favor of the Administrative
Agent, for the benefit of itself and the Lenders, securing, in accordance with
the terms of the Security Documents, the Obligations, and the Collateral is
subject to no Liens other than Permitted Liens. The Liens created by the
Security Documents are enforceable as security for the Obligations in accordance
with their terms with respect to the Collateral subject to the following
qualifications: (i) an order of specific performance and an injunction are
discretionary remedies and, in particular, may not be available where damages
are considered an adequate remedy at law; and (ii) applicable bankruptcy,
insolvency, liquidation, reorganization, reconstruction and other similar laws
affecting enforcement of creditors' rights generally (insofar as any such law
relates to the bankruptcy, insolvency or similar event of the Parent, the
Borrower or any of the Borrower's Subsidiaries, as the case may be).
(v) Indebtedness for Money Borrowed. Except as described on Schedule 6
attached hereto and other than the Advances, if any, none of the Parent, the
Borrower, or any of the Borrower's Subsidiaries has outstanding, as of the
Agreement Date, any Indebtedness for Money Borrowed.
(w) Solvency. As of the Agreement Date and after giving effect to the
transactions contemplated by the Loan Documents: (i) the property of the
Borrower, at a fair valuation, will exceed its debt; (ii) the capital of the
Borrower will not be unreasonably small to conduct its business; (iii) the
Borrower will not have incurred debts beyond its ability to pay such debts as
they mature; and (iv) the present fair salable value of the assets of the
Borrower will be greater than the amount that will be required to pay its
probable liabilities (including debts) as they become absolute and matured. For
purposes of this Section, "debt" means any liability on a claim, and "claim"
means (a) the right to payment, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
undisputed, legal, equitable, secured or unsecured, or (b) the right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is
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reduced to judgment, fixed, contingent, matured, unmatured, undisputed, secured
or unsecured.
(x) Patents, Trademarks, Copyrights, etc. The Borrower and each of its
Subsidiaries owns, possesses, or has the right to use all material patents,
trademarks, trademark rights, trade names, trade name rights, service marks and
copyrights, and rights with respect thereof, necessary to conduct its respective
business as now conducted, without known conflict with any patent, trademark,
trade name, service mark, or copyright of any other Person, and in each case,
subject to no mortgage, pledge, lien, lease, encumbrance, charge, security
interest, title retention agreement, or option. All such patents, trademarks,
trademark rights, trade names, trade name rights, service marks and copyrights
are listed as of the Agreement Date on Schedule 1 attached hereto and are in
full force and effect, the holder thereof is in full compliance in all material
respects with all of the provisions thereof, and no such asset or agreement is
subject to any pending or threatened attack or revocation.
(y) Year 2000 Compliance. Each of the Parent and the Borrower has (i)
initiated a review and assessment of all areas within the Parent's, the
Borrower's and each of the Borrower's Subsidiaries' respective business and
operations (including those affected by suppliers, vendors and customers) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Parent, the Borrower or any of the Borrower's
Subsidiaries (or suppliers, vendors and customers) may be unable to recognize
and perform properly date-sensitive functions involving certain dates prior to
and any date after December 31, 1999), (ii) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan in accordance with that timetable. Based on the foregoing,
the Parent and the Borrower believe that all computer applications (including
those of its suppliers, vendors and customers) that are material to the
Parent's, the Borrower's or any of the Borrower's Subsidiaries' business and
operations are reasonably expected on a timely basis to be able to perform
properly date-sensitive functions for all dates before and after January 1, 2000
(that is, be "Year 2000 Compliant"), except to the extent that a failure to do
so could not reasonably be expected to have a Materially Adverse Effect.
(z) Parent Assets. As of the Agreement Date, the Parent has no assets
other than the Capital Stock of the Borrower, investments in the Borrower and/or
the Borrower's Subsidiaries permitted hereunder, rights under the Securities
Purchase Agreement, rights under the Stockholders Agreement, and the Bid Equity
Commitments, so long as the proceeds of such Bid Equity Commitments are disposed
of in accordance with Section 5.17(b) hereof.
(aa) Parent Business. The Parent is engaged in no business other than
holding the assets described in Section 4.1(z) hereof, incurring Indebtedness
permitted under Section 7.1 hereof and incurring the Bid Equity Commitments, so
long as the proceeds of such Bid Equity Commitments are disposed of in
accordance with Section 5.17(b) hereof.
Section 4.2 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement and any other Loan
Document shall be deemed to be made, and shall be true and correct, at and as of
the Agreement Date, on the date of each
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Advance and on the date of issuance of each Letter of Credit, which, if funded,
would increase the aggregate principal amount of the Loans outstanding, except
to the extent previously fulfilled in accordance with the terms hereof and to
the extent relating specifically to the Agreement Date. All representations and
warranties made under this Agreement and the other Loan Documents shall survive,
and not be waived by, the execution hereof by the Lenders and the Administrative
Agent, any investigation or inquiry by any Lender or the Administrative Agent,
or the making of any Advance under this Agreement.
ARTICLE 5 General Covenants
So long as any of the Obligations is outstanding and unpaid or the
Lenders have an obligation to fund Advances hereunder (whether or not the
conditions to borrowing have been or can be fulfilled), and unless the Required
Lenders, or such greater number of Lenders as may be expressly provided herein,
shall otherwise consent in writing:
Section 5.1 Preservation of Existence and Similar Matters. Except as
permitted under Section 7.4(b) hereof, the Parent and the Borrower will, and
will cause each of the Borrower's Subsidiaries to:
(a) preserve and maintain its existence, and its material rights,
franchises, licenses and privileges in the state of its incorporation or
formation, as the case may be; and
(b) qualify and remain qualified and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, except for qualifications
and authorizations the lack of which, singly or in the aggregate, has not had
and, insofar as can reasonably be foreseen, will not have a Materially Adverse
Effect on the Parent, the Borrower and the Borrower's Subsidiaries taken as a
whole.
Section 5.2 Business; Compliance with Applicable Law. The Parent and the
Borrower will, and will cause each of the Borrower's Subsidiaries to, (a) engage
in the business of building and operating a wireless communications network and
related businesses, and (b) comply with the requirements of all Applicable Law,
except where the failure to do so individually or in the aggregate could not
reasonably be expected to have a Materially Adverse Effect.
Section 5.3 Maintenance of Properties. The Parent and the Borrower will, and
will cause each of the Borrower's Subsidiaries to, maintain or cause to be
maintained in the ordinary course of business in good repair, working order and
condition (reasonable wear and tear excepted) all properties used in their
respective businesses (whether owned or held under lease), other than obsolete
equipment or unused assets, and from time to time make or cause to be made all
needed and appropriate repairs (it being understood that the Borrower shall be
deemed to be
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in compliance with this Section 5.3 if, in connection with any damage to its
properties covered by insurance, the Borrower is diligently pursuing the repair
or replacement of such damaged assets), renewals, replacements, additions,
betterments and improvements thereto.
Section 5.4 Accounting Methods and Financial Records. The Parent and the
Borrower will, and will cause each of the Borrower's Subsidiaries to, on a
consolidated and consolidating basis, maintain a system of accounting
established and administered in accordance with GAAP, keep adequate records and
books of account in which complete entries will be made in accordance with GAAP
and reflecting all transactions required to be reflected by GAAP, and keep
accurate and complete records of their respective properties and assets. The
Parent, the Borrower and the Borrower's Subsidiaries will maintain a fiscal year
ending on December 31st.
Section 5.5 Insurance. The Parent and the Borrower will, and will cause each
of the Borrower's Subsidiaries to:
(a) maintain insurance, including, but not limited to, business
interruption coverage and public liability coverage insurance, from responsible
companies in such amounts and against such risks to the Parent, the Borrower and
each of the Borrower's Subsidiaries as is usual and customary for similarly
situated companies engaged in the cellular telephone and wireless communications
industry and as is reasonably acceptable to the Administrative Agent (including,
without limitation, larceny, embezzlement or other criminal misappropriation
insurance);
(b) keep their respective assets insured by insurers on terms and in a
manner acceptable to the Administrative Agent against loss or damage by fire,
theft, burglary, loss in transit, explosions and hazards insured against by
extended coverage, in amounts which are usual and customary for the cellular
telephone and wireless communications industry and reasonably acceptable to the
Administrative Agent, all premiums thereon to be paid by the Parent, the
Borrower and the Borrower's Subsidiaries; and
(c) require that each insurance policy provide for at least thirty (30)
days' prior written notice to the Administrative Agent of any termination of or
proposed cancellation or nonrenewal of such policy, and name the Administrative
Agent as additional named lender loss payee and, as appropriate, additional
insured, to the extent of the Obligations.
In addition to the foregoing, in the event that any insurer distributes
insurance proceeds, a condemnation award, or any other disbursement in
connection with any of the foregoing insurance policies, the Administrative
Agent is authorized to collect such distribution and, if received by the Parent,
the Borrower or any of the Borrower's Subsidiaries, such distribution shall be
paid over to the Administrative Agent; provided that (i) if the aggregate
distribution (other than any proceeds of business interruption insurance) are
less than $3,000,000, such distribution shall be paid over to the Borrower
unless an Event of Default has occurred and is continuing, and (ii) all proceeds
of business income insurance shall be paid over to the Borrower
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unless an Event of Default has occurred and is continuing. Any such distribution
retained by or paid over to the Administrative Agent shall be held by the
Administrative Agent and released from time to time to pay the costs of
repairing, restoring or replacing the affected property in accordance with the
terms of the applicable Loan Document, subject to the provisions of the
applicable Loan Document regarding application of such distribution during an
Event of Default. If any such distribution retained by or paid over to the
Administrative Agent as provided above continue to be held by the Administrative
Agent on the date that is one hundred eighty (180) days after the occurrence of
the event resulting in such distribution, then such distribution shall be
applied to prepay the Loans as set forth in Section 8.3 hereof.
Section 5.6 Payment of Taxes and Claims. The Parent and the Borrower will,
and will cause each of the Borrower's Subsidiaries to, pay and discharge all
income and other material taxes, including, without limitation, withholding
taxes, assessments and governmental charges or levies required to be paid by
them or imposed upon them or their income or profits or upon any properties
belonging to them, prior to the date on which penalties attach thereto, and all
lawful claims for labor, materials and supplies which, if unpaid, might become a
Lien or charge (other than a Permitted Lien) upon any of their properties;
provided, however, that no such tax, assessment, charge, levy or claim need be
paid which is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on the
appropriate books, but only so long as such tax, assessment, charge, levy or
claim does not become a Lien or charge other than a Permitted Lien and no
foreclosure, distraint, sale or similar proceedings shall have been commenced.
The Parent and the Borrower will, and will cause each of the Borrower's
Subsidiaries to, timely file all material information returns required by
federal, state or local tax authorities.
Section 5.7 Compliance with ERISA.
(a) The Borrower shall, and shall cause its Subsidiaries to, make all
contributions to any Employee Pension Plan when such contributions are due and
not incur any "accumulated funding deficiency" within the meaning of Section
412(a) of the Code, whether or not waived, and will otherwise comply in all
material respects with the requirements of the Code and ERISA with respect to
the operation of all Plans.
(b) The Borrower shall, and shall cause its Subsidiaries to, comply in
all material respects with the requirements of COBRA with respect to any Plans
subject to the requirements thereof.
(c) The Borrower shall furnish to the Administrative Agent (with copies
for the Lenders) (i) within thirty (30) days after any officer of the Borrower
obtains knowledge that a "prohibited transaction" (within the meaning of Section
406 of ERISA or Section 4975 of the Code) has occurred with respect to any Plan
of the Borrower or its ERISA Affiliates, including its Subsidiaries, that any
Reportable Event has occurred with respect to any Employee Pension Plan or that
PBGC has instituted or will institute proceedings under Title IV of ERISA to
terminate any Employee Pension Plan or to appoint a trustee to administer any
Employee Pension
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Plan, a statement setting forth the details as to such prohibited transaction,
Reportable Event or termination or appointment proceedings and the action which
it (or any other Employee Pension Plan sponsor if other than the Borrower)
proposes to take with respect thereto, together with a copy of the notice of
such Reportable Event given to PBGC if a copy of such notice is available to the
Borrower, any of its Subsidiaries or any of its ERISA Affiliates, (ii) promptly
after receipt thereof, a copy of any notice the Borrower, any of its
Subsidiaries or any of its ERISA Affiliates or the sponsor of any Plan receives
from PBGC, or the Internal Revenue Service or the Department of Labor which sets
forth or proposes any action or determination with respect to such Plan, (iii)
promptly after the filing thereof, any annual report required to be filed
pursuant to ERISA in connection with each Plan maintained by the Borrower or any
of its ERISA Affiliates, including its Subsidiaries, and (iv) promptly upon the
Administrative Agent's or any Lender's request therefor, such additional
information concerning any such Plan as may be reasonably requested by the
Administrative Agent or any Lender.
(d) The Borrower will promptly notify the Administrative Agent of any
excise taxes which have been assessed or which the Borrower, any of its
Subsidiaries or any of its ERISA Affiliates has reason to believe may be
assessed against the Borrower, any of its Subsidiaries or any of its ERISA
Affiliates by the Internal Revenue Service or the Department of Labor with
respect to any Plan of the Borrower or its ERISA Affiliates, including its
Subsidiaries which could reasonably be expected to have a Materially Adverse
Effect.
(e) Within the time required for notice to the PBGC under Section
302(f)(4)(A) of ERISA, the Borrower will notify the Administrative Agent and the
Lenders of any lien arising under Section 302(f) of ERISA in favor of any Plan
of the Borrower or its ERISA Affiliates, including its Subsidiaries which could
reasonably be expected to have a Materially Adverse Effect.
(f) The Borrower will not, and will not permit any of its Subsidiaries
or any of its ERISA Affiliates to, take any of the following actions or permit
any of the following events to occur if such action or event together with all
other such actions or events would subject the Borrower, any of its Subsidiaries
or any of its ERISA Affiliates to any tax, penalty or other liabilities which
could reasonably be expected to have a Materially Adverse Effect:
(i) engage in any transaction in connection with which the
Borrower, any of its Subsidiaries or any ERISA Affiliate could be subject to
either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax
imposed by Section 4975 of the Code;
(ii) terminate any Employee Pension Plan in a manner, or take any
other action, which could result in any liability of the Borrower, any of its
Subsidiaries or any ERISA Affiliate to the PBGC;
(iii) fail to make full payment when due of all amounts which,
under the provisions of any Plan, the Borrower, any of its Subsidiaries or any
ERISA Affiliate is required to pay as contributions thereto, or permit to exist
any accumulated funding deficiency
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within the meaning of Section 412(a) of the Code, whether or not waived, with
respect to any Employee Pension Plan; or
(iv) permit the present value of all benefit liabilities under all
Employee Pension Plans which are subject to Title IV of ERISA to exceed the
present value of the assets of such Plans allocable to such benefit liabilities
(within the meaning of Section 4041 of ERISA), except as may be permitted under
actuarial funding standards adopted in accordance with Section 412 of the Code.
Section 5.8 Visits and Inspections. The Parent and the Borrower will, and
will cause each of the Borrower's Subsidiaries to, permit representatives of the
Administrative Agent and any of the Lenders, prior to the occurrence of an Event
of Default upon reasonable notice and during business hours and at any time upon
the occurrence and during the continuance of an Event of Default to: (i) visit
and inspect the properties of the Parent, the Borrower or any of the Borrower's
Subsidiaries; (ii) inspect and make extracts from and copies of their respective
books and records; and (iii) discuss with their respective principal officers
their respective businesses, assets, liabilities, financial positions, results
of operations and business prospects. The Parent, the Borrower and each of the
Borrower's Subsidiaries will also permit representatives of the Administrative
Agent and any of the Lenders to discuss with their respective accountants the
Parent's, the Borrower's and the Borrower's Subsidiaries' businesses, assets,
liabilities, financial positions, results of operations and business prospects.
Section 5.9 Payment of Indebtedness; Loans. Subject to any provisions herein
or in any other Loan Document, the Parent and the Borrower will, and will cause
each of the Borrower's Subsidiaries to, pay any and all of their respective
Indebtedness when and as it becomes due or to the extent of trade payables of
such Persons otherwise in accordance with ordinary business practices customary
for the cellular telephone and wireless communications industry, other than
amounts diligently disputed in good faith and for which adequate reserves have
been set aside in accordance with GAAP.
Section 5.10 Use of Proceeds. The Borrower will use the aggregate proceeds
of all Advances under the Commitments directly or indirectly: (a) to fund
Capital Expenditures and investments of the Borrower and its Subsidiaries; (b)
for working capital needs and other general corporate purposes of the Borrower
and its Subsidiaries which do not otherwise conflict with this Section 5.10
(including, without limitation, the payment of fees and expenses incurred in
connection with the execution and delivery of this Agreement and the other Loan
Documents); and (c) subject to compliance with Section 7.6 hereof, to finance
Acquisitions and investments hereunder. No proceeds of Advances hereunder shall
be used for the purchase or carrying or the extension of credit for the purpose
of purchasing or carrying, any margin stock within the meaning of the
Regulations.
Section 5.11 Indemnity. The Borrower agrees to indemnify and hold harmless
each Lender, the Administrative Agent, and each of their respective
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Affiliates, employees, representatives, shareholders, officers, directors,
trustees, investment advisors and counsel (any of the foregoing shall be an
"Indemnitee") from and against any and all claims, liabilities, losses, damages,
actions, attorneys' fees and expenses (as such fees and expenses are incurred)
and demands by any party, including the costs of investigating and defending
such claims, whether or not the Parent, the Borrower, any of the Borrower's
Subsidiaries or the Person seeking indemnification is the prevailing party: (a)
resulting from any breach or alleged breach by the Parent, the Borrower or any
Subsidiary of the Borrower of any representation or warranty made hereunder; (b)
otherwise arising out of the Commitments or otherwise under this Agreement, any
Loan Document or any transaction contemplated hereby or thereby, including,
without limitation, the use of the proceeds of Loans hereunder in any fashion by
the Borrower or the performance of their respective obligations under the Loan
Documents by the Parent, the Borrower or any of the Borrower's Subsidiaries; or
(c) in connection with taxes (not including Excluded Taxes), fees, and other
charges payable in connection with the Loans, or the execution, delivery, and
enforcement of this Agreement, the Security Documents, the other Loan Documents,
and any amendments thereto or waivers of any of the provisions thereof; unless
the Person seeking indemnification hereunder is determined in such case to have
acted with gross negligence or willful misconduct, in any case, by a final,
non-appealable judicial order of a court of competent jurisdiction. The
obligations of the Borrower under this Section 5.11 are in addition to, and
shall not otherwise limit, any liabilities which the Borrower might otherwise
have in connection with any warranties or similar obligations of the Borrower in
any other Loan Document.
Section 5.12 Interest Rate Hedging. Within ninety (90) days immediately
following the Agreement Date, and at all times thereafter, the Borrower shall at
all times maintain one (1) or more Interest Rate Hedge Agreements with respect
to the Borrower's interest obligations on an aggregate principal amount of not
less than fifty percent (50%) of the principal amount of Indebtedness for Money
Borrowed outstanding from time to time (other then Indebtedness for Money
Borrowed that bears interest at a fixed rate). Such Interest Rate Hedge
Agreements shall provide interest rate protection in conformity with
International Swap Dealers Association standards and for a period averaging at
least eighteen (18) months from the date of such Interest Rate Hedge Agreements
across all such Interest Rate Hedge Agreements or, if earlier, until the
Maturity Date on terms acceptable to the Administrative Agent, such terms to
include consideration of the creditworthiness of the other party to the proposed
Interest Rate Hedge Agreement. All Obligations of the Borrower to the
Administrative Agent or any of the Lenders or any of their Affiliates pursuant
to any Interest Rate Hedge Agreement permitted hereunder and all Liens granted
to secure such Obligations shall rank pari passu with all other Obligations and
Liens securing such other Obligations; and any Interest Rate Hedge Agreement
between the Borrower and any other Person shall be unsecured.
Section 5.13 Covenants Regarding Formation of Subsidiaries and Acquisitions.
(i) At the time of any Acquisition permitted hereunder or (ii) within thirty
(30) days of the formation of any new Subsidiary of the Borrower or any of its
Subsidiaries which is permitted under this Agreement,
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including, without limitation, the formation of any License Sub, the Borrower
will, and will cause its Subsidiaries, including each License Sub, as
appropriate, to: (a) provide to the Administrative Agent (1) an executed
Subsidiary Security Agreement for such new Subsidiary, in substantially the form
of Exhibit J attached hereto, together with appropriate Uniform Commercial Code
financing statements, and (2) an executed Subsidiary Guaranty for such new
Subsidiary, in substantially the form of Exhibit K attached hereto, together
with other appropriate documentation, all of which shall constitute both
Security Documents and Loan Documents for purposes of this Agreement, as well as
a loan certificate for such new Subsidiary, substantially in the form of Exhibit
I attached hereto, together with appropriate attachments; (b) pledge to the
Administrative Agent all of the Ownership Interests of such Subsidiary or Person
which is acquired or formed, beneficially owned by the Borrower or any of the
Borrower's Subsidiaries, as the case may be, as additional Collateral for the
Obligations to be held by the Administrative Agent in accordance with the terms
of the Borrower's Pledge Agreement, an existing Subsidiary Pledge Agreement, or
a new Subsidiary Pledge Agreement in substantially the form of Exhibit L
attached hereto, and execute and deliver to the Administrative Agent all such
other documentation for such pledge as, in the reasonable opinion of the
Administrative Agent, is necessary and appropriate; and (c) provide revised
financial projections for the remainder of the fiscal year and for each
subsequent year until the Maturity Date which reflect such Acquisition or, to
the extent of any material change in the previous financial projections
provided, formation, certified by the chief financial officer of the Borrower,
together with a statement by such Authorized Officer of the Borrower that no
Default exists or would be caused by such Acquisition or formation, and all
other documentation, including one or more opinions of counsel, which are
satisfactory to the Administrative Agent and which in its reasonable opinion are
necessary and appropriate with respect to such Acquisition or the formation of
such Subsidiary. Any document, agreement or instrument executed or issued
pursuant to this Section 5.13 shall be a "Loan Document" for purposes of this
Agreement.
Section 5.14 Payment of Wages. The Borrower shall and shall cause each of
its Subsidiaries to at all times comply, in all material respects, with the
requirements of the Fair Labor Standards Act, as amended, including, without
limitation, the provisions of such Act relating to the payment of minimum and
overtime wages as the same may become due from time to time.
Section 5.15 Further Assurances. The Parent and the Borrower will promptly
cure, or cause to be cured, defects in the creation and issuance of any of the
Notes and the execution and delivery of the Loan Documents (including this
Agreement), resulting from any acts or failure to act by the Parent, the
Borrower or any of the Borrower's Subsidiaries or any employee or officer
thereof. The Parent and the Borrower at their expense will promptly execute and
deliver to the Administrative Agent and the Lenders, or cause to be executed and
delivered to the Administrative Agent and the Lenders, all such other and
further documents, agreements, and instruments in compliance with or
accomplishment of the covenants and agreements of the Parent and the Borrower in
the Loan Documents, including this Agreement, or to correct any error, ambiguity
or inconsistency in the Loan Documents, or more fully to state the obligations
set out herein or in any of the Loan Documents, or to obtain any
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consents, all as may be reasonably necessary or appropriate in connection
therewith and as may be reasonably requested.
Section 5.16 License Subs. At the time of any Acquisition permitted
hereunder, the Borrower shall cause each of the Licenses being acquired by the
Borrower or any of its Subsidiaries to be transferred to one or more License
Subs, each of which License Subs shall have as its sole asset or assets the
Licenses of the Borrower or any of its Subsidiaries and an agreement with the
Borrower and such of its Subsidiaries subject to such License or Licenses, such
that from and after such applicable date neither the Borrower nor its
Subsidiaries (other than License Subs) shall hold any Licenses other than
through one or more duly created and existing License Subs. The Borrower shall
not permit the License Subs to have any business activities, operations, assets,
Indebtedness, Guaranties or Liens (other than pursuant to a Subsidiary Guaranty
and Subsidiary Security Agreement issued in connection herewith or any Agreement
referred to in the preceding sentence and other than Indebtedness to the FCC
which Indebtedness may be secured as permitted by Section 7.2 hereof). Promptly
after the transfer of the Licenses to the License Subs, the Borrower shall
provide to the Administrative Agent copies of any required consents to such
transfer from the FCC and any other governmental authority, together with a
certificate of an Authorized Signatory stating that all Necessary Authorizations
relating to such transfer have been obtained or made, are in full force and
effect and are not subject to any pending or threatened reversal or
cancellation.
Section 5.17 Business of the Parent; Immediate Contributions to the
Borrower.
(a) The Parent shall engage solely in the business of holding the
assets described in Section 4.1(z) hereof, incurring Indebtedness permitted by
Section 7.1 and incurring the Bid Equity Commitments, so long as the proceeds of
such Bid Equity Commitments are disposed of in accordance with Section 5.17(b)
hereof.
(b) The Parent shall immediately (i) contribute to the Borrower upon
receipt (A) any capital contributions and (B) net proceeds from the issuance of
any Indebtedness (excluding Subordinated Debt) and (ii) lend to the Borrower the
net proceeds of any Subordinated Debt, which loan shall be subordinate to the
Obligations hereunder on terms reasonably satisfactory to the Required Lenders.
Section 5.18 Year 2000 Compliance. The Parent and the Borrower will promptly
notify the Lenders in the event the Parent or the Borrower discovers or
determines that any computer application (including those of its suppliers,
vendors and customers) that is material to the Parent's, the Borrower's or any
of the Borrower's Subsidiaries' business and operations will not be Year 2000
Compliant, except to the extent that such failure could not reasonably be
expected to have a Materially Adverse Effect.
Section 5.19 Bidding Company Documentation. The Borrower will (a) cause the
Bidding Company Documentation (i) to be in form and substance reasonably
satisfactory to the
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Administrative Agent and (ii) to become effective on or prior to April 1, 1999,
(b) provide the Administrative Agent with (i) such proof of the effectiveness of
the Bidding Company Documentation as the Administrative Agent may reasonably
request and (ii) opinions of counsel to the Borrower, including, without
limitation, special FCC counsel to the Borrower, as to the enforceability of the
Bidding Company Documentation and such other matters as the Administrative Agent
may reasonably request and (iii) pledge the Bidding Company Documentation to the
Administrative Agent, for itself and on behalf of the Lenders, as additional
security for the Obligations.
Section 5.20 The Bid Equity Commitments. The Parent and the Borrower will
(a) cause the Bid Equity Commitments (i) to be in form and substance reasonably
satisfactory to the Administrative Agent and (ii) to become effective and (b)
provide the Administrative Agent with such proof of the effectiveness as the
Administrative Agent may reasonably request, in each case, on or prior to the
date on which the Bidding Company submits a bid or bids on behalf of the
Borrower in the Auction which singly or in the aggregate exceed $7,500,000;
provided, however, that the Bid Equity Commitments need not become effective if
the Bidding Company does not submit any bid or bids in the Auction that the
Borrower has agreed to fund under the Bidding Company Documentation which singly
or in the aggregate exceed $7,500,000, uses its best efforts to obtain prompt
return of all funds placed in escrow with the FCC, and reimburses substantially
all funds invested in it by the Borrower to the Borrower no later than the third
(3rd) Business Day after the Bidding Company's receipt of such funds from the
escrow account with the FCC. In the event that the Bid Equity Commitments are
required to become effective pursuant to this Section 5.20, the Parent and the
Borrower will cause the Bid Equity Commitments to be funded, and the Bid Equity
Commitments Documentation to become effective and provide the Administrative
Agent with such proof of the effectiveness of the Bid Equity Commitments
Documentation as the Administrative Agent may reasonably request on or prior to
December 31, 1999.
ARTICLE 6 Information Covenants
So long as any of the Obligations is outstanding and unpaid or the Lenders
have an obligation to fund Advances hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Required Lenders shall
otherwise consent in writing, the Borrower will furnish or cause to be furnished
to the Administrative Agent (with sufficient copies for each Lender), at its
respective offices:
Section 6.1 Quarterly Financial Statements and Information. Within sixty
(60) days after the last day of each of the first three (3) fiscal quarters of
the Borrower during any fiscal year, the balance sheets of the Borrower on a
consolidated and consolidating basis with its Subsidiaries and the Parent, as at
the end of such quarter and as of the end of the preceding fiscal year, and the
related statements of
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operations and the related statements of cash flows of the Borrower on a
consolidated and consolidating basis with its Subsidiaries and the Parent, for
such quarter and for the elapsed portion of the year ended with the last day of
such quarter, which shall set forth in comparative form such figures as at the
end of and for such quarter and appropriate prior period, shall provide
consolidated and consolidating figures with respect to any Acquisitions
consummated during such period, and shall be certified by the chief financial
officer of the Borrower to have been prepared in accordance with GAAP and to
present fairly in all material respects the financial position of the Borrower
on a consolidated and consolidating basis with its Subsidiaries and the Parent,
as at the end of such period and the results of operations for such period, and
for the elapsed portion of the year ended with the last day of such period,
subject only to normal year-end and audit adjustments and the absence of notes
thereto.
Section 6.2 Annual Financial Statements and Information. Within one hundred
and twenty (120) days after the end of each fiscal year of the Borrower, the
audited consolidated and consolidating balance sheets of the Parent, the
Borrower and the Borrower's Subsidiaries, as of the end of such fiscal year and
the related audited consolidated and consolidating (excluding License Subs)
statements of operations of the Parent, the Borrower and the Borrower's
Subsidiaries, for such fiscal year and for the previous fiscal year, the related
audited consolidated and consolidating (excluding License Subs) statements of
cash flow and stockholders' equity of the Parent, the Borrower and the
Borrower's Subsidiaries, for such fiscal year and for the previous fiscal year,
which shall be accompanied by an opinion of independent certified public
accountants of recognized national standing acceptable to the Administrative
Agent (without a "going concern" or like qualification or exception and without
any qualification or exception as to the scope of the audit), together with a
statement of such accountants that in connection with their audit, nothing came
to their attention that caused them to believe that the Parent or the Borrower
was not in compliance with or was otherwise in Default under the terms,
covenants, provisions or conditions of Articles 7 and 8 hereof insofar as they
relate to accounting or financial matters.
Section 6.3 Performance Certificates. At the time the financial statements
are furnished pursuant to Sections 6.1 and 6.2 hereof, a certificate of the
president or chief financial officer of the Borrower as to its financial
performance in substantially the form attached hereto as Exhibit E:
(a) setting forth as and at the end of such quarterly period or fiscal
year, as the case may be, the arithmetical calculations required to establish
(i) any adjustment to the Applicable Margins, as provided for in Section 2.3(f)
hereof and (ii) whether or not the Borrower was in compliance with the
requirements of Sections 7.8, 7.9, 7.10, 7.11, 7.12, 7.13, 7.14, 7.15, 7.16 and
7.17 hereof;
(b) setting forth on a consolidated basis for the Borrower and its
Subsidiaries for each such fiscal quarter (i) the number of Subscribers, POPs
and market penetration at the beginning of the quarter, (ii) the number of gross
new Subscribers added and deactivated Subscribers lost during the quarter and
(iii) the number of Subscribers, POPs and market
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penetration at the end of the quarter; and
(c) stating that no Default has occurred as at the end of such
quarterly period or year, as the case may be, or, if a Default has occurred,
disclosing each such Default and its nature, when it occurred, whether it is
continuing and the steps being taken by the Borrower with respect to such
Default.
Section 6.4 Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower or the Parent by the Borrower's or the Parent's
independent public accountants regarding the Borrower or the Parent, including,
without limitation, any management report prepared in connection with the annual
audit referred to in Section 6.2 hereof.
(b) Promptly upon receipt thereof, copies of any material adverse
notice or report regarding any License from the FCC or any other governmental
authority.
(c) From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the business, assets, liabilities, financial position, projections, results of
operations or business prospects of the Parent, the Borrower or any of the
Borrower's Subsidiaries, as the Administrative Agent or any Lender may
reasonably request.
(d) Annually, certificates of insurance indicating that the
requirements of Section 5.5 hereof remain satisfied for such fiscal year,
together with copies of any new or replacement insurance policies obtained
during such year.
(e) Prior to March 31st of each year, an annual budget for each year
after 1999 for the Parent, the Borrower and the Borrower's Subsidiaries, in form
and substance reasonably satisfactory to the Administrative Agent.
(f) Promptly after the sending thereof, copies of all material
statements, reports and other material non-proprietary information which the
Parent, the Borrower or any of the Borrower's Subsidiaries sends to security
holders of the Parent or the Borrower generally or files with the Securities and
Exchange Commission or any national securities exchange, or would be required to
file therewith if it were a registered reporting company.
(g) Within forty-five (45) days after the last day of each month prior
to the delivery of financial statements of the Borrower, its Subsidiaries and
the Parent as required pursuant to Section 6.1 hereof, (i) the balance sheet of
the Borrower on a consolidated basis with its Subsidiaries and the Parent as at
the end of such month, and the related statements of operations of the Borrower
on a consolidated basis with its Subsidiaries and the Parent, certified by the
chief financial officer of the Borrower to have been prepared in accordance with
GAAP and to present fairly in all material respects the financial position of
the Borrower, its
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Subsidiaries and the Parent on a consolidated basis as at the end of such month
and the results of operations for such month, subject only to normal year-end
and audit adjustments and the absence of notes thereto, and (ii) a certificate
of the chief financial officer of the Borrower setting forth (A) the aggregate
number of Subscribers at the end of the calendar month preceding such calendar
month and (B) the aggregate number of Subscribers at the end of such calendar
month,.
(h) Within five (5) Business Days after the same are sent, a copy of
any financial statement, report or notice which the Parent, the Borrower or any
Subsidiary of the Borrower sends to any Person under or pursuant to or in
connection with the Securities Purchase Agreement, the Network License
Agreement, the Stockholders Agreement, the Roaming Agreement, the Resale
Agreement, or any other PCS Document, in each case if such statement, report or
notice relates to an event that has resulted or could reasonably be expected to
result in a Default, an Event of Default or a Materially Adverse Effect; and,
within five (5) Business Days after the same are received by the Parent, the
Borrower or any Subsidiary, copies of all notices sent to any such Person under
or pursuant to or in connection with any such agreement or instrument which
notice relates to an event that has resulted or could reasonably be expected to
result in a Default, an Event of Default or a Materially Adverse Effect.
Section 6.5 Notice of Litigation and Other Matters. Notice specifying the
nature and status of any of the following events, promptly, but in any event not
later than fifteen (15) days after the occurrence of any of the following events
becomes known to a senior officer of the Parent or the Borrower:
(a) the commencement of all proceedings and investigations by or before
any governmental body and all actions and proceedings in any court or before any
arbitrator against, or to the extent known to the Parent or the Borrower, in any
other way relating materially adversely to the Parent, the Borrower, any
Subsidiary of the Borrower or to the extent such action could reasonably be
expected to have a Materially Adverse Effect; provided, however, that no such
information that is subject to the attorney-client privilege need be disclosed;
(b) any material adverse change with respect to the business, assets,
liabilities, financial position, results of operations or business prospects of
the Parent, the Borrower or any Subsidiary of the Borrower, other than changes
in the ordinary course of business which have not had and would not reasonably
be expected to have a Materially Adverse Effect;
(c) any material amendment or change to the financial projections or
annual budget provided to the Lenders by the Borrower;
(d) the occurrence or non-occurrence of any event (A) which constitutes
a Default or an Event of Default by the Parent, the Borrower or any Subsidiary
of the Borrower, or an event or condition which gives rise to any put right or
other prepayment right of any holder of Indebtedness, under any material
agreement other than this Agreement and the other Loan Documents to which the
Parent, the Borrower or any Subsidiary of the Borrower is party or by which any
of their respective properties may be bound or (B) which could have a Materially
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Adverse Effect, giving in each case the details thereof and specifying the
action proposed to be taken with respect thereto;
(e) the occurrence of any Reportable Event or a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) with respect to any Plan of the Borrower or any of its Subsidiaries or
the institution or threatened institution by PBGC of proceedings under ERISA to
terminate or to partially terminate any such Plan or the commencement or
threatened commencement of any litigation regarding any such Plan or naming it
or the trustee of any such Plan with respect to such Plan or any action taken by
the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate of the
Borrower to withdraw or partially withdraw from any Plan or to terminate any
Plan; and
(f) the occurrence of any event subsequent to the Agreement Date which,
if such event had occurred prior to the Agreement Date, would have constituted
an exception to the representation and warranty in Section 4.1(l) hereof.
ARTICLE 7 Negative Covenants
So long as any of the Obligations is outstanding and unpaid or the Lenders
have an obligation to fund Advances hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Required Lenders, or
such greater number of Lenders as may be expressly provided herein, shall
otherwise give their prior consent in writing.
Section 7.1 Indebtedness of the Parent, the Borrower and the Borrower's
Subsidiaries. The Parent and the Borrower shall not, and shall not permit any of
the Borrower's Subsidiaries to, create, assume, incur or otherwise become or
remain obligated in respect of, or permit to be outstanding, any Indebtedness
except;
(a) the Obligations;
(b) operating accounts payable, accrued expenses and customer advance
payments incurred in the ordinary course of business;
(c) Indebtedness secured by Permitted Liens, provided that such
Indebtedness was incurred to finance the asset on which such Permitted Lien
exists;
(d) obligations under Interest Hedge Agreements of the Borrower or its
Subsidiaries with respect to the Loans;
(e) unsecured Indebtedness of the Borrower or any of its Subsidiaries
to the Borrower or any such Subsidiary so long as the corresponding debt
instruments, if any, are
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pledged to the Administrative Agent as security for the Obligations;
(f) Capitalized Lease Obligations in an amount for the Borrower on a
consolidated basis with its Subsidiaries not in excess of $20,000,000 in the
aggregate at any one time outstanding;
(g) the Subordinated Debt, provided that such Subordinated Debt is (a)
issued on terms reasonably satisfactory to the Required Lenders, (b) is in an
aggregate principal amount not to exceed $200,000,000, or such greater amount as
may be approved by the Required Lenders, and (c) the proceeds of such
Subordinated Debt shall be used by the Borrower solely to fund the build-out of
the Borrower's Cellular System and working capital needs and other general
corporate purposes of the Borrower and its Subsidiaries related to such
build-out, except to the extent provided in Section 7.6(e)(vii) hereof, or as
otherwise approved by the Required Lenders;
(h) to the extent that the accrual of dividends with respect to the
Series A Preferred Stock would be considered Indebtedness, the accrual of
dividends with respect to such Series A Preferred Stock, provided that no
dividends may be paid in respect thereof under any circumstances prior to the
date that is six (6) months after the Maturity Date;
(i) FCC Indebtedness assumed in connection with the Licenses set forth
on Schedule 1 attached hereto in an aggregate principal amount not to exceed
$48,000,000;
(j) other unsecured Indebtedness of the Borrower and its Subsidiaries
not to exceed an aggregate principal amount of $10,000,000 at any time
outstanding;
(k) Indebtedness of the Borrower to the Parent issued in accordance
with Section 5.17(b)(ii) hereof; and
(l) Bid Equity Commitments in the form of unsecured subordinated
Indebtedness of the Parent, provided that such unsecured subordinated
Indebtedness (a) has a maturity date that is not earlier than the date which is
six (6) months subsequent to the Term Loan B Maturity Date, (b) is issued on
terms reasonably satisfactory to the Administrative Agent, (c) is in an
aggregate principal amount not to exceed the Aggregate Bid License Purchase
Price, and (d) the proceeds of such unsecured subordinated Indebtedness shall be
used by the Parent solely as provided in Section 5.17(b) hereof and by the
Borrower solely to fund the Aggregate Bid License Purchase Price.
Section 7.2 Limitation on Liens. The Parent and the Borrower shall not, and
shall not permit any of the Borrower's Subsidiaries to, create, assume, incur or
permit to exist or to be created, assumed, incurred or permitted to exist,
directly or indirectly, any Lien on any of its properties or assets, whether now
owned or hereafter acquired, except for Permitted Liens.
Section 7.3 Amendment and Waiver. The Parent
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and the Borrower shall not, and shall not permit any of the Borrower's
Subsidiaries to, enter into any amendment of, or agree to or accept or consent
to any waiver of any of the provisions of its articles or certificate of
incorporation, or its partnership agreement or its by-laws, as appropriate, or
any of the Subordinated Debt Documents, PCS Documents, Bidding Company
Documentation or the Bid Equity Commitments Documentation (other than immaterial
amendments which could not reasonably be expected to have a Materially Adverse
Effect on the Administrative Agent or any Lender or any of their rights or
claims under any of the Loan Documents).
Section 7.4 Liquidation, Merger or Disposition of Assets.
(a) Disposition of Assets. The Parent and the Borrower shall not, and
shall not permit any of the Borrower's Subsidiaries to, at any time sell, lease,
abandon or otherwise dispose of any assets (other than assets disposed of in the
ordinary course of business or obsolete or worn out assets or assets no longer
useful in the business of the Borrower or any of its Subsidiaries) without the
prior written consent of the Required Lenders; provided, however, that the
Parent and the Borrower may, and may permit any of the Borrower's Subsidiaries
to, without the prior written consent of the Required Lenders: (i) transfer
assets (including cash or Cash Equivalents) among the Borrower and its
Subsidiaries (excluding Subsidiaries described in clause (b) of the definition
of "Subsidiary" set forth in Article 1 hereof); (ii) transfer assets (including
cash or Cash Equivalents) between or among Subsidiaries (excluding Subsidiaries
described in clause (b) of the definition of "Subsidiary" set forth in Article 1
hereof) of the Borrower; (iii) sell or otherwise dispose of assets of the
Borrower or its Subsidiaries under this clause (iii) in an aggregate amount not
to exceed $1,000,000.00 in any fiscal year; or (iv) engage in Tower
Sale/Leaseback Transactions not to exceed, in the aggregate, $25,000,000,
provided that if any Revolving Loans are then outstanding, the Net Proceeds of
any such Tower Sale/Leaseback Transaction are used to repay the Revolving Loans.
(b) Liquidation or Merger. The Parent and the Borrower shall not, and
shall not permit any of the Borrower's Subsidiaries to, at any time liquidate or
dissolve itself (or suffer any liquidation or dissolution) or otherwise wind up,
or enter into any merger, other than (so long as no Default exists or is caused
thereby): (i) a merger or consolidation among the Borrower and one (1) or more
of its Subsidiaries, provided that the Borrower is the surviving corporation;
(ii) a merger between or among two (2) or more Subsidiaries of the Borrower;
(iii) in connection with an Acquisition permitted hereunder effected by a merger
in which the Borrower or one of its Subsidiaries is the surviving corporation;
or (iv) in a merger in which the Borrower is not a party, where the surviving
corporation is a Subsidiary of the Borrower and the requirements of Section 5.13
hereof have been satisfied.
Section 7.5 Limitation on Guaranties. The Parent and the Borrower shall not,
and shall not permit any of the Borrower's Subsidiaries to, at any time
Guaranty, assume, be obligated with respect to, or permit to be outstanding any
Guaranty of, any obligation of any other Person other than: (a) a guaranty by
endorsement of negotiable instruments for collection in the ordinary course of
business; (b) Guaranties
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constituting Indebtedness permitted pursuant to Section 7.1 hereof; or (c) as
may be contained in any Loan Document.
Section 7.6 Investments and Acquisitions. The Parent and the Borrower shall
not, and shall not permit any of the Borrower's Subsidiaries to, directly or
indirectly, make any loan, investment or advance, or otherwise acquire for
consideration evidences of Indebtedness, Capital Stock or other securities of
any Person or other assets or property (other than assets or property in the
ordinary course of business), or make any Acquisition; provided, however, that
so long as no Default then exists or would be caused thereby:
(a) the Borrower and its Subsidiaries may, directly or through a
brokerage account (i) purchase marketable, direct obligations of the United
States of America, its agencies and instrumentalities maturing within three
hundred sixty-five (365) days of the date of purchase, (ii) purchase commercial
paper or other corporate Indebtedness issued by corporations, each of which
shall have a combined net worth of at least $100,000,000 and each of which
conducts a substantial part of its business in the United States of America,
maturing within two hundred seventy (270) days from the date of the original
issue thereof, and rated "P-2" or better by Moody's Investors Service, Inc., or
any successor, or "A-2" or better by Standard and Poor's Ratings Group, a
division of McGraw Hill, Inc., or any successor, and (iii) purchase repurchase
agreements, bankers' acceptances, and certificates of deposit maturing within
three hundred sixty-five (365) days of the date of purchase which are issued by,
or time deposits maintained with, a United States national or state Lender the
deposits of which are insured by the Federal Deposit Insurance Corporation or
the Federal Savings and Loan Insurance Corporation and having capital, surplus
and undivided profits totaling more than $100,000,000.00 and rated "A" or better
by Moody's Investors Service, Inc., or any successor, or Standard and Poor's
Ratings Group, a division of McGraw Hill, Inc., or any successor; and
(b) (i) the Borrower and the Subsidiaries of the Borrower may incur
intercompany Indebtedness under Section 7.1 (e) hereof, and (ii) subject to
compliance with Section 5.13 hereof, the Borrower may own Capital Stock of the
Subsidiaries of the Borrower existing on the Agreement Date, any new Subsidiary
and, as permitted by Section 5.16 hereof, any License Sub;
(c) the Borrower may make an Acquisition with the prior written consent
of the Required Lenders, provided that the Borrower complies with Section 5.13
hereof in connection therewith, and provides to the Administrative Agent and the
Lenders financial projections and calculations, in form and substance
satisfactory to the Administrative Agent, specifically demonstrating the
Borrower's compliance with Sections 7.8, 7.9, 7.10, 7.11, 7.12, 7.13, 7.14,
7.15, 7.16, and 7.17 hereof and its ability to meet its repayment obligations
hereunder through the Maturity Date, after giving effect thereto;
(d) the Borrower may, directly or indirectly, make one or more
investments, in an aggregate amount not to exceed $5,000,000, in Persons formed
for the purpose of holding
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intellectual property rights to be used by the Parent, the Borrower and the
Borrower's Subsidiaries, or any of them;
(e) the Borrower may make investments in the Bidding Company, provided
that:
(i) at no time shall the investments by the Borrower in the
Bidding Company exceed the Aggregate Bid License Purchase Price;
(ii) at no time shall the Aggregate Bid License Purchase Price
exceed the lesser of (A) $25,000,000 and (B) the sum of (1) $7,500,000
and (2) the Bid Equity Commitments;
(iii) at no time shall investments by the Borrower in the Bidding
Company funded with the proceeds of an Advance under the Revolving Loan
Commitment exceed $7,500,000, and the proceeds of such Advance shall be
used solely to make the Deposit Loan and/or to fund all or a portion of
the Aggregate Bid License Purchase Price;
(iv) at no time shall the Bid License Purchase Price for any Bid
License exceed $10.00 per POP with respect to the POPs covered by such
Bid License;
(v) if at any time all or any portion of the Deposit is refunded
to the Bidding Company, then the Bidding Company shall, within three
(3) Business Days thereof, make a payment to the Borrower under, and in
accordance with the terms of, the Deposit Loan Note in an amount equal
to the amount of the Deposit so refunded;
(vi) if at any time the Borrower shall receive any payment on the
Deposit Loan, then the Borrower shall, within five (5) Business Days
thereof, repay, first, if an Advance under the Revolving Loan
Commitment was used to fund all or any portion of such Deposit Loan,
the Revolving Loans used to fund such Deposit Loan in an amount equal
to the amount of the payment on the Deposit Loan so received, together
with any accrued interest with respect thereto and, second, any source
of the deposit Loan other than Revolving Loans;
(vii) any Surplus Subordinated Debt shall be applied, first, to
repay the Revolving Loans used to fund the Deposit Loan, if any,
second, to repay any source of the Deposit Loan other than the
Revolving Loans, third, to fund the Aggregate Bid License Purchase
Price (or repay the source thereof if previously funded other than with
the Bid Equity Commitments) in an amount equal to the excess, if any,
of $7,500,000 over the Deposit, fourth, at the Borrower's election, to
fund the balance of the Aggregate Bid License Purchase Price in an
amount required to reduce the Bid Equity Commitments to $0.00 and,
fifth, as provided in
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Section 7.1(g) hereof; and
(f) the Parent may make investments in and loans and advances to the
Borrower as otherwise permitted hereunder.
Section 7.7 Limitation on Distributions. The Parent and the Borrower shall
not, and shall not permit any of the Borrower's Subsidiaries to, make any
Restricted Payment or Restricted Purchase; provided, however, that such
Restricted Payments or Restricted Purchases may be made if (a) the Total
Leverage Ratio is less than 5.00 to 1.00, (b) the Borrower has made all
repayments from Excess Cash Flow required under Section 2.7(b)(iv) hereof, and
(c) no Default or Event of Default exists, both before and after giving effect
to such Restricted Payments or Restricted Purchases. Notwithstanding any of the
foregoing, so long as no Default has occurred and is continuing both before and
after giving effect to the following Restricted Payments or Restricted
Purchases, the Borrower and its Subsidiaries shall be permitted to make
Restricted Payments or Restricted Purchases (i) to the Parent to pay
administrative and other similar costs and franchise and other similar taxes
required to be paid by the Parent, in an aggregate amount not to exceed
$1,000,000 per fiscal year, (ii) to fund, as and when due, payments of regularly
scheduled interest and principal in respect of any Indebtedness incurred by the
Parent that is permitted under Section 7.1 hereof, other than payments in
respect of the Subordinated Debt prohibited by the subordination provisions
thereof, and (iii) pursuant to and in accordance with stock option plans or
other benefit plans for management or employees of the Parent, the Borrower or
the Borrower's Subsidiaries, in an aggregate amount not to exceed $1,000,000 per
fiscal year.
Section 7.8 Senior Debt Capitalization Ratio. (a) As of the end of any
calendar quarter, and (b) at the time of any Advance hereunder (after giving
effect to such Advance) which, if funded, would increase the aggregate principal
amount of the Loans outstanding on such date of determination, the Borrower
shall not permit the Senior Debt Capitalization Ratio to exceed 0.50 to 1.00;
provided, however, that if (i) all Unfunded Commitments (as defined in the
Securities Purchase Agreement) have been contributed in full in cash to the
Borrower and (ii) the ratio of Covered POPs to Total POPs, in each case within
the Licensed Territory (as defined in the Network License Agreement), exceeds
0.60 to 1.00, then the ratio of Total Debt Capitalization Ratio may exceed 0.50
to 1.00, but shall not exceed 0.55 to 1.00.
Section 7.9 Total Debt Capitalization Ratio. (a) As of the end of any
calendar quarter, and (b) at the time of any Advance hereunder (after giving
effect to such Advance) which, if funded, would increase the aggregate principal
amount of the Loans outstanding on such date of determination, the Borrower
shall not permit the Total Debt Capitalization Ratio to exceed, (1) from the
Agreement Date through June 30, 2001, 0.70 to 1.00, and (2) at all times
thereafter, 0.75 to 1.00.
Section 7.10 Minimum Required Covered POPs. (a) As of each calendar quarter
end and (b) at the time of any Advance hereunder which, if funded, would
increase the aggregate
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principal amount of the Loans outstanding on such date of determination, the
Borrower shall not permit the ratio of (1) Covered POPs to (2) Total POPs to be
less than or equal to the percentages set forth below for the periods indicated:
Ratio of Covered
Period POPs to Total POPs
------ ------------------
From September 30, 1999 through June 29, 2000 30%
From June 30, 2000 through June 29, 2001 55%
From June 30, 2001 through June 29, 2002 65%
From June 30, 2002 through June 29, 2003 75%
At all times thereafter 80%
Section 7.11 Minimum Subscribers. (a) As of each calendar quarter end set
forth below, and (b) at the time of any Advance hereunder which, if funded,
would increase the aggregate principal amount of the Loans outstanding on such
date of determination, the Borrower shall not permit the total number of
Subscribers on such date to be less than the number of Subscribers set forth
below for the periods indicated:
Period Number of Subscribers
------ ---------------------
From March 31, 2000 through June 29, 2000 30,000
From June 30, 2000 through September 29, 2000 53,000
From September 30, 2000 through December 30, 2000 95,000
From December 31, 2000 through March 30, 2001 137,000
From March 31, 2001 through June 29, 2001 190,000
From June 30, 2001 through September 29, 2001 220,000
From September 30, 2001 through December 30, 2001 247,000
From December 31, 2001 through March 30, 2002 277,000
From March 31, 2002 through June 29, 2002 315,000
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Period Number of Subscribers
------ ---------------------
From June 30, 2002 through September 29, 2002 345,000
At all times thereafter 400,000
Section 7.12 Aggregate Service Revenue. (a) As of each calendar quarter end
set forth below, and (b) at the time of any Advance hereunder which, if funded,
would increase the aggregate principal amount of the Loans outstanding on such
date of determination, the Borrower shall not permit its total Aggregate Service
Revenue for the immediately preceding four (4) fiscal quarter period to be less
than the following Aggregate Service Revenue amounts for the periods indicated:
Total Aggregate
Period Service Revenue
------ ---------------
From March 31, 2000 through June 29, 2000 $5,800,000
From June 30, 2000 through September 29, 2000 $14,000,000
From September 30, 2000 through December 30, 2000 $23,000,000
From December 31, 2000 through March 30, 2001 $42,000,000
From March 31, 2001 through June 29, 2001 $69,000,000
From June 30, 2001 through September 29, 2001 $96,000,000
From September 30, 2001 through December 30, 2001 $123,000,000
From December 31, 2001 through March 30, 2002 $144,000,000
From March 31, 2002 through June 29, 2002 $164,000,000
From June 30, 2002 through September 29, 2002 $185,000,000
At all times thereafter $225,000,000
Section 7.13 Maximum Capital Expenditures. (a) As of each fiscal quarter end
set forth below, and (b) at the time of any Advance hereunder which, if funded,
would increase the aggregate principal amount of the Loans outstanding on such
date of determination, the Borrower shall not permit Capital Expenditures
(excluding assets purchased with the proceeds of obsolete, worn out or no longer
useful assets as permitted by Section 7.4(a) hereof) for the Borrower and its
Subsidiaries to exceed in any period;
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Period Total Capital Expenditures
------ --------------------------
The Agreement Date through December 31, 1999 $334,000,000
From January 1, 2000 through December 31, 2000 $167,000,000
From January 1, 2001 through December 31, 2001 $91,000,000
From January 1, 2002 through December 31, 2002 $15,000,000
From January 1, 2003 through December 31, 2003 $15,000,000
From January 1, 2004 through December 31, 2004 $15,000,000
From January 1, 2005 through December 31, 2005 $15,000,000
From January 1, 2006 through December 31, 2006 $15,000,000
From January 1, 2007 through December 31, 2007 $15,000,000
; provided that any permitted amount which is not spent in any period specified
above (excluding any amount carried forward from the immediately preceding
period permitted to be spent during such period) may be carried forward to the
immediately subsequent period, and may be spent in addition to the otherwise
applicable limitation for such period; provided further that for purposes of
calculating the amount of any carry-forward amount for any period under this
Section 7.13, any amount carried forward from the preceding period shall be
deemed to be the first amount spent during the current period.
Section 7.14 Total Leverage Ratio. (a) As of the end of any calendar quarter
and (b) at the time of any Advance hereunder (after giving effect to such
Advance) which, if funded, would increase the aggregate principal amount of the
Loans outstanding on such date of determination, in each case, on and after the
Go-Positive Date, the Borrower shall not permit the Total Leverage Ratio to
exceed the ratios set forth below during the periods indicated:
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Period Ratio
------ -----
Go-Positive Date through
December 31, 2002 12.50:1
January 1, 2003 through
March 31, 2003 12.00:1
April 1, 2003 through
June 30, 2003 9.00:1
July 1, 2003 through
December 31, 2003 7.00:1
January 1, 2004 and
thereafter 5.00:1
Section 7.15 Senior Leverage Ratio. (a) As of the end of any calendar
quarter and (b) at the time of any Advance hereunder (after giving effect to
such Advance) which, if funded, would increase the aggregate principal amount of
the Loans outstanding on such date of determination, in each case, on and after
the Go-Positive Date, the Borrower shall not permit the Senior Leverage Ratio to
exceed the ratios set forth below during the periods indicated:
Period Ratio
------ -----
Go-Positive Date through 10.00:1
December 31, 2002
January 1, 2003 through 9.00:1
March 31, 2003
April 1, 2003 through 6.00:1
June 30, 2003
July 1, 2003 through 5.00:1
December 31, 2003
January 1, 2004 and
thereafter 4.00:1
Section 7.16 Fixed Charges Coverage Ratio. (a) As of the end of any calendar
quarter and (b) at the time of any Advance hereunder (after giving effect to
such Advance) which, if funded, would increase the aggregate principal amount of
the Loans outstanding on such date of determination, the Borrower shall not
permit
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the Fixed Charges Coverage Ratio to be less than the ratios set forth
below for the periods indicated:
Period Ratio
------ -----
January 1, 2003 through 1.00:1
March 31, 2004
April 1, 2004 and thereafter 1.10:1
Section 7.17 Interest Coverage Ratio. (a) As of the end of any calendar
quarter and (b) at the time of any Advance hereunder (after giving effect to
such Advance) which, if funded, would increase the aggregate principal amount of
the Loans outstanding on such date of determination, the Borrower shall not
permit the Interest Coverage Ratio to be less than the ratios set forth below
for the periods indicated:
Period Ratio
------ -----
January 1, 2002 through 1.25:1
September 30, 2003
October 1, 2003 through 1.50:1
September 30, 2004
October 1, 2004 2.00:1
and thereafter
Section 7.18 Affiliate Transactions. Except as set forth on Schedule 5
attached hereto, and other than such management agreements between the Parent,
the Borrower and/or any of the Borrower's Subsidiaries, on the one hand, and its
License Subs, on the other hand, regarding the use of the Licenses and pursuant
to the Management Agreement, the Parent and the Borrower shall not, and shall
not permit any of the Borrower's Subsidiaries to, at any time engage in any
transaction with an Affiliate or make an assignment or other transfer of any of
its properties or assets to any Affiliate (other than to the Borrower or a
Subsidiary of the Borrower) on terms less advantageous to the Borrower or such
Subsidiary than would be the case if such transaction had been effected with a
non-Affiliate.
Section 7.19 Real Estate. None of the Parent, the Borrower or any of the
Borrower's Subsidiaries shall purchase any real estate or enter into any
sale/leaseback transaction, except (a) as contemplated in an Acquisition
permitted under Section 7.6 hereof or (b) in connection with a Tower
Sale/Leaseback Transaction permitted under Section 7.4 hereof.
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Section 7.20 ERISA Liabilities. The Borrower shall not, and shall cause each
of its ERISA Affiliates not to, (i) permit the assets of any of their respective
Plans to be less than the amount necessary to provide all accrued benefits under
such Plans or (ii) enter into any Multiemployer Plan.
Section 7.21 No Limitation on Upstream Dividends by Subsidiaries. The
Borrower shall not permit any Subsidiary to enter into or agree, or otherwise
become subject (other than pursuant to Applicable Law), to any agreement,
contract or other arrangement with any Person pursuant to the terms of which (a)
such Subsidiary is or would be prohibited from or limited in declaring or paying
any cash dividends or distributions on any class of its Capital Stock or any
other Ownership Interests owned directly or indirectly by the Borrower or from
making any other distribution on account of any class of any such Capital Stock
or Ownership Interests (herein referred to as "Upstream Dividends") or (b) the
declaration or payment of Upstream Dividends by a Subsidiary to the Borrower or
to another Subsidiary, on an annual or cumulative or other basis, is or would be
otherwise limited or restricted.
ARTICLE 8 Default
Section 8.1 Events of Default. Each of the following shall constitute an
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement, any of
the Loan Documents, or any of them, shall prove incorrect or misleading in any
material respect when made or deemed to be made pursuant to Section 4.2 hereof;
or
(b) The Parent or the Borrower shall default in the payment of: (i) any
interest, fees or other amounts payable hereunder or under the Notes, any of the
Loan Documents, or any of them, to the Lenders, the Administrative Agent or the
Issuing Bank, when due and such default is not cured within three (3) Business
Days after the occurrence thereof; or (ii) any principal under any of the Notes,
reimbursement obligations in respect of any Letter of Credit, or any of them,
when due (including, without limitation, pursuant to Section 2.7 hereof); or
(c) The Parent or the Borrower shall default in the performance or
observance of any agreement or covenant contained in Sections 5.2(a), 5.10,
5.13, 5.16 or 5.17 hereof or in Article 6 (other than Section 6.4 hereof) or
Article 7 hereof; or
(d) The Parent or the Borrower shall default in the performance or
observance
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of any other agreement or covenant contained in this Agreement not specifically
referred to elsewhere in this Section 8.1, and such default shall not be cured
within a period of thirty (30) days from the occurrence of such default; or
(e) There shall occur any default in the performance or observance of
any agreement or covenant or breach of any representation or warranty contained
in any of the Loan Documents (other than this Agreement or as otherwise provided
in this Section 8.1) by the Borrower, any of its Subsidiaries, the Parent or any
other obligor thereunder, which shall not be cured within a period of thirty
(30) days from the occurrence of such default; or
(f) There shall be entered and remain unstayed a decree or order for
relief in respect of the Borrower, any of its Subsidiaries or the Parent under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable Federal or state bankruptcy law or other similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
similar official of the Borrower, any of its Subsidiaries or the Parent, or of
any substantial part of their respective properties; or ordering the winding-up
or liquidation of the affairs of the Borrower, any of its Subsidiaries or the
Parent; or an involuntary petition shall be filed against the Borrower, any of
its Subsidiaries or the Parent and a temporary stay entered, and (i) such
petition and stay shall not be diligently contested or (ii) any such petition
and stay shall continue undismissed for a period of sixty (60) consecutive days;
or
(g) The Borrower, any of its Subsidiaries or the Parent shall file a
petition, answer or consent seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable Federal
or state bankruptcy law or other similar law, or the Borrower, any of its
Subsidiaries or the Parent shall consent to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment or taking
of possession of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Borrower, any of its Subsidiaries
or the Parent or of any substantial part of their respective properties, or the
Borrower, any of its Subsidiaries or the Parent shall fail generally to pay
their respective debts as they become due or shall be adjudicated insolvent; or
the Borrower, any of its Subsidiaries or the Parent shall take any action in
furtherance of any such action; or
(h) A judgment not covered by insurance shall be entered by any court
against the Borrower, any of its Subsidiaries or the Parent for the payment of
money which exceeds singly or in the aggregate with other such judgments,
$5,000,000 or a warrant of attachment or execution or similar process shall be
issued or levied against property of the Borrower, any of its Subsidiaries or
the Parent which, together with all other such property of the Borrower, any of
the Borrower's Subsidiaries or the Parent subject to other such process, exceeds
in value $5,000,000 in the aggregate, and if, within thirty (30) days after the
entry, issue or levy thereof, such judgment, warrant or process shall not have
been paid or discharged or stayed pending appeal or removed to bond, or if,
after the expiration of any such stay, such judgment, warrant or process shall
not have been paid or discharged or removed to bond; or
(i) There shall be at any time any "accumulated funding deficiency," as
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defined in ERISA or in Section 412 of the Code, with respect to any Plan
maintained by the Borrower or any of its Subsidiaries or any ERISA Affiliate, or
to which the Borrower or any of its Subsidiaries or any ERISA Affiliate has any
liabilities, or any trust created thereunder; or a trustee shall be appointed by
a United States District Court to administer any such Plan; or PBGC shall
institute proceedings to terminate any such Plan; or the Borrower or any of its
Subsidiaries or any ERISA Affiliate shall incur any liability to PBGC in
connection with the termination of any such Plan; or any Plan or trust created
under any Plan of the Borrower or any of its Subsidiaries or any ERISA Affiliate
shall engage in a "prohibited transaction" (as such term is defined in Section
406 of ERISA or Section 4975 of the Code) which would subject any such Plan, any
trust created thereunder, any trustee or administrator thereof, or any party
dealing with any such Plan or trust to the tax or penalty on "prohibited
transactions" imposed by Section 502 of ERISA or Section 4975 of the Code; to
the extent any of the foregoing has had or could reasonably be expected to have
a Materially Adverse Effect; or
(j) There shall occur (i) any acceleration of the maturity of, or any
failure to pay at final maturity, any Indebtedness of the Borrower, any of its
Subsidiaries or the Parent in an aggregate principal amount exceeding
$5,000,000; (ii) any event of default which would permit such acceleration of
such Indebtedness described in clause (i) of this paragraph (j) and which event
of default has not been cured within any applicable cure period or waived in
writing prior to any declaration of an Event of Default or acceleration of the
Loans hereunder; or (iii) any default under any Interest Rate Hedge Agreement
having a notional principal amount of $5,000,000 or more; or
(k) One or more Licenses (other than Give-back Licenses) shall be
terminated or revoked, or any such License shall fail to be renewed at the
stated expiration thereof; or
(l) Any Loan Document or any material provision thereof, shall at any
time and for any reason be declared by a court of competent jurisdiction to be
null and void, or a proceeding shall be commenced by the Parent, the Borrower or
any of the Borrower's Subsidiaries seeking to establish the invalidity or
unenforceability thereof (exclusive of questions of interpretation of any
provision thereof), or the Parent, the Borrower or any of the Borrower's
Subsidiaries shall deny that it has any liability or obligation for the payment
of principal or interest purported to be created under any Loan Document; or
(m) Any Security Document shall for any reason, fail or cease (except
by reason of lapse of time) to create a valid and perfected and first-priority
Lien on or Security Interest in any portion of the Collateral purported to be
covered thereby, subject only to Permitted Liens, except (i) as a result of the
sale or other disposition of the applicable Collateral in a transaction
permitted under the Loan Documents or (ii) as a result of the Administrative
Agent's failure to maintain possession of any stock certificates, promissory
notes or other instruments delivered to it under any Security Document or the
Administrative Agent's failure to file necessary continuation financing
statements or make required filings with the Patent and Trademark Office of the
United States after delivery to the Administrative Agent by the Parent,
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the Borrower or the Borrower's Subsidiaries of executed copies of such financing
statements and filings; or
(n) The Borrower shall fail to make any payments required to be made to
the FCC or any other Governmental Authority with respect to any License held by
the Borrower or any of its Subsidiaries, or with respect to any Indebtedness or
other payment obligations relating thereto as and when due, which failure could
reasonably be expected to lead to the loss, termination, revocation, non-renewal
or material impairment of any License (other than any Give-back License) or
otherwise result in a Materially Adverse Effect; or
(o) The Borrower's right to use any "AT&T" trademark pursuant to the
Network License Agreement shall terminate (it being understood that, on or after
the date which is five (5) years from the Agreement Date, neither the
non-renewal of the Network License Agreement by AT&T Corp. nor the termination
of the Network License Agreement by AT&T Corp. as a result of a Disqualifying
Transaction (as defined in the Stockholders Agreement) shall constitute an Event
of Default hereunder); or
(p) The Borrower, any of its Subsidiaries or the Parent shall lose any
rights to the benefit of, or the occurrence of any default or the termination of
any rights under, any application, marketing or other material agreements, which
loss, occurrence or termination could reasonably be expected to result in a
Materially Adverse Effect (it being understood that, on or after the date which
is five (5) years from the Agreement Date, neither the non-renewal of the
Network License Agreement by AT&T Corp. nor the termination of the Network
License Agreement by AT&T Corp. as a result of a Disqualifying Transaction (as
defined in the Stockholders Agreement) shall in and of itself constitute an
Event of Default hereunder); or
(q) The failure of any party to the Securities Purchase Agreement, the
Stockholders' Agreement or the Bid Equity Commitments Documentation to comply
with any funding or contribution obligation under such Agreement and such
failure shall continue unremedied for a period of thirty (30) days; or
(r) Any Change of Control Event shall occur or exist; or
(s) There shall occur any default or event of default under the Bidding
Company Documentation by the Borrower or the Bidding Company in its obligations
to the Borrower, after giving effect to any cure periods set forth therein, and
such default or material event of default shall remain uncured for thirty (30)
days immediately following the expiration of such cure periods, if any.
Section 8.2 Remedies.
(a) If an Event of Default specified in Section 8.1 hereof (other than
an Event of Default under either Section 8.1(f) or (g) hereof) shall have
occurred and shall be continuing,
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the Administrative Agent, at the request of the Required Lenders subject to
Section 9.8(a) hereof, shall, by notice to the Borrower, formally declare that
an Event of Default has occurred, and (i) (A) terminate the Commitments, and/or
(B) declare the principal of and interest on the Loans and the Notes and all
other amounts owed to the Lenders and the Administrative Agent under this
Agreement, the Notes and any other Loan Documents to be forthwith due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived, anything in this Agreement, the Notes or any
other Loan Document to the contrary notwithstanding, and the Commitments shall
thereupon forthwith terminate and (ii) require the Borrower to, and the Borrower
shall thereupon, deposit in an interest bearing account with the Administrative
Agent, as cash collateral for the Obligations, an amount equal to the maximum
amount currently or at any time thereafter to be drawn on all outstanding
Letters of Credit, and the Borrower hereby pledges to the Administrative Agent,
the Lenders and the Issuing Bank and grants to them a security interest in, all
such cash as security for the Obligations.
(b) Upon the occurrence and continuance of an Event of Default
specified in either Section 8.1(f) or (g) hereof, all principal, interest and
other amounts due hereunder and under the Notes, and all other Obligations,
shall thereupon and concurrently therewith become due and payable and the
Commitments shall forthwith terminate and the principal amount of the Loans
outstanding hereunder shall bear interest at the Default Rate, all without any
action by the Administrative Agent, the Lenders, the Required Lenders, the
Issuing Bank or any of them, and without presentment, demand, protest or other
notice of any kind, all of which are expressly waived, anything in this
Agreement or in the other Loan Documents to the contrary notwithstanding.
(c) Upon acceleration of the Notes, as provided in subsection (a) or
(b) of this Section 8.2, the Administrative Agent and the Lenders shall have all
of the post-default rights granted to them, or any of them, as applicable, under
the Loan Documents and under Applicable Law.
(d) Following acceleration of the Notes as provided in subsection (a)
or (b) of this Section 8.2, provided the Required Lenders elect to initiate (or
direct the Administrative Agent to initiate) either (i) a civil proceeding for
the appointment of a receiver with respect to the Parent's or the Borrower's
assets or (ii) an involuntary bankruptcy (or similar) petition against Parent or
the Borrower, the Required Lenders shall have the right, but not the obligation,
to direct the Administrative Agent, to the extent permitted under Applicable
Law, to take possession of and to operate the Cellular Systems of the Borrower
and its Subsidiaries during the Pre-receivership Period, in accordance with the
terms of the Licenses and pursuant to the terms and subject to any limitations
contained in the Security Documents and, within guidelines established by the
Required Lenders prior to such action, to make any and all payments and
expenditures necessary or desirable in connection therewith, including, without
limitation, payment of wages as required under the Fair Labor Standards Act, as
amended, and any necessary withholding taxes to state or federal authorities. In
the event the guidelines referred to in the preceding sentence do not
contemplate payments or expenditures that subsequently arise in the ordinary
course after the
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Administrative Agent has begun to operate the systems or in the event that the
Required Lenders fail to agree upon the guidelines referred to in the preceding
sentence within six (6) Business Days after the Administrative Agent has begun
to operate any Cellular System, the Administrative Agent may, after giving three
(3) Business Days' notice to the Lenders of its intention to do so, make such
payments and expenditures as it deems reasonable and advisable in its sole
discretion to maintain the normal day-to-day operation of such systems. All
payments and expenditures incurred in connection with this provision in excess
of receipts shall constitute costs and expenses of performance and/or collection
reimbursable by the Parent and the Borrower pursuant to Section 11.2 hereof,
which until paid by the Parent and the Borrower shall be reimbursed to the
Administrative Agent by the Lenders pursuant to Section 9.11 hereof. Such
payments and expenditures in excess of receipts shall constitute Advances under
the Revolving Loan Commitment, not in excess of the Available Revolving Loan
Commitment. Advances made pursuant to this Section 8.2(d) shall bear interest as
provided in Section 2.3(d) hereof and shall be payable on demand. The making of
one (1) or more Advances under this Section 8.2(d) shall not create any
obligation on the part of the Lenders to make any additional Advances hereunder.
No exercise by the Administrative Agent and the Required Lenders of the rights
granted to any of them under this Section 8.2(d) shall constitute a waiver of
any other rights and remedies granted to the Administrative Agent and the
Lenders, or any of them, under this Agreement or any other Loan Document or at
law. The Parent and the Borrower hereby irrevocably appoints the Administrative
Agent, as administrative agent for the Lenders, the true and lawful attorney of
the Parent and the Borrower, in its name and stead and on its behalf, to
execute, receipt for or otherwise act in connection with any and all contracts,
instruments or other documents in connection with the completion and operating
of such systems in the exercise of the Administrative Agent and Lenders' rights
under this Section 8.2(d). Such power of attorney is coupled with an interest
and is irrevocable. The rights of the Administrative Agent and the Lenders under
this Section 8.2(d) shall be subject to the prior compliance with the
Communications Act and the FCC rules and policies promulgated thereunder to the
extent applicable to the exercise of such rights. If the Administrative Agent
(or the Lenders) take possession of the systems pursuant to this Section 8.2(d)
prior to initiation of the actions described in the first sentence of this
Section, the Administrative Agent shall initiate such action within the time
period established by the Required Lenders prior to such action.
(e) Upon acceleration of the Notes, as provided in subsection (a) or
(b) of this Section 8.2, the Administrative Agent, upon request of the Required
Lenders, shall, to the extent permitted by Applicable Law, have the right to the
appointment of a receiver for the properties and assets of the Borrower, its
Subsidiaries and the Parent, and the Borrower, for itself and, to the extent
permitted by Applicable Law, on behalf of its Subsidiaries, and the Parent,
hereby consent to such rights and such appointment and, to the extent permitted
by Applicable Law, hereby waives any objection the Borrower, any Subsidiary and
the Parent may have thereto or the right to have a bond or other security posted
by the Administrative Agent on behalf of the Lenders, in connection therewith.
The rights of the Administrative Agent under this Section 8.2(e) shall be
subject to its prior compliance with the Communications Act and the FCC rules
and policies promulgated thereunder to the extent applicable to the exercise of
such rights.
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(f) The rights and remedies of the Administrative Agent and the Lenders
hereunder shall be cumulative, and not exclusive.
Section 8.3 Payments Subsequent to Declaration of Event of Default.
Subsequent to the acceleration of the Loans under Section 8.2 hereof, payments
and prepayments under this Agreement made to any of the Administrative Agent and
the Lenders or otherwise received by any of such Persons (from realization on
Collateral for the Obligations or otherwise) shall be paid over to the
Administrative Agent (if necessary) and distributed by the Administrative Agent
as follows: first, to the Administrative Agent's reasonable costs and expenses,
if any, incurred in connection with the collection of such payment or
prepayment, including, without limitation, any reasonable costs incurred by it
in connection with the sale or disposition of any Collateral for the Obligations
and all amounts under Section 11.2(b) and (c) hereof; second, to the Lenders and
the Administrative Agent for any fees hereunder or under any of the other Loan
Documents then due and payable; third, to the Lenders pro rata on the basis of
their respective unpaid principal amounts (except as provided in Section 2.2(e)
hereof), to the payment of any unpaid interest which may have accrued on the
Obligations; fourth, to the Lenders pro rata until all Loans have been paid in
full (and, for purposes of this clause, obligations under Interest Rate Hedge
Agreements with the Lenders or their Affiliates or any of them shall be paid on
a pro rata basis with the Loans); fifth, to the Lenders pro rata on the basis of
their respective unpaid amounts, to the payment of any other unpaid Obligations;
and sixth, to the Borrower or as otherwise required by law.
ARTICLE 9 The Administrative Agent
Section 9.1 Appointment and Authorization. Each Lender hereby irrevocably
appoints and authorizes, and hereby agrees that it will require any transferee
of any of its interest in its portion of the Loans and in its Notes irrevocably
to appoint and authorize, the Administrative Agent and the Issuing Bank to take
such actions as its agent on its behalf and to exercise such powers hereunder
and under the other Loan Documents as are delegated by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto. None of
the Administrative Agent, the Issuing Bank, or any of their directors, officers,
employees, agents or counsel, shall be liable for any action taken or omitted to
be taken by it or them hereunder or in connection herewith, except for its or
their own gross negligence or willful misconduct as determined by a final,
non-appealable judicial order of a court of competent jurisdiction.
Section 9.2 Interest Holders. The Administrative Agent and the Issuing Bank
may treat each Lender, or the Person designated in the last notice filed with
the Administrative Agent, as the holder of all of the interests of such Lender
in its portion of the Loans and in its Notes until written notice of transfer,
signed by such Lender (or the Person
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designated in the last notice filed with the Administrative Agent) and by the
Person designated in such written notice of transfer, in form and substance
satisfactory to the Administrative Agent, shall have been filed with the
Administrative Agent.
Section 9.3 Consultation with Counsel. The Administrative Agent and the
Issuing Bank may consult with Powell, Goldstein, Frazer & Murphy LLP, Atlanta,
Georgia, special counsel to the Administrative Agent and the Issuing Bank, or
with other legal counsel selected by it and shall not be liable for any action
taken or suffered by it in good faith in consultation with such counsel and in
reasonable reliance on such consultations.
Section 9.4 Documents. The Administrative Agent and the Issuing Bank shall
be under no duty to examine, inquire into, or pass upon the validity,
effectiveness or genuineness of this Agreement, any Note, any other Loan
Document, or any instrument, document or communication furnished pursuant hereto
or in connection herewith, and the Administrative Agent and the Issuing Bank
shall be entitled to assume that they are valid, effective and genuine, have
been signed or sent by the proper parties and are what they purport to be.
Section 9.5 Administrative Agent and Affiliates. With respect to the
Commitments and the Loans, the Lender which is an Affiliate of the
Administrative Agent shall have the same rights and powers hereunder as any
other Lender and the Administrative Agent and Affiliates of the Administrative
Agent may accept deposits from, lend money to and generally engage in any kind
of business with the Parent, the Borrower, any of the Borrower's Subsidiaries or
any Affiliates of, or Persons doing business with, the Borrower and the Parent,
as if they were not affiliated with the Administrative Agent and without any
obligation to account therefor.
Section 9.6 Responsibility of the Administrative Agent and the Issuing Bank.
The duties and obligations of the Administrative Agent and the Issuing Bank
under this Agreement are only those expressly set forth in this Agreement. The
Administrative Agent and the Issuing Bank shall be entitled to assume that no
Default or Event of Default has occurred and is continuing unless it has actual
knowledge, or has been notified in writing by the Borrower or the Parent, of
such fact, or has been notified by a Lender in writing that such Lender
considers that a Default or an Event of Default has occurred and is continuing,
and such Lender shall specify in detail the nature thereof in writing. The
Administrative Agent shall not be liable hereunder for any action taken or
omitted to be taken except for its own gross negligence or willful misconduct as
determined by a final, non-appealable judicial order of a court of competent
jurisdiction. The Administrative Agent shall provide each Lender with copies of
all documents and reports received by it under Article 6 hereof promptly upon
its receipt thereof. The Administrative Agent and the Issuing Bank shall provide
each Lender with copies of such other documents received from the Borrower or
the Parent as such Lender may reasonably request.
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Section 9.7 Security Documents. The Administrative Agent and the Issuing
Bank are hereby authorized to act on behalf of the Lenders, in its own capacity
and through other agents and sub-agents appointed by it, under the Security
Documents; provided, however, that the Administrative Agent and the Issuing Bank
shall not agree to the release of any Collateral, or any property encumbered by
any mortgage, pledge or security interest, except in compliance with Section
11.12 hereof.
Section 9.8 Action by the Administrative Agent and the Issuing Bank.
(a) The Administrative Agent and the Issuing Bank shall be entitled to
use its discretion with respect to exercising or refraining from exercising any
rights which may be vested in it by, and with respect to taking or refraining
from taking any action or actions which it may be able to take under or in
respect of, this Agreement, unless the Administrative Agent or the Issuing Bank
shall have been instructed by the Required Lenders to exercise or refrain from
exercising such rights or to take or refrain from taking such action; provided,
however, that the Administrative Agent and the Issuing Bank shall not exercise
any rights under Section 8.2(a) hereof without the request of the Required
Lenders (or, where expressly required, all the Lenders) unless time is of the
essence. The Administrative Agent and the Issuing Bank shall incur no liability
under or in respect of this Agreement with respect to anything which it may do
or refrain from doing in the reasonable exercise of its judgment or which may
seem to it to be necessary or desirable in the circumstances, except for its
gross negligence or willful misconduct as determined by a final, non-appealable
judicial order of a court of competent jurisdiction.
(b) The Administrative Agent and the Issuing Bank shall not be liable
to the Lenders or to any Lender or the Borrower, any of the Borrower's
Subsidiaries or the Parent in acting or refraining from acting under this
Agreement or any other Loan Document in accordance with the instructions of the
Required Lenders (or, where expressly required, all the Lenders), and any action
taken or failure to act pursuant to such instructions shall be binding on all
Lenders. The Administrative Agent and the Issuing Bank shall not be obligated to
take any action which is contrary to law or which would in the Administrative
Agent's and the Issuing Bank's reasonable opinion subject the Administrative
Agent and the Issuing Bank to liability.
Section 9.9 Notice of Default or Event of Default. In the event that the
Administrative Agent, the Issuing Bank or any Lender shall acquire actual
knowledge, or shall have been notified, of any Default or Event of Default, the
Administrative Agent and the Issuing Bank or such Lender shall promptly notify
the Lenders and the Administrative Agent and the Issuing Bank, as applicable
(provided that failure to give such notice shall not result in any liability on
the part of such Lender or the Administrative Agent and the Issuing Bank), and
the Administrative Agent and the Issuing Bank shall take such action and assert
such rights under this Agreement and the other Loan Documents as the Required
Lenders shall request in writing, and the Administrative Agent and the Issuing
Bank shall not be subject to any liability by reason of its acting pursuant to
any such request. If the Required Lenders shall fail to request the
Administrative Agent and the Issuing Bank to take action or to
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assert rights under this Agreement or any other Loan Documents in respect of any
Default or Event of Default within ten (10) days after their receipt of the
notice of any Default or Event of Default from the Administrative Agent, the
Issuing Bank or any Lender, or shall request inconsistent action with respect to
such Default or Event of Default, the Administrative Agent and the Issuing Bank
may, but shall not be required to, take such action and assert such rights
(other than rights under Article 8 hereof) as it deems in its discretion to be
advisable for the protection of the Lenders; provided, however, that if the
Required Lenders have instructed the Administrative Agent and the Issuing Bank
not to take such action or assert such right, in no event shall the
Administrative Agent act and the Issuing Bank contrary to such instructions.
Section 9.10 Responsibility Disclaimed. The Administrative Agent and the
Issuing Bank shall not be under any liability or responsibility whatsoever as
Administrative Agent:
(a) To the Borrower, the Parent or any other Person as a consequence of
any failure or delay in performance by or any breach by, any Lender or Lenders
of any of its or their obligations under this Agreement;
(b) To any Lender or Lenders, as a consequence of any failure or delay
in performance by, or any breach by, (i) the Borrower or the Parent of any of
its obligations under this Agreement or the Notes or any other Loan Document or
(ii) any Subsidiary of the Borrower or any other obligor under any other Loan
Document;
(c) To any Lender or Lenders, for any statements, representations or
warranties in this Agreement, or any other document contemplated by this
Agreement or any information provided pursuant to this Agreement, any other Loan
Document or any other document contemplated by this Agreement, or for the
validity, effectiveness, enforceability or sufficiency of this Agreement, the
Notes, any other Loan Document or any other document contemplated by this
Agreement; or
(d) To any Person for any act or omission other than that arising from
gross negligence or willful misconduct of the Administrative Agent as determined
by a final, non-appealable judicial order of a court of competent jurisdiction.
Section 9.11 Indemnification. The Lenders agree to indemnify the
Administrative Agent and the Issuing Bank (to the extent not reimbursed by the
Borrower) pro rata according to their respective Commitment Ratios, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including fees and expenses of
experts, agents, consultants and counsel) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent and the Issuing Bank in any way relating to or arising out
of this Agreement, any other Loan Document or any other document
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contemplated by this Agreement or any other Loan Document or any action taken or
omitted by the Administrative Agent and the Issuing Bank or under this
Agreement, any other Loan Document or any other document contemplated by this
Agreement; provided, however, that no Lender shall be liable to the
Administrative Agent and the Issuing Bank or for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of such Person as determined by a final, non-appealable judicial
order of a court of competent jurisdiction.
Section 9.12 Credit Decision. Each Lender represents and warrants to each
other and to the Administrative Agent and the Issuing Bank that:
(a) In making its decision to enter into this Agreement and to make its
portion of the Loans it has independently taken whatever steps it considers
necessary to evaluate the financial condition and affairs of the Borrower and
the Parent and that it has made an independent credit judgment, and that it has
not relied upon the Administrative Agent, the Issuing Bank or information
provided by the Administrative Agent and the Issuing Bank (other than
information provided to the Administrative Agent and the Issuing Bank by the
Borrower and the Parent and forwarded by the Administrative Agent and the
Issuing Bank to the Lenders); and
(b) So long as any portion of the Loans remains outstanding or such
Lender has an obligation to make its portion of Advances hereunder, it will
continue to make its own independent evaluation of the Collateral and of the
financial condition and affairs of the Borrower and the Parent.
Section 9.13 Successor Administrative Agent or Issuing Bank. Subject to the
appointment and acceptance of a successor Administrative Agent or Issuing Bank
as provided below, the Administrative Agent or Issuing Bank, as applicable, may
resign at any time by giving written notice thereof to the Lenders and the
Borrower and the Parent and may be removed at any time for cause by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint a successor Administrative Agent or Issuing Bank, as
applicable, which appointment shall, prior to a Default, be subject to the
consent of the Borrower and the Parent, acting reasonably. If no successor
Administrative Agent or Issuing Bank, as applicable, shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Administrative Agent or Issuing Bank,
as applicable, gave notice of resignation or the Required Lenders' removal of
the retiring Administrative Agent or Issuing Bank, as applicable, then the
retiring Administrative Agent or Issuing Bank, as applicable, may, on behalf of
the Lenders, appoint a successor Administrative Agent or Issuing Bank, as
applicable, which shall be any Lender or a commercial Lender organized or
licensed under the laws of the United States of America or any political
subdivision thereof which has combined capital and reserves in excess of
$250,000,000. Such appointment shall, prior to a Default, be subject to the
consent of the Borrower and the Parent, acting reasonably. Upon the acceptance
of any appointment as Administrative Agent or Issuing Bank, as applicable,
hereunder by a successor Administrative Agent or Issuing Bank, as applicable,
such successor Administrative Agent or Issuing Bank, as applicable, shall
thereupon succeed to and become vested with all the rights, powers, privileges,
duties and obligations of the retiring Administrative
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Agent or Issuing Bank, as applicable, and the retiring Administrative Agent or
Issuing Bank, as applicable, shall be discharged from its duties and obligations
hereunder and under the other Loan Documents. After any retiring Administrative
Agent's or Issuing Bank's, as applicable, resignation or removal hereunder as
Administrative Agent or Issuing Bank, as applicable, the provisions of this
Article shall continue in effect for its benefit in respect of any actions taken
or omitted to be taken by it while it was acting as the Administrative Agent or
Issuing Bank, as applicable.
Section 9.14 Collateral Actions. Each of the parties hereto acknowledges and
agrees that all provisions herein and under any Security Document relating to
rights and remedies under any Security Document shall be exercised only upon the
direction of the Required Lenders (except as expressly set forth in Section 9.8
hereof), and that the provisions of this Section 9.14 may not be amended except
with the consent of the Required Lenders.
Section 9.15 Delegation of Duties. The Administrative Agent and the Issuing
Bank may execute any of its duties under the Loan Documents by or through agents
or attorneys selected by it using reasonable care, and shall be entitled to
advice of counsel concerning all matters pertaining to such duties.
ARTICLE 10 Change in Circumstances Affecting Eurodollar Advances
Section 10.1 Eurodollar Basis Determination Inadequate or Unfair. If with
respect to any proposed Eurodollar Advance for any Interest Period, the
Administrative Agent determines after consultation with the Lenders that
deposits in dollars (in the applicable amount) are not being offered to each of
the Lenders in the relevant market for such Interest Period, the Administrative
Agent shall forthwith give notice thereof to the Borrower and the Lenders,
whereupon until the Administrative Agent notifies the Borrower that the
circumstances giving rise to such situation no longer exist, the obligations of
any affected Lender to make its portion of such type of Eurodollar Advances
shall be suspended.
Section 10.2 Illegality. If after the date hereof, the adoption of any
Applicable Law, or any change in any Applicable Law (adopted after the Agreement
Date), or any change (after the Agreement Date) in interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender with any directive (whether or not having the force of law) of any
such authority, central bank or comparable agency (issued after the Agreement
Date), shall make it unlawful or impossible for any Lender to make, maintain or
fund its portion of Eurodollar Advances, such Lender shall so notify the
Administrative Agent, and the
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Administrative Agent shall forthwith give notice thereof to the other Lenders
and the Borrower. Before giving any notice to the Administrative Agent pursuant
to this Section 10.2, such Lender shall designate a different lending office if
such designation will avoid the need for giving such notice and will not, in the
sole judgment of such Lender, be otherwise materially disadvantageous to such
Lender. Upon receipt of such notice, notwithstanding anything contained in
Article 2 hereof, the Borrower shall repay in full the then outstanding
principal amount of such Lender's portion of each affected Eurodollar Advance,
together with accrued interest thereon, on either (a) the last day of the then
current Interest Period applicable to such affected Eurodollar Advances if such
Lender may lawfully continue to maintain and fund its portion of such Eurodollar
Advance to such day or (b) immediately if such Lender may not lawfully continue
to fund and maintain its portion of such affected Eurodollar Advances to such
day. Concurrently with repaying such portion of each affected Eurodollar
Advance, the Borrower may borrow a Base Rate Advance from such Lender, and such
Lender shall make such Advance, if so requested, in an amount such that the
outstanding principal amount of the affected Note or Notes held by such Lender
shall equal the outstanding principal amount of such Note or Notes immediately
prior to such repayment.
Section 10.3 Increased Costs.
(a) If after the date hereof, the adoption of any Applicable Law, or
any change in any Applicable Law (adopted after the Agreement Date), or any
change (after the Agreement Date) in interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof or compliance by any Lender with any
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency (issued after the Agreement Date):
(1) shall subject any Lender to any tax, duty or other charge with
respect to its obligation to make its portion of Eurodollar Advances, or its
portion of existing Eurodollar Advances, or shall change the basis of taxation
of payments to any Lender of the principal of or interest on its portion of
Eurodollar Advances or in respect of any other amounts due under this Agreement,
in respect of its portion of Eurodollar Advances or its obligation to make its
portion of Eurodollar Advances (except for changes in the rate or method of
calculation of tax on the overall net income of such Lender and except other
Excluded Taxes); or
(2) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System, but excluding any included in an applicable Eurodollar
Reserve Percentage), special deposit, capital adequacy, assessment or other
requirement or condition against assets of, deposits with or for the account of,
or commitments or credit extended by, any Lender or shall impose on any Lender
or the London interbank borrowing market any other condition affecting its
obligation to make its portion of such Eurodollar Advances or its portion of
existing Advances;
and the result of any of the foregoing is to increase the cost to such Lender of
making or maintaining any of its portion of Eurodollar Advances, or to reduce
the amount of any sum
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received or receivable by such Lender under this Agreement or under its Note
with respect thereto, then, on the earlier of a date within ten (10) days after
demand by such Lender or the Maturity Date, the Borrower agrees to pay to such
Lender such additional amount or amounts as will compensate such Lender for such
increased costs. Each Lender will promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Lender to compensation pursuant to this
Section 10.3 and will designate a different lending office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the sole judgment of such Lender made in good faith, be otherwise
disadvantageous to such Lender.
(b) Any Lender claiming compensation under this Section 10.3 shall
provide the Borrower with a written certificate setting forth the additional
amount or amounts to be paid to it hereunder and calculations therefor in
reasonable detail. Such certificate shall be presumptively correct absent
manifest error. Notwithstanding the foregoing, the Borrower shall only be
obligated to compensate such Lender for any amount under this subsection arising
or occurring during (i) in the case of each such request for compensation, any
time or period commencing not more than ninety (90) days prior to the date on
which such Lender submits such request and (ii) any other time or period during
which, because of the unannounced retroactive application of such law,
regulation, interpretation, request or directive, such Lender could not have
known that the resulting reduction in return might arise. In determining such
amount, such Lender may use any reasonable averaging and attribution methods. If
any Lender demands compensation under this Section 10.3, the Borrower may at any
time, upon at least five (5) Business Days' prior notice to such Lender, prepay
in full such Lender's portion of the then outstanding Eurodollar Advances,
together with accrued interest thereon to the date of prepayment, along with any
reimbursement required under Section 2.11 hereof. Concurrently with prepaying
such portion of Eurodollar Advances the Borrower may borrow a Base Rate Advance,
or a Eurodollar Advance not so affected, from such Lender, and such Lender
shall, if so requested, make such Advance in an amount such that the outstanding
principal amount of the affected Note or Notes held by such Lender shall equal
the outstanding principal amount of such Note or Notes immediately prior to such
prepayment.
(c) The Administrative Agent shall use reasonable efforts to determine
whether or not the circumstances which have caused the claim for compensation
under this Section 10.3 shall continue and shall notify the Lenders and the
Borrower immediately if it shall determine that such circumstances no longer
exist.
Section 10.4 Effect On Other Advances. If notice has been given pursuant to
Section 10.1, 10.2 or 10.3 hereof suspending the obligation of any Lender to
make its portion of any type of Eurodollar Advance, or requiring such Lender's
portion of Eurodollar Advances to be repaid or prepaid, then, unless and until
such Lender notifies the Borrower that the circumstances giving rise to such
repayment no longer apply, all amounts which would otherwise be made by such
Lender as its portion of Eurodollar Advances shall, unless otherwise notified by
the Borrower, be made instead as Base Rate Advances.
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Section 10.5 Claims for Increased Costs and Taxes. In the event that any
Lender shall decline to make Eurodollar Rate Loans pursuant to Sections 10.1 and
10.2 hereof or shall have notified the Borrower that it is entitled to claim
compensation pursuant to Section 10.3, 2.10(b) or 2.13 hereof or is unable to
complete the form required or subject to withholding as provided in Section 2.14
hereof (each such lender being an "Affected Lender"), the Borrower at its own
cost and expense may designate a replacement lender (a "Replacement Lender") to
assume the Commitment and the obligations of any such Affected Lender hereunder,
and to purchase the outstanding Loans of such Affected Lender and such Affected
Lender's rights hereunder and with respect thereto, and within ten (10) Business
Days of such designation the Affected Lender shall (a) sell to such Replacement
Lender, without recourse upon, warranty by or expense to such Affected Lender,
by way of an Assignment and Assumption Agreement substantially in the form of
Exhibit M attached hereto, for a purchase price equal to (unless such Lender
agrees to a lesser amount) the outstanding principal amount of the Loans of such
Affected Lender, plus all interest accrued and unpaid thereon and all other
amounts owing to such Affected Lender hereunder, including without limitation,
any amount which would be payable to such Affected Lender pursuant to Section
2.11 hereof, and (b) assign the Commitment of such Affected Lender and upon such
assumption and purchase by the Replacement Lender, such Replacement Lender shall
be deemed to be a "Lender" for purposes of this Agreement and such Affected
Lender shall cease to be a "Lender" for purposes of this Agreement and shall no
longer have any obligations or rights hereunder (other than any obligations or
rights which according to this Agreement shall survive the termination of the
Commitment).
ARTICLE 11 Miscellaneous
Section 11.1 Notices.
(a) Except as otherwise expressly provided herein, all notices and
other communications under this Agreement and the other Loan Documents (unless
otherwise specifically stated therein) shall be in writing and shall be deemed
to have been given three (3) Business Days after deposit in the mail, designated
as certified mail, return receipt requested, postage-prepaid, or one (1)
Business Day after being entrusted to a reputable commercial overnight delivery
service for next day delivery, or when sent on a Business Day prior to 5:00 p.m.
(New York, New York time) by telecopy addressed to the party to which such
notice is directed at its address determined as provided in this Section 11.1.
All notices and other communications under this Agreement shall be given to the
parties hereto at the following addresses:
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(i) If to the Borrower or the Parent, to it at:
Tritel Holding Corp./Tritel, Inc.
1080 River Oaks Drive, Suite B-100
Jackson, Mississippi 39208
Attn: E. B. Martin, Jr. and
Karlen Turbeville
Telecopy No.: (601) 936-6045
with a copy to:
Brown & Wood LLP
One World Trade Center
New York, New York 10048-0557
Attn: Patricia A. Murphy, Esq.
Michael A. King, Esq.
Telecopy No.: (212) 839-5599
Tritel, Inc.
1080 River Oaks Drive, Suite B-100
Jackson, Mississippi 39208
Attn: General Counsel
Telecopy No.: (601) 936-6045
(ii) If to the Administrative Agent, to it at:
Toronto Dominion (Texas), Inc.
909 Fannin, Suite 1700
Houston, Texas 77010
Attn: Jano Mott
Telecopy No.: (713) 951-9921
with a copy to:
Powell, Goldstein, Frazer & Murphy LLP
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Cindy A. Brazell, Esq.
Telecopy No.: (404) 572-6999
(iii) If to the Lenders or the Issuing Bank, to them at the
addresses set forth on Schedule 9 attached hereto.
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Copies shall be provided to persons other than parties hereto only in the case
of notices under Article 8 hereof and the failure to provide such copies shall
not affect the validity of the notice given to the primary recipient.
(b) Any party hereto may change the address to which notices shall be
directed under this Section 11.1 by giving ten (10) days' prior written notice
of such change to the other parties.
Section 11.2 Expenses. The Borrower will promptly pay, or reimburse:
(a) all reasonable out-of-pocket expenses of the Administrative Agent
in connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents, and any waiver, amendment or consent in
connection with any of the foregoing, and the transactions contemplated
hereunder and thereunder and the making of the initial Advance hereunder
(whether or not such Advance is made), including, but not limited to, the fees
and disbursements of Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia
special counsel for the Administrative Agent;
(b) all reasonable out-of-pocket expenses of the Administrative Agent
and the Lenders in connection with the restructuring and "work out" of the
transactions contemplated in this Agreement or the other Loan Documents,
including, but not limited to, the reasonable fees and disbursements of any
experts, agents or consultants and of special counsel for the Administrative
Agent and the Lenders; and
(c) all reasonable out-of-pocket costs and expenses of obtaining
performance under this Agreement or the other Loan Documents and all reasonable
out-of-pocket costs and expenses of collection if an Event of Default occurs in
the payment of the Notes, which in each case shall include reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent and the Lenders.
Section 11.3 Waivers. The rights and remedies of the Administrative Agent
and the Lenders under this Agreement and the other Loan Documents shall be
cumulative and not exclusive of any rights or remedies which they would
otherwise have. No failure or delay by the Administrative Agent, the Required
Lenders, or the Lenders, or any of them, in exercising any right, shall operate
as a waiver of such right. The Administrative Agent and the Lenders expressly
reserve the right to require strict compliance with the terms of this Agreement
in connection with any future funding of a Request for Advance. In the event the
Lenders decide to fund a Request for Advance at a time when the Borrower is not
in strict compliance with the terms of this Agreement, such decision by the
Lenders shall not be deemed to constitute an undertaking by the Lenders to fund
any further Request for Advance or preclude the Lenders or the Administrative
Agent from exercising any rights available under the Loan Documents or at law or
equity. Any waiver or indulgence granted by the Administrative Agent, the
Lenders, or the Required Lenders, or any of them, shall not constitute a
modification of this
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Agreement or any other Loan Document, except to the extent expressly provided in
such waiver or indulgence, or constitute a course of dealing at variance with
the terms of this Agreement or any other Loan Document such as to require
further notice of their intent to require strict adherence to the terms of this
Agreement or any other Loan Document in the future.
Section 11.4 Set-Off. In addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and during the continuation thereof, the
Administrative Agent and each of the Lenders are hereby authorized by the
Borrower at any time or from time to time, without notice to the Borrower or to
any other Person, any such notice being hereby expressly waived to the extent
permitted by Applicable Law, to set off and to appropriate and to apply any and
all deposits (general or special, time or demand, including, but not limited to,
Indebtedness evidenced by certificates of deposit, in each case whether matured
or unmatured) and any other Indebtedness at any time held or owing by any Lender
or the Administrative Agent, to or for the credit or the account of the Borrower
or any of its Subsidiaries, against and on account of the obligations and
liabilities of the Borrower to the Lenders and the Administrative Agent,
including, but not limited to, all Obligations and any other claims of any
nature or description arising out of or connected with this Agreement, the Notes
or any other Loan Document, irrespective of whether (a) any Lender or the
Administrative Agent shall have made any demand hereunder or (b) any Lender or
the Administrative Agent shall have declared the principal of and interest on
the Loans and other amounts due hereunder to be due and payable as permitted by
Section 8.2 hereof and although such obligations and liabilities or any of them
shall be contingent or unmatured. Upon direction by the Administrative Agent
with the consent of the Lenders, each Lender holding deposits of the Borrower or
any of its Subsidiaries shall exercise its set-off rights as so directed.
Section 11.5 Assignment.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder, under the Notes or under any other Loan Document without
the prior written consent of each of the Lenders.
(b) Each Lender may (A) sell assignments or participations of one
hundred percent (100%) or less of its interests hereunder to one or more
Affiliates of such Lender or an Approved Fund, (B) grant any Federal Reserve
Bank collateral security pursuant to Regulation A of the Board of Governors of
the Federal Reserve System and any Operating Circular issued by such Federal
Reserve Bank without limitation and (C) in the case of any Lender that is a fund
that invests in bank loans, such Lender may pledge all or any portion of its
Loans and Notes to any trustee for, or any other representative of, holders of
obligations owed, by such fund, as security for such obligations; provided that
any foreclosure or similar action by such trustee or representatives shall be
subject to the provisions of this Section concerning assignments; provided,
however, that no such collateral assignment shall relieve such Lender of its
rights and obligations hereunder.
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(c) Each of the Lenders may at any time enter into assignment
agreements or participations with one or more other Lenders or other Persons
pursuant to which such Lender may assign or participate its interests under this
Agreement and the other Loan Documents, including its interest in any particular
Advance or portion thereof, provided that all assignments and participations
(other than assignments to another Lender or an Approved Fund, which may be made
without limitation, whether as to dollar amount or otherwise, so long as, if
such assignment takes place after the occurrence and during the continuance of
an Event of Default such assignment is made with the prior written consent of
the Administrative Agent, which consent shall not be unreasonably withheld or
delayed, and other assignments and participations described in Section 11.5(b)
hereof which may be made without any limitation whatsoever) shall be in minimum
principal amounts of the lesser of (x) the entire remaining amount of such
Lender's Loans and Commitments; (y) $5,000,000 and (z) such other amount as may
be agreed to in writing by the Administrative Agent and the Borrower, and shall
be subject to the following additional terms and conditions:
(i) No assignment shall be sold without the prior consent of the
Administrative Agent and, prior to the occurrence of and during the continuation
of an Event of Default, the consent of the Borrower, which consents shall not be
unreasonably withheld or delayed; provided, however, that during an Event of
Default the Borrower shall receive notice of such assignment;
(ii) Any Person purchasing a participation or an assignment of any
portion of the Loans from any Lender shall be required to represent and warrant
that its purchase shall not constitute a "prohibited transaction" (as defined in
Section 4.1(m) hereof);
(iii) Assignments permitted hereunder (including the assignment of
any Advance or portion thereof) may be made with all voting rights, and shall be
made pursuant to an Assignment and Assumption Agreement substantially in the
form of Exhibit M attached hereto;
(iv) An administrative fee of $3,500 shall be payable to the
Administrative Agent by the assigning Lender at the time of any assignment
hereunder;
(v) Any Lender making an assignment of its rights and obligations
under the Revolving Loan Commitment shall also make an assignment of an equal
percentage of its outstanding loans under its Revolving Loan Commitment;
(vi) No participation agreement shall confer any rights under this
Agreement or any other Loan Document to any purchaser thereof, or relieve any
issuing Lender from any of its obligations under this Agreement, and all actions
hereunder shall be conducted as if no such participation had been granted;
provided, however, that any participation agreement may confer on the
participant the right to approve or disapprove decreases in the interest rate or
fees or in the dates of payment thereof, increases in the principal amount of
the Loans participated in by such participant, decreases in fees, extensions of
the Maturity Date or other principal payment date for the Loans or of a
scheduled reduction of either Commitment or
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releases of all or substantially all of the Collateral or any Subsidiary
Guaranty (other than in accordance with Section 11.12(d) hereof); and provided
further, however, that, notwithstanding the foregoing, prior to the occurrence
and during the continuance of an Event of Default, no participation agreement
may be made under this Section 11.5(c)(vi) with any Competitor of the Borrower
without the prior written consent of the Borrower, such consent not to be
unreasonably withheld;
(vii) Each Lender agrees to provide the Administrative Agent and
the Borrower with prompt written notice of any issuance of participations in or
assignments of its interests hereunder;
(viii) No assignment, participation or other transfer of any
rights hereunder or under the Notes shall be effected that would result in any
interest requiring registration under the Securities Act of 1933, as amended, or
qualification under any state securities law;
(ix) No such assignment may be made to (A) any bank or other
financial institution (excluding funds) unless (1) such bank or other financial
institution either (x) has a minimum capital and surplus of $500,000,000, or (y)
is "adequately capitalized" (as such term is defined in 12 USCA Section
1831(b)(1)(B) as in effect on the Agreement Date) and (2) a receiver or
conservator (including, without limitation, the Federal Deposit Insurance
Corporation, the Resolution Trust Company or the Office of Thrift Supervision)
has not been appointed with respect to such bank or other financial institution,
(B) any fund unless such fund either (1) invests in commercial loans or (2) has
total assets in excess of $125,000,000, or (C) any other Person unless such
Person either (1) is an "accredited investor" (as defined in Regulation D of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder) or (2) has total assets in excess of $100,000,000; and
(x) If applicable, each Lender shall, and shall cause each of its
assignees to, provide to the Administrative Agent on or prior to the effective
date of any assignment an appropriate Internal Revenue Service form as required
by Applicable Law supporting such Lender's or assignee's position that no
withholding by the Borrower or the Administrative Agent for United States income
tax payable by such Lender or assignee in respect of amounts received by it
hereunder is required. For purposes of this Agreement, an appropriate Internal
Revenue Service form shall mean Form 1001 (Ownership Exemption or Reduced Rate
Certificate of the United States Department of Treasury), Form 4224 (Exemption
from Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States), Form W-8 (Certificate of Foreign
Status) or any successor or related forms adopted by the relevant United States
taxing authorities.
(d) Except as specifically set forth in Section 11.5(c) hereof, nothing
in this Agreement or the Notes, expressed or implied, is intended to or shall
confer on any Person other than the respective parties hereto and thereto and
their successors and assignees permitted hereunder and thereunder any benefit or
any legal or equitable right, remedy or other claim under
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this Agreement or the Notes.
(e) In the case of any participation, all amounts payable by the
Borrower under the Loan Documents shall be calculated and made in the manner and
to the parties hereto as if no such participation had been sold.
(f) The provisions of this Section 11.5 shall not apply to any purchase
of participations among the Lenders pursuant to Section 2.12(b) hereof.
(g) The Administrative Agent, acting, for this purpose only, as agent
of the Borrower shall maintain, at no extra charge or cost to the Borrower, a
register (the "Register") at the address to which notices to the Administrative
Agent are to be sent under Section 11.1 hereof on which Register the
Administrative Agent shall enter the name, address and taxpayer identification
number (if provided) of the registered owner of the Loans evidenced by a
Registered Note or, upon the request of the registered owner, for which a
Registered Note has been requested. A Registered Note and the Loans evidenced
thereby may be assigned or otherwise transferred in whole or in part only by
registration of such assignment or transfer of such Registered Note and the
Loans evidenced thereby on the Register. Any assignment or transfer of all or
part of such Loans and the Registered Note evidencing the same shall be
registered on the Register only upon compliance with the other provisions of
this Section 11.5 and surrender for registration of assignment or transfer of
the Registered Note evidencing such Loans, duly endorsed by (or accompanied by a
written instrument of assignment or transfer duly executed by) the Registered
Noteholder thereof, and thereupon one or more new Registered Notes in the same
aggregate principal amount shall be issued to the designated assignee(s) or
transferee(s) and, if less than the aggregate principal amount of such
Registered Notes is thereby transferred, the assignor or transferor. Prior to
the due presentment for registration of transfer of any Registered Note, the
Borrower and the Administrative Agent shall treat the Person in whose name such
Loans and the Registered Note evidencing the same is registered as the owner
thereof for the purpose of receiving all payments thereon and for all other
purposes, notwithstanding any notice to the contrary.
(h) The Register shall be available for inspection by the Borrower and
any Lender at any reasonable time during the Administrative Agent's regular
business hours upon reasonable prior notice.
Section 11.6 Accounting Principles. All references in this Agreement to GAAP
shall be to such principles as in effect from time to time. All accounting terms
used herein without definition shall be used as defined under GAAP as in effect
from time to time; provided, however, that if the Borrower notifies the
Administrative Agent that the Borrower requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the date hereof in
GAAP or in the application thereof on the operations of such provision (or if
the Administrative Agent notifies the Borrower that the Required Lenders request
an amendment to any provision hereof for such purpose) regardless of whether any
such notice is given before or after such change in GAAP or in the application
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thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith. All references to the financial statements of the Borrower
and to its Net Income, Operating Cash Flow, Indebtedness for Money Borrowed,
Interest Expense, and other such terms shall be deemed to refer to such items of
the Borrower and its Subsidiaries, on a fully consolidated basis.
Section 11.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 11.8 Governing Law. This Agreement and the Notes shall be construed
in accordance with and governed by the internal laws of the State of New York
applicable to agreements made and to be performed in the State of New York. If
any action or proceeding shall be brought by the Administrative Agent or any
Lender hereunder or under any other Loan Document in order to enforce any right
or remedy under this Agreement or under any Note or any other Loan Document, the
Borrower hereby consents and will, and the Borrower will cause each Subsidiary
to, submit to the jurisdiction of any state or federal court of competent
jurisdiction sitting within the area comprising the Southern District of New
York on the Agreement Date. To the extent permitted by Applicable Law, the
Borrower, for itself and on behalf of its Subsidiaries, hereby agrees that
service of the summons and complaint and all other process which may be served
in any such suit, action or proceeding may be effected by mailing by registered
mail a copy of such process to the offices of the Borrower at the address given
in Section 11.1 hereof and that personal service of process shall not be
required. Nothing herein shall be construed to prohibit service of process by
any other method permitted by law, or the bringing of any suit, action or
proceeding in any other jurisdiction. To the extent permitted by Applicable Law,
the Borrower agrees that final judgment in such suit, action or proceeding shall
be conclusive and may be enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by Applicable Law. The Borrower, for
itself and on behalf of its Subsidiaries, hereby irrevocably waives, to the
fullest extent permitted by law, any objection that it may now or hereafter have
to the laying of venue of any such suit, action or proceeding brought in any
such court and any claim that such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.
Section 11.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 11.10 Interest.
(a) In no event shall the amount of interest due or payable hereunder
or under the Notes exceed the maximum rate of interest allowed by Applicable
Law, and in the event any
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such payment is inadvertently made by the Borrower or inadvertently received by
the Administrative Agent or any Lender, then such excess sum shall be credited
as a payment of principal, unless the Borrower shall notify the Administrative
Agent or such Lender, in writing, that it elects to have such excess sum
returned forthwith. It is the express intent hereof that the Borrower not pay
and the Administrative Agent and the Lenders not receive, directly or indirectly
in any manner whatsoever, interest in excess of that which may legally be paid
by the Borrower under Applicable Law.
(b) Notwithstanding the use by the Lenders of the Base Rate and the
Eurodollar Rate as reference rates for the determination of interest on the
Loans, the Lenders shall be under no obligation to obtain funds from any
particular source in order to charge interest to the Borrower at interest rates
related to such reference rates.
Section 11.11 Table of Contents and Headings. The Table of Contents and the
headings of the various subdivisions used in this Agreement are for convenience
only and shall not in any way modify or amend any of the terms or provisions
hereof, nor be used in connection with the interpretation of any provision
hereof.
Section 11.12 Amendment and Waiver. Neither this Agreement nor any term
hereof may be amended orally, nor may any provision hereof be waived orally but
only by an instrument in writing signed by the Required Lenders and the
Administrative Agent at the direction of the Required Lenders and, in the case
of an amendment, by the Parent and the Borrower, except that in the event of (a)
any increase in the amount of any Commitment, (b) any delay or extension in the
terms of repayment of the Loans or any mandatory reductions in either Commitment
provided in Sections 2.5 or 2.7 hereof, (c) any reduction in principal, interest
or fees due hereunder or postponement of the payment thereof without a
corresponding payment by the Borrower, (d) any release of all or a substantial
part of the Collateral for the Loans, except in connection with a merger, sale
or other disposition otherwise permitted hereunder (in which case such release
shall require no further approval by the Lenders), (e) any waiver of any Default
due to the failure by the Borrower to pay any sum due to any of the Lenders
hereunder, (f) any release of any Guaranty of all or any portion of the
Obligations, except in connection with a merger, sale or other disposition
otherwise permitted hereunder (in which case, such release shall require no
further approval by the Lenders) or (g) any amendment of this Section 11.12, the
definition of Required Lenders or of any Section herein to the extent that such
Section requires action by all Lenders, any such amendment or waiver or consent
may be made only by an instrument in writing signed by each of the Lenders and
the Administrative Agent and, in the case of an amendment, by the Parent and the
Borrower. Any amendment to any provision hereunder governing the rights,
obligations or liabilities of the Administrative Agent may be made only by an
instrument in writing signed by the Administrative Agent and by each of the
Lenders. In addition to, and not in derogation of, Section 2.15 hereof, the
parties hereto hereby agree that (a) the provisions of Section 2.15 hereof may
be modified or waived only by a writing signed by the Issuing Banks and (b) that
the terms "Revolving Loan Commitment" and "Available Revolving Loan Commitment
may only be modified or amended by a writing signed by the Issuing Bank and such
other Persons as
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determined in accordance with this Section 11.12. No term or provision of any
Security Document may be amended or waived orally, but only by an instrument in
writing signed by the Administrative Agent with the direction of the Required
Lenders and, in the case of an amendment, by such of the Parent, the Borrower
and the Borrower's Subsidiaries as are party thereto; provided, however, that
the written consent of all of the Lenders shall be required with respect to any
amendment to or waiver of the provisions of any Security Document which would
have the effect of (i) releasing all or a substantial part of the Collateral for
the Loans, other than in connection with any merger, sale or other disposition
otherwise permitted hereunder (which shall require no further approval by the
Lenders) or (ii) releasing any Guarantor from all or any portion of the
Obligations, except in connection with a merger, sale or other disposition
otherwise permitted hereunder (in which case, such release shall require no
further approval by the Lenders). The Lenders hereby instruct and authorize the
Administrative Agent to enter into the Security Documents (and all other Loan
Documents) referred to in Section 3.1 hereof as of the Agreement Date and any
other Security Documents required to be entered into by the Borrower or any of
its Subsidiaries hereunder.
Section 11.13 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement and the other documents described or contemplated herein
will embody the entire agreement and understanding among the parties hereto and
thereto and supersede all prior agreements and understandings relating to the
subject matter hereof and thereof.
Section 11.14 Other Relationships. No relationship created hereunder or
under any other Loan Document shall in any way affect the ability of the
Administrative Agent and each Lender to enter into or maintain business
relationships with the Borrower or any of its Affiliates beyond the
relationships specifically contemplated by this Agreement and the other Loan
Documents.
Section 11.15 Directly or Indirectly. If any provision in this Agreement
refers to any action taken or to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person, whether or not expressly
specified in such provision.
Section 11.16 Reliance on and Survival of Various Provisions. All covenants,
agreements, statements, representations and warranties made herein or in any
certificate delivered pursuant hereto (i) shall be deemed to have been relied
upon by the Administrative Agent and each of the Lenders notwithstanding any
investigation heretofore or hereafter made by any of them and (ii) shall survive
the execution and delivery of the Notes and shall continue in full force and
effect so long as any Note is outstanding and unpaid. Any right to
indemnification hereunder, including, without limitation, rights pursuant to
Sections 2.11, 2.13, 5.11, 10.3 and 11.2 hereof, shall, except to the extent
specifically provided therein, survive the termination of this Agreement and the
payment and performance of all Obligations.
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Section 11.17 Senior Debt. The Obligations are secured by the Security
Documents and are intended by the parties hereto to be senior in right of
payment to all other Indebtedness of the Borrower.
Section 11.18 Obligations Several. The obligations of the Administrative
Agent and each of the Lenders hereunder are several, not joint.
Section 11.19 Confidentiality. Each of the Administrative Agent and the
Lenders shall hold all non-public, proprietary or confidential information
(which has been identified as such by the Borrower) obtained pursuant to the
requirements of this Agreement in accordance with their customary procedures for
handling confidential information of this nature and in accordance with safe and
sound banking or investing practices; provided, however, that each of the
Administrative Agent and the Lenders may make disclosure of any such information
to their examiners, regulators, Affiliates, outside auditors, counsel,
consultants, appraisers and other professional advisors in connection with this
Agreement or as reasonably required by any proposed syndicate member or any
proposed transferee or participant in connection with the contemplated transfer
of any Note or participation therein, provided each of the foregoing is advised
of this provision and agrees to be bound by the terms hereof; and provided
further, however, that, notwithstanding the foregoing, prior to the occurrence
and during the continuance of an Event of Default, no disclosure may be made to
any Competitor of the Borrower without (i) the prior written consent of the
Borrower, such consent not to be unreasonably withheld, or (ii) as required or
requested by any governmental authority or representative thereof, including any
securities exchange or self-regulatory organization, having examination
authority over such Person or in connection with the enforcement hereof or of
any Loan Document or related document or pursuant to legal process or with
respect to any litigation between or among the Borrower and any of the Lenders
or involving any Lender. In no event shall any Lenders be obligated or required
to return any materials furnished to it by the Borrower. The foregoing
provisions shall not apply to a Lender with respect to information that (i) is
or becomes generally available to the public (other than through such Lender) or
(ii) comes into the possession of such Lender in a manner not involving a breach
of a duty of confidentiality owing to the Borrower.
ARTICLE 12 Waiver of Jury Trial
Section 12.1 Waiver of Jury Trial. THE BORROWER, FOR ITSELF, AND ON BEHALF
OF ITS SUBSIDIARIES, THE PARENT AND EACH OF THE ADMINISTRATIVE AGENT, THE
LENDERS AND THE ISSUING BANK, HEREBY AGREE TO WAIVE AND HEREBY WAIVE THE RIGHT
TO A TRIAL BY JURY IN ANY COURT AND IN ANY ACTION OR PROCEEDING OF ANY TYPE IN
WHICH THE BORROWER, ANY OF THE BORROWER'S SUBSIDIARIES, THE PARENT, ANY OF THE
LENDERS, THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR
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ANY OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS IS A PARTY, AS TO ALL MATTERS AND
THINGS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT, ANY OF THE NOTES OR
THE OTHER LOAN DOCUMENTS AND THE RELATIONS AMONG THE PARTIES LISTED IN THIS
SECTION 12.1. EXCEPT AS PROHIBITED BY LAW, EACH PARTY TO THIS AGREEMENT WAIVES
ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THIS
SECTION, ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH PARTY TO THIS
AGREEMENT (i) CERTIFIES THAT NEITHER ANY REPRESENTATIVE, AGENT OR ATTORNEY OF
THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY
LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS AND (ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND EACH OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION. THE PROVISIONS OF THIS SECTION HAVE
BEEN FULLY DISCLOSED BY AND TO THE PARTIES AND THE PROVISIONS SHALL BE SUBJECT
TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY
OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed by their duly authorized officers, all as of the day
and year first above written.
BORROWER: TRITEL HOLDING CORP., a Delaware
corporation
By:
--------------------------------------
Name:
Title:
PARENT: TRITEL, INC., a Delaware corporation
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 1
<PAGE>
ADMINISTRATIVE AGENT, TORONTO DOMINION (TEXAS), INC.,
LENDERS AND ISSUING BANK: as Administrative Agent and Lender
By:
--------------------------------------
Name:
Title:
THE TORONTO-DOMINION BANK, HOUSTON
AGENCY, as Issuing Bank
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 2
<PAGE>
BARCLAYS BANK PLC, as Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 3
<PAGE>
NATIONSBANK, N.A., as Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 4
<PAGE>
ABN AMRO BANK N.V., as a Lender
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 5
<PAGE>
THE BANK OF NEW YORK, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 6
<PAGE>
THE BANK OF NOVA SCOTIA, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 7
<PAGE>
THE BANK OF TOKYO-MITSUBISHI
TRUST COMPANY, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 8
<PAGE>
CIBC INC., as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 9
<PAGE>
THE CIT GROUP/EQUIPMENT FINANCING, INC.,
as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 10
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH, as a
Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 11
<PAGE>
DRESDNER BANK AG NEW YORK AND GRAND
CAYMAN BRANCHES, as a Lender
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 12
<PAGE>
FIRST UNION NATIONAL BANK, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 13
<PAGE>
HELLER FINANCIAL, INC., as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 14
<PAGE>
MEESPIERSON CAPITAL CORP., as a Lender
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 15
<PAGE>
MERITA BANK PLC, as a Lender
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 16
<PAGE>
PNC BANK NATIONAL ASSOCIATION, as a
Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 17
<PAGE>
ROYAL BANK OF CANADA, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 18
<PAGE>
SOCIETE GENERALE, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 19
<PAGE>
AG CAPITAL FUNDING PARTNERS, L.P., as a
Lender
By: Angelo, Gordon & Co., L.P. as
Investment Adviser
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 20
<PAGE>
BANKBOSTON, N.A., as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 21
<PAGE>
BDC FINANCE, LLC, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 22
<PAGE>
CYPRESSTREE INVESTMENT FUND, LLC, as a
Lender
By: CypressTree Investment Management
Company, Inc., its Managing Member
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 23
<PAGE>
DEBT STRATEGIES FUND II, INC., as a
Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 24
<PAGE>
DEBT STRATEGIES FUND III, INC., as a
Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 25
<PAGE>
FLOATING RATE PORTFOLIO, as a Lender
By: INVESCO Senior Secured Management,
Inc. as attorney in fact
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 26
<PAGE>
FRANKLIN FLOATING RATE TRUST, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 27
<PAGE>
KZH CYPRESSTREE-1 LLC, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 28
<PAGE>
[SIGNATURE PAGE INTENTIONALLY LEFT BLANK]
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 29
<PAGE>
[SIGNATURE PAGE INTENTIONALLY LEFT BLANK]
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 30
<PAGE>
MERRILL LYNCH SENIOR FLOATING RATE FUND,
INC., as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 31
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY, as
a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 32
<PAGE>
MORGAN STANLEY DEAN WITTER PRIME INCOME
TRUST, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 33
<PAGE>
[SIGNATURE PAGE INTENTIONALLY LEFT BLANK]
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 34
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND,
as a Lender
By: CypressTree Investment Management
Company, Inc. as Portfolio Manager
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 35
<PAGE>
PARIBAS CAPITAL FUNDING LLC, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 36
<PAGE>
SENIOR DEBT PORTFOLIO, as a Lender
By: Boston Management and Research, as
Investment Advisor
By:
--------------------------------------
Name:
Title:
EATON VANCE SENIOR INCOME TRUST, as a
Lender
By: Eaton Vance Management, as Investment
Advisor
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 37
<PAGE>
STEIN ROE & FARNHAM, INCORPORATED, as
Agent for KEYPORT LIFE INSURANCE COMPANY,
as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 38
<PAGE>
MERRILL LYNCH SENIOR FLOATING RATE FUND
II, INC., as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP.
AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 39
<PAGE>
Exhibit 10.11
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (the
"Amendment") is made as of this 21st day of April, 1999 by and among TRITEL PCS,
INC. (formerly known as Tritel Holding Corp.), a Delaware corporation (the
"Borrower"), TRITEL, INC., a Delaware corporation (the "Parent"), the Lenders
(as defined in the Loan Agreement defined below) and Toronto Dominion (Texas),
Inc. (the "Administrative Agent"), as administrative agent for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower, the Parent, the Lenders and the Administrative
Agent are all parties to that certain Amended and Restated Loan Agreement dated
as of March 31, 1999 (the "Loan Agreement"); and
WHEREAS, the Borrower desires to issue subordinated indebtedness
pursuant to Section 7.1(g) of the Loan Agreement (the "Subordinated Debt") and
to have such subordinated indebtedness guaranteed by its Subsidiaries and the
Parent on a subordinated basis; and
WHEREAS, the Borrower has requested the Administrative Agent and the
Lenders, and the Administrative Agent and the Lenders have agreed, subject to
the terms hereof, to amend the Loan Agreement and to consent to the terms of the
Subordinated Debt, in each case, as provided herein;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is acknowledged, the parties agree that all
capitalized terms used herein which are not otherwise defined herein shall have
the meanings ascribed thereto in the Loan Agreement and further agree as
follows:
1. Amendment to Article 1, Definitions, of the Loan Agreement. Section
1.1, Defined Terms, of the Loan Agreement is hereby amended by deleting the
definition "License Subs" in its entirety and by substituting, in lieu thereof,
the following:
"'License Subs' shall mean, collectively, Tritel A/B Holding Corp.,
Tritel C/F Holding Corp., NexCom, Inc., Clearcall, Inc., Global PCS, Inc.,
Clearwave, Inc., DigiNet PCS, Inc., DigiCom, Inc. and DigiCall, Inc., each a
Delaware corporation, and AirCom PCS, Inc. and QuinCom, Inc., each an Alabama
corporation, and any other wholly-owned Subsidiary of the Borrower designated as
a License Sub by notice to the Administrative Agent, in each case, the Capital
Stock of which is pledged to the Administrative Agent pursuant to a Borrower's
Pledge Agreement or a Subsidiary Pledge Agreement, as appropriate; and 'License
Sub' shall mean any
<PAGE>
one of the foregoing License Subs."
2. Amendment to Article 5, Affirmative Covenants, of the Loan Agreement.
Section 5.16, License Subs, of the Loan Agreement is hereby amended by deleting
such section in its entirety and by substituting, in lieu thereof, the
following:
"Section 5.16 License Subs. At the time of any Acquisition
permitted hereunder, the Borrower shall cause each of the Licenses
being acquired by the Borrower or any of its Subsidiaries to be
transferred to one or more License Subs, each of which License Subs
shall have as its sole asset or assets the Licenses of the Borrower or
any of its Subsidiaries and an agreement with the Borrower and such of
its Subsidiaries subject to such License or Licenses, such that from
and after such applicable date neither the Borrower nor its
Subsidiaries (other than License Subs) shall hold any Licenses other
than through one or more duly created and existing License Subs. The
Borrower shall not permit the License Subs to have any business
activities, operations, assets, Indebtedness, Guaranties or Liens
(other than holding Licenses and owning the Capital Stock or other
ownership interests of other License Subs, and other than pursuant to a
Subsidiary Guaranty and Subsidiary Security Agreement issued in
connection herewith or any Agreement referred to in the preceding
sentence and other than Indebtedness to the FCC which Indebtedness may
be secured as permitted by Section 7.2 hereof). Promptly after the
transfer of the Licenses to the License Subs, the Borrower shall
provide to the Administrative Agent copies of any required consents to
such transfer from the FCC and any other governmental authority,
together with a certificate of an Authorized Signatory stating that all
Necessary Authorizations relating to such transfer have been obtained
or made, are in full force and effect and are not subject to any
pending or threatened reversal or cancellation."
3. Amendments to Article 7, Negative Covenants, of the Loan Agreement.
(a) Section 7.1, Indebtedness of the Parent, the Borrower and the
Borrower's Subsidiaries, of the Loan Agreement is hereby amended by deleting
subsection 7.1(g) thereof in its entirety and by substituting, in lieu thereof,
the following:
"(g) the Subordinated Debt, provided that (i) such
Subordinated Debt (A) is issued on terms reasonably satisfactory to the
Required Lenders and (B) has an aggregate initial price to investors
not to exceed $250,000,000, or such greater amount as may be approved
by the Required Lenders, and (ii) the proceeds of such Subordinated
Debt shall be used by the Borrower solely to fund the transaction costs
related to such Subordinated Debt, build-out of the Borrower's Cellular
System and working capital needs and other general corporate purposes
of the Borrower and its Subsidiaries related to such build-out, except
to the extent provided in Section 7.6(e)(vii) hereof, or as otherwise
approved by the Required Lenders;"
(b) Section 7.5, Limitation on Guaranties, of the Loan Agreement is
hereby amended
-2-
<PAGE>
by deleting such section in its entirety and by substituting, in lieu thereof,
the following:
"Section 7.5 Limitation on Guaranties. The Parent and the
Borrower shall not, and shall not permit any of the Borrower's
Subsidiaries to, at any time Guaranty, assume, be obligated with
respect to, or permit to be outstanding any Guaranty of, any obligation
of any other Person other than: (a) a guaranty by endorsement of
negotiable instruments for collection in the ordinary course of
business; (b) Guaranties constituting Indebtedness permitted pursuant
to Section 7.1 hereof; (c) a may be contained in any Loan Document; and
(d) Guaranties by the Borrower's Subsidiaries (excluding License Subs)
and the Parent of the Subordinated Debt issued under Section 7.1(g)
hereof, provided that neither the Borrower's Subsidiaries nor the
Parent may Guaranty such Subordinated Debt unless (i) such Subsidiaries
and the Parent have also Guaranteed the Obligations pursuant to
Subsidiary Guaranties or a Parent Guaranty Agreement, respectively,
(ii) each such Guaranty of such Subordinated Debt is subordinated to
such Subsidiary Guaranties or such Parent Guaranty Agreement,
respectively, on terms no less favorable to the Lenders than the
subordination provisions of such Subordinated Debt, and (iii) each such
Guaranty of such Subordinated Debt provides for the release and
termination thereof, without action by any party, upon any release and
termination (except a release or termination by or as a result of
payment in full of the Obligations) of such Subsidiary Guaranties or
such Parent Guaranty Agreement, respectively."
4. Consent to Terms of Subordinated Debt. Subject to the terms and
conditions hereof, the Lenders hereby consent to the terms of the Subordinated
Debt set forth in the description of notes attached hereto as Exhibit A and made
a part hereof (or on terms substantially as set forth in the description of
notes attached hereto as Exhibit A and in no event materially less favorable to
the interests of the Lenders than are the terms set forth in such description of
notes). On or prior to the issuance of such Subordinated Debt, the Borrower and
the Parent shall provide to the Administrative Agent, in form and substance
satisfactory to the Administrative Agent, (a) certification to the Lenders (i)
of the Borrower's and the Parent's compliance with Sections 7.8 through and
including 7.17 of the Loan Agreement both before and after giving effect to the
issuance of the Subordinated Debt, (ii) that neither a Default or an Event of
Default exists or will be caused by the issuance of the Subordinated Debt, (iii)
that the aggregate initial public offering price or purchase price of such
Subordinated Debt does not exceed $250,000,000.00, and (iv) that the proceeds of
such Subordinated Debt will be used by the Borrower solely to fund the
transaction costs related to such Subordinated Debt, the build-out of the
Borrower's Cellular System and working capital needs and other general corporate
purposes of the Borrower and its Subsidiaries related to such build-out, except
to the extent provided in Section 7.6(e)(vii) of the Loan Agreement, (b) pro
forma projections both before and after giving effect to such Subordinated Debt,
and (c) evidence that the documentation evidencing such Subordinated Debt shall
be on the terms of such Subordinated Debt set forth in the description of notes
attached hereto as Exhibit A (or on terms substantially as set forth in the
description of notes attached hereto as Exhibit A and in no event materially
less favorable to the interests of the Lenders than are the terms set forth in
such description of notes).
-3-
<PAGE>
5. No Other Amendment or Waiver. Notwithstanding the agreement of the
Lenders to the terms and provisions of this Amendment, the Borrower and the
Parent acknowledge and expressly agree that this Amendment is limited to the
extent expressly set forth herein and shall not constitute a modification of the
Loan Agreement or any other Loan Documents or a course of dealing at variance
with the terms of the Loan Agreement or any other Loan Documents (other than as
expressly set forth above) so as to require further notice by the Administrative
Agent or the Lenders, or any of them, of its or their intent to require strict
adherence to the terms of the Loan Agreement and the other Loan Documents in the
future. All of the terms, conditions, provisions and covenants of the Loan
Agreement and the other Loan Documents shall remain unaltered and in full force
and effect except as expressly modified by this Amendment.
6. Representations and Warranties. Each of the Borrower and the Parent
hereby represents and warrants to and in favor of the Administrative Agent and
the Lenders as follows:
(a) each representation and warranty set forth in Article 4 of the
Loan Agreement is hereby restated and affirmed as true and correct in all
material respects as of the date hereof, except to the extent previously
fulfilled in accordance with the terms of the Loan Agreement or to the extent
relating specifically to the Agreement Date (or date prior thereto) or otherwise
inapplicable;
(b) each of the Borrower and the Parent has the corporate power
and authority (i) to enter into this Amendment and (ii) to do all acts and
things as are required or contemplated hereunder to be done, observed and
performed by it;
(c) this Amendment has been duly authorized, validly executed and
delivered by one or more Authorized Signatories of each of the Borrower and the
Parent, and this Amendment and the Loan Agreement, as amended hereby, constitute
the legal, valid and binding obligations of each of the Borrower and the Parent,
enforceable against each of the Borrower and the Parent in accordance with their
respective terms, subject, as to enforcement of remedies, to the following
qualifications: (i) an order of specific performance and an injunction are
discretionary remedies and, in particular, may not be available where damages
are considered an adequate remedy at law and (ii) enforcement may be limited by
bankruptcy, insolvency, liquidation, reorganization, reconstruction and other
similar laws affecting enforcement of creditors' rights generally (insofar as
any such law relates to the bankruptcy, insolvency or similar event of the
Borrower or the Parent); and
(d) the execution and delivery of this Amendment and performance
by each of the Borrower and the Parent under the Loan Agreement, as amended
hereby, does not and will not require the consent or approval of any regulatory
authority or governmental authority or agency having jurisdiction over the
Borrower and/or the Parent which has not already been obtained, nor be in
contravention of or in conflict with the certificate of incorporation or by-laws
of either of the Borrower and the Parent, or any provision of any statute,
judgment, order, indenture, instrument, agreement, or undertaking, to which the
Borrower and/or the Parent is party or by which the Borrower's and/or the
Parent's respective assets or properties are bound.
-4-
<PAGE>
7. Conditions Precedent to Effectiveness of Amendment. The
effectiveness of this Amendment is subject to:
(a) the execution and delivery of this Amendment by the Borrower,
the Parent, the Administrative Agent and the Required Lenders;
(b) all of the representations and warranties of each of the
Borrower and the Parent under Section 6 hereof, which are made as of the date
hereof, being true and correct in all material respects;
(c) receipt by the Administrative Agent and each of the Lenders of
a certificate of the chief financial officer of each of the Borrower and the
Parent certifying that no Default exists both before and after giving effect to
this Amendment;
(d) receipt by the Administrative Agent and each of the Lenders of
a signed legal opinion of counsel to the Parent, the Borrower and the Borrower's
Subsidiaries, in form and substance satisfactory to the Administrative Agent and
its counsel; and
(e) receipt of any other documents or instruments that the
Administrative Agent, the Lenders, or any of them, may reasonably request,
certified by an officer of each of the Borrower and the Parent if so requested.
8. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which
when taken together shall constitute one and the same agreement.
9. Loan Documents. Each reference in the Loan Agreement or any other
Loan Document to the term "Loan Agreement" shall hereafter mean and refer to the
Loan Agreement as amended hereby and as the same may hereafter be amended.
10. Governing Law. This Amendment shall be construed in accordance with
and governed by the internal laws of the State of New York applicable to
agreements made and to be performed in New York.
11. Effective Date. Upon satisfaction of the conditions precedent
referred to in Section 7 above, this Amendment shall be effective as of the date
first above written.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their respective
duly authorized officers or representatives to execute and deliver this
Amendment all as of the day and year first above written.
BORROWER: TRITEL PCS, INC.
By:
--------------------------------------
Name:
Title:
PARENT: TRITEL, INC.
By:
--------------------------------------
Name:
Title:
ADMINISTRATIVE AGENT
AND LENDERS: TORONTO DOMINION (TEXAS), INC., as
Administrative Agent and Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 1
<PAGE>
BARCLAYS BANK PLC, as Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 2
<PAGE>
NATIONSBANK, N.A., as Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 3
<PAGE>
ABN AMRO BANK N.V., as a Lender
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 4
<PAGE>
THE BANK OF NEW YORK, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 5
<PAGE>
THE BANK OF NOVA SCOTIA, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 6
<PAGE>
THE BANK OF TOKYO-MITSUBISHI
TRUST COMPANY, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 7
<PAGE>
CIBC INC., as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 8
<PAGE>
THE CIT GROUP/EQUIPMENT FINANCING, INC.,
as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 9
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH, as a
Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 10
<PAGE>
DRESDNER BANK AG NEW YORK AND GRAND
CAYMAN BRANCHES, as a Lender
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 11
<PAGE>
FIRST UNION NATIONAL BANK, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 12
<PAGE>
HELLER FINANCIAL, INC., as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 13
<PAGE>
MEESPIERSON CAPITAL CORP., as a Lender
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 14
<PAGE>
MERITA BANK PLC, as a Lender
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 15
<PAGE>
PNC BANK NATIONAL ASSOCIATION, as a
Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 16
<PAGE>
ROYAL BANK OF CANADA, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 17
<PAGE>
SOCIETE GENERALE, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 18
<PAGE>
ATHENA CDO, LIMITED, as a Lender
By: Pacific Investment Management Company,
as its Investment Advisor
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 19
<PAGE>
AG CAPITAL FUNDING PARTNERS, L.P., as a
Lender
By: Angelo, Gordon & Co., L.P. as
Investment Adviser
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 20
<PAGE>
BANKBOSTON, N.A., as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 21
<PAGE>
BDC FINANCE, LLC, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 22
<PAGE>
CAPTIVA III FINANCE LTD., as a Lender
as advised by Pacific Investment
Management Company
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 23
<PAGE>
CYPRESSTREE INVESTMENT FUND, LLC, as a
Lender
By: CypressTree Investment Management
Company, Inc., its Managing Member
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 24
<PAGE>
DEBT STRATEGIES FUND II, INC., as a
Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 25
<PAGE>
DEBT STRATEGIES FUND III, INC., as a
Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 26
<PAGE>
DELANO COMPANY, as a Lender
By: Pacific Investment Management
Company, as its Investment Advisor
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 27
<PAGE>
EATON VANCE SENIOR INCOME TRUST, as a
Lender
By: Eaton Vance Management, as
Investment Advisor
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 28
<PAGE>
FLOATING RATE PORTFOLIO, as a Lender
By: INVESCO Senior Secured Management,
Inc. as attorney in fact
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 29
<PAGE>
FRANKLIN FLOATING RATE TRUST, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 30
<PAGE>
KZH CYPRESSTREE-1 LLC, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 31
<PAGE>
MAGNETITE ASSET INVESTORS LLC, as a
Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 32
<PAGE>
MERRILL LYNCH GLOBAL INVESTMENT SERIES:
INCOME STRATEGIES PORTFOLIO, as a Lender
By: Merrill Lynch Asset Management, L.P.,
as Investment Advisor
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 33
<PAGE>
MERRILL LYNCH PRIME RATE PORTFOLIO, as a
Lender
By: Merrill Lynch Asset Management, L.P.,
as Investment Advisor
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 34
<PAGE>
MERRILL LYNCH SENIOR FLOATING RATE FUND,
INC., as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 35
<PAGE>
MERRILL LYNCH SENIOR FLOATING RATE FUND
II, INC., as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 36
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY, as
a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 37
<PAGE>
MORGAN STANLEY DEAN WITTER PRIME INCOME
TRUST, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 38
<PAGE>
NATIONAL WESTMINSTER BANK PLC, as a
Lender
By: NatWest Capital Markets Limited,
its Agent
By: Greenwich Capital Markets, Inc.,
its Agent
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 39
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND,
as a Lender
By: CypressTree Investment Management
Company, Inc. as Portfolio Manager
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 40
<PAGE>
PARIBAS CAPITAL FUNDING LLC, as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 41
<PAGE>
PILGRIM PRIME RATE TRUST, as a Lender
By: Pilgrim Investments, Inc., as its
investment manager
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 42
<PAGE>
SENIOR DEBT PORTFOLIO, as a Lender
By: Boston Management and Research, as
Investment Advisor
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 43
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STEIN ROE & FARNHAM, INCORPORATED, as
Agent for KEYPORT LIFE INSURANCE COMPANY,
as a Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 44
<PAGE>
VAN KAMPEN PRIME RATE INCOME TRUST, as a
Lender
By:
--------------------------------------
Name:
Title:
TRITEL HOLDING CORP. AND TRITEL, INC.
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
Signature Page 45
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MASTER LEASE AGREEMENT
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THIS AGREEMENT is made this ____ day of October, 1998, between TRITEL
COMMUNICATIONS, INC., a Delaware corporation, with its principal offices located
at 1410 Livingston Lane, Jackson, Mississippi 39213 ("TRITEL") and CROWN
COMMUNICATION INC., a Delaware corporation, with its principal offices located
at Southpointe, 375 Southpointe Boulevard, Canonsburg, Pennsylvania 15317
("CROWN").
WITNESSETH:
WHEREAS, CROWN owns, controls and will be constructing communications
facilities throughout the United States;
WHEREAS, TRITEL desires to lease space on certain communications
facilities owned or otherwise controlled by CROWN (hereinafter generally
referred to as "Leased Premises"); and
WHEREAS, CROWN and TRITEL are desirous of establishing terms and
conditions which will apply to multiple sites located in the United States which
are to be leased by CROWN to TRITEL.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and intending to be legally bound hereby, the parties hereto agree as
follows:
1. SITE LEASES
1.1. SITE LEASE ACKNOWLEDGMENTS. This Agreement contains the basic
terms and conditions upon which each communications facility is leased by CROWN
to TRITEL. That portion of each location wherein CROWN owns or otherwise
controls a communications facility which is leased by TRITEL pursuant to this
Agreement will be individually referred to as a "Site." When the parties agree
on the particular terms for the lease of a Site, the parties will execute a Site
Lease Acknowledgment ("SLA") in the form attached hereto as Exhibit "A" which
describes the specific location, description and size of the Site for each
particular communications facility. TRITEL shall indicate its interest in a
particular communications facility by completing and forwarding an executed SLA
to CROWN. The SLA shall become effective and become part of this Agreement upon
its execution by both CROWN and TRITEL. The parties acknowledge and agree that,
notwithstanding any other language in this Agreement to the contrary, TRITEL's
use of a Site pursuant to this Agreement does not constitute a conveyance of any
interest in real estate to TRITEL. The relationship between CROWN and TRITEL is
not one of tenancy and no leasehold interest or other interest in real estate
has been or will be created.
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1.2. INITIAL SITES. TRITEL is interested in leasing from CROWN the
Sites set forth on Exhibit "B" attached hereto. CROWN shall use its best efforts
to provide SLAs for all Sites listed on Exhibit "B".
2. USE
The Site may be used by TRITEL only for the installation, operation and
maintenance of unmanned radio communications equipment consistent with the terms
of the SLA. TRITEL must, at TRITEL'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 ("FCC"). TRITEL must operate its equipment in
a manner that 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 TRITEL, at TRITEL's expense, in executing such
documents or applications required in order for TRITEL to obtain such licenses,
permits or other governmental approval needed for TRITEL's permitted use of the
Site.
Notwithstanding the foregoing, CROWN shall obtain, at CROWN's expense,
any municipal permits necessary for the initial installation of the Site. TRITEL
will maintain the Site in a reasonable condition and in a manner that will not
interfere with other uses of the communications facility.
3. TERM
3.1. TERM OF AGREEMENT. The term of this Agreement shall be five (5)
years commencing on the date first written above with up to five (5) automatic
annual extensions unless either party gives the other party written notice of
its intent to terminate at least six (6) months prior to the end of the then
current term.
3.2. TERM OF SLA. Each Site leased by CROWN to TRITEL pursuant to an
SLA shall be leased for an initial term (the "Initial Term") of five (5) years
with the commencement date as of the first (lst) day of the month following the
commencement of the installation of TRITEL's antennas and transmission lines at
the Site so long as the installation continues in a timely fashion
("Commencement Date"). The term of each particular SLA shall automatically be
extended for up to four (4) additional five (5) year terms (each a "Renewal
Term") unless TRITEL 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; provided, however, that the term of all SLAs
shall continue for their respective terms and shall not necessarily terminate
upon the expiration of the term of this Agreement. 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
TRITEL'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.
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4. FEES
4.1. ANNUAL FEE. The annual fee shall be paid in equal monthly
installments beginning on the Commencement Date and continuing on the first day
of each and every month thereafter. Payments shall be made to CROWN, or such
other person, firm or place as CROWN may, from time to time, designate in
writing at least thirty (30) days in advance of any fee payment date. The amount
of the annual fee shall be that amount designated on the applicable SLA. The fee
amounts for an SLA shall be calculated according to the schedule set forth in
Exhibit "C" attached hereto which amounts shall be adjusted on each Adjustment
Date according to the formula set forth in Section 4.2.
4.2. FEE ADJUSTMENT. The annual fee and other fees identified in this
Agreement (including those fees listed in Exhibit "C") shall be adjusted upward
(collectively "Adjusted Fee") on the second anniversary of the date of this
Agreement and every annual anniversary thereafter ("Adjustment Date") by
[CONFIDENTIAL TREATMENT REQUESTED].
4.3. ADDITIONAL FEES. TRITEL shall pay as additional fees any increase
in taxes or other assessment, including but not limited to real estate taxes,
and any new taxes or assessments levied against the Leased Premises. The
additional fee paid by TRITEL shall be determined based upon TRITEL's percentage
of the total tax or assessment or increase thereof, wherein the numerator is the
monthly fee payment made by TRITEL for the Site and the denominator is the total
monthly fee payments received by CROWN from all users of that which occur as a
direct result of the placement of TRITEL's equipment, antennae and
communications facility upon the Site. CROWN will provide reasonable
documentation of real estate taxes attributable to the improvements, or portions
thereof, that are constructed or installed by or on behalf of TRITEL.
4.4. 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:
4.4.1. The rate of [CONFIDENTIAL TREATMENT REQUESTED] per annum; or
4.4.2. The maximum rate allowed under the laws of the jurisdiction
in which the Site is located.
4.5. 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.
5. ACCESS
TRITEL shall have free access during the term of an SLA to the Site
twentyfour (24) hours per day, seven (7) days per week. TRITEL 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;
provided, however, CROWN will provide TRITEL prior written notice of any such
restrictions that are not indicated in the Prime Lease attached to the
applicable SLA. In the event TRITEL, its agents or contractors perform any work
at a Site, TRITEL will indemnify and
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reimburse CROWN for any and all claims of liability or losses by any third party
resulting from any actual damages or losses sustained by CROWN resulting from
any down time in operation directly attributable to TRITEL's work at a Site.
CROWN shall furnish TRITEL 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
TRITEL or persons under their direct supervision will be permitted to enter said
Site. TRITEL will retain ownership of all buildings, equipment and appurtenances
TRITEL installs at any Site; provided, however, that the removal of said
equipment will not adversely affect the integrity of any structures.
6. IMPROVEMENTS AND CONSTRUCTION
6.1. APPROVED COMMUNICATIONS FACILITY. TRITEL has the right, at
TRITEL's sole cost and expense, to erect, maintain, replace and operate at the
Site only that communications equipment specified on the SLA. It is understood
that TRITEL 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 an 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 TRITEL's current FCC
licenses or successor licenses 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 and that any change in frequency shall not interfere with the then
existing equipment upon the Site. Prior to commencing any installation or
material alteration of a communications facility TRITEL must obtain CROWN's
approval of:
6.1.1. TRITEL's plans for installation or alteration work; and,
6.1.2. The identity of the contractor performing the installation or
material alteration or in any way accessing the tower
structure itself.
CROWN's approval must not be unreasonably withheld,
conditioned or delayed. All of TRITEL's installation and
alteration work must be performed:
6.1.3. At TRITEL's sole cost and expense;
6.1.4. 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;
6.1.5. In accordance with applicable building codes and with the
provisions of Exhibit "D" attached hereto; and,
6.1.6. Must not adversely affect the structural integrity or
maintenance of the Site or any structure on or use of the
Leased Premises.
Any alterations to a structure on the Leased Premises must be designed,
at TRITEL's sole cost and expense, by an engineer licensed or authorized in the
jurisdiction where the Site is
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located. Notwithstanding the foregoing, for any structural alterations of the
communications facility, such engineer must be approved by CROWN which approval
will not be unreasonably withheld, conditioned, or delayed. For structural
alterations requiring a municipal permit, the engineer must be satisfactory to
the local municipality, to the extent required by such municipality.
Following the initial installation of a Site, any installation,
maintenance, material alteration or removal of equipment at a Site by TRITEL 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. Notwithstanding the foregoing contained
through section 6.1, TRITEL shall have the right to access and perform routine
maintenance upon its equipment without notice to or approval by CROWN.
Any erection, maintenance, replacement and removal will in no way
damage or interfere with CROWN's use of or any operations at the communications
facility. If damage or interference is caused by TRITEL and TRITEL fails to make
such repair or commence the repairs within thirty (30) days after notice by
CROWN, CROWN may make the repairs and the reasonable costs thereof shall be
payable to CROWN by TRITEL upon written notice. If TRITEL 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.
6.2. LIENS. TRITEL must keep the Site free from any liens arising from
any work performed, materials furnished or obligations incurred by or at the
request of TRITEL. If any lien is filed against the Site as a result of the acts
or omissions of TRITEL's employees, agents or contractors, TRITEL must discharge
the lien or bond the lien off in a manner reasonably satisfactory to CROWN
within thirty (30) days after TRITEL receives written notice from any party that
the lien has been filed. If TRITEL fails to discharge or bond any 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. TRITEL 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 and reasonable disbursements
in connection therewith.
6.3. WAIVER OF CROWN'S LIEN. CROWN waives any lien rights it may have
concerning TRITEL's improvements which are deemed TRITEL's personal property and
TRITEL has the right to remove the same at any time without CROWN's consent.
6.4. POSSESSION. Taking possession of the Site by TRITEL is conclusive
evidence that TRITEL:
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6.4.1. Accepts the Site as suitable for the purposes for which they
are leased;
6.4.2. Accepts the Site and any structure on the Site and every part
and appurtenance thereof AS IS, with all faults; and,
6.4.3. Waives any claims against CROWN in respect of defects in the
Site or the Leased Premises and its appurtenances, their
habitability or suitability for any permitted purposes,
except:
6.4.3.1. If otherwise expressly provided hereunder;
6.4.3.2. If resulting from the negligence or willful
misconduct of CROWN, CROWN's employees, agents or
contractors;
6.4.3.3. If resulting from any known claim by a third party
not identified by CROWN in CROWN's representations
under this Agreement; or,
6.4.3.4. If CROWN had actual or constructive knowledge or
should have known of defects and did not disclose
those defects to TRITEL.
For the purposes of this provision, TRITEL is deemed
to take possession upon the Commencement Date of the
respective SLA. Conducting tests and inspections on the
Site is not the commencement of construction.
7. INTERFERENCE
TRITEL agrees to have installed transmitting and receiving equipment of
the type and frequency which will not cause Measurable Interference as defined
by the FCC to CROWN and/or other users of the communications facility at the
Site whose equipment is properly tuned and operating. A "present user" of the
communications facility at the Site shall be defined as a telecommunications
provider licensed by the FCC which is located on the communications facility at
the Site as of the Commencement Date of each SLA and specifically identified in
each SLA and may include without limitation, Crown. In the event TRITEL's
equipment causes such interference, with any Present User whose equipment is
properly tuned and operating, TRITEL will take all steps necessary to correct
and eliminate the interference within fortyeight (48) hours of the notice of
such interference by CROWN via facsimile, or via other notice defined in this
Agreement, to TRITEL's Director of Network Engineering. CROWN agrees that any
future users of the Leased Premises who take possession after the date of
execution of any SLA will have installed transmitting and receiving equipment of
the type and frequency which will not cause Measurable Interference to TRITEL.
If any user of the Site causes Measurable Interference to TRITEL and CROWN does
not commence efforts to facilitate the cure of that Measurable Interference,
then TRITEL may terminate the applicable SLA after 48 hours written notice from
TRITEL. TRITEL will reasonably cooperate with CROWN and any user to help
eliminate Measurable Interference provided that reasonable cooperation shall
include the expenditure of time and not the expenditure of money. In the event
of such termination, TRITEL agrees to waive any other available remedies.
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8. INDEMNIFICATION
TRITEL 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 TRITEL'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 TRITEL for any
of the above reasons, then TRITEL shall protect and hold CROWN harmless and pay
all reasonable costs, penalties, charges, damages, expenses and reasonable
attorneys' fees incurred or paid by CROWN in connection therewith.
CROWN shall indemnify and hold TRITEL 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 TRITEL, or its subcontractors, servants, agents or invitees. If
TRITEL is made a party to any litigation commenced by or against CROWN for any
of the above reasons, then CROWN shall protect and hold TRITEL harmless and pay
all reasonable costs, penalties, charges, damages, expenses and reasonable
attorneys' fees incurred or paid by TRITEL in connection therewith.
9. INSURANCE
TRITEL shall maintain at its expense throughout the term of this
Agreement, general liability insurance with a combined single limit of Five
Million ($5,000,000.00) Dollars for bodily injury and property damage. At
execution of this Agreement, TRITEL 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. TRITEL shall also maintain Auto Liability insurance in an amount no less
than One Million ($1,000,000.00) Dollars combined single limit for bodily injury
and/or property damage. TRITEL must also maintain statutory Workers'
Compensation Insurance and Employee's Liability for the statutory limit but in
no event less than One Million ($1,000,000.00) Dollars. The amount of the
insurance limits identified above shall be increased on every fifth anniversary
of the date of this Agreement by twentyfive (25%) percent over the amount of the
insurance limits for the immediately preceding five (5) year period.
All insurers will be rated AX(10) 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 TRITEL.
TRITEL will not do or permit to be done in or about the Leased Premises
nor bring or keep or permit to be brought to the Leased Premises anything that
will increase the existing premiums for any insurance policy carried by CROWN
covering the Site, any improvements thereon, or the Leased Premises; or, (b)
will increase the existing premiums for any such policy
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Crown covering the Site beyond that contemplated for the addition of TRITEL's
communications equipment and cabinet or building. CROWN acknowledges and agrees
that the installation of TRITEL's communications equipment upon the Leased
Premises 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.
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. TRITEL 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.
TRITEL's contractors will maintain Independent Contractor Insurance in
the amounts indicated above.
10. SURRENDER OF PREMISES
TRITEL, 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 TRITEL to remain on the Site after termination of this
Agreement or the applicable SLA, the annual fee shall be increased to one and
onehalf 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 TRITEL 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 TRITEL from the Leased Premises.
11. COVENANTS AND WARRANTIES
11.1. CROWN. CROWN warrants, with respect to each particular SLA that:
11.1.1. 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;
11.1.2. 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
materially interferes with transmission or reception by
TRITEL's communications equipment;
11.1.3. The Leased Premises, to the best knowledge of CROWN, is
not contaminated by any Environmental Hazards as defined
below;
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11.1.4. Telephone service and electrical service are available to
TRITEL at each and every Site with the understanding that
TRITEL will pay for utility services needed to operate its
communications equipment; and,
11.1.5. CROWN will keep, at CROWN's expense, the communications
structure upon which TRITEL'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.
11.1.6. CROWN shall also maintain during the term of each SLA
property insurance, including coverage for fire, extended
coverage, vandalism and malicious mischief on the Site, in
an amount not less than 90% of the full replacement cost
of the tower and related facilities (excluding, however,
all communications equipment at the Site).
11.2. TRITEL. TRITEL warrants, with respect to each particular SLA
that:
11.2.1. TRITEL will maintain the antennas, transmission lines and
other appurtenances in proper operating condition and
maintain same as to appearance and safety; and,
11.2.2. All installations and operations by TRITEL 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 TRITEL's radio equipment, except as
specifically provided herein.
11.3. MUTUAL. Each party represents and warrants to the other party
that:
11.3.1. It has full right, power and authority to make this
Agreement and to enter into the SLAs;
11.3.2. 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;
11.3.3. That such party is qualified to do business in any states
in which the Sites are located; and,
11.3.4. All persons signing on behalf of such party were
authorized to do so by appropriate corporate or
partnership action.
11.4. NO BROKERS. CROWN and TRITEL 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; however if TRITEL subsequently obtains a realtor
who will represent TRITEL in
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regards to this transaction, and then TRITEL shall be responsible for the
compensation of that realtor.
11.5. WARRANTIES AND REPRESENTATIONS. The warranties and
representations made in paragraphs 11.1 and 11.3 shall be deemed to be made,
reaffirmed, ratified, rewarranted and re-represented upon the execution of each
SLA.
12. CASUALTY OR CONDEMNATION
12.1. CASUALTY. If there is a casualty to any structure upon which a
TRITEL communications facility is located, CROWN must within ninety (90) 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, TRITEL is entitled to reinstall
TRITEL's communications equipment. In the event such repairs or restoration will
reasonably require more than ninety (90) days to complete, TRITEL is entitled to
terminate the applicable SLA upon thirty (30) day's prior written notice. During
such restoration period, TRITEL may request to install or place a temporary
communications facility upon the Site to operate its communications facility.
Such installation shall be approved by CROWN and TRITEL, and rental reduction
shall be negotiated prior to such installation.
12.2. CONDEMNATION. If there is a condemnation of the Site which
renders the Site unusable, 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. TRITEL is entitled to
pursue a separate condemnation award for TRITEL's communications equipment and
interest in the Site, from the condemning authority.
13. DEFAULT
13.1. TRITEL'S DEFAULT. The occurrence of any one or more of the
following shall constitute an "Event of Default" by TRITEL under this Agreement:
13.1.1. If TRITEL fails with respect to any Site to pay any fee or
other sums payable by TRITEL within twenty (20) business
days of TRITEL's receipt of written request for payment;
13.1.2. Breach of any representation, warranty or covenant set
forth in this Agreement including any SLA, with the
exception of the nonpayment of any fee or other sums by
TRITEL, 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 TRITEL to complete the cure so long as TRITEL
commences the cure within such thirty (30) day period and
thereafter continuously and diligently pursues and
completes such cure;
13.1.3. If any petition is filed by or against TRITEL, 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
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any petition filed against TRITEL, such petition is not
dismissed within sixty (60) days after the filing
thereof), or TRITEL 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;
13.1.4. If a receiver, custodian or trustee is appointed for
TRITEL or for any of the assets of TRITEL and such
appointment is not vacated within sixty (60) days of the
date of appointment;
13.1.5. If TRITEL makes a transfer in fraud of creditors; or,
13.1.6. If TRITEL's equipment is found to be interfering as
described in this Agreement and said interference is not
timely corrected as provided herein.
13.2. CROWN'S REMEDIES. If an Event of Default occurs, in addition to
any other remedy at law or equity, CROWN (without notice or demand except as
expressly required above) may terminate this Agreement or the applicable SLAs,
in which event TRITEL will immediately surrender the Sites to CROWN. TRITEL will
become liable for damages equal to the total of:
13.2.1. The actual and reasonable costs of recovering the Sites;
13.2.2. The fee earned as of the date of termination, plus
interest thereon from the date due until paid;
13.2.3. The amount by which any fees and other benefits that CROWN
would have received under the SLAs for the remainder of
the term under the SLAs; and
13.2.4. All other sums of money and damages owing by to CROWN.
CROWN may elect any one or more of the foregoing remedies with respect
to this Agreement or to any particular SLA. CROWN agrees to waive recovery of
consequential damages.
13.3. CROWN'S DEFAULT. The occurrence of any one or more of the
following shall constitute an "Event of Default":
13.3.1. If CROWN is in breach of any representation, warranty or
covenant set forth in this Agreement 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;
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13.3.2. If any petition is filed by or against CROWN, 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 the respect
to any petition filed against CROWN, such petition is not
dismissed within sixty (60) days after the filing
thereof), or CROWN 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;
13.3.3. If a receiver, custodian or trustee is appointed for CROWN
or for any of the assets of CROWN and such appointment is
not vacated within sixty (60) days of the date of
appointment; or,
13.3.4. If CROWN makes a transfer in fraud of creditors.
13.4. If an Event of Default occurs, TRITEL may, in addition to any
other remedy available at law or in equity, at TRITEL's option upon written
notice:
13.4.1. Terminate the applicable SLA;
13.4.2. Incur any reasonable expense necessary to perform the
obligation of CROWN specified in such notice and invoice
CROWN for the reasonable expenses, together with interest
as set forth herein from the date named. Any invoice shall
be accompanied by documentation detailing reasonable
expenses. If CROWN fails to reimburse the costs within
thirty (30) days of receipt of written notice, then TRITEL
is entitled to offset and deduct such expenses from the
fees or other charges next becoming due under any SLA.
TRITEL may elect any one or more of the foregoing remedies with respect to any
particular SLA. TRITEL agrees to waive recovery of consequential damages.
14. 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 TRITEL remediate any
Environmental Hazards located at any Site unless TRITEL or TRITEL's officers,
employee, agents or contractors placed the Environmental Hazards on the Site.
TRITEL will not bring to, transport across or dispose of any Environmental
Hazards on any particular Leased Premises or Site without CROWN's prior written
approval, which approval shall not unduly be withheld or delayed. TRITEL'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
12
<PAGE>
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.
15. COVENANT OF QUIET ENJOYMENT
CROWN covenants that TRITEL, on paying the rent and performing all the
terms, covenants and conditions of this Agreement, shall peaceably and quietly
have, hold and enjoy the Leased Premises.
16. ENTIRE AGREEMENT
It is agreed and understood that this Agreement, including all SLAs,
contain all the agreements, promises and understandings between CROWN and TRITEL
and that no verbal or oral agreements, promises or understandings shall be
binding upon either CROWN or TRITEL 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.
17. GOVERNING LAW
The laws of the Commonwealth of Kentucky, disregarding conflict of law
principles, shall govern this Agreement. Further, each party submits to the
jurisdiction of any federal or commonwealth court sitting in Louisville,
Kentucky.
18. ASSIGNMENT
This Agreement may not be sold, assigned or transferred, in whole or in
part, by TRITEL without prior approval or consent of CROWN which consent may not
be unreasonably withheld, delayed or conditioned; provided, however, that TRITEL
may assign its interest in this Agreement to its parent company, any subsidiary
or affiliate, or to any successor-in-interest or entity acquiring 51% or more of
its stock or assets, or that has net worth of at least $25,000,000.00. It is
understood that any such assignment shall not relieve TRITEL of any liability
for performance of this Agreement. TRITEL acknowledges that TRITEL is the
current holder of all FCC Licenses for the Sites and for the equipment installed
at the Sites pursuant to this Agreement.
19. 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.
20. 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
13
<PAGE>
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.
21. 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.
22. 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 Licensee: Tritel Communications, Inc.
1410 Livingston Lane
Jackson, MS 39213
Attn: Kenneth F. Harris
As to CROWN: Crown Communication Inc.
Crown Square at Southpointe
375 Southpointe Boulevard
Canonsburg, PA 15317
Attention: Legal Department
CROWN or TRITEL may from time to time designate any other additional
address for this purpose by giving written notice to the other party.
23. BINDING EFFECT
This Agreement shall extend to and bind the heirs, personal
representatives, successors and assigns of the parties hereto.
24. PRIME LEASE AGREEMENT
The parties acknowledge that CROWN's rights in the 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
14
<PAGE>
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 and
CROWN will exercise its reasonable efforts to obtain such approval at no
additional cost to CROWN. 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 which 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 TRITEL. Further, TRITEL
agrees that the SLA shall be subject to the terms of the Prime Lease. 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. 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 the
right to terminate an SLA and all of TRITEL's rights to the premises pursuant to
the SLA if any equipment placed on the Site by TRITEL unreasonably interferes
with any equipment located on said Leased Premises and TRITEL fails to resolve
such interference problem as provided herein.
26. MAINTENANCE OF TOWER AND COMPLIANCE WITH LAW
CROWN, at CROWN's sole cost and expense, shall maintain the tower, and
any other portions of the Property and improvements thereto, in good order and
repair, wear and tear, damage by fire, the elements or other casualty excepted.
CROWN shall be responsible for compliance with any applicable marking and
lighting requirements of the FAA and the FCC and any and all other applicable
rules, laws, regulations which are applicable to any tower or other structure
and any property under each SLA. Notwithstanding the foregoing, TRITEL shall be
responsible for compliance with all applicable rules, laws, regulations which
are applicable to TRITEL's equipment, antennae, cabinet and other items and
property belonging to TRITEL.
27. SUPERSEDES
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 be bound by that Confidentiality Agreement dated October 8, 1998.
Notwithstanding anything contained in these exhibits and schedules, in
the event that there is any conflict between the terms of these exhibits and
schedules and paragraph 7 of this Agreement, the terms and provisions of the
exhibits and schedules shall control.
15
<PAGE>
28. COMPLIANCE WITH FCC RADIO
FREQUENCY RADIATION REQUIREMENTS
28.1. TRITEL'S INSTALLATION OR MODIFICATION OF EQUIPMENT AT THE SITES.
If TRITEL's installation or modification of equipment at a Site would put any
user of the Site into noncompliance with the FCC's exposure limits for radio
frequency radiation, then (i) in the event that such noncompliance can be cured
by limiting the general public's access to the Site, TRITEL shall pay its
prorata costs associated with limiting access to the Site prior to making such
installation and/or modification; or, (ii) in the event such noncompliance can
be cured by modifying the equipment of existing users of the Site, and such
users consent to such modifications, TRITEL shall pay its prorata costs
associated with making such modifications.
28.2. FUTURE COOPERATION. In the event that future installations and/or
modifications proposed by third parties would put any user of the Site into
noncompliance with the FCC's exposure limits for radio frequency radiation and
cannot be cured by limiting access to the Site, TRITEL shall not unreasonably
withhold its consent, when requested by CROWN, to modify its equipment so long
as all costs associated with making such modifications to TRITEL's equipment are
borne by the party proposing such installation and/or modification. TRITEL
further agrees that in the event that there is any change to applicable rules,
regulations and procedures governing radio frequency radiation which put the
Site into noncompliance with the FCC's or any other governmental agency's
exposure limits for radio frequency radiation, TRITEL will cooperate with CROWN
and other users of the Site to bring the Site into compliance, which cooperation
shall include but not be limited to sharing pro rata the costs associated with
bringing the Site into compliance.
28.3. PROTECTION OF WORKERS. TRITEL agrees to reduce power or suspend
operation if necessary and upon reasonable notice to prevent possible
overexposure of workers or the public to RF radiation. In the event that such
reduction or suspension causes a material reduction or impairment in service
and/or impairs in building coverage and the coverage objectives of TRITEL to the
applicable communications facility at the applicable Site for a period of ten
(10) days or more, TRITEL shall have the right to terminate the applicable SLA
(without further remedy or right of recovery).
28.4. 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 noncompliance 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.
28.5. MUTUAL CERTIFICATIONS. CROWN and TRITEL each certifies to the
other that it has adopted a safety plan for its employees and requires
certification of its subcontractors 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, its employees and subcontractors, have been directed to
comply with their respective safety plan.
29. THIRD PARTIES
16
<PAGE>
Any obligations imposed on TRITEL in this Agreement shall be equally
and fully applicable to any other third parties that TRITEL brings on to the
property or comes upon the property through or under the authority of TRITEL.
Any breach by such other third parties shall be deemed a breach by TRITEL of
this Agreement and TRITEL shall be fully liable and responsible to CROWN
pursuant to the terms of this Agreement for such breach.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands and affixed
their respective seals the day and year first above written.
TRITEL COMMUNICATIONS, INC.
By: _____________________________________
Jerry M. Sullivan, Jr. Executive Vice President
and Chief Operating Officer
CROWN COMMUNICATION INC.
By: _____________________________________
John P. Kelly, Executive Vice President
and Chief Operating Officer
18
<PAGE>
Echo 013 KY-LEX, Lexington
EXHIBIT "A" TO THE MASTER LEASE AGREEMENT
-----------------------------------------
SITE LEASE ACKNOWLEDGMENT
This Master Lease Site Lease Acknowledgment ("SLA") is made and entered
into as of this ____ day of _______, 1999, by and between TRITEL COMMUNICATIONS,
INC., a Delaware corporation ("TRITEL") and CROWN COMMUNICATION INC., a Delaware
corporation, d/b/a CROWN COMMUNICATIONS ("CROWN"), pursuant and subject to that
certain Master Lease Agreement (the "Agreement") by and between the parties
hereto, dated as of October 30, 1998. All capitalized terms have the meanings
ascribed to them in the Agreement.
1. The Site shall consist of a portion of that certain parcel of
property, located in the City of Lexington, the County of Fayette, and the State
of Kentucky, more particularly described as all of Lot 3-C1 Block "A", Unit 3,
Lakeview Industrial Subdivision, together with the non-exclusive right for
ingress and egress, seven (7) days a week twentyfour (24) 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
rightofway extending from the nearest public rightofway to the premises, said
premises and rightofway for access being substantially as described herein in
Exhibit "4" (collectively the "Site") to the SLA attached hereto and made a part
hereof.
2. TRITEL shall have the right to install its antennas and equipment
consistent with the specifications and in the locations described below:
<TABLE>
<CAPTION>
<S> <C>
Manufacturer and type-number: Tx: Three (3) Allgon 7200.01
Rx: Three (3) Allgon 7251.01
Number of antennas: Six (6)
Weight and dimension of antenna(s) (LxWxD): Tx: 13.2 lbs., 74.8" x 5.5" x 2"
Rx: 17.6 lbs., 75" x 5" x 3.2"
Transmission line mfr. & type no.: Comscope CR50-1873PE
Diameter & length of transmission line: 1 5/8", 315'
Location of antennas (as described in
Exhibit "2" attached hereto and made a
part hereof): Echo 013 KY-LEX, Lexington
Centerline height of antenna(s) on structure: 265'
Direction of radiation: 0(o), 0(o), 120(o), 120(o), 240(o), 240(o)
</TABLE>
18
<PAGE>
Echo 013 KY-LEX, Lexington
Equipment building/floor space
dimensions (as described in Exhibit "3"
attached hereto and made part hereof): To be mounted in Room A in a 9' x
10' lease area within CROWN's
equipment building.
Frequencies/Max Power Output Tx: 1950-1965
Rx: 1950-1965
3. The first (1st) annual fee payment due and payable by TRITEL to
CROWN is [CONFIDENTIAL TREATMENT REQUESTED] per year, payable in equal monthly
installments of [CONFIDENTIAL TREATMENT REQUESTED], in accordance with the
Agreement. Any future fee adjustments shall be calculated in accordance with the
Agreement.
4. The parties acknowledge that CROWN's rights in the property derive
from a certain agreement dated August 15, 1997 between CROWN herein and Robert
A. Crown d/b/a Crown Communications, hereinafter referred to as the "Prime
Lease" and attached hereto as Exhibit "4" to the SLA.
IN WITNESS WHEREOF, the parties hereto have set their hands and affixed
their respective seals the day and year first above written.
TRITEL COMMUNICATIONS, INC.
By: _____________________________________
Jerry M. Sullivan, Jr. Executive Vice President
and Chief Operating Officer
CROWN COMMUNICATION INC.
D/B/A/ CROWN COMMUNICATIONS
By: _____________________________________
John P. Kelly, Executive Vice President
and Chief Operating Officer
<PAGE>
Echo 013 KY-LEX, Lexington
EXHIBIT "1" TO THE SLA
SITE DESCRIPTION
Street Address: 2599 Palumbo Drive
Lexington, KY 40509
Fayette County
Latitude: 38(o) 0' 54"
Longitude: 84(o) 26' 18"
<PAGE>
Echo 013 KY-LEX, Lexington
EXHIBIT "2" TO THE SLA
LOCATION OF ANTENNAS
SEE ATTACHED ENGINEERING SHEET
<PAGE>
CROWN COMMUNICATIONS, INC
ENGINEERING SHEET
CUSTOMER: Tritel Communications
JOB NUMBER 3199
SITE OF INTEREST: ECHO-013 KY-LEX LEXINGTON
REQUESTED INSTALLATION DATE: ________________
Crown Project Manager Marshall Boyd Phone Number 502-240-0044 Ext. 15
Network Manager John Eigenbrode Phone Number 724-416-2255
-----------------------
Latitude: 38(0) 00' 55.00" N Rev. Date
-----------------------
Longitude: 84(0) 26' 17.00" W 12/17/98
-----------------------
ANTENNA INFORMATION:
*See Key Below
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ANTENNA USE ANT. ANTENNA LEVEL UPRIGHT AZIMUTH DOWN TOWER FEEDLINE FEEDLINE COLOR
ID CODE TYPE MODEL (FEET) /INVERT (0)T/M TILT MOUNT TYPE LENGTH CODE
* * CTR LINE (0) PREAmp
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 A1 T P 7200.01 265' Upright 0(0) - - 1 5/8" 315' 2
- ------------------------------------------------------------------------------------------------------------------------------------
2 A4 R P 7251.01 265' Upright 0(0) - Yes 2 x 1 5/8" 315' 2222
- ------------------------------------------------------------------------------------------------------------------------------------
3 B1 T P 7200.01 265' Upright 120(0) - - 1 5/8" 315' 6
- ------------------------------------------------------------------------------------------------------------------------------------
4 B4 R P 7251.01 265' Upright 120(0) - Yes 2 x 1 5/8" 315' 6666
- ------------------------------------------------------------------------------------------------------------------------------------
5 C1 T P 7200.01 265' Upright 240(0) - - 1 5/8" 315' 9
- ------------------------------------------------------------------------------------------------------------------------------------
6 C4 R P 7251.01 265' Upright 240(0) - Yes 2 x 1 5/8" 315' 9999
- ------------------------------------------------------------------------------------------------------------------------------------
7
- ------------------------------------------------------------------------------------------------------------------------------------
8
- ------------------------------------------------------------------------------------------------------------------------------------
9
- ------------------------------------------------------------------------------------------------------------------------------------
10
- ------------------------------------------------------------------------------------------------------------------------------------
11
- ------------------------------------------------------------------------------------------------------------------------------------
12
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
T-TRANSMIT O-OMNI M-MICROWAVE DISH G-GPS
R-RECEIVE P-PANEL Y-YAGI
D-DUPLEX D-DIPOLE S-SAT. DISH
<TABLE>
<CAPTION>
ANTENNA SPECIFICATIONS:
- ------------------------------------------------------------------------------------------------------------------------------------
ANT. MODEL MANUFACTURER CONNECTOR TYPE DIMENSIONS WEIGHT WIND LOADING MOUNT
(H X W X D) WEIGHT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
7251.01 Allgon DIN Female 75"x5x3.2" 17.6 lbs 2.6 ft2 --
- ------------------------------------------------------------------------------------------------------------------------------------
7200.01 Allgon DIN Female 74.8"x5.5"x2" 13.2 lbs 2.85 ft2 --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FEEDLINE MANUFACTURER: COMSCOPE CR5O-1873PE 1 5/8" COAX
LIGHTNING SUPPRESSOR:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MANUFACTURER MODEL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Polyphaser
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT "2"
<PAGE>
CROWN COMMUNICATIONS, INC
ENGINEERING SHEET
Base Station Equipment:
Manufacturer: Ericsson
Model Number:
Power Output (Watts):
Connector Type(s): N Female
Floor Space Assign: 9' x 10' leased area per floor plan
Frequencies (Mhz): Transmit Receive
----------------------------------------------
1950-1965 1950-1965
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TRANSMITTER INTERMOD PROTECTION:
Bandpass Filter Mfg.:
Bandpass Filter Model #:
Bandpass Filter Range:
Duplexer Mfg.:
Duplexer Model #:
Duplexer TXRX Isolation:
LAND/BUILDING/POWER REQUIREMENTS:
Building/Shelter Size: Equipment to be mounted in Room A as per floor plan
in 9'x 10' lease area
Building/Shelter Type:
Required AC Power: 100 amp service
House or Metered Power: Metered
Generator / Non Generator: Non-Generator
NETWORK ENGINEERING APPROVAL: JJE DATE: 12/18/98
COMMENTS / SPECIAL INSTRUCTIONS
<PAGE>
Echo 013 KY-LEX, Lexington
EXHIBIT "3" TO THE SLA
DESCRIPTION OF EQUIPMENT BUILDING/FLOOR SPACE
SEE ATTACHED SITE PLAN
<PAGE>
Echo 013 KY-LEX, Lexington
GRAPHIC OMITTED
<PAGE>
Echo 013 KY-LEX, Lexington
EXHIBIT "4" TO THE SLA
PRIME LEASE AGREEMENT
SEE ATTACHED SPECIAL WARRANTY DEED
<PAGE>
SPECIAL WARRANTY DEED
THIS DEED MADE the ____ day of ________, 1997 by and between ROBERT A. CROWN
D/B/A CROWN COMMUNICATIONS, [a married man], with an address of the Township of
Collier, County of Allegheny and Commonwealth of Pennsylvania (hereinafter
called "Grantor")
AND
CROWN COMMUNICATION INC., a Delaware corporation, with an address of 510 Bering
Drive, Suite 301, Houston, TX 77057 (hereinafter called "Grantee")
WITNESSETH, that for valuable consideration in the total amount of __________
paid in cash, the receipt of which is hereby acknowledged, Grantor does hereby
grant, bargain, sell, convey and transfer, unto Grantee, its successors and
assigns, the following described real estate situated in Fayette County,
Kentucky, and being more particularly described as follows:
All of Lot 3C1 Block "A", Unit 3, Lakeview Industrial Subdivision, in Lexington,
Fayette County, Kentucky, as shown on the Fourth Amended Final Record Plat of
Lot 3, Block "A", Lakeview Industrial Subdivision, of record in the Fayette
County Clerk's Office, Plat Cabinet J, Slide 196.
Being the same property conveyed to Crown Communications, a sole proprietorship,
by deed dated July 30, 1991, of record in Deed Book 1594, Page 578 and being the
same property conveyed to Robert A. Crown d/b/a Crown Communications, by Deed of
Correction, dated December 23, 1991, of record in Deed Book 1614, page 58, both
in the Office of the Clerk of the County Court of Fayette County, Kentucky.
Exhibit 2
Exhibit 4
<PAGE>
Echo 013 KY-LEX, Lexington
TO HAVE AND TO HOLD, Said land, with its appurtenances, unto said Grantee, its
successors and assigns forever, with covenant of Special Warranty, and said
Grantor further covenants with said Grantee, its successors and assigns, that
Grantor is lawfully seized of said land in fee simple, and has full right and
power to convey the same, and that said land is free from all encumbrances.
PROVIDED, however, there is excepted from the foregoing covenants and
warranties, all reservations, building and use restrictions in prior deeds or
instruments of record; public utility easements and other easements as shown of
record; all matters apparent upon an inspection of the property hereby conveyed
and all zoning and land use laws; and all coal, mineral and mining rights and
oil and gas leases heretofore granted.
WITNESS, Whereof said Grantor has hereunto set his hand on the day and
date first above written.
-------------------------------
ROBERT A. CROWN
D/B/A CROWN COMMUNICATIONS
COMMONWEALTH OF PENNSYLVANIA )
) ss:
COUNTY OF ALLEGHENY )
The foregoing instrument was acknowledged before me this ____ day of
August, 1997, by Robert A. Crown, d/b/a Crown Communications.
My commission expires: ________________________
------------------------
Notary Public
<PAGE>
Echo 013 KY-LEX, Lexington
CONSIDERATION CERTIFICATE
We, Robert A. Crown, d/b/a Crown Communications, Grantor, and
_______________________, ______________________ of Crown Communication Inc., do
hereby certificate pursuant to KRS Chapter 382, that the abovestated
consideration in the amount of ______________, is true, correct and full
consideration paid for the property herein conveyed.
------------------------------------
ROBERT A. CROWN
D/B/A CROWN COMMUNICATIONS
------------------------------------
CROWN COMMUNICATION INC.
By: ________________________________
Its: _______________________________
COMMONWEALTH OF PENNSYLVANIA )
) SS:
COUNTY OF ALLEGHENY )
The foregoing consideration certificate was subscribed and sworn to
before me this ____ day of August, 1997, by Robert A. Crown, d/b/a Crown
Communications, Grantor, and _____________________________, _________________,
of Crown Communication Inc., a Delaware corporation, Grantee, on behalf of the
corporation.
My commission expires: ________________________
------------------------
Notary Public
(SEAL)
This instrument was prepared by:
- -----------------------------
Donald A. Kortlandt
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, Pennsylvania 15222-2312
(412) 355-6546
<PAGE>
MASTER LICENSE AGREEMENT
Between
Signal One, LLC
And
Tritel Communications, Inc.
Dated: , 199__
<PAGE>
Table of Contents
Page
----
1. Master License..................................................1
2. Premises........................................................1
3. Use.............................................................1
4. Provision of Information........................................2
5. Term............................................................2
6. License Fees....................................................2
7. Facilities; Utilities; Access...................................3
8. Interference....................................................4
9. Tests and Contingencies.........................................4
10. Taxes...........................................................5
11. Waive of Licensor's Lien........................................5
12. Termination.....................................................6
13. Event of Default; Remedies......................................6
14. Destruction or Condemnation.....................................7
15. Insurance.......................................................7
16. Waiver of Subrogation...........................................7
17. Assignment and Subletting.......................................7
18. Warranty of Title and Quiet Enjoyment...........................8
19. Repairs.........................................................8
20. Hazardous Substances............................................8
21. Liability and Indemnity.........................................9
22. Miscellaneous...................................................9
23. Marking and Lighting Requirements..............................10
24. Radio Frequency Exposure Safety Plan...........................11
Exhibit A Site License
Exhibit B Non-Disturbance Agreement
Exhibit C Memorandum of Lease.
Exhibit D RF Radiation MPE Evaluation Questionnaire
2
<PAGE>
MASTER LICENSE AGREEMENT
------------------------
(MULTIPLE LOCATIONS)
--------------------
This Master License Agreement ("Agreement") is entered into as of the
__ day of December, 1998 between Signal One, LLC, a Delaware Limited Liability
Corporation, ("Licensor") and Tritel Communications, Inc., a Delaware
corporation ("Licensee").
R-1. Licensee is licensed by the Federal Communications Commission
("FCC") to construct and operate communications systems throughout the United
States.
R-2. Licensor owns, leases from a prime landlord under a lease
agreement ("Prime Lease"), operates and/or manages real estate, buildings,
towers, tanks, and/or other improvements ("Improvements") on real property (each
a "Site") throughout the United States and wishes to grant the right to use
portions of a number of the Sites to Licensee for the purpose of locating and
operating communications facilities and services thereon.
R-3. Licensee desires to obtain the right to use from Licensor portions
of such Sites for such purpose.
NOW, THEREFORE for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. MASTER LICENSE. This Agreement sets forth the basic terms and conditions upon
which the right to use each Site or portion thereof is licensed by Licensor to
Licensee. Upon the parties' agreement as to the particular terms of any such
license, the parties shall execute and attach hereto a completed site license
("Site License") in substantially the form attached hereto as EXHIBIT A, which
is incorporated herein by this reference. The terms and conditions of any Site
License shall govern and control in the event of a discrepancy or inconsistency
with the terms and conditions of this Agreement.
2. PREMISES. Licensor either owns, leases or licenses the Sites and
Improvements. Upon request of Licensee, Licensor shall obtain the written
consent of the prime landlord, if consent is required under the Prime Lease, to
the Site License within thirty (30) days of the Site License. Upon execution of
a Site License and subject to the terms and conditions of this Agreement and the
Site License for the particular Site, Licensor hereby grants to Licensee, the
right to use space on the Site as more particularly described in each Site
License and space on the related Improvements (collectively, the "Premises")
together with easements for access and utilities and grants Licensee the right
to install and maintain transmission and utility wires, poles, cables, conduits
and pipes on the Site including over, under or along a right-of-way extending
from the nearest public right-of-way to the Premises.
3. USE. The Premises may be used by Licensee for any activity in connection with
the provision of communications services for which they are licensed by the FCC
to provide, including the right to install, maintain, operate, service, modify
and replace Licensee Facilities, without notice or Licensor's prior approval
except as may be provided in the Site License; provided however, if any
modification would alter the RF signature or the load factor on the tower, such
shall require the prior approval of Licensor, which approval shall not be
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unreasonably withheld, delayed or conditioned. Following the completion of any
installation and any modification, Licensee shall provide to Licensor, at
Licensee's expense, updated, as-built drawings, initialed by Licensee,
documenting all installed Licensee Facilities on the Site, including the
configuration thereof and any other information reasonably requested by
Licensor. The as-built drawings shall include an as-built survey locating the
Site to a monument or the tower (the "As-Built Survey"). Licensor agrees to
cooperate with Licensee, at Licensee's expense, in making application for and
obtaining all licenses, permits and any and all other necessary approvals that
may be required for Licensee's intended use of the Premises. Licensee shall at
all times take affirmative action to maintain all necessary permits, licenses
and government approvals.
4. PROVISION OF INFORMATION. Licensor shall provide Licensee with such
information regarding each Site which it operates throughout the United States
as may be necessary for Licensee to evaluate the usefulness of such Site for its
purposes. Licensor agrees to use reasonable efforts to cause each of its
subsidiaries and managers at each such Site to cooperate fully with Licensee and
its agents for the purpose of making appropriate engineering and boundary
surveys, inspections, soil test borings, other reasonably necessary tests and
constructing the Licensee Facilities (as defined in Paragraph 7(a) below),
including providing Licensee and such agents with access to such Sites and the
opportunity to conduct limited testing at any such Site, subject to reasonable
limitations imposed by Licensor and/or any of such managers.
5. TERM. The term of this Agreement shall be five (5) years commencing as of the
date contained in the Site License ("Commencement Date") and shall remain in
effect until expiration or termination of the last Site License entered into
pursuant to this Agreement. The term of each Site License shall be as identified
in the Site License terminating on the fifth (5th) anniversary of the
Commencement Date as identified in the Site License (the "Term") unless
otherwise terminated as provided herein. Licensee shall have the right to extend
the Term for four (4) successive five (5) year periods (the "Renewal Terms") on
the same terms and conditions as set forth herein. Each Site License shall
automatically be extended for each successive Renewal Term unless Licensee
notifies Licensor of its intention not to renew at least sixty (60) days prior
to commencement of the succeeding Renewal Term.
6. LICENSE FEES. Within fifteen (15) days of the Commencement Date and on the
first day of each month thereafter, Licensee shall pay to Licensor license fees
in accordance with each Site License ("License Fees"). License Fees for any
fractional month at the beginning or at the end of the Term or Renewal Term
shall be prorated. Any installment of License Fees shall be considered late if
not received by Licensor within fifteen (15) days of the due date and shall be
subject to a late payment charge in the amount of [CONFIDENTIAL TREATMENT
REQUESTED]of the amount of such installment. Interest shall accrue after the
date any installment of License Fees is considered late at the rate of
[CONFIDENTIAL TREATMENT REQUESTED] per month or the maximum effective variable
contract rate of interest which Licensor may from time to time lawfully charge,
whichever is less.
License Fees shall escalate by [CONFIDENTIAL TREATMENT REQUESTED]or CPI
(not to exceed [CONFIDENTIAL TREATMENT REQUESTED]per year), whichever is
greater, on the yearly anniversary of the Site License.
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7. FACILITIES; UTILITIES; ACCESS.
(a) Upon execution of a Site License, Licensee shall have the right to
erect, maintain, repair, replace, modify and operate on the applicable Premises
radio communications facilities, including without limitation air conditioned
equipment shelters and rooms, utility lines, transmission lines, electronic
equipment, radio transmitting and receiving antennas and supporting equipment
and structures thereto ("Licensee Facilities"). Upon execution of a Site
License, Licensee may install on any Site the antennas/dishes, if any, described
on the field drawings attached as EXHIBIT 1 to the applicable Site License and
the equipment shelter/room/cabinets, if any, described on the field drawings
attached as EXHIBIT 2 to such Site License and shall be entitled to replace any
thereof from time to time. In connection therewith, Licensee has the right to do
all work necessary to prepare, maintain and alter the Premises for Licensee's
business operations and to install transmission lines connecting the antennas to
the transmitters and receivers. If deemed necessary or desirable by Licensee,
Licensee may submit architectural and/or engineering plans and specifications
for each Site to Licensor, which shall be deemed approved if no response is
received from Licensor within fifteen (15) days, and which shall be incorporated
in each Site License as EXHIBIT 3 upon approval. All of Licensee's construction
and installation work shall be performed at Licensee's sole cost and expense and
in a good and workmanlike manner. Title to the Licensee Facilities shall be held
by Licensee. All of Licensee's Facilities shall remain Licensee's personal
property and are not fixtures. Licensee has the right to remove all Licensee
Facilities at its sole expense on or before the expiration or earlier
termination of each Site License; provided, Licensee repairs any damage to the
Premises caused by such removal.
(b) Licensee shall have the right to draw electricity and other
utilities from the existing utilities on the Site or obtain separate utility
service from any utility company that will provide service to the Site
(Including a standby power generator for Licensee's exclusive use). Payment of
electricity shall be made in accordance with each Site License. Licensor agrees
to sign such documents or easements as may be required by said utility companies
to provide such service to the Premises, including (if Licensor owns the site)
the grant to Licensee or to the servicing utility company at no cost to the
Licensee, of an easement in, over, across or through the Site as required by
such servicing utility company to provide utility services as provided herein.
Any easement necessary for such power or other utilities will be at a location
acceptable to Licensor and the servicing utility company.
(c) Licensee, Licensee's employees, agents, subcontractors, lenders and
invitees shall have access to the Premises without notice to Licensor
twenty-four (24) hours a day, seven (7) days a week, at no charge, subject to
reasonable security, control and safety procedures adopted from time to time by
Licensor to install, maintain, repair, modify and replace Licensee Facilities,
without the payment of additional rent. Licensor grants to Licensee, and its
agents, employees, contracts, guests and invitees, a non-exclusive right for
pedestrian and vehicular ingress and egress described in the Site License.
(d) Unless otherwise specified in the Site License, Licensor shall
maintain the Premises and tower and surrounding area in a safe condition and
shall maintain all access roadways from the nearest public roadway to the
Premises in a manner sufficient to allow pedestrian and vehicular access at all
times under normal weather conditions. Licensor shall be responsible for
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maintaining and repairing such roadway, at its sole expense, except for any
damage caused by Licensee's use of such roadways, normal wear and tear excepted.
(e) Licensee, at its expense, may use appropriate means of restricting
access to the Licensee Facilities, provided that Licensor shall have access to
the Site and the Improvements (but not necessarily the Licensee Facilities
themselves) at all times.
(f) Licensor shall take no action which would adversely affect
Licensee's use of the Site and not violate any term of the Prime Lease, if any,
which would give the prime landlord the right, with passage of time and/or
giving of notice to terminate the Prime Lease and comply with all rules and
regulations of the FCC and FAA and all federal, state and local laws governing
the Premises and the Site.
8. INTERFERENCE.
(a) Based upon information which shall be supplied by Licensor prior to
the execution of any Site License and included in such Site License as EXHIBIT
5, Licensee will evaluate the possibility of interference to the Licensee
Facilities at the Site from Licensor's current use of the Site and from other
existing uses of the Site. Licensee shall operate the Licensee Facilities in a
manner that will not cause interference to Licensor and other licensees of the
Site, provided that their installations predate that of the Licensee Facilities.
All operations by Licensee shall be in compliance with all FCC requirements.
(b) Subsequent to the installation of the Licensee Facilities, Licensor
shall not permit itself or its licensees to install new equipment on the
Premises or property contiguous thereto owned or controlled by Licensor, if such
equipment is likely to cause interference with Licensee's operations. Such
interference shall be deemed a material breach by Licensor. In the event
interference occurs, Licensor agrees to take all action necessary to eliminate
such interference, within thirty (30) days; provided, however, that if such
interference cannot reasonably be eliminated within such 30-day period, then
Licensor shall have such additional time as is necessary for the Licensor to
eliminate such interference, as long as Licensor promptly institutes the action
necessary to eliminate such interference and diligently pursues such action to
completion. In the event Licensor fails to comply with this paragraph, Licensee
may terminate the affected Site License and/or pursue any other remedies
available under this Agreement and the Site License, at law, and/or at equity,
including injunctive relief.
9. TESTS AND CONTINGENCIES.
(a) Licensor acknowledges that Licensee's ability to use any Premises
is contingent upon their suitability for Licensee's intended use from both an
economic and a technical engineering basis and Licensee's ability to obtain any
and all governmental licenses, permits, approvals, or other relief required or
deemed necessary or appropriate by Licensee for such use (the "Governmental
Approvals") and any other consents required for Licensee's use of such Premises
by the contingency date set forth in the Site License; provided that Licensee
shall have the right, without obligation, to appeal any denial of any such
Governmental Approval and the contingency date for obtaining Governmental
Approvals shall be extended until such time as a final non-appealable decision
is rendered.
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(b) Licensee may within ninety (90) days from the date of any Site
License, order a title search and/or survey of the Site or the Premises which is
a part thereof to determine if there are any conditions, liens, easements,
restrictions, encroachments, overlaps or other rights or grants which interfere
with Licensee's intended use and enjoyment of the Premises. If a survey is
performed, in the event of any inconsistency between the Site License and the
survey, Licensor shall make such amendments to the Site License and adjustments
in the location of the Premises as shall be reasonably necessary for Licensee's
use and satisfactory to Licensor and Licensee. If the title search or the survey
discloses any matters which Licensee deems unsuitable or which interfere with
Licensee's use and enjoyment of the Premises, Licensor shall cure such defects
within sixty (60) days or elect to allow Licensee to terminate the Site License.
The cost and expense for any title or survey work shall be borne by Licensee.
Licensee may obtain title insurance on its interest in the Premises. Licensor
shall cooperate by executing documentation required by the title insurance
company and reasonably acceptable to Licensor.
(c) Licensee is permitted, at its option, to obtain within ninety (90)
days after the date of any Site License, at Licensee's expense, satisfactory
soil boring, percolation or other tests or reports of the Premises as are deemed
appropriate by Licensee to determine the physical characteristics and conditions
thereof. Any such tests or reports shall indicate, to Licensee's reasonable
satisfaction, that the Premises are suitable for Licensee's use.
(d) Upon written request given by Licensee to Licensor, Licensor shall
use diligent efforts to obtain within ninety (90) days from the date of any Site
License and, at its sole expense, a non-disturbance agreement from each
mortgagee of any interest in the Premises and the prime landlord, if any, of the
Premises, other than for a mortgagee of Licensee's leasehold interest in the
Premises, which non-disturbance agreement shall be in substantially the form
attached hereto as EXHIBIT B or other form acceptable to Licensee.
(e) Licensee may perform radio frequency propagation tests, confirm
availability of utilities and easements for ingress and egress, tower capacity
and the environmental conditions of the Premises.
(f) If any of the contingencies of this Paragraph 9 are not satisfied
within any applicable time period or waived by Licensee in writing, Licensee
shall have the right, without obligation, to terminate the related Site License
thereafter and render it null and void from and after the date of termination.
10. TAXES. If personal property taxes are assessed against the Premises,
Licensee shall pay any portion of such taxes directly attributable to the
Licensee Facilities located on a particular Site. Licensor shall pay all real
property taxes, assessments and deferred taxes on the Site.
11. WAIVE OF LICENSOR'S LIEN.
(a) Licensor waives any lien rights it may have against the Licensee
Facilities and Licensee has the right to remove the same at any time without
Licensor's consent.
(b) Licensor acknowledges that Licensee may have entered into a
financing arrangement including promissory notes and financial and security
agreements for the financing of the Licensee Facilities (the "Collateral") with
a third party financing entity (and may in the future
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enter into additional financing arrangements with other financing entities). In
connection therewith, Licensor (i) consents to the installation of the
Collateral; (ii) disclaims any interest in the Collateral, as fixtures or
otherwise; and (iii) agrees that the Collateral shall be exempt from execution,
foreclosure, sale, levy, attachment, or distress for any License Fees due or to
become due and that such Collateral may be removed at any time without recourse
to legal proceedings.
12. TERMINATION. A Site License may be terminated as follows: (i) by either
party upon a default of any covenant or term thereof by the other party, which
default is not cured within sixty (60) days of receipt of written notice of
default, provided that the grace period for any monetary default is ten (10)
days from receipt of notice of such default; or (ii) upon giving Licensor thirty
(30) days prior written notice if Licensee is unable to obtain or maintain any
license, permit or other approval necessary for the construction and operation
of Licensee Facilities without further liability under such Site License after
the effective date of termination; or (iii) upon giving Licensor thirty (30)
days prior written notice if Licensee is unable to occupy and utilize the
Premises due to an action of the FCC which adversely and economically affects
Licensee's business at this Site, including without limitation, a take back of
channels or change in frequencies, without further liability under such Site
License after the effective date of termination; or (iv) on or prior to the
first anniversary of the Commencement Date, upon giving Licensor one hundred
eighty (180) days prior written notice if Licensee determines that the Premises
are not appropriate for its operations for economic or technological reasons,
including, without limitation, signal interference, without further liability
under such Site License after the effective date of termination. Upon any
default by Licensor, in addition to the foregoing remedies, Licensee may, at its
option, elect to cure Licensor's default, in which event Licensee shall have the
right to offset any and all reasonable costs incurred in curing Licensor's
default against any License Fees or other amounts due Licensor.
13. EVENT OF DEFAULT; REMEDIES.
(a) In the event of a monetary default by the Licensee, Licensor shall
give Licensee written notice of said default, and Licensee shall have ten (10)
days from the date of receipt of said notice within which to cure the default.
In the event of any other default by the Licensee, Licensor shall give Licensee
written notice of said default, and Licensee shall have sixty (60) days from the
date of receipt of said notice within which to cure the default. If the Licensee
fails to cure the default, Licensor shall have the right to enter the Site and
to disable and remove any and all of the Licensee's Facilities from the Site.
Licensor shall then have the right to store the Licensee's Facilities, and the
Licensee shall indemnify and hold the Licensor harmless from the costs of
removal and storage.
(b) In addition to the remedies contained in paragraph (a), Licensor
shall have available to it all rights and remedies provided by law, in equity or
by statute. No right or remedy is intended to be exclusive of any other right or
remedy, and the Licensor's election of a specific remedy shall not preclude it
from using any other remedy available to it by statute or equity.
(c) In the event that the Licensor uses collection action to recover
any money owed to it by Licensee, Licensee agrees to pay the costs of
collection, including Licensor's reasonable attorney's fees.
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14. DESTRUCTION OR CONDEMNATION. If the Premises or Licensee Facilities are
damaged, destroyed, condemned or transferred in lieu of condemnation, Licensee
may elect to terminate the affected Site License as of the date of the damage,
destruction, condemnation or transfer in lieu of condemnation by giving notice
to Licensor no more than forty-five (45) days following the date of such damage,
destruction, condemnation or transfer in lieu of condemnation. If Licensee
chooses not to terminate the Site License, License Fees shall be reduced or
abated on a per diem basis in proportion to the actual reduction or abatement of
use of the Premises. Licensor and Licensee shall each be entitled to pursue
their own separate awards in the event of a taking of a Site. Notwithstanding
the foregoing, in the event the Premises are damaged or destroyed, Licensee
shall not terminate the Site License covering such Premises if: (a) within
forty-five (45) days after the date of such damage or destruction, Licensor
elects to repair, restore or rehabilitate the Premises; (b) so notifies Licensee
in writing; (c) commences and diligently pursues such repair; (d) such repair
can be reasonably completed within a period of time not to exceed thirty (30)
days, but if it cannot be reasonably completed within that period of time, in no
event longer than ninety (90) days; and (e) Licensor secures, at Licensor's
expense, a suitable temporary facility for Licensee.
15. INSURANCE. Licensee, at Licensee's sole cost and expense, shall procure and
maintain on the Premises and on the Licensee Facilities (to include the
equipment, shelter, room and cabinets), bodily injury and property damage
insurance with a combined single limit of at least One Million and 00/100
Dollars ($1,000,000.00) per occurrence. Such insurance shall insure, on an
occurrence basis, against liability of Licensee, its employees and agents
arising out of or in connection with Licensee's use of the Premises, all as
provided for herein. Licensor, at Licensor's sole cost and expense, shall
procure and maintain on the Site, bodily injury and property damage insurance
with a combined single limit of at least One Million Dollars ($1,000,000.00) per
occurrence. Such insurance shall insure, on an occurrence basis, against
liability of Licensor, its employees and agents arising out of or in connection
with Licensor's use, occupancy and maintenance of the Site. Each party shall be
named as an additional insured on the other's policy. Each party shall provide
to the other a certificate of insurance evidencing the coverage required by this
paragraph within thirty (30) days of the Commencement Date.
16. WAIVER OF SUBROGATION. Licensor and Licensee release each other and their
respective principals, officers, directors, employees, representatives and
agents, from any claims for damage to any person or to the Premises or to the
Licensee Facilities thereon caused by, or that result from, risks insured
against under any insurance policies carried by the parties and in force at the
time of any such damage. Licensor and Licensee shall cause each insurance policy
obtained by them to provide that the insurance company waives all right of
recovery by way of subrogation against the other in connection with any damage
covered by any policy. Neither Licensor nor Licensee shall be liable to the
other for any damage caused by fire or any of the risks insured against under
any insurance policy required by Paragraph 15.
17. ASSIGNMENT AND SUBLETTING. Licensee may not assign, or otherwise transfer
all or any part of its interest in this Agreement or any Site License or in the
Premises without the prior written consent of Licensor; provided, however, that
Licensee may assign its interest to its parent company, any subsidiary or
affiliate of it or its parent company or to any successor-in-interest or entity
acquiring fifty-one percent (51%) or more of its stock or assets, subject to any
financing entity's interest, if any, in this Agreement as set forth in Paragraph
11 above. Licensor may
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assign this Agreement or any Site License upon written notice to Licensee,
subject to the assignee assuming all of Licensor's obligations herein, including
but not limited to, those set forth in Paragraph 11 above. Notwithstanding
anything to the contrary contained in this Agreement, Licensee may assign,
mortgage, pledge, hypothecate or otherwise transfer without consent its interest
in this Agreement or Site License to any financing entity, or agent on behalf of
any financing entity to whom Licensee (i) has obligations for borrowed money or
in respect of guaranties thereof, (ii) has obligations evidenced by bonds,
debentures, notes or similar instruments, or (iii) has obligations under or with
respect to letters of credit, bankers acceptances and similar facilities or in
respect of guaranties thereof. Upon notification to Licensor by Licensee of any
such assignment, Licensee shall be relieved of all future performance,
liabilities and obligations under such Site License. Licensee may not otherwise
assign or sublet any Site License without Licensor's consent, which shall not be
unreasonably withheld or delayed.
18. WARRANTY OF TITLE AND QUIET ENJOYMENT. Licensor warrants that: (i) Licensor
owns or has good leasehold interests in the Sites and has unrestricted rights,
based upon the public deed records, of access, ingress and egress thereto; (ii)
Licensor has full right to make and perform this Agreement and each Site License
entered into pursuant to the terms hereof; and (iii) Licensor covenants and
agrees with Licensee that upon Licensee paying the License Fees and observing
and performing all the terms, covenants and conditions on Licensee's part to be
observed and performed, Licensee may peacefully and quietly enjoy the Premises.
Licensor agrees to indemnify and hold harmless Licensee from any and all claims
against Licensee's interest in each Site License made by persons lawfully
claiming from, through or under Licensor, but not otherwise.
19. REPAIRS. Licensee shall not be required to make any repairs to the Premises
or Site unless such repairs shall be necessitated by reason of the default or
neglect of Licensee. Upon expiration or termination of each Site License,
Licensee shall restore the Premises to the condition in which it existed upon
execution hereof, reasonable wear and tear and loss by casualty or other causes
beyond Licensee's control excepted.
20. HAZARDOUS SUBSTANCES. Licensee agrees that it will not use, generate, store
or dispose of any Hazardous Material on, under, about or within any Site in
violation of any law or regulation. Licensor represents, warrants and agrees (1)
that neither Licensor nor, to Licensor's knowledge, any third party has used,
generated, stored or disposed of, or permitted the use, generation, storage or
disposal of, any Hazardous Material on, under, about or within any Site except
as disclosed on any Site License, and (2) that Licensor will not, and will not
permit any third party to use, generate, store or dispose of any Hazardous
Material on, under, about or within any Site in violation of any law or
regulation. Licensor and Licensee each agree to defend, indemnify and hold
harmless the other and the other's partners, affiliates, agents and employees
against any and all losses, liabilities, claims and/or costs (including
reasonable attorneys' fees and cost) arising from any breach of any
representation, warranty or agreement contained in this paragraph. In addition,
Licensor shall defend, indemnify and hold harmless Licensee from all other
losses, liabilities, claims and/or costs arising from or related to the
environmental condition of the Site, including costs of remediation, which are
not the result of any act of Licensee. As used in this paragraph, "Hazardous
Material" shall mean petroleum or any petroleum product, asbestos, any substance
known by the state in which any Site is located to cause cancer and/or
reproductive toxicity, and/or any substance, chemical or waste that is
identified as hazardous, toxic or
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dangerous in any applicable federal, state or local law or regulation. This
paragraph shall survive the termination of this Agreement.
21. LIABILITY AND INDEMNITY. Licensee shall indemnify and hold Licensor harmless
from all claims (including attorney's fees, costs and expenses of defending
against such claims) arising or alleged to arise from the acts or omissions of
Licensee or Licensee's agents, employees, licensees, invitees or contractors
occurring in or about the Site. Licensor shall indemnify and hold Licensee
harmless from all claims (including attorneys' fees, costs and expenses of
defending against such claims) arising or alleged to arise from the acts or
omissions of Licensor or Licensor's agents, employees, licensees, invitees,
contractors or other tenants occurring in or about the Premises. In no event
shall the liability of Licensee or Licensor under this Agreement include damages
for lost profits, consequential or punitive damages. The duties and liabilities
described in this Paragraph 21 survive termination of this Agreement.
22. MISCELLANEOUS.
(a) This Agreement together with each Site License entered into
pursuant to the terms hereof constitutes the entire agreement and understanding
between the parties, and supersedes all offers, negotiations and other
agreements concerning the subject matter contained herein. Any amendments to
this Agreement and each Site License must be in writing and executed by both
parties.
(b) If any provision of this Agreement or any Site License is invalid
or unenforceable with respect to any party, the remainder of this of this
Agreement and/or Site License or the application of such provision to persons
other than those as to whom it is held invalid or unenforceable, shall not be
affected and each provision of this Agreement and/or Site License shall be valid
and enforceable to the fullest extent permitted by law.
(c) This Agreement and each Site License shall be binding on and inure
to the benefit of the successors and permitted assignees of the respective
parties.
(d) Any notice or demand required to be given herein shall be made by
certified or registered mail, return receipt requested, or reliable overnight
courier to the address of the respective parties set forth below:
Licensor: SIGNAL ONE, LLC
5751 Uptain Road
Uptain Building, Suite 407
Chattanooga, TN 37411-5647
423-954-1111
Licensee: TRITEL COMMUNICATIONS, INC.
Kenneth F. Harris, Director of Site Acquisition
1410 Livingston Lane
Jackson, MS 39213
(601) 362-2200
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Any such notice or demand shall be deemed to have been given if mailed, on the
expiration of forty-eight (48) hours after the date mailed, or if sent by
overnight courier, on the expiration of twenty-four (24) hours after the date
sent by overnight courier. Any party may change such party's address for
purposes of this Agreement by giving notice of such change to the other parties
pursuant to this paragraph.
(e) Each Site License and this Agreement as applied to that Site
License shall be construed in accordance with the laws of the State of
Tennessee.
(f) Licensor acknowledges that a Memorandum of Lease in substantially
the form annexed hereto as EXHIBIT C may be recorded by Licensee, at Licensee's
sole expense, in the Official Records of the city or county where the Premises
is located.
(g) In any case where the approval or consent of one party hereto is
required, requested or otherwise to be given under this Agreement or any Site
License, such party shall not unreasonably delay or withhold its approval or
consent.
(h) The prevailing party in any litigation arising hereunder or under
any Site License shall be entitled to its reasonable attorney's fees, expert
witness fees and court costs, including appeals, if any.
(i) If either party is represented by a real estate broker in this
transaction, that party shall be fully responsible for any fee due such broker,
and shall hold the other party harmless from any claims for commission by such
broker. (j) All Riders and Exhibits annexed hereto form material parts of this
Agreement and each Site License.
(k) This Agreement and any Site License may be executed in duplicate
counterparts, each of which shall be deemed an original.
23. MARKING AND LIGHTING REQUIREMENTS.
(a) Licensor shall be responsible for compliance with all marking and
lighting requirements of the Federal Aviation Administration ("FAA") and the FCC
provided that if the requirement for compliance results from Licensee's
Facilities, Licensee shall pay for such reasonable costs and expenses (including
for any lighting automated alarm system). Should Licensee be cited because the
Site is not in compliance and, should Licensor fail to cure the conditions of
noncompliance, Licensee may either terminate the affected Site License or
proceed to cure the conditions of noncompliance at Licensor's expense, which
amounts may be deducted from the License Fees or otherwise obtained from
Licensor.
(b) If lighting requirements apply and a lighting automatic alarm
system has been installed by Licensor, Licensor shall allow Licensee to
bridge-in to the system to permit a parallel alarm or to install a second alarm
(to the extent permitted under the Prime Lease) if a bridge would interfere with
Licensor's alarm. Licensee shall be responsible for the cost and expense of
maintaining the bridge or parallel alarm. Notwithstanding anything in this
Paragraph
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23(b), the responsibility for compliance with FAA and FCC requirements shall
remain with Licensor as provided in Paragraph 23(a) above.
24. RADIO FREQUENCY EXPOSURE SAFETY PLAN. Licensee acknowledges and understands
that Licensor has installed or may install certain signage and/or physical
barriers pertaining to radio frequency exposure from Licensor's transmitter and
other equipment. Licensee shall instruct all of its personnel and its
contractors performing work at the Site to read carefully all such signage, to
follow the instructions provided in such signage, and to honor all physical
barriers. In no event shall Licensee's personnel or contractors tamper with any
such signage or barriers. Licensee shall be responsible for placement of signage
or physical barriers at or near Licensee's Facilities at the Site in order to
comply with applicable FCC radio frequency exposure guidelines. Licensor agrees
that it shall cooperate with Licensee in these efforts and that Licensor shall
instruct its personnel and contractors performing work at the Site to read
carefully all such signage, to follow the instructions provided in such signage,
and to honor all physical barriers. In no event shall Licensor's personnel or
contractors tamper with any such signage or barriers. Licensor and Licensee
shall cooperate in good faith to minimize any confusion or unnecessary
duplication that could result from similar signage being posted respecting other
carriers' transmission equipment (if any) at or near the Site. Licensee shall
complete the Questionnaire in substantially the form annexed hereto as EXHIBIT D
may be recorded by Licensee, at Licensee's sole expense, in the Official Records
of the city or county where the Premises is located.
IN WITNESS WHEREOF, the parties have executed this Master License
Agreement as of the date first above written.
LICENSOR: LICENSEE:
By:.............................. By:...................................
Jerry M. Sullivan, Jr
Title:........................... Title: Executive Vice President
and Chief Operating Offer
Date:............................ Date:.................................
Tax ID#.......................... Tax ID#...............................
11
<PAGE>
License ID #: TN0504T0791 Tenant ID #:T079
EXHIBIT A
SITE LICENSE
This Site License to the Master License Agreement dated December 31,
1998 ("Agreement"), between SIGNAL ONE, LLC ("Licensor") and TRITEL
COMMUNICATIONS, INC. ("Licensee") is executed this ____ day of March, 1999. This
License Supersedes all previous Agreements, both verbal and written between the
parties for this Site.
1. Site Name/Number: TN0504 Chattanooga/Standifer Gap Park
2. Name of Licensor: Signal One, LLC
3. Name of Licensee: Tritel Communications, Inc.
4. Site Street Address: 1225 Firedog Drive
5. Equipment: See Exhibit 1 attached
6. Site Latitude and Longitude: 35(degree) 01' 58" 85(degree) 06' 14"
7. Mounting Height: 170 feet (portal at 160 feet) AGL
8. Commencement Date: Upon installation of equipment, but no
later than 5/1/99
9. Monthly License Fees: [CONFIDENTIAL TREATMENT REQUESTED]
10. Escalation: The greater of [CONFIDENTIAL TREATMENT
REQUESTED] or [CONFIDENTIAL TREATMENT
REQUESTED], but not to exceed
[CONFIDENTIAL TREATMENT REQUESTED]
annually
11. Term: Five (5) Years
12. Electricity: By Separate Meter
13. Site Ownership: LicensorLeased (Copy of Underlying Land
Lease Attached as Exhibit 5
14. Special Access Requirements: N/A
15. Existingc Environmental Issues: N/A
16. Licensor Contact Misty Audier Day(423) 9541111
Emergency Access: Pager (888) 9547784
<PAGE>
17. Licensee Contact for Emergency: Ken Harris Ph # (601) 3622210
LICENSOR: LICENSEE:
SIGNAL ONE, LLC TRITEL COMMUNICATIONS, INC.
By:_________________________________ By:________________________________
Printed Name: C. John Enloe Printed Name: Jerry M. Sullivan, Jr.
Title: Chief Operating Officer Title: Executive Vice
President/COO
Date:_______________________________ Date:_______________________________
2
<PAGE>
EXHIBITS
The following Exhibits are acknowledged and are hereby incorporated
In this Site License Agreement
Exhibit 1 Licensee's Equipment to be installed at that site
Exhibit 2 RF MPE Questionnaire to be completed by Licensee
Exhibit 3 Tritel Standard Entry Agreement
Exhibit 4 Copy of Site Development Plan/Survey
Exhibit 5 Copy of Underlying Land Lease
Licensor Licensee
- ------------------ ----------------
Initials Initials
3
<PAGE>
EXHIBIT 1
Licensee's Equipment to be installed at the Site (Attached)
Licensor Licensee
- ------------------ ----------------
Initials Initials
4
<PAGE>
EXHIBIT 2
RF MPE Questionnaire to be completed by Licensee (Attached)
Licensor Licensee
- ------------------ ----------------
Initials Initials
5
<PAGE>
SIGNAL ONE
RF RADIATION MPE EVALUATION QUESTIONNAIRE
(MAXIMUM PERMISSIBLE EXPOSURE)
Name of
Licensee:_________________________ Contact:______________________________
License
Today's Date:_____________ Expiration Date:___________________________________
Call Sign: ____________ Site Name: ________________________________________
Antenna Location:_____________________________________________________________
(Lat., long., or UTM)
Mailing Address: _____________________________________________________________
Phone No: (____) ______________________Fax No: (____) _______________________
email: ______________________________________________________________________
Emission
Transmit Frequency (MHz): _____________________ Designator: _______________
Transmitter RF Output Power (W): ____________________________________________
Antenna Gain (DB): _________________________Line Loss:_______________________
Type of Antenna Feed Line:____________________________________________________
(e.g. coax, hardline, openwire, direct end feed, waveguide)
Type of Antenna:
______________________________________________________________________________
(e.g. dipole, vertical, beam, parabolic dish)
Height of Antenna on Tower:___________________________________________________
Is this a Directional Antenna? Yes [ ] No [ ]
If Yes, what is the Beam Width (Degrees)?__________________
Return Completed Questionnaire To: Signal One, LLC
5751 Uptain Road
Suite 407
Chattanooga, TN 37411
OR Via Facsimile to: (423) 9541182
ATTN: Kimberly Price
6
<PAGE>
EXHIBIT 3
Tritel Standard Entry Agreement (Attached)
Licensor Licensee
- ------------------ ----------------
Initials Initials
7
<PAGE>
Site: Chattanooga/Standifer Gap Park Site ID: TN0504
ENTRY AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of the ____
day of March, 1999 by and between Signal One, LLC, "Landowner or Ground Lessor",
and Tritel Communications, Inc. "TRITEL", concerning the Site identified above.
A. TRITEL has an interest in subleasing the Property for use as a tower
or antenna site for the receipt and transmission of wireless communications
signals; and
B. In order for TRITEL to determine the viability and feasibility of
the Property as a tower or antenna site, it is necessary for employees, agents
or independent contractors of TRITEL to enter upon and inspect the Property
and/or temporarily locate communications equipment on the Property to conduct
short term radio propagation tests.
C. TRITEL desires to provide for the entry upon, inspection and/or
testing activities, and other applications concerning the Property pursuant to
the terms contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
undertakings, and other considerations set forth in this Agreement, Landowner or
Ground Lessor and TRITEL agree as follows:
1. Consent. Landowner or Ground Lessor consents and agrees that TRITEL,
its employees, agents, and independent contractors ("Authorized Parties") may
enter upon the Property to conduct and perform the following activities
("Permitted Activities"): radio propagation studies. TRITEL agrees to be
responsible for any and all costs related to the Permitted Activities, including
installation on and operation and removal of equipment on the Property.
2. Access. Landowner or Ground Lessor agrees that the Authorized
Parties may enter upon 24 hours prior notice to Landowner or Ground Lessor.
TRITEL shall conduct the Permitted Activities with minimal interference with the
business activities being conducted on the Property.
3. Removal of Property. TRITEL agrees that it will, upon the conclusion
of the term of this Agreement, remove any equipment installed on the Property as
a part of the Permitted Activities, repair any damage to the Property that might
have been caused in connection with any of the Permitted Activities, and will
return the Property to the condition it was in before TRITEL's entry onto the
Property. In the event that any equipment installed on the Property by TRITEL is
not timely removed, Landowner or Ground Lessor will have the right to remove
such equipment and TRITEL agrees to be responsible for the reasonable costs of
such removal.
4. Indemnity. TRITEL agrees to indemnify, save harmless, and defend its
directors, officers, employees, and property management agent, if any, from and
against any and all claims, actions, damages, liability and expense in
connection with personal injury and/or damage to property arising from or out of
any occurrence in, upon or at the Property caused by the act or
8
<PAGE>
omission of the Authorized Parties in conducting the Permitted Activities. Any
defense conducted by TRITEL of any such claims, actions, damages, liability, and
expense will be conducted by attorneys chosen by TRITEL, and TRITEL will be
liable for the payment of any and all court costs, expenses of litigation,
reasonable attorneys' fees and any judgment that may be entered therein.
5. Governing Law. The parties agree that the interpretation and
construction of this Agreement shall be governed by the laws of the state in
which the Property is located, without regard to such state's conflict of laws
provisions.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the day and year first above written.
TRITEL COMMUNICATIONS, INC. SIGNAL ONE, LLC
By:________________________________ By: _______________________________
Name: Jerry M. Sullivan, Jr. Name: C. John Enloe
------------------------------ ------------------------------
Title: Executive Vice President/COO Title: Chief Operating Officer
----------------------------- ------------------------------
Date:______________________________ Date:______________________________
9
<PAGE>
EXHIBIT 4
Copy of Site Development Plan/Survey (Attached)
Licensor Licensee
- ------------------ ----------------
Initials Initials
10
<PAGE>
SITE SURVEY HERE
11
<PAGE>
EXHIBIT 5
Copy of Underlying Land Lease (Attached)
Licensor Licensee
- ------------------ ----------------
Initials Initials
12
<PAGE>
LAND LEASE AGREEMENT
Summit, TN Site No.: TN-060-98
THIS AGREEMENT, made this ___ day of _______________, 1997, between the
City of Chattanooga, Department of Public Works ("Landlord"), and SIGNAL ONE
CORPORATION, a Tennessee Corporation ("Tenant"):
1. PROPERTY. Landlord is the owner of certain real property located in
Hamilton County, State of Tennessee, and Tenant desires to lease a portion of
such real property, together with a rightofway thereto as hereinafter described
(such portion of real property and such rightofway being hereinafter called the
"Premises"). The Premises are more specifically depicted in, and substantially
shown on Exhibit "A" attached hereto and made a part hereof. A copy of the
survey of the property will be provided upon its completion and attached hereto
as Exhibit "B. "
2. PREMISES AND TERM. In consideration of the obligation of Tenant to
pay rent as hereinafter provided and in consideration of the other terms,
provisions and covenants hereof, Landlord hereby demises and leases to Tenant
and Tenant hereby takes from Landlord, the Premises, together with all rights,
privileges, easements, and appurtenances belonging or in any way pertaining
thereto, TO HAVE AND TO HOLD the same for a primary term of twenty (20) years,
commencing upon the receipt of building permits by Signal One Corporation or on
February 1, 1998, whichever first occurs.
3. RENEWAL. The term of this Lease Agreement will automatically renew
for ONE renewal term of twenty (20) years to begin upon the expiration of the
Primary Term unless either party gives a sixty (60) day notice of cancellation.
All of the other terms, provisions and covenants of this Lease Agreement shall
apply to the Renewal Term.
4. RENT.
(a) Tenant shall pay rent to Landlord at the rate of DOLLARS PER
MONTH commencing upon the receipt of building permits by Signal One Corporation
or on February 1, 1998, whichever first occurs. A monthly rental payment shall
be due and payable on or before the tenth day of each succeeding calendar month
during the Primary Term and any Renewal Term. The rent shall escalate at the
rate of each year on the anniversary date of the Lease.
(b) All payments of rent shall be made to Landlord as the same shall
become due in lawful money of the United States of America at the address
specified in Section 18 of this Lease Agreement, or to such other party or at
such other address as may be designated by Landlord by written notice delivered
to Tenant at least ten (10) days prior to the next ensuing monthly rental
payment date.
5. USE.
(a) The premises are being leased for the purposes of erecting,
installing, operating, and maintaining radio and communications towers,
buildings, and equipment. At all times during the term of this Lease Agreement,
Tenant shall have free access to the Premises
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<PAGE>
seven days a week, 24 hours a day, for these purposes and, if the Premises are
not conterminous with the entire parcel for which a legal description is
provided on Exhibit "A" and "B", shall at all times have an easement over the
parcel of land owned by Landlord that contains the Premises in order to have
free access to the Premises and for necessary utilities.
(b) Tenant shall have the right to sublease or grant licenses to use
the radio tower or any structure or equipment on the Premises but no such
sublease or license shall relieve Lessee from its obligation under this Lease
Agreement.
(c) If, at any time during the term of this Lease Agreement, the
Federal Aviation Administration, Federal Communications Commission, or other
governmental agency changes its regulations and requirements so that Tenant may
no longer use the Premises for the purposes originally intended, Tenant shall
have the right to terminate this Lease Agreement upon written notice to Landlord
and payment of rent through date of removal of the radio and communications
tower, building, equipment, and related items. In the event tenant terminates
this lease for any reason, then tenant shall have the responsibility to remove
all said property at its own expense.
6. UTILITY CHARGES. Tenant shall pay all charges incurred for the use
by Tenant of utility services at the Premises including, without limitation,
gas, electricity, water, sewer, and telephone.
7 INSURANCE.
(a) Tenant shall insure against property damage and bodily injury
arising by reason of occurrences on or about the Premises in the amount of not
less than One Million ($1,000,000.00) Dollars.
(b) The insurance coverage provided for herein may be maintained
pursuant to master policies of insurance covering other tower locations of
Tenant and its corporate affiliates. All insurance policies required to be
maintained by Tenant hereunder shall be with responsible insurance companies
authorized to do business in the state where the Premises are located if
required by law, shall name the Landlord as an additional insured, as
appropriate, and shall provide for cancellation only upon ten (10) days' prior
written notice to Landlord. Tenant shall evidence such insurance coverage by
delivering to Landlord, if requested, a copy of all such policies or, at
Tenant's option, certificates in lieu thereof issued by the insurance companies
underwriting such risks.
PLEASE NOTE - PAGE 5 MISSING
12. DEFAULT.
(a) The following events shall be "Events of Default" under this
Lease Agreement:
(1) Tenant shall fail to pay any installment of rent hereby
reserved as and when the same shall become due and shall not cure such default
within ten (10) days after written notice thereof is given by Landlord to
Tenant;
14
<PAGE>
(2) Tenant shall fail to comply with any term, provision or
covenant of this Lease Agreement, other than the payment of rent, and shall not
cure such failure within thirty (30) days after written notice thereof is given
by Landlord to Tenant.
(b) Upon occurrence of any Event of Default, Landlord shall have the
option to pursue any one or more of the following remedies without any notice or
demand whatsoever:
(1) Terminate this Lease Agreement, in which event Tenant shall
immediately surrender the Premises;
(2) Enter upon and take possession of the Premises and remove
Tenant and other
persons who may be occupying the Premises, by force if necessary;
(3) Enter upon the Premises, without being liable for any claim
for damages, and do whatever Tenant is obligated to do under the terms of this
Lease Agreement; and Tenant agrees to reimburse Landlord on demand for any
expenses which Landlord may incur in thus effecting compliance with Tenant's
obligations hereunder.
13. RIGHT OF INSPECTION. Landlord and its agents and representatives
shall be entitled to enter upon and inspect the Premises at any time during
normal business hours, provided only that such inspection shall not unreasonably
interfere with Tenant's business.
14. WARRANTY OF TITLE AND QUIET ENJOYMENT.
(a) Landlord represents and warrants that it is the owner in fee
simple of the Premises, and that it alone has the full right to lease the
Premises for the term set out herein. Landlord further represents and warrants
that Tenant, on paying the rent and performing its obligations hereunder, shall
peaceably and quietly hold and enjoy the Premises for the term of this Lease
Agreement, including the Renewal Term, without any hindrance, molestation or
ejection by Landlord, its successors or assigns, or those claiming through them.
(b) During the term of this Lease Agreement, Landlord covenants and
agrees that it will not grant, create or suffer any claim, lien, encumbrance,
easement, restriction, or other charge or exception to title to the Premises
without the prior written consent of Tenant; provided, however, that it is
expressly agreed and understood that Landlord may subject its interest in the
Premises to a first mortgage loan if the lender shall agree for itself, its
successors and assigns, by written instrument to be bound by the terms of this
Lease Agreement; not to disturb Tenant's use or possession of the Premises in
the event of a foreclosure of such lien or encumbrance so long as Tenant is not
in default hereunder; and not to join Tenant as a party defendant in any such
foreclosure proceeding taken by it.
15. HOLDING OVER BY TENANT. Should Tenant or any assigns, sublessee or
licensee of Tenant hold over the Premises or any part thereof after the
expiration of the Primary Term or Renewal Term hereof, unless otherwise agreed
to in writing, such holdover shall constitute and be construed as a tenancy from
monthtomonth only, but otherwise upon the same terms and conditions.
15
<PAGE>
16. RIGHT OF FIRST REFUSAL. If during the term of this Lease Agreement,
including the Renewal Term, the Landlords shall have received a bona fide offer
to purchase the Premises from any third party, the Landlord shall serve a notice
upon the Tenant. The notice shall set forth the exact terms of the offer so
received, together with a copy of such offer, and shall state the desire of the
Landlord to sell the Premises on such terms and conditions. Thereafter, the
Tenant shall have the right and option to purchase the Premises at the price and
upon the terms and conditions specified in the offer. If the Tenant desires to
exercise its option, it shall give notice to that effect to the Landlord within
thirty (30) days after receipt of the Landlord's notice. The Tenant's failure to
give timely notice shall be deemed a waiver of its right of first refusal.
17. LENDERS' CONTINUATION RIGHTS.
(a) Landlord recognizes the leases of all tower lessees and will
permit each of such lessees to remain in occupancy of its premises
notwithstanding any default hereunder by Lessee, so long as each such respective
lessee is not in default under the lease covering its premises.
(b) Landlord hereby agrees to subordinate any lien or security
interest which it may have which arises by law or pursuant to this Lease
Agreement to the lien and security interest of Tenant's mortgagee in the
collateral securing all indebtedness at any time owed by Tenant to its
mortgagee, and furthermore agrees that upon an event of default under the loan
documents between Tenant and its mortgagee or this Lease Agreement, Tenant's
mortgagee shall be fully entitled to exercise its rights against the Collateral
prior to the exercise by the Landlord of any rights which it may have therein,
including, but not limited to, entry upon the Premises and removal of the
Collateral free and clear of the Landlords' lien and security interest.
18. NOTICE AND PAYMENTS. Any notice, document or payment required or
permitted to be delivered or remitted hereunder or by law shall be deemed to be
delivered or remitted when deposited in the United States mail, postage prepaid,
addressed to the parties hereto at the respective addresses set out below, or at
such other address as they shall have theretofore specified by written notice
delivered in accordance herewith:
LANDLORD: City of Chattanooga
Department of Public Works
Suite 210, City Hall
Chattanooga, TN 37402
TENANT: Signal One Corporation
5751 Uptain Road, Ste. 407
Chattanooga, TN 37411
19. PROPERTY TAXES. TENANT SHALL BE RESPONSIBLE FOR MAKING ANY
NECESSARY RETURNS FOR AND PAYING ANY AND ALL PROPERTY TAXES OF ANY KIND OR
NATURE. THE TENANT SHALL NOTIFY THE HAMILTON COUNTY ASSESSOR OF TAXES OF ITS
LEASE HOLD INTEREST IN THE PROPERTY SO THAT A TIMELY ASSESSMENT OF ITS INTEREST
MAY BE MADE.
20. MISCELLANEOUS. This Lease Agreement contains the entire agreement
of the parties hereto with respect to the subject matter hereof and can be
altered, amended, or modified
16
<PAGE>
only by written consent executed by all parties, and shall be governed by the
laws of the state of Tennessee.
17
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Land Lease
Agreement, the day and year first above written.
SIGNAL ONE CORPORATION
By:__________________________________
G. Larry Wells
President
STATE OF TENNESSEE
COUNTY OF HAMILTON
Before me, the undersigned authority, on this day personally appeared
G. LARRY WELLS, known to me (or proved to me) to be the person whose name is
subscribed to the foregoing instrument, and acknowledged to me that he executed
the same for the purposes and in consideration therein expressed.
Given under my hand and seal of office this ___ day of
___________________ 1998.
- -----------------------------
Notary Public
My commission expires:_________
By:
Jack Marcellis
Administrator
STATE OF TENNESSEE
COUNTY OF HAMILTON
Before me, the undersigned authority, on this day personally appeared
___________________, known to me (or proved to me) to be the person whose name
is subscribed to the foregoing instrument, and acknowledged to me that he
executed the same for the purposes and in consideration therein expressed.
Given under my hand and seal of office this _________ day of
___________________1998.
- -----------------------------
Notary Public
My commission expires:_________
18
<PAGE>
EXHIBIT "A"
The property referenced in the Lease Agreement between SIGNAL ONE
CORPORATION and the City of Chattanooga Department of Public Works is described
in the records of the Register of Deeds for the County of Hamilton in Deed Book
3392 page 30 belonging to The City of Chattanooga. SIGNAL ONE CORPORATION is
leasing a 100' X 100' portion of that property, shown as Tax Map 140 , parcel
141 a copy of which is attached, including the thirty (30') foot easement
indicated thereon, and any easement necessary utility easements. Upon completion
of a survey, a copy of said survey will be provided as Exhibit "B." The 100' x
100' site must be approved by the City of Chattanooga.
19
<PAGE>
================================================================================
MANAGEMENT AGREEMENT
between
TRITEL MANAGEMENT, LLC
and
TRITEL, INC.
Dated as of January 7, 1999
================================================================================
<PAGE>
MANAGEMENT AGREEMENT
--------------------
This Management Agreement (the "Agreement") is entered into as of
January 7, 1999 (the "Effective Date") by and between TRITEL MANAGEMENT, LLC, a
Mississippi limited liability company ("Manager"), and TRITEL, INC., a Delaware
corporation (the "Company"). Capitalized terms used but not defined in this
Agreement shall have the meanings given to such terms in the Stockholders
Agreement of the Company, dated as of the date hereof (the "Stockholders
Agreement").
W I T N E S S E T H:
WHEREAS, the operation of the Business, including, without limitation,
the determination of policy, the preparation and filing of any and all
applications and other filings with the FCC, the hiring, supervision and
dismissal of personnel, day-to-day system operations, and the payment of
financial obligations and operating expenses, shall be controlled by the
Company, and Manager shall assist the Company in connection therewith and any
action undertaken by Manager shall be under the Company's continuing oversight,
review, control and approval, and the Company shall retain unfettered control
of, access to, and use of the Business, including its facilities and equipment
and shall be entitled to receive all profits from the operation of the Business;
WHEREAS, William M. Mounger, II, E.B. Martin, Jr., Jerry M. Sullivan,
Jr. (collectively, the "Senior Executives") are the owners of all of the
ownership interests in Manager and are each employed by the Company pursuant to
their respective employment agreements with the Company of even date herewith
(collectively, the "Employment Agreements");
WHEREAS, the Senior Executives are the owners of all of the issued and
outstanding shares of Voting Preference Stock and of 100% of the issued and
outstanding shares of Class C Common Stock;
WHEREAS, the Senior Executives are willing to cause Manager to provide
management services for the Company and its Subsidiaries on the terms and
subject to the conditions contained in this Agreement; and
WHEREAS, the parties desire to execute this Agreement to specify the
terms upon which Manager will perform services to the Company hereunder.
NOW, THEREFORE, for and in consideration of the premises, the covenants
and agreements set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged by the execution and delivery
hereof, the parties agree as follows:
Section 1. Engagement. The Company hereby engages Manager to oversee,
manage and supervise the Company and the development and operation of the
Business, and Manager hereby accepts such engagement, subject to and upon the
terms and conditions hereof.
<PAGE>
Section 2. Management Standards. Manager shall discharge its duties
hereunder in compliance with the Stockholders' Agreement, the Network Membership
License Agreement, the Resale Agreement and the Roaming Agreement (collectively
the "Operating Agreements") and all applicable Law. In performing its
obligations hereunder, Manager shall act in a manner that it reasonably believes
to be in or not opposed to the best interests of the Company consistent with the
standards set forth herein. Nothing in this Agreement shall be construed as
constituting Manager an agent of the Company beyond the extent expressly
provided in, and as limited by, this Agreement.
Section 3. Services to be Provided.
(a) Scope of Services. Subject to the Company's oversight, review
and ultimate control and approval and the limitations of Section 3(d) below,
Manager shall be responsible for the design, construction and operation of the
Company and the Business in accordance with the Operating Agreements, which
shall be carried out by the Company's employees under the supervision and
control of the Senior Executives. To this end Manager shall provide generally,
on the terms and subject to the conditions set forth herein and in a manner
consistent with the standards set forth herein and in the Operating Agreements,
supervisory services with respect to (I) all administrative, accounting,
billing, credit, collection, insurance, purchasing, clerical and such other
general services as may be necessary to the administration of the Business, (II)
operational, engineering, maintenance, construction, repair and such other
technical services as may be necessary to the construction and operation of the
Business, and (III) marketing, sales, advertising and such other promotional
services as may be necessary to the marketing of the Business. The services for
which Manager shall be responsible, subject in each case to the Operating
Agreements, the Company's oversight, review and ultimate control and approval
and to the limitations of Section 3(d) below, shall include but shall not be
limited to the following:
(i) the marketing of Company Communications Services to be
offered and provided by the Company;
(ii) the management, tax compliance, accounting and financial reporting for the
Company including, but not limited to, the preparation and presentation of
reports and reviews of the business, financial results and condition, regulatory
status, competitive position and strategic prospects of the Company as requested
by the Board of Directors;
(iii) the regulatory processing for the Company, including
without limitation the preparation and filing of all appropriate regulatory
filings, certificates, tariffs and reports that are required by, and
participation in any hearings or other proceedings before, local, state and
federal governmental regulatory bodies;
(iv) the engineering, design, planning, construction and
installation, maintenance and repair (both emergency and routine) and operation
of, and equipment purchases for, the Company;
(v) assisting the Company in the development and preparation of
budgets, including, without limitation, preparing and presenting, not later than
90 days before the
2
<PAGE>
beginning of each fiscal year, a proposed draft of an annual operating budget
for the Company's review, evaluation and approval setting forth in reasonable
detail the anticipated capital expenditures and other projected costs and
expenses of constructing and operating the Business during the period covered by
the budget, as well as projected revenues for that period, and generally
describing all contracts and commitments which Manager expects to enter into on
behalf of the Company during the period covered thereby;
(vi) services relating to sales of the products and services
offered by the Company, including without limitation processing orders for
service, customer support, billing for services provided by the Company and
collection of receivables for the Company;
(vii) management information services for the Company;
(viii) monitoring and controlling the Business and its PCS and
Cellular Systems;
(ix) negotiating contracts, issuing purchase orders and otherwise
entering into agreements on behalf of the Company for the purchase, lease,
license or use of such properties, services and rights as may be necessary or
desirable in the judgment of Manager for the operation of the Company;
(x) supervising, recruiting and training all necessary personnel
to be employed by the Company, and determining salaries, wages and benefits for
the Company's employees;
(xi) administering the Company's employee benefit programs and
the Company's programs for compliance with applicable laws governing the
administration and operation of such plans and programs;
(xii) administering the Company's risk management programs,
including negotiating the terms of property and casualty insurance and preparing
a comprehensive disaster recovery program; and
(xiii) in furtherance of the foregoing, making or committing to
make expenditures (including capital expenditures) on behalf of the Company.
(b) Accounts. Subject to the foregoing, the Company shall be
responsible for payment of all costs and expenses necessary to fund the ongoing
business and operations of the Business and for the provision of all services of
Manager hereunder, which shall include, but not be limited to, expenses arising
under Article 3, payments to independent contractors, payments to vendors and
suppliers of the Business, and interest payments to creditors who have financed
the construction or operation of the Business. To the extent provided herein,
Manager shall make such payments on the Company's behalf from one or more
accounts maintained in the name of the Company at one or more banks acceptable
to the Board of Directors, into which all Company revenues shall be deposited
(the "Accounts"). All funds of the Company shall be promptly deposited in such
bank accounts. All disbursements made by the Company as permitted under this
Agreement shall be made by checks drawn on the Accounts, and all funds on
deposit in the Accounts shall at all times be the property of the Company.
Manager will have the right and
3
<PAGE>
authority to make deposits to and disbursements and withdrawals from the
Accounts as required in connection with the performance of its services
hereunder, provided that all signatories on the Accounts shall be subject to the
approval of the Board of Directors.
(c) Restrictions on Manager's Authority. Any provision to the
contrary in this Agreement notwithstanding, unless such action is within (or on
terms more favorable to the Company than) parameters set forth in a budget or
business plan approved by the Board of Directors, Manager shall not do, or cause
or permit to be done, any of the following for or on behalf of the Company
without the prior written consent of the Board of Directors (excluding the
Senior Executives that are directors of the Company):
(i) settle any claim or litigation by or against the Company if
the settlement involves a payment of $100,000 or more, or any regulatory
proceedings involving the Company, unless such action is consistent with the
Company's regulatory strategy as set forth in a budget approved by the Board of
Directors;
(ii) lend money or guarantee debts of others (other than
wholly-owned Subsidiaries of the Company) on behalf of the Company, or assign,
transfer, or pledge any debts due the Company, or release or discharge any debt
due or compromise any claim of the Company, other than trade credit and advances
to employees in the ordinary course of business;
(iii) invest in or otherwise acquire any debt or equity
securities of any other Person, enter into any binding agreement for the
acquisition of any interest in any business entity or other Person (whether by
purchase of assets, purchase of stock or other securities, merger, loan or
otherwise), or enter into any joint venture or partnership with any other
Person;
(iv) take any tax reporting position or make any related election
on behalf of the Company which is inconsistent with the directions given by the
Board of Directors;
(v) formally assert a strategic position with respect to a
material matter before the Federal Communications Commission or any Governmental
Authority on behalf of the Company with respect to any such matter;
(vi) knowingly take or fail to take any action that violates (A)
any Law relating to the Business, (B) any agreement, arrangement or
understanding to which the Company is a party, including an Operating Agreement,
(C) any License or other governmental authorization granted to the Company in
connection with its ownership and operation of the Business, or (D) any judicial
or administrative order or decree to which the Company is subject, in each case
unless such violation would not be reasonably expected (so far as can be
foreseen at the time) to have a material adverse effect on the Company or the
Business;
(vii) sell, assign, transfer, or otherwise dispose of, or
hypothecate or grant a Lien on any assets belonging to the Company (other than
the disposal of assets or equipment in the ordinary course of business);
(viii) take any action amending or agreeing to amend any License
granted to the Company in connection with its ownership and operation of the
Business;
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(ix) borrow money on behalf of the Company or enter into other
forms of financing for the Business, including any capital lease;
(x) commingle any funds of the Company with funds of any other
entity or Person;
(xi) hire or fire the independent certified public accountants of
the Company;
(xii) pay to any employee or agent of, or consultant or advisor
to, the Company, compensation in any form in excess of $100,000 in any fiscal
year;
(xiii) establish any reserves; or
(xiv) enter into any contract, agreement or other commitment or
issue any purchase order, which contract or other agreement or purchase order
(i) is not in the ordinary course of business, (ii) obligates the Company to
make payments of $100,000 or more or (iii) will create a material variance
(greater than 15%) relative to (x) in the case of a capital expenditure, the
total budget for capital expenditures contained in any budget approved by the
Board of Directors and (y) in the case of an operating expense, the total
operating expense budget contained in any budget approved by the Board of
Directors, in each case for the year-to-date period in which the expenditure is
made or incurred and taking into account all previous expenditures and
commitments in such year-to-date period, provided, that the approval of the
Board of Directors shall not be required for any contract, purchase order or
agreement the material terms of which are within (or on terms more favorable to
the Company than) the parameters set forth in any budget approved by the Board
of Directors; or terminate or amend in any material respect any contract,
agreement or other commitment or purchase order, in each case if the execution
and delivery or issuance thereof requires approval pursuant to this Section
3(d).
Section 4. Compensation.
(a) Reimbursement. The Company shall reimburse Manager for all
out-of-pocket expenses ("Out-of-Pocket Expenses") reasonably incurred by Manager
for goods and services provided by third parties to, for or on behalf of the
Company. Manager shall provide the Company with a statement setting forth in
reasonable detail (and with copies of invoices or other supporting
documentation) the Out-of-Pocket Expenses claimed and the Company shall pay to
Manager each such amount within thirty (30) days of receipt of the statement.
Notwithstanding anything to the contrary contained in this Agreement, (i) no
portion of the salaries of the Senior Executives or the general overhead
expenses of Manager shall be subject to reimbursement as Out-of-Pocket Expenses
and (ii) in no event will Manager be responsible for the payment from its own
funds of any expenses, obligations or liabilities of the Company.
(b) Management Fees. In consideration of Manager's performance of
its responsibilities with respect to the Business, the Company shall pay
Manager, commencing on the date hereof, a management fee per annum equal to
$10,000 (the "Management Fee").
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(c) Disputes, etc. If the Company disputes the amount of expenses or
fees claimed by Manager, the Company shall notify Manager in writing before
payment is due, and if the matter cannot be resolved informally between the
parties, either the Company or Manager may request resolution of the dispute
pursuant to Section 9. The Company shall pay when due the portion of any such
amounts that is not in dispute.
Section 5. Term and Termination.
(a) Term. This Agreement shall commence on the Effective Date and,
unless earlier terminated in accordance herewith, shall terminate on the fifth
(5th) anniversary of the Effective Date (the "Term").
(b) Termination.
(i) By Either Party. Either party may terminate this Agreement in
the event that a Governmental Authority shall enter an order appointing a
custodian, receiver, trustee, intervenor or other officer with similar powers
with respect to the other party or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition in
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding up or liquidation of such party; or if a party files a petition seeking
any such order; or if any such petition shall be filed against such party and
shall not be dismissed within sixty (60) days thereafter; or an order shall have
been issued granting such party a suspension of payments under applicable law
and any such order is not dismissed within sixty (60) days thereafter.
(ii) By Company. The Company may terminate this Agreement:
(A) immediately in the event of a material breach of this
Agreement by Manager (as determined by a majority vote of the Board
of Directors (excluding the Senior Executives that are directors of
the Company)), which has not been cured within thirty (30) days
following notice thereof from the Company, including, without
limitation, the failure of the Company to meet any of the objectives
set forth on Schedule I hereto;
(B) immediately in the event that the Company shall fail to
comply with the terms of any representation, warranty, covenant or
agreement contained in the Credit Documents or in any other
agreement or instrument pursuant to which the Company has incurred
indebtedness for borrowed money in the principal amount of
$25,000,000 or more, which failure to comply results in (unless such
failure to comply has been waived or cured in the applicable cure
period) an event of default thereunder;
(C) immediately in the event that the indebtedness incurred
pursuant to the Credit Documents or any other indebtedness for
borrowed money of the Company in the principal amount of $25,000,000
or more shall have been accelerated by the holder thereof; or
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(D) immediately in the event that the Employment Agreements
of any two of the three Senior Executives are terminated for any
reason pursuant to their respective terms.
(iii) By Manager. Manager may terminate this Agreement:
(A) in the event of a material breach of this Agreement by
the Company (other than a payment default) which has not been cured
within thirty (30) days following notice thereof from the Company;
or
(B) voluntarily upon thirty (30) days prior written notice
to the Company.
(c) Remedies. The remedies set forth herein are not intended to be
exclusive, and all remedies shall be cumulative and may be exercised
concurrently with any other remedy available to Manager or the Company at law or
in equity.
(d) Continuing Obligations. After receipt of written notice of
termination, but prior to the effective date of such termination, Manager shall
continue to perform under this Agreement unless specifically instructed to
discontinue such performance. In the event of termination, Manager and the
Company shall remain liable for their respective obligations accrued under this
Agreement prior to the effective date of termination.
(e) Transition Arrangements.
(i) In the event of termination of the Manager for any reason,
Manager shall at the Company's expense cooperate with the Company in order to
facilitate the transition to a new management service provider (the "New
Provider"). Upon such termination, the Board of Directors (excluding the Senior
Executives that are directors of the Company) shall nominate a New Provider that
would not cause a significant detrimental effect on the eligibility of the
Company to realize the benefits, if any, that the Company derives from its
status as a "very small business," as defined in 47 CFR Section 24.720(b)(2),
which New Provider shall be acceptable to Manager. Manager shall at the
Company's expense take whatever steps are commercially reasonable to assist the
New Provider in assuming the management of the Company and the operation of the
Business including, without limitation, transferring to the New Provider all
historical financial, tax, accounting and other data in the possession of
Manager, and giving such consents, assigning such permits and executing such
instruments as may be necessary to vest in the New Provider those rights that
were necessary for Manager to perform its services hereunder.
(ii) Within five (5) business days after the nomination by the
Board of Directors of a New Provider, the Senior Executives agree to nominate a
successor Person or group of Persons (collectively, a "Successor Control Group")
that would not cause a significant detrimental effect on the eligibility of the
Company to hold a Block F PCS license and to realize the benefits, if any, that
the Company derives from its status as a "very small business," as defined in 47
CFR Section 24.720(b)(2), to whom the Voting Preference Common Stock and Class C
Common Stock shall be transferred by the Senior Executives, which Successor
Control Group shall be reasonably acceptable to the Board of Directors
(excluding the Senior Executives
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that are directors of the Company); it being understood that the New Provider
shall be deemed to be a Successor Control Group reasonably acceptable to the
Board of Directors. Immediately after a Successor Control Group reasonably
acceptable to the Board of Directors is nominated, the Company, the Senior
Executives and the Manager shall take, or cause to be taken, all actions
necessary or required, including, without limitation, filing of all applications
with the FCC, to obtain all requisite consents and authorizations to permit the
transfer of the Voting Preference Common Stock and Class C Common Stock to the
Successor Control Group. On the first business day after all such consents and
authorizations shall have been obtained, the Senior Executives agree to resign
as directors and officers of the Company and to sell to the Successor Control
Group all of the shares of Voting Preference Common Stock for the per share
price paid by them for such shares and exchange with the Company the shares of
Class C Common Stock beneficially owned by them for an equal number of shares of
Class A Voting Common Stock of the Company. If at any time, whether by reason of
the inability of the Company to obtain all requisite consents and authorizations
to permit the transfer of the Voting Preference Common Stock to the Successor
Control Group or otherwise, the Board of Directors withdraws its consent to the
nomination of a Successor Control Group, the procedure outlined in Sections
5(e)(i) and (ii) shall be repeated commencing with the nomination by the Senior
Executives of a Successor Control Group within five (5) business days after the
nomination by the Board of Directors of a successor New Provider.
(f) Return of Information. Upon termination of this Agreement, all
books and records in the possession of Manager relating to the maintenance and
operation of and accounting for the Company, together with all supplies and
other items of property owned by the Company and in Manager's possession, shall
be delivered to the Company.
Section 6. Noncompetition and Confidentiality.
(a) Noncompetition. During the Term and for one year thereafter if
after the expiration of the Term on the fifth (5th) anniversary of the Effective
Date the Company offers to extend this Agreement for at least one (1) year on
terms and conditions no less favorable than those contained herein and the
Manager rejects such offer, neither of Manager nor any of its respective
Affiliates shall, without the consent of the Company, assist or become
associated with any person or entity, whether as a principal, partner, employee,
consultant or shareholder (other than as a holder of not in excess of 5% of the
outstanding voting shares of any publicly traded company) that is actively
engaged in the business of providing mobile wireless telecommunications services
in the Territory.
(b) Confidentiality. Without the prior written consent of the
Company, except to the extent required by an order of a court having competent
jurisdiction or under subpoena from a governmental body or agency, none of
Manager, the Senior Executives, nor any of their respective Affiliates shall
disclose any trade secrets, customer lists, drawings, designs, information
regarding product development, marketing plans, sales plans, manufacturing
plans, financial records, packaging design or other financial, commercial,
business or technical information relating to the Company or any of its
subsidiaries or affiliates (collectively, "Confidential Information"), to any
third person, unless such Confidential Information has been previously disclosed
to the public by the Company or is in the public domain (other than by reason of
Manager's, the Senior Executives' or any of their respective Affiliates' breach
of this
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Section 6(b)), except that Manager, the Senior Executives and their respective
Affiliates may disclose Confidential Information to the extent advisable in
their sole discretion in connection with (i) the performance of Manager's duties
hereunder, or (ii) the issuance of Company securities, or (iii) obtaining
financing for the Company, or (iv) the enforcement of Manager's rights under
this Agreement, or (v) any disclosures that may be required by law, including
securities laws.
(c) Company Property. Promptly following the termination of this
Agreement, Manager and the Senior Executives shall return to the Company all
property of the Company, and all copies thereof in its possession or under its
control, and all tangible embodiments of Confidential Information in its
possession in whatever media such Confidential Information is maintained.
(d) Non-Solicitation of Employees. During the Term and for one year
thereafter, none of Manager, the Senior Executives nor any of their respective
Affiliates will directly or indirectly induce any employee of the Company or any
of its subsidiaries or affiliates to terminate employment with such entity, and
will not directly or indirectly, either individually or as owner, agent,
employee, consultant or otherwise, employ or offer employment to any person who
is or was employed by the Company or a subsidiary thereof, unless such person
shall have ceased to be employed by such entity for a period of at least six
months.
(e) Injunctive Relief with Respect to Covenants. Manager and each
Senior Executive acknowledge and agree that the covenants and obligations with
respect to noncompetition, inventions, confidentiality and Company property
contained in this Section 6 relate to special, unique and extraordinary matters
and that a violation of any of the terms of such covenants and obligations will
cause the Company irreparable injury for which adequate remedies are not
available at law. Therefore, Manager and the Senior Executives agree that the
Company shall be entitled to an injunction, restraining order, or such other
equitable relief as a court of competent jurisdiction may deem necessary or
appropriate to restrain Manager and the Senior Executives from committing any
violation of the covenants and obligations contained in this Section 6. These
injunctive remedies are cumulative and are in addition to any other rights and
remedies the Company may have at law or in equity.
Section 7. Limitations of Liability.
(a) Force Majeure. Neither of the parties will be liable for
nonperformance or defective or late performance of any of its obligations
hereunder to the extent and for such periods of time as such nonperformance,
defective performance or late performance is due to reasons outside such party's
control, including acts of God, war (declared or undeclared), acts (including
failure to act) of any governmental authority, riots, revolutions, fire, floods,
explosions, sabotage, nuclear incidents, lightning, weather, earthquakes,
storms, sinkholes, epidemics, strikes, or delays of suppliers or subcontractors
for the same causes. Neither party shall be required to settle any labor dispute
in any manner which is deemed by that party to be less than totally
advantageous, in that party's sole discretion.
(b) Exculpation of Manager. Notwithstanding any other provision of
this Agreement, Manager shall not be liable for any failure or delay in its
performance hereunder,
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(except with respect to its performance of its obligations under Section 5(e))
or for any performance which is substandard, except where such failure, delay or
substandard performance is the result of willful misconduct or gross negligence
on the part of Manager.
(c) No Consequential or Special Damages. Manager shall not be
responsible to the Company or any other Person for any indirect, incidental,
consequential or special damages to the Company, the Business or any subscriber
or customer of any Business or any other person, including any damage to or loss
of revenues, business or goodwill, suffered by any person or entity for any
failure of any system or failure of performance hereunder. Manager's liability
to the Company in respect of any such failure shall be limited to the amounts
paid by the Company to Manager pursuant to this Agreement for the period of any
such failure.
Section 8. Books and Records. Manager shall keep or cause to be kept
accounts and complete books and records with respect to its management of the
operation of the Business, showing all costs, expenditures, allocations,
receipts, revenues, assets, and liabilities; any and all other records
necessary, convenient or incidental to recording the financial aspects of the
operation of the Business and sufficient to record the profits and losses
generated by the operation of the Business. Within fifteen (15) days after the
end of each month Manager shall prepare or cause to be prepared and transmit to
the Company unaudited statements, which shall include a general ledger and a
trial balance. Manager shall also provide at the Company's request and expense
any and all such additional statements or reports as may be reasonably necessary
to the Company's oversight and control of the Business. The Company shall have
control over and access, at all reasonable times during normal business hours,
to the books and records maintained by Manager pursuant to this Section 9.
Section 9. Dispute Resolution.
(a) Dispute Resolution. The parties desire to resolve disputes
arising out of this Agreement without litigation. Accordingly, except for action
seeking a temporary restraining order injunction related to the purposes of this
Agreement, or suit to compel compliance with this dispute resolution process,
the parties agree to use the dispute resolution procedures set forth in Section
9 as their sole remedy with respect to any controversy or claim arising out of
or relating to this Agreement or its breach.
At the written request of any party, the parties to the dispute will
appoint knowledgeable, responsible representatives to meet and negotiate in good
faith to resolve any dispute arising under this Agreement. The parties intend
that these negotiations be conducted by non-lawyer, business representatives,
including at least one senior executive of each party to the dispute. The
location, format, frequency, duration and conclusion of these discussions shall
be left to the discretion of the representatives. Discussion and correspondence
among the representatives for purposes of these negotiations shall be treated as
confidential information developed for purposes of settlement, exempt from
discovery and production, which shall not be admissible in the arbitration
described below. Documents identified in or provided with such communications,
which are not prepared for purposes of the negotiations, are not so exempted and
may, if otherwise admissible, be admitted in evidence in the arbitration or
lawsuit.
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(b) Mediation. If the negotiations set forth in Section 9(a) do not
resolve the dispute within thirty (30) days of the initial written request, the
parties agree to work in good faith to settle the dispute by mediation under the
commercial mediation rules of the American Arbitration Association. The parties
will attempt to agree on a mediator. If they are unable to do so, the mediation
will be referred to the New York, New York office of the American Arbitration
Association for mediation which will appoint a qualified mediator to serve. The
mediation shall take place in New York, New York or such other location as
mutually agreed upon by the parties. Unless the parties agree otherwise, the
first mediation session shall take place no later than ten (10) days after the
initial written request to negotiate. The mediation shall continue until the
dispute is resolved or until such time as the mediator makes a good faith
determination that the likelihood of resolution is sufficiently remote that
continuation of the mediation is not warranted.
(c) Arbitration. If the mediation conducted pursuant to Section 9(b)
does not resolve the dispute within thirty (30) days of the commencement of
mediation, or if prior to the expiration of such thirty (30) day period the
mediator determines that continuation of the mediation process is not warranted,
the dispute shall be submitted to binding arbitration by a panel of three
arbitrators pursuant to the Commercial Arbitration Rules of the American
Arbitration Association. Any party may demand such arbitration in accordance
with the procedures set out in those rules. Each party shall have the right to
take the deposition of up to five individuals (or a larger number of individuals
with the consent of two of the three arbitrators), and any expert witness
designated by the other party. Each party shall also have the right to request
production of relevant documents, the scope and enforcement of which shall be
governed by the arbitrator. Additional discovery may be only by order of the
arbitrator, and only upon a showing of substantial need. The arbitrator shall be
authorized to issue subpoenas for the purpose of requiring attendance of
witnesses at depositions. The arbitration hearing shall be commenced within ten
(10) days of the determination that mediation is not going to be successful. The
arbitration shall be held in New York, New York or such other location as
mutually agreed upon by the parties. The arbitrator shall control the scheduling
so as to process the matter expeditiously. The parties may submit written
briefs. The arbitrator shall rule on the dispute by issuing a written opinion
within thirty (30) days after the close of hearings. The times specified in this
section may be extended upon mutual agreement of the parties or by the
arbitrator upon a showing of good cause. The award rendered by arbitration shall
be final, binding and nonappealable judgment and the aware may be entered in any
court of competent jurisdiction in the United States. Special, consequential or
punitive damages shall not be awarded by the arbitrator.
(d) Confidentiality. The parties agree that all communications and
negotiations between the parties during the dispute resolution process, any
settlements agreed upon during the dispute resolution process and any
information regarding the other party obtained during the dispute resolution
process (that are not already public knowledge) are confidential and may be
disclosed only to employees and agents of the parties who shall have a "need to
know" the information and who shall have been made aware of the confidentiality
obligations set forth in this Section, unless the party is required by law to
disclose such information.
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(e) Fees and Expenses. The parties shall equally split the fees of
the mediator and the arbitrator. Any party found by the arbitrator to have
breached this Agreement shall pay all other out-of-pocket costs and expenses,
including reasonable attorneys' fees and expenses, of the other party incurred
in connection with the dispute resolution process. If the arbitrator does not
find that any party has breached this Agreement, then each party shall bear its
own costs and expenses, including attorneys' fees and expenses.
Section 10. Inspection Rights; Delivery of Information.
(a) Company's Right to Inspect. Manager will permit representatives
of the Company, at the Company's cost, during normal business hours and upon not
less than five business days' advanced written request, to (i) visit and inspect
during normal business hours Manager's properties and facilities which are
utilized in connection with Manager's provision of services to the Company
pursuant to this Agreement, including without limitation access to, and the
right to make copies of, books and records of the Company located at such
properties and facilities, and (ii) discuss with Manager's officers and
employees such properties and facilities and Manager's provision of services to
the Company pursuant to this Agreement. All such information shall be held in
confidence by the Company, except for disclosures made to the Company's
advisors, lenders and investors, or as required to be disclosed by process of
law or other applicable law.
(b) Notice of Certain Events. Promptly, and in any event within
three (3) business days after Manager has received notice or has otherwise
become aware thereof, Manager shall give the Company notice of (i) the
commencement of any material proceeding or investigation against the Company or
Manager by or before any governmental body or in any court or before any
arbitrator which would be likely to have a material adverse effect on Manager,
the Business or the Company, or on Manager's ability to perform its obligations
hereunder, and (ii) the occurrence or non-occurrence of any event (x) which
constitutes, or which with the passage of time or giving of notice or both would
constitute, a default by the Company or Manager under this Agreement or under
any other material agreement to which the Company or Manager is a party or by
which its properties may be bound, and (y) would be likely to have a material
adverse effect on Manager, the Business or the Company, or on Manager's ability
to perform its obligations hereunder, giving in each case the details thereof
and specifying the action being taken or proposed to be taken with respect
thereto. Promptly upon receipt thereof, Manager shall deliver to the Company
copies of any material notice or report regarding any License from the grantor
of such license or from any Governmental authority regarding the Business or the
Company.
(c) Other Information. From time to time and promptly upon each
request, Manager shall provide the Company with such data, certificates,
reports, statements, financial projections, documents or further information
regarding the business, equity owners, assets, liabilities, financial position
or results of operations of Manager, as may be reasonably requested by the
Company.
Section 11. Representations and Warranties. Each party makes the
following representations and warranties to the other party, as a material
inducement to the other party to enter into this Agreement.
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(a) Organization and Standing of Parties. Each party is duly
organized, validly existing and in good standing under the laws of the State of
its formation referenced in the first paragraph of this Agreement. Each party
has full limited liability company or corporate power and authority to own its
assets and carry on its business as now conducted by it.
(b) Execution, Delivery, Performance and Binding Effect. The
execution, delivery and performance by each party of this Agreement have been
duly authorized by all necessary limited liability company or corporate action,
as appropriate, including by such party's members or managers or stockholders or
directors, as appropriate. Each party has full power and authority to enter into
and perform its obligations under this Agreement. The execution, delivery and
performance by such party of this Agreement will not (with the passage of time
or giving of notice or both) conflict with, violate any provision of, result in
the breach of, or constitute a default under (i) such party's articles of
organization, certificate of incorporation, regulations, or other constituent,
organizational or governing documents, as applicable, (ii) any License held by
such party, (iii) any Law, (iv) any order, writ, injunction, decree, judgment or
regulation of any Governmental Agency or (v) any contract, agreement,
arrangement or understanding, (A) to which such party is a party, (B) to which
or by which such party is subject or bound, or (C) to which or by which such
party's assets are subject or bound. The execution, delivery and performance of
this Agreement will not (with the passage of time or giving of notice or both)
(i) create or impose any Lien upon the assets of such party, (ii) result in the
termination, suspension, modification or impairment of any contract, agreement,
arrangement or understanding (A) to which such party is a party, (B) to which,
or by which, such party is subject or bound, or (C) to which or by which such
party's assets are subject or bound, or (iii) result in the termination,
suspension, modification or impairment of any governmental license, permit,
authorization or certificate held by such party or relating to its assets or
businesses. This Agreement constitutes the legal, valid and binding obligation
of such party enforceable against it in accordance with its terms.
(c) Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
Governmental Authority or other Person is required on the part of each party in
connection with the execution, delivery and performance of this Agreement.
(d) Litigation; Claims. With respect to each party, there is no
claim, action, audit, arbitration, dispute, investigation, suit, litigation or
legal proceeding pending, or to the best of such party's knowledge threatened,
against such party (i) relating to or otherwise affecting such party's ability
to execute and deliver this Agreement or to perform such party's obligations
hereunder, or (ii) which would materially adversely affect the Company or the
Company's contemplated business.
(e) Court Orders, Decrees, Judgments, etc. There is outstanding no
order, writ, injunction, decree or judgment of any court, governmental agency or
arbitration tribunal against a party (i) relating to or otherwise affecting such
party's ability to execute and deliver this Agreement or to perform such party's
obligations hereunder or (ii) which would materially adversely affect the
Company or the Company's contemplated business.
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Section 12. Miscellaneous.
(a) Counterparts. This Agreement may be executed by one or more of
the parties hereto in any number of counterparts and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
(b) Construction. Each of the parties hereto acknowledge that it has
reviewed this Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any amendments hereto.
(c) Benefit; Assignment. This Agreement shall be binding upon and
inure to the benefit of all parties hereto and their respective successors and
permitted assigns; provided, however, that Manager shall not assign or otherwise
transfer its rights and obligations under this Agreement without the Company's
prior written consent. Any sale, assignment, sublease or other transfer in
violation of this Section 12(c) shall be null and void. Each of the Stockholders
shall be deemed a third party beneficiary of the Company's rights under this
Agreement and shall be permitted to exercise any rights pursuant to this
provision with the consent of AT&T and two-thirds in interest of the Cash Equity
Investors.
(d) Complete Agreement. This document, the exhibits attached hereto
and each of the documents referred to herein, embody the complete agreement and
understanding among the parties and supersede and preempt any prior
understandings, agreements, or representations by or among the parties written
or oral, which may have related to the subject matter hereof in any way.
(e) Amendment. This Agreement may not be amended except by a writing
signed by each of the parties.
(f) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws, and not the laws of conflict, of the State
of New York.
(g) Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall for any reason or to any
extent be invalid or unenforceable, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected thereby, but, rather, shall be enforced to the extent permitted by law.
Furthermore, in lieu of such an illegal, invalid or unenforceable provision,
there shall be added automatically as part of this Agreement a provision as
similar in terms to such illegal, invalid or unenforceable provision as may be
possible and be legal, valid or enforceable.
(h) Further Assurances. The parties agree that they will take all
such further actions and execute and deliver all such further instruments and
documents as may be required in order to effectuate the agreements set forth in
this Agreement.
(i) Waiver. No failure or delay on the part of the parties or any of
them in exercising any right, power or privilege hereunder, nor any course of
dealing among the parties or any of them shall operate as a waiver of any such
right, power or privilege nor shall any single or partial exercise of any such
right, power or privilege preclude the simultaneous or later
14
<PAGE>
exercise of any other right, power or privilege. The rights and remedies herein
expressly provided are cumulative and are not exclusive of any rights or
remedies which the parties or any of them would otherwise have.
(j) Notices. All notices and communications hereunder shall be in
writing and shall be deemed to have been duly given to a party when delivered in
person (including delivery by an express delivery service or by facsimile
transmission during the recipient's regular business hours) to an officer of the
Company or to Manager, respectively, or three (3) business days after such
notice is enclosed in a properly sealed envelope, certified or registered, and
deposited (postage and certification or registration prepaid) in a post office
or collection facility regularly maintained by the United States Postal Service
and addressed as follows:
If to Manager:
Tritel, Inc.
1080 River Oaks Drive
Suite B-100
Jackson, MS 39208
Attn: Chief Executive Officer
Telephone: (601) 936-0893
Facsimile: (601) 936-6045
with a copy to:
Tritel, Inc.
1080 River Oaks Drive
Suite B-100
Jackson, MS 39208
Attn: General Counsel
Telephone: (601) 936-0893
Facsimile: (601) 936-6045
If to the Company:
Tritel, Inc.
1080 River Oaks Drive
Suite B-100
Jackson, MS 39208
Attn: Chief Executive Officer
Telephone: (601) 936-0893
Facsimile: (601) 936-6045
With copies to:
Tritel Management, LLC
1080 River Oaks Drive
Suite B-100
Jackson, MS 39208
15
<PAGE>
Attention: General Counsel
Telephone: (601) 936-0893
Facsimile: (601) 936-6045
AT&T Wireless Services, Inc.
5000 Carillon Point
Kirkland, Washington 98033
Attention: William W. Hague
Telephone: (425) 828-8461
Facsimile: (425) 828-8451
and
AT&T Corp.
295 North Maple Avenue
Basking Ridge, NJ 07920
Attention: Corporate Secretary
Telephone:
Facsimile: (908) 953-4657
and
Friedman Kaplan & Seiler LLP
875 Third Avenue, 8th Floor
New York, New York 10022
Attention: Daniel M. Taitz
Telephone: (212) 833-1109
Facsimile: (212) 355-6401
and
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, New York 10112
Attention: Gregg S. Lerner, Esq.
Telephone: (212) 698-7705
Facsimile: (212) 698-7825
and
To each Cash Equity Investor, to its address set forth on
Schedule I to the Stockholders Agreement.
and
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
16
<PAGE>
Attention: Mark S. Wojciechowski, Esq.
Telephone: (212) 506-2525
Facsimile: (212) 262-1910
or to such other addresses as either party may designate in a
written notice served upon the other party in the manner provided
herein.
* * *
17
<PAGE>
IN WITNESS WHEREOF, the parties have set their hands effective as of the
date first written above.
COMPANY:
TRITEL, INC.
By:
----------------------------------------
Name:
Title:
MANAGER:
TRITEL MANAGEMENT, LLC
By:
----------------------------------------
Name:
Title:
In order to induce the Company to execute and deliver the foregoing Management
Agreement, by their execution in the spaces provided below each of the
undersigned hereby agrees to be bound by the provisions of Sections 5(e) and 6
of this Agreement and to use good faith efforts to cause the Manager to perform
all of its obligations pursuant to this Agreement.
SENIOR EXECUTIVES
By:
----------------------------------------
William M. Mounger, II
By:
----------------------------------------
E.B. Martin, Jr.
By:
----------------------------------------
Jerry M. Sullivan, Jr.
18
<PAGE>
SCHEDULE I
----------
Objectives
----------
[TO BE ESTABLISHED BY THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS]
I-1
<PAGE>
Table of Contents
Page
Section 1. Engagement.....................................................1
Section 2. Management Standards...........................................2
Section 3. Services to be Provided.2
(a) Scope of Services..............................................2
(b) Accounts.......................................................3
(c) Restrictions on Manager's Authority............................4
Section 4. Compensation.5
(a) Reimbursement..................................................5
(b) Management Fees................................................5
(c) Disputes, etc..................................................6
Section 5. Term and Termination.6
(a) Term...........................................................6
(b) Termination.6
(c) Remedies.......................................................7
(d) Continuing Obligations.........................................7
(e) Transition Arrangements.7
(f) Return of Information..........................................8
Section 6. Noncompetition and Confidentiality.8
(a) Noncompetition.................................................8
(b) Confidentiality................................................8
(c) Company Property...............................................9
(d) Non-Solicitation of Employees..................................9
(e) Injunctive Relief with Respect to Covenants....................9
Section 7. Limitations of Liability.9
(a) Force Majeure..................................................9
(b) Exculpation of Manager.........................................9
(c) No Consequential or Special Damages...........................10
Section 8. Books and Records.............................................10
Section 9. Dispute Resolution............................................10
(a) Dispute Resolution............................................10
(b) Mediation.....................................................11
(c) Arbitration...................................................11
(d) Confidentiality...............................................11
(e) Fees and Expenses.............................................12
I-i
<PAGE>
Section 10. Inspection Rights; Delivery of Information....................12
(a) Company's Right to Inspect....................................12
(b) Notice of Certain Events......................................12
(c) Other Information.............................................12
Section 11. Representations and Warranties................................12
(a) Organization and Standing of Parties..........................13
(b) Execution, Delivery, Performance and Binding Effect...........13
(c) Consents......................................................13
(d) Litigation; Claims............................................13
(e) Court Orders, Decrees, Judgments, etc.........................13
Section 12. Miscellaneous.................................................14
(a) Counterparts..................................................14
(b) Construction..................................................14
(c) Benefit; Assignment...........................................14
(d) Complete Agreement............................................14
(e) Amendment.....................................................14
(f) Governing Law.................................................14
(g) Severability..................................................14
(h) Further Assurances............................................14
(i) Waiver........................................................14
(j) Notices.......................................................15
Schedule I - Objectives
I-ii
<PAGE>
MASTER ANTENNA SITE LEASE NO. D41
- --------------------------------------------------------------------------------
LESSOR: PINNACLE TOWERS INC. LESSEE: TRITEL COMMUNICATIONS, INC.
1549 RINGLING BOULEVARD 1410 LIVINGSTON LANE
THIRD FLOOR JACKSON, MS 39213-8003
SARASOTA, FL 34236
- --------------------------------------------------------------------------------
Lessor operates the antenna site(s) described in the Antenna Site Lease
Schedule(s) executed and delivered by Lessor and Lessee pursuant to this Lease
from time to time (each a "Schedule" and, collectively, the "Schedules"). Lessor
desires to lease to Lessee and Lessee desires to lease from Lessor certain space
at the site for installation and operation of Lessee's equipment on the terms
set forth in the Schedule(s) and herein. If the terms of a Schedule conflict
with this Lease, the Schedule shall control.
1. LEASED PREMISES. Lessor hereby leases to Lessee space at the site as
specified and described in a Schedule. If a Schedule provides that Lessee's
equipment will be connected to a multiplexer, Lessee shall be responsible for
all costs of multiplexer modules and other equipment required for the
connection. So long as Lessee has made the rental payments provided for in the
specific Schedule, the Lessee shall have quiet enjoyment of the site or sites
described in each Schedule.
2. TERM.
(a) The initial term and, if applicable, renewal terms of this Lease
for any antenna system shall be as specified on a Schedule. If a Schedule
provides for renewal terms, then, provided Lessee is not in default, the lease
term for the antenna system identified in the Schedule shall automatically renew
at the commencement of each such renewal term unless, upon written notice to
Lessor no later than ninety (90) days before the expiration of the term then
current Lessee terminates the Schedule.
(b) If Lessee holds over the lease premises after the final term of
a Schedule, the Schedule shall revert to a month-to-month term, and rent shall
be 150% of the rent for the last month of the preceding term. Lessor shall have
the right during such month-to-month term to terminate the Schedule without
cause upon thirty (30) days notice to Lessee.
3. RENT.
(a) Lessee shall pay rent at the rate(s) specified in a Schedule.
Rent for any fractional month at the beginning or end of a term shall be
prorated.
(b) Lessee shall pay rent by electronic transfer or direct to
Lessor's lockbox account at Pinnacle Towers Inc., P.O. Box 550094, Tampa, FL
33655-0094 no later than the first day of each calendar month with respect to
which it is payable. If payment is not received by the 10th of any month, Lessor
has the option to charge a late fee equal to the greater of [CONFIDENTIAL
TREATMENT REQUESTED] or [CONFIDENTIAL TREATMENT REQUESTED] per month of the
amount due.
(c) Any security deposit required by a Schedule will be held in a
non-interest bearing account and shall be returned to Lessee thirty (30) days
following the conclusion of the lease term of the Schedule, provided Lessee is
not in default.
(d) Lessee shall pay all sales or use taxes applicable to rent
payable under this Lease or as a direct result of Lessee's equipment being
located on the leased premises.
4. INSTALLATION.
(a) Lessee shall install and operate only the equipment identified
in the Schedule(s), and the cost of Lessee's installation and licensing fees
shall be borne solely by Lessee. Lessee shall comply with all site rules and
standards contained in Exhibit A to this Lease.
(b) During installation, Lessee shall not cause interference of any
kind to the activities of Lessor or lessees on the site. If such interference is
caused by Lessee and cannot be reduced to levels reasonably acceptable to
Lessor, Lessee shall immediately halt all installation work, and Lessor may
elect to terminate this Lease by giving Lessee ten (10) days written notice.
5. USES OF LEASED PREMISES.
(a) Lessee shall use the leased premises and conduct its
communications operations in compliance with the terms of its FCC license and
applicable regulations imposed by any other governmental agency. Lessee shall,
if requested, provide Lessor with copies of such permits. If, through no fault
of Lessee, a license is denied, and Lessee promptly notifies and provides
evidence to Lessor of the denial, this Lease may be terminated by Lessee thirty
(30) days following such written notification.
(b) Lessee shall have a non-exclusive right to access the premises
twenty-four (24) hours a day, 365 days a year for its employees, agents, or
representatives as designated. In accordance with procedures in Exhibit A,
Lessee will be issued a key, key card, and/or access code to unlock the gate and
transmitter room for maintenance purposes. This key may not be duplicated,
loaned, or transferred to any other entity. If this key or keycard is lost or
the integrity of security is breached by Lessee, Lessee will bear the expense
for Lessor to
<PAGE>
re-tool the locks, reprogram the security system, and provide new keys and/or
keycards for all authorized persons. Lessee shall provide Lessor the name of
Lessee's custodian of the key or keycard; should the custodian change, Lessee
shall notify Lessor, in writing, of the new custodian's identity within
twenty-four (24) hours.
(c) Before performing any installation or maintenance work at a
site, Lessee shall notify Lessor and obtain Lessor's approval of the work to be
performed and the persons to perform the work, which approval shall not be
unreasonably withheld, delayed or conditioned. All contractors and
subcontractors of Lessee who perform any services on the leased premises must be
approved by Lessor in advance which approval shall not be unreasonably withheld,
delayed or conditioned and must hold all licenses necessary for the work being
performed. Lessee shall maintain a log of the entry and exit of its employees
and agents and shall make the log available to Lessor upon request.
(d) Lessee shall not bring onto the site any hazardous substances or
hazardous wastes.
(e) Lessee shall not cause interference of any kind to the
operations of the Lessor or other lessees at the site in excess of levels
permitted by the FCC, to the extent that Lessor or such lessee had equipment
installed at the site prior to the execution of the particular Schedule (the
"Present Users") as well as interference to consumer electronic devices and
blanketing interference as defined by section 73.318 of the FCC rules. If Lessee
is notified that its operations are causing objectionable interference to the
legally and properly tuned and operating equipment of the Present Users, Lessee
shall immediately undertake all necessary steps to determine the cause of and
eliminate such interference. If the interference continues for a period in
excess of forty-eight (48) hours following notification, Lessor shall have the
right to cause Lessee to cease operating the offending equipment or to reduce
the power sufficiently to remove the interference until the condition can be
remedied. Lessee shall continue to be obligated to pay rent, and Lessor shall
not be held liable for any damages or loss of revenues. If Lessee is required to
discontinue its operation under this section for a period of sixty (60) days,
and provided Lessee has diligently pursued all reasonable cures and is unable to
eliminate the interference, then Lessee shall have the right to terminate this
Lease. Provided Lessee's equipment is operating properly, if the operations of
any equipment installed after Lessee's equipment cause objectionable
interference to Lessee's operation, then Lessor shall require the interfering
lessee or party to remedy the interference and bear the costs thereof.
(f) Lessee understands that it is the intention of Lessor to
accommodate as many users as possible at its sites. Lessee shall cooperate with
Lessor in rescheduling its transmitting activities, reducing power, or
interrupting its activities for limited periods of time in order to permit the
safe installation of new equipment or new facilities at the site or to permit
repairs to facilities of any user of the site or to the site or related.
(g) Lessor makes no guaranty or warranty, including any implied
warranty of merchantability or fitness for a particular use except as
specifically stated in this Agreement or the Schedules. Lessee has examined the
leased premises and determined that they are suitable for its purposes.
6. UTILITIES. Lessee shall pay all installation costs for electrical
power feeds, phone lines, and other utilities to its equipment. Lessee shall pay
for all Lessee's electrical power usage either directly to the utility company
or as a reimbursement to Lessor.
7. INSURANCE. (a) Insurance requirements for Lessee and Lessee's
contractors contained in exhibit B. (b) Insurance requirements for Lessor and
Lessor's contractors contained in exhibit C.
8. MAINTENANCE OF SITE.
(a) Lessor shall maintain the site(s) in good repair, ordinary wear
and tear excepted, and in compliance with applicable sections of Part 17 of the
FCC's rules pertaining to lighting, marking, inspection, and maintenance. In
cases where such FCC regulations require the painting of Lessee's feedlines,
Lessee hereby consents to such painting.
(b) Lessee shall maintain its equipment in accordance with standards
of good engineering practice to assure that it conforms with the site standards
in Exhibit A and shall at the conclusion of a Schedule surrender possession of
the leased premises to Lessor in the same condition they were at the
commencement of the Schedule, ordinary wear and tear excepted.
9. ALTERATION BY LESSEE.
(a) Lessee may not make improvements or alterations to the tower(s),
building(s), or any portion of the premises without the expressed written
permission of Lessor, which approval shall not be unreasonably withheld, delayed
or conditioned. Any such improvements that are approved by Lessor and made by
Lessee shall become the property of Lessor upon termination or expiration of
this Lease, provided however, that any cabinets, equipment shelters, equipment,
antennae, antennae systems, etc. shall remain the property of Lessee.
(b) Lessee may make changes and alterations in its equipment
provided that (i) such changes or alterations conform with standards of good
engineering practice and the provisions of Section 5, (ii) plans and
specifications are first submitted to and approved in writing by Lessor, which
approval shall not be unreasonably withheld, delayed or conditioned and (iii)
any proposed changes or alterations do not increase the "wind loading" of the
tower. At Lessor's request, Lessee will provide an independent professional
analysis of "wind loading" and stress to determine any changes that equipment
replacements or alterations would cause. Notwithstanding the foregoing, the
Lessee shall have the right to perform and do routine maintenance upon its
equipment.
<PAGE>
10. SITE DAMAGE; DAMAGE TO LESSEE'S EQUIPMENT; SERVICE INTERRUPTION.
(a) If a site is fully or partially destroyed or damaged, Lessor, at
its option, may elect to terminate a Schedule upon ten (10) days written notice
to the Lessee. In this event, Lessee shall owe rent only up to the date on which
Lessee was unable to conduct its normal operations solely due to the damage or
destruction of the site.
(b) Lessor, at its option, may elect to repair or rebuild the site,
in which case, the Schedule shall remain in force. If reconstruction or repair
cannot reasonably be undertaken without dismantling Lessee's antenna, then
Lessor may remove Lessee's antenna and interrupt Lessee's operations, thereafter
replacing the antenna as soon as reasonably possible. Lessee shall be entitled
to a pro rata abatement of rent for the time it is unable to conduct its normal
operations as a result of such total or partial destruction or damage or need of
repair.
(c) Under no circumstances whatsoever shall Lessor be responsible
for damage to or loss of Lessee's equipment, or for financial loss due to
business interruption, unless by Lessor's willful misconduct or neglect.
(d) Lessor shall incur no liability to Lessee for failure to furnish
space and/or electrical power if prevented by war, fires, accidents, acts of
God, or other causes beyond its reasonable control. During such period, Lessee
shall be entitled only to a pro rata abatement of rent for the time it is unable
to conduct substantially normal operations as a result of such circumstances,
except that Lessee shall not be entitled to any abatement for outages of less
than twenty-four (24) hours consecutive duration.
11. EMINENT DOMAIN. If the land or leased premises upon which a tower,
foundation, or building is located are acquired or condemned under the power of
eminent domain, whether by public authority, public utility, or otherwise, then
the applicable Schedule shall terminate as of the date of the acquisition.
Lessor shall be entitled to the entire amount of any condemnation award, and
Lessee shall be entitled to make claim for and retain a condemnation award based
on and attributable to the expense and damage of removing its fixtures.
12. INDEMNIFICATION. (a) Lessee shall indemnify, hold harmless, and
defend Lessor for and against any and all liabilities, claims, demands, suits,
damages, actions, recoveries, judgments, and expenses (including court costs,
reasonable attorneys' fees, and costs of investigation) resulting from injuries
to or death of any person or any damage to property or loss of revenues due to
discontinuance of operations at the leased premises resulting from, or that is
claimed to result from or arise out of any act or omission of Lessee or its
contractors, subcontractors, agents, or representatives in or around the leased
premises or any breach of this Lease by Lessee, except to the extent such
liabilities are caused by the negligence, willful misconduct or gross negligence
of Lessor or its contractors, subcontractors, agents, employees or
representatives.
(b) Lessor shall indemnify, hold harmless, and defend Lessee for and
against any and all liabilities, claims, demands, suits, damages, actions,
recoveries, judgments, and expenses (including court costs, reasonable
attorneys' fees, and costs of investigation) resulting from injuries, to or
death of any person or any damage to property or loss of revenues due to
discontinuance of operations at the leased premises resulting from, or that is
claimed to result from or arise out of any act or omission of Lessor or its
contractors, subcontractors, agents, or representatives in or around the leased
premises or any breach of this Lease by Lessor, except to the extent such
liabilities are caused by the negligence, willful misconduct or gross negligence
of Lessee or its contractors, subcontractors, agents, employees or
representatives.
13 ASSIGNMENT. Lessee shall not assign, mortgage, or encumber this
Lease and shall not sublet or permit the leased premises or any part thereof to
be used by others without the express written approval of Lessor, which consent
shall not be unreasonably withheld, delayed. or conditioned. No sublease or
authorized use by others shall relieve Lessee of its obligations under this
Lease. Lessor may assign, mortgage, or encumber its rights under this Lease at
any time.
14. DEFAULT BY LESSEE. If Lessee fails to make payments within ten (10)
days of date due, or fails to comply with any other term of this Lease and does
not cure such other failure within thirty (30) days after Lessor provides Lessee
with written notice, Lessor shall have the option to terminate this Lease or any
Schedule, in which event Lessee shall surrender possession of the leased
premises within ten (10) days, or to pursue any other remedy available to Lessor
under this Lease or otherwise provided by law or equity. If any default cannot
be reasonably cured within thirty (30) days, Lessee will not be deemed to be in
default if Lessee commences curing such default and thereafter diligently
pursues such cure to completion. Lessor may also apply any or all of the deposit
or prepaid rent to cure a default. Lessee shall be liable for all expenses
incurred by Lessor for recovery, and repossession by Lessor shall not affect the
obligations of Lessee for the unexpired term of a Schedule unless Lessor
terminates the Schedule or this Lease.
15. DEFAULT BY LESSOR. If Lessor fails to cure any monetary defaults
within ten (10) days of written notice from the Lessee, or fails to comply with
any other term of this Lease and does not cure such other failure within thirty
(30) days after Lessee provides Lessor with written notice, Lessee shall have
the option to terminate this Lease or any Schedule, or to pursue any other
remedy available to Lessor under this Lease or otherwise provided by law or
equity, including without limitation an action for damages. If any default
cannot be reasonably cured within thirty (30) days, Lessor will not be deemed to
be in default if Lessor commences curing such default and thereafter diligently
pursues such cure to completion.
16. REMOVAL OF LESSEE'S EQUIPMENT. At the termination of a Schedule,
provided Lessee is not in default, Lessee shall have thirty (30) days to remove
its equipment. Lessee shall pay all costs in connection with the removal.
<PAGE>
17. SUBORDINATION. This Lease is and shall be subject and subordinate
to all mortgages that may now or hereafter affect the leased premises and to all
renewals, modifications, consolidations, replacements, and extensions thereof;
provided, however, as a condition precedent to any such subordination, the party
secured by such instrument shall covenant for itself and any purchaser at
foreclosure not to disturb Lessee's quiet enjoyment so long as Lessee is not in
default hereunder. This subordination shall be self-operative and no further
instrument of subordination shall be required by any mortgagee. However, upon
written request from Lessor, Lessee shall execute a certificate confirming such
subordination.
18. LIENS. Lessee shall not suffer or permit any liens to stand against
the leased premises or any part thereof by reason of any work, labor, service,
or materials done for, or supplied for, or supplied to or claimed to have been
done for, or supplied to, Lessee or anyone holding Lessee's property or any part
thereof through or under Lessee ( "Mechanics' Liens"). If any Mechanics' Lien
shall at any time be filed against the leased premises, Lessee shall cause it to
be discharged of record within thirty (30) days after the date of filing by
either payment, deposit, or bond. If Lessee fails to discharge any such
Mechanics' Lien within such period, then, in addition to any other right or
remedy of Lessor, Lessor may, but shall not be obligated to, procure the
discharge of the Mechanics' Lien. All amounts incurred by Lessor, including
reasonable attorneys' fees, in procuring the discharge of such Mechanics' Lien,
together with interest thereon at 12% per annum from the date of incurrence,
shall become due and payable immediately by Lessee to Lessor.
19. ESTOPPEL CERTIFICATES. At any time, but not with less than ten (10)
days prior notice, Lessee shall execute, acknowledge, and deliver to Lessor a
statement in writing certifying that this Lease and applicable Schedule(s) are
unmodified and in full force and effect (or, if there have been any
modifications, that the Lease is in full force and effect as modified and
stating the modifications), and the dates to which rent and other charges, if
any, have been paid in advance.
20. MISCELLANEOUS. (a) The remedies provided herein shall be
cumulative and shall not preclude the assertion by any party hereto of any other
rights or the seeking of any other remedies against the other parties hereto.
(b) Should Lessor permit a continuing default by Lessee under this
Lease, the obligations of Lessee hereunder shall continue, and such permissive
default shall not be construed as a renewal of the term hereof nor as a waiver
of any of the rights of Lessor or obligations of Lessee hereunder.
(c) In addition to the other remedies in this Lease, and anything
contained herein to the contrary notwithstanding, Lessor shall be entitled to
specific performance or injunctive relief of any violation or attempted or
threatened violation of this Lease by Lessee without the necessity to post a
bond.
(d) This Lease may be executed in counterparts, and any number of
counterparts signed in the aggregate by the parties will constitute a single,
original instrument.
(e) This Lease, including the exhibits, schedules, lists and other
documents referred to herein, contain the entire understanding of the parties
with respect to its subject matter. There are no restrictions, agreements,
promises, warranties, covenants, or understandings other than expressly set
forth herein or therein. This Lease supersedes all prior agreements and
understandings between the parties with respect to its subject matter. No
modification of this Lease shall be effective unless contained in a writing
signed, dated and fully witnessed by the authorized representative of both
parties.
(f) All notices, requests, claims, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally by FAX by courier or mailed (certified mail, postage
prepaid, return receipt requested) to Lessor at the address shown herein and to
Lessee at the address shown on a Schedule or to such other address as any party
may have furnished to the other in writing in accordance with this provision.
(g) This Lease shall be governed by, construed and enforced in
accordance with the laws of the state of Florida without regard to its conflict
of laws rules.
<PAGE>
[SIGNATURE PAGE ONLY]
IN WITNESS THEREOF, this Lease has been duly executed and delivered by Lessor
and Lessee on the date indicated below.
LESSOR: PINNACLE TOWERS INC.
WITNESS:____________________________ BY:_______________________________
Veronica E. Allgeier
Regional Sales Manager
WITNESS:____________________________ DATE:_____________________________
LESSEE: TRITEL COMMUNICATIONS, INC.
WITNESS:____________________________ BY:_______________________________
Jerry M. Sullivan, Jr.
Executive Vice President, COO
WITNESS:____________________________ DATE:_____________________________
<PAGE>
EXHIBIT A
TO
PINNACLE TOWERS INC. MASTER ANTENNA SITE LEASE #D41
ANTENNA SITE STANDARDS
1. PURPOSE: In order to minimize interference to every Lessee's
operations and equipment, and to maintain good engineering practice, the
following installation and maintenance standards are being established and may
be amended by Lessor when deemed necessary.
2. PRE-INSTALLATION STANDARDS: Prior to any installation, Lessee must
provide Lessor with complete plans for approval, including list of proposed
equipment and subcontractors, and no work may be performed until approval has
been given and all criteria has been met. All equipment must be placed in
approved locations only, and any changes must be approved by Lessor before the
installation begins. The Lessor or its representative shall be on-site during
major work on the tower. Such approvals must not be unreasonably withheld,
delayed or conditioned. Lessee shall provide the Lessor such plans and in the
event that the Lessor does not object to such plans prior to the expiration of
thirty (30) days, the Lessor will be deemed to have approved such plans. Lessee
must notify the Lessor at least five (5) days in advance of any installation
work. Following initial installation, routine maintenance work to Lessee's
equipment may be performed without prior notice.
3. INSTALLATION:
(a) The following minimum protective devices must be properly
installed:
(1) Lightning arrestor in feedline at wall feedthru plate for all
non-broadcast antennas.
(2) Surge protectors in any AC & phone line circuit.
(3) Transmitter RF shielding kit if applicable.
(4) Isolator and harmonic filter.
(5) Duplexer or cavity bandpass filter.
(b) All transmitters, duplexers, isolators, multicouplers, etc. must
be housed in a metal cabinet or rack-mounted.
(c) All transmission lines entering the building must be 1/2'
Heliax/Wellflex or better via a wall feedthru plate, terminating
in a properly installed lightning arrestor with an ID tag on
both ends of the line.
(d) Solid outer shield cable such as Superflex or Heliax/Wellflex
must be used for all intercabling outside the cabinet. The use
of braided RF cable (eg; RG8) will NOT be permitted outside the
cabinet to minimize RF leakage which could cause interference.
(e) All antenna, power and phone cables shall be routed to the base
station in a neat manner using routes provided for that purpose.
All phone lines shall use shielded cable properly grounded.
(f) All stations are to obtain power from the power panel and/or AC
receptacle provided for their specific use.
(g) All RF equipment cabinets must be grounded to the site ground
system using copper strap or ribbon cable with cadweld or silver
solder connections.
(h) All antenna lines shall be electrically bonded to the tower at
the antenna and at the bottom of the tower using grounding kits
installed per manufacturer's specifications, and all antenna
brackets must be pre-approved.
(i) All equipment cabinets shall be identified with a typed label
under plastic on which the Lessee's name, address and 24-hour
phone number must be listed, in addition to a copy of Lessee's
FCC license.
(j) Monitor speakers shall be disabled except when maintenance is
being performed.
(k) All antenna lines will be tagged within twelve (12) inches of
the antenna, at the entrance to the building, at the repeater or
base station cabinet, and/or at the multicoupler/combiner ports.
(l) No drilling, welding or alteration of the tower is permitted for
any reason.
(m) All ferrous metals located outside of the building or on the
tower shall be either stainless steel or hot-dipped galvanized,
not plated.
(n) Painted towers will require the painting of feedline by the
Lessee prior to or before completion of the install.
4. GENERAL: Lessee must comply with any applicable instructions regarding
any site security system.
(a) Gates shall remain closed at all times unless entering or
exiting the premises. When leaving the building, ensure that all
doors are locked and the security system is armed.
(b) Any tower elevator may be used only after receiving proper
instruction on its use, signing a waiver and receiving
authorization from the Lessor.
(c) This lease does not guarantee parking space. If space is
available, park only in the designated areas. Do not park so as
to block any ingress or egress except as may be necessary to
load or unload equipment. Parking is for temporary use while
working at the site.
(d) Do not adjust or tamper with the thermostats or HVAC systems.
(e) Access to the building roof is restricted to authorized
maintenance personnel.
<PAGE>
EXHIBIT B
TO
PINNACLE TOWERS INC. MASTER ANTENNA SITE LEASE #D41
INSURANCE FOR LESSEE AND LESSEE'S CONTRACTORS AND SUBCONTRACTORS
Lessee, its contractors and its subcontractors will provide certificates of
insurance with Lessor named as "additionally insured" on policies except workers
compensation showing the insurance in force with a thirty (30) days day notice
of cancellation, non-renewal or material change. Certificate must be site
specific. In addition, it is the Lessee's responsibility to communicate to
Lessor, forty eight (48) hours in advance, when any work (other than emergency
work) will be taking place at tower site. Coverage for Lessee, Lessee's
contractors and subcontractors are as follows:
Insurance: Before commencement of any lease term under the schedule, Lessee,
Lessee's contractors and subcontractors operations shall procure and maintain
insurance coverage covering all of Lessee's, its contractors and subcontractors
operations and activities in, upon or in conjunction with the leased premise.
The insurance shall be provided in companies legally qualified to transact
business in the State where the site is located in companies with an AM Best
Rating of A-: VIII or greater with the following minimum limits.
Lessor shall be added as an additional insured on Lessee's policies except
workers compensation.
A certificate of insurance naming the Lessor as an additional insured and
showing the insurance in force shall be delivered to the Lessor with a thirty
(30) day notice of cancellation, non-renewal or material change.
Lessee agrees that the insurance coverage's outlined above may be maintained
pursuant to master policies of insurance covering the specific site locations
but requires that limits shall not be reduced at the Lessor's site by activities
at the Lessee's other sites or operations. Limits of coverage are named site
specific.
Primary Insurance Requirements - Lessee and all Lessee's contractors and / or
subcontractors.
Property: Lessee is responsible for insuring for all loss or damage to their
property or the property of others for which they are responsible including loss
of use or business interruption. Lessor assumes no responsibility for damage
occurring to Lessee's, Lessee's contractors and / or subcontractors real,
personal property and / or business interruption regardless of location.
Business Automobile Liability: Bodily Injury and Property Damage Liability or
owned, hired and non-owned vehicles:
Combine Single Limit $ 1,000,000.00
Commercial General Liability: Including but not limited to bodily injury
liability, property damage liability, products and completed operations
liability, broad form property damage liability and personal injury liability:
Policy Form Occurrence
General Aggregate Limit $ 1,000,000.00
Products & Completed Operations Limit $ 1,000,000.00
Personal Injury & Advertising Injury Limit $ 1,000,000.00
Each Occurrence Limit $ 1,000,000.00
Fire Damage Limit $ 50,000.00
Medical Expense Limit $ 5,000.00
<PAGE>
EXHIBIT B (CONT.)
TO
PINNACLE TOWERS INC. MASTER ANTENNA SITE LEASE # D41
INSURANCE FOR LESSEE AND LESSEE'S CONTRACTORS AND SUBCONTRACTORS
Workers Compensation:
Requirements for the State of the site location Statutory
Employers Liability
Limit each accident $ 100,000.00
Limit disease aggregate $ 500,000.00
Limit disease each employee $ 100,000.00
Excess Insurance Requirements - Lessee and all Lessee's contractors and / or
subcontractors - Specific Functions
Lessee will require contractors working on the leased site in the capacity of
General Site Maintenance limited to: Grounds and vegetation maintenance and
installation not requiring heavy equipment. Minor repairs and installations to
existing facilities (locks, plumbing, fencing, air conditioning, etc.) will
carry an umbrella / excess liability in excess of the business automobile,
commercial general liability and workers compensation of a minimum of:
Each occurrence limit $1,000,000.00
General aggregate limit $1,000,000.00
Lessee will require contractors working at the Tower site only but not on the
Tower itself, excluding the above functions, to carry an umbrella excess
liability in excess of the business automobile, commercial general liability and
workers compensation with total minimum limits of:
Each occurrence limit $3,000,000.00
General aggregate limit $3,000,000.00
Lessee will require contractors working at the Tower site in any capacity which
requires climbing the tower, to carry an umbrella/excess liability in excess of
the business automobile, commercial general liability and workers compensation
totaling of a minimum of:
Each occurrence limit $5,000,000.00
General aggregate limit $5,000,000.00
The Lessee and Lessee's representatives, contractors and independent
contractors, are not related to the Lessor other than by this lease of space at
the site.
<PAGE>
ANTENNA SITE LEASE SCHEDULING NO.: 070210006D4101
MASTER ANTENNA SITE LEASE NO.: D41
Lease Reference:
Page (1) of (2)
This Antenna Site Lease Schedule is an integral part of the Master Antenna Site
Lease referred to above, the terms of which are hereby incorporated herein. If
there is a conflict between the terms of this Schedule and the Lease, this
Schedule shall prevail.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
LESSOR: Name: Pinnacle Towers Inc.
Address: 1549 Ringling Boulevard, Third Floor
City/State/Zip: Sarasota, FL 34236
Phone: (941) 364-8886 Fax: (941) 364-8761
LESSEE: Name: Tritel Communications, Inc.
Address: 1410 Livinston Lane
City/State/Zip: Jackson, MS 39213-8003
Entity Type: Corporation Business Type: PCS
Contact(s): Ken Harris
Phone: (601) 362-2200 Fax: (601)362-2664
SITE: Name: Clarksville (#0210-006)
Address: Toliver Court
City/County/State: Clarksville/Montgomery/TN 37040
Coordinates: Latitude: 36-35-26.93 Longitude: 087-20-48.18
</TABLE>
INITIAL MONTHLY RENTAL RATE: $[CONFIDENTIAL TREATMENT REQUESTED] per month plus
any additional rent as specified herein.
STRUCTURAL ANALYSIS FEE: $[CONFIDENTIAL TREATMENT REQUESTED] (Engineering
assessment letter only) due prior to commencement of Initial Term. Lessor hereby
warrants that it shall commence in good faith efforts to structurally analyze
improve if be necessary, the above named facility, for use by Lessee in the
operation of its communications systems as described herein.
INITIAL TERM: Five (5) years commencing on the earlier of the start date of
installation, but not later than December 1, 1998.
RENEWAL TERM(S): Five (5 ) automatic terms of five (5) years each unless written
notice is given by Lessee to Lessor ninety (90) days prior to the end of the
then-current term, of Lessee's intent to not renew next term.
ESCALATION FEE: An annual [CONFIDENTIAL TREATMENT REQUESTED] escalation fee or
will automatically go into effect each anniversary of the "commencing" date
throughout the initial and each successive term.
INSURANCE: Within five (5) days from the signing of this agreement, Lessee will
provide Lessor with a "Certificate of Insurance" naming Pinnacle Towers Inc. as
"Additionally Insured". Such certificate will be specific to this site only and
shall carry general liability in the amounts as specified on attached Exhibit
"B" titled "Insurance for Lessee's Contractors and Subcontractors".
UTILITIES: Lessee shall be solely liable for all utility expenses relating to
its installation and equipment. Lessee's electrical service shall be separately
metered, and Lessee shall be fully responsible for all costs associated with
metering, including the cost of its installation and usage.
GROUND SPACE: The placement of Lessee's slab and / or building on available
ground space must be pre-approved by Lessor prior to installation. No changes to
this placement shall be allowed without prior written approval. All
pre-installation of said pad will be coordinated through the appropriate site
manager of said facility. No changes to this placement slab/platform will be
allowed without prior approval from Lessor. Lessee shall be solely liable for
all expenses related to installation of said pad/platform as well as
modifications to compound fending to enclose Lessee's equipment.
PARTIAL INVALIDITY: The invalidity of one or more phrases sentences, clauses,
sections or articles contained in this Schedule shall not affect the remaining
portions so long as the material purposes of this Schedule can be determined and
effectuated.
Lessee's FCC License/Call Sign:____________Expiration Date:_______________
INITIALS:_________
<PAGE>
ANTENNA SITE LEASE SCHEDULE NO.: 070210006D4101
MASTER ANTENNA SITE LEASE NO.: D41
Lease Reference:________________________
Page (2) of (2)
[X] Lessee owned antenna(s) OR _____________Multiplexer port of Lessor's antenna
(1) TO BE INSTALLED ON TOWER:
# of Antennas: 6 # of Feedlines: 6
Ant # 1 -6 Transmit: [X] Receive: [X]
Mounting Height: 290 feet Tower leg: _____ Antenna Weight:_____ lbs ea
Antenna Mfg/Model: DAPA / 59000 Length: 70.3"
Antenna Mount: Pipe Mount Fix 904 Weight: 14.6 lbs .
Feedline Mfg/Type: Andrew Diameter: 1-5/8"
(2) TO BE INSTALLED: LESSEE'S BUILDING / OUTDOOR PAD/SLAB: [X]
Equipment Mfg/Model: Lucent PCS TDMA Type III Digital:[X]
Type (Terminal, Transmitter, Repeater, etc,): PCS Radio Base Station
# of Cabinets: 2 # of Channels: 3 Ground Space Requested: 9x 13 or 117 sq ft
Power Requirements (Voltage): 220 Volts AC BTU Requirements: N/A
Required AC Breaker Amps: 125 AC Line Voltage: 220
Transmit Power of Equipment: 30 Watts Effective Radiated Power (ERP): 375 Watts
Transmit Frequencies: PCS "B" Band
Receive Frequencies: PCS "B" Band
Filters/Duplexers: _______________
D) TOWER CREW
Company Name: ______________Contact Name: ____________Phone #: __________Fax #:
INSTALLATION: Lessee shall install and operate only the equipment identified in
the Schedule(s), and the cost of Lessee's installation and licensing fees shall
be borne solely by Lessee. Lessee shall comply with all site rules and standards
contained in Exhibit A to this Lease. During installation, Lessee shall not
cause interference of any kind to the activities of Lessor or lessees on the
site. If such interference is caused by Lessee and cannot be reduced to levels
reasonably acceptable to Lessor, Lessee shall immediately halt all installation
work, and Lessor may elect to terminate this Lease by giving Lessee ten (10)
days written notice.
NOTE:
- -----
For additional site standards please refer to attached Exhibit "A" titled
"Antenna Site Standards" For additional insurance requirements, please refer to
attached Exhibit "B" titled "Insurance for Lessee's Contractors and
Subcontractors".
THIS SCHEDULE CONTAINS, IN ITS ENTIRETY, LESSEE'S INVENTORY OF EQUIPMENT
SPECIFTC TO THIS RENTAL AGREEMENT.
<TABLE>
<CAPTION>
<S> <C>
LESSOR: PINNACLE TOWERS INC.
WITNESS:_______________________________ BY:___________________________________________
Veronica E. Allgeier, Regional Sales Manager
WITNESS:_______________________________ DATE:_________________________________________
LESSEE: TRITEL COMMUNICATIONS, INC.
WITNESS:_______________________________ BY:____________________________________________
WITNESS:_______________________________ DATE: October 19, 1998
Jerry M. Sullivan, Jr.
PRINT NAME & TITLE Executive Vice President/
Chief Operating Officer
</TABLE>
<PAGE>
ADDENDUM
MASTER LEASE #D41
PAGE 1 OF 2
Notwithstanding anything to the contrary contained in the master lease, Lessor
and Lessee agree to the following caveats:
1. Notwithstanding anything contained in Paragraph 5(c), Lessee maintains the
right to perform routine maintenance on its equipment at the Site without
the prior notice to and the consent of the Lessor.
2. Notwithstanding anything contained in Paragraph 5(g) , Lessee is unable to
unilaterally determine that each site is or will be suitable for its
purposes. Lessee agrees however, by virtue of each executed Site specific
Lease Schedule that it thereby individually acknowledges Site suitability
and acceptability.
3. Notwithstanding anything contained in Paragraph 10(c), Lessor shall not be
responsible for any incidental or consequential damages incurred resulting
from (i) Lessee's (or any party claiming by, through or under Lessee) use
or Lessee's (or any party claiming by, through or under Lessee) inability
to use the Premises (or any portion thereof), or from (ii) damage to
Lessee's (or any party claiming by, through or under Lessee) equipment
which is caused by the negligence of Lessor. Lessee shall not be
responsible for any incidental or consequential damages incurred resulting
from (I) Lessor's (or any party claiming by, through or under Lessor) use
or Lessor's (or any party claiming by, through or under Lessor) inability
to use the Property, the Tower or the Premises (or any portion thereof) or
from (ii) damage to the Tower, the Property, the Premises, or equipment or
property of the Lessor (or any party claiming by, through or under the
Lessor) which is caused by the negligence of Lessee.
4. Lessor hereby represents and warrants to Lessee that Lessor has good and
marketable title to its leasehold interest in the Premises on each schedule
and to its interest in an access easement and utility easement to each site
on each schedule and that it has complete, good and marketable access to
each site on each schedule, free and clear of all liens and encumbrances
except those described herein to each Schedule. Lessor will warrant and
defend the same to Lessee against the claims and demands of all persons and
entities. Lessor, upon request of Lessee, will make available to Lessee any
and all title insurance policies or commitments regarding each site on each
Schedule as may be in Lessor's possession. Further, Lessor will assist
Lessee, at no cost or expense to Lessor, in obtaining a commitment or title
insurance policy covering the Premises on each site on each schedule.
Lessor further represents and warrants that all utilities (including
without limitation telephone and electricity) are connected to and
available at each site on each Schedule.
5. Lessor hereby represents and warrants that all operations conducted by
Lessor in connection with the Tower and the premises located on each
Schedule meet all applicable state, federal, county, and local codes and
regulations and that all permits and approvals necessary for the operation
of each tower and communications facility at each site on each Schedule
have been obtained, are in full force and effect and have not been
rescinded, modified, revoked, altered or terminated. Lessor agrees that it
will conduct its operations in the future in accordance with all such codes
and regulations. Lessor is not required to obtain any consent under any
ground lease, mortgage, deed of trust, or other instrument encumbering the
leased premises located on each Schedule in order for Lessee to construct,
operate, maintain, or access Lessee's communications facility on each site
on each Schedule.
6. During the term of the Lease, Lessee will substantially comply with all
applicable state, federal, county, and local laws, codes, and regulations
relating to Lessor's use of the leased premises on each Schedule. Lessor
will not commit or suffer to be committed any waste on the Premises or any
nuisance on each site on each Schedule.
<PAGE>
Master Lease #D41
PAGE 2 OF 2
7. Pursuant to paragraph 20(g), the terms and conditions of the Lease will be
governed by the laws of the State within which the Leased Premises is
located.
<TABLE>
<CAPTION>
<S> <C>
LESSOR: PINNACLE TOWERS INC.
WITNESS:_______________________________ BY:___________________________________________
WITNESS:_______________________________ DATE:_________________________________________
LESSEE: TRITEL COMMUNICATIONS, INC.
WITNESS:_______________________________ BY:____________________________________________
JERRY M. SULLIVAN, JR.
EXECUTIVE VICE PRESIDENT/
CHIEF OPERATING OFFICER
WITNESS:_______________________________ DATE:__________________________________________
</TABLE>
<PAGE>
ANTENNA SITE LEASE SCHEDULE #055097001N0003
MASTER ANTENNA SITE LEASE NO.: D41
TriTel Ref #
Page (1) of (2)
This Antenna Site Lease Schedule is an integral part of the Master Antenna Site
Lease referred to above, the term of which are incorporated herein. If there is
a conflict between the terms of this Schedule and the Lease, this Schedule shall
prevail.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
LESSOR: Name: Pinnacle Towers Inc. Phone: (941)364-8886
Address: 1549 Ringling Boulevard, Third Floor Fax: (941)364-8761
City/State/Zip: Sarasota, FL 34236
Phone: (601) 362-2200
LESSEE: Name: TriTel Communications, Inc.
Address: 1410 Livingston Lane Fax: (601)362-2664
City/State/Zip: Jackson, MS 39213-8003
Entity Type: Business Type: Corporation Business Type: PCS
CONTACT(S): Turpin Mott, AgentMgr (SpectraSite); E/M: [email protected] / P: 601-898-6283 / F:
601-898-6286 Ken Harris, Dir/Site Acquis (TriTel) E/M: [email protected]; Phone: 601-898-6209
/ F: 601-898-6216
SITE: Name: Ridgeland <Tower ID # 5097-001
Address: 6735 Richmond Grove Road
City/County/State: Ridgeland(Madison County), MS
Coordinates: Latitude: N34-36-59.99 Longitude: W087-03-59.55
</TABLE>
INITIAL RENTAL RATE: $[CONFIDENTIAL TREATMENT REQUESTED] PER MONTH plus any
applicable sales tax and additional rent, as
specified herein.
CAPITAL EXPENSE (NON-REFUNDABLE): $[CONFIDENTIAL TREATMENT REQUESTED] DUE PRIOR
TO COMMENCEMENT OF THE INITIAL TERM FOR UTILITIES
ACCESS. LESSEE WILL BE RESPONSIBLE FOR ALL CONTRACTOR
EXPENSES RELATIVE TO CONNECTING ITS EQUIPMENT TO THE
UTILITIES SERVICE NOW PRESENT AT THE SITE.
DUE DILIGENCE (NON-REFUNDABLE FEE): $[CONFIDENTIAL TREATMENT REQUESTED] DUE BY
3/L/99. Lessee shall have a Due Diligence period
beginning 3/L/99, not to exceed 5/31/99 for Lessee
and its agents, surveyors and other representatives
to have full access to the Site for the sole purpose
of determining through geological, radio frequency,
and engineering testing the feasibility or
suitability of the Site for Lessee's permitted use.
If, in the sole and absolute opinion of Lessee, the
Site is deemed unsuitable for such use, Lessee shall
have the right at any time prior to the expiration of
the Due Diligence period to terminate this Schedule
by providing written notice of termination to Lessor,
and Lessee shall remove all testing equipment and
restore any disturbance to the Site caused by such
testing within ten (10) days following such written
notification.
INITIAL TERM: Five (5) years commencing on the earlier of the start
date of install but no later than 6/1/99.
RENEWAL TERM(S): Up to four (4) automatic terms of five (5) years each
unless written notice is given by Lessee tol essor no
less than ninety (90) days prior to the end of the
then-current term, of Lessee's intent to not renew
next term.
ESCALATION FEE: An annual escalation fee of [CONFIDENTIAL
TREATMENT REQUESTED] or the Consumer Price Index,
whichever is larger, will automatically go into
effect on the anniversary of the commencement date
throughout the Initial Term and each successive
Renewal Terms.
INSURANCE: Within five (5) days from the signing of this
agreement, Lessee will provide Lessor with
"Certificate of Insurance" naming Pinnacle Towers
Inc. as "Additionally Insured". Such certificate will
be specific to this site only and shall carry general
liability in the amounts as specified on attached
Exhibit "A" entitled "Insurance for Lessee and
Lessee's Contractors and Subcontractors".
THIS AGREEMENT IS THE INITIAL AGREEMENT FOR THIS SITE
BETWEEN LESSEE AND LESSOR. IT DOES NOT SUPERSEDE ANY
OTHER.
INITIALS:_______
<PAGE>
ANTENNA SITE LEASE SCHEDULE #055097001N0003
MASTER ANTENNA SITE LEASE NO.: D41
TriTel Ref #
Page (2) of (2)
LESSEE'S FCC LICENSE/CALL SIGN: ______________ EXPIRATION DATE: _________
X LESSEE OWNED ANTENNA(S) OR ___ MULTIPLEXER PORT OF LESSOR'S ANTENNA
A) TO BE MOUNTED ON THE TOWER: # of Antennas: Six (6) # of Feedlines: Six (6)
ANT #1 - #3: Transmit Only: X Mounting Height: 250'
Azimuths: 10, 130 & 250 degrees Antenna Mfg/Model: ALLGON 7200.01
Length 74.8" ea. Antenna Weight: 22.1 lbs ea Antenna Mount:
Antenna Mount Weight: ____ Feedline Mfg/Type: CommScope or Trilogy
Feedline Diameter: 1-5/8"
ANT #4 - #6: Receive Only: [X] Mounting Height: 250'
Azimuths: 10, 130 & 250 degrees
Antenna Mfg/Model: ALLGON 7251.01 Length 75" ea.
Antenna Weight. 17.6 lbs ea Antenna Mount:
Antenna Mount Weight:
Feedline Mfg/Type: CommScope or Trilogy
Feedline Diameter: 1-5/8"
B) TO BE INSTALLED IN LESSEE'S OUTDOOR SHELTER ON PAD:
Equipment Mfg/Model: Ericsson/SCCB RBS 884 Macro Digital: [X]
Analog: [ ]
Type (Terminal, Transmitter, etc,): Transceiver
#of Cabinets: One (1) Cabinet Dimen: N/A
Ground space requested: Up to 12' x 18' <234 sq ft>*
Power Requirements: 220 Volts AC BTU Requirements: N/A
Required AC Breaker Amps: 100 Amps
AC Line Voltage: 220 Volts
Maximum AC Current Draw @ Given Line Voltage: 42 Amps
Transmit Power of Equipment: 30Watts
Effective Radiated Power (ERP): 500 Watts
# of Channels: PCS "B" Block
Transmit Frequencies: 1950 - 1965 MHz
Receive Frequencies:1870 - 1885 MHz
Filters: As required Note: N/A .
C) TOWER CREW... Company Name: _______________________________________________
Contact Name: ____________________ Phone #: _____________ Fax #:______________
NOTE: * THE PLACEMENT AND SIZE OF LESSEE'S SLAB AND/OR BUILDING ON AVAILABLE
GROUND SPACE WILL BE PRE-APPROVED BY LESSOR PRIOR TO INSTALL AND SHALL BE
INCLUDED IN THIS SCHEDULE AS "EXHIBIT B". NO CHANGES TO THIS PLACEMENT SHALL BE
ALLOWED WITHOUT PRIOR APPROVAL AND AN AMENDED "EXHIBIT B" TO THIS SCHEDULE.
LESSEE SHALL BE SOLELY LIABLE FOR ALL UTILITY COSTS RELATING TO THE INSTALLATION
AND OPERATION OF ITS EQUIPMENT. LESSEE'S SERVICE SHALL BE SEPARATELY METERED AND
LESSEE SHALL BE FULLY RESPONSIBLE FOR ALL COSTS ASSOCIATED WITH THE INSTALLATION
OF THAT METER AND ITS USAGE.
THIS SCHEDULE CONTAINS, IN ITS ENTIRETY, LESSEE'S LISTING OF EQUIPMENT AT THIS
SITE.
<TABLE>
<CAPTION>
<S> <C>
LESSOR: PINNACLE TOWERS INC.
WITNESS:_______________________________ BY:___________________________________________
Barbara H. Gonshor
Senior Regional Sales Manager
WITNESS:_______________________________ DATE:_________________________________________
LESSEE: TRITEL COMMUNICATIONS, INC.
WITNESS:_______________________________ BY:____________________________________________
Jerry M. Sullivan, Jr.
Executive Vice President & COO
WITNESS:_______________________________ DATE:__________________________________________
</TABLE>
<PAGE>
EXHIB1T A
TO
PINNACLE TOWERS INC.
ANTENNA SITE LEASE SCHEDULE #055097001N0003
MASTER ANTENNA SITE LEASE NO.: D41
TriTel Ref #
Page (1) of (2)
INSURANCE FOR LESSEE AND LESSEE'S CONTRACTORS AND SUBCONTRACTORS
----------------------------------------------------------------
Lessee, its contractors and its subcontractors will provide certificates of
insurance with Lessor named as "Additionally Insured" on policies except workers
compensation showing the insurance in force with a thirty (30) days day notice
of cancellation, non-renewal or material change. Certificate must be site
specific. In addition, it is the Lessee's responsibility to communicate to
Lessor, forty eight (48) hours in advance, when any work (other than emergency
work) will be taking place at tower site. Coverage for Lessee, Lessee's
contractors and subcontractors are as follows:
Insurance: Before commencement of any lease term under the schedule, Lessee,
Lessee's contractors and subcontractors operations shall procure and maintain
insurance coverage covering all of Lessee's, its contractors and subcontractors
operations and activities in, upon or in conjunction with the leased premise.
The insurance shall be provided in companies legally qualified to transact
business in the State where the site is located in companies with an AM Best
Rating of A-: VIII or greater with the following minimum limits.
Lessor shall be added as an "Additional Insured" on Lessee's policies except
workers compensation.
A certificate of insurance naming the Lessor as an "Additional Insured" and
showing the insurance in force shall be delivered to the Lessor with a thirty
(30) day notice of cancellation, non-renewal or material change.
Lessee agrees that the insurance coverage's outlined above may be maintained
pursuant to master policies of insurance covering the specific site locations
but requires that limits shall not be reduced at the Lessor's site by activities
at the Lessee's other sites or operations. Limits of coverage are named site
specific.
Primary Insurance Requirements - Lessee and all Lessee's contractors and / or
subcontractors.
Property: Lessee is responsible for insuring for all loss or damage to their
property or the property of others for which they are responsible including loss
of use or business interruption. Lessor assumes no responsibility for damage
occurring to Lessee's, Lessee's contractors and / or subcontractors real,
personal property and / or business interruption regardless of location.
Business Automobile Liability: Bodily Injury and Property Damage Liability or
owned, hired and non-owned vehicles:
Combined Single Limit $ 1,000,000.00
Commercial General Liability: Including but not limited to bodily injury
liability, property damage liability, products and completed operations
liability, broad form property damage liability and personal injury liability:
Policy Form Occurrence
General Aggregate Limit $ 1,000,000.00
Products & Completed Operations Limit $ 1,000,000.00
Personal Injury & Advertising Injury Limit $ 1,000,000.00
Each Occurrence Limit $ 1,000,000.00
Fire Damage Limit $ 50,000.00
Medical Expense Limit $ 5,000.00
Workers Compensation:
Requirements for the State of the site location Statutory
Employers Liability
Limit each accidenT $ 100,000.00
Limit disease aggregate $ 500,000.00
Limit disease each employee $ 100,000.00
INITIALS: __________/____________
<PAGE>
EXHIBIT A
TO
PINNACLE TOWER INC.
ANTENNA SITE LEASE SCHEDULE #055097001N0003
MASTER ANTENNA SITE LEASE NO.: D41
TriTel Ref #
Page (2) of (2)
INSURANCE FOR LESSEE AND LESSEE'S CONTRACTORS AND SUBCONTRACTORS (CONTINUED)
- ----------------------------------------------------------------------------
Excess Insurance Requirements - Lessee and all Lessee's contractors and / or
subcontractors - Specific Functions:
Lessee will require contractors working on the leased site in the capacity of
General Site Maintenance limited to: Grounds and vegetation maintenance and
installation not requiring heavy equipment. Minor repairs and installations to
existing facilities (locks, plumbing, fencing, air conditioning, etc.) will
carry an umbrella / excess liability in excess of the business automobile,
commercial general liability and workers compensation of a minimum of:
Each occurrence limit $1,000,000.00
General aggregate limit $1,000,000.00
Lessee will require contractors working at the Tower site only but not on the
Tower itself, excluding the above fianctions, to carry an umbrella / excess
liability in excess of the business automobile, commercial general liability and
workers compensation with total minimum limits of:
Each occurrence limit $3,000,000.00
General aggregate limit $3,000,000.00
Lessee will require contractors working at the Tower site in any capacity which
requires climbing the tower, to carry an umbrella/excess liability in excess of
the business automobile, commercial general liability and workers compensation
totaling of a minimum of:
Each occurrence limit $5,000,000.00
General aggregate limit $5,000,000.00
The Lessee and Lessee's representatives, contractors and independent
contractors, are not related to the Lessor other than by this lease of space at
the site.
INITIAL:_________/___________
<PAGE>
INSTALLMENT PAYMENT PLAN NOTE
(Broadband Personal Communications Service, C Block): Auction Event No. 5)
US $42,525,211.95
Washington, D.C.
License No.: PBB044C
FOR VALUE RECEIVED, the undersigned, Mercury PCS, L L C, a Mississippi
Limited Liability Company, ("Maker"), promises to pay to the order of the
FEDERAL COMMUNICATIONS COMMISSION, an independent regulatory agency of the
United States ("Payee" or "Commission"), the principal sum of 42,525,211.95
DOLLARS ("Principal Amount"), together with accrued interest, computed at the
annual rate of seven percent (7.0%) per annum, ("Annual Rate") on the unpaid
Principal Amount hereof, from the date of this Note until the date the entire
Principal Amount has been paid in full.
Interest and principal shall be payable as set forth below and in
accordance with Schedule A attached hereto and made a part hereof:
Interest only, at the Annual Rate from the date hereof until the last
day of the month ninety (90) days hence, shall be due and payable on December
31, 1996. Commencing December 31, 1996, Maker shall pay interest only at the
Annual Rate, in equal consecutive quarterly installments of $744,191.21 due on
the last day of the month and every ninety (90) days thereafter from December
31, 1996 through September 30, 2002.
Commencing December 31, 2002, Maker shall pay principal and interest in
equal quarterly installments of $3,070,302.29 due on the last day of each month
ninety (90) days hence through and including September 30, 2006 ("Maturity
Date").
The entire unpaid Principal Amount, together with accrued and unpaid
interest thereon, and all remaining obligations of Maker hereunder, shall be due
and payable on the Maturity Date.
All interest shall be computed on the basis of a 360-day year for
actual days elapsed.
All payments to be made hereunder, of principal, interest, costs,
expenses, or other sums due hereunder, shall be made to the holder of this Note
in lawful money of the United States of America which at the time of payment
shall be legal tender for the payment of public and private debts, free and
clear and without reduction by reason of any present or future income, stamp or
other taxes, levies, imposts, deductions, charges, compulsory loans or
withholdings whatsoever, including interest thereon or penalties with respect
thereto, if any imposed, assessed, levied or collected by any political
subdivision or taxing authority thereof or therein, on or in respect of this
Note or the obligations it evidences. All payments shall be made during normal
business
<PAGE>
hours at the Commission's designated lockbox location as set forth from time to
time in the Commission's then-applicable orders and regulations and/or public
notices.
This Note is secured by, and entitled to the benefits of, a Security
Agreement (the "Security Agreement") of even date between Maker and Payee. All
the terms, covenants, conditions and agreements contained in the Security
Agreement are hereby incorporated herein and made part of this Note to the same
extent and effect as if fully set forth herein. It is expressly understood by
Maker that all of the terms of the Security Agreement apply to this Note and
that reference in the Security Agreement to "this Agreement" includes both the
Security Agreement and this Note.
IT IS HEREBY EXPRESSLY AGREED THAT TIME IS OF THE ESSENCE FOR THE
PERFORMANCE OF ALL TERMS AND CONDITIONS UNDER THIS NOTE AND THE SECURITY
AGREEMENT.
A default under this Note ("Event of Default") shall occur upon any or
all of the following:
a. non-payment by Maker of any Principal or Interest on the due date as
specified hereinabove if the Maker remains delinquent. for more than 90 days and
(1) Maker has not submitted a request, in writing, for a grace
period or extension of payments, if any such grace period or
extension of payments is provided for in the then-applicable
orders and regulations of the Commission; or
(2) Maker has submitted a request, in writing, for a grace period or
extension of payments, if any such grace period or extension of
payments is provided for in the then-applicable orders and
regulations of the Commission, and following the expiration of
the grant of such grace period or extension or upon denial of
such a request for a grace period or extension, Maker has not
resumed payments of Interest and Principal in accordance with
the terms of this Note;
or;
b. failure by Maker to comply with any other condition for holding the
above referenced license (as defined in the Security Agreement) as set
forth in the license or in the Communications Act of 1934, as amended,
or the then-applicable orders and regulations of the Commission; or
c. violation by Maker of any other covenant or term of this Note or the
Security Agreement.
Upon any Event of Default under this Note, Payee may assess a late fee and/or
administrative charge, plus the costs of collection, litigation, attorneys'
fees, and default payment as specified in the then-applicable orders and
regulations of the Commission, as amended, and Maker acknowledges that it is
liable and herein expressly promises to pay on demand such additional
<PAGE>
costs, expenses, late charges, administrative charges, attorneys fees, and
default payment. Upon a default under this Note, the unpaid Principal Amount,
plus all unpaid interest accrued thereon, together with any late fee and/or
administrative charge, plus the costs of collection, litigation, attorneys'
fees, and default payment as specified in the then-applicable orders and
regulations of the Commission, as amended, shall become immediately due and
payable. The Maker hereby acknowledges that the Commission has issued Maker the
above referenced license pursuant to the Communications Act of 1934, as amended,
that is conditioned upon full and timely payment of financial obligations under
the Commission's installment payment plan, as set forth in the then-applicable
orders and regulations of the Commission, as amended, and that the sanctions and
enforcement authority of the Commission shall remain applicable in the event of
a failure to comply with the terms and conditions of the license, regardless of
the enforceability of this Note or the Security Agreement.
No delay or omission on the part of Payee in exercising any right under
this Note, the Security Agreement, or any other instrument securing this Note,
shall operate as a waiver of such right or of any other right of Payee, nor
shall any waiver by Payee of any such right or rights on any one occasion be
deemed a bar to or waiver of the same right or rights on any future occasion.
The Maker is liable for all costs of collection or enforcement of the
Payee's rights under this Note or under the Security Agreement or under any
other instrument now or hereafter executed by Maker in favor of Payee which in
any manner evidences or constitutes additional security for this Note, including
reasonable attorneys' fees, whether suit is brought or not, and all such costs
shall be paid by the Maker on demand, and whether or not such collection or
enforcement occurs in any bankruptcy, reorganization, receivership or other
proceedings involving creditors' rights or involving a claim under this Note or
any of the other loan documents.
Maker, all endorsers and guarantors hereof and any other party who may
become liable for all or any part of the obligation evidenced hereby, waive
presentment for payment, notice or dishonor, protest and notice of protest,
notice of nonpayment and any and all lack of diligence or delays in collection
or enforcement of this Note.
If Maker is comprised of more than one party, all such parties shall be
jointly and severally bound and liable as Maker under this Note.
Maker may prepay all or any part of the Principal Amount without
premium or penalty upon ten (10) days' prior written notice to Payee, given in
the manner provided in the Security Agreement.
Partial prepayments shall not postpone or reduce regular payments to be
made hereunder. All such prepayments shall be applicable first to the payment of
late charges, if any, costs and expenses, and administrative penalties due
hereunder, then to accrued and unpaid interest, then to that portion of the
unpaid Principal Amount due on the Maturity Date and then, if applicable, to any
unpaid installments of principal in the inverse order of installment maturities.
The Payee may require that any partial prepayments be made on the dates
installments of principal and interest are due hereunder.
<PAGE>
Anything to the contrary notwithstanding, Payee shall not charge, take
or receive, and Maker shall not be obligated to pay to Payee, any amounts
constituting interest on the Principal Amount in excess of the maximum rate
permitted by applicable law. If by reason of the acceleration of the unpaid
Principal Amount or otherwise, interest in excess of the highest legal contract
rate permitted by applicable law shall at any time be paid, any such excess
shall constitute and be treated as a payment of outstanding principal hereunder
and shall operate to reduce such outstanding Principal Amount.
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS NOTE, THE SECURITY
AGREEMENT, OR OTHER DOCUMENTS EVIDENCING OR SECURING THE DEBT TRANSACTION
EVIDENCED HEREBY MAY ONLY BE BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF COLUMBIA, AND, BY EXECUTION AND DELIVERY OF THIS NOTE AND SECURITY
AGREEMENT, THE MAKER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURT. THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN THE DISTRICT OF COLUMBIA.
THE MAKER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF THE
AFOREMENTIONED COURT IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF A COPY
THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, TO THE
MAKER AT ITS ADDRESS PROVIDED HEREIN. SUCH SERVICE SHALL BE DEEMED TO HAVE
OCCURRED ON THE THIRD DAY AFTER SUCH MAILING. NOTHING CONTAINED HEREIN SHALL
AFFECT THE RIGHT OF PAYEE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE MAKER IN ANY
OTHER JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, WILLINGLY, VOLUNTARILY,
UNCONDITIONALLY, IRREVOCABLY AND INTENTIONALLY FOREVER WAIVES ANY RIGHT IT MAY
HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS NOTE, THE SECURITY AGREEMENT, OR OTHER
DOCUMENTS EVIDENCING OR SECURING THE DEBT TRANSACTION EVIDENCED HEREBY, ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (VERBAL OR WRITTEN) OR ACTION
OF ANY PERSON OR ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THIS
TRANSACTION, DOCUMENT OR ANY RELATED DOCUMENT OR IN ANY WAY RELATING TO THE
COLLATERAL (INCLUDING, WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS
TRANSACTION OR ANY CLAIMS OR DEFENSES ASSERTING THAT THIS TRANSACTION, IN WHOLE
OR IN PART, WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). MAKER
REPRESENTS THAT NO ORAL OR WRITTEN STATEMENTS HAVE BEEN MADE BY ANY PARTY TO
INCLUDE THIS
<PAGE>
SUBMISSION OR JURISDICTION AND WAIVER OF TRAIL BY JURY OR IN ANY WAY TO MODIFY
OR NULLIFY ITS STATED EFFECT. MAKER FURTHER REPRESENTS THAT IT HAS BEEN
REPRESENTED BY INDEPENDENT COUNSEL, SELECTED BY ITS OWN FREE WILL, IN SIGNING
THIS NOTE AND IN THE MAKING OF THIS WAIVER AND THAT IT HAS HAD THE OPPORTUNITY
TO DISCUSS THIS WAIVER WITH SUCH COUNSEL. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR PAYEE TO ENTER INTO THIS TRANSACTION AND THE VARIOUS DOCUMENTS
RELATED THERETO.
Maker acknowledges that this Note and Security Agreement (any any
attachements affixed thereto by the Commission with the permission and knowledge
of the Maker/Debtor), along with the then-current applicable Commission orders
and regulations and the Communications Act of 1934, as amended, set forth the
entire agreement, written and oral, of the parties, and all inconsistent prior
statements, understandings, notices, representations and agreements between the
parties, oral or written, are superseded by and merged in this Note, the
Security Agreement or other documents evidencing or securing the debt
transaction evidenced hereby. Except as otherwise expressly provided herein, all
of Payee's representations, warranties, covenants and agreements in this Note
and Security Agreement shall merge in the documents and agreements executed by
the Maker and shall not survive said execution.
If any provision or part of this Note and/or the Security Agreement
shall for any reason be held or deemed to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Note and this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein and
the remaining provisions of this Note shall remain in full force and effect. The
enforceability of the Note and/or the Security Agreement do not alter the rights
and obligations of the Maker and Payee under the Communications Act of 1934, as
amended, or under the then-applicable orders and regulations of the Commission,
as amended.
Any notice demand or request hereunder shall be given in the manner set
forth in the Security Agreement.
This Note shall be governed by and construed in accordance with the
Communications Act of 1934, as amended, the then-applicable orders and
regulations of the Commission, and federal law. Nothing in this Note shall be
deemed to modify any then-applicable orders and regulations of the Commission,
and nothing in this Note shall be deemed to release the Maker from compliance
therewith. This Note may not be changed, modified, waived, terminated or
discharged orally, but only by an agreement in writing executed by the party
against whom enforcement of any such change, modification, waiver, termination,
or discharge is sought.
Maker represents and warrants that any statements made by or on behalf
of Maker in connection with this Note: (i) are true and accurate in all material
respects; and (ii) do not omit any material facts or information that would make
such statement misleading in the context of Payee's evaluation of the note, and
acknowledges and agrees that Payee is entitled to and his relied on such
statements in agreeing to the Note.
Payee shall have the right at any time to assign, endorse, pledge,
convey or otherwise transfer this Note and all of the other loan documents to
any party. From and after the date of
<PAGE>
such assignment, endorsement, pledge, conveyance or other transfer, such
transferee shall be entitled to exercise any and all rights and remedies of
Payee hereunder. Maker shall not assign, convey or otherwise transfer its rights
and obligations hereunder.
Date: NOVEMBER 1, 1996 -------------------------------------------
MERCURY PCS, LLC
BY MSM, INC., MANAGER
By:
----------------------------------------
JERRY M. SULLIVAN, JR.
Its: VICE PRESIDENT
<PAGE>
LICENSE NUMBER: PBB044C
INSTALLMENT PLAN C AMORTIZATION SCHEDULE
FOR FEDERAL COMMUNICATIONS COMMISSION BROADBAND PERSONAL COMMUNICATIONS
SERVICE, C-BLOCK LICENSES
(INTEREST-ONLY PAYMENTS FOR THE FIRST SIX YEARS)
ORIG BALANCE ORIG RATE TERM (YRS) 1ST PMT FUTURE VALUE
---------------------------------------------------------------------
$42,525,211.95 7.00% 10 DEC-96 $0
---------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW BALANCE
- ------------------------------------------------------------------------------------------------------------------------------------
PMT# DATE YR RATE P&I PAYMENT PRINCIPAL INTEREST EXTRA PRIN (Prin Only) CUM. INTEREST YEARLY TOTAL INT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Dec-96 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $744,191.21 $744,191.21
- ------------------------------------------------------------------------------------------------------------------------------------
2 Mar-97 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $1,488,382.42 $744,191.21
- ------------------------------------------------------------------------------------------------------------------------------------
3 Jun-97 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $2,232,573.63 $1,488,382.42
- ------------------------------------------------------------------------------------------------------------------------------------
4 Sep-97 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $2,976,764.84 $2,232,573.83
- ------------------------------------------------------------------------------------------------------------------------------------
5 Dec-97 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $3,720,956.05 $2,976,764.84
- ------------------------------------------------------------------------------------------------------------------------------------
6 Mar-98 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $4,465,147.25 $744,191.21
- ------------------------------------------------------------------------------------------------------------------------------------
7 Jun-98 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $5,209,338.46 $1,488,382.42
- ------------------------------------------------------------------------------------------------------------------------------------
8 Sep-98 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $5,953,529.67 $2,232,573.63
- ------------------------------------------------------------------------------------------------------------------------------------
9 Dec-98 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $6,697,720.88 $2,976,764.84
- ------------------------------------------------------------------------------------------------------------------------------------
10 Mar-99 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $7,441,912.09 $744,191.21
- ------------------------------------------------------------------------------------------------------------------------------------
11 Jun-99 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $8,186,103.30 $1,488,382.42
- ------------------------------------------------------------------------------------------------------------------------------------
12 Sep-99 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $8,930,294.51 $2,232,573.63
- ------------------------------------------------------------------------------------------------------------------------------------
13 Deo-99 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $9,674,485.72 $2,976,764.84
- ------------------------------------------------------------------------------------------------------------------------------------
14 Mar-2000 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $10,418,676.93 $744,191.21
- ------------------------------------------------------------------------------------------------------------------------------------
15 Jun-2000 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $11,162,868.14 $1,488,382.42
- ------------------------------------------------------------------------------------------------------------------------------------
16 Sep-2000 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $11,907,059.35 $2,232,573.63
- ------------------------------------------------------------------------------------------------------------------------------------
17 Deo-2000 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $12,651,250.56 $2,976,764.84
- ------------------------------------------------------------------------------------------------------------------------------------
18 Mar-2001 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $13,395,441.76 $744,191.21
- ------------------------------------------------------------------------------------------------------------------------------------
19 Jun-2001 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $14,139,632.97 $1,488,382.42
- ------------------------------------------------------------------------------------------------------------------------------------
20 Sep-2001 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $14,883,824.18 $2,232,573.63
- ------------------------------------------------------------------------------------------------------------------------------------
21 Dec-2001 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $15,628,015.39 $2,976,764.84
- ------------------------------------------------------------------------------------------------------------------------------------
22 Mar-2002 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $16,372,206.60 $744,191.21
- ------------------------------------------------------------------------------------------------------------------------------------
23 Jun-2002 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $17,116,397.81 $1,488,382.42
- ------------------------------------------------------------------------------------------------------------------------------------
24 Sep-2002 7.00% $744,191.21 $0.00 $744,191.21 $0.00 $42,525,211.95 $17,860,589.02 $2,232,573.63
- ------------------------------------------------------------------------------------------------------------------------------------
25 Dec-2002 7.00% $3,070,302.29 $2,326,111.08 $744,191.21 $0.00 $40,199,100.87 $18,604,780.23 $2,976,764.84
- ------------------------------------------------------------------------------------------------------------------------------------
26 Mar-2003 7.00% $3,070,302.29 $2,366,818.02 $703,484.27 $0.00 $37,832,282.85 $19,308,264.50 $703,484.27
- ------------------------------------------------------------------------------------------------------------------------------------
27 Jun-2003 7.00% $3,070,302.29 $2,408,237.34 $662,064.95 $0.00 $35,424,045.51 $19,970,329.45 $1,365,549.22
- ------------------------------------------------------------------------------------------------------------------------------------
28 Sep-2003 7.00% $3,070,302.29 $2,450,381.49 $619,920.80 $0.00 $32,973,664.02 $20,590,250.25 $1,985,470.02
- ------------------------------------------------------------------------------------------------------------------------------------
29 Dec-2003 7.00% $3,070,302.29 $2,493,263.17 $577,039.12 $0.00 $30,480,400.85 $21,167,289.37 $2,562,509.14
- ------------------------------------------------------------------------------------------------------------------------------------
30 Mar-2004 7.00% $3,070,302.29 $2,536,895.28 $533,407.01 $0.00 $27,943,505.57 $21,700,696.38 $533,407.01
- ------------------------------------------------------------------------------------------------------------------------------------
31 Jun-2004 7.00% $3,070,302.29 $2,581,290.94 $489,011.35 $0.00 $25,362,214.63 $22,189,707.73 $1,022,418.36
- ------------------------------------------------------------------------------------------------------------------------------------
32 Sep-2004 7.00% $3,070,302.29 $2,626,463.53 $443,838.76 $0.00 $22,735,751.10 $22,633,546.49 $1,466,257.12
- ------------------------------------------------------------------------------------------------------------------------------------
33 Dec-2004 7.00% $3,070,302.29 $2,672,426.65 $397,875.64 $0.00 $20,063,324.45 $23,031,422.13 $1,864,132.76
- ------------------------------------------------------------------------------------------------------------------------------------
34 Mar-2005 7.00% $3,070,302.29 $2,719,194.11 $351,108.18 $0.00 $17,344,130.34 $23,382,530.31 $351,108.18
- ------------------------------------------------------------------------------------------------------------------------------------
35 Jun-2005 7.00% $3,070,302.29 $2,766,780.01 $303,522.28 $0.00 $14,577,350.33 $23,686,052.59 $654,630.46
- ------------------------------------------------------------------------------------------------------------------------------------
36 Sep-2005 7.00% $3,070,302.29 $2,815,198.66 $255,103.63 $0.00 $11,762,151.67 $23,941,156.22 $909,734.09
- ------------------------------------------------------------------------------------------------------------------------------------
37 Dec,2005 7.00% $3,070,302.29 $2,864,464.64 $205,837.65 $0.00 $8,897,687.03 $24,146,993.87 $205,837.65
- ------------------------------------------------------------------------------------------------------------------------------------
38 Mar-2006 7.00% $3,070,302.29 $2,914,592.77 $155,709.52 $0.00 $5,983,094.26 $24,302,703.39 $361,547.17
- ------------------------------------------------------------------------------------------------------------------------------------
39 Jun-2006 7.00% $3,070,302.29 $2,965,598.14 $104,704.15 $0.00 $3,017,496.12 $24,407,407.54 $466,251.32
- ------------------------------------------------------------------------------------------------------------------------------------
40 Sep-2006 7.00% $3,070,302.29 $3,017,496.11 $52,806.18 $0.00 $0.01 $24,460,213.72 $519,057.50
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
License No.: CWB269F
FIRST MODIFICATION OF
---------------------
INSTALLMENT PAYMENT PLAN NOTE
-----------------------------
FOR BROADBAND PCS F BLOCK
-------------------------
THIS FIRST MODIFICATION OF INSTALLMENT PAYMENT PLAN NOTE ("First
Modification") is executed on the _____ day of _______________, 1998, and is
intended to be effective for all purposes as of the 31st day of July, 1998
("Effective Date"), by and between: (i) MERCURY PCS II, L.L.C., a
___________________ ("Maker"); and (ii) FEDERAL COMMUNICATIONS COMMISSION, an
independent regulatory agency of the United States ("Payee" or "Commission").
W I T N E S S E T H:
- - - - - - - - - -
RECITALS:
R-1. Reference is made to that certain Installment Payment Plan Note
made by Maker, payable to the order of the Commission, in the original principal
amount of $ 377,404.80 ("Original Note"). The Original Note is secured by,
amongst other things: (i) that certain Security Agreement by and between the
Maker and the Commission ("Security Agreement"); and (ii) those certain
Financing Statements related thereto (collectively, "Financing Statements"). The
Original Note, Security Agreement, Financing Statements and all other documents
evidencing, governing or securing the Original Note, together with any and all
amendments, modifications or supplements thereto, are hereinafter collectively
referred to as the "Loan Documents". All of the terms, conditions and provisions
of the Loan Documents are hereby incorporated herein and made a part hereof in
their entireties by this reference.
R-2. The Security Agreement and Financing Statements created a first
lien security interest in the "License" and the "Collateral" (as those terms are
defined in the Security Agreement).
R-3. Pursuant to that certain Public Notice, DA 97-883 (rel. April 28,
1997) ("Suspension Order"), the Commission suspended the deadline for payment of
installment payments required to be made under the Original Note. Pursuant to
that certain Second Report and Order and Further Notice of Proposed Rule Making
adopted September 25, 1997 and released October 16, 1997 ("Second Report and
Order"), the Commission rescinded the Suspension Order and ordered the
reinstatement of payments under the Original Note effective March 31, 1998 and
agreed to a schedule for payment of all accrued and unpaid interest due under
the Original Note. The Second Report and Order was subsequently modified by that
certain Order on Reconsideration of the Second Report and Order adopted March
23, 1998 and released March 24, 1998 ("Order on Reconsideration"). Pursuant to
the Order on Reconsideration and the Public Notice, DA-98-741 (rel. April 17,
1998), the date for the
<PAGE>
resumption of payments under the Original Note was
changed to July 31, 1998 as well as certain other modifications to the terms
contained in the Second Report and Order.
R-4. Maker and the Commission are entering into this First Modification
for the purpose of modifying the Original Note to provide for the repayment of
all accrued and unpaid interest due under the Original Note and to make certain
other conforming changes to the Original Note as provided herein. It is the
intention of the Maker and the Payee that except as specifically modified by
this First Modification, the Original Note shall continue in full force and
effect.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the sum of Ten dollars ($10.00) and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned parties hereby covenant and agree and amend the Original Note as
follows:
1. The foregoing Recitals, including all terms defined therein, are
hereby incorporated in this First Modification to the same extent as if they had
been herein stated in full. The documents referred to in the Original Note shall
include the documents referred to therein, as well as any and all modifications,
amendments, additions and/or supplements thereto and/or replacements thereof.
2. This First Modification shall amplify and modify where specifically
provided herein but shall not replace the Original Note. Except as specifically
modified herein, all of the terms, conditions and obligations of the Original
Note shall remain in full force and effect, and all of the rights and remedies
provided for therein shall be preserved to the Commission. If there is any
conflict between the provisions of this First Modification and the provisions of
the Original Note, the provisions of this First Modification shall govern and
prevail. THE COMMISSION AND MAKER COVENANT AND AGREE THAT THIS FIRST
MODIFICATION ONLY MODIFIES THE TERMS OF THE ORIGINAL NOTE AND IS NOT A NOVATION
OF THE ORIGINAL NOTE.
3. The Security Agreement and Financing Statements will continue to
encumber the License and Collateral with a first lien security interest. The
Original Note, as modified by this First Modification (hereinafter collectively
referred to as the "Note"), and all extensions, renewals, modifications and
amendments and consolidations thereof or substitutions therefore shall continue
to be secured by the Security Agreement and all other documents, instruments,
certifications, security agreements and financing statements executed and
delivered in connection therewith by the Maker or by its successors. The
Original Note and this First Modification shall be entitled to the benefits of,
and to the security required to be provided by, the aforesaid documents, some of
which contain provisions for the acceleration of the maturity of the Note upon
the happening of certain stated events.
4. The Amortization Schedule attached to the Original Note as Schedule
A is hereby deleted in its entirety. All references in the Original Note to
Schedule A are hereby deleted. All payments under the Note shall continue to be
made in accordance with the terms of the Original Note, as modified by the
provisions of this First Modification.
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5. Maker and the Commission covenant and agree that pursuant to the
terms of the Suspension Order and the Second Report and Order, interest payments
under the Original Note were suspended for the period effective as of April 28,
1997 through and including March 31, 1998. The entire amount of unpaid interest
that accrued during the period beginning with the grant date of the License
through and including March 31, 1998 is hereinafter referred to as the
"Suspension Interest". All Suspension Interest is to be repaid in eight (8)
equal payments with the first such payment being due on the Effective Date. In
addition, pursuant to the terms of the Order on Reconsideration, (i) all
interest accrued on the Original Note from April 1, 1998 through the Effective
Date ("Deferred Interest") is due and payable in full on the Effective Date,
(ii) all payments under the Note were reinstated as of the Effective Date, and
(iii) the schedule for making quarterly interest and/or principal payments under
the Note was changed to require quarterly payments on October 31, January 31,
April 30 and July 31 of each year without any modification to the amounts for
each payment as provided in the Original Note, with the first such payment being
due and payable on October 31, 1998. Based upon the foregoing, the Original Note
is hereby amended to provide that the payments of interest and principal shall
be as follows:
a. On the Effective Date, Maker shall make a payment to Payee in the
amount of all Deferred Interest ("Deferred Interest Payment").
b. On the Effective Date, and continuing on each following October 31,
January 31, April 30 and July 31 thereafter until all Suspension Interest has
been paid in full, Maker shall make a payment equal to one-eighth (1/8th) of the
Suspension Interest outstanding as of March 31, 1998 ("Suspension Interest
Payment").
c. Thereafter, except as provided in Sections 5.a and 5.b above, Maker
shall continue to make interest only payments to the Commission at the "Annual
Rate" (as that term is defined in the Original Note) in equal consecutive
quarterly installments, and principal and interest payments to the Commission in
equal quarterly installments in the amount provided in the Original Note, all as
provided in the Original Note, except for the following modifications:
(i) payments of interest accruing from and after the Effective Date
shall now be due on October 31, January 31, April 30 and July 31 of each year
(such quarterly dates are hereinafter referred to as the "New Quarterly Payment
Dates" or individually a "New Quarterly Payment Date");
(ii) the last quarterly interest only payment shall be due on the
New Quarterly Payment Date occurring immediately prior to the date that the
first payment of principal and interest is due;
(iii) if the first quarterly payment of principal and interest
required under the Original Note is due on a New Quarterly Payment Date, the
first quarterly payment of principal and interest shall be due on such New
Quarterly Payment Date as provided in the Original Note and thereafter, Maker
shall be required to make its payments of principal and interest in equal
quarterly installments in the amount provided in the Original Note on each
succeeding New Quarterly Payment Date; and
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(iv) if the first quarterly payment of principal and interest
required under the Original Note is due on a day other than one of the New
Quarterly Payment Dates, the Original Note is hereby modified to provide that
the first quarterly payment of principal and interest shall be due on the first
New Quarterly Payment Date following the date currently provided in the Original
Note for the first payment of principal and interest and thereafter, Maker shall
be required to make its payments of principal and interest in equal quarterly
installments in the amount provided in the Original Note on each succeeding New
Quarterly Payment Date.
The Maker and the Commission acknowledge and agree that no
modification is being made to the "Maturity Date" (as that term is defined in
the Original Note) and that the entire "Principal Amount" (as that term is
defined in the Original Note), together with accrued and unpaid interest
thereon, and all other remaining obligations of Maker under the Note, if not
sooner paid, shall be due and payable on the Maturity Date.
6. The sixth (6th) paragraph of the Original Note reading "All interest
shall be computed on the basis of a 360-day year for actual days elapsed." is
hereby deleted in its entirety and replaced with the following:
Interest on the Principal Amount of this Note shall be computed at
the Annual Rate on the basis of a three hundred sixty (360) -day
year composed of twelve (12) months of thirty (30) days each, except
that interest due and payable for a period of less than a full
quarterly payment period shall be calculated by dividing the full
quarterly payment by the actual number of calendar days in the
applicable quarterly payment period to create a daily rate that is
multiplied by the actual number of days elapsed since the last day
of the previous quarterly payment period.
7. If the Suspension Interest Payment and Deferred Interest Payment due
on the Effective Date are received by the Commission on or before October 29,
1998, together with any applicable late fee, Maker and the Commission agree that
the paragraphs of the Original Note defining when an "Event of Default" occurs
will be modified by deleting in their entirety the provisions beginning with the
phrase "a. Any non-payment by Maker of any Principal and/or Interest on the due
date..." and continuing through "... Maker has not resumed payments of Principal
and/or Interest in accordance with the terms of this Note; or" and replaced with
the following:
a. Any non-payment by Maker of any Principal and/or Interest on the
due date specified hereinabove, and the failure to make such
payment, together with all applicable "Late Fees" (as hereinafter
defined) within one hundred eighty (180) days after such Principal
and/or Interest payment due date; or
8. The Original Note is hereby amended to provide that in addition to
the Events of Default listed therein, as modified by this First Modification, it
shall be an Event of Default under the Note if either the Suspension Interest
Payment due on the Effective Date or the Deferred Interest Payment due on the
Effective Date is not received by the Commission on or before October 29, 1998.
No additional grace or cure period shall be applicable to such payment.
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<PAGE>
All other payments of Suspension Interest shall be subject to the same terms and
conditions as the remaining Principal and/or Interest payments under the Note.
9. The paragraph of the Original Note which imposes a late fee upon the
occurrence of any Event of Default is hereby modified by deleting in its
entirety the provision beginning with the phrase "Upon any Event of Default
under this Note, Payee may assess a late fee and/or administrative charge,..."
and continuing through "... 5% (five percent) of the payment shall be added to
each payment of monies due under this Note that is not timely paid under the
terms of this Note." and substituting in its place the following:
Should any payment of Principal and/or Interest required under
this Note not be paid in full on the due date as specified
hereinabove, Maker acknowledges that the Payee will incur extra
expenses for the handling of the delinquent payment and servicing
the indebtedness evidenced hereby, and that the exact amount of
these extra expenses is extremely difficult and impractical to
ascertain. Therefore, Maker shall, in such event, without further
notice, and without prejudice to the right of the Payee to collect
any other amounts provided to be paid hereunder or under the
Security Agreement, or to declare an Event of Default, pay to the
Commission the "Late Fee" (as hereinafter defined) to compensate
Payee for expenses incurred in handling delinquent payments and the
Maker confirms and agrees that the Late Fee is a fair approximation
of the expense so incurred by the Payee. The "Late Fee" is defined
as the total, if any, of the "Non-Delinquency Late Fee" and the
"Grace Period Late Fee" (as hereinafter defined). The
"Non-Delinquency Late Fee" shall be an amount equal to five percent
(5.0%) of any Principal and/or Interest payment required to be made
hereunder and shall be automatically assessed if such payment is not
made on the original date that such Principal and/or Interest
Payment is due (without the benefit of any notice or grace period).
If such Principal and/or Interest payment, together with the
Non-Delinquency Late Fee, is not made on or before the ninetieth
(90th) -day after the original date that such Principal and/or
Interest payment was due, such payment shall automatically be
subject to a second late fee (the "Grace Period Late Fee") equal to
ten percent (10.0%) of the amount of such past due Principal and/or
Interest Payment (without the benefit of any notice or grace period)
in addition to the Non-Delinquency Late Fee.
In addition to the foregoing, there shall also automatically be
imposed on Maker, and Maker shall pay to the Commission without
further notice, and without prejudice to the right of the Payee to
collect any other amounts provided to be paid hereunder or under the
Security Agreement, or to declare an Event of Default, the
"Resumption Date Late Fee" (as hereinafter defined) to compensate
Payee for expenses incurred in handling delinquent payment of the
Suspension Interest Payment due on the Effective Date and/or the
Deferred Interest Payment. The Maker confirms and agrees that the
Resumption Date Late Fee is a fair
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<PAGE>
approximation of the expense so incurred by the Payee. The
"Resumption Date Late Fee" shall be an amount equal to (i) five
percent (5.0%) of the Suspension Interest Payment due on the
Effective Date if such payment is not received by the Payee on the
Effective Date (without the benefit of any notice or grace period),
and (ii) five percent (5.0%) of the Deferred Interest Payment due on
the Effective Date if such payment is not received by the Payee on
the Effective Date (without the benefit of any notice or grace
period).
Maker and Payee agree that all references in the Original Note to a late fee
shall be deemed to be a reference to the Late Fee and/or the Resumption Date
Late Fee, as applicable.
10. All defined terms contained in the Loan Documents shall have the
same meaning as set forth therein except as may otherwise be expressly set forth
in this First Modification. Maker and the Commission covenant and agree that the
reference in the Security Agreement to the "Note" shall be deemed a reference to
the Original Note, as modified by this First Modification.
11. This First Modification constitutes the entire agreement regarding
the amendment and modification of the Original Note between Maker and the
Commission and is intended by Maker and the Commission to be a complete,
exclusive and final integration of all prior and contemporaneous agreements and
negotiations of Maker and the Commission concerning the amendment and
modification of the Original Note. There have been no other agreements,
covenants, representations or warranties between Maker and the Commission
regarding the amendment and modification of the Original Note other than those
expressly stated or referred to in this First Modification or in any document
delivered pursuant hereto.
12. This First Modification may be amended or modified only by written
instruments signed by Maker and the Commission. If any covenant, condition or
provision of this First Modification is declared by a court of competent
jurisdiction to be invalid and not binding on the Maker and/or the Commission,
such declaration shall in no way affect the validity of the other remaining
covenants, conditions and provisions of this First Modification.
13. This First Modification shall bind, inure to the benefit of and be
enforceable by Maker and the Commission, their respective heirs, beneficiaries,
legal representatives, successors and assigns.
14. Except as modified by this First Modification, Maker agrees that
the Original Note shall continue in full force and effect without modification,
and the Original Note and all of the other Loan Documents are hereby expressly
approved, ratified, confirmed and reaffirmed by all parties to this First
Modification. Maker hereby acknowledges and agrees that it has no claims,
counterclaims, set-offs, defenses or other causes of action against the
Commission and/or under the Note, Security Agreement or any of the other Loan
Documents and to the extent that any such set-offs, counterclaims, defenses or
other causes of action may exist, whether known or unknown, they are hereby
waived and forever relinquished by the Maker.
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15. This First Modification shall be governed and construed in
accordance with the Communications Act of 1934, as amended from time to time,
the then applicable orders and regulations of the Commission and federal law.
16. This First Modification may be executed in counterparts, each of
which shall be deemed to be an original and all of which shall collectively be
deemed to constitute a single document.
IN WITNESS WHEREOF, intending to be legally bound, the undersigned
Maker and the Commission have each executed this First Modification, under seal,
as of the day and year first hereinabove written.
[SIGNATURE PAGES FOLLOW]
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SIGNATURE PAGE
FIRST MODIFICATION OF
INSTALLMENT PAYMENT PLAN NOTE
Witness/Attest: MAKER:
- ----------------------------------- MERCURY PCS II, L.L.C.
A __________________________________
By:___________________________ (SEAL)
Name:_________________________
Title:________________________
Date:___________________, 1998
8
<PAGE>
SIGNATURE PAGE
FIRST MODIFICATION OF
INSTALLMENT PAYMENT PLAN NOTE
COMMISSION:
-----------
FEDERAL COMMUNICATIONS COMMISSION
WITNESS:
- ------------------------------- By:______________________________
Name: ___________________________
Its: Authorized Signatory for the
Wireless Telecommunications
Bureau, Federal Communications
Commission
9
<PAGE>
TRITEL COMMUNICATIONS, INC.
1410 Livingston Lane
Jackson, MS 39213-8003
July 2, 1998 Phone: (601) 362-2200
Facsimile: (601) 362-2664
Mr. G.F. Amann
Director of Contracts
General Counsel
GeoTrans Wireless
46050 Manekin Plaza
Suite 100
Sterling, VA 20166
Gentlemen:
THIS AGREEMENT is entered into by and between Tritel Communications, Inc.,
hereinafter referred to as "Tritel" and H.S.I. GeoTrans Wireless, hereinafter
referred to as "GeoTrans Wireless".
WHEREAS, the parties recited hereinabove have agreed to negotiate and enter into
mutually acceptable service agreement covering certain Site Acquisition Services
applicable to certain Federal Communications Commission (FCC) licenses currently
owned or to be acquired by Tritel.
AND WHEREAS, the parties hereto wish to enter into an interim agreement prior to
the completion of the formal service agreement recited hereinabove so as to
commence Site Acquisition Services required by Tritel and alleviate any further
delays.
NOW THEREFORE, Tritel and GeoTrans Wireless hereby agree as follows:
1) GeoTrans Wireless agrees to commence preliminary site acquisition
services on Thursday, July 2, 1998 and continue to provide such
services for the earlier of July 31, 1998 or such date as the formal
service agreement has been executed by Tritel and GeoTrans Wireless.
2) GeoTrans Wireless agrees to invoice for the services rendered during
this interim period on a time and materials basis and said invoices
shall not exceed [CONFIDENTIAL TREATMENT REQUESTED].
3) GeoTrans Wireless agrees that all time and material charges invoiced to
Tritel prior to the execution of the formal agreement shall be
submitted promptly to Tritel. All invoices submitted by GeoTrans
Wireless must be accompanied by a representation and warranty of
GeoTrans Wireless that all laborers, subcontractors, suppliers and
others who might claim lien rights on the product or services, have
been or will be timely paid in full. Tritel shall
<PAGE>
Mr. G. F. Amann
July 2, 1998
Page Two
remit payment on all uncontested amounts invoiced within thirty (30)
days from receipt of such invoice.
If the foregoing represents the spirit and expressed intent of our agreement,
please so indicate by executing same in the space provided below and return one
(1) copy to this office for our files. Should you have any questions or if I may
be of further assistance in the meantime, please feel free to call.
Yours very truly,
TRITEL COMMUNICATIONS, INC.
Jerry M. Sullivan, Jr.
Executive Vice President/COO
JMS/lsb
AGREED TO AND ACCEPTED
THIS ___th DAY OF JULY, 1998.
H.S.I. GEOTRANS WIRELESS
- -------------------------------------
By: G.F. Amann
Director of Contracts, General Counsel
<PAGE>
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "Agreement"),dated as of the lst day of
June, 1998, is made by and between TRITEL COMMUNICATIONS, INC., a Delaware
corporation ("Tritel"), and GALAXY PERSONAL COMMUNICATIONS SERVICES, INC., a
Delaware corporation ("Galaxy"), which is a wholly-owned subsidiary of WORLD
ACCESS, INC., a Delaware corporation.
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
SECTION 1. THE SERVICES
1.1 SERVICES.
Galaxy will perform the services described on Exhibit A (the
"Services") for Tritel (or subsidiaries or entities under common control with
Tritel, as directed by Tritel) regarding the project described therein (the
"Project") in accordance with the terms and conditions of this Agreement. Galaxy
will perform the Services in a professional, workmanlike manner, will exercise
reasonable skill, care and diligence in the performance of the Services and will
carry out its responsibilities in accordance with industry accepted good
professional engineering practices and in compliance with all standards and
rules reasonably established by Tritel from time to time; provided, however,
that any timetables agreed to by Galaxy shall be subject to appropriate
adjustment in the event Tritel materially changes its established standards and
rules. Unless otherwise agreed by Tritel in writing, Galaxy will provide all
personnel, equipment and supplies necessary or appropriate to perform the
Services.
1.2 EXAMINATION OF THE SERVICES.
Galaxy has examined the applicable ordinances, rules and regulations,
and has examined the markets where the Services will be provided and satisfied
itself as to all conditions to be encountered in the performance of the
Services.
1.3 TIME IS OF THE ESSENCE.
Upon execution of this Agreement the parties shall promptly negotiate
and establish a general overall progress schedule for the performance of the
Services in all markets subject to this Agreement and completion of the Project,
which schedule shall be supplemented (prior to commencing Services in any
market) with more detailed and mutually established market by market progress
schedules (the general and more detailed progress schedules may be hereafter
referred to collectively as the "Progress Schedule") which shall include a
description of milestones marking the completion of certain successive phases of
the Services (the "Milestones"). The Progress Schedule, when executed by Tritel
and Galaxy, shall be deemed an addendum to this Agreement and become an integral
part of this Agreement. The Progress Schedule may be amended by mutual agreement
of Tritel and Galaxy in writing.
<PAGE>
In the performance of Galaxy's obligations under this Agreement, time
is of the essence. Galaxy agrees to see to the timely performance of the
Services in accordance with the Progress Schedule and will not delay (beyond
deadlines established in the Progress Schedule) or interfere with other portions
of work on the Project. Galaxy recognizes that Tritel will incur severe economic
loss if the Project is not timely completed, and that Galaxy will be responsible
to compensate Tritel for such loss in accordance with Section 1.9 if Galaxy does
not comply with the Progress Schedule.
1.4 COMMENCEMENT AND PROGRESS.
Upon Tritel and Galaxy's mutual execution of the Progress Schedule,
Galaxy will commence providing Services within a market specified by Tritel
within three (3) weeks after written notice from Tritel to Galaxy, and shall
provide the Services diligently and in accordance with the Progress Schedule.
1.5 PRIORITY OF SERVICES.
Within the parameters of the Progress Schedule, Tritel shall have the
right to decide the time, order and priority in which the various portions of
the Services shall be performed and all other matters relevant to the timely and
orderly conduct of Galaxy's Services.
1.6 COORDINATION.
Galaxy shall cooperate with Tritel and all other contractors involved
in the Project in the provision of the Services. Tritel shall cooperate with
Galaxy in connection with its provision of the Services, and shall instruct its
contractors and agents involved in the Project to do likewise.
1.7 AUTHORIZED REPRESENTATIVE; PERSONNEL.
Galaxy shall designate one or more persons who shall be Galaxy's
authorized representative(s) on-site and off-site. Tritel shall have the right
to approve any personnel assigned by Galaxy to perform any Services, which
approval shall not be unreasonably withheld or delayed.
1.8 ASSIGNMENT AND SUBCONTRACTING.
Galaxy will not assign the work under this Agreement, or subcontract
any portion of it, without the written consent of Tritel. Galaxy will not make
any assignment of payments to be earned by Galaxy under this Agreement without
the prior written approval of Tritel.
1.9 CONSEQUENCES FOR DELAY.
Except as noted below, in the event of a delay of Galaxy referred to in
Section 1.3, there shall be deducted from the Compensation payable to Galaxy the
following amounts: (a) a charge equal to [CONFIDENTIAL TREATMENT REQUESTED] per
day per cell site for each day of delay in the Progress Schedule (or, if Tritel
incurs extraordinary expense to maintain its schedule in spite of Galaxy's
delay, an amount equal to such expense) materially attributable to Galaxy,
subject to a maximum delay charge of [CONFIDENTIAL TREATMENT REQUESTED] per cell
site; or (b) a charge
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equal to [CONFIDENTIAL TREATMENT REQUESTED] per day per each cell site within a
system or cluster of cell sites each as will be mutually defined in the Progress
Schedule (which system or cluster cannot be placed in commercial service due to
one or more cell sites within such system or cluster not being placed in
commercial service) for each day of delay in the Progress Schedule (or if Tritel
incurs extraordinary expense to maintain its schedule in spite of Galaxy's
delay, an amount equal to such expense), subject to a maximum delay charge of
[CONFIDENTIAL TREATMENT REQUESTED] per cell site for each cell site within such
system or cluster.
Galaxy will be excused for any delay caused by acts of God, war
(including civil war), civil unrest, acts of government, fire, floods,
explosions, inclement weather, epidemics, quarantine restrictions,
interplanetary catastrophes, delays solely caused by Tritel or its vendors or
other contractors, or other events beyond the control of Galaxy. Galaxy will be
entitled to extensions of time for such delay only upon written notice to Tritel
within ten (10) days after commencement of the delay.
The foregoing sums represent the amount of liquidated damages which the
parties have agreed upon as compensation to Tritel for any delay in placing
Tritel's systems in commercial service in accordance with the Progress Schedule
as a result of Galaxy's delay or interference. The parties acknowledge that such
sums represent a fair and equitable amount of compensation for delay in view of
the impossibility of ascertaining actual damages. The foregoing liquidated
damages clause shall, however, be in addition to and not in substitution for any
other rights or remedies which Tritel may have under this Agreement or otherwise
against Galaxy by reason of its failure to complete the Services with the time
limits referred to above.
If due to any act or omission of Galaxy mutually agreed Acceptance
Criteria (defined below) are not met and the commercial launch of a system is
delayed, in addition to the delay liquidated damages set forth above, Galaxy
shall correct to Tritel's reasonable satisfaction, at Galaxy's sole cost, any
deficiency in the applicable design criteria, including, reasonable costs
associated with additional planning and testing, acquiring and constructing
additional cell sites erroneously omitted from (or required as a result of any
flaw in) Galaxy's original RF design and the cost of additional base stations
and other equipment and supplies not contemplated in Galaxy's original RF
design. The provisions of this paragraph shall not apply to deficiencies caused
by Tritel's deviation from the original design criteria.
SECTION 2. COMPENSATION
2.1 COMPENSATION.
Tritel will pay Galaxy for Services rendered in accordance with Exhibit
B (the "Compensation"). Unless expressly excluded pursuant to the terms of this
Agreement, all costs and expenses related to the provision of the Services are
included in the Compensation. However, any state and local sales or use taxes
arising from Tritel's payment of the Compensation are not included and, if
applicable, shall be payable by Tritel.
2.2 PAYMENT TERMS.
Galaxy will submit invoices to Tritel in accordance with the Milestone
schedule set forth in Exhibit A. Tritel will remit all properly payable amounts
within thirty (30) days of Tritel
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receipt of any such invoice unless Tritel elects the financing option set forth
below. Tritel may elect to finance the payment of any invoice for a period of up
to nine months. If Tritel so elects, interest will begin to accrue on all
charges set forth in any deferred invoice at a floating per annum rate equal to
the prime rate of interest published in The Wall Street Journal plus one percent
beginning on the thirty-first day following Tritel's receipt of any such
invoice. Each invoice will describe, in reasonable detail and with respect to
the relevant invoice period (a) a description of the Services provided, and (b)
any work product created. The Compensation shall not be altered except as
specifically provided for in this Agreement.
2.3 INVOICE REPRESENTATION.
All invoices must be accompanied by a representation and warranty of
Galaxy that all laborers, subcontractors, suppliers and others who might claim
lien rights on the Project have been or will be timely paid in full.
2.4 PAYMENT NOT ACCEPTANCE.
Payment to Galaxy alone does not constitute or imply acceptance by
Tritel of any portion of Galaxy's Services.
2.5 GALAXY PAYMENT FAILURE.
If it appears to Tritel that the labor, material and other bills
incurred in the performance of Galaxy's Services (which if unpaid may give rise
to lien rights or claims on the Project) are not being currently paid, Tritel
may take such steps as it deems necessary to insure that the money paid to
Galaxy will be utilized to pay such bills.
2.6 BACK CHARGES AND WITHHOLDS.
Tritel may withhold payments from Galaxy in amounts that are sufficient
to protect Tritel in the event of any of the following:
(a) Galaxy's improper or delayed works, defective work or damage to the
work, which is not corrected by it;
(b) Any claims Tritel may have against Galaxy arising out of other
projects;
(c) Filing of any claims, demands, suits, attachments and/or liens
against Galaxy;
(d) Reasonable evidence brought to Tritel's attention that any claims,
demands, suits, attachments and/or liens are to be filed against Galaxy which
could potentially affect the Project;
(e) Reasonable evidence brought to Tritel's attention of prospective
insolvency of Galaxy; or
(f) Any bona fide claim or lien against Tritel or the premises upon
which the Services were performed which arises out of Galaxy's default in its
performance of this Agreement.
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<PAGE>
2.7 FINAL PAYMENT.
The final payment will be due when Galaxy's Services have been
completed and accepted by Tritel, which acceptance shall not be unreasonably
withheld. For purposes of this Section 2.7, final payment shall be deemed to
have been made upon Tritel's election to finance the charges subject to the
final payment, effective upon Tritel's provision of notice of such election to
Galaxy. The making and acceptance of final payment constitutes a waiver of any
claims by Galaxy against Tritel for compensation for extra work or for
compensation of any kind claimed by Galaxy because of the activities of Tritel
in connection with the Project. Prior to final payment Galaxy shall submit to
Tritel:
(a) Galaxy's affidavit that all payrolls, bills for materials and
equipment, and other indebtedness connected with Galaxy's Services for which
Tritel or its property might in any way be liable, have been paid, or otherwise
satisfied;
(b) Satisfaction of all required acceptance criteria which shall be
mutually established by Tritel and Galaxy within 90 days of execution of this
Agreement in accordance with the parameters and procedures set forth in the
General Milestone and Acceptance Criteria Schedule attached as Exhibit C (such
acceptance criteria as shall be established may be referred to as the
"Acceptance Criteria"); and
(c) Other data as reasonably required by Tritel, such as receipts,
releases, and waivers of liens.
Final payment shall constitute a waiver of all claims by Galaxy for additional
compensation relating to Galaxy's Services, but shall in no way relieve Galaxy
of liability for obligations assumed under this Agreement or for faulty or
defective work appearing within sixty (60) days from the later of (i) final
payment; or (ii) commercial in-service use of the applicable system.
2.8 SUSPENSION OF SERVICES.
During the term of this Agreement, Tritel may elect to suspend Services
in progress in a specific market due to any of the following conditions:
(i) FCC or state regulatory actions which affect a specific Tritel
service area;
(ii) Moratoriums or similar actions imposed by state or local
authorities which would materially affect Tritel's ability to
complete network deployment within such area; or
(iii) Mutual agreement by Galaxy and Tritel.
If Services were suspended as a result of any of the above conditions, Galaxy
would receive demobilization compensation during the suspension and
remobilization compensation if Galaxy's personnel are remobilized.
Demobilization compensation will equal [CONFIDENTIAL TREATMENT REQUESTED] of the
hourly rates of personnel demobilized (assuming a 9-hour workday and 5-day
workweek during any period of demobilization) plus a demobilization fee of
[CONFIDENTIAL TREATMENT REQUESTED] per person demobilized. Upon remobilization,
Galaxy will be paid a fee
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<PAGE>
of [CONFIDENTIAL TREATMENT REQUESTED] per Galaxy employee remobilized. Tritel
would not assign work in progress, suspended under this provision, to other
contractors or internal personnel for resumption of work without the mutual
consent of Tritel and Galaxy. The Progress Schedule for any market suspended
shall be tolled during any period of suspension. No suspension of services under
this provision will occur prior to completion of the design phase and issuance
of search rings.
SECTION 3. TERM.
The term of this Agreement will commence on the date hereof and, unless
otherwise earlier terminated pursuant to Section 11 or extended upon mutual
agreement of the parties, will end upon the earlier of: (i) Galaxy's completion
and Tritel's acceptance of the Services (as determined by the Acceptance
Criteria); or (ii) fifteen (15) months from the date of Galaxy's commencement of
Services in the last market of Tritel in the Project covered by this Agreement.
SECTION 4. INDEPENDENT CONTRACTOR.
Galaxy will perform the Services as an independent contractor of
Tritel, and this Agreement will not be construed to create a partnership, joint
venture or employment relationship between Galaxy and Tritel. Galaxy will not
represent itself to be an employee or agent of Tritel or enter into any
agreement on Tritel's behalf or in Tritel's name, unless Galaxy is specifically
authorized in writing by Tritel to do so.
SECTION 5. COMPLIANCE WITH LAWS.
Galaxy will at its own cost (a) comply with all federal, state and
local laws, ordinances, regulations and orders with respect to its performance
of the Services (collectively, the "laws"), (b) file all reports relating to the
Services (including, without limitation, tax returns), (c) pay all filing fees
and federal, state and local taxes applicable to Galaxy's business as the same
shall become due, and (d) pay all amounts required under local, state and
federal workers' compensation acts, disability benefit acts, unemployment
insurance acts and other employee benefit acts when due. Galaxy will provide
Tritel with such documents and other supporting materials as Tritel may
reasonably request to evidence Galaxy's continuing compliance with this Section
5. Galaxy is liable to Tritel for all fines and penalties attributable to any
acts of commission or omission by Galaxy, its employees and agents resulting
from the failure to comply with laws.
SECTION 6. INSURANCE.
6.1 COVERAGE REQUIREMENTS.
Prior to providing any Services, Galaxy will procure and maintain
throughout the term of this Agreement insurance policies (including, without
limitation, automobile insurance, commercial liability insurance, professional
liability insurance and statutory workers' compensation insurance) that are
sufficient to protect Galaxy's business against all applicable risks and, upon
Tritel's request, furnish Tritel with an endorsement from the insurance carriers
showing Tritel as an additional insured under Galaxy's insurance. Galaxy will
provide Tritel
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with certificates of insurance and other supporting materials as Tritel may
reasonably request to evidence Galaxy's continuing compliance with the preceding
sentence.
6.2 CANCELLATION.
Galaxy's insurance policies shall contain a provision that coverage
afforded under the policies will not be canceled, changed in a manner to reduce
coverage from the levels currently in effect or not renewed (unless replaced
with equivalent coverage with an alternate carrier) until at least thirty days'
prior written notice has been given to Tritel. A statement to this effect will
be included with Galaxy's insurance certificates. Certificates of insurance
acceptable to Tritel shall be filed with Tritel prior to the commencement of
Galaxy's Services.
6.3 WAIVER OF SUBROGATION.
Tritel and Galaxy waive all rights against each other and against
separate contractors, and all other subcontractors for damages caused by fire or
other perils to the extent covered by Builder's Risk or any other property
insurance purchased for the Project, except such rights as they may have to the
proceeds of such insurance.
6.4 RISK OF LOSS.
Galaxy will be liable for all loss or damage, other than ordinary wear
and tear, to Tritel's property in Galaxy's possession or control. In the event
of any such loss or damage, Galaxy will pay Tritel the full current replacement
cost of such equipment or property within thirty (30) days after its loss or
damage.
6.5 NO WORKERS' COMPENSATION LIMITATION ON INDEMNITY.
In any and all claims against Tritel by any employee of Galaxy or
anyone directly or indirectly employed by Galaxy or anyone for whose acts Galaxy
may be liable, the indemnification obligations under Section 9 shall not be
limited in any way by any limitation on the amount or type of damages,
compensation or benefits payable by or for Galaxy under Workers' Compensation
laws, disability benefit laws or other employee benefit laws.
SECTION 7. OWNERSHIP AND USE OF PROPRIETARY MATERIALS
7.1 PROPRIETARY MATERIALS.
As used in this Agreement, "Proprietary Materials" means all products,
devices, computer programs, techniques, know-how, algorithms, procedures,
discoveries or inventions, whether patentable or copyrightable and whether
reduced to practice, and all materials, texts, drawings, specifications, source
code, data and other recorded information, in preliminary or final form and on
any media whatsoever, that (a) is within the scope of the Project or (b) reduced
to practice, developed, discovered, invented or made by Galaxy during the term
of this Agreement, whether solely or jointly with others, and for the purposes
of performing the Services.
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7.2 OWNERSHIP.
Tritel will be the exclusive owner of all Proprietary Materials arising
from Galaxy's performance of this Agreement. To the extent permitted under the
U.S. Copyright Act (17 USC (Section) 101 et seq., and any successor statute
thereto), the Proprietary Materials will constitute "works made for hire," and
the ownership of such Proprietary Materials will vest in Tritel at the time they
are created. To the extent the Proprietary Materials are not "works made for
hire" under applicable copyright laws, Galaxy hereby assigns and transfers to
Tritel all right, title and interest that Galaxy may now or hereafter have in
the Proprietary Materials, subject to the limitations set forth in Section 7.4.
Galaxy will promptly disclose to Tritel all Proprietary Materials.
7.3 FURTHER ACTS.
Galaxy will take such action (including, but not limited to, the
execution, acknowledgement, delivery and assistance in preparation of documents
or the giving of testimony) as may be requested by Tritel to evidence, transfer,
vest or confirm Tritel's right, title and interest in the Proprietary Materials.
7.4 LIMITATION.
Notwithstanding any other provision of this Agreement to the contrary,
this Section 7 will not obligate Galaxy to assign or offer to assign to Tritel
any of Galaxy's rights in an invention for which no equipment, supplies,
facilities or trade secret information of Tritel was used and which was
developed entirely on Galaxy's own time, unless the invention relates directly
to the Project.
7.5 USE.
Except as required for Galaxy's performance of the Services or as
authorized in writing by Tritel, Galaxy will not use, disclose, publish or
distribute any Proprietary Materials or remove any Proprietary Materials from
Tritel's premises. Galaxy will hold all Proprietary Materials in trust for
Tritel and will deliver them to Tritel upon request and in any event upon the
expiration or termination of this Agreement.
7.6 NON-INFRINGEMENT WARRANTY.
Galaxy represents and warrants that any Proprietary Materials
originating from Galaxy, and the exercise by Tritel of its rights hereunder with
respect to the Proprietary Materials, will not infringe upon, violate or
misappropriate any patent, copyright, trade secret, trademark, contract or other
right or interest of any third party.
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7.7 OTHER COMPANIES.
During the course of executing the amended services, Galaxy employees
may use software and documentation created by other RF services companies. Each
Galaxy employee who uses these software products must agree in writing to
protect any confidential information they acquire through training on or use of
these software products.
7.8 REMEDIES.
Galaxy agrees that damages may be inadequate to compensate for the
unique losses to be suffered in the event of a breach of the provisions set
forth in Sections 7.1 through 7.7, and that Tritel will be entitled, in addition
to any other remedy it may have under this Agreement or at law, to seek and
obtain injunctive and other equitable relief, including specific performance of
the terms of this Agreement without the necessity of posting bond.
SECTION 8. NO CONFLICTING OBLIGATIONS.
8.1 OTHER AGREEMENTS.
Galaxy's execution, delivery and performance of this Agreement will not
violate any other employment, nondisclosure, confidentiality, consulting or
other agreement to which Galaxy is a party or by which it may be bound.
8.2 THIRD-PARTY CONFIDENTIAL INFORMATION.
Galaxy will not use, in the performance of the Services or the creation
of any Proprietary Materials, or disclose to Tritel any confidential or
proprietary information of any other person if such use or disclosure would
violate any obligation or duty that Galaxy owes to such other person. Galaxy's
compliance with this Section 8.2 will not prohibit, restrict or impair Galaxy's
performance of the Services and it's other obligations and duties to Tritel.
SECTION 9. INDEMNIFICATION.
Galaxy shall indemnify, defend and hold Tritel (and Tritel's agents,
legal representatives, officers, directors, shareholders and employees) harmless
from all claims, damages, losses, costs, expenses (including attorneys' fees)
and liabilities, including any amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, arising out of or resulting from any
claim, action, investigation or other proceeding (including any proceeding by
any of Galaxy's employees, agents or subcontractors), actual or threatened, that
is based upon (a) a default by Galaxy in the performance of its obligations
under this Agreement, (b) any representation or warranty of Galaxy being untrue
in any material respect, (c) the conduct of Galaxy's business, (d) any negligent
act or omission of Galaxy, or (e) the infringement or misappropriation of any
foreign or United States patent, copyright, trade secret or other proprietary
right by the Proprietary Materials originating from Galaxy.
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SECTION 10. NONDISCLOSURE AGREEMENT
As a condition to Tritel's obligations under this Agreement, Galaxy
agrees to abide by all the terms and conditions of that certain Non-disclosure
Agreement dated as of May 28, 1998, executed by and between Tritel and Galaxy
(the "Non-disclosure Agreement"). SECTION 11. TERMINATION.
11.1 TERMINATION FOR CAUSE.
Tritel may terminate this Agreement upon an Event of Default (defined
below), provided, however, that as to any of the matters set forth in
subparagraphs (iii) through (vii) of Section 13: (a) Tritel sends written notice
to Galaxy describing the breach in reasonable detail, (b) Galaxy does not cure
the breach within thirty (30) days following its receipt of such notice, and (c)
following the expiration of the thirty-day cure period, Tritel sends a second
written notice to Galaxy indicating Tritel's desire to terminate this Agreement.
If an Event of Default results from any of the matters set forth in
subparagraphs (i) and (ii) of Section 13, Tritel's termination of this Agreement
shall be effective upon giving notice of termination to Galaxy. Galaxy may
terminate this Agreement upon Tritel's material breach of this Agreement,
provided that (a) Galaxy sends written notice to Tritel describing the breach in
reasonable detail, (b) Tritel does not- cure the breach within thirty (30) days
following its receipt of such notice, and (c) following the expiration of the
thirty-day cure period, Galaxy sends a second written notice to Tritel
indicating Galaxy's desire to terminate this Agreement.
If Tritel terminates this Agreement for cause as described above,
Tritel, without prejudice to any other remedy it might have, may terminate this
Agreement and complete the Services by such means as Tritel deems fit. In such
case, Galaxy shall not be entitled to receive any further payment until Galaxy's
Services are completed. If the unpaid balance of the Compensation shall exceed
the aggregate of (1) the expense of Tritel of completing the Services, including
compensation for additional managerial and administrative services, and (2) the
losses and damages of Tritel, including its attorneys' fees and litigation
expense, such excess shall be paid to Galaxy. If the expense of completing
Galaxy's Services and the losses and damages of Tritel shall exceed the unpaid
balance of the Compensation, Galaxy shall pay the difference to Tritel promptly
on demand.
11.2 TERMINATION FOR CONVENIENCE.
Either Tritel or Galaxy may terminate this Agreement at any time upon
ninety (90) days' written notice to the other (a "Termination for Convenience").
Upon a Termination for Convenience by Tritel, Galaxy shall be compensated for
any Services rendered but which have not been paid ("Unpaid Services") on a time
and materials basis as set forth in Exhibit B, unless the Unpaid Services
constitute a Milestone in which case payment shall be made in accordance with
the Milestone schedule set forth in Exhibit B. Upon a Termination for
Convenience by Galaxy, Galaxy shall not be compensated for any Unpaid Services
unless the Unpaid Services constitute a Milestone in which case payment shall be
made in accordance with the Milestone schedule set forth in Exhibit B.
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11.3 SURVIVAL.
Sections 5 and 7 and Sections 9 through 24 (together with all other
provisions of this Agreement that may reasonably be interpreted or construed as
surviving termination of the Term) will survive the termination of the Term.
SECTION 12. NOTICES.
All notices given hereunder will be given (and shall be deemed to have
been given upon receipt) in writing, will refer to this Agreement and will be
personally delivered, sent by telecopy, by other electronic facsimile
transmission or by registered or certified mail (return receipt requested) to
the address set forth below the parties' signatures at the end of this
Agreement. Any party may from time to time change such address by giving the
other party notice of such change in accordance with this Section 12.
SECTION 13. EVENT OF DEFAULT.
For the purposes of this Agreement, an "Event of Default" shall be if:
(i) At any time there shall be filed by or against Galaxy in any
court a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee
of all or a portion of the property of Galaxy, and within
twenty (20) days from the filing date Galaxy fails to secure a
discharge; or
(ii) Galaxy makes an assignment for the benefit of creditors or
petitions for or enters into an agreement or arrangement with
its creditors; or
(iii) Galaxy materially fails to prosecute the Services in accordance
with the Acceptance Criteria, and therefore, fails to complete
the Services entirely on or before any date established in the
Progress Schedule for partial, substantial or final completion
(except for delays for which Galaxy is entitled to additional
time); or
(iv) There is a breach of any of Galaxy's representation or
warranties contained in this Agreement or required to accompany
any invoice rendered under this Agreement; or
(v) Galaxy fails to supply sufficient labor, material and/or
equipment so as to complete the Services in accordance with the
Progress Schedule, unless such delay is excused in accordance
with Section 1.9; or
(vi) Galaxy performs defective work and fails to correct promptly
and properly such defective work; or
(vii) Without limitation, Galaxy fails to perform any material
provision of this Agreement.
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SECTION 14. ASSIGNMENT
Galaxy may not assign this Agreement, in whole nor in part, without
Tritel's prior written consent. Tritel may assign its rights hereunder to (a)
any corporation or other entity resulting from any merger, consolidation or
other reorganization to which Tritel is a party, (b) any corporation,
partnership, association or other entity or person to which Tritel may transfer
all or substantially all of the assets and business of Tritel existing at such
time, or (c) any subsidiary of or entity under common control with Tritel. Upon
any such assignment by Tritel and the full and unconditional assumption by such
assignee of all of Tritel's obligations hereunder arising after such assignment,
Tritel shall be released and free from any obligation or liability under this
Agreement arising after such assignment. All the terms and provisions of this
Agreement will be binding upon and inure to the benefit of and be enforceable by
the parties hereto and their respective successors and permitted assigns.
SECTION 15. PERSONNEL
The terms and conditions of this Agreement will be binding upon
Galaxy's employees, agents, subcontractors and affiliates.
SECTION 16. WAIVERS
No delay or failure by any party hereto in exercising or enforcing any
of its rights or remedies hereunder, and no course of dealing or performance
with respect thereto, will constitute a waiver thereof. The express waiver by a
party hereto of any right or remedy in a particular instance or will not
constitute a waiver thereof in any other instance. All rights and remedies will
be cumulative and not exclusive of any other rights or remedies.
SECTION 17. AMENDMENTS
No amendment, waiver or discharge of any provision of this Agreement
will be effective unless made in writing that specifically identifies this
Agreement and the provision intended to be amended, waived or discharged and
signed by Tritel and Galaxy. Each such amendment, waiver or discharge will be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 18. APPLICABLE LAW
This Agreement and each of the documents referred to herein shall be
interpreted, construed, applied and enforced in accordance with the laws of the
State of Mississippi, without regard to any rules governing conflicts of laws.
Any action to enforce arising out of, or relating in any way to, any of the
provisions of this Agreement may be brought and prosecuted only within such
court or courts located in the State of Mississippi as is provided by law; and
the parties consent to the jurisdiction of said court or courts located in the
State of Mississippi and the service of process by registered mail, return
receipt requested, or by any other manner provided by law.
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SECTION 19. SEVERABILITY
If any provision of this Agreement is held invalid, illegal or
unenforceable in any jurisdiction, for any reason, then, to the full extent
permitted by law (a) all other provisions hereof will remain in full force and
effect in such jurisdiction and will be liberally construed in order to carry
out the intent of the parties hereto as nearly as may be possible, (b) such
invalidity, illegality or unenforceability will not affect the jurisdiction
thereover will have the power to reform such provision to the extent necessary
for such provision to be enforceable under applicable law.
SECTION 20. ENTIRE AGREEMENT
This Agreement and the Non-disclosure Agreement, including the exhibits
and schedules hereto and thereto, constitute the entire agreement between the
parties with respect to their subject matters, and all prior or contemporaneous
oral or written communications, understandings or agreements between the parties
with respect to such subject matters are hereby superseded in their entireties.
SECTION 21. DISPUTES
21.1 AGREEMENT TO ARBITRATE.
All claims, disputes and matters in question arising out of, or
relating to, this Agreement or any claimed breach of this Agreement, except for
claims of Galaxy which have been waived by its acceptance of final payment,
shall be decided by arbitration in accordance with the Construction Industry
Arbitration Rules of the American Arbitration Association then in effect unless
the parties mutually agree otherwise. This agreement to arbitrate shall be
specifically enforceable.
21.2 DEMAND FOR ARBITRATION.
Notice of demand for arbitration shall be filed in writing with the
other party to this Agreement and with American Arbitration Association. The
demand for arbitration shall be made within thirty (30) days after written
notice of the claim, dispute or other matter in question has been given, and in
no event shall it be made after the when institution of legal or equitable
proceedings based on such claim, dispute or other matter in question would be
barred by the applicable statute of limitations, whichever occurs first. The
location of the arbitration proceeding shall be Jackson, Mississippi.
21.3 AWARD.
The award rendered by the arbitrator(s) shall be final and judgment may
be entered upon it in accordance with applicable law in any court having
jurisdiction.
21.4 SAME ARBITRATORS.
At the election of Tritel, any arbitration proceeding instituted by
either party under this Agreement may be consolidated with any other arbitration
proceeding then or thereafter pending
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between either party and any other person or entity if the respective
arbitrations involve similar questions of fact or law or arise out of any work
done or services supplied for the design or construction of the Project.
21.5 EXCEPTIONS.
This agreement to arbitrate shall not apply to any claim of
contribution or indemnity asserted by one party of this Agreement against the
other party and arising out of an action brought in a state or federal court or
in arbitration by a person who is under no obligation to arbitrate the subject
matter of such action with either of the parties to this Agreement, or who does
not consent to such arbitration.
SECTION 22. COUNTERPARTS.
This Agreement may be executed in two or more counterparts that
together shall constitute a single agreement.
SECTION 23. HEADINGS.
The headings contained in this Agreement are for ease of reference and
shall not affect the interpretation or meaning of this Agreement.
SECTION 24. PUBLICITY.
So long as this Agreement is in effect, neither Galaxy, World Access,
Inc. nor any of their affiliates, officers, directors, employees or agents shall
issue any press release or otherwise make any public statement with respect to
the existence of this Agreement or the subject matter of this Agreement without
the prior written consent of Tritel.
SECTION 25. LIMITATION OF LIABILITY.
Except for the liquidated damages and other payment undertakings of
Galaxy as set forth in Section 1.9, expenses of arbitration and awards of
attorneys fees and expenses, in no event shall Galaxy be liable under this
Agreement for: (i) special, incidental or consequential damages (including loss
of profits) regardless of legal theory advanced, whether foreseen or unforeseen;
or (ii) an amount exceeding the price of Services rendered through the date of
any termination or expiration of this Agreement.
SECTION 26. FORCE MAJEURE.
In the event a party's performance of an obligation hereunder is
rendered impossible or commercially impractical (rather than simply delayed) due
to causes beyond its control and without its fault or negligence, including, but
not limited to, acts of God, war (including civil war), civil unrest, acts of
government, fire, floods, explosions, inclement weather, epidemics, quarantine
restrictions, interplanetary catastrophes, strikes or labor unrest (of third
parties but not of such party), material shortage, or delays in transportation,
such party's performance of such obligation shall be excused.
* * *
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The parties have executed this Agreement as of the date first set forth
above.
TRITEL COMMUNICATIONS, INC.
By: ____________________________________
Name: Jerry M. Sullivan, Jr.
Its: Executive Vice President
ADDRESS:
1410 Livingston Lane
Jackson, Mississippi 39213-8003
Attn: Jerry M. Sullivan, Jr.
GALAXY PERSONAL COMMUNICATIONS
SERVICES, INC.
By: _____________________________________
Name: Joseph W. Forbes, Jr.
Its: President
ADDRESS:
1075 Windward Ridge, Suite 100
Alpharetta, Georgia 30005
Attn: Joseph W. Forbes
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EXHIBIT A
GENERAL DESCRIPTION OF SERVICES
A.1 RF ENGINEERING SERVICES
Galaxy specializes in the design, development and implementation of advanced
wireless communications systems. The firm offers full-service engineering
consulting for system design, implementation and optimization. Listed below are
the major engineering activities and key deliverables (broken down into three
major phases) to be provided by Galaxy to Tritel regarding Tritel's proposed
TDMA IS-136 PCS system. This Agreement is contingent upon Tritel and Galaxy
reaching a consensus on design methodology and acceptance criteria within days
from the execution of this Agreement.
A.1.1 Phase I - RF Engineering Services - Initial RF Design
RF design using a basic cell planning grid which attempts to meet the technical
design objectives. This design stage includes cell counts, basic propagation
analysis, and a detailed design document. A consensus allows the RF designer to
proceed to the next design step.
Major Engineering Activities:
o Establish and Finalize Design Criteria
o Perform Detailed Demographic/Traffic Data Analysis
o Complete Propagation Model Validation
o Complete System Design and Demand Analysis
o Complete Site Verification/Survey
o Analyze Drive Test Measurements
o Complete Nominal System Design
Key Deliverable: Search Area Maps: that detail for each site:
latitude/ longitude, AMSL ground elevation, address,
coverage objectives and preliminary site design
recommendations (tower height, ERP, etc.).
Handoff: Site Acquisition
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Phase I Interim Deliverables:
o Market Visit Report that further describes market's demographic profile but
also includes data on business expansion and development, and recent
population shifts. Potential sites for propagation model validation drive
testing are identified.
o Drive Test and Propagation Model Validation Data that provides a detailed
coverage and propagation analysis (i.e. path loss per decade, 1 mile
intercept, slope, scattergrams, etc.). This data can be used to generalize
the propagation environment for similar morphological and terrestrial areas
within the market, thereby providing Tritel with a more refined and
accurate RF prediction modeling tool.
o Detailed Terrain Analysis Report for the markets under design. This
analysis will include estimates of mean and standard deviation of the AMSL
ground elevation. identification of locations that may drastically affect
RF propagation and coverage are also identified.
o Preliminary Phase I Initial RF Design Document that includes the estimated
number of cell sites, best server plots and coverage maps for each market,
final demographic data, terrain analysis and preliminary traffic analysis,
if applicable.
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A.1.2 Phase H - RF Engineering Services - Final RF Design and Implementation
Major Engineering Activities:
o Evaluate real world sites and collocation
possibilities
o Rank Candidate Sites
o Analyze Drive Test Measurements
o Engineering Analysis of Engineered Sites
o Provide RF engineering information required for
FCC/FAA filings
o True-up design -Validate Sites
o Evaluate microwave incumbent cases
o Develop Preliminary Frequency Coordination
o Ensure special design considerations and growth
strategies are being addressed
Key Deliverable: Approved Sites
Handoff: Site Acquisition, Site Construction
Phase II Interim Deliverables:
o Candidate Evaluation Report that describes candidate sites submitted by site
acquisition which were evaluated on a per design site basis. The report will
also provide a detailed description of why each site was approved or
disapproved for final consideration.
o Candidate Evaluation Drive Data that provides detailed coverage information
and test configuration setup.
o Modified RF Network Design pursuant to approved leased candidates and
collocation candidates to be included in the final RF Network Design. This
design will include sites that have passed zoning and are inline for
permanent placement within the system design.
o Final RF Network Design that includes coverage, complete frequency
coordination and future issues associated with the design.
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A.1.3 Phase III - RF Engineering Services - Network Optimization
Major Engineering Activities:
o Create System Optimization Procedures
o Perform System Wide Testing and Integration
o Perform system wide interference analysis testing
o Perform Network Optimization
o Complete Frequency Coordination
o Complete Interference Testing from Non-Relocated
Market Incumbents
Key Deliverable: System Available for Commercial Service
Handoff: Operations
Phase III Interim Deliverables:
o RF Network System Optimization Guidelines and Procedures Manual that includes
descriptions of key system parameters, procedures for adjusting parameters
and processes for solving various system problems.
o RF Network System Optimization Report detailing the current system parameter
settings and the solutions which were provided to resolve system problems.
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A.2 RF PROJECT MANAGEMENT SERVICES
Major Project Management Activities:
o Manage RF Project Schedule for all markets
assigned to Galaxy by Tritel
o Provide overall RF Project Management for all RF
consulting firms
o Ensure Uniform RF Design Standards for all
markets
o Ensure Uniform RF Design Processes for all
markets
o Perform review of nominal RF Design in all
markets
o Coordinate information flow between all RF Design
teams and Tritel Project Manager
Key Deliverable: RF Project Schedule, Project Status
Reporting
Handoff: Tritel Project Manager
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EXHIBIT B
COMPENSATION
B.1 PRICING SUMMARY:
B.1.1 Fixed Rate Pricing
Galaxy shall perform the Services for Tritel as described in Exhibit A. Section
A.1.1 The Fixed Rate Pricing set forth below (which shall apply under this
Agreement unless Tritel elects to procure Services on an time and materials
basis as outlined in Section B. 1.3) is on a "per site" basis. The price per
site for each phase is based on a minimum of 875 "effective base stations" for
which Tritel hereby engages Galaxy. These pr ices are based on Galaxy performing
all three phases of RF Engineering Services outlined herein.
An "effective base station" shall mean either (a) Galaxy's provision of Services
equaling approximately one hundred percent (100%) of the RF engineering services
required to provide RF Design, Implementation and Optimization to construct and
place in commercial service one (1) cell site within Tritel's system, or (b)
Galaxy's provision of Services equaling less than one hundred percent (100%) of
the RF engineering services required to provide RF Design, Implementation and
Optimization to construct and place in service more than one (1) cell site but
which in the aggregate total approximately one hundred percent (100%) of
Services required to construct and place in commercial service an average cell
site within Tritel's total system.
FIXED RATE PRICING PER SITE
- --------------------------------------------------------------------------------
DESCRIPTION OF SERVICE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PHASE I - INITIAL RF DESIGN [CONFIDENTIAL TREATMENT REQUESTED]
- --------------------------------------------------------------------------------
PHASE II - IMPLEMENTATION [CONFIDENTIAL TREATMENT REQUESTED]
- --------------------------------------------------------------------------------
PHASE III - OPTIMIZATION [CONFIDENTIAL TREATMENT REQUESTED]
- --------------------------------------------------------------------------------
TOTAL RF ENGINEERING COST PER SITE [CONFIDENTIAL TREATMENT REQUESTED]
- --------------------------------------------------------------------------------
PROJECT MANAGEMENT SERVICES [CONFIDENTIAL TREATMENT REQUESTED]
- --------------------------------------------------------------------------------
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B.1.2 Volume Purchase Commitment
Tritel engages Galaxy to provide the complete RF Design services, outlined in
Exhibit A. Section A.1, for a minimum of 875 effective base stations. At
Tritel's election, Galaxy may also be engaged under this Agreement to complete
additional effective base stations as assigned by Tritel at the same per site
price. Tritel has also engaged Galaxy to provide the overall RF Project
Management services outlined in Exhibit A, Section A.2 for a minimum of 1275
base stations.
B.1.3 Hourly Engineering Services Rates
The following rates will apply for services performed on a time and material
basis, if applicable, and are good through December of 1999.
DESCRIPTION OF RESOURCE HOURLY RATE
PRINCIPAL / VP OF ENGINEERING [CONFIDENTIAL TREATMENT REQUESTED]
DIRECTOR OF ENGINEERING [CONFIDENTIAL TREATMENT REQUESTED]
RADIO PROJECT MANAGER [CONFIDENTIAL TREATMENT REQUESTED]
SENIOR RADIO ENGINEER [CONFIDENTIAL TREATMENT REQUESTED]
RADIO ENGINEER [CONFIDENTIAL TREATMENT REQUESTED]
DESIGN ENGINEER [CONFIDENTIAL TREATMENT REQUESTED]
ASSOCIATE RADIO ENGINEER [CONFIDENTIAL TREATMENT REQUESTED]
FIELD ENGINEER [CONFIDENTIAL TREATMENT REQUESTED]
ENGINEERING AIDE [CONFIDENTIAL TREATMENT REQUESTED]
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B.2 TEST EQUIPMENT CHARGES:
Listed below are the components whose costs are included in the Fixed Rate
Pricing of Section B. 1. 1. This equipment is necessary to perform testing for
propagation model validation, clear channel verification and candidate
evaluation.
o Grayson Transmitters (20 Watt)
o Grayson PCS 1900 Scan Receivers
o Cables and Antennas
o Drive Test Vehicles (including maintenance and insurance)
o Laptop Computer
o In addition, Galaxy can provide the equipment necessary to complete
IS-136 optimization within the Tritel BTA markets.
B.3 BOOM TRUCK RENTAL FEES:
At Tritel's request, Galaxy shall provide a boom truck platform to be utilized
in conjunction with propagation model and candidate evaluation testing. Pricing
includes operator, fuel and insurance and a 15 test sites per month minimum
would apply.
- --------------------------------------------------------------------------------
40 METER BOOM TRUCK WITH NECESSARY IMPLEMENTS:
[CONFIDENTIAL TREATMENT REQUESTED] PER SITE(1)
50 METER BOOM TRUCK WITH NECESSARY IMPLEMENTS:
[CONFIDENTIAL TREATMENT REQUESTED] PER SITE(2)
- --------------------------------------------------------------------------------
B.4 TRAVEL EXPENSES:
Listed below are costs included in the Fixed Rate Pricing of section B.1.1.:
o Travel Expenses and accommodations away from Atlanta, GA including
airfare.
o One rental vehicle for each Galaxy personnel deployed in the market.
o Galaxy personnel will be allotted one trip home per month.
o Galaxy per diem rates are per standard 1997 U.S. Government CONUS
rates for the market that work is being performed in.
Extraordinary travel required by Tritel outside of travel between the designated
markets and Atlanta will be billed at actual costs plus an [CONFIDENTIAL
TREATMENT REQUESTED]processing fee.
- ----------------
(1) Mobilization charges of $2000 per market will apply
(2) Mobilization charges of $2000 per market will apply
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B.5 OFFICE EXPENSES:
Office space and all utility costs are not part of this proposal for all markets
outside of Atlanta, GA. Galaxy will require access to a data network, a HP755
plotter, color printer, fax machine, and laser printer. Shipping, supplies, and
copying capabilities to be provided by Tritel. Galaxy will provide the following
equipment and software required to complete the Project:
o WIZARDO(R) RF Prediction and Modeling Tool
o MAPINFO Software
o MAPINFO Databases (Census, Demographic, Traffic)
o Computers - (minimum requirements: 133 MHz, Pentium, 32MB RAM)
o Laptop computers - (minimum requirements: 100 MHz, Pentium,
16 MB RAM)
B. 7 REIMBURSABLE EXPENSES:
The following charges are not included in the fixed rate pricing and are payable
by Tritel:
1. Photocopying, printing, and other reproduction costs.
2. Topographic and city Maps, models, drawings, and any other presentation
materials.
3. FAA analysis.
4. Reasonable telephone, fax and wireless phone charges.
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B.8 TERMS OF PAYMENT
The tern s of Galaxy's payment structure is Net 30 days upon receipt of invoice
unless Tritel elects the financing option set forth in the Agreement. Fixed Rate
Billing is based on a 15-month duration of work as to each market assigned to
Galaxy by Tritel during the term of this Agreement. Pricing beyond that time
frame will be based on Galaxy's Hourly rates set forth in Section B. 1.3.
Invoices shall be rendered according to the following milestones:
RF Engineering and Project Management Services Payment Milestones
<TABLE>
<CAPTION>
Milestone: Fee:
- ---------- ----
<S> <C>
o Project Initiation, invoiced 45 days after contract signing [CONFIDENTIAL TREATMENT REQUESTED]
o Acceptance of Nominal RF Design [CONFIDENTIAL TREATMENT REQUESTED]
o Search Area Maps Issued [CONFIDENTIAL TREATMENT REQUESTED]
o RF Acceptance of Site Candidate [CONFIDENTIAL TREATMENT REQUESTED]
o Commercial In-Service [CONFIDENTIAL TREATMENT REQUESTED]
</TABLE>
Invoices shall initially be based on the parties' mutual good faith estimate of
the total cell sites required in the market(s) in which Services have been
commenced and which are the subject of the invoices ("Initial Invoice"). If
actual cell site counts differ from the estimated count used to calculate
Initial Invoice amounts:
I) The excess amount invoiced, if any, shall be payable by Galaxy to Tritel as
follows:
i) if the Initial Invoice terms were net 30, like terms apply;
ii) if the Initial Invoice terms were under the Financing Plan, the
excess shall be subtracted from the Initial Invoice amount
financed and payment structure will be adjusted accordingly,
with credit given for any excess interest charges accrued;
iii) at Tritel's option, the excess shall be rendered in equivalent
Services value on a time and materials basis.
II) The amount of deficiency in the invoice total, it any, shall be payable by
Tritel as follows:
i) if the Initial Invoice terms were net 30, like terms apply;
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ii) if the Initial Invoice terms were under the Financing Plan, net
30 terms apply.
As soon as the actual number of cell sites to be constructed in such markets is
determined by Tritel invoices shall thereafter be based on the actual cell site
count rather than the estimate.
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B.9 CONDITIONS AND CONSIDERATIONS
The following conditions and specific assumptions apply to the fixed rate
pricing under this Agreement:
o Galaxy requires 3-week mobilization from issuance of Purchase Order.
o Galaxy assumes a fifteen- (15) month deployment schedule per market based on
FAA tower height approval process. o Fixed rate pricing assumes the following:
1. Completion of all associated tasks in a fifteen (15) month period. Delays
beyond such period directly attributable to equipment vendors, zoning
entities, FAA, FCC or regulatory bodies or to Tritel's internal delays
will result in charges on a time and materials basis.
2. Propagation Model Validation testing at a maximum of 15% of the total
Project sites.
3. Evaluation of up to three (3) viable candidates submitted by site
acquisition personnel per Search Area.
4. Drive testing of up to 80% of the total sites will be performed for
candidate evaluation.
5. Drive testing for one (1) candidate per site for data analysis.
6. Use of Wizard(R) propagation software for the specified duration of this
Project is included. Use of another tool and any Unix workstations
required for the tool would be at a straight pass-through charge to
Tritel.
7. Data collection and computer workstations/laptops necessary to complete
this scope of work is included in the fixed rate pricing.
8. A nine-(9) hour workday, and twenty-two (22) work days per month.
9. Meals and lodging Per Diem costs at standard 1997 government CONUS rates
are included in the fixed rate pricing.
10. Travel and per diem expenses are included in the fixed rate pricing.
o Tritel will provide Galaxy personnel access to full office workspace outside
of Atlanta, GA.
o Tritel will provide Letters of Intent for sites to be used in Propagation
Model Validation testing.
o Microwave relocation services are not included in the fixed rate pricing but
are available upon Tritel's request.
o Frequency coordination for all testing is excluded from this scope of work.
o Crane rental charges are optional services available to Tritel.
o Technology-specific phones and test equipment required for network
optimization is not included.
o FAA filing and authorization is excluded.
o If Galaxy is required to redesign the RF Plan, following acceptance of the
nominal design by Tritel and issue of the initial search rings, additional
payments will be billed under the following conditions:
1. No property available or failure to perform by Site Acquisition Tritel
(10% of Phase 1&2 Per Site Costs for each search ring reissued for the
same design location).
2. Marketing Objectives change requiring new design (10% of Phase 1&2 Per
Site Costs for each search ring reissued).
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3. New site or new design location required to fulfill or enhance design
objectives as defined by Tritel Project manager (100% of Phase 1 & 2 Per
Site Costs for each search ring issued).
4. Approved Site Candidate rejected for any non-RF Issue (50% of Phase 1&2
Per Site Costs for each search ring reissued).
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<PAGE>
EXHIBIT C
GENERAL MILESTONE AND ACCEPTANCE CRITERIA SCHEDULE
Milestone Completion and Acceptance Criteria of RF Engineering Deliverables for
Tritel Wireless Markets
The following conditions, when fulfilled, define Milestone completion and
acceptance criteria for the Services ("Acceptance"). Tritel acknowledges and
accepts that failure to adhere to the Acceptance Criteria unless otherwise
authorized in writing by Galaxy shall constitutes waiver of all Tritel's claims
against Galaxy for subsequent delays or failures in network performance.
Acceptance Criteria:
MILESTONE NO. 1 NOMINAL RF DESIGN
i. Tritel will designate a single contact to provide authorized acceptance
and final approvals of all Galaxy deliverables.
ii. Tritel and Galaxy must create and mutually agree upon a market by
market design criteria prior to the initiation of design activities,
including service levels, reliability margins, coverage objectives,
subscriber counts and planned system growth.
iii. Tritel, Galaxy and Tritel's designated equipment vendor must agree on
equipment performance specifications to be utilized in the design of
Tritel's network prior to the initiation of design activities. Final
responsibility for all equipment performance issues remains with
Tritel's designated equipment vendor.
iv. Tritel and Galaxy will mutually agree on Computer-aided design tools to
be utilized during the design of Tritel's markets.
v. Galaxy will recommend at its discretion the appropriate quantity of
sites required for Propagation Model Validation (PMV) Tests in
individual markets in order to calibrate industry accepted
computer-aided simulation models utilized in the design of Tritel's
markets. Tritel is responsible for providing timely permission to
access to selected PMV sites via its designated Site Acquisition
Contractor. Tritel is responsible for providing clear frequencies for
use by Galaxy in PMV testing, errors resulting from non-clear
frequencies provided to Galaxy resulting in erroneous PMV data will be
Tritel's responsibility.
vi. Galaxy will make available to Tritel for its approval the nominal RF
design of individual markets, including link budgets, model parameters,
antenna specifications and expected coverage criteria during a formal
design review prior to issuance of Search Area Maps to Tritel's
designated Site Acquisition Contractor.
NO. 2 MILESTONE SEARCH AREA MAPS
i. Issuance of Search Area Maps
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NO. 3 MILESTONE SITE ACCEPTANCE
i. Information for site candidates will be provided in a format mutually
agreed to by Galaxy, Tritel and its designated Site Acquisition
Contractor. Galaxy will be responsible for approval or disapproval of
proposed candidates within a mutually agreed to review interval.
ii. Tritel or its designate will provide timely access to all candidate
sites required by Galaxy for candidate testing during the site approval
process.
iii. Any design criteria exceptions will be mutually agreed upon between
Galaxy and Tritel and Tritel's equipment vendor if appropriate. Design
criteria exceptions include, but are not limited to: Antenna Radiation
Centerline Heights, Antenna Orientations, Site locations outside of
specified search area, Antenna Placement and deviation from recommended
site validation activities.
iv. Galaxy and Tritel will mutually agree upon a format for delivering
required information for FCC and FAA filings.
NO. 4 MILESTONE OPTIMIZATION
i. Tritel will provide Galaxy with available cleared spectrum on a market
by market basis for use in frequency planning activities in a mutually
agreed to time interval prior to the initiation of any optimization
activities. Available spectrum must be sufficient to support a mutually
agreed upon frequency reuse plan to meet approved channel counts.
ii. Galaxy will make available to Tritel for its approval the final RF
design of individual markets, including link budgets, model parameters,
antenna specifications, expected coverage criteria, final frequency
plan and a traffic/channel plan during a formal design review prior to
initiation of frequency planning activities.
iii. Performance of antennas within specified operational parameters are the
sole responsibility of the antenna vendor.
iv. Galaxy, Tritel and Tritel's equipment vendor will mutually agree on a
format for required equipment database information.
v. Galaxy, Tritel and Tritel's equipment vendor will mutually agree to an
Optimization Test Plan developed by Galaxy.
vi. Galaxy will not initiate cluster testing activities until all sites
have completed Tritel's vendor commissioning process.
vii. Delays in optimization due to equipment failure, installation problems
or construction defects will be the responsibility of Tritel's
designated vendors.
viii. Delays in optimization due to failure to implement require engineering
parameter changes will be the responsibility of Tritel or their
designated operations agent.
ix. Galaxy requires remote access to switch databases in order to verify
engineering parameter changes.
x. Optimization Tests will be performed on baseline drives of primary
routes within the established service area, operating to the
established design criteria.
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<PAGE>
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "Agreement" dated as of the 27th day of
August, 1998, is made by and between TRITEL COMMUNICATIONS, INC., a Delaware
corporations ("Tritel") and GALAXY PERSONAL COMMUNICATIONS SERVICES, INC., a
Delaware corporation ("Galaxy"), which is a wholly owned subsidiary of WORLD
ACCESS, INC., a Delaware corporation.
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
SECTION 1. THE SERVICES
1.1 SERVICES.
Galaxy will perform the services described on Exhibit A (the "Services")
for Tritel (or subsidiaries or entities under common control with Tritel, as
directed by Tritel regarding the project described therein (the "Project") in
accordance with the terms and conditions of the Agreement. Galaxy will perform
the Services in a professional, workmanlike manner, will exercise reasonable
skill, care and diligence in the performance of the Services and will carry out
its responsibilities in accordance with industry accepted good professional
engineering practices and in compliance with all standards and rules reasonably
established by Tritel from time to time; provided, however, that any timetables
agreed to by Galaxy shall be subject to appropriate adjustment in the event
Tritel materially changes its established standards and rules. Unless otherwise
agreed to by Tritel in writing, Galaxy will provide all personnel, equipment and
supplies necessary or appropriate to perform the Services.
1.2 EXAMINATION OF THE SERVICES.
Galaxy has examined the applicable ordinances, rules and regulations,
and has examined the markets where the Services will be provided and satisfied
itself as to all conditions to be encountered in the performance of the
Services.
1.3 TIME IS OF THE ESSENCE.
Upon execution of this Agreement, the parties shall promptly negotiate
and establish a general overall progress schedule for the performance of the
Services in all markets subject to this Agreement and completion of the Project,
which schedule shall be supplemented (prior to commencing Services in any
market) with more detailed and mutually established market by market progress
schedules (the general and more detailed progress schedules may be hereafter
referred to collectively as the "Progress Schedule") which shall include a
description of milestones marking the completion of certain successive phases of
the Services (the "Milestones"). The Progress Schedule, when executed by Tritel
and Galaxy, shall be deemed an
<PAGE>
addendum to this Agreement and become an integral part of this Agreement. The
Progress Schedule may be amended by mutual agreement of Tritel and Galaxy in
writing.
In the performance of Galaxy's obligations under this Agreement, time is
of the essence. Galaxy agrees to see to the timely performance of the Services
in accordance with the Progress Schedule and will not delay (beyond deadlines
established in the Progress Schedule) or interfere with other portions of work
on the Project. Galaxy recognizes that Tritel will incur severe economic loss if
the Project is not timely completed, and that Galaxy will be responsible to
compensate Tritel for such loss in accordance with Section 1.9 if Galaxy does
not comply with the Progress Schedule. Because the activities of Galaxy are
dependent upon other organizations' delivery of services and goods, Galaxy shall
not be held liable for delays caused by third parties beyond its control.
1.4 COMMENCEMENT AND PROGRESS.
Upon Tritel and Galaxy's mutual execution of the Progress Schedule,
Galaxy will commence providing Services within a market specified by Tritel
within three (3) weeks after written notice from Tritel to Galaxy, and shall
provide the Services diligently and in accordance with the Progress Schedule.
1.5 PRIORITY OF SERVICES.
Within the parameters of the Progress Schedule, Tritel shall have the
right to decide the time, order and priority in which the various portions of
the Services shall be performed and all other matters relevant to the timely and
orderly conduct of Galaxy's Services.
1.6 COORDINATION.
Galaxy shall cooperate with Tritel and all other contractors involved in
the Project in the provision of the Services. Tritel shall cooperate with Galaxy
in connection with its provision of the Services, and shall instruct its
contractors and agents involved in the Project to do likewise.
1.7 AUTHORIZED REPRESENTATIVE; PERSONNEL.
Galaxy shall designate one or more persons who shall be Galaxy's
authorized representative(s) on-site and off-site. Tritel shall have the right
to approve any personnel assigned by Galaxy to perform any Services, which
approval shall not be unreasonably withheld or delayed.
1.8 ASSIGNMENT AND SUBCONTRACTING.
Galaxy will not assign the work under this Agreement, or subcontract any
portion of it, without the written consent of Tritel. Galaxy will not make any
assignment of payments to be earned by Galaxy under this agreement without the
prior written approval of Tritel.
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<PAGE>
1.9 CONSEQUENCES FOR DELAY.
Except as noted below, in the event of a delay of Galaxy referred to in
Section 1.3, there shall be deducted from the Compensation payable to Galaxy the
following amounts: (a) a charge equal to [CONFIDENTIAL TREATMENT REQUESTED] per
day per cell site for each day of delay in the Progress Schedule (or, if Tritel
incurs extraordinary expense to maintain its schedule in spite of Galaxy's
delay, an amount equal to such expense) materially attributable to Galaxy,
subject to a maximum delay charge of [CONFIDENTIAL TREATMENT REQUESTED] per cell
site; or (b) a charge equal to [CONFIDENTIAL TREATMENT REQUESTED] per day per
each cell site within a system or cluster of cell sites each as will be mutually
defined in the Progress Schedule (which system or cluster cannot be placed in
commercial service due to one or more cell sites within such system or cluster
not being placed in commercial service) for each day of delay in the Progress
Schedule (or if Tritel incurs extraordinary expense to maintain its schedule in
spite of Galaxy's delay, an amount equal to such expense), subject to a maximum
delay charge of [CONFIDENTIAL TREATMENT REQUESTED] per cell site for each cell
site within such system or cluster.
Galaxy will be excused for any delay caused by acts of God, war
(including civil war), civil unrest, acts of government, fire, floods,
explosions, inclement weather, epidemics, quarantine restrictions,
interplanetary catastrophes, delays solely caused by Tritel or its vendors or
other contractors, or other events beyond the control of Galaxy. Galaxy will be
entitled to extensions of time for such delay only upon written notice to Tritel
within ten (10) days after commencement of the delay.
The foregoing sums represent the amount of liquidated damages which the
parties have agreed upon as a compensation to Tritel for any delay in placing
Tritel's systems in commercial service in accordance with the Progress Schedule
as a result of Galaxy's delay or interference. The parties acknowledge that such
sums represent a fair and equitable amount of compensation for delay in view of
the impossibility of ascertaining actual damages. The foregoing liquidated
damages clause shall, however, be in addition to and not in substitution for any
other rights or remedies which Tritel may have under this Agreement or otherwise
against Galaxy by reason of its failure to complete the Services with the time
limits referred to above.
If due to any act or omission of Galaxy mutually agreed Acceptance
Criteria (defined below) are not met and the commercial launch of a system is
delayed, in addition to the delay liquidated damages set forth above, Galaxy
shall corrected to Tritel's reasonable satisfaction, at Galaxy's sole cost, any
deficiency in the implementation of fixed network services that is within
Galaxy's sole control. The provisions of this paragraph shall not apply to
deficiencies caused by Tritel's deviation from the original project criteria or
by Tritel's direction to conduct implementation or interconnect activities in a
manner inconsistent with Galaxy's recommendations.
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<PAGE>
SECTION 2. COMPENSATION
2.1 COMPENSATION.
Tritel will pay Galaxy for Services rendered in accordance with Exhibit
B (the "Compensation"). Unless expressly excluded pursuant to the terms of this
Agreement, all costs and expenses related to the provision of the Services are
included in the Compensation. However, any state and local sales or use taxes
arising from Tritel's payment of the Compensation are not included and, if
applicable, shall be payable by Tritel.
2.2 PAYMENT TERMS.
Galaxy will submit invoices to Tritel in accordance with the Milestone
schedule set forth in Exhibit A. Tritel will remit all properly payable amounts
within thirty (30) days of Tritel receipt of any such invoice unless Tritel
elects the financing option set forth below. Tritel may elect to finance the
payment of any invoice for a period of up to nine months. If Tritel so elects,
interest will begin to accrue on all charges set forth in any deferred invoice
at a floating per annum rate equal to the prime rate of interest published in
The Wall Street Journal plus one percent beginning on the thirty-first day
following Tritel's receipt of any such invoice. Each invoice will describe, in
reasonable detail and with respect to the relevant invoice period (a) a
description of the Services provided, and (b) any work product created. The
Compensation shall not be altered except as specifically provided for in this
Agreement.
2.3 INVOICE REPRESENTATION.
All invoices must be accompanied by a representation and warranty of
Galaxy that all laborers, subcontractors, suppliers and others who might claim
lien rights on the Project have been or will be timely paid in full.
2.4 PAYMENT NOT ACCEPTANCE.
Payment to Galaxy alone does not constitute or imply acceptance by
Tritel of any portion of Galaxy's Services.
2.5 GALAXY PAYMENT FAILURE.
If it appears to Tritel that the labor, material and other bills
incurred in the performance of Galaxy's Services (which if unpaid may give rise
to lien rights or claims on the Project) are not being currently paid, Tritel
may take such steps as it deems necessary to insure that the money paid to
Galaxy will be utilized to pay such bills.
2.6 BACK CHARGES AND WITHHOLDS.
Tritel may withhold payments from Galaxy in amounts that are sufficient
to protect Tritel in the event of any of the following:
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<PAGE>
(a) Galaxy's improper or delayed works, defective work or damage to
the work, which is not corrected by it;
(b) Any claims Tritel may have against Galaxy arising out of other
projects;
(c) Filing of any claims, demands, suits, attachments and/or liens
against Galaxy;
(d) Reasonable evidence brought to Tritel's attention that any
claims, demands, suits, attachments and/or liens are to be filed
against Galaxy which could potentially affect the Project;
(e) Reasonable evidence brought to Tritel's attention of prospective
insolvency of Galaxy; or
(f) Any bona fide claim or lien against Tritel or the premises upon
which the Services were performed which arises out of Galaxy's
default in its performance of this Agreement. 2.7 FINAL PAYMENT.
2.7 FINAL PAYMENT.
The final payment will be due when Galaxy's Services have been completed
and accepted by Tritel, which acceptance shall not be unreasonably withheld. For
purposes of this Section 2.7, final payment shall be deemed to have been made
upon Tritel's election to finance the charges subject to the final payment,
effective upon Tritel's provision of notice of such election to Galaxy. The
making and acceptance of final payment constitutes a waiver of any claims by
Galaxy against Tritel for compensation for extra work or for compensation of any
kind claimed by Galaxy because of the activities of Tritel in connection with
the Project. Prior to final payment Galaxy shall submit to Tritel:
(a) Galaxy's affidavit that all payrolls, bills for materials and
equipment, and other indebtedness connected with Galaxy's
Services for which Tritel or its property might in any way be
liable, have been paid, or otherwise satisfied;
(b) Satisfaction of all required acceptance criteria which shall be
mutually established by Tritel and Galaxy within 90 days of
execution of this Agreement in accordance with the parameters and
procedures set forth in the General Milestone and Acceptance
Criteria Schedule attached as Exhibit C (such acceptance criteria
as shall be established may be referred to as the "Acceptance
Criteria"); and
(c) Other data as reasonably required by Tritel, such as receipts,
releases, and waivers of liens.
Final payment shall constitute a waiver of all claims by Galaxy for additional
compensation relating to Galaxy's Services, but shall in no way relieve Galaxy
of liability for obligations
5
<PAGE>
assumed under this Agreement or for faulty or defective work appearing within
sixty (60) days from the later of (i) final payment; or (ii) commercial
in-service use of the applicable system.
2.8 SUSPENSION OF SERVICES.
During the term of this Agreement, Tritel may elect to suspend Services
in progress in a specific market due to any of the following conditions:
(i) FCC or state regulatory actions which affect a specific Tritel
service area;
(ii) Moratoriums or similar actions imposed by state or local
authorities which would materially affect Tritel's ability to
complete network deployment within such area; or
(iii) Mutual agreement by Galaxy and Tritel.
If Services were suspended as a result of any of the above conditions, Galaxy
would receive demobilization compensation during the suspension and
remobilization compensation if Galaxy's personnel are remobilized.
Demobilization compensation will equal 30% of the hourly rates of personnel
demobilized (assuming a 9-hour workday and 5-day workweek during any period of
demobilization) plus a demobilization fee of $2,000 per person demobilized. Upon
remobilization, Galaxy will be paid a fee of $2,000 per Galaxy employee
remobilized. Tritel would not assign work in progress, suspended under this
provision, to other contractors or internal personnel for resumption of work
without the mutual consent of Tritel and Galaxy. The Progress Schedule for any
market suspended shall be tolled during any period of suspension. No suspension
of services under this provision will occur prior to completion of the design
phase and issuance of search rings.
SECTION 3. TERM.
The term of this Agreement will commence on the date hereof and, unless
otherwise earlier terminated pursuant to Section II or extended upon mutual
agreement of the parties, will end upon the earlier of: (i) Galaxy's completion
and Tritel's acceptance of the Services (as determined by the Acceptance
Criteria); or (ii) fifteen (15) months from the date of Galaxy's commencement of
Services in the last market of Tritel in the Project covered by this Agreement.
SECTION 4. INDEPENDENT CONTRACTOR.
Galaxy will perform the Services as an independent contractor of Tritel,
and this Agreement will not be construed to create a partnership, joint venture
or employment relationship between Galaxy and Tritel. Galaxy will not represent
itself to be an . employee or agent of Tritel or enter into any agreement on
Tritel's behalf or in Tritel's name, unless Galaxy is specifically authorized in
writing by Tritel to do so.
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<PAGE>
SECTION 5. COMPLIANCE WITH LAWS.
Galaxy will at its own cost (a) comply with all federal, state and local
laws, ordinances, regulations and orders with respect to its performance of the
Services (collectively, the "laws"), (b) file all reports relating to the
Services (including, without limitation, tax returns), (c) pay all filing fees
and federal, state and local taxes applicable to Galaxy's business as the same
shall become due, and (d) pay all amounts required under local, state and
federal workers' compensation acts, disability benefit acts, unemployment
insurance acts and other employee benefit acts when due. Galaxy will provide
Tritel with such documents and other supporting materials as Tritel may
reasonably request to evidence Galaxy's continuing compliance with this Section
5. Galaxy is liable to Tritel for all fines and penalties attributable to any
acts of commission or omission by Galaxy, its employees and agents resulting
from the failure to comply with laws.
SECTION 6. INSURANCE.
6.1 COVERAGE REQUIREMENTS.
Prior to providing any Services, Galaxy will procure and maintain
throughout the term of this Agreement insurance policies (including, without
limitation, automobile insurance, commercial liability insurance, professional
liability insurance and statutory workers' compensation insurance) that are
sufficient to protect Galaxy's business against all applicable risks and, upon
Tritel's request, furnish Tritel with an endorsement from the insurance carriers
showing Tritel as an additional insured under Galaxy's insurance. Galaxy will
provide Tritel with certificates of insurance and other supporting materials as
Tritel may reasonably request to evidence Galaxy's continuing compliance with
the preceding sentence.
6.2 CANCELLATION.
Galaxy's insurance policies shall contain a provision that coverage
afforded under the policies will not be canceled, changed in a manner to reduce
coverage from the levels currently in effect or not renewed (unless replaced
with equivalent coverage with an alternate carrier) until at least thirty days'
prior written notice has been given to Tritel. A statement to this effect will
be included with Galaxy's insurance certificates. Certificates of insurance
acceptable to Tritel shall be filed with Tritel prior to the commencement of
Galaxy's Services.
6.3 WAIVER OF SUBROGATION.
Tritel and Galaxy waive all rights against each other and against
separate contractors, and all other subcontractors for damages caused by fire or
other perils to the extent covered by Builder's Risk or any other property
insurance purchased for the Project, except such rights as they may have to the
proceeds of such insurance.
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6.4 RISK OF LOSS.
Galaxy will be liable for all loss or damage, other than ordinary wear
and tear, to Tritel's property in Galaxy's possession or control. In the event
of any such loss or damage, Galaxy will pay Tritel the full current replacement
cost of such equipment or property within thirty (30) days after its loss or
damage.
6.5 NO WORKERS' COMPENSATION LIMITATION ON INDEMNITY.
In any and all claims against Tritel by any employee of Galaxy or anyone
directly or indirectly employed by Galaxy or anyone for whose acts Galaxy may be
liable, the indemnification obligations under Section 9 shall not be limited in
any way by any limitation on the amount or type of damages, compensation or
benefits payable by or for Galaxy under Workers' Compensation laws, disability
benefit laws or other employee benefit laws.
SECTION 7. OWNERSHIP AND USE OF PROPRIETARY MATERIALS
7.1 PROPRIETARY MATERIALS.
As used in this Agreement, "Proprietary Materials" means all products,
devices, computer programs, techniques, know-how, algorithms, procedures,
discoveries or inventions, whether patentable or copyrightable and whether
reduced to practice, and all materials, texts, drawings, specifications, source
code, data and other recorded information, in preliminary or final form and on
any media whatsoever, that (a) is within the scope of the Project or (b) reduced
to practice, developed, discovered, invented or made by Galaxy during the term
of this Agreement, whether solely or jointly with others, and for the purposes
of performing the Services.
7.2 OWNERSHIP.
Tritel will be the exclusive owner of all Proprietary Materials arising
from Galaxy's performance of this Agreement. To the extent permitted under the
U.S. Copyright Act (17 USC ss. 101 et seq., and any successor statute thereto),
the Proprietary Materials will constitute "works made for hire," and the
ownership of such Proprietary Materials will vest in Tritel at the time they are
created. To the extent the Proprietary Materials are not "works made for hire"
under applicable copyright laws, Galaxy hereby assigns and transfers to Tritel
all right, title and interest that Galaxy may now or hereafter have in the
Proprietary Materials, subject to the limitations set forth in Section 7.4.
Galaxy will promptly disclose to Tritel all Proprietary Materials.
7.3 FURTHER ACTS.
Galaxy will take such action (including, but not limited to, the
execution, acknowledgement, delivery and assistance in preparation of documents
or the giving of testimony) as may be requested by Tritel to evidence, transfer,
vest or confirm Tritel's right, title and interest in the Proprietary Materials.
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7.4 LIMITATION.
Notwithstanding any other provision of this Agreement to the contrary,
this Section 7 will not obligate Galaxy to assign or offer to assign to Tritel
any of Galaxy's rights in an invention for which no equipment, supplies,
facilities or trade secret information of Tritel was used and which was
developed entirely on Galaxy's own time, unless the invention relates directly
to the Project.
7.5 USE.
Except as required for Galaxy's performance of the Services or as
authorized in writing by Tritel, Galaxy will not use, disclose, publish or
distribute any Proprietary Materials or remove any Proprietary Materials from
Tritel's premises. Galaxy will hold all Proprietary Materials in trust for
Tritel and will deliver them to Tritel upon request and in any event upon the
expiration or termination of this Agreement.
7.6 NON-INFRINGEMENT WARRANTY.
Galaxy represents and warrants that any Proprietary Materials
originating from Galaxy, and the exercise by Tritel of its rights hereunder with
respect to the Proprietary Materials, will not infringe upon, violate or
misappropriate any patent, copyright, trade secret, trademark, contract or other
right or interest of any third party.
7.7 OTHER COMPANIES.
During the course of executing the amended services, Galaxy employees
may use software and documentation created by other service companies. Each
Galaxy employee who uses these software products must agree in writing to
protect any confidential information they acquire through training on or use of
these software products.
7.8 REMEDIES.
Galaxy agrees that damages may be inadequate to compensate for the
unique losses to be suffered in the event of a breach of the provisions set
forth in Sections 7.1 through 7.7, and that Tritel will be entitled, in addition
to any other remedy it may have under this Agreement or at law, to seek and
obtain injunctive and other equitable relief, including specific performance of
the terms of this Agreement without the necessity of posting bond.
SECTION 8. NO CONFLICTING OBLIGATIONS.
8.1 OTHER AGREEMENTS.
Galaxy's execution, delivery and performance of this Agreement will not
violate any other employment, nondisclosure, confidentiality, consulting or
other agreement to which Galaxy is a party or by which it may be bound.
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<PAGE>
8.2 THIRD-PARTY CONFIDENTIAL INFORMATION.
Galaxy will not use, in the performance of the Services or the creation
of any Proprietary Materials, or disclose to Tritel any confidential or
proprietary information of any other person if such use or disclosure would
violate any obligation or duty that Galaxy owes to such other person. Galaxy's
compliance with this Section 8.2 will not prohibit, restrict or impair Galaxy's
performance of the Services and it's other obligations and duties to Tritel.
SECTION 9. INDEMNIFICATION.
Galaxy shall indemnify, defend and hold Tritel (and Tritel's agents,
legal representatives, officers, directors, shareholders and employees) harmless
from all claims, damages, losses, costs, expenses (including attorneys' fees)
and liabilities, including any amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, arising out of or resulting from any
claim, action, investigation or other proceeding (including any proceeding by
any of Galaxy's employees, agents or subcontractors), actual or threatened, that
is based upon (a) a default by Galaxy in the performance of its obligations
under this Agreement, (b) any representation or warranty of Galaxy being untrue
in any material respect, (c) the conduct of Galaxy's business, (d) any negligent
act or omission of Galaxy, or (e) the infringement or misappropriation of any
foreign or United States patent, copyright, trade secret or other proprietary
right by the Proprietary Materials originating from Galaxy.
SECTION 10. NONDISCLOSURE AGREEMENT
As a condition to Tritel's obligations under this Agreement, Galaxy
agrees to abide by all the terms and conditions of that certain Non-disclosure
Agreement dated as of May 28, 1998, executed by and between Tritel and Galaxy
(the "Non-disclosure Agreement").
SECTION 11. TERMINATION.
11.1 TERMINATION FOR CAUSE.
Tritel may terminate this Agreement upon an Event of Default (defined
below), provided, however, that as to any of the matters set forth in
subparagraphs (iii) through (vii) of Section 13: (a) Tritel sends written notice
to Galaxy describing the breach in reasonable detail, (b) Galaxy does not cure
the breach within thirty (30) days following its receipt of such notice, and (c)
following the expiration of the thirty-day cure period, Tritel sends a second
written notice to Galaxy indicating Tritel's desire to terminate this Agreement.
If an Event of Default results from any of the matters set forth in
subparagraphs (i) and (ii) of Section 13, Tritel's termination of this Agreement
shall be effective upon giving notice of termination to Galaxy. Galaxy may
terminate this Agreement upon Tritel's material breach of this Agreement,
provided that (a) Galaxy sends written notice to Tritel describing the breach in
reasonable detail, (b) Tritel does not cure the breach within thirty (30) days
following its receipt of such notice, and (c) following the expiration of the
thirty-day cure period, Galaxy sends a second written notice to Tritel
indicating Galaxy's desire to terminate this Agreement.
10
<PAGE>
If Tritel terminates this Agreement for cause as described above,
Tritel, without prejudice to any other remedy it might have, may terminate this
Agreement and complete the Services by such means as Tritel deems fit. In such
case, Galaxy shall not be entitled to receive any further payment until Galaxy's
Services are completed. If the unpaid balance of the Compensation shall exceed
the aggregate of (1) the expense of Tritel of completing the Services, including
compensation for additional managerial and administrative services, and (2) the
losses and damages of Tritel, including its attorneys' fees and litigation
expense, such excess shall be paid to Galaxy. If the expense of completing
Galaxy's Services and the losses and damages of Tritel shall exceed the unpaid
balance of the Compensation, Galaxy shall pay the difference to Tritel promptly
on demand.
11.2 TERMINATION FOR CONVENIENCE.
Either Tritel or Galaxy may terminate this Agreement at any time upon
ninety (90) days' written notice to the other (a "Termination for Convenience").
Upon a Termination for Convenience by Tritel, Galaxy shall be compensated for
any Services rendered but which have not been paid ("Unpaid Services") on a time
and materials basis as set forth in Exhibit B, unless the Unpaid Services
constitute a Milestone in which case payment shall be made in accordance with
the Milestone schedule set forth in Exhibit B. Upon a Termination for
Convenience by Galaxy, Galaxy shall not be compensated for any Unpaid Services
unless the Unpaid Services constitute a Milestone in which case payment shall be
made in accordance with the Milestone schedule set forth in Exhibit B.
11.3 SURVIVAL.
Sections 5 and 7 and Sections 9 through 24 (together with all other
provisions of this Agreement that may reasonably be interpreted or construed as
surviving termination of the Term) will survive the termination of the Term.
SECTION 12. NOTICES.
All notices given hereunder will be given (and shall be deemed to have
been given upon receipt) in writing, will refer to this Agreement and will be
personally delivered, sent by telecopy, by other electronic facsimile
transmission or by registered or certified mail (return receipt requested) to
the address set forth below the parties' signatures at the end of this
Agreement. Any party may from time to time change such address by giving the
other party notice of such change in accordance with this Section 12.
SECTION 13. EVENT OF DEFAULT.
For the purposes of this Agreement an "Event of Default shall be if:
(i) At any time there shall be filed by or against Galaxy in any
court a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a
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<PAGE>
receiver or trustee of all or a portion of the property of
Galaxy, and within twenty (20) days from the filing date Galaxy
fails to secure a discharge; or
(ii) Galaxy makes an assignment for the benefit of creditors or
petitions for or enters into an agreement or arrangement with its
creditors; or
(iii) Galaxy materially fails to prosecute the Services in accordance
with the Acceptance Criteria, and therefore, fails to complete
the Services entirely on or before any date established in the
Progress Schedule for partial, substantial or final completion
(except for delays for which Galaxy is entitled to additional
time); or
(iv) There is a breach of any of Galaxy's representation or warranties
contained in this Agreement or required to accompany any invoice
rendered under this Agreement; or
(v) Galaxy fails to supply sufficient labor, material and/or
equipment so as to complete the Services in accordance with the
Progress Schedule, unless such delay is excused in accordance
with Section 1.9; or
(vi) Galaxy performs defective work and fails to correct promptly and
properly such defective work; or
(vii) Without limitation, Galaxy fails to perform any material
provision of this Agreement.
SECTION 14. ASSIGNMENT
Galaxy may not assign this Agreement, in whole nor in part, without
Tritel's prior written consent. Tritel may assign its rights hereunder to (a)
any corporation or other entity resulting from any merger, consolidation or
other reorganization to which Tritel is a party, (b) any corporation,
partnership, association or other entity or person to which Tritel may transfer
all or substantially all of the assets and business of Tritel existing at such
time, or (c) any subsidiary of or entity under common control with Tritel. Upon
any such assignment by Tritel and the full and unconditional assumption by such
assignee of all of Tritel's obligations hereunder arising after such assignment,
Tritel shall be released and free from any obligation or liability under this
Agreement arising after such assignment. All the terms and provisions of this
Agreement will be binding upon and inure to the benefit of and be enforceable by
the parties hereto and their respective successors and permitted assigns.
SECTION 15. PERSONNEL
The terms and conditions of this Agreement will be binding upon Galaxy's
employees, agents, subcontractors and affiliates.
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<PAGE>
SECTION 16. WAIVERS
No delay or failure by any party hereto in exercising or enforcing any
of its rights or remedies hereunder, and no course of dealing or performance
with respect thereto, will constitute a waiver thereof. The express waiver by a
party hereto of any right or remedy in a particular instance or will not
constitute a waiver thereof in any other instance. All rights and remedies will
be cumulative and not exclusive of any other rights or remedies.
SECTION 17. AMENDMENTS
No amendment, waiver or discharge of any provision of this Agreement
will be effective unless made in writing that specifically identifies this
Agreement and the provision intended to be amended, waived or discharged and
signed by Tritel and Galaxy. Each such amendment, waiver or discharge will be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 18. APPLICABLE LAW
This Agreement and each of the documents referred to herein shall be
interpreted, construed, applied and enforced in accordance with the laws of the
State of Mississippi, without regard to any rules governing conflicts of laws.
Any action to enforce arising out of, or relating in any way to, any of the
provisions of this Agreement may be brought and prosecuted only within such
court or courts located in the State of Mississippi as is provided by law; and
the parties consent to the jurisdiction of said court or courts located in the
State of Mississippi and the service of process by registered mail, return
receipt requested, or by any other manner provided by law.
SECTION 19. SEVERABILITY
If any provision of this Agreement is held invalid, illegal or
unenforceable in any jurisdiction, for any reason, then, to the full extent
permitted by law (a) all other provisions hereof will remain in full force and
effect in such jurisdiction and will be liberally construed in order to carry
out the intent of the parties hereto as nearly as may be possible, (b) such
invalidity, illegality or unenforceability will not affect the jurisdiction
thereover will have the power to reform such provision to the extent necessary
for such provision to be enforceable under applicable law.
SECTION 20. ENTIRE AGREEMENT
This Agreement and the Non-disclosure Agreement, including the exhibits
and schedules hereto and thereto, constitute the entire agreement between the
parties with respect to their subject matters, and all prior or contemporaneous
oral or written communications, understandings or agreements between the parties
with respect to such subject matters are hereby superseded in their entireties.
13
<PAGE>
SECTION 21. DISPUTES
21.1 AGREEMENT TO ARBITRATE.
All claims, disputes and matters in question arising out of, or relating
to, this Agreement or any claimed breach of this Agreement, except for claims of
Galaxy which, have been waived by its acceptance of final payment, shall be
decided by arbitration in accordance with the Construction Industry Arbitration
Rules of the American Arbitration Association then in effect unless the parties
mutually agree otherwise. This agreement to arbitrate shall be specifically
enforceable.
21.2 DEMAND FOR ARBITRATION.
Notice of demand for arbitration shall be filed in writing with the
other party to this Agreement and with American Arbitration Association. The
demand for arbitration shall be made within thirty (30) days after written
notice of the claim, dispute or other matter in question has been given, and in
no event shall it be made after the when institution of legal or equitable
proceedings based on such claim, dispute or other matter in question would be
barred by the applicable statute of limitations, whichever occurs first. The
location of the arbitration proceeding shall be Jackson, Mississippi.
21.3 AWARD.
The award rendered by the arbitrator(s) shall be final and judgment may
be entered upon it in accordance with applicable law in any court having
jurisdiction.
21.4 SAME ARBITRATORS.
At the election of Tritel, any arbitration proceeding instituted by
either party under this Agreement may be consolidated with any other arbitration
proceeding then or thereafter pending between either party and any other person
or entity if the respective arbitrations involve similar questions of fact or
law or arise out of any work done or services supplied for the design or
construction of the Project.
21.5 EXCEPTIONS.
This agreement to arbitrate shall not apply to any claim of contribution
or indemnity asserted by one party of this Agreement against the other party and
arising out of an action brought in a state or federal court or in arbitration
by a person who is under no obligation to arbitrate the subject matter of such
action with either of the parties to this Agreement, or who does not consent to
such arbitration.
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SECTION 22. COUNTERPARTS.
This Agreement may be executed in two or more counter parts that
together shall constitute a single agreement.
SECTION 23. HEADINGS.
The headings contained in this Agreement are for ease of reference and
shall not affect the interpretation or meaning of this Agreement.
SECTION 24. PUBLICITY.
So long as this Agreement is in effect, neither Galaxy, World Access,
Inc. nor any of their affiliates, officers, directors, employees or agents shall
issue any press release or otherwise make any public statement with respect to
the existence of this Agreement or the subject matter of this Agreement without
the prior written consent of Tritel.
SECTION 25. LIMITATION OF LIABILITY.
Except for the liquidated damages and other payment undertakings of
Galaxy as set forth in Section 1.9, expenses of arbitration and awards of
attorneys fees and expenses, in no event shall Galaxy be liable under this
Agreement for: (i) special, incidental or consequential damages (including loss
of profits) regardless of legal theory advanced, whether foreseen or unforeseen;
or (ii) an amount exceeding the price of Services rendered through the date of
any termination or expiration of this Agreement.
SECTION 26. FORCE MAJEURE.
In the event a party's performance of an obligation hereunder is
rendered impossible or commercially impractical (rather than simply delayed) due
to causes beyond its control and without its fault or negligence, including, but
not limited to, acts of God, war (including civil war), civil unrest, acts of
government, fire, floods, explosions, inclement weather, epidemics, quarantine
restrictions, interplanetary catastrophes, strikes or labor unrest (of third
parties but not of such party), material shortage, or delays in transportation,
such party's performance of such obligation shall be excused.
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<PAGE>
The parties have executed this Agreement as of the date first set forth above.
TRITEL COMMUNICATIONS, INC.
By:______________________________
Name: Jerry M. Sullivan, Jr.
Its: Executive Vice President
Chief Operating Officer
Address:
1410 Livingston Lane
Jackson, Mississippi 39213-8003
Attn: Jerry M. Sullivan, Jr.
GALAXY PERSONAL COMMUNICATIONS SERVICES, INC.
By:______________________________
Name: Linda S. Rothermel
Its: Director Sales and Marketing
Address:
1075 Windward Ridge Parkway, Suite 100
Alpharetta, GA 30005
Attn: Linda S. Rothermel
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<PAGE>
EXHIBIT A
GENERAL DESCRIPTION OF SERVICES
1.0 WIRELINE COORDINATION
The scope of the coordination will be dependent on the type of link selected on
a site by site basis. Galaxy will recommend which is most appropriate for each
site. Galaxy will use MapInfo to generate maps to show the planned sites and the
following information: location, site number, tower height, and logical
connectivity.
1.1 LEASED LINE DESIGN
Galaxy will determine the type of service required for a particular site
and request the service provider to provision for the link. A basic site
sketch will be drawn and furnished to the Leased Line provider with
recommendations and service requirements. This process encompasses a
Service Inquiry, Service Order, coordination of Civil Ready Dates, the
Customer Desired Due Date (CDDD), and delivery of the Leased Line to the
site. Galaxy will be responsible for and act as the Operator's
Representative in all aspects of provisioning Leased Line facilities to
the sites excluding execution of lease agreements with service
providers. Follow-up with provider will be documented and any deviation
from Request for Service date will be forwarded to Operations personnel.
Based on the information supplied by the Leased Line Provider,
integrated with the construction schedule, Galaxy will prepare and
maintain a Facilities Deployment Schedule that will be utilized in
network deployment with regards to the Fixed Network Department.
While testing and reliability of the leased line will be the
responsibility of the service provider, Galaxy will evaluate the results
of any tests as available and will accept or reject any such service as
appropriate.
2.0 IN-MARKET ENGINEERING
Galaxy will communicate transport requirements to Tritel's construction manager
via sketches showing distances and requirements unique to that location. Serving
Telephone Companies will also be noted. At that time an initial plan and route
is selected for site service and delivery of Leased Line facilities. Galaxy
engineers will survey every site to determine optimal routing and least cost.
The engineer will make determinations in the field, which will then be
integrated into the overall network plan. All field data will be evaluated for
accuracy and efficiency.
<PAGE>
2.1 FIELD COORDINATION OF FACILITY ROUTING
Galaxy will attend an on-site review of the preferred site and conduct
initial field survey and assessment of the leased line routing.
Documentation in the form of CellSite Survey will be recorded.
In order to meet the requirements for expedient site activation, Galaxy
will recommend construction methods that will minimize local telephone
company construction requirements, local permitting requirements, and
maximize the use of Company's site development contractors in such a way
that site connectivity of any type of installation will be handled in an
expeditious manner.
2.2 PUNCH LISTS AND PROBLEM RESOLUTION
Individual site hand over visits may be required to verify substantial
completion of network facilities and/or resolution of network
roadblocks. In this event, Galaxy will dispatch a Network Engineer for
this purpose. This individual will be responsible to facilitate
resolution of the problems by interfacing with the Telco, Program
Management and the Site Contractor as necessary.
3.0 SITE DOCUMENTATION
Galaxy will prepare a basic schematic of connectivity from the BTS site to the
outside plant and forward this to the client and the service provider. Client
personnel can then use this schematic for maintenance and ordering purposes at
the site. This sketch is not intended to replace the A&E civil drawings.
4.0 DEPLOYMENT COORDINATION
Galaxy will attend deployment meetings in each market as required to ensure the
seamless integration of transport facilities into the wireless network. Input
from these meetings will be used to direct the work and appropriately schedule
the delivery of facilities to the sites.
5.0 PROJECT DOCUMENTATION
Galaxy will compile a detailed CELLSITE FACILITIES RECORD, which will be
available in both hard and soft copy:
o CellSite Survey (site sketch)
o Digital site photo
o Site data (location, building management contact, lock combination, etc.)
o T-1 Routing Design (as needed for Rooftop sites)
o LEC and Power Company contact names & numbers
<PAGE>
Leased Line Site (as required, if microwave is not selected)
o Service Inquiry
o T-1 Service Order
o Service provider quotes
o MapInfo Plot of Topology
o CFA assignment(s)
o Client and Service Provider Circuit IDs
Microwave Site Documentation (as required)
o Path survey
o Path design
o Equipment and waveguide specifications
o Transmission power
o Frequency report
o FCC application and certificate
o Testing and installation documentation
o Digital photos
6.0 DATABASE MANAGEMENT
Galaxy will use its proprietary database to document data on a per site basis.
The database will also facilitate ordering and mapping associated with
provisioning. Standard reports are available; however, customized reports can be
developed for the client. Tritel would be charged an hourly rate to develop
customized reports upon Tritel's request. To ensure swift deployment, the
database includes RBOC tariffs in all 50 states, updated monthly.
7.0 SERVICES
7.1 TURNKEY MICROWAVE SERVICES
7.1.1 PRELIMINARY FEASIBILITY STUDY
A course grade microwave feasibility study shall be done to
verify path viability utilizing USGS Quad maps to assess all
potential obstructions along the path and determine preliminary
antenna heights. Upon successfully passing the feasibility
study, Galaxy will conduct a complete microwave path survey to
insure path integrity.
<PAGE>
7.1.2 MICROWAVE PATH AND SITE SURVEYS
When the transport medium chosen is microwave and the
feasibility has been determined, Galaxy will establish the
estimated necessary microwave antenna centerlines. The
availability of transmission capacity from the site to a hub
facility will then be confirmed. As an incremental pass-through
charge, arrangements for a structural capacity review of the
tower to support the microwave antenna at the necessary height
will be performed.
7.1.3 MICROWAVE PATH DESIGN
Galaxy will run a computer-based model to assess microwave
transmission attenuation. This same model will also calculate
the required antenna design, transmitter power, and wave guide
type. This process will serve as a verification of equipment
recommendation from Galaxy. Based on this comparison, Galaxy
will prepare equipment specifications with the path design
attached and will forward to the owner's Equipment Management
for procurement. Galaxy will provide a Technical Survey Report.
7.1.4 FREQUENCY COORDINATION AND LICENSING PREPARATION
Galaxy will arrange for the frequency coordination necessary
for transmitting. Galaxy will complete and submit the FCC
License application and follow up with the FCC to obtain the
acceptance certificate.
7.1.5 INSTALLATION ENGINEERING AND SPECIFICATION
Once the path design, equipment selection, and tower
coordination has been completed and authorized by Company,
Galaxy will deploy an installation team into the field to
install all necessary hardware and radios. This team will
perform all required tests in order to ensure reliability and
complete satisfaction by Company.
7.1.6 SITE COMMISSIONING AND DOCUMENTATION
All installation and engineering procedures will be documented.
This information along with Digital site photos will be
provided in a concise professional format (hard and soft copy)
to Company after commissioning.
<PAGE>
8.0 INTERCONNECTION WITH PSTN
The determination of LEC Access Tandems and the Interexchange Carriers (IXCs)
Point-of-Presence (POPs) locations in each Local Access Transport Area (LATA) is
the first phase in the PSTN design. The location of these points will drive the
location of the Mobile Switching Center (MSC), given that the closer the MSC is
to these points, the lower the cost of wireline transmission. Galaxy will
compare real estate cost with transmission costs in the placement of the MSC.
Most metropolitan LATAs have two Access Tandem locations that might be used for
connection. Tritel should plan to connect to each for diversity purposes and to
obtain better Virtual Rate Center (VRC) coverage.
Each NXX obtained by Tritel must be tied to an exchange within the LATA for
rating purposes. In some LECs, a different VRC may be used for each NXX obtained
by Tritel while in others, Tritel will be allowed only one VRC per Access
Tandem. A unique VRC for each NXX obtained would help Tritel establish different
rating zones within a LATA to:
o minimize costs for wireline customers calling Tritel wireless customers
o minimize Tritel's mobile-to-land costs.
Galaxy assumes that a minimum of one NXX per LATA will be necessary for launch,
depending on the requirements of each situation.
In order to obtain NXX codes for Tritel through the LEC, Galaxy will assist with
and require:
o Tritel Access Customer Name Abbreviation (ACNA)
o Operating Company Number (OCN)
o Exact address of the switch
o V & H coordinates of the switch
o CLLI code for the MSC site
o Tritel POP site in other LATAs
Galaxy will develop procedures to obtain NXX codes in LATAs in and outside the
MSC location. In some cases, the LEC will require Tritel to obtain a
Point-of-Presence (POP) before Galaxy can secure these NXXs. Alternatively,
using an IXC puts Tritel at risk should Tritel want to change carriers in the
future. Thus, the ideal location would be the LEC wire center near all IXC POPs.
During the interim, Tritel should attempt to use the BTS site on a building
closest to the Access Tandem or the End Office to connect to in that LATA.
Galaxy does not anticipate a need for equipment at this location, but Tritel
should obtain enough space to allow cross-connects and additional equipment that
can be installed to support future growth.
Lead times to order an NXX block of 10,000 numbers through LECs is about 66
days.
<PAGE>
To determine the PSTN connections needed, we recommend reviewing Bellcore
Technical Reference TR-NPL-000145, Issue 2, dated December 1993.
In the early stages of Tritel's network development. it is assumed most traffic
will be sent and received from the LEC Access Tandem using Type 2A circuits.
Some LECs require that these circuits be directionalized, meaning that separate
trunk groups are established to and from the tandem. Some LECs also require a
separate equal access trunk group labeled Type 2T or 2AT.
Type 2B circuits directly to end offices may be used at a later date as traffic
loads dictate. Costs would be the driving factor that would determine whether
these circuits would be installed. Economic analysis will be used at the
appropriate time to determine when to install such circuits.
Galaxy assumes that Tritel will use a selected carrier or carriers for branded
long distance service. Whether direct trunks will be installed to other long
distance carriers would again be a function of traffic loads. The LATA Access
Tandem will have connections to all long distance carriers serving the area and
until loads build to a point of dictating direct connections, traffic for these
carriers should be handled using the tandem.
Most LECs require a Type 1 trunk group to handle 800, N11, 1+, 0+, and 0-
traffic. Galaxy will make application for and secure this trunk group.
After Tritel has developed trunking requirements for E911, Directory Assistance
(DA), Directory Assistance Call Completion (DACC), Operator Services, and call
volume, Galaxy will make application for and process all required paperwork.
Galaxy will then track status and ensure that Operations personnel are notified
of installation and test dates. These requirements will drive the MSC trunking
for each LATA within a market. Tritel will need to determine the LATAs to be
served at launch and LATAs for later implementation. Access Tandem connections
in each LATA served will generally be required. If only a small portion of the
LATA is to be covered, a Type 1 connection to an end office will be recommended.
E911 needs in each LATA must be carefully investigated. Galaxy recommends and
will implement connection for E911 through a dedicated NXX for E911 use where
Tritel would outpulse NXX-XXXX as the called number. The NXX indicates Tritel
and the XXXX indicates the sector of call origination. ANI would not be sent.
E911 requirements may change as the FCC refines a method of pinpointing the
location of wireless stations. Implementing these methodologies would be outside
this scope of work.
9.0 SUBCONTRACTING
Galaxy may elect to subcontract some components of the scope of work for fixed
network services. In such a circumstance, Tritel shall have the right to approve
the contracting firm or personnel and shall not unreasonably withhold approval.
Any subcontractors will be managed directly by Galaxy personnel to ensure
consistent quality in service delivery to Tritel.
<PAGE>
10.0 RESPONSIBILITY OF PARTIES
With respect to Fixed Network services, Galaxy's efforts will be subject to
changes, requests, or acts of Tritel, the Program Manager, or other Parties
given responsibility for aspects of the Fixed Network Services. Galaxy is not
liable for liquidated damages or delay penalties due to changes to the progress
schedule or acts and omissions made by other parties outside Galaxy's control
that impede or delay Galaxy's ability to complete work activities.
<PAGE>
EXHIBIT B
COMPENSATION
B.1 FEE SCHEDULE
Galaxy Engineering offers a per site list price that includes:
o Implementation as defined in Sections 1 through 6
o Interconnection as defined in Section 8
The list price per site for implementation is[CONFIDENTIAL TREATMENT REQUESTED].
However, because the volume of sites requested by the client exceeds 1200, and
because of the significant RF work also being completed for the client, we are
pleased to offer a reduction, itemized per site as follows:
o Per Site Implementation Fee: [CONFIDENTIAL TREATMENT REQUESTED]
o Per Site Interconnect Fee [CONFIDENTIAL TREATMENT REQUESTED]
As site redesign becomes necessary, the fee per each site redesign will be
[CONFIDENTIAL TREATMENT REQUESTED].
Microwave design and installation:
Number of Paths Price Per Path for Design & Installation
--------------- ----------------------------------------
1--25 [CONFIDENTIAL TREATMENT REQUESTED]
26+ [CONFIDENTIAL TREATMENT REQUESTED]
If microwave is selected as the transport medium, Tritel will be charged for the
first site implementation milestone for the applicable percent of the per-site
fee for achieving the first milestone. In addition, Tritel will be charged for
the price per path listed above.
This fee schedule and the following hourly rates are valid for fixed network
projects of greater than 1200 sites.
B.1.2 TRAVEL AND OFFICE EXPENSES
Travel Expenses and accommodations away from Atlanta, GA including coach airfare
will be passed through to the client. One rental vehicle for each Galaxy
employee deployed in the market. Galaxy personnel will be allotted one trip home
per month. Galaxy per diem rates are per standard 1998 U.S. Government CONUS
rates for the market that work is being performed in. Extraordinary travel
required by Tritel outside of travel between the markets and Atlanta will be
billed at actual costs plus an [CONFIDENTIAL TREATMENT REQUESTED] processing
fee.
<PAGE>
Office Expenses will be passed through at cost, where applicable. Office space
outside of Atlanta (set up upon Tritel's request) will be billed to or arranged
by Tritel at Tritel's discretion.
B.1.3 HOURLY RATES FOR OUT OF SCOPE SERVICES
The following Hourly Rates apply to work performed upon client request that is
outside the scope of this proposal. Listed below are the personnel expected to
work full-time on this project upon acceptance by the client.
DESCRIPTION HOURLY RATE
----------- -----------
FIXED NETWORK MANAGER [CONFIDENTIAL
TREATMENT
REQUESTED]
SYSTEM INTEGRATOR [CONFIDENTIAL
TREATMENT
REQUESTED]
FIXED NETWORK ADMINISTRATOR [CONFIDENTIAL
TREATMENT
REQUESTED]
OSP SUPERVISOR [CONFIDENTIAL
TREATMENT
REQUESTED]
FIELD TECHNICIANS--IN MARKET [CONFIDENTIAl
TREATMENT
REQUESTED]
CAD/MAPINFO COORDINATOR [CONFIDENTIAL
TREATMENT
REQUESTED]
B.2 ASSUMPTIONS
o Site Acquisition Request forms will be released in clusters.
o Site Acquisition Service Providers will release sites in clusters.
o Galaxy will release sites to construction in clusters.
o Galaxy will coordinate weekly status meetings.
o Galaxy will request competitive bids for site construction.
o Consultants will be retained directly by the owner for the following
services: FAA Evaluations, FCC requirements, Microwave Relocation, and Tower
De-tuning Analyses.
<PAGE>
o The Client will provide Equipment Vendor information as requested to complete
these scopes of services.
o Galaxy is to be named as an additional insured on all required certificates
of insurance from contractors, consultants, and vendors involved in the
project.
B.3 PAYMENT TERMS
The terms of Galaxy's payment structure is Net 30 days upon receipt of invoice
unless Tritel elects the financing option set forth in the Agreement. Invoices
shall be rendered according to
the following milestones:
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Fixed Network Engineering Payment Milestones
<TABLE>
<CAPTION>
Milestone: Fee:
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
o Project Initiation [CONFIDENTIAL
TREATMENT REQUESTED]
o Service Inquiry Form Issued [CONFIDENTIAL
TREATMENT REQUESTED]
o Order Placed [CONFIDENTIAL
TREATMENT REQUESTED]
o Delivery of T-1 or 90 days after Order Placement [CONFIDENTIAL
TREATMENT REQUESTED]
o Site Documentation Submitted to Tritel or 90 days after T-1 [CONFIDENTIAL
Delivery TREATMENT REQUESTED]
</TABLE>
Invoices shall initially be based on the parties' mutual good faith estimate of
the total cell sites required in the market(s) in which Services have been
commenced and which are the subject of the invoices ("Initial Invoice"). If
actual cell site counts differ from the estimated count used to calculate
Initial Invoice amounts:
I) The excess amount invoiced, if any, shall be payable by Galaxy to Tritel as
follows:
i) if the Initial Invoice terms were net 30, like terms apply;
ii) if the Initial Invoice terms were under the Financing Plan, the excess
shall be subtracted from the Initial Invoice amount financed and
payment structure will be adjusted accordingly, with credit given for
any excess interest charges accrued;
iii) at Tritel's option, the excess shall be rendered in equivalent
Services value on a time and materials basis.
II) The amount of deficiency in the invoice total, if any, shall be payable by
Tritel as follows:
i) if the Initial Invoice terms were net 30, like terms apply;
ii) if the Initial Invoice terms were under the Financing Plan, net 30
terms apply.
As soon as the actual number of cell sites to be constructed in such markets is
determined by Tritel invoices shall thereafter be based on the actual cell site
count rather than the estimate.
<PAGE>
EXHIBIT C
MILESTONE COMPLETION AND GENERAL ACCEPTANCE CRITERIA OF FIXED NETWORK
ENGINEERING DELIVERABLES FOR TRITEL WIRELESS MARKETS
The following conditions, when fulfilled, define Milestone completion and
Acceptance Criteria for the Services ("Acceptance"). Tritel acknowledges and
accepts that failure to adhere to the Acceptance Criteria unless otherwise
authorized in writing by Galaxy shall constitute waiver of all Tritel' s claims
against Galaxy for subsequent delays or failures in network performance.
Acceptance Criteria:
In-Market Engineering/Implementation Phase
i. Galaxy's Fixed Network Implementation phase will begin when Tritel gives
authorization to Galaxy to issue Service Inquires.
ii. The issuance of a Service Inquiry Form will signify the first milestone
for Fixed Network Site Implementation.
iii. The second milestone for Fixed Network Site Implementation is achieved
when the T-1 is ordered (leased line or microwave).
iv. The third milestone for Fixed Network Site Implementation is the
delivery of the T-1, including testing and acceptance.
v. The fourth milestone for Fixed Network Site Implementation is the
delivery of the Fixed Network Site Implementation documentation, "Site
Book."
vi. Galaxy's Fixed Network Implementation phase will conclude in each BTA
when for 3 consecutive months the number of sites ordered in that market
is less than 5% per month of the total initial Search Areas deployed.
Terms
o Any contractual obligations made with carriers will be the sole
responsibility of Tritel. All carrier equipment purchases and/or lease
agreements will be the sole responsibility of Tritel. Galaxy will, at
Tritel's discretion, issue all purchase orders to carriers/vendors.
o In order to process T-1 orders some carriers will require valid E911
addresses. It will be Tritel's responsibility (via a Site Acquisition
Contractor) to obtain and provide valid addresses to Galaxy.
o Charges required by a Carrier due to: Special Construction, cancellations,
delays (outside the control of Galaxy Engineering) or repeated installation
trips will be the responsibility of Tritel.
Interconnection Phase
i. The Interconnection phase will begin simultaneously with the Fixed
Network Design phase.
<PAGE>
ii. Galaxy applies for NXX(s) in each LATA. A requirement for Galaxy to
begin application is that Tritel or its design agent establish the
location of the MSC for Type 1 Circuit Application.
iii. Trunks Ordered (following marketing input):
Terms
o Tritel Interconnection objectives (Operator Services, 0+, 0-, 555-1212, Area
Wide Calling Plans, IT circuits, etc.) will need to be established before
the interconnect phase can begin.
o The minimum processing time for NXX's is 66 days. Galaxy Fixed Network
Engineering will require specific information from Tritel as outlined in
Section 8 of the Scope of Services in order to obtain NXX's for each LATA.
o The Interconnection phase will conclude simultaneously with the Fixed
Network Implementation phase. At such time when the Fixed Network
Implementation phase has concluded, Galaxy Engineering will support the
hand-off of all interconnect data to permanent Tritel Operations personnel.
<PAGE>
AGREEMENT
THIS AGREEMENT is made by and between BellSouth Telecommunications,
Inc., ("BellSouth"), a Georgia corporation, and Tritel Communications, Inc.,
("Carrier") a Delaware corporation and shall be deemed effective as of March 16,
1999 (the "Effective Date"). This agreement may refer to either BellSouth or
Carrier or both as a "party" or "parties."
WITNESSETH
WHEREAS, BellSouth is an incumbent local exchange carrier ("ILEC")
authorized to provide telecommunications services in the states of Alabama,
Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South
Carolina, and Tennessee; and
WHEREAS, Carrier is a Commercial Mobile Radio Service ("CMRS") provider
licensed by the Federal Communications Commission ("FCC") to provide CMRS in the
states of Alabama, Florida, Georgia, Kentucky, Mississippi, and Tennessee; and
WHEREAS, the parties wish to interconnect their facilities and exchange
traffic for the purposes of fulfilling their obligations pursuant to Sections
251, 252 and 271 of the Telecommunications Act of 1996 and to replace any and
all other prior agreements, both written and oral;
NOW THEREFORE, in consideration of the mutual agreements contained
herein, BellSouth and Carrier agree as follows:
I. DEFINITIONS For purposes of this Agreement, the following capitalized terms
have the meanings set forth below unless the context requires otherwise. Terms
that appear herein (whether or not capitalized) that are not defined herein have
the meanings ascribed to them in the Act, or (if not defined therein) have the
meanings customarily associated with them based on ordinary usage in the
telecommunications industry as of the Effective Date.
A. COMMISSION is defined as the appropriate regulatory agency in each
of BellSouth's nine state region: Alabama, Florida, Georgia, Kentucky,
Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee.
B. EFFECTIVE DATE is defined in the first sentence of this Agreement.
C. INTERMEDIARY FUNCTION is defined as the delivery, pursuant to this
agreement or to Commission directive, of local or toll (using traditional
landline definitions) telecommunications traffic to or from (i) a local exchange
carrier (LEC) other than BellSouth; or (ii) an alternative (or competitive)
local exchange carrier ("ALEC"); or (iii) another telecommunications carrier
(such as a CMRS provider) other than Carrier through the network of one party
from or to an end user of the other party.
D. LOCAL TRAFFIC is defined for purposes of reciprocal compensation
under this Agreement as: (1) any telephone call that originates on the network
of Carrier within a Major
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Trading Area ("MTA") and terminates on the network of BellSouth in the same MTA
and within the Local Access and Transport Area ("LATA") in which the call is
handed off from Carrier to BellSouth, and (2) any telephone call that originates
on the network of BellSouth that is handed off to Carrier in the same LATA in
which the call originates and terminates on the network of Carrier in the MTA in
which the call is . handed off from BellSouth to Carrier. For purposes of this
Agreement, LATA shall have the same definition as that contained in the
Telecommunications Act of 1996, and MTA shall have the same definition as that
contained in the FCC's rules.
E. LOCAL INTERCONNECTION is defined for purposes of this Agreement as
(1) the connection of the parties' respective networks for the exchange and
delivery of Local Traffic between the parties to be terminated on each party's
network so that end users of either party have the ability to reach end users of
the other party without the use of any access code or substantial delay in the
processing of the call; and (2) a LEC's provision of unbundled network features,
functions, and capabilities to carrier.
F. NON-LOCAL TRAFFIC is defined as all traffic that is neither Local
Traffic nor access services (the latter described in Section V.F of this
Agreement).
G. PERCENT OF INTERSTATE USAGE (PIU) is defined as a factor to be
applied to that portion of Non-Local Traffic comprised of interstate interMTA
minutes of use in order to -designate those minutes that should be rated as
interstate access services minutes of use. The numerator is all interstate
interMTA minutes of use, less any interstate minutes of use for "Terminating
Party Pays" services, such as 800 Services. The denominator is all interMTA
minutes of use less all minutes attributable to "Terminating Party Pays"
services.
H. PERCENT LOCAL USAGE (PLU) is defined as a factor to be applied to
terminating minutes of use. The numerator is all "nonintermediary" Local Traffic
minutes of use. The denominator is the total minutes of use including Local
Traffic and Non-Local Traffic.
I. TELECOMMUNICATIONS ACT OF 1996 ("ACT") means Public Law 104-104 of
the United States Congress effective February 8, 1996. The Act amended the
Communications Act of 1934 (47, U.S.C. Section 1 et. seq.).
II. PURPOSE
The parties desire to enter into this Agreement consistent with all
applicable federal, state and local statutes, rules and regulations in effect as
of the date of its execution including, without limitation, the Act at Sections
251, 252 and 271. The access and interconnection obligations contained herein
enable Carrier to provide CMRS in those areas-where it is authorized to provide
such services within the nine state region of BellSouth.
The parties have entered into this Agreement to memorialize their
agreement with respect to certain matters concerning Local Interconnection as a
result of their negotiations pursuant to Sections 251 and 252 of the Act. With
respect to any facility, feature, function, service, or other arrangement
concerning Local Interconnection -or any other matter subject to negotiation
pursuant to Sections 251 and 252 of the Act between the parties that has not
been agreed upon by the parties and memorialized herein, (a) the parties may
conduct further negotiations pursuant to
2
<PAGE>
Sections 251 and 252 of the Act upon a written request therefor by Carrier, and
(b) Carrier reserves any rights it might have under Section 332 of the
Communications Act of 1934, 47 U.S.C. 332, as amended.
III. TERM OF THE AGREEMENT
A. The term of this Agreement shall be two years, beginning on the
Effective Date and shall automatically renew for additional six (6) month terms
unless either party provides written notice of termination to the other party at
least sixty (60) days prior to the last day of the initial two-year term or any
subsequent six-month renewal term, as the case may be.
B. In the event BellSouth or Carrier receives from the other a notice
of termination pursuant to paragraph A of this section, Carrier may within 30
calendar days from the receipt thereof send to BellSouth a written request to
renegotiate this Agreement pursuant to Sections 251 and 252 of the Act, in which
case this Agreement shall not be terminated, but shall continue in full force
and effect, unless and until a substitute agreement between the parties with
respect to the matters governed herein takes effect.
C. Notwithstanding the foregoing, the parties may terminate this
Agreement at any time upon their written mutual consent.
IV. LOCAL INTERCONNECTION
A. The delivery of Local Traffic between the parties shall be
reciprocal and compensation will be mutual according to the provisions of this
Agreement. The parties agree that the exchange of traffic on BellSouth's
interMTA EAS routes shall be considered as Local Traffic and compensation for
the termination of such traffic shall be pursuant to the terms of this section.
EAS routes are those exchanges within an exchange's Basic Local Calling Area, as
defined in Section A3 of BellSouth's General Subscriber Services Tariff.
B. Each party will pay the other for terminating its Local Traffic on
the others network the local interconnection rates as set forth in Attachment
B-1, by this reference incorporated herein. The amount that each party shall pay
to the other for the delivery of Local Traffic shall be calculated by
multiplying the applicable rate in Attachment B-1 for each type of call by the
total minutes of use each month for each such type of call. The minutes of use
or portion thereof for each call, as the case may be, will be accumulated for
the monthly billing period and the total of such minutes of use for the entire
month rounded to the nearest minute. The usage charges will be based on. the
rounded total monthly minutes. The charges for Local Interconnection shall be
billed monthly and payable monthly. Late payment fees, not to exceed 1 1/2% per
month after the due date may be assessed, if undisputed interconnection charges
are not paid, within thirty (30) days of the due date of the monthly bill.
V. METHODS OF INTERCONNECTION
A. 1. The parties agree that there are three appropriate methods of
interconnecting facilities: (a) virtual collocation where physical collocation
is not practical for technical reasons or because of space limitations; (b)
physical collocation; and (c) interconnection at any technically feasible point
via purchase of facilities from either party by the
3
<PAGE>
other party. Rates and charges for collocation are set forth in Attachment C-1
3, incorporated herein by this reference, or as otherwise agreed upon by the
parties. Type 1, Type 2A and Type 2B interconnection arrangements described in
BellSouth's General Subscriber Services Tariff, Section A35, or, in the case of
North Carolina, in the North Carolina Connection and Traffic Interchange
Agreement effective June 30, 1994, as amended, may be purchased pursuant to this
Agreement provided, however, that such interconnection arrangements shall be
provided at the rates, terms and conditions set forth in this Agreement.
Facilities for interconnection or for other BellSouth-supplied facilities,
features, functions, or services may be purchased by Carrier (i) pursuant to a
separate agreement between the parties, or (ii) pursuant to the rates, terms and
conditions set forth in applicable tariffs, including without limitation
BellSouth's intrastate Switched Access (Section E6) or Special Access (Section
E7) services tariff.
2. Local Interconnection shall be provided at a level of quality at
least equal to that which each party provides to itself, to any of its
Affiliates, or, in the case of BellSouth-supplied interconnection, at least
equal to that provided by BellSouth to any similarly-situated CMRS provider
having interconnection arrangement(s) with BellSouth comparable to the
interconnection arrangement(s) provided to Carrier under this Agreement; except
that, upon request, a different level of quality may be provided to the extent
technically feasible and subject to the negotiation of acceptable provisions and
compensation arrangements. All interconnection facilities shall meet the
applicable telecommunications industry standards of engineering, design, and
operation, as the case may be, for LEC-CMRS interconnection in effect from time
to time.
B. The parties agree to accept and provide any of the preceding methods
of interconnection. Reciprocal connectivity shall be established to at least one
BellSouth access tandem within every LATA Carrier desires to serve, or Carrier
may elect to interconnect directly at an end office for delivery of traffic to
end users served by that end office. Such interconnecting facilities shall
conform, at a minimum, to the telecommunications industry standard of DS-1
pursuant to Bellcore Standard No. TRNWT-00499. Signal transfer point, Signaling
System 7 ("SS7") connectivity is required at each interconnection point after
Carrier implements SS7 capability within its own network. BellSouth will provide
out-of-band signaling using Common Channel Signaling Access Capability where
technically and economically feasible, in accordance with the technical
specifications set forth in the BellSouth Guidelines to Technical Publication,
TR-TSV-000905. The parties agree to engineer their respective facilities (i) to
provide the necessary on-hook, off-hook answer and disconnect supervision,
(ii)to hand off calling party number ID when technically feasible, and (iii) to
honor privacy codes and line blocking requests
C. Nothing herein shall prevent Carrier from utilizing existing
collocation facilities, purchased from the appropriate tariffs, for local
interconnection; provided, however, that, unless otherwise agreed to by the
parties, if Carrier orders new facilities for interconnection or rearranges any
of its existing facilities in order to use such facilities for local
interconnection hereunder and a BellSouth charge is applicable thereto,
BellSouth shall only charge Carrier the lower of the interstate or intrastate
tariffed rate or promotional rate.
D. The parties agree to establish trunk groups from the interconnecting
facilities of subsection (A) of this section such that each party provides a
reciprocal of each trunk-group
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<PAGE>
established by the other party. Notwithstanding the foregoing, each party may
construct its network, including the interconnecting facilities, to achieve
optimum cost effectiveness and network efficiency. The parties agree to provide
at least a P.01 level of service and to work cooperatively in the placement
and/or removal of interconnection facilities.
Unless otherwise agreed:
(i) BellSouth will provide or bear the cost of all trunk groups for the
delivery of Local Traffic from BellSouth's network to Carrier's MSCs within
BellSouth's service territory; and
(ii) Carrier will provide or bear the cost of all trunk groups for the
delivery of Local Traffic from Carrier to each BellSouth access tandem and end
office at which the parties' networks are interconnected; Carrier may supply its
own interconnection facilities or may purchase such facilities (a) from
BellSouth pursuant to a separate agreement or tariff for this purpose, or (b)
from any other third-party supplier; and
(iii) in the event the parties agree to use two-way interconnection
facilities in lieu of separate one-way facilities, the appropriate charges for
such facilities shall be divided on a pro rata basis reflecting the estimated or
actual percentage of traffic that terminates on the network of each party;
provided however that, in such circumstance, BellSouth's treatment of Carrier as
to said charges shall be consistent with BellSouth treatment of other local
exchange carriers for the same charges.
E. The parties agree to use an auditable PLU factor as a method for
determining the amount of traffic exchanged by the parties that is Local Traffic
and the amount of traffic that is Non-Local Traffic. The PLU factor will be used
for traffic delivered by either party for termination on the other party's
network.
F. When the parties provide an access service connection between an
interexchange carrier ("IXC") and each other, each party will provide its own
access services to the IXC. If access charges are billed, each party will bill
its own access services rates to the IXC.
G. The ordering and provision of all services purchased from BellSouth
by Carrier shall be as set forth in the BellSouth Telecommunications Wireless
Customer Guide as amended from time to time. The ordering and provisioning of
facilities or services by a party, including, but limited to, installation,
testing, maintenance, repair, and disaster recovery, shall be provided at a
level of quality and care at least equal to that which it provides to itself, an
affiliate, or, in the case of BellSouth supplied interconnection, at least equal
to that provided by BellSouth to any other similarly situated CMRS provider
having interconnection arrangement(s) with BellSouth comparable to the
interconnection arrangement(s) provided to Carrier under this Agreement, unless
Carrier and BellSouth specifically negotiate a different level of quality or
care.
H. BellSouth will make available to Carrier an electronic mail
capability, via the Internet, through which Carrier may deliver ordering
information to BellSouth and through which Carrier may receive confirmation of
such ordering information.
I. Upon request, the parties shall conduct further negotiations
pursuant to Sections 251 and 252 of the Act regarding interconnection, services
or network elements and nothing in
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<PAGE>
this agreement shall prohibit, or shall be construed to prohibit, such
negotiations or any arbitration arising therefrom, if necessary; provided that
Carrier may not make more than one such request for negotiations in any calendar
year during which the Agreement is in effect.
VI. INTRALATA AND INTERLATA NON-LOCAL TRAFFIC INTERCONNECTION
A. The delivery of Non-Local Traffic by a party to the other party
shall be reciprocal and compensation will be mutual. For terminating its
Non-Local Traffic on the other party's network, each party will pay either the
access charges described in p9ragraph (B) hereunder or the Non-Local
Intermediary Charges described in paragraph (D) hereunder, as appropriate.
B. For originating and terminating intrastate or interstate interMTA
Non-Local Traffic, each party shall pay the other BellSouth's intrastate or
interstate, as appropriate, switched network access service rate elements on a
per minute of use basis. Said rate elements shall be as set out in BellSouth's
Intrastate Access Services Tariff or BellSouth's Interstate Access Services
Tariff as those tariffs may be amended from time to time during the term of this
Agreement. The appropriate charges will be determined by the routing of the
call.
C. The parties agree that actual traffic measurements in each of the
appropriate categories is the preferred method of classifying and billing
traffic. If, however, either party cannot measure traffic in each category, then
the parties shall agree on a surrogate method of classifying and billing
traffic, taking into consideration territory served (e.g. MTA boundaries, LATA
boundaries and state boundaries) and traffic routing of the parties.
D. If Non-Local Traffic originated by a party to this Agreement is
delivered by the other party for termination to the network of a nonparty
telecommunications carrier ("Nonparty Carrier"), then the party performing the
intermediary function will bill the other party and the other party shall pay a
$.002 per minute intermediary charge in addition to any charges that the party
performing the intermediary function may be obligated to pay to the Nonparty
Carrier (collectively called "Non-Local Intermediary Charges"). The parties
agree that the charges that the party performing the intermediary function may
be obligated to pay to the Nonparty Carrier may change during the term of this
Agreement and that the appropriate rate shall be the rate in effect when the
traffic is terminated. The parties shall agree for purposes of this section, and
subject to verification by audit what percentage of the Non-Local Traffic
delivered to BellSouth by Carrier shall be subject to Non-Local Intermediary
Charges. The parties agree that none of the Non-Local Traffic delivered to
Carrier by BellSouth shall be subject to the Non-Local Intermediary Charges.
VII. PROVISION OF UNBUNDLED ELEMENTS
A. BellSouth shall, upon request of Carrier, and to the extent
technically feasible, provide to Carrier access to its Network Elements for the
provision of a Carrier telecommunications service. Any request by Carrier for
access to a BellSouth Network Element that is not already available shall be
treated as a Network Element bona fide request. Carrier agrees to pay the cost
associated with the bona fide request if Carrier cancels the request or fails to
purchase the service once completed. Carrier shall provide BellSouth access to
its Network Elements as mutually agreed by the parties or as required by the
Commission or the FCC.
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<PAGE>
B. A Network Element obtained by one party from the other party under
this section may be used in combination with the facilities of the requesting
party only to provide a telecommunications service, including obtaining billing
and collection, transmission, and routing of the telecommunications service.
VIII. ACCESS TO POLES, DUCTS, CONDUITS, AND RIGHTS OF WAY
BellSouth agrees to provide to Carrier, pursuant to 47 U.S.C.
(Section) 224, as amended by the Act, nondiscriminatory access to any pole,
duct, conduit, or right-of-way owned or controlled by BellSouth.
IX. ACCESS TO 91 1/E911 EMERGENCY NETWORK
A. BellSouth and Carrier recognize that 911 and E911 services were
designed and implemented primarily as methods of providing emergency services to
fixed location subscribers. While BellSouth and Carrier recognize the need to
provide "911-like" service to mobile subscribers, both parties recognize that
current technological restrictions prevent an exact duplication of the services
provided to fixed location customers. BellSouth agrees to route "911 -like"
calls received from Carrier to the emergency agency designated by Carrier for
such calls. Carrier agrees to provide the information necessary to BellSouth so
that each call may be properly routed and contain as much pertinent information
as is technically feasible.
B. BellSouth and Carrier recognize that the technology and regulatory
requirements for the provision of "911-like" service by CM RS carriers are
evolving and agree to modify or supplement the foregoing in order to incorporate
industry accepted technical improvements that Carrier desires to implement and
to permit Carrier to comply with applicable regulatory requirements.
X. ACCESS TO TELEPHONE NUMBERS
Carrier is responsible for interfacing with the North American Numbering Plan
administrator for all matters dealing with dedicated NXXs. BellSouth will
cooperate with Carrier in the provision of shared NXXs where BellSouth is the
service provider.
XI. ACCESS TO SIGNALING AND SIGNALING DATABASES
A. BellSouth will offer to Carrier use of BellSouth's signaling network
and signaling databases on an unbundled basis at BellSouth's published tariffed
rates set forth in Section XLB below or at unbundled rates that may be available
through non-tariffed arrangements. Signaling functionality will be available
with both A-link and B-link connectivity.
B. Where interconnection is via B-link connections, charges for the SS7
interconnection elements are as follows: 1) Port Charge - BellSouth shall not
bill an STP port charge nor shall BellSouth pay a port charge; 2) SS7 Network
Usage -BellSouth shall bill its tariffed usage charge and shall pay usage billed
by the Carrier at rates not to exceed those charged by BellSouth; 3) SS7 Link -
BellSouth will bill its tariffed charges for only two links of each quad
ordered. Application of these charges in this manner is designed to reflect the
reciprocal use of the parties' signaling networks. Where interconnection is via
A-link
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connections, charges for the SS7 interconnection elements are as follows: 1)
Port Charge - BellSouth shall bill its tariffed STP port charge but shall not
pay a termination charge at the Carrier's end office; 2) SS7 Network Usage -
BellSouth shall bill its tariffed usage charge but shall not pay for any usage;
3) SS7 Link - BellSouth shall bill its tariffed charges for each link in the
A-link pair but shall not pay the Carrier for any portion of those links.
XII. NETWORK DESIGN AND MANAGEMENT
A. The parties agree to work cooperatively to install and maintain
reliable interconnected telecommunications networks, including but not limited
to, maintenance contact numbers and escalation procedures. BellSouth agrees to
provide public notice of changes in the information necessary for the
transmission and routing of Carriers services using its local exchange
facilities or networks, as well as of any other changes that would affect the
interoperability of those facilities and networks.
B. The interconnection of all networks will be based upon accepted
industry/national guidelines for transmission standards and traffic blocking
criteria.
C. The parties will work cooperatively to apply sound network
management principles by invoking appropriate network management controls, e.g..
call gapping, to alleviate or prevent network congestion.
D. Neither party will charge rearrangement, reconfiguration,
disconnection, termination or other such non-recurring fees that may be
associated with the initial reconfiguration of either party's existing network
interconnection arrangements. Except as otherwise agreed by the parties, the
parties may charge non-recurring fees for any additions to, or added capacity
to, any facility or trunk.
E. The parties agree to provide Common Channel Signaling (CCS)
information to one another, where available, in conjunction with all traffic in
order to enable full interoperability of CLASS features and functions except for
features or functions that have not been deployed in the parties' respective
networks. All CCS signaling parameters will be provided, including automatic
number identification (ANI), originating line information (OLI) calling party
category, charge number, etc. All privacy indicators will be honored, and the
parties agree to cooperate on the exchange of Transactional Capabilities
Application Part (TCAP) messages to facilitate full interoperability of
CCS-based features between the respective networks.
F. For network expansion, the parties agree to review engineering
requirements on a quarterly basis and establish forecasts for trunk utilization
as required by Section VI of this Agreement. New trunk groups will be
implemented as stated by engineering requirements for both parties.
G. The parties agree to provide each other with the proper call
information for Local Traffic, including without limitation, originating call
party number, destination call party number, Carrier Identification Code, all
proper translations for routing between networks and any information necessary
for billing where either party provides recording capabilities. The exchange of
information is required to enable each party to bill properly.
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XIII. AUDITING PROCEDURES
A. Upon thirty (30) days written notice, each party must provide the
other the ability and opportunity to conduct an annual audit to ensure the
proper billing of traffic between the parties. The parties agree to retain
records of call detail for a minimum of nine months from which the PLU, the
percent intermediary traffic, the percent interMTA traffic, and the PIU can be
ascertained. The audit shall be accomplished during normal business hours at an
office designated by the party being audited. Audit request shall not be
submitted more frequently than one (1) time per calendar year. Audits shall be
performed by a mutually acceptable independent auditor paid for by the party
requesting the audit. The PLU shall be adjusted based upon the audit results and
shall apply to the usage for the quarter the audit was completed, the usage for
the quarter prior to the completion of the audit, and to the usage for the two
quarters following the completion of the audit.
B. For combined interstate and intrastate Carrier traffic terminated by
BellSouth over the same facilities, Carrier shall provide, to the extent
technically feasible, a PIU factor to BellSouth. Should Carrier in the future
provide toll services through the use of network switched access services, then
all jurisdictional report requirements, rules and regulations specified in
E2.3.14 of BellSouth's Intrastate Access Services Tariff will apply to Carrier.
After the Local Traffic percentage has been determined by use of the PLU factor
for application and billing of Local Interconnection, the PIU factor will be
used for application and billing of interstate and intrastate access charges, as
appropriate.
XIV. LIABILITY AND INDEMNIFICATION
A. Liability Cap.
(1) With respect to any claim or suit, whether based in contract, tort
or any other theory of legal liability, by Carrier, any Carrier customer or by
any other person or entity, for damages associated with any of the services
provided by BellSouth pursuant to or in connection with this Agreement,
including but not limited the installation, provision, preemption, termination,
maintenance, repair or restoration of service, and subject to -the provisions of
the remainder of this Article XIV, BellSouth's liability shall be limited to an
amount equal to the proportionate charge for the service provided pursuant to
this Agreement, for the period during which the service was affected.
Notwithstanding the foregoing, claims for damages by Carrier, any Carrier
customer or any other person or entity resulting from the gross negligence or
willful misconduct of BellSouth and claims for damages by Carrier resulting from
the failure of BellSouth to honor in one or more material respects any one or
more of the material provisions of this Agreement shall not be subject to such
limitation of liability.
(2) With respect to any claim or suit, whether based in contract, tort
or any other theory of legal liability, by BellSouth, any BellSouth customer or
by any other person or entity, for damages associated with any of the services
provided by Carrier pursuant to or in connection with this Agreement, including
but not limited to the installation, provision, preemption, termination,
maintenance, repair or restoration of service, and subject to the provisions of
the remainder of this Article XIV, Carriers liability shall be limited to an
amount equal to the proportionate charge for the service provided pursuant to
this Agreement for the period during
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which the service was affected. Notwithstanding the foregoing, claims for
damages by BellSouth, any BellSouth customer or any other person or entity
resulting from the gross negligence or willful misconduct of Carrier and claims
for damages by BellSouth resulting from the failure of Carrier to honor in one
or more material respects any one or more of the material provisions of this
Agreement shall not be subject to such limitation of liability.
B. Neither party shall be liable for any act or omission of any other
telecommunications company to the extent such other telecommunications company
provides a portion of a service.
C. Neither party shall be liable for damages to the other party's
terminal location, point of interconnection, or the other party's customers'
premises resulting from the furnishing of a service, including but not limited
to the installation and removal of equipment and associated wiring, except to
the extent the damage is caused by such Party's gross negligence or willful
misconduct.
D. Each party shall, to the greatest extent permitted by the law
governing this Agreement ("Applicable Law"), include in its tariff (if it files
one) or, where it does not file a tariff, in an appropriate contract with its
customers that relates to the subject matter of this Agreement, a limitation of
liability (i) that covers the other party to the same extent the first party
covers itself and (ii) that limits the amount of damages a customer may recover
to the amount charged the applicable customer for the service that gave rise to
such loss.
E. No Consequential Damages - EXCEPT AS OTHERWISE PROVIDED IN THIS
SECTION XIV, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT,
INCIDENTAL, CONSEQUENTIAL, RELIANCE, OR SPECIAL DAMAGES SUFFERED BY SUCH OTHER
PARTY (INCLUDING WITHOUT LIMITATION DAMAGES FOR HARM TO BUSINESS, LOST REVENUES,
LOST SAVINGS, OR LOST PROFITS SUFFERED BY SUCH OTHER PARTY), REGARDLESS OF THE
FORM OF ACTION, WHETHER IN CONTRACT, WARRANTY, STRICT LIABILITY, OR TORT,
INCLUDING WITHOUT LIMITATION NEGLIGENCE OF ANY KIND WHETHER ACTIVE OR PASSIVE,
AND REGARDLESS OF WHETHER THE PARTIES KNEW OF THE POSSIBILITY THAT SUCH DAMAGES
COULD RESULT. EACH PARTY HEREBY AGREES TO HOLD HARMLESS THE OTHER PARTY AND SUCH
OTHER PARTYS AFFILIATES, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS FROM ALL SUCH DAMAGES. PROVIDED, HOWEVER, NOTHING CONTAINED IN THIS
SECTION XVIII SHALL LIMIT A PARTY'S LIABILITY TO THE OTHER FOR (1) WILLFUL OR
INTENTIONAL MISCONDUCT, GROSS NEGLIGENCE, OR FAILURE TO HONOR ONE OR MORE OF THE
MATERIAL PROVISIONS OF THIS AGREEMENT IN ONE OR MORE MATERIAL RESPECTS; (11)
BODILY INJURY, DEATH OR DAMAGE TO TANGIBLE REAL OR TANGIBLE PERSONAL PROPERTY
PROXIMATELY CAUSED BY A PARTY'S NEGLIGENT ACT OR OMISSION OR THAT OF ITS AGENTS,
SUBCONTRACTORS OR EMPLOYEES, NOR SHALL ANYTHING CONTA1NED IN THIS SECTION XIV
LIMIT THE PARTIES' INDEMNIFICATION OBLIGATIONS AS SPECIFIED HEREIN.
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F. Obligation to Indemnify - Each party shall, and hereby agrees to,
defend at the other party's request, indemnify and hold harmless the other party
and each of its officers, directors, employees and agents (each, an
"Indemnitee") against and in respect of any loss, debt, liability, damage,
obligation, claim, demand, judgment or settlement of any nature or kind, known
or unknown, liquidated or unliquidated, including without limitation all
reasonable costs and expenses incurred (legal, accounting or otherwise)
(collectively, "Damages") arising out of, resulting from or based upon any
pending or threatened claim, action, proceeding or suit by any third party (a
"Claim") (i) arising from any breach of any representation, warranty or covenant
made by such indemnifying party (the "Indemnifying Party") in this Agreement,
(ii) based upon injuries or damage to any person or property or the environment
arising out of or in connection with this Agreement that are the result of the
Indemnifying Party's actions, breach of Applicable Law, or status of its
employees, agents and subcontractors, or (iii) for actual or alleged
infringement of any patent, copyright, trademark, service mark, trade name,
trade dress, trade secret or any, other intellectual property right, now known
or later developed (referred to as "Intellectual Property Rights") to the extent
that such Claim for infringement arises from Indemnitee's use of the services
provided to it under this Agreement.
G. Each party's failure to perform under this Agreement shall be
excused by labor strikes, civil commotion, criminal actions taken against them,
acts of God, and other circumstances beyond their reasonable control.
H. The obligations of the parties contained within this section shall
survive the expiration of this Agreement.
XV. MORE FAVORABLE PROVISIONS
A. The parties agree that if -
1. the FCC or the Commission finds that the terms of this Agreement
are inconsistent in one or more material respects with any of its or their
respective decisions, rules, or regulations, or
2. the FCC or the Commission preempts the effect of this Agreement,
then, in either case, upon such occurrence becoming final and no longer subject
to administrative or judicial review, the parties shall immediately commence
good faith negotiations to conform this Agreement to the requirements of any
such decision, rule, regulation, or preemption. The revised agreement shall have
the same effective date as the initial FCC or Commission action giving rise to
such negotiations. The rates, terms, and conditions of any new agreement shall
not be applied retroactively to any period prior to such effective date except
to the extent that such retroactive effect is expressly required by such FCC or
Commission decision, rule, regulation, or preemption.
B. In the event that BellSouth, either before or after the Effective
Date, enters into an agreement with any other telecommunications carrier (an
"Other Interconnection Agreement") which provides for the provision within a
state of any of the arrangements covered by this Agreement upon rates, terms or
conditions that differ from the rates, terms and conditions for such
arrangements set forth in this Agreement ("Other- Terms"), then BellSouth shall
be deemed thereby to have offered such arrangements to Carrier upon such Other
Terms in that state only,
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which Carrier may accept as provided in Part E of this Section. In the event
that Carrier accepts such offer within sixty (60) days after the Commission, or
the FCC, as the case may be, approves such Other Interconnection Agreement
pursuant to Section 252 of the Act, or within thirty (30) days after Carrier
acquires actual knowledge of an Other Interconnection Agreement not requiring
the approval of the Commission pursuant to Section 252 of the Act, as the case
may be, such Other Terms shall be effective between BellSouth and Carrier as of
the effective date of such Other Interconnection Agreement or the .Effective
Date of this Agreement, whichever is later. In the event that Carrier accepts
such offer more than sixty (60) days after the Commission, or the FCC, as the
case may be, approves such Other Interconnection Agreement pursuant to Section
252 of the Act, or more than thirty (30) days after acquiring actual knowledge
of an Other Interconnection Agreement not requiring the approval of the
Commission pursuant to Section 252 of the Act, as the case may be, such Other
Terms shall be effective between BellSouth and Carrier as of the date on which
Carrier accepts such offer.
C. In the event that after the Effective Date the FCC or the Commission
having jurisdiction enters an order (an "Interconnection Order") requiring
BellSouth to provide within a particular state any of the arrangements covered
by this Agreement upon Other Terms, then upon such Interconnection Order
becoming final, no petitions for reconsideration pending, and the time for
seeking reconsideration has expired, BellSouth shall be deemed to have offered
such arrangements to Carrier upon such Other Terms, which Carrier may accept as
provided in Part E of this Section. In the event that Carrier accepts such offer
within sixty (60) days after the date on which such Interconnection Order
becomes final, no petitions for reconsideration pending, and the time for
seeking reconsideration has expired, such Other Terms shall be effective between
BellSouth and Carrier as of the effective date of such Interconnection Order or
the Effective Date of this Agreement, whichever is later. In the event that
Carrier accepts such offer more than sixty (60) days after the date on which
such Interconnection Order becomes final, no petitions for reconsideration
pending, and the time for seeking reconsideration has expired, such Other Terms
shall be effective between BellSouth and Carrier as of the date on which Carrier
accepts such offer. Provided, however, that if after judicial review, the rates
set forth in such Other Terms and accepted by Carrier are revised, stayed or
modified by an order of a judicial authority of competent jurisdiction (a
"Judicial Modification"), then BellSouth or Carrier, as applicable, shall make a
corrective payment to the other party equal to the difference between (a) the
lesser of (1) the rates set forth herein, or (2) modified rates (if any) set
forth in such Judicial Modification, and (b) the rates in such Other Terms for
the period from (x) the date on which Carrier accepted such Other Terms until
(y) the effective date of the Judicial Modification, plus simple interest
determined in accordance with Section F below. The Parties' obligation to make
such corrective payments as set forth in this Section shall survive for a period
of three (3) years after the termination or expiration of this Agreement for any
reason.
D. In the event that after the Effective Date BellSouth files and
subsequently receives approval for one or more intrastate or interstate tariffs
(each, an "Interconnection Tariff") offering to provide within a particular
state any of the arrangements covered by this Agreement upon Other Terms, then
upon such Interconnection Tariff becoming effective, BellSouth shall be deemed
thereby to have offered such arrangements to Carrier upon such Other Terms in
that state only, which Carrier may accept as provided in Part E of this Section.
In the event that Carrier accepts such offer within sixty (60) days after the
date on which such Interconnection Tariff becomes effective, such Other Terms
shall be effective between BellSouth and Carrier as
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of the effective date of such Interconnection Tariff or the Effective Date of
this Agreement, whichever is later. In the event that Carrier accepts such offer
more than sixty (60) days after the date on which such Interconnection Tariff
becomes ' effective, such Other Terms shall be effective between BellSouth and
Carrier as of the date on which Carrier accepts such offer.
E. In the event that BellSouth is deemed to have offered Carrier the
arrangements covered by this Agreement upon Other Terms, Carrier in its sole
discretion may accept such offer either --
1. by accepting such Other Terms in their entirety; or
2. by accepting the Other Terms that directly relate to any one or
more of the following arrangements as described by lettered category:
A. local interconnection (including transport and termination),
B. interLATA and lntraLATA toll traffic interconnection,
C. unbundled access to network elements, which include: local
loops, network interface devices, switching capability, interoffice transmission
facilities, signaling networks and call-related databases, operations support
systems functions, operator services and directory assistance, and any elements
that result from subsequent bona fide requests,
D. access to poles, ducts, conduits and rights-of-way,
E. access to 911 /E91 1 emergency network,
F. collocation, or
G. access to telephone numbers.
The terms of this Agreement, other than those affected by the Other Terms
accepted by Carrier, shall remain in full force and effect.
F. Corrective Payment. In the event that --
1. BellSouth and Carrier revise this Agreement pursuant to Part A
of this Section, or
2. Carrier accepts a deemed offer of Other Terms pursuant to Part
Eof this Section,
then BellSouth or Carrier, as applicable, shall make a corrective payment to the
other party to correct for the difference between (a) the rates set forth herein
and (b) the rates in such revised agreement or Other Terms for the period from
(x) the effective date of such revised agreement or Other Terms until (y) the
later of the date that the parties execute such revised agreement or the parties
implement such Other Terms, plus simple interest at a rate equal to the thirty
(30) day commercial paper rate in effect from time to time for high-grade,
unsecured notes sold through dealers by major corporations in multiples of
$1,000.00 as regularly published in The Wall Street Journal
XVI. TAXES AND FEES
A. Definition. For purposes of this section, the terms "taxes" and
"fees" shall include but not be limited to federal, state or local sales, use,
excise, gross receipts or other taxes or tax-like fees of whatever nature and
however designated (including tariff surcharges and any fees, charges or other
payments, contractual or otherwise, for the use of public streets or rights of
way, whether designated as franchise fees or otherwise) which are imposed, or
sought to be imposed, on or with respect to the services furnished hereunder or
measured by the charges or payments therefor.
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B. Taxes And Fees Imposed Directly On Either Providing Party Or
Purchasing Party.
1. Taxes and fees imposed on the providing party, which are neither
permitted nor required to be passed on by the providing party to its customer,
shall be borne and paid by the providing party.
2. Taxes and fees imposed on the purchasing party, which are not
required to be collected and/or remitted by the providing party, shall be borne
and paid by the purchasing party.
C. Taxes And Fees Imposed On Purchasing Party But Collected And
Remitted By Providing Party.
1. Taxes and fees imposed on the purchasing party shall be borne by the
purchasing party, even if the obligation to collect and/or remit such taxes or
fees is placed on the providing party.
2. To the extent permitted by applicable law, any such taxes and fees
shall be shown as separate items on applicable billing documents between the
Parties. Notwithstanding the foregoing, the purchasing party shall remain liable
for any such taxes and fees regardless of whether they are actually billed by
the providing party at the time that the respective service is billed.
3. If the purchasing party determines that in its opinion any such
taxes or fees are not payable, the providing party shall not bill such taxes or
fees to the purchasing party if the purchasing party provides written
certification, reasonably satisfactory to the providing party, stating that it
is exempt or otherwise not subject to the tax or fee, setting forth the basis
therefor, and satisfying any other requirements under applicable law. If any
authority seeks to collect any such tax or fee that the purchasing party has
determined and certified not to be payable, or any such tax or fee that was not
billed by the providing party, the purchasing party shall have the right, at its
own expense, to contest the same in good faith, in its own name or on the
providing party's behalf. In any such contest, the purchasing party shall
promptly furnish the providing party with copies of all filings in any
proceeding, protest, or legal challenge, all rulings issued in connection
therewith, and all correspondence between the purchasing party and the
governmental authority.
4. In the event that all or any portion of an amount sought to be
collected must be paid in order to contest the imposition of any such tax or
fee, or to avoid the existence of a lien on the assets of the providing party
during the pendency of such contest, the purchasing party shall be responsible
for such payment and shall be entitled to the benefit of any refund or recovery.
5. If it is ultimately determined that any additional amount of such a
tax or fee is due to the imposing authority, the purchasing party shall pay such
additional amount, including any interest and penalties thereon.
6. Notwithstanding any provision to the contrary, the purchasing party
shall protect, indemnify and hold harmless (and defend at the purchasing party's
expense) the providing party from and against any such tax or fee, interest or
penalties thereon, or other charges or payable
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expenses (including reasonable attorney fees) with respect thereto, which are
incurred by the providing party in connection with any claim for or contest of
any such tax or fee.
7. Each party shall notify the other party in writing of any
assessment, proposed assessment or other claim for any additional amount of such
a tax or fee by a governmental authority; such notice to be provided, if
possible, at least ten (10) days prior to the date by which a response, protest
or other appeal must be filed, but in no event later than thirty (30) days after
receipt of such assessment, proposed assessment or claim.
8. The Purchasing Party shall have the right, at its own expense, to
claim a refund or credit, in its own name or on the Providing Party's behalf, of
any such tax or fee that it determines to have paid in error, and the Purchasing
Party shall be entitled to any recovery thereof.
D. Taxes And Fees Imposed On Providing Party But Passed On To
Purchasing Party.
1. Taxes and fees imposed on the providing party, which are permitted
or required to be passed on by the providing party to its customer, shall be
borne by the purchasing party.
2. To the extent permitted by applicable law, any such taxes and fees
shall be shown as separate items on applicable billing documents between the
Parties. Notwithstanding the foregoing, the purchasing party shall remain liable
for any such taxes and fees regardless of whether they are actually billed by
the providing party at the time that the respective service is billed.
3. If the purchasing party disagrees with the providing party's
determination as to the application or basis of any such tax or fee, the Parties
shall consult with respect to the imposition and billing of such tax or fee and
with respect to whether to contest the imposition of such tax or fee.
Notwithstanding, the foregoing, the providing party shall retain responsibility
for determining whether and to what extent any such taxes or fees are
applicable. The providing party shall further retain responsibility for
determining whether and how to contest the imposition of such taxes or fees;
provided, however, that any such contest undertaken at the request of the
purchasing party shall be at the purchasing party's expense. In the event that
such contest must be pursued in the name of the providing party, the providing
party shall permit the purchasing party to pursue the contest in the name of the
providing party and the providing party shall have the opportunity to
participate fully in the preparation of such contest.
4. If after consultation in accordance with the preceding Section, the
- -purchasing party does not agree with the providing party's final determination
as to the application or basis of a particular tax or fee, and if the providing
party, after receipt of a written request by the purchasing party to contest the
imposition of such tax or fee with the imposing authority, fails or refuses to
pursue such contest or to allow such contest by the purchasing party, the
purchasing party may utilize the dispute resolution process outlined in Section
XVIII of this Agreement. Utilization of the dispute resolution process shall not
relieve the purchasing party from liability for any tax or fee billed by the
providing party pursuant to this subsection during the pendency of such dispute
resolution proceeding. In the event that the purchasing party prevails in such
dispute resolution proceeding, it shall be entitled to a refund in accordance
with the final decision
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therein. Notwithstanding the foregoing, if at any time prior to a final decision
in such dispute resolution proceeding the providing party initiates a contest
with the imposing authority with respect to any of the issues involved in such
dispute resolution proceeding, the dispute resolution proceeding shall be
dismissed as to such common issues and the final decision rendered in the
contest with the imposing authority shall control as to such issues.
5. In the event that all or any portion of an amount sought to be
collected must be paid in order to contest the imposition of any such tax or
fee, or to avoid the existence of a lien on the assets of the providing party
during the pendency of such contest, the purchasing party shall be responsible
for such payment and shall be entitled to the benefit of any refund or recovery.
6. If it is ultimately determined that any additional amount of such a
tax or fee is due to the imposing authority, the purchasing party shall pay such
additional amount, including any interest and penalties thereon.
7. Notwithstanding any provision to the contrary, the purchasing party
shall protect, indemnify and hold harmless (and defend at the purchasing party's
expense) the providing party from and against any such tax or fee, interest or
penalties thereon, or other charges or payable expenses (including reasonable
attorney fees) with respect thereto, which are incurred by the providing party
in connection with any claim for or contest of any such tax or fee.
8. Each party shall notify the other party in writing of any
assessment, proposed assessment or other claim for any additional amount of such
a tax or fee by a governmental authority; such notice to be provided, if
possible, at least ten (10) days prior to the date by which a ' response,
protest or other appeal must be filed, but in no event later than thirty (30)
days after receipt of such assessment, proposed assessment or claim.
E. Mutual Cooperation. In any contest of a tax or fee by one Party, the
other Party shall cooperate fully by providing records, testimony and such
additional information or assistance as may reasonably be necessary to pursue
the contest. Further, the other Party shall be reimbursed for any reasonable and
necessary out-of pocket copying and travel expenses incurred in assisting in
such contest.
XVII. TREATMENT OF PROPRIETARY AND CONFIDENTIAL INFORMATION
A. The parties agree that it may be necessary to provide each other
with certain confidential information, including trade secret information,
including but not limited to, technical and business plans, technical
information, proposals, specifications, drawings, procedures, customer account
data, call detail records and like information (hereinafter collectively
referred to as "Information"). The parties agree that if Information is provided
in written, graphic or other usable form and clearly marked with a confidential,
private or proprietary legend, then that Information will be returned to the
owner within a reasonable time. Both parties agree that such marked Information
shall not be copied or reproduced in any form except to the extent required to
perform this Agreement. The parties shall protect any Information received from
distribution, disclosure or dissemination to anyone except employees of the
parties with an identifiable need to know such Information who agree in writing
to be
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bound by the terms of this Section; however, in no event shall any of Carrier's
Information be disclosed to any person employed by an Affiliate of BellSouth
engaged in the provision of CMRS. In the event any person having had access to
Carrier's Information is subsequently employed by an Affiliate of BellSouth
engaged in the provision of CMRS, such person shall be required to agree in
writing not to reveal or use such Information. The parties will use the same
standard of care to protect Information received as they would use to protect
their own confidential and proprietary Information.
B. Notwithstanding the foregoing, all Information in any party's
possession that would constitute Customer Proprietary Network Information of the
party or the parties' customers pursuant td any federal or state law or the
rules and regulations of the FCC or any state commission, and any Information
developed or received by a party regarding the other party's facilities,
services, volumes, or usage shall automatically be deemed confidential
Information for all purposes, even if not marked as such, and shall be held
confidential as is required for Information.
C. Notwithstanding the foregoing, there will be no obligation to
protect any portion of any Information that is either: 1) made publicly
available by the owner of the Information or lawfully disclosed by a nonparty to
this Agreement; 2) lawfully obtained from any source other than the owner of the
Information; 3) independently developed by personnel of the receiving party to
whom Information had not been previously disclosed and not based on or derived
from such Information; or 4) previously known to the receiving party without an
obligation to keep it confidential. A party may also disclose all Information it
is required or ordered to disclose by law, a court, or governmental agency, as
long as the party that owns such Information has been notified of the required
disclosure promptly after the disclosing party becomes aware of its requirement
to disclose. The party required to disclose the Information shall take all
lawful measures to avoid disclosing the Information called for until the party
that owns the Information has had a reasonable time to seek and comply with a
protective order issued by a court or governmental agency of competent
jurisdiction that with respect to the Information otherwise required to be
disclosed.
D. The party's obligations to safeguard information shall survive for
one (1) year after the expiration or termination of this Agreement for any
reason whatsoever.
XVIII. RESOLUTION OF DISPUTES
Except as otherwise stated in this Agreement, if any dispute arises as
to the interpretation of any provision of this Agreement or as to the proper
implementation of this Agreement, the parties shall initially refer the disputed
issue to the individuals designated by the parties . If the issue is not
resolved within 30 days, either party may petition the Commission for a
resolution of the dispute, and/or pursue any other remedy available to it at law
or in equity..
XIX. LIMITATION OF USE
The parties agree that this Agreement shall not be proffered by either
party in another jurisdiction as evidence of any concession or as a waiver of
any position taken by the other party in that jurisdiction or for any other
purpose.
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XX. WAIVERS
This Agreement may not be amended in any way except upon the written
consent of the parties. No party shall be deemed to have waived any rights it
has under the Agreement based on its prior decision not to enforce, or its
failure to strictly enforce, any such rights, including, without limitation, the
right to seek specific performance or other injunctive relief. No amendment or
waiver of any provision of this Agreement, and no consent to any default under
this Agreement shall be effective unless the same is in writing and signed by an
officer of the party against whom such amendment, waiver or consent is claimed.
XXI. MISCELLANEOUS TERMS
A. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Georgia, without regard to Georgia's
conflict of law principles, and, where applicable, federal law, including the
Communications Act of 1934, as amended by the Act.
B. In the event any provision of this Agreement shall be held to be
invalid, illegal or unenforceable, it shall be severed from the Agreement and
the remainder of this Agreement shall remain valid and enforceable and shall
continue in full force and effect; provided, however, that if any severed
provisions of this Agreement are essential to any party's ability to continue to
perform its material obligations hereunder to the reasonable satisfaction of the
party to which the obligations are owed, the parties shall immediately begin
negotiations of new provisions to replace the severed provisions.
C. The parties are independent contractors and nothing herein shall be
construed to imply that they are partners, joint venturers or agents of one
another.
D. Except as otherwise expressly provided in this Agreement, each of
the remedies provided under this Agreement is cumulative and is in addition to
any remedies that may be available at law or in equity.
E. Except as may be specifically set forth in this Agreement, this
Agreement does not provide and shall not be construed to provide any person not
a party or proper assignee or successor hereunder with any remedy, claim,
liability, reimbursement, cause of action, or other privilege arising under or
relating to this Agreement.
F. Neither party shall publish or use any advertising, sales promotions
or other publicity materials that use the other party's logo, trademarks or
service marks without the prior written approval of the other party.
G. No party may assign any of its rights or delegate any of its
obligations under this Agreement without the prior written consent of the other
party, which will not be unreasonably withheld; provided, that (i) the parties
will permit the addition of whollyowned Affiliates as parties hereto, and (ii) a
party may assign its rights or delegate its obligations hereunder without the
consent of the other party to a wholly-owned Affiliate if such Affiliate is, in
the case of BellSouth, an authorized local exchange telephone carrier, or in the
case of Carrier, a licensed provider of radio telecommunications services, and
provided further that (a) the performance of
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any assignee shall be guaranteed by any such assignor and (b) a Carrier may also
assign its rights or obligations to a controlling parent corporation without the
consent of BellSouth
H. Any liabilities or obligations of a party for acts or omissions
prior to the cancellation or termination of this Agreement, any obligation of a
party under the provisions regarding indemnification, Confidential Information,
limitations on liability, and any other provisions of this Agreement which, by
their terms, are contemplated to survive (or to be performed after) termination
of this Agreement, shall survive cancellation or termination thereof.
I. Whenever any-provision of this Agreement refers to a technical
reference, technical publication, any publication of telecommunications industry
administrative or technical standards, or any other document specifically
incorporated into this Agreement, it will be deemed to be a reference to the
most recent version or edition (including any amendments, supplements, addenda,
or successors) or such documents that is in effect, and will include the most
recent version or edition (including any amendments, supplements, addenda, or
successors) or each document incorporated by-reference in such a technical
reference, technical publication, or publication of industry standards. Should
there be an inconsistency between or among publications or standards, the
parties shall mutually agree upon which requirement shall apply.
J. The drafting of this Agreement was a collaborative effort between
the parties. Accordingly, in connection with the interpretation for any reason
of any provision of this Agreement, there shall be no inference drawn against
the party that drafted such provision.
XXII. EXECUTION
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, and which together shall constitute a single
agreement. A facsimile copy of a party's execution of this Agreement shall be
valid and binding upon the party and must be followed as soon as practicable
thereafter by the original version of such execution.
XXIII. NOTICES
A. Every notice, consent, approval, or other communications required or
contemplated by this Agreement shall be in writing and shall be delivered in
person, via overnight mail, or given by postage prepaid mail, address to:
BELLSOUTH TELE COMMUNICATIONS, INC. TRITEL COMMUNICATIONS, INC.
675 W. Peachtree St. N.E. 112 E. State Street, Suite B
Suite 4300 Ridgeland, Mississippi 39157
Atlanta, Georgia 30375 Attn: Mr. Roland Patterson
Attn: Legal Dept. "Wireless" Attorney Senior Director of Technical Facilities
Copy to:
Walt Sapronov, Esq.
Gerry, Friend & Sapronov, LLP
Three Ravinia Drive, Suite 1450
Atlanta, Georgia 30346-2131
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or at such other address as the intended recipient previously shall have
designated by written notice to the other party.
B. Where specifically required, notices shall be by certified or
registered mail. Unless otherwise provided in this Agreement, notice by mail
shall be effective on the date it is officially recorded as delivered by return
receipt or equivalent, and in the absence of such record of delivery, it shall
be presumed to have been delivered the fifth day, or next business day after the
fifth day, after it was deposited in the mails; and by overnight mail, the day
after being sent.
XXIV. ENTIRE AGREEMENT
This Agreement and its Attachments, incorporated herein by this
reference, sets forth the entire understanding and supersedes prior agreements
between the parties relating to the subject matter contained herein and merges
all prior discussions between them, and neither party shall be bound by any
definition, condition, provision, representation, warranty, covenant or promise
other than as expressly stated in this Agreement or as is contemporaneously or
subsequently set forth in writing and executed by a duly authorized officer or
representative of the party to be bound thereby. In the event of any conflict
between the term(s) of this Agreement and those of an applicable tariff, the
terms of this Agreement shall control.
BELLSOUTH TELECOMMUNICATIONS, INC. TRITEL COMMUNICATIONS, INC.
By:_______________________________ By:______________________________
Jerry D. Hendrix Jerry M. Sullivan, Jr.
- ---------------------------------- ----------------------------------
Name Name
Director Executive Vice President
- ---------------------------------- ----------------------------------
Title Title
______________________________ ______________________________
Date Date
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ATTACHMENT B-1
CMRS Local Interconnection Rates
--------------------------------
(All rates are Per Minute of Use)
Alabama
- -------
Type 1 (End Office Switched): $.004709
Type 2A (Tandem Switched): $.004709
Type 2B (Dedicated End Office): $.0017
Florida
- -------
Type 1 (End Office Switched): $.003776
Type 2A (Tandem Switched): $.003776
Type 2B (Dedicated End Office): $.002
Georgia
- -------
Type 1 (End Office Switched): $.004513
Type 2A (Tandem Switched): $.004513
Type 2B (Dedicated End Office): $.00160
Kentucky
- --------
Type 1 (End Office Switched): $.005273
Type 2A (Tandem Switched): $.005273
Type 2B (Dedicated End Office): $.002562
Mississippi
- -----------
Type 1 (End Office Switched): $.009104
Type 2A (Tandem Switched): $.009104
Type 2B (Dedicated End Office'): $.0026
Tennessee
- ---------
Type 1 (End Office Switched): $.003767
Type 2A (Tandem Switched): $.003767
Type 2B (Dedicated End Office): $.0019
21
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Attachment C-1
Unbundled Products and Services and New Services
Service: Subscriber Listing Information
Description: Subscriber primary listing information provided at no charge and
in an acceptable format will be published at no charge as
standard directory listings in an alphabetical directory
published by or for BellSouth at no charge to each ALEC end user
customer.
State(s): All
Rates (1) No charge for ALEC-1 customer primary listings.
(2) Additional listings and optional listings may be provided by
BellSouth at rates set forth in BellSouth's intrastate General
Subscriber Services Tariffs.
22
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Attachment C-13
Unbundled Products and Services and New Services
Service: Virtual Collocation
Description: Virtual Expanded Interconnection Service (VEIS) provides
for location interconnection in collocator
provided/BellSouth leased fiber optic facilities to
BellSouth's switched and special access services, and local
interconnection
facilities.
Rates, Terms and Conditions:
State(s): All except Florida: In all states except Florida, the rates, terms
and conditions will be applied as set forth in
Section 20 of BellSouth Telecommunication's,
Inc. Interstate Access Service Tariff, FCC
No. 1.
State: Florida In the state of Florida, the rates, terms and
conditions will be applied as set forth in
Section E20 of BellSouth Telecommunication's,
Inc. Intrastate Access Service Tariff.
- -------------------------------------------------------------------------------
Service: Physical Collocation
Description: Per FCC - (10/19/92 FCC Order, para 39)
Physical Collocation is whereby "the interconnection
party
pays for LEC central office space in which to locate the
equipment necessary to terminate its transmission links,
and
has physical access to the LEC central office to install,
maintain, and repair this equipment."
State(s): All
Rates, Terms and Conditions: To be negotiated
23
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EXECUTION COPY
AGREEMENT
FOR
PROJECT AND CONSTRUCTION
MANAGEMENT SERVICES
BETWEEN
TRITEL COMMUNICATIONS, INC. AND TRITEL FINANCE, INC.
AND
BECHTEL CORPORATION
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TABLE OF CONTENTS
ARTICLE PAGE NO.
1.0 Project............................................................1
2.0 Contractor's Services..............................................1
3.0 Information and Items to be Furnished by Owner.....................3
4.0 Notice to Proceed and Time of Performance..........................4
5.0 Compensation and Payment...........................................4
6.0 Accounting of Costs................................................5
7.0 Changes and Extra Work.............................................5
8.0 Notice and Acceptance of Completion................................5
9.0 Responsibility of Contractor.......................................6
10.0 Insurance..........................................................8
11.0 Ownership of Plans and Title to Work...............................9
12.0 Force Majeure.....................................................12
13.0 Termination.......................................................12
14.0 Suspension of Services............................................13
15.0 Notices...........................................................13
16.0 Representative of the Parties.....................................14
17.0 Transfer of Ownership.............................................14
18.0 Assignment and Subcontracts.......................................15
19.0 Fair Operation of Agreement.......................................15
20.0 Dispute Resolution................................................15
21.0 Applicable Law....................................................16
22.0 Successors and Assigns............................................16
23.0 Severability......................................................16
24.0 Entire Agreement..................................................16
25.0 Disclosure........................................................17
ATTACHMENT A Scope of Services A-1
ATTACHMENT B Compensation B-1
ATTACHMENT C Description of Contractor Positions C-1
ATTACHMENT D Staffing Plan and Estimated ODCs D-1
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AGREEMENT
FOR
PROJECT AND CONSTRUCTION
MANAGEMENT SERVICES
THIS AGREEMENT ("Agreement") is entered into this 24th day of November, 1998, by
and between TRITEL COMMUNICATIONS, INC. and TRITEL FINANCE, INC. (jointly,
"Owner"), and BECHTEL CORPORATION ("Contractor") but shall be effective as of
the date final approval by Owner's board(s) of directors is obtained. Owner
shall notify Contractor in writing promptly of the date that such final approval
is obtained and confirming the effective date of this Agreement. Contractor
agrees to furnish the skill and judgment specified in Paragraph 9.1 in
furthering the interests of Owner. Contractor agrees to furnish efficient
administration and management services as described in this Agreement and to
perform such services in an expeditious and economical manner consistent with
this Agreement and the best interests of Owner.
1.0 THE PROJECT
1.1 The project consists of the build-out of a Personal Communications System
incorporating PCS-sites and mobile switching centers (individually, an "MSC")
located in the States of Alabama, Georgia, Indiana, Kentucky, Louisiana,
Mississippi and Tennessee, in the United States of America. As used herein, the
term "Project" or PCS System" shall mean only those areas of the project
described above that are assigned to Contractor by Owner.
1.2 The Project will be described more particularly in the drawings, plans and
specifications to be prepared by Contractor or by other retained design
professionals (whose services will be procured as provided in this Agreement)
and approved by Owner under this Agreement.
2.0 CONTRACTOR'S SERVICES
2.1 Contractor will perform, or cause to be performed, the services (hereinafter
referred to as the "Services") generally described below which are more fully
described in Attachment A ("Scope of Services"), attached hereto and made a part
hereof, and the Services shall be performed by Contractor with respect to such
PCS-sites and MSC locations as are assigned by Owner to Contractor. Contractor
shall perform the Services in accordance with the standard set forth in
Paragraph 9.1, in compliance with all local, city, county, state and federal
laws, rules, regulations, statutes and ordinances now in effect or hereafter
enacted, and in compliance with Owner's instructions issued from time to time
(to the extent not inconsistent with the preceding standards). Contractor shall
use reasonable good faith efforts to minimize turnover of Project personnel.
2.2 Contractor will provide the overall coordination and administration for the
Project as described in the Scope of Services, including, but not limited to:
2.2.1 providing a preliminary assessment of the Project budget taking into
account the activities contemplated for the Project;
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2.2.2 consulting with any design professionals and Owner concerning the Project
and development of Project plans, drawings and specifications;
2.2.3 providing recommendations on construction feasibility, actions designed to
minimize adverse effects of labor or material shortages, time requirements for
procurement, installation and construction completion, and factors related to
construction costs including estimates of alternate designs or materials; and
providing preliminary budgets and possible economies and budgets detailing
Contractor's anticipated man hours and expenses for the Project on a per
PCS-site and MSC basis;
2.2.4 preparing and periodically updating Project schedules for Owner's
approval, such schedules coordinated and integrated with all equipment, services
and activities provided by others in connection with the Project;
2.2.5 developing and recommending milestone completion dates for the Project;
2.2.6 recommending to Owner phases and timing of issuance of drawings and
specifications to facilitate phased construction of the work taking into
consideration such factors as economies, time of performance, availability of
labor and materials and provisions for temporary facilities;
2.2.7 providing contract administration services, including preparing Owner's
construction documents (such as bid packages and contracts) for the Project for
Owner's approval;
2.2.8 identifying and recommending possible contractors, including suppliers of
materials and equipment for approval and signing by Owner;
2.2.9 recommending to Owner a schedule of procurement for long-lead time items
which constitute part of the work as required to meet the Project schedules;
2.2.10 providing monthly (or such other interval as may be approved by Owner)
written reports to Owner on the progress of the Project to include problems
encountered or other similar relevant data as to all sites for the Project as
Owner may reasonably require;
2.2.11 developing systems of cost control for the Project, including regular
monitoring of actual costs for activities in progress and estimates for
uncompleted tasks and proposed changes;and
2.2.12 administering and coordinating Owner's design professionals, contractors
and suppliers and any other persons performing any work or supplying any
materials for the Project.
2.3 Contractor shall perform the Services as an agent of Owner. Regarding such
capacity as an agent of Owner, upon request Owner shall confirm to third parties
Contractor's authorization to so act for and on behalf of Owner.
2.4 Nothing in this Agreement is intended or shall be construed to constitute
Owner, or any of its employees, agents or contractors, as an employee, agent or
partner of Contractor, nor shall Owner, or any of its employees, agents or
contractors have, authority to bind Contractor in any respect except as may be
provided by written agreement.
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2.5 Contractor's employees, agents and subcontractors shall not be treated as
employees of Owner for any purpose including, but not limited to, federal or
state tax purposes. Contractor shall be solely responsible for the filing of all
tax returns required by law to be filed by Contractor relating to its
performance of the Services, and the payment of all contributions, payments and
taxes, required by law to be filed or paid by Contractor relating to the
performance of the Services by Contractor and its employees, agents and
subcontractors.
3.0 INFORMATION AND ITEMS TO BE FURNISHED BY OWNER
3.1 Owner shall furnish to Contractor in a timely manner available data and
other information to provide the basis upon which Contractor shall perform the
Services. Contractor warrants that it has sufficient data and other information
to commence performance of the Services on the effective date of this Agreement.
3.2 Upon receipt of documents, reports, plans or data from Contractor for
approval, Owner will promptly (and in any event within fifteen (15) days of
their receipt) either approve or disapprove, or furnish other written
instructions to Contractor with respect to said documents, reports, plans or
data. If Owner's written approval or disapproval or other written instruction is
not furnished to Contractor within such fifteen (15) day period, such documents,
reports, plans or data will be deemed to be approved.
3.3 Owner shall furnish sites for the Project and, subject to applicable advance
notice requirements existing in favor of any third parties, shall furnish to
Contractor and Owner's contractors unobstructed access to the sites and all
other locations involved in the performance of the Services.
3.4 Solely with respect to Owner's main Project office in Jackson and regional
Project offices covering areas assigned to Contractor, Owner shall furnish as
reasonably necessary for Contractor's performance of Services the following
items which shall be of substantially comparable kind and quality to those
furnished by Owner to its employees: office space; office equipment; computers;
phone systems; communications networks and connectivity to Contractor's support
offices; and office supplies. Upon the termination or expiration of this
Agreement, Contractor shall return such items to Owner undamaged (taking into
account normal wear and tear).
3.5 Owner and Contractor will establish the general terms and conditions,
including warranties, to be incorporated into all bid packages, contracts, and
purchase orders entered into by Owner for the Project. With respect to any
contracts with others relating to the Project and entered into after the
execution of this Agreement, Owner agrees that Contractor shall be designated as
Owner's agent and that all indemnity, all release and all hold harmless
agreements contained in such contracts and purchase orders whereby the
contractor or supplier agrees to indemnify, release or hold Owner harmless shall
be extended to protect Contractor.
3.6 Owner shall make direct commitments for all services, machinery, equipment,
materials and supplies required for incorporation into the Project or for use in
construction thereof and for the performance of all construction and other work,
and shall make payments directly for such
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commitments; provided that Contractor shall provide the accounting and
controller management services set forth in Attachment A.
3.7 Owner shall furnish or secure the information, items and approvals required
to be furnished or secured by it at such times and in such manner as may be
reasonably required for the expeditious and orderly performance of the Services
by Contractor.
4.0 NOTICE TO PROCEED AND TIME OF PERFORMANCE
4.1 Contractor shall commence the performance of its Services upon the effective
date of this Agreement, which date shall be deemed the date of Notice to
Proceed.
4.2 Subject to the termination provisions of Article 13.0 (Termination), the
term of this Agreement is two (2) years from the effective date of this
Agreement but may, subject to Article 7.0 (Changes and Extra Work), be extended
by mutual agreement of the parties.
5.0 COMPENSATION AND PAYMENT
5.1 For the performance of the Services, Owner agrees to pay Contractor, in the
manner and at the times specified, the Compensation consisting of Hourly Unit
Rate Payments and Other Direct Costs (jointly, "Compensation"), and make
available the amounts needed for Owner to pay the Owner Costs, as such terms are
defined in Attachment B, attached hereto and by this reference made a part
hereof
5.2 In addition, promptly after the effective date of this Agreement, Contractor
shall invoice Owner for any remaining amounts due for work performed by
Contractor under the Letter of Intent between Owner and Contractor dated August
10, 1998, as amended. Owner shall pay Contractor such invoiced amounts within
thirty (30) days after receipt of the invoice.
5.3 Any amounts due and remaining unpaid after the due date shall accrue
interest, commencing on the day after the due date and compounded for each day
thereafter until the date paid, at the rate equal to [CONFIDENTIAL TREATMENT
REQUESTED] above the prime lending rate quoted to substantial and responsible
commercial borrowers on ninety-day loans by the Morgan Guarantee Trust Company,
New York, on each day such interest accrues.
5.4 Any terms or conditions set forth on any invoice which are inconsistent with
or in addition to the terms and conditions set forth in this Agreement shall be
of no effect. Each invoice for Compensation shall include the following
information: first, in support of the Hourly Unit Rate Payments, the name and
position of Contractor's employees that have performed Services during the
period covered by the invoice, the number of hours worked by each such employee
during that same period, the Hourly Unit Rate applicable to each such employee
and the total amount payable to Contractor for Hourly Unit Rate Payments;
second, in support of the Other Direct Costs, the total amount owed for the
Other Direct Costs during the period covered by the invoice, a description of
the type of Other Direct Costs included in the invoice, a breakdown on a
market-by-market basis of where the Other Direct Costs were incurred, and
receipts to support any Other Direct Costs in excess of twenty-five dollars; and
third, in support of the Owner Costs, the relevant invoices of Owner's
contractors and suppliers.
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6.0 ACCOUNTING OF COSTS
6.1 Contractor shall maintain books and accounts of the time expended by its
personnel and of the Other Direct Costs in accordance with generally accepted
accounting principles and practices consistently applied. Owner, during
Contractor's normal business hours for the duration of this Agreement and for a
period of three (3) years after the completion of the Services, shall have
access to these books and accounts to the extent required to verify the hours
charged for which Hourly Unit Rate Payments were received and the Other Direct
Costs (excluding the development of established or standard allowances and
rates) incurred hereunder. A copy of all records relating to the payments made
out of the Owner's Zero Balance Operating Account shall be turned over to Owner
at the conclusion of the Project.
7.0 CHANGES AND EXTRA WORK
7.1 Owner may require or approve changes within the general scope of
Contractor's Services hereunder by a written Change Order, or may request extra
work to be mutually agreed upon.
7.2 In the event any such change causes an increase or decrease in the time for
performing Contractor's Services, the parties shall agree upon an equitable
adjustment of the schedule obligations to the extent they are affected by such
change. Contractor's staffing plan that is mutually agreed upon in accordance
with and for the purposes described in Paragraph I a of Attachment B and the
determination of the applicable Hourly Unit Rate Payments under that Paragraph
shall also be subject to an equitable adjustment to the extent affected by any
such scope change or by any changed circumstances outside of Contractor's
control, including Force Majeure events, changes in law, and Owner's delay in
performing its obligations hereunder.
7.3 Owner reserves the right to direct Contractor to reduce the number of
Contractor's personnel assigned to the Project at any time upon thirty (30) days
prior written notice to Contractor of such reduction. Further, Owner reserves
the right to reduce the number of PCS-sites and/or MSCs assigned to Contractor
at any time. Any such reductions shall be without penalty to Owner.
8.0 NOTICE AND ACCEPTANCE OF COMPLETION
8.1 Upon completion of Services in connection with a particular PCS-site or MSC,
Contractor may, and upon completion of the Services for the Project, Contractor
shall, notify Owner in writing of the date of said completion and request
confirmation thereof by Owner. Upon receipt of such notice, Owner shall confirm
to Contractor in writing that the Services referred to in such notice were
completed on the date indicated in such notice, or provide Contractor with a
written listing of the Services not completed.
8.2 If Owner does not respond to Contractor's initial notice of completion
within thirty (30) days, Contractor shall provide Owner with a second notice of
completion. Any Services included in Contractor's second notice to Owner and not
listed by Owner as incomplete in a listing delivered to Contractor within
fifteen (15) days of receipt of said second notice, shall be deemed complete and
accepted by Owner.
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8.3 With respect to Services listed by Owner as incomplete, Contractor shall
complete such Services and the above acceptance procedure shall be repeated.
8.4 In the event Owner does not respond to Contractor's second notice within
fifteen (15) days after receipt of any such second notice, the Services included
in such second notice shall be deemed complete and accepted by Owner.
9.0 RESPONSIBILITY OF CONTRACTOR
9.1 Contractor will perform its Services, with that degree of skill and judgment
that is normally exercised by recognized international professional engineering,
construction and construction management firms with respect to services of a
similar nature. Contractor shall reperform at its expense any professional
services which are (a) deficient because of Contractor's failure to perform any
such Services in accordance with the above standard, and (b) reported in writing
to Contractor within a reasonable time, not to exceed thirty (30) days, after
the discovery thereof, but in no event later than the first to occur of (i)
twenty-four (24) months after the completion and acceptance of the applicable
Services, and (ii) one (1) year after the assigned PCS-site or MSC location to
which the Services apply has been placed in commercial service. Except as set
forth above in this Paragraph 9.1, Contractor's responsibility hereunder with
respect to each individual PCS-site and MSC location shall terminate upon the
completion and acceptance of Services with respect to such PCS-site or MSC
location. The warranty set forth in this Paragraph 9.1 is the sole and exclusive
warranty of Contractor in connection with the Services and Contractor hereby
disclaims and Owner waives any other express, implied or statutory warranties,
including warranties of merchantability or fitness for a particular purpose.
9.2 Owner acknowledges that the work required to complete the Project shall
require the involvement and assistance of other professionals and service
companies ("Independent Contractors") which shall include but not be limited to
architects, RF and civil engineers, site acquisition consultants, environmental
consultants, geotechnical firms, surveyors, graphic artists, and construction
crews. Contractor shall make reasonable efforts to locate and interview
Independent Contractors as agent for Owner. Privity of contract shall exist only
between Owner and the Independent Contractors with respect to the services to be
performed by the Independent Contractors pursuant to express written agreements
that are executed by Owner and such Independent Contractors. Owner shall grant
or deny approval of any Independent Contractor recommended by Contractor and may
terminate the services of an Independent Contractor for good cause or otherwise
upon appropriate notice to the Independent Contractor. Contractor shall
coordinate and manage the services of the Independent Contractors as agent for
Owner, subject to any limitations on Contractor's authority mutually agreed by
the parties . Owner shall be solely responsible for the payment of invoices
submitted by the Independent Contractors; provided that Contractor shall provide
the accounting and controller management services set forth in Attachment A.
Owner shall indemnify Contractor from any and all claims, losses, costs or
expenses associated with the services provided by the Independent Contractors,
except to the extent that the same arise from the failure of Contractor to
coordinate, monitor and manage the services of the Independent Contractors or
otherwise perform the Services as required by this Agreement.
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9.3 In conjunction with meeting Contractor's obligations as set forth in
Attachment A hereto, Contractor shall be responsible for inspecting the work of
Independent Contractors and/or their subcontractors on the construction sites
from time to time or as directed by Owner to monitor compliance by such
Independent Contractors with their contractual responsibilities to Owner. With
regard to work quality and safety, Contractor's obligations are to report any
deficiencies or instances of noncompliance by such Independent Contractors to
Owner and to make recommendations on how to remedy such deficiencies or such
noncompliance, recognizing that Contractor is providing project management
services and that Owner will look to the Independent Contractors to remedy any
deficiencies in their work quality and for implementation of the safety
programs. With respect thereto, Contractor shall be responsible for inspecting
from time to time construction means, methods, techniques, sequences,
procedures, or safety precautions and programs implemented by such Independent
Contractors in connection with the Project in order to monitor compliance by
such Independent Contractors and/or their subcontractors with all construction
specifications and their related contractual obligations to Owner, including
compliance with federal, state, or local laws, regulations and codes as they
pertain to the actual construction work.
9.4 Except for any liabilities arising under the third-party indemnity set forth
in Paragraph 9.7, in no event shall Contractor's liability to Owner, however
caused, exceed in the cumulative aggregate an amount equal to $ 10,000,000 (Ten
Million Dollars), and Owner hereby releases Contractor from any liability in
excess thereof.
9.5 Owner's and Contractor's remedies specified in this Agreement are the sole
and exclusive remedies of either party for liabilities arising out of or in
connection with this Agreement.
9.6 Except for Contractor's obligations set forth in Paragraph 3.4, Contractor's
liability for loss of or damage to the Project or other property of Owner or in
the custody of Owner (including any leased property) shall be limited to those
payments made on Contractor's behalf by the insurers affording the insurance
described in Paragraph 10.2, and Owner hereby releases and agrees to indemnify
Contractor from any loss, damage or expense in excess of those payments.
9.7 Contractor agrees to indemnify, defend and hold harmless Owner and its
directors, officers, partners, agents and employees from and against any
third-party claims for personal injury to or death of persons and for loss of or
damage to third-party property (including reasonable attorneys' fees and
expenses) to the extent resulting from or arising out of the negligence or
willful misconduct of Contractor. Contractor shall not be required to indemnify
Owner for any act or omission of Contractor which is done at the express
direction of Owner, except to the extent that Contractor acts (or fails to act)
in a negligent manner in carrying out Owner's instructions.
9.8 In no event shall either party, it officers, agents or employees or its
subcontractors, or contractors or suppliers of any tier providing equipment,
materials or services for the Project be liable to the other party for
consequential loss or damage, including, but not limited to, loss of use, loss
of profit or loss of revenue, and each party hereby releases the other party,
its respective
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officers, agents, employees, subcontractors, contractors and suppliers from and
against such liability.
9.9 The releases from liability and limitations on liability expressed in this
Agreement shall apply even in the event of the fault, negligence in whole or in
part, strict liability, breach of contract or otherwise, of the party released
or whose liability is limited and shall extend to the subcontractors and related
entities of such party and its and their directors, officers and employees.
10.0 INSURANCE
10.1 Contractor Insurance
Contractor has in force and will maintain during the performance of the
Services, the following insurance:
10.1.1 Workers' Compensation covering Contractor's employees, and Employers'
Liability Insurance as required by applicable law but in no event with a limit
of less than $ 1,000,000 per occurrence and in the aggregate .
10.1.2 Automobile Bodily Injury and Property Damage Liability Insurance covering
all owned, non-owned or hired by Contractor automobiles or automotive equipment,
with limits as follows:
Bodily Injury and Property Damage: $2,000,000 combined single limit each
occurrence
10.1.3 Comprehensive Crime coverage with limits of $10,000,000 per occurrence.
10.1.4 Owner, Airwave Communications, LLC and Digital PCS, LLC shall be named as
an additional insureds under the insurance required by Paragraph 10.1.2, and
Contractor shall furnish Owner a certificate evidencing each such policy of
insurance in Paragraph 10.1 which shall also include a waiver of subrogation in
favor of Owner, Airwave Communications, LLC and Digital PCS, LLC. Such policies
shall provide that written notice shall be given to Owner and each other
additional insured thirty (30) days prior to cancellation or material change of
any protection which said policies provide for Owner and each other additional
insured.
10.2 Owner's Project Insurance
Prior to commencement of Services at the Project sites, Owner shall take out,
carry and maintain, during the performance of the Services and for such
additional period as hereinafter specified, the following Project Insurance
covering Owner, Contractor and all contractors and subcontractors of every tier
as Named Insureds. Such insurance shall include a waiver of subrogation in favor
of all Named Insureds.
10.2.1 Third-Party Losses and Damages
Comprehensive Bodily and Personal Injury and Property Damage Liability
Insurance, including contractual Broad Form Property Damage Cover and completed
operations coverage, but
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excluding coverage for automobile liability and automobile physical damage which
should be insured by each contractor and subcontractor. The policy limit will be
a combined single limit for Personal Injury and Property Damage of not less than
$ 10,000,000 each occurrence, with a cross-liability or severability of interest
clause, and covering against liabilities arising out of or in any way connected
with the Project, including personal injury claims against any insured by
employees of any other insured. Such insurance shall state that it is primary
and that any other insurance carried by the Named Insureds shall be specific
excess and not contributing therewith. This insurance shall not contain any
exclusion which denies coverage because liability for injuries to persons or
damage to property arising out of the preparation of maps, plans, designs,
specifications, or the performance of inspection services or out of any other
Services to be performed by Contractor under this Agreement. This insurance
shall not cover bodily injury or disease to Contractor's employees otherwise
covered under the Workers' Compensation coverage required in Paragraph 10.1.1.
This insurance shall be maintained in force until three (3) years after
acceptance or termination of the Services.
10.2.2 Builder's Risk or Course of Construction Insurance
Builder's Risk or Course of Construction Insurance, insuring on an "All Risks"
basis with a limit of not less than the full insurable replacement cost of the
Project, subject to reasonable and customary deductible amounts as selected by
Owner, and covering the Project and all materials and equipment to be
incorporated therein, including property in transit, in storage or elsewhere.
Such insurance shall state that it is primary, shall include coverage for
physical damage resulting in any way from the Services, including physical loss
or damage resulting from design error, faulty workmanship or defective
materials, and shall include an insurer's waiver of subrogation or right of
recourse in favor of each Named Insured thereunder. Furthermore, such insurance
shall remain in effect until the entire Project is completed and accepted by
Owner.
10.3 Special Provisions
Owner shall furnish Contractor a certificate evidencing each such policy of
insurance or, upon Contractor's request, a copy of each policy of insurance
required by Paragraph 10.2. Such policies shall provide that written notice
shall be given to Contractor thirty (30) days prior to cancellation or material
change of any protection which said policies provide for Contractor.
10.4 Insurance by Others
In the event Owner elects to cause any of the insurance described in Paragraph
10.2 to be carried by a party other than Owner or Contractor, Owner hereby
agrees to cause such other party to arrange the insurance as herein provided.
11.0 OWNERSHIP OF PLANS, TITLE TO WORK AND CONFIDENTIAL INFORMATION
11.1 All drawings, plans, specifications, findings and reports, developed by
Contractor under this Agreement shall become the exclusive property of Owner for
unrestricted use by Owner. All such drawings, plans and specifications shall at
Owner's request be delivered to Owner upon completion of such Services, but
Contractor may retain and use copies thereof and the
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information contained therein for internal purposes, and shall at all times
retain the copyright to its copyrightable work product, provided, however,
Contractor hereby grants Owner a perpetual license to use any such
copyrighted/copyrightable work product.
11.2 All portions of the Project completed or in the course of construction at
the job sites shall be the sole property of Owner, and the title to such
materials, equipment and supplies, the costs of which are Other Direct Costs,
shall pass immediately to and vest in Owner upon the happening of any event by
which title passes from the vendor or supplier thereof.
11.3 As used in this Agreement, "Confidential Information" means all information
of either party that is not generally known to the public, whether of a
technical, business or other nature (including, without limitation, trade
secrets, know-how and information relating to the technology, customers,
business plans, promotional and marketing activities, finances and other
business affairs of such party), that is disclosed by one party (the "Disclosing
Party") to the other party (the "Receiving Party") and that is marked or
otherwise designated in writing as confidential. Confidential Information may be
contained in tangible materials, such as drawings, models, data, specifications,
reports, compilations and computer programs, or may be in the nature of
unwritten knowledge. In addition, Confidential Information includes all
information that the nondisclosing party may obtain by walk-through examination
of the Disclosing Party's premises, or concerning the existence, progress and
contents of the discussions between the parties to the extent the disclosure of
such information to unauthorized third persons could reasonably be expected to
materially adversely affect the Owner's interests. For purposes of this
Agreement but without limiting the scope of the definition of Confidential
Information, the number, location, configuration and status of all proposed
sites in the PCS System and any associated financial information, as well as the
timetable and operational status of the PCS System itself, shall be deemed to be
Confidential Information of Owner.
11.4 The Receiving Party, except as expressly provided in this Agreement, shall
not disclose Confidential Information to anyone without the Disclosing Party's
prior written consent. The Receiving Party may disclose Confidential Information
to third parties providing services or goods in connection with the Project to
the extent necessary for such third party to perform its work. The Receiving
Party will not use, or permit others to use, Confidential Information for any
purpose other than performing their obligations under this Agreement or, if to a
third party performing work in connection with the Project, then under such
third party's Project agreement. The Receiving Party will take all reasonable
measures to avoid disclosure, dissemination or unauthorized use of Confidential
Information, including at a minimum those measures it takes to protect its own
Confidential Information of a similar nature.
11.5 The provisions of Paragraph 11.4 will not apply to any information that (i)
is or becomes publicly available without breach of this Agreement; (ii) can be
shown by documentation to have been known to the Receiving Party at the time of
its receipt from the Disclosing Party, (iii) can be shown by documentation to
have been independently developed by the Receiving Party without reference to
any Confidential Information, or (iv) was received by the Receiving Party from a
third party either not subject to a confidentiality obligation or not otherwise
prohibited from transmitting the information to the Receiving Party.
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11.6 The Receiving Party shall restrict the possession, knowledge, development
and use of Confidential Information to its employees, agents, subcontractors and
entities controlled by it or under common control with it (collectively,
"Personnel") who have a need to know such Confidential Information in connection
with the purposes set forth in this Agreement. The Receiving Party's Personnel
shall have access only to the Confidential Information they need for such
purposes. The Receiving Party shall ensure that its Personnel comply with this
Agreement.
11.7 If the Receiving Party becomes legally obligated to disclose Confidential
Information by any governmental entity with jurisdiction over it, the Receiving
Party shall give the Disclosing Party prompt written notice sufficient to allow
the Disclosing Party to seek a protective order or other appropriate remedy. The
Receiving Party shall disclose only such information as is legally required and
will use its reasonable best efforts to obtain confidential treatment for any
Confidential Information that is so disclosed.
11.8 All Confidential Information shall remain the exclusive property of the
Disclosing Party, and the Receiving Party shall have no rights, by license or
otherwise, to use the Confidential Information except as expressly provided
herein.
11.9 The Receiving Party acknowledges (1) that the use, misappropriation or
disclosure of the Confidential Information in a manner inconsistent with this
Article 11.0 would cause irreparable injury to the Disclosing Party, (ii) that
all such Confidential Information is the property of the Disclosing Party and
(iii) that it is essential to the protection of the Disclosing Party's goodwill
and to the maintenance of the Disclosing Party's competitive position that the
Confidential Information be kept secret and that the Confidential Information
not be disclosed by the Receiving Party to others or used by the Receiving Party
to the Receiving Party's own advantage or the advantage of others, except as
permitted herein. The Receiving Party further acknowledges that the Receiving
Party's agreement to the provisions of this. Article 11.0 and the enforceability
of such provisions against the Receiving Party are an essential element of this
Agreement and that, absent such provisions and the enforceability thereof, the
Disclosing Party would neither (a) enter into this Agreement nor (b) permit the
Receiving Party access to and use of Confidential Information.
11.10 Each party acknowledges that the provisions of this Article 11.0 of this
Agreement are material to the other party, that the other party would not have
entered into this Agreement if it did not include Article 11.0, and that the
damages sustained by the other party as a result of a breach of this Article
cannot be adequately remedied by damages at law. Each party therefore agrees
that the other party, notwithstanding any other provision of this Agreement and
in addition to any other remedy it may have at law, shall be entitled to
injunctive and any other equitable relief to prevent or curtail any breach of
this Article.
11.11 The provisions of this Article 11.0 shall survive expiration or
termination of this Agreement and shall remain binding for a period of three
years from the termination or expiration of this Agreement.
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12.0 FORCE MAJEURE
12.1 Neither party hereto shall be considered in default in the performance of
its obligations hereunder to the extent that the performance of any such
obligation, except the obligation for payment of money, is prevented or delayed
by any cause, existing or future, which is beyond the reasonable control of the
affected party, or by a strike, lockout or other labor difficulty, the
settlement of which shall be within the sole discretion of the party involved
(individually or in the aggregate, a "Force Majeure").
12.2 Each party hereto shall give notice promptly to the other of the nature and
extent of any Force Majeure claimed to delay, hinder or prevent performance of
the Services under this Agreement. In the event either party is prevented or
delayed in the performance of its obligations by reason of such Force Majeure,
the parties shall meet and agree upon an equitable adjustment of the schedule
obligations and other affected provisions of this Agreement.
13.0 TERMINATION
13.1 Owner may for its convenience terminate Contractor's Services at any time
by giving Contractor thirty (30) days prior written notice of such termination,
whereupon Contractor shall:
13.1.1 Stop the performance of Services terminated hereunder except as maybe
necessary to carry out such termination;
13.1.2 Terminate, to the extent possible and at Owner's request, outstanding
contracts, subcontracts or purchase orders relating to the Services terminated;
and
13.1.3 Take any other action toward termination of Services which Owner may
reasonably direct.
13.2 This Agreement may be terminated by either party hereto by written notice
to the other party at any time upon a material breach by the other party of any
of the provisions of this Agreement and the breaching party's failure to cure
such breach within thirty (30) days, or such longer period as the parties may
mutually agree to in writing, after its receipt of written notice thereof from
the non-breaching party.
13.3 Should Owner elect to terminate this Agreement for cause under Paragraph
13.2, Contractor will be required to apprise replacement personnel of all
aspects of the Project for a period of thirty (30) days from the effective date
of the termination and shall promptly turn over all documentation prepared in
conjunction with or pertaining to the Project that is the property of Owner.
Should Owner elect to terminate this Agreement for convenience under Paragraph
13.1, Contractor will be required to apprise Owner's replacement personnel (and
not any personnel of a replacement contractor) of all aspects of the Project for
a period of thirty (30) days from the effective date of the termination and
shall promptly turnover all documentation prepared in conjunction with or
pertaining to the Project that is the property of Owner.
13.4 Upon termination or expiration of this Agreement, Contractor (or its
representatives) shall promptly submit to Owner an invoice covering all unbilled
Compensation and Other Direct Costs, if any, earned or incurred to the date of
termination or expiration together with an estimate
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of the Compensation and Other Direct Costs, if any, that would be chargeable to
Owner if any particular services for work then in progress were to be completed
by Contractor. Upon request by Owner (but not otherwise) Contractor shall
complete such work in progress, including any work required under Paragraph
13.3, as Owner shall designate, and this Agreement shall in such case be deemed
extended with respect to such work only until such work is completed and paid
for. Owner shall pay Contractor for any Services performed up to and including
the date of termination in accordance with Attachment B, including Hourly Unit
Rate Payments and Other Direct Costs reasonably incurred in carrying out the
termination and in performing the obligations set forth in Paragraph 13.1 and
13.3. Contractor shall use reasonable efforts to minimize the amounts payable
hereunder.
14.0 SUSPENSION OF SERVICES
14.1 Owner may suspend the performance of Contractor's Services hereunder in
whole or in part, at any time and from time to time upon thirty (30) days prior
written notice of such suspension. Thereafter, Contractor shall resume the full
performance of the Services when directed to do so by reasonable notice from
Owner.
14.2 In the event of suspension of the performance of the Services at Owner's
request, Contractor shall be entitled to Hourly Unit Rate Payments for Services
performed to carry out the suspension and in reactivating the Services after the
suspension and for Bechtel personnel that Owner requests Contractor to maintain
on standby for the Project. In addition, Contractor shall be entitled to
reimbursement for Other Direct Costs reasonably incurred by Contractor in
suspending the Services and during the period of suspension , and in
reactivating the Services after the end of the suspension period to the extent
that such additional costs are incurred. Owner shall specify in its suspension
notice the anticipated duration of such suspension and its instructions
concerning Contractor's maintaining personnel on standby for the Project. If
Owner does not request personnel to remain on standby, Contractor may reassign
personnel as a result of any suspension of Services hereunder. Contractor will
use reasonable efforts to minimize the amounts payable hereunder. In addition,
Contractor shall be entitled to an equitable adjustment of the schedule
obligations upon any suspension.
14.3 In the event any suspension of the Services exceeds a reasonable time (not
to exceed sixty (60) days in the aggregate), Contractor may terminate its
obligation to perform the Services, without thereby being in default and without
prejudice to any of its rights or remedies under this Agreement, by so notifying
Owner in writing, and any such termination shall be treated as if Owner
terminated for convenience under Article 13.0.
14.4 Contractor may suspend or terminate for cause its obligation to perform the
Services if Owner fails to honor any of the payment provisions for two (2)
successive months. In the event of a suspension under this Paragraph 14.4, the
provisions of Article 14.0 shall apply as if it were an Owner suspension.
15.0 NOTICES
15.1 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
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transmission, or by registered or certified mail (return receipt requested),
postage prepaid, 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):
To Owner:
1410 Livingston Lane
Jackson, MS 39213-8003
Attn: Mr. David Walsh
Fax: (601) 362-2664
With a copy to:
1410 Livingston Lane
Jackson, MS 39213-8003
Attn: Mr. Jerry M. Sullivan, Jr.
Fax: (601) 362-2664
To Contractor:
112B East State Street
Ridgeland, MS 39517
Attn: Mr. Russ Glass
Fax: (601) 898-6259
With a copy to:
3000 Post Oak Boulevard
Houston, TX 77056-6503
Attn: Mr. Lester Hurst
Fax: (713) 965-9914
16.0 REPRESENTATIVE OF THE PARTIES
16.1 Contractor and Owner each hereby appoint the representative designated
below who will be authorized and empowered to act for, and on behalf of, each on
matters within the terms of this Agreement:
Owner's Representative: David Walsh
Contractor's Representative: Russ Glass
This appointment will remain in full force and effect until written notice of
substitution is delivered to the other party.
17.0 TRANSFER OF OWNERSHIP
17.1 Owner represents either that it is the sole Owner of the Project or that it
is authorized to bind and does bind all owners of the Project to the releases
and limitations of liability set forth in this Agreement. Owner may request
Contractor to perform any portion of the Services for the benefit of an
affiliate or subsidiary and in such case, Contractor shall perform the Services
for the benefit of such related entity and Owner shall obtain such related
entity's agreement in writing to be bound by such releases and limitations of
liability such that the total aggregate
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liability of Contractor to Owner and such related entities shall not exceed the
limits of liability set forth in this Agreement.
17.2 Owner agrees that it shall obtain from any direct transferee of Owner's
interest in the Project such transferee's agreement in writing that it will be
bound by such releases and limitations of liability such that the total
aggregate liability of Contractor to Owner and such transferees shall not exceed
the limits of liability set forth in this Agreement.
18.0 ASSIGNMENT AND SUBCONTRACTS
18.1 This Agreement shall not be assigned by either party without the prior
written approval of the other, which approval shall not be unreasonably
withheld. In the event Owner sells its assets in conjunction with an assignment
of Owner's Federal Communication Commission licenses for the PCS System or any
subpart thereof, then Owner may assign the warranty in this Agreement to the
buyer without Contractor's approval.
18.2 Except as set forth below in this Paragraph 18.2, Contractor may not
subcontract its Services or any portion thereof without the prior written
approval of the Owner. Contractor may subcontract portions of the Services to
entities controlled by it or under common control with it without the prior
written approval of Owner. Contractor hereby guarantees to Owner that such
entities will comply with the responsibilities and liabilities herein assumed by
Contractor, and Owner may hold Contractor responsible for any failure to so
comply. Contractor agrees that Owner will incur no duplication of costs or
increased taxes resulting from any such subcontract and shall indemnify and hold
Owner harmless from any such costs or taxes. Owner agrees that the limitations
on Contractor's liability set forth in this Agreement constitute the aggregate
limit of liability of Contractor and its related entities under this Agreement.
19.0 FAIR OPERATION OF AGREEMENT
19.1 In entering into this Agreement, Owner and Contractor recognize that it is
impracticable to make provision for every contingency which may arise during the
life of this Agreement. Owner and Contractor concur in the principle that this
Agreement shall operate between them with fairness and if, in the course of the
performance of this Agreement, an infringement of this principle is anticipated
or disclosed, then Owner and Contractor shall promptly consult together in good
faith in an endeavor to agree upon such action as may be necessary to remove the
cause or causes of such infringement.
20.0 DISPUTE RESOLUTION
20.1 Each party agrees to attempt in good faith to resolve any controversy,
claims, or dispute arising out of or relating to the Agreement or breach thereof
(hereinafter collectively referred to as "Dispute") promptly by negotiation
between representatives of the parties who have authority to settle the Dispute.
The disputing party shall give the other party a written "Notice of Dispute."
The parties shall determine the procedures for the negotiation after the Notice
of Dispute is received. If a Dispute
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has not been resolved within thirty (30) days after the applicable Notice of
Dispute is delivered, either party may pursue its rights under Paragraphs 20.2
and 20.3 below.
20.2 With the exception of any claim under Article 11.0, any Dispute which has
not been resolved in accordance with Paragraph 20.1 above shall be decided by
arbitration in accordance with the Commercial Rules of Arbitration of the
American Arbitration Association then in effect unless the parties mutually
agree otherwise. This Agreement to arbitrate shall be specifically enforceable
under the prevailing arbitration law or the Federal Arbitration Act. The parties
agree that the site of any arbitration shall be Jackson, Mississippi; provided
that any and all arbitrators will come from neutral locations mutually agreeable
to the parties.
20.3 Any award rendered by the arbitrator(s) shall be final and judgment may be
entered upon it in accordance with applicable law in any court having
jurisdiction thereof.
20.4 Unless otherwise agreed in writing, during any such Dispute Contractor
shall perform the Services and maintain the schedule required by this Agreement,
and Owner shall continue to make payments in accordance with this Agreement.
21.0 APPLICABLE LAW
21.1 This Agreement shall be construed and interpreted in accordance with the
internal laws of the State of Mississippi without giving effect to the conflicts
of law principles thereof.
22.0 SUCCESSORS AND ASSIGNS
22.1 Except with respect to any indemnities or releases from or limitations of
liability that expressly cover other parties, 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.
23.0 SEVERABILITY
23.1 In the event that any of the provisions, or portions or applications
thereof, of this Agreement are held to be unenforceable or invalid by any court
of competent jurisdiction or arbitrator, as applicable, Owner and Contractor
shall negotiate in good faith an equitable adjustment in the provisions of this
Agreement with a view toward effecting the original purpose of this Agreement as
closely as possible, and the validity and enforceability of the remaining
provisions or portions or applications thereof shall not be affected thereby.
24.0 GENERAL PROVISIONS
24.1 Any Services (other than those performed under the Amendment to the Letter
of Intent between the parties dated as of September 30, 1998) provided for
herein which were performed by Contractor prior to the effective date of this
Agreement shall be deemed to have been performed under this Agreement. This
Paragraph 24.1 is not intended to modify the compensation provisions applicable
to the Services performed under the Letter of Intent between the parties dated
as of August 10, 1998, as amended.
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24.2 No delay or failure on the part of any Party hereto in exercising any
right, power or privilege under this Agreement or under any other documents
furnished in connection with or pursuant to this Agreement shall impair any such
right, power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right, power or privilege,
or the exercise of any other right, power or privilege under this Agreement. No
waiver shall be valid against any party hereto unless made in writing and signed
by the party against whom enforcement of such waiver is sought and then only to
the extent expressly specified therein.
24.3 Each party to this Agreement represents and warrants to the other party to
this Agreement that neither the execution and delivery of this Agreement nor the
carrying out of any of the transactions contemplated herein will in any respect
result in any violation of or be in conflict with any term or provision of any
agreement, document or instrument to which the representing party is a party or
by which it is bound. Each party to this Agreement further represents and
warrants to the other party to this Agreement that this Agreement has been duly
executed and delivered on behalf of the representing party and constitutes a
valid and binding obligation of the representing party, enforceable in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights and as may
be limited by the exercise of judicial discretion and the application of
principles of equity including, without limitation, requirements of good faith,
fair dealing, conscionability and materiality (regardless of whether this
Agreement is considered in a proceeding in equity or at law).
24.4 To the fullest extent permitted by law, neither party shall be liable to
the other for exemplary or punitive damages.
24.5 This Agreement, together with all agreements, attachments, exhibits and
instruments referred to herein, constitutes the entire agreement between the
parties hereto relating to the subject matter hereof, and supersedes any
previous agreements or understandings and may be modified only in writing signed
by the parties with the same formalities as this Agreement.
24.6 The singular and plural and any gender shall include the other.
24.7 The headings and captions and any index or table of contents in this
Agreement are for convenience only and shall not be considered a part of or
affect the construction or interpretation of any provision of this Agreement.
24.8 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.
25.0 DISCLOSURE
25.1 Contractor shall inform Owner of rebates or discounts, if any, offered by
any services or materials suppliers to Contractor as a result of Contractor's
purchasing activities as agent for Owner hereunder and shall pass on to Owner
any such rebates or discounts.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the day and year first herein above written.
<TABLE>
<CAPTION>
<S> <C>
TRITEL COMMUNICATIONS, INC. TRITEL FINANCE, INC.
By: By:
----------------------------- -----------------------------
Name: Jerry M. Sullivan, Jr. Name: Jerry M. Sullivan, Jr.
--------------------------- ---------------------------
Title: Exec. VP/Chief Operating Officer Title: Exec. VP/Chief Operating Officer
---------------------------------- ----------------------------------
</TABLE>
BECHTEL CORPORATION
By:
------------------------------
Name: L.W. Hurst
----------------------------
Title: Vice President/General Manager
-------------------------------
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ATTACHMENT A
SCOPE OF SERVICES
Contractor will plan, coordinate and manage the assigned work required for the
deployment of Owner's PCS System of PCS-sites and MSC locations for the BTAs
listed at the end of this attachment. Contractor will provide project and
construction management services, including coordination for RF engineering,
site acquisition, site engineering and design, construction, equipment and
material suppliers and other contractors of Owner involved in the implementation
effort and including the services described in this Attachment A.
PROGRAM OFFICE
- --------------
Contractor will establish an "umbrella" organization to provide overall
management of the Project. This organization will be located in Owner's office
in Jackson and will provide project and construction management functions for
the Project. There will be a single Project Manager who will serve as the single
point of contact for Owner for all issues on the Project. All of the Contractor
personnel on the Project will report to the Project Manager.
The Project office will also include other Contractor management personnel
necessary to perform the Services for the Project.
Contractor will develop a Project Execution Plan and Quality Plan for Owner's
approval, establish standards for all Project functions, develop Project level
schedules and budgets and monitor and report on total Project progress.
Contractor will also establish engineering standards and criteria, including
standardized site arrangements and details and will produce a work process flow
chart that shows the responsibilities and interfaces for the design and
construction of a typical PCS-site and for assigned MSC locations.
REGIONAL PROJECT MANAGEMENT TEAMS
- ---------------------------------
Since the construction of the PCS System will be spread across seven states,
five Regional Offices will be established to effectively manage the network
implementation. Preliminary locations for the Regional Offices are:
o Jackson, MS - managing the state of Mississippi, except for the Gulf Coast
o Birmingham, AL - managing the state of Alabama, except for the Gulf Coast
o Knoxville, TN - managing the Knoxville, Chattanooga and Cleveland BTAs in
Tennessee and the Dalton and Rome BTAs in Georgia
o Nashville, TN - managing the Nashville, Cookeville and Clarksville BTAs in
Tennessee and the Hopkinsville, Madisonville and Bowling Green BTAs in
Kentucky
o Louisville, KY - managing the Louisville, Lexington, Corbin and Owensboro
BTAs in Kentucky
A regional operations management team will be located in each Regional Office to
provide support for site acquisition, site engineering, permitting, procurement,
construction, testing and turnover of PCS-sites and MSC locations in the region.
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The Contractor team will work with Owner's regional manager and function as
Owner's representatives in the region, will coordinate RF engineering with other
functions, will manage site acquisition, permitting, procurement, construction,
schedule and budget progress and performance, and will manage Owner contracts,
testing and turnover.
PROJECT COST AND SCHEDULE CONTROLS
- ----------------------------------
As overall Project manager, Contractor will assist with the development of
project budgets and define the format and frequency for reporting schedule
progress and performance against budgets, as appropriate. Contractor will
provide annual budgets for its Services revised on a quarterly basis at least
thirty (30) days prior to beginning of each quarter during the term of this
Agreement. Owner's contracts will require that all Project participants (major
equipment vendor, RF engineers, site acquisition contractors) will provide
information to Contractor as specified, for incorporation into Project status
reports.
Schedule progress will be monitored using a hierarchical series of schedules of
varying levels of detail.
The schedule called the Project Milestone Summary Schedule will reflect target
dates for all Regions, and will provide schedule status for the total Project.
The schedules called the Regional Milestone Summary Schedules will be the basis
for monitoring schedule status in each of the Regions, and will depict progress
against critical path milestone activities.
The database called the Project Critical Events database will track progress on
each PCS-site (or candidate site) and MSC location for each Region. This
database will be supported by all Project participants and will be used by
Contractor to generate summary level critical/action items reporting for the
Project.
Owner will ensure that the following are obtained and made available to
Contractor for performance of the Services:
Inputs/Information Required
- ---------------------------
From Site Acquisition Contractor(s)
o Detailed information on each site or candidate site
o Progress reporting on all data base elements in SAC responsibility on a
weekly basis, with exception reporting daily for critical/problem items.
From RF Engineer(s)
o Detailed information on RF design plan for each Region or sub-network,
identifying critical items and restraints
o Progress reporting on all RF data base elements on a weekly basis, with
exception reporting daily for critical/problem activities.
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From Major Equipment Vendor
o Detailed information on BTS with demarcation points identified and switch
equipment design and delivery schedule for each Region, including
installation and test duration and restraints.
o Progress reporting for all major equipment vendor responsibilities on a
weekly basis, with exception reporting daily for critical/problem activities.
As the job evolves, additions, deletions and changes to Project scope will be
identified and submitted to Owner for review and approval. As scope changes are
approved, they will be incorporated into the budget to provide a current
assessment of the total Project cost.
Standard reports will be issued on a regular basis to keep Owner informed on key
and/or critical issues regarding the status of the Project.
As required by Paragraph 2.2.10, a report called the Project Progress Report
will be prepared monthly by the Jackson Project Office which will summarize
activity in all Regions. This report will include narrative summaries of the RF
engineering, site acquisition, facility design, construction management and
spectrum clearing activities. It will also provide schedule performance
calculations, percent complete assessment, action items list and the list of
pending scope changes.
Inputs/Information Required
- ---------------------------
From All Project Participants
o Narrative description of activities ongoing for the month in each of the
Regions. Highlight key accomplishments and critical problem areas.
o Listing and description of any outstanding scope changes including their
effect on cost and schedule.
CONTRACT ADMINISTRATION
- -----------------------
Contractor will interpret and maintain Owner's contracts for site design and
construction, as agent for Owner. Contractor will also:
o Provide control of contractor proposals and processing |X| Manage the award
process for released PCS sites and MSC locations |X| Monitor contractors'
overall compliance with contract terms and Project established procedures,
and report any instances of noncompliance to Owner
o Manage the contract changes/disputes and claims process Manage the Project
backcharge process
o Provide quality surveillance of contractors' work
o Ensure final inspection items are completed
o Perform contract close-out functions with all contractors and provide
completed turnover package to Owner for all contracts
ACCOUNTING/CONTROLLER MANAGEMENT
- --------------------------------
Contractor will perform the following activities:
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o Review all invoices for conformance to contract/purchase order, terms and
receiving documents and submit to Owner for approval
o Perform the accounts payable function as Owner's agent by writing all checks
on Owner's check stock for Owner-approved invoices and providing monthly
reconciliation for funds expended for materials, contracts and subcontracts
in accordance with Attachment B
o Provide detailed tax and property asset reporting for all expenses handled by
Contractor accounting
o Perform tracking and statusing of all invoices from the time they are
received, through the review and approval cycle to payment and close-out of
the bill
o Code invoices with accounting and physical location codes to meet Owner's
requirements
o Provide information required for electronic interfaces to Owner's accounting
and management systems.
PROCUREMENT AND MATERIALS MANAGEMENT
- ------------------------------------
Contractor will, as Owner's agent, assist Owner in procuring equipment,
materials and services required for the construction of the PCS-sites and MSC
locations, excluding the radio equipment and switches provided by major
equipment vendor under contract to Owner. All purchase orders and contracts will
be issued by Owner with Contractor acting as agent. Subject to the requirement
set forth in Paragraph 17.1, Owner may request Contractor to perform these
procurement and materials management services in the name of an affiliate or
subsidiary of Owner.
Procurement activities will include receipt of the specification and/or material
requisition; supplier bidding and selection; formation and negotiation of Owner
contracts and purchase orders; expediting and supplier surveillance; and
coordination and management of delivery of materials to installation
contractors, PCS-sites or MSC locations as required.
A Project Procurement Manager ("PPM") will be assigned to the Project Office in
Jackson to plan, organize, staff and manage procurement activities. The PPM will
assist the Owner in developing a procurement plan for third-party materials
which is consistent with the Regional Milestone Schedules.
Each Regional Office will have a Procurement/Materials Manager assigned to
perform the following functions:
o Solicit proposals for A/E and construction contractors and award contracts
for administration in the local markets.
o Obtain material requirements and required delivery dates for approved sites
and forward to Project office for ordering.
o Coordinate with local contractors to confirm delivery of third-party
material.
o Prepare or obtain material receiving reports for third party material to
allow for payment processing
o Assist in the site material reconciliation process, as necessary, to develop
material records, cost reports, etc. for turnover packages, etc.
o Monitor contractors' control of customer-furnished material for
inventory-tracking purposes.
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Material releases to Owner contractors will be coordinated utilizing
Contractor's automated PTS.
Contractor will establish Owner agreements with vendors to ship material for
each site to Owner's contractor responsible for construction. Material will be
shipped on a "just in time" basis to meet the scheduled construction start
dates. Owner's contractor will receive and store all Owner-furnished material
for their respective PCS-sites and MSC locations.
Each Region will maintain a small stock of items to be used in case of lost or
damaged parts; i.e. connectors, jumpers, antennas, etc.
ENGINEERING MANAGEMENT
- ----------------------
The Contractor will assist Owner with its development of engineering standards,
technical specifications, and design criteria utilizing information and data as
provided by the Owner, RF engineering, site acquisition and BTS and MSC
equipment suppliers. Contractor will maintain and update these standards as
required and will manage and control the distribution and use of these
documents. These documents will be provided to all local A/E firms for use in
design of the PCS sites and MSC locations in order to standardize PCS sites and
MSC locations and maintain quality throughout the BTAs.
The Contractor will provide engineering support to the Owner to identify
qualified local A/E firms and to establish contracts with a number of firms in
each of the regional areas. Contractor will manage the firms employed by Owner
to provide geotechnical reports and other required studies or analysis.
Contractor will manage the A/E firms engaged to prepare the zoning, permitting,
and construction documents to monitor compliance with the project design
criteria, local codes and standards and Owner requirements.
CONSTRUCTION MANAGEMENT
- -----------------------
Contractor will provide construction management services for the construction of
all assigned PCS-sites and MSC locations in the Owner PCS network. Contractor
will assist Owner in identitfying qualified, local contractors in each of the
Regions to perform the construction activities. Contractor will coordinate and
inspect contractor work activities for quality and to maintain control of the
Project schedule.
Contractor will perform a constructability analysis for each MSC location and
each primary PCS-site candidate as part of the overall site assessment effort.
Contractor will manage all civil, electrical and mechanical construction
performed by Owner's contractors to make the site ready for installation of the
BTS or MSC equipment and will conduct site visits to verify compliance with the
contract requirements. Major equipment vendor will be responsible for
installation of the BTS and MSC equipment, under contract with Owner. Contractor
will coordinate with major equipment vendor to verify demarcation points and
schedule the installation and testing activities to meet the milestone dates on
the Project schedule.
Contractor will develop pro forma contracts and scope descriptions for
construction of the PCSsites and MSC locations. When a sufficient number of
PCS-sites have been released for
CONFIDENTIAL
A-5
<PAGE>
EXECUTION COPY
construction in a Region (target is 300%), Contractor will notify the
appropriate contractors to begin construction.
Contractor will prepare a Project Safety Plan for Owner's review and approval.
Owner's contractors in each and every Region will be required by contract to
implement a safety program consistent with the work performed and in conformance
with Owner's Project Safety Plan.
PCS-SITE AND MSC LOCATION TURNOVER
- ----------------------------------
The Regional Document Control Center will collect and maintain PCS-site and MSC
location records prior to turnover. Document Control will process records
according to applicable Project procedures, prepare transmittal documents and
obtain appropriate signatures for records turnover to Owner.
Some PCS-site and MSC location records will be turned over progressively, upon
approval and issuance of the documents. Other records will be turned over as a
part of the PCS-site turnover package.
Completion of initial and final inspection by Owner, completion of all punchlist
items, and turnover of all required documents to Owner will be documented via a
letter. Owner will acknowledge receipt and acceptance and will return the
acknowledgment to the Contractor Regional Operations Manager.
The Regional Operations Manager will be responsible for processing and
implementing the PCSSite and MSC Location Turnover Procedure. Owner will be
responsible for receiving turned-over records, verifying transmittals and
returning acknowledgment receipts to the Regional Operations Manager.
The following documents are to be turned over to Owner as the PCS-site or MSC
turnover package. The Contractor Regional Operations Manager, or designee, will
manage document compliance.
o Site License/Lease Abstract (Summary)
o Copy of lease/purchase agreement
o Copy of easement agreements
o Site Option Report/photos, etc.
o Survey, Geotechnical and/or Tower Study
o Intermodulation study report (if required)
o Environmental Phase 1 Report
o Title report, if required, and title insurance policy
o Zoning documentation
o FAA consultant study and FAA approval
o FCC tower registration number - frequency band
o Site Completion Checklist
o Grounding Post-Test Results
o Special installation and Inspection Reports
o Sweep Test Results
CONFIDENTIAL
A-6
<PAGE>
EXECUTION COPY
o Concrete Cylinder Strength Test Reports
o Photo Documentation
o Construction As-Built Drawings (Hard copy and disk)
o Vendor Drawings (foundations, poles towers)
o Design Calculations
o Third-Party Materials (type, quantity, cost)
o Final Construction Owner-contractor Cost
o Release of Lien
BTAs Included in Owner Network Implementation
MISSISSIPPI
- -----------
BTA # 94 Columbus-Starkville
BTA # 175 Greenville-Greenwood
BTA # 186 Hattiesburg
BTA # 210 Jackson
BTA # 246 Laurel
BTA # 269 McComb-Brookhaven
BTA # 292 Meridian
BTA # 315 Natchez
BTA # 449 Tupelo-Corinth
BTA # 455 Vicksburg
ALABAMA
- -------
BTA # 17 Anniston
BTA # 44 Birmingham
BTA # 108 Decatur
BTA # 115 Dothan-Enterprise
BTA # 146 Florence
BTA # 158 Gadsden
BTA # 198 Huntsville
BTA # 305 Montgomery
BTA # 334 Opelika-Auburn
BTA # 415 Selma
BTA # 450 Tuscaloosa
KENTUCKY
- --------
BTA # 52 Bowling Green-Glasgow
BTA # 98 Corbin
BTA # 252 Lexington
BTA # 263 Louisville
BTA # 273 Madisonville
BTA # 338 Owensboro
CONFIDENTIAL
A-7
<PAGE>
EXECUTION COPY
TENNESSEE
- ---------
BTA # 76 Chattanooga
BTA # 83 Clarksville, TN-Hopkinsville, KY
BTA # 85 Cleveland
BTA # 96 Cookeville
BTA # 232 Knoxville
BTA # 314 Nashville
GEORGIA
- -------
BTA # 102 Dalton
BTA # 237 La Grange
BTA # 384 Rome
CONFIDENTIAL
A-8
<PAGE>
EXECUTION COPY
ATTACHMENT B
COMPENSATION
1. COMPENSATION: For performance of the Services described in
Attachment A Owner shall pay Contractor's Compensation, consisting of Hourly
Unit Rate Payments plus Other Direct Costs (as such terms are defined below):
a. Hourly Unit Rate Payments. Owner shall pay Contractor for its labor
costs incurred in the performance of the Services. Labor costs are based on
hours worked, including scheduled and approved overtime in accordance with
established Contractor's policies and procedures and billed at Hourly Unit Rates
(whether straight time or overtime) as set forth in the table below. Contractor
and Owner have agreed upon an initial staffing plan which is attached as
Attachment D hereto. Further, Owner and Contractor shall agree at least fifteen
(15) days prior to the commencement of each calendar quarter (commencing with
the quarter beginning April 1, 1999) on any revisions to such staffing plan for
each position defined below for the upcoming quarter. Contractor shall be paid
at the Hourly Unit Rates in column A for all hours worked during that quarter
that fall within the staffing plan for the position in question and at the
Hourly Unit Rates in column B for the hours worked during that quarter that
exceed the staffing plan for the position in question.
CONFIDENTIAL
A-7
EXECUTION COPY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
POSITIONS HOURLY UNIT RATES HOURLY UNIT RATES
- ------------------------------------------------------------------------------------------------
A B
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Project Manager [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Assistant Project Manager/Business Manager [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Contracts/QA Manager [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Controls Manager [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Engineering Manager [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Operations Manager [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Accounting Manager [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Design Engineer Supervisor [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Lead Field Coordinator [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Procurement Manager [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Records Manager [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Regional Operations Manager [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Contract Administrator [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Coordinators (Construction, Site Acquisition) [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Resident Engineer [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Safety Manager [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Accountants [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Cost/Schedule Engineer [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
CONFIDENTIAL
B-4
EXECUTION COPY
- ------------------------------------------------------------------------------------------------
Purchasing Specialist/Material Supervisor [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Standards/Design Engineer [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Regional Document Controls [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Accounts Payable Processor [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
Clerical Support [CONFIDENTIAL [CONFIDENTIAL
TREATMENT REQUESTED] TREATMENT REQUESTED]
- ------------------------------------------------------------------------------------------------
</TABLE>
Notes: Hourly Unit Rates shown above are inclusive of salaries; profit, cost of
capital, allowances for holidays; paid time off and other paid absences; costs
related to employee social, insurance, and retirement benefits; all payroll
taxes; premiums for unemployment insurance, worker's compensation and corporate
overhead expenses. Rates will remain unchanged through the two-year term of this
Agreement. A description of each position is included as Attachment C to the
Agreement.
b. Other Direct Costs. Owner shall also reimburse Contractor for other
direct costs incurred that are allocable to and reasonably necessary for the
performance of the Services ("ODCs") ODCs will be passed through at Contractor's
cost, and include:
o Relocation (to and from) expenses (including shipping and storage allowances,
shipment of automobile and en-route expenses), transportation, lodging,
subsistence and other travel and living-related expenses of personnel engaged
in the performance of the Services in accordance with Contractor's employment
conditions as approved by Owner.
o The identifiable and reasonable cost of office supplies, office space,
computers, reproduction, communication requirements (including cellular
telephones) and delivery services.
o Costs of subcontracts, subconsultants and other outside services and
facilities, if any.
o Federal, state and local taxes of any kind (subject to the provisions of
Paragraph 18.2), assessments, duties, permits, insurance and licenses,
excepting only payroll taxes included in payroll costs and taxes levied
solely on or measured by Contractor's net income.
o Any and all other direct costs and expenses incurred by Contractor that are
either preapproved by Owner or otherwise authorized under the Project
procedures established by the parties, and that are not included in payroll
costs as defined above, that are allocable to and reasonably necessary for
the performance of the Services.
An estimate of Project ODCs is included on Attachment D.
2. OWNER COSTS: Owner shall make available the amounts necessary to pay
invoices submitted by Owner's contractors and suppliers and any other costs that
Owner requests Contractor to pay as its agent.
3. PAYMENT: Payment of Compensation and Owner Costs shall be made as
follows (supplemented by other procedures as may be agreed by the Parties from
time to time):
B-9
<PAGE>
a. Owner shall maintain an account (a "Funding Account") for the purpose
of paying the Compensation and Owner Costs. Owner shall at all times retain
title to the balance in the Funding Account. Owner shall maintain, in
coordination with Contractor, in the same financial institution in which the
Funding Account is maintained, an operating account(s) (a "Zero Balance
Operating Account"). All payments of Compensation and Owner Costs shall be made
by checks drawn on the Zero Balance Operating Account and which shall be
executed by duly authorized representatives of Contractor. No check shall be
issued for any purpose other than that of making payments for Compensation, for
Owner Costs, for expenses incurred in suspending or terminating the Services, or
for such other expenses specifically provided in the Agreement or approved by
Owner.
b. The amount provided by Owner in the Funding Account will at all times
be sufficient for the payment of Compensation and Owner Costs from the Zero
Balance Operating Account as checks or transfers in payment for such are
presented for payment to the financial institution where the Funding Account is
maintained. Owner will determine the amounts of deposits to be made to the
Funding Account using a monthly estimate of Compensation and Owner Costs to be
prepared by Contractor (however, deposits may not necessarily be made on a
monthly basis). As soon as practical after the effective date of the Contract,
Contractor will prepare an estimate of Compensation to be payable to Contractor
and of Owner Costs to be incurred during the initial month or fraction thereof
and the following calendar month. By the 15th day of each subsequent calendar
month, a similar estimate of Compensation and Owner Costs for the next calendar
month will be prepared by Contractor and submitted to Owner.
c. Contractor shall submit to Owner all invoices for Owner Costs upon
receipt and verification and all Contractor invoices for Compensation once every
two weeks. Such invoices shall be reviewed and approved in writing by Owner
(with exceptions, if any, noted) within five (5) business days following Owner's
receipt thereof.
d. Thereafter, Contractor shall submit to Owner, at regular intervals as
agreed by the Parties, complete lists of checks it has prepared for issuing.
Such lists will be reviewed and approved in writing by the Owner (with
exceptions, if any, noted) within three (3) business days following Owner's
receipt of the list. Contractor may release checks in payment of the listed
checks immediately upon Owner's approval, or if Owner fails to respond, after
the third (3) business day following Owner's receipt of the list.
e. Contractor shall submit to Owner the following:
(i) Promptly after each series of checks have been issued, a
statement of Compensation and Owner Costs paid during
the period covered by the statement, prepared in such
form and supported by copies of such invoices, payroll
records, and other documents as Owner shall reasonably
request and an electronic statement summarizing these
matters in greater detail in accordance with the
procedures to be established by the parties.
(ii) Weekly, fixed asset reports.
B-3
<PAGE>
(iii) Within three (3) business days after receipt by Bechtel
from the bank, a copy of the Zero Balance Operating
Account bank statement and a reconciliation of the
Account. This reconciliation will include a list of the
checks which have cleared the account, funds transfers,
and outstanding checks. Any discrepancies identified in
the reconciliation process or by Contractor's audit of
bank records shall be immediately brought to Owner's
attention. These discrepancies will be resolved as
appropriate and in a timely manner.
f. Following Final Acceptance of the Project, Contractor shall submit
to Owner a statement showing total Compensation and Owner Costs. Within ten (10)
days after receipt thereof, Owner shall pay to Contractor the total amount of
Compensation less amounts of Compensation previously paid by Owner to
Contractor, or if amounts of Compensation previously paid to Contractor exceed
the total amount of Compensation, Contractor shall refund such excess to Owner.
<PAGE>
EXECUTION COPY
CONFIDENTIAL ATTACHMENT C
DESCRIPTION OF CONTRACTOR POSITIONS
Project Manager
Team leader. Provides policy and procedures for the overall operation of the
Project team. Serves as the focal point for Owner interface with Contractor. The
Project Manager (PM) is the one person in the Contractor team accountable to the
customer for applying Contractor resources for project execution.
Assistant Project Manager/Business Manager
Responsible to the Project Manager for the staffing of the project control,
contract administration and accounting resources for the establishment of the
Project schedule, Project code of accounts, resource budget, accounts payable
and receivable systems, prime and other contract administration processes. The
Assistant Project Manager (APM) serves as the senior member of the Contractor
team in the absence of the PM.
Contracts/QA Manager
The Contracts/Quality Assurance Manager is responsible for contract formation,
administration and management; personnel management of employees performing
contracts functions; developing processes and procedures to effectively control
and manage contract required activities; establishing and maintaining the
Division of Responsibilities matrix and specific contract compliance
responsibility matrices; and monitoring Project performance for compliance with
contract terms and conditions. In addition to managing contracts, this manager
is also responsible for monitoring quality assurance. These responsibilities
include performing quality system audits and making all project participants
aware of the quality program that they are expected to implement.
Controls Manager
The Controls Manager (a.k.a. - Project Controls Manager/PCM) is responsible for
the preparation and maintenance of Project budgets and schedules. The PCM
defines and implements the procedures employed in the Project to establish
capital and non-capital cost budgets, to manage change, and to prepare and
maintain Project schedules. Additionally, the PCM provides direction for the
accounting function.
Engineering Manager
The Engineering Manager (PEM) is responsible for the PCS site architectural
and/or engineering (A/E) Services for the Project. The PEM will direct
Contractor project resources to manage the services provided to the Project by
local A/E firms. The PEM will monitor the A/E firms' compliance with quality
requirements and standard details for their engineering services of PCS site
facilities.
Operations Manager
Assures uniformity of operation throughout the Project. Travel throughout the
regions to train personnel for and monitor processes as developed for the
Project. Direct development of procedures and standards for the Project. All
Regional Operations Managers report to the Operations Manager for overall
Project coordination.
C-1
<PAGE>
EXECUTION COPY
Accounting Manager
The Accounting Manager (PAM) is responsible to the PCM for the establishment of
the Project accounting processes in accordance with the Generally Accepted
Accounting Practices and the Contractor Commercial Operations and Finance and
Accounting methods and procedures. The PAM operates the accounts payable and
accounts receivable services vital to the Project's operations.
Design Engineer Supervisor
The Design Engineer Supervisor (DES) is responsible to the PEM for providing
technical engineering management services to the Project team to prepare and
maintain cell site engineering standards and specifications applied to define
the services to be provided by local A/E firms and others.
Lead Field Coordinator
Responsible for interfacing with the contractors on day to day construction
activities, schedules, material coordination and quality issues. Coordinate the
construction schedules with all of the regional players, RF, site acquisition,
project controls, RE's, equipment suppliers, contract administrator, fixed
network designers, and Owner. Direct daily activities of the construction field
coordinators.
Coordinators
Manages and coordinates individual cell site construction. Prepares and executes
the individual cell site schedule and monitors the contractors to assure they
meet the schedule. Witness all milestone points during the site construction
(i.e., Concrete pours, Sweep testing, Ground testing, final tower erection
etc.). Final inspection of turnover package to assure completeness.
Procurement Manager
The Procurement Manager (PPM) is responsible to the PM for the establishment and
implementation of procurement process procedures and for material and
procurement tracking processes. The PPM is the person in the Project team
assigned to establish on Owner's behalf the material and services supply
purchase orders and contracts for the development of the project cell sites.
Records Manager
The Records Manager (PRM) is responsible to the PM for the identification and
implementation of Project administrative procedures and processes. The PRM will
manage the document control processes in the program office and the regional
offices to ensure consistent and effective control of the Project documentation
and communications.
Regional Operations Manager
Responsible for the overall Project and construction management as Tritel's
authorized agent for the region build out. Manages and coordinates the work flow
process through all phases of the build out (i.e., site acquisition, RF design,
construction, testing and turnover). Responsible for informing contractors
about, and monitoring contractors' compliance with, the Safety and Health plan
and the Quality plan implemented by these contractors. Accountable to the
Project Manager for management of the capital budget and project schedule for
the region.
C-2
<PAGE>
EXECUTION COPY
Contract Administrator Within the authorization limitations specified by Owner,
the Contract Administrator is responsible for administration of all contracts;
monitoring, evaluating and negotiating changes, claims and disputes with
contractors; processing backcharges; managing the contractor invoice/payment
process; coordinating final acceptance process; and contract closeout and
processing warranty claims.
Resident Engineer
The Resident Engineer (RE) is the person responsible for the direct interface
with the project A/E firms. The RE provides oversight of the A/E firms,
reviewing the design/engineering products prepared by the firms for the project.
The RE coordinates the efforts of the A/E firms to ensure the site development
work proceeds in accordance with the Project schedule.
Safety Manager
Responsible for and informing contractors about, and monitoring contractors'
compliance with, the Project Safety and Health Plan implemented by these
contractors. Provide appropriate training throughout the Project regions. Visit
the regions on a regular visit to monitor compliance with the Safety Plan or
individual contractor's plans, if applicable.
Accountants
The Accountants assigned to the Project team are responsible to the PAM for the
processing of project accounting data. In particular, they shall be responsible
for the processing of invoices provided to the Project by its suppliers, and for
the preparation and issue of invoices for Contractor services for payment by
Owner. The accountants shall maintain the necessary accounting records to
provide timely deposit of funds to the ZBA and to provide accounting for the
disbursement of funds from the ZBA.
Cost/Schedule Engineer
The Cost/Schedule (C/S) Engineer is responsible to the PCM for implementation of
Project control procedures, providing monitoring and reporting of resource
expenditures as compared to Project budgets and, schedules. The C/S Engineer is
responsible for maintaining the Cell Site Status System (CS3) database for the
region.
Purchasing Specialist/Material Supervisor
The Purchasing Specialist/Material Supervisor is responsible to the PPM for the
implementation of blanket procurement actions, securing the necessary materials
and services for the development of Project cell sites. The Purchasing
Specialist/Material Supervisor is also responsible for the establishment and
maintenance of an inventory of construction spares in the regional office, to be
used to maintain construction schedules in the event of material shortages at a
site under construction.
Standards/Design Engineer
The Standards/Design Engineer is a resource employable from the Contractor
office in Gaithersburg, MD to provide and maintain Project design standards and
specifications to be used by the local A/E firms.
CONFIDENTIAL
C-3
<PAGE>
EXECUTION COPY
Regional Document Control
The Regional Document Control is responsible for the establishment and operation
of the document and correspondence control processes employed in the Regional
offices to collect, categorize, file and maintain for turnover, the necessary
documentation defining the Project cell sites.
Accounts Payable Processor
The Accounts Payable Processor is a specialized accounting position responsible
for the processing of supplier invoices and maintaining and documenting the
disposition of supplier invoices.
Clerical Support
The position Clerical Support refers to clerk and secretarial services which
will be required by the Project to free the Project staff to perform the
technical tasks essential to the implementation of the Project. These positions
will be all local hires.
C-4
<PAGE>
EXECUTION COPY
ATTACHMENT D
STAFFING PLAN AND ESTIMATED ODCS
(See attached)
CONFIDENTIAL
<PAGE>
ATTACHMENT D
STAFFING PLAN
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
TRITEL STAFFING PLAN
- -----------------------------------------------------------------------------------------------
1998 1999
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONTHS 1 2 3 4 5 6 7 8 9 10 11 12 13 14
- -----------------------------------------------------------------------------------------------
POSITION Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
- -----------------------------------------------------------------------------------------------
JACKSON PROGRAM OFFICE
- -----------------------------------------------------------------------------------------------
Project Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Assistant Proj. Manager 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Engineering Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Operations Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Controls Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Cost/Schedule Engineer 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Contracts/QA Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Procurement Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Purchasing 0 1 1 1 1 1 1 1 1 1 1 1 1 1
Specialist/Material
Supervisor
- -----------------------------------------------------------------------------------------------
Safety Manager 0.5 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Records Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Clerical support 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
SUBTOTAL 10.5 12 12 12 12 12 12 11 11 11 11 11 11 11
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
JACKSON REGIONAL OFFICE
- -----------------------------------------------------------------------------------------------
Regional Operations Manager 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Resident Engineer 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Contract Administrator 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Contract Administrator 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Cost/Schedule Engineer 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Purchasing
Specialist/Material
Supervisor 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Lead Field Coordinator 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Field Coordinator 3 3 5 5 5 5 5 5 5 5 5 3 2 1
- -----------------------------------------------------------------------------------------------
Power Coordinator 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Regional Document Controls
Manager 2 2 2 2 2. 2 2 2 2 2 2 2 2 2
- -----------------------------------------------------------------------------------------------
Clerical support 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
SUBTOTAL 11 12 16 16 16 16 16. 16 16 16 16 12 8 6
- ----------------------------------------------------------------------------------------------
1
- ----------------------------------------------------------------------------------------------
KNOXVILLE REGIONAL OFFICE
- ----------------------------------------------------------------------------------------------
Regional Operations Manager 1 1 1 1 1 1 1 1 1 1 1 1
- ----------------------------------------------------------------------------------------------
Resident Engineer 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- ----------------------------------------------------------------------------------------------
Contract Administrator 1 1 1 1 1 1 1 1 1 1 1
- ----------------------------------------------------------------------------------------------
Contract Administrator 1 1 1 1 1 1 1 1 1 1 1
- ----------------------------------------------------------------------------------------------
Cost/Schedule Engineer 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- ----------------------------------------------------------------------------------------------
Purchasing
Special/Material Supervisor 1 1 1 1 1 1 1 1 1 1 1
- ----------------------------------------------------------------------------------------------
Lead Field Coordinator 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- ----------------------------------------------------------------------------------------------
Field Coordinator 1 3 5 7 7 7 7 7 7 7 7 4 2 1
- ----------------------------------------------------------------------------------------------
Power Coordinator 2 2 2 2 2 2 2 2
- ----------------------------------------------------------------------------------------------
Regional Document Controls
Manager 2 2 2 2 2 2 2 2 2 2 2 2 2 2
- ----------------------------------------------------------------------------------------------
Clerical support 1 1 1 1 1 1 1 1 1 1 1 1 1
- ----------------------------------------------------------------------------------------------
SUBTOTAL 8 12 14 19 19 19 19 19 19 19 19 13 9 8
- ----------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------
11/24/98
15:19
- -------------------------------------------------------------------------------
2000
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONTHS 15 16 17 18 19 20 21 22 TOTAL
- -------------------------------------------------------------------------------
POSITION Jan Feb Mar Apr May Jun Jul Aug JOBHOURS
- -------------------------------------------------------------------------------
JACKSON PROGRAM OFFICE
- -------------------------------------------------------------------------------
Project Manager 1 1 1 1 1 1 1 1 3.564
- -------------------------------------------------------------------------------
Assistant Proj. Manager 1,134
- -------------------------------------------------------------------------------
Engineering Manager 1 1 1 1 1 1 1 3.402
- -------------------------------------------------------------------------------
Operations Manager 2,268
- -------------------------------------------------------------------------------
Controls Manager 1 1 1 2,754
- -------------------------------------------------------------------------------
Cost/Schedule Engineer 1 1 1 1 1 1 1 3,633
- -------------------------------------------------------------------------------
Contracts/QA Manager 1 1 1 1 1 1 1 3,402
- -------------------------------------------------------------------------------
Procurement Manager 1 1 1 1 1 1 1 3,402
- -------------------------------------------------------------------------------
Purchasing 2,249
Specialist/Material
Supervisor
- -------------------------------------------------------------------------------
Safety Manager 2,336
- -------------------------------------------------------------------------------
Records Manager 1 1 1 1 3,114
- -------------------------------------------------------------------------------
Clerical support 1 1 1 1 1 1 1 3,633
- -------------------------------------------------------------------------------
SUBTOTAL 8 8 8 7 6 6 6 1 34,891
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
JACKSON REGIONAL OFFICE
- -------------------------------------------------------------------------------
Regional Operations Manager 2,076
- -------------------------------------------------------------------------------
Resident Engineer 2,422
- -------------------------------------------------------------------------------
Contract Administrator 1,903
- -------------------------------------------------------------------------------
Contract Administrator 1,903
- -------------------------------------------------------------------------------
Cost/Schedule Engineer 2,422
- -------------------------------------------------------------------------------
Purchasing
Specialist/Material
Supervisor 2,076
- -------------------------------------------------------------------------------
Lead Field Coordinator 2,076
- -------------------------------------------------------------------------------
Field Coordinator 9,861
- -------------------------------------------------------------------------------
Power Coordinator 1,557
- -------------------------------------------------------------------------------
Regional Document Controls
Manager 4,844
- -------------------------------------------------------------------------------
Clerical support 2,249
- -------------------------------------------------------------------------------
SUBTOTAL 0 0 0 0 0 0 0 0 33,389
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
KNOXVILLE REGIONAL OFFICE
- -------------------------------------------------------------------------------
Regional Operations Manager 2,076
- -------------------------------------------------------------------------------
Resident Engineer 2,422
- -------------------------------------------------------------------------------
Contract Administrator 1,903
- -------------------------------------------------------------------------------
Contract Administrator 1,903
- -------------------------------------------------------------------------------
Cost/Schedule Engineer 2,422
- -------------------------------------------------------------------------------
Purchasing
Special/Material Supervisor 1,903
- -------------------------------------------------------------------------------
Lead Field Coordinator 2,422
- -------------------------------------------------------------------------------
Field Coordinator 12,456
- -------------------------------------------------------------------------------
Power Coordinator 2,768
- -------------------------------------------------------------------------------
Regional Document Controls
Manager 4,844
- -------------------------------------------------------------------------------
Clerical support 1 2,249
- -------------------------------------------------------------------------------
SUBTOTAL 0 0 0 0 0 0. 0 0 37,368
- -------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
TRITEL STAFFING PLAN
- -----------------------------------------------------------------------------------------------
1998 1999
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONTHS 1 2 3 4 5 6 7 8 9 10 11 12 13 14
- -----------------------------------------------------------------------------------------------
POSITION Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
- -----------------------------------------------------------------------------------------------
MONTGOMERY SATELLITE OFFICE
- -----------------------------------------------------------------------------------------------
Lead Field Coordinator 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Field Coordinator 1 1 2 2 2 2 2 2 2 2 1 1
- -----------------------------------------------------------------------------------------------
Clerical support 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
SUBTOTAL 1 3 3 4 4 4 4 4 4 4 4 1 0 0
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
HUNTSVILLE SATELLITE OFFICE
- -----------------------------------------------------------------------------------------------
Lead Field Coordinator 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Field Coordinator 1 1 2 2 2 2 2 2 2 2 1
- -----------------------------------------------------------------------------------------------
Clerical support 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
SUBTOTAL 1 3 3 4 4 4 4 4 4 4 4 1 0 0
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
LOUSVILLE/LEXINGTON
REGIONAL OFFICE
- -----------------------------------------------------------------------------------------------
Regional Operations Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Resident Engineer 1 1 1 1 2 2 2 2 2 2 2 1
- -----------------------------------------------------------------------------------------------
Contract Administrator 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Contract Administrator 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Cost/Schedule Engineer 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Purchasing
Specialist/Material
Supervisor 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Lead Field Coordinator 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Field Coordinator 2 3 4 6 6 6 6 6 6 6 6 6 2
- -----------------------------------------------------------------------------------------------
Power Coordinator 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Regional Document Controls
Manager 2 2 2 2 2 2 2 2 2 2 2 2 2
- -----------------------------------------------------------------------------------------------
Clerical support 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
SUBTOTAL 2 8 11 12 14 15 17 17 18 18 18 18 18 11
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
NASHVILLE REGIONAL OFFICE
- -----------------------------------------------------------------------------------------------
Regional Operations Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Resident Engineer 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Contract Administrator 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Contract Administrator 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Cost/Schedule Engineer 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Purchasing
Specialist/Material
Supervisor 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Lead Field Coordinator 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Field Coordinator 2 3 4 6 6 6 6 6 6 6 6 6 3 2
- -----------------------------------------------------------------------------------------------
Power Coordinator 2 2 2 2 2 2 2
- -----------------------------------------------------------------------------------------------
Regional Document Controls
Manager 2 2 2 2 2 2 2 2 2 2 2 2 2 2
- -----------------------------------------------------------------------------------------------
Clerical support 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
SUBTOTAL 9 11 13 15 17 18 18 18 18 18 18 18 12 10
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
BIRMINGHAM REGIONAL OFFICE
- -----------------------------------------------------------------------------------------------
Regional Operations Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Resident Engineer 1 1 1 3 3 3 3 3 3 3 3 1 1 1
- -----------------------------------------------------------------------------------------------
Contract Administrator 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Contract Administrator 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Cost/Schedule Engineer 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Purchasing
Specialist/Material
Supervisor 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
- ----------------------------------------------------------------------------------
2000
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONTHS 15 16 17 18 19 20 21 22 TOTAL
- ----------------------------------------------------------------------------------
POSITION Jan Feb Mar Apr May Jun Jul Aug JOBHOURS
- ----------------------------------------------------------------------------------
MONTGOMERY SATELLITE OFFICE
- ----------------------------------------------------------------------------------
Lead Field Coordinator 1,903
- ----------------------------------------------------------------------------------
Field Coordinator 3,287
- ----------------------------------------------------------------------------------
Clerical support 1,730
- ----------------------------------------------------------------------------------
SUBTOTAL 0 6,920
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
HUNTSVILLE SATELLITE OFFICE
- ----------------------------------------------------------------------------------
Lead Field Coordinator 1,903
- ----------------------------------------------------------------------------------
Field Coordinator 3,287
- ----------------------------------------------------------------------------------
Clerical support 1,730
- ----------------------------------------------------------------------------------
SUBTOTAL 0 0 0 0 0 0 0 0 6,920
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
LOUSVILLE/LEXINGTON
REGIONAL OFFICE
- ----------------------------------------------------------------------------------
Regional Operations Manager 1 1 1 1 1 1 3,460
- ----------------------------------------------------------------------------------
Resident Engineer 1 1 1 1 1 4,152
- ----------------------------------------------------------------------------------
Contract Administrator 1,903
- ----------------------------------------------------------------------------------
Contract Administrator 1 1 1 1 1 1,903
- ----------------------------------------------------------------------------------
Cost/Schedule Engineer 1 1 1 1 1 1 3,287
- ----------------------------------------------------------------------------------
Purchasing
Specialist/Material
Supervisor 1 1 1 1 1 2,249
- ----------------------------------------------------------------------------------
Lead Field Coordinator 2,422
- ----------------------------------------------------------------------------------
Field Coordinator 2 2 2 2 2 1 13,148
- ----------------------------------------------------------------------------------
Power Coordinator 1,384
- ----------------------------------------------------------------------------------
Regional Document Controls
Manager 1 1 1 1 1 1 1 5,536
- ----------------------------------------------------------------------------------
Clerical support 2,249
- ----------------------------------------------------------------------------------
SUBTOTAL 8 8 8 8 8 4 0 0 41,693
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
NASHVILLE REGIONAL OFFICE
- ----------------------------------------------------------------------------------
Regional Operations Manager 1 2,595
- ----------------------------------------------------------------------------------
Resident Engineer 2,422
- ----------------------------------------------------------------------------------
Contract Administrator 2,076
- ----------------------------------------------------------------------------------
Contract Administrator 1 1,730
- ----------------------------------------------------------------------------------
Cost/Schedule Engineer 1 2,595
- ----------------------------------------------------------------------------------
Purchasing
Specialist/Material
Supervisor 1,903
- ----------------------------------------------------------------------------------
Lead Field Coordinator 2,422
- ----------------------------------------------------------------------------------
Field Coordinator 1 11,937
- ----------------------------------------------------------------------------------
Power Coordinator 2,768
- ----------------------------------------------------------------------------------
Regional Document Controls
Manager 1 5,017
- ----------------------------------------------------------------------------------
Clerical support 2,249
- ----------------------------------------------------------------------------------
SUBTOTAL 5 0 0 0 0 0 0 0 37,714
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
BIRMINGHAM REGIONAL OFFICE
- ----------------------------------------------------------------------------------
Regional Operations Manager 1 1 2,768
- ----------------------------------------------------------------------------------
Resident Engineer 5,190
- ----------------------------------------------------------------------------------
Contract Administrator 1 1 2,768
- ----------------------------------------------------------------------------------
Contract Administrator 1,903
- ----------------------------------------------------------------------------------
Cost/Schedule Engineer 1 1 2,768
- ----------------------------------------------------------------------------------
Purchasing
Specialist/Material
Supervisor 2,076
- ----------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
TRITEL STAFFING PLAN
- -----------------------------------------------------------------------------------------------
1998 1999
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONTHS 1 2 3 4 5 6 7 8 9 10 11 12 13 14
- -----------------------------------------------------------------------------------------------
POSITION Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
- -----------------------------------------------------------------------------------------------
Lead Field Coordinator 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Field Coordinator 2 4 6 6 6 6 6 6 6 6 6 6 3
- -----------------------------------------------------------------------------------------------
Power Coordinator 2 2 2 2 2 2 2 2 2 2
- -----------------------------------------------------------------------------------------------
Regional Document Controls
Manager 2 2 2 2 2 2 2 2 2 2 2 2 2 2
- -----------------------------------------------------------------------------------------------
Clerical support 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
SUBTOTAL 7 10 13 20 20 20 20 20 20 20 20 18 8 13
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
FREDERICK OFFICE
- -----------------------------------------------------------------------------------------------
Accounting Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Accountant 0.5 0.5 0.5 0.5 0.5 0.5 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Accounts Payable Processor 0 0.5 0.5 0.5 0.5 0.5 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Accounts Payable Processor 0.5 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Accounts Payable Processor 0 0 0.5 0.5 0.5 0.5 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Clerical support 0 0 0.5 0.5 0.5 0.5 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Design Engineering
Supervisor 1 1 1 1
- -----------------------------------------------------------------------------------------------
Standards/Design Engineer 3 3 3 3 1 1
- -----------------------------------------------------------------------------------------------
Clerical Support
- -----------------------------------------------------------------------------------------------
SUBTOTAL 6 7 8 8 5 5 6 6 6 6 6 6 6 6
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
2000
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONTHS 15 16 17 18 19 20 21 22 TOTAL
- ----------------------------------------------------------------------------------
POSITION N Jan Feb Mar Apr May Jun Jul Aug JOBHOURS
- ----------------------------------------------------------------------------------
Lead Field Coordinator 1 1 2,768
- ----------------------------------------------------------------------------------
Field Coordinator 1 1 12,283
- ----------------------------------------------------------------------------------
Power Coordinator 3,460
- ----------------------------------------------------------------------------------
Regional Document Controls
Manager 2 1 5,363
- ----------------------------------------------------------------------------------
Clerical support 1 2,422
- ----------------------------------------------------------------------------------
SUBTOTAL 8 6 0 0 0 0 0 0 43,769
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
FREDERICK OFFICE
- ----------------------------------------------------------------------------------
Accounting Manager 1 1 1 1 1 3,287
- ----------------------------------------------------------------------------------
Accountant 0 1 1 1 1 1 2,768
- ----------------------------------------------------------------------------------
Accounts Payable Processor 1 1 1 0.5 0.5 2,509
- ----------------------------------------------------------------------------------
Accounts Payable Processor 0 1 1 1 0.5 0.5 3,028
- ----------------------------------------------------------------------------------
Accounts Payable Processor 1 1 1 0.5 0.5 2,422
- ----------------------------------------------------------------------------------
Clerical support 1 1 1 0.5 0.5 2,422
- ----------------------------------------------------------------------------------
Design Engineering
Supervisor 692
- ----------------------------------------------------------------------------------
Standards/Design Engineer 2,422
- ----------------------------------------------------------------------------------
Clerical Support 0
- ----------------------------------------------------------------------------------
SUBTOTAL 6 6 6 4 4 0 0 0 19,549
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
TRITEL STAFFING PLAN
- -----------------------------------------------------------------------------------------------
1998 1999
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONTHS 1 2 3 4 5 6 7 8 9 10 11 12 13 14
- -----------------------------------------------------------------------------------------------
POSITION Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
- -----------------------------------------------------------------------------------------------
TOTAL PROJECT STAFFING
- -----------------------------------------------------------------------------------------------
PROJECT MANAGER 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Assistant Proj.
Manager/Business Manager 1 1 1 1 1 1 1 0 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------
Engineering Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Operations Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Controls Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Cost/Schedule Engineer 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Accounting Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Accountant 0.5 0.5 0.5 0.5 0.5 0.5 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Accounts Payable Processor 0 0.5 0.5 0.5 0.5 0.5 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Accounts Payable Processor 0.5 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Accounts Payable Processor 0 0 0.5 0.5 0.5 0.5 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Clerical Support 0 0 0.5 0.5 0.5 0.5 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Contracts/QA Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Procurement Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Purchasing
Specialist/Material
Supervisor 0 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Safety Manager 0.5 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Regional Operations Manager 5 5 5 5 5 5 5 5 5 5 5 5 3 3
- -----------------------------------------------------------------------------------------------
Resident Engineer 4 4 5 7 7 7 8 6 6 8 8 6 6 5
- -----------------------------------------------------------------------------------------------
Contract Administrator 4 4 5 5 5 5 5. 5 5 5 5 3 2 1
- -----------------------------------------------------------------------------------------------
Contract Administrator 0 0 1 3 3 4 4 4 6 6 5 5 5 4
- -----------------------------------------------------------------------------------------------
Cost/Schedule Engineer 4 5 5 5 5 5 5 5 5 5 5 5 5 5
- -----------------------------------------------------------------------------------------------
Purchasing 1 2 4 4 4 4. 5 5 5 5 5 5 3 2
Specialist/Material
Supervisor
- -----------------------------------------------------------------------------------------------
Lead Field Coordinator 7 7 7 7 7 7 7 7 7 7 7 5 4 4
- -----------------------------------------------------------------------------------------------
Field Coordinator 6 15 23 32 34 34 34 34 34 34 34 27 19 9
- -----------------------------------------------------------------------------------------------
Power Coordinator 0 0 1 5 7 8 8 8 8 8 8 5 3 30
- -----------------------------------------------------------------------------------------------
Records Manager 1 1 1 1 1 1 1 1 1 1 1 1 1 1
- -----------------------------------------------------------------------------------------------
Regional Document Controls 8 10 10 10 10 10 10 10 10 10 10 10 10 10
Manager
- -----------------------------------------------------------------------------------------------
Clerical support 1 8 8 8 8 8 8 8 8 8 8 6 6 6
- -----------------------------------------------------------------------------------------------
Design Engineering 1 1 1 1 0 0 0 0 0 0 0 0 0 0
Supervisor
- -----------------------------------------------------------------------------------------------
Standards/Design Engineer 3 3 3 3 1 1 0 0 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------
TOTAL 55.5 78 93 110 111 113 116 115 116 116 116 98 82 65
- -----------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
2000
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONTHS 15 16 17 18 19 20 21 22 TOTAL
- ---------------------------------------------------------------------------------
POSITION Jan Feb Mar Apr May Jun Jul Aug JOBHOURS
- ---------------------------------------------------------------------------------
TOTAL PROJECT STAFFING
- ---------------------------------------------------------------------------------
PROJECT MANAGER 1 1 1 1 1 1 1 1 3,564
- ---------------------------------------------------------------------------------
Assistant Proj.
Manager/Business Manager 0 0 0 0 0 0 0 0 1,134
- ---------------------------------------------------------------------------------
Engineering Manager 1 1 1 1 1 1 1 0 3,402
- ---------------------------------------------------------------------------------
Operations Manager 0 0 0 0 0 0 0 0 2,268
- ---------------------------------------------------------------------------------
Controls Manager 1 1 1 0 0 0 0 0 2,754
- ---------------------------------------------------------------------------------
Cost/Schedule Engineer 1 1 1 1 1 1 1 0 3,633
- ---------------------------------------------------------------------------------
Accounting Manager 1 1 0 0 0 3,287
- ---------------------------------------------------------------------------------
Accountant 1 1 1 1 1 0 0 0 2,768
- ---------------------------------------------------------------------------------
Accounts Payable Processor 1 1 1 0.5 0.5 0 0 0 2,509
- ---------------------------------------------------------------------------------
Accounts Payable Processor 1 1 1 0.5 0.5 0 0 0 3,028
- ---------------------------------------------------------------------------------
Accounts Payable Processor 1 1 1 0.5 0.5 0 0 0 2,422
- ---------------------------------------------------------------------------------
Clerical Support 1 1 1 0.5 0.5 0 0 0 2,422
- ---------------------------------------------------------------------------------
Contracts/QA Manager 1 1 1 1 1 1 1 0 3,402
- ---------------------------------------------------------------------------------
Procurement Manager 1 1 1 1 1 1 1 0 3,402
- ---------------------------------------------------------------------------------
Purchasing
Specialist/Material
Supervisor 0 0 0 0 0 0 0 0 2,249
- ---------------------------------------------------------------------------------
Safety Manager 0 0 0 0 0 0 0 0 2,336
- ---------------------------------------------------------------------------------
Regional Operations Manager 3 2 1 1 1 1 0 0 12,975
- ---------------------------------------------------------------------------------
Resident Engineer 1 1 1 1 1 0 0 0 16,608
- ---------------------------------------------------------------------------------
Contract Administrator 1 1 0 0 0 0 0 0 10,553
- ---------------------------------------------------------------------------------
Contract Administrator 2 1 1 1 1 0 0
- ---------------------------------------------------------------------------------
Cost/Schedule Engineer 3 2 1 1 1 1 0 0 13,494
- ---------------------------------------------------------------------------------
Purchasing 1 1 1 1 1 0 0 0 10,207
Specialist/Material
Supervisor
- ---------------------------------------------------------------------------------
Lead Field Coordinator 1 1 0 0 0 0 0 0 15,916
- ---------------------------------------------------------------------------------
Field Coordinator 4 3 2 2 2 1 0 0 66,259
- ---------------------------------------------------------------------------------
Power Coordinator 0 0 0 0 0 0 0 0 11,937
- ---------------------------------------------------------------------------------
Records Manager 1 1 1 1 0 0 0 0 3,114
- ---------------------------------------------------------------------------------
Regional Document Controls 4 2 1 1 1 1 0 0 25,604
Manager
- ---------------------------------------------------------------------------------
Clerical support 2 1 1 1 1 1 1 0 18,511
- ---------------------------------------------------------------------------------
Design Engineering 0 0 0 0 0 0 0 0 692
Supervisor
- ---------------------------------------------------------------------------------
Standards/Design Engineer 0 0 0 0 0 0 0 0 2,422
- ---------------------------------------------------------------------------------
TOTAL 35 28 22 19 18 10 6 1 262,213
- ---------------------------------------------------------------------------------
</TABLE>
<PAGE>
ATTACHMENT D
ESTIMATED OCDS
[CONFIDENTIAL TREATMENT REQUIRED]
<PAGE>
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "Agreement"), dated as of the 28th day of
July, 1998, is made by and between TRITEL COMMUNICATIONS, INC., a Delaware
corporation ("Tritel"), and SPECTRASITE COMMUNICATIONS, INC., a Delaware
corporation ("SpectraSite").
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
SECTION 1. THE SERVICES
1.1. SERVICES.
SpectraSite will perform the services described on Exhibit A (the
"Services") for Tritel (or subsidiaries or entities under common control with
Tritel, as directed by Tritel) regarding the project described therein (the
"Project") in accordance with the terms and conditions of this Agreement.
SpectraSite will perform the Services in a professional, workmanlike manner,
will exercise reasonable skill, care and diligence in the performance of the
Services and will carry out its responsibilities in accordance with industry
accepted good professional engineering practices and in compliance with all
standards and rules reasonably established by Tritel from time to time;
provided, however, that any timetables agreed to by SpectraSite shall be subject
to appropriate adjustment in the event Tritel materially changes its established
standards and rules. Unless otherwise agreed by Tritel in writing, SpectraSite
will provide all personnel, equipment and supplies necessary or appropriate to
perform the Services.
1.2. EXAMINATION OF THE SERVICES.
SpectraSite has examined the applicable ordinances, rules and
regulations, and has examined the markets where the Services will be provided
and satisfied itself as to all conditions to be encountered in the performance
of the Services; provided, however, Tritel acknowledges that such ordinances,
rules and regulations may change from time to time and that such ordinances,
rules and regulations may be subject to conflicting interpretations. SpectraSite
shall not be liable to Tritel for any damages or delays which may be caused by
changes in or ambiguities associated with such ordinances, rules and
regulations. In any event, SpectraSite shall be entitled to rely upon the advice
and opinions of counsel engaged by Tritel.
1.3. TIME IS OF THE ESSENCE.
Upon execution of this Agreement, the parties shall promptly negotiate
and establish a general overall progress schedule for the performance of the
Services in all markets subject to this Agreement and completion of the Project,
which schedule shall be supplemented (prior to commencing individual site
Services in any market) with more detailed and mutually established market by
market progress schedules (the general and more detailed progress schedules may
be hereafter referred to collectively as the "Progress Schedule") which shall
include a description of milestones marking the completion of certain successive
phases of the Services (the
1
<PAGE>
"Milestones"). The Progress Schedule, when executed by Tritel and SpectraSite,
shall be deemed an addendum to this Agreement and become an integral part of
this Agreement. The Progress Schedule may be amended by mutual agreement of
Tritel and SpectraSite in writing.
In the performance of SpectraSite's obligations under this Agreement,
time is of the essence. SpectraSite agrees to see to the timely performance of
the Services in accordance with the Progress Schedule and will not delay (beyond
deadlines established in the Progress Schedule) or interfere with other portions
of work on the Project. SpectraSite recognizes that Tritel will incur severe
economic loss if the Project is not timely completed, and that SpectraSite will
be responsible to compensate Tritel for such loss in accordance with Section 1.9
if SpectraSite does not comply with the Progress Schedule.
1.4. COMMENCEMENT AND PROGRESS.
Upon execution of this Agreement, SpectraSite will commence providing
preliminary Services to Tritel prior to the establishment of the Progress
Schedule. Tritel shall compensate SpectraSite for such preliminary Services in
accordance with Exhibit B.
Upon Tritel and SpectraSite's mutual execution of the Progress
Schedule, SpectraSite will commence providing Services within a market specified
by Tritel within three (3) weeks after written notice from Tritel to
SpectraSite, and shall provide the Services diligently and in accordance with
the Progress Schedule.
1.5. PRIORITY OF SERVICES.
Within the parameters of the Progress Schedule, Tritel shall have the
right to decide the time, order and priority in which the various portions of
the Services shall be performed and all other matters relevant to the timely and
orderly conduct of SpectraSite's Services.
1.6. COORDINATION.
SpectraSite shall cooperate with Tritel and all other contractors
involved in the Project in the provision of the Services. Tritel shall cooperate
with SpectraSite in connection with its provision of the Services, and shall
instruct its contractors and agents involved in the Project to do likewise.
1.7. AUTHORIZED REPRESENTATIVE; PERSONNEL.
SpectraSite shall designate one or more persons who shall be
SpectraSite's authorized representative(s) on-site and off-site. Tritel shall
have the right to approve any personnel (whether employees, contractors or
otherwise) assigned by SpectraSite to perform any Services, which approval shall
not be unreasonably withheld or delayed.
1.8. ASSIGNMENT AND SUBCONTRACTING.
SpectraSite will not assign the work under this Agreement, or
subcontract any portion of it, without the written consent of Tritel.
Notwithstanding the foregoing, SpectraSite shall be entitled to enter into
independent contractor relationships with agents to perform site acquisition
2
<PAGE>
services. SpectraSite will not make any assignment of payments to be earned by
SpectraSite under this Agreement without the prior written approval of Tritel.
1.9 CONSEQUENCES FOR DELAY.
Except as noted below, in the event of a delay of SpectraSite referred
to in Section 1.3, there shall be deducted from the Compensation payable to
SpectraSite the following amounts: (a) a charge equal to [CONFIDENTIAL TREATMENT
REQUESTED] per day per search ring for each day of delay in the Progress
Schedule solely attributable to SpectraSite, subject to a maximum delay charge
of [CONFIDENTIAL TREATMENT REQUESTED] per search ring. References to "search
ring" shall mean any search rings as is issued by Tritel or its RF engineering
contractor(s) or as such may be modified pursuant to mutual agreement of Tritel
and SpectraSite.
SpectraSite will be excused for any delay caused by acts of God, war
(including civil war), civil unrest, acts of government (including moratoriums,
changes in statutes, rules, ordinances or regulations, or changes in the
interpretation or application of statutes, rules, ordinances or regulations),
fire, floods, explosions, inclement weather, epidemics, quarantine restrictions,
delays caused by Tritel or its vendors or other contractors, extraordinary
delays caused by the review, negotiation and execution of leases by prospective
lessors or other events beyond the control of SpectraSite. SpectraSite will be
entitled to extensions of time for such delay only upon written notice to Tritel
within ten (10) days after SpectraSite discovers that an event has occurred
which will cause such delay. The foregoing sums represent the amount of
liquidated damages which the parties have agreed upon as compensation to Tritel
for any delay in placing Tritel's systems in commercial service in accordance
with the Progress Schedule as a result of SpectraSite's delay or interference.
The parties acknowledge that such sums represent a fair and equitable amount of
compensation for delay in view of the impossibility of ascertaining actual
damages.
SECTION 2. COMPENSATION.
2.1. COMPENSATION.
Tritel will pay SpectraSite for Services rendered and reimburse
SpectraSite for expenses in accordance with Exhibit B (the "Compensation"). Any
state and local sales or use taxes arising from Tritel's payment of the
Compensation are not included and, if applicable, shall be payable by Tritel.
2.2. PAYMENT TERMS.
SpectraSite will submit invoices to Tritel monthly. Tritel will remit
all properly payable amounts within thirty (30) days of Tritel receipt of any
such invoice unless Tritel elects the financing option set forth below. Tritel
may elect to finance the payment of any service fees on a given invoice for a
period of up to nine months, but Tritel shall not be allowed to finance any
Reimbursable Expenses or Direct Expenses and those sums shall continue to be due
and payable within thirty (30) days of the date of Tritel's receipt of
SpectraSite's invoice. If Tritel so elects, it shall provide written notice to
SpectraSite not later than thirty (30) days after receipt of the
3
<PAGE>
invoice that Tritel wishes to finance and interest will begin to accrue on all
charges set forth in any deferred invoice at a floating per annum rate equal to
the prime rate of interest published in The Wall Street Journal plus three
percent beginning on the thirty-first day following Tritel's receipt of any such
invoice. Tritel agrees to execute a promissory note evidencing said indebtedness
if such a request is made by SpectraSite. Tritel agrees that SpectraSite may
accelerate the outstanding balance of any outstanding indebtedness together with
accrued interest in the event of a breach or other default by Tritel under the
terms of this Agreement or in the event that Tritel elects to terminate this
Agreement pursuant to section 11 of this Agreement. Each invoice will describe
in reasonable detail and with respect to the relevant invoice period a
description of the Services provided. The Compensation shall not be altered
except as specifically provided for in this Agreement.
2.3. INVOICE REPRESENTATION.
All invoices must be accompanied by a representation and warranty of
SpectraSite that all laborers, subcontractors, suppliers and others who might
claim lien rights on the Project have been or will be timely paid in full.
2.4. PAYMENT NOT ACCEPTANCE.
Payment to SpectraSite alone does not constitute or imply acceptance by
Tritel of any portion of SpectraSite's Services.
2.5. SPECTRASITE PAYMENT FAILURE.
If it appears to Tritel that the labor, material and other bills
incurred in the performance of SpectraSite's Services (which if unpaid may give
rise to lien rights or claims on the Project) are not being currently paid,
Tritel may take such steps as it deems necessary to insure that the money paid
to SpectraSite will be utilized to pay such bills.
2.6. BACK CHARGES AND WITHHOLDS.
Tritel may withhold payments from SpectraSite in amounts that are
sufficient to protect Tritel in the event of any of the following:
(a) Any claims Tritel may have against SpectraSite arising out of
other projects;
(b) Reasonable evidence brought to Tritel's attention that any claims,
demands, suits, attachments and/or liens are to be filed against
SpectraSite which could potentially affect the Project;
(c) Any bona fide claim or lien against Tritel or the premises upon
which the Services were performed which arises out of
SpectraSite's default in its performance of this Agreement.
4
<PAGE>
2.7. FINAL PAYMENT.
The final payment for any portion of the Project will be due when
SpectraSite's Services relating to such portion of the Project have been
completed and accepted by Tritel, which acceptance shall not be unreasonably
withheld. For purposes of this Section 2.7, final payment shall be deemed to
have been made upon Tritel's election to finance the charges subject to the
final payment, effective upon Tritel's provision of notice of such election to
SpectraSite. Prior to final payment SpectraSite shall submit to Tritel:
(a) SpectraSite's affidavit that all payrolls, bills for materials and
equipment, and other indebtedness connected with SpectraSite's
Services regarding such portion of the Project for which Tritel or
its property might in any way be liable, have been paid, or
otherwise satisfied; and
(b) Other data as reasonably required by Tritel, such as receipts,
releases, and waivers of liens.
SECTION 3. TERM.
The term of this Agreement will commence on the date hereof and, unless
otherwise earlier terminated pursuant to Section 11 or extended upon mutual
agreement of the parties, will end upon the earlier of:(i) SpectraSite's
completion and Tritel's acceptance of the Services; or (ii) three (3) years from
the date of SpectraSite's commencement of Services in the last market of Tritel
in the Project covered by this Agreement.
SECTION 4. INDEPENDENT CONTRACTOR.
SpectraSite will perform the Services as an independent contractor of
Tritel, and this Agreement will not be construed to create a partnership, joint
venture or employment relationship between SpectraSite and Tritel. SpectraSite
will not represent itself to be an employee or agent of Tritel or enter into any
agreement on Tritel's behalf or in Tritel's name, unless SpectraSite is
specifically authorized in writing by Tritel to do so.
SECTION 5. COMPLIANCE WITH LAWS.
SpectraSite will at its own cost (a) comply with all federal, state and
local laws, ordinances, regulations and orders with respect to its performance
of the Services (collectively, the "laws", (b) file all reports relating to the
Services (including, without limitation, tax returns), (c) pay all filing fees
and federal, state and local taxes applicable to SpectraSite's business as the
same shall become due, and (d) pay all amounts required under local, state and
federal workers' compensation acts, disability benefit acts, unemployment
insurance acts and other employee benefit acts when due, SpectraSite will
provide Tritel with such documents and other supporting materials as Tritel may
reasonably request to evidence SpectraSite's continuing compliance with this
Section 5. SpectraSite is liable to Tritel for all fines and penalties
attributable to any acts of commission or omission by SpectraSite, its employees
and agents resulting from the failure to comply with laws.
5
<PAGE>
SECTION 6. INSURANCE. SpectraSite will procure and maintain, during the term of
this Agreement, insurance of the following types and coverage amounts:
(a) Workers compensation insurance in accordance with the provisions
of the applicable workers compensation or similar law of the state
applicable to Contractor's personnel;
(b) Comprehensive general liability insurance with minimum coverage of
$1,000,000 combined single limit per occurrence for bodily injury
or property damage;
(c) Automobile liability insurance insuring all owned, non-owned and
hired automotive equipment in minimum combined single limit
amounts of $1,000,000;
(d) Umbrella coverage of not less than $4,000,000 combined single
limit in excess of the coverage required in subsections (b) and
(c) above;
(e) Errors and omissions coverage of not less than $1,000,000 per
occurrence.
Tritel shall be named as additional insured under the insurance
required under subsections (b), (c), (d), and (e). SpectraSite shall
provide Tritel with certificates of insurance evidencing the coverage
required above. Such insurance will provide for 30 days prior written
notice to Tritel in event of cancellation, non-renewal, or material
changes in coverage.
SECTION 7. CONFIDENTIAL INFORMATION.
SpectraSite acknowledges that all documents and records containing
Confidential Information, whether prepared by SpectraSite, Tritel or others, are
the property of and belong to Tritel and shall be returned to Tritel upon
request. No Confidential Information shall be used by SpectraSite for any
purpose other than rendering the Services hereunder, and SpectraSite shall not
disclose Confidential Information to others except as may be necessary to render
the Services hereunder. This term shall survive the termination of this
Agreement. This term "Confidential information" means information, except as may
be properly in the public domain, about Tritel's projects, processes,
management, operations, services, manufacturing, purchasing, accounting,
marketing, merchandising, selling, research and development, any other
information of a proprietary or competitively sensitive nature or such other
information designated by Tritel in writing to be Confidential Information.
Further, Tritel is a party to certain confidentiality and non-isclosure
agreements with other vendors/service providers and, as a contractor of Tritel,
SpectraSite may be granted access to certain confidential and proprietary
information of such third parties. As to any such information provided to
SpectraSite, it shall fully comply with all requirements of any confidentiality
or non-disclosure agreements applicable to such information.
SECTION 8. NO CONFLICTING OBLIGATIONS.
8.1. OTHER AGREEMENTS.
SpectraSite's execution, delivery and performance of this Agreement
will not violate any other employment, nondisclosure, confidentiality,
consulting or other agreement to which SpectraSite is a party or by which it may
be bound.
6
<PAGE>
8.2. THIRD-PARTY CONFIDENTIAL INFORMATION.
SpectraSite will not use, in the performance of the Services or the
creation of any Proprietary Materials, or disclose to Tritel any confidential or
proprietary information to any other person if such use or disclosure would
violate any obligation or duty that SpectraSite owes to such other person.
SpectraSite's compliance with this Section 8.2 will not prohibit, restrict or
impair SpectraSite's performance of the Services and it's other obligations and
duties to Tritel.
SECTION 9. INDEMNIFICATION.
SpectraSite shall indemnify, defend and hold Tritel (and Tritel's
agents, legal representatives, officers, directors, shareholders and employees)
harmless from all claims, damages, losses, costs, expenses (including attorneys'
fees) and liabilities, including any amounts paid in satisfaction of judgments,
in compromise or as fines and penalties, arising out of or resulting from any
claim, action, investigation or other proceeding (including any proceeding by
any of SpectraSite's employees, agents or subcontractors), actual or threatened,
that is based upon (a) a default by SpectraSite in the performance of its
obligations under this Agreement, (b) any representation or warranty of
SpectraSite being untrue in any material respect, (c) the conduct of
SpectraSite's business, (d) any negligent act or omission of SpectraSite, or (e)
the infringement or misappropriation of any foreign or United States patent,
copyright, trade secret or other proprietary right by the Proprietary Materials
originating from SpectraSite.
Tritel shall indemnify, defend and hold Tritel (and Tritel's agents,
legal representatives, officers, directors, shareholders and employees) harmless
from all claims, damages, losses, costs, expenses (including attorneys' fees)
and liabilities, including any amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, arising out of or resulting from any
claim, action, investigation or other proceeding (including any proceeding by
any of Tritel's employees, agents or subcontractors), actual or threatened, that
is based upon (a) a default by Tritel in the performance of its obligations
under this Agreement or (b) any representation or warranty of Tritel being
untrue in any material respect.
SECTION 10. NONDISCLOSURE AGREEMENT.
As a condition to Tritel's obligations under this Agreement,
SpectraSite agrees to abide by all the terms and conditions of that certain
Non-disclosure Agreement dated as of July 28, 1998 executed by and between
Tritel and SpectraSite (the "Non-disclosure Agreement").
SECTION 11. TERMINATION.
11.1. TERMINATION FOR CAUSE.
Tritel may terminate this Agreement upon an Event of Default (defined
below), provided, however, that as to any of the matters set forth in
subparagraphs (iii) through (vii) of Section 13: (a) Tritel sends written notice
to SpectraSite describing the breach in reasonable detail, (b) SpectraSite does
not cure the breach within thirty (30) days following its receipt of such
notice, and (c) following the expiration of the thirty-day cure period, Tritel
sends a second written notice to SpectraSite indicating Tritel's desire to
terminate this Agreement. If an Event of Default results from any of the matters
set forth in subparagraphs (i) and (ii) of Section 13, Tritel's
7
<PAGE>
termination of this Agreement shall be effective upon giving notice of
termination to SpectraSite. SpectraSite may terminate this Agreement upon
Tritel's material breach of this Agreement, provided that (a) SpectraSite sends
written notice to Tritel describing the breach in reasonable detail, (b) Tritel
does not cure the breach within thirty (30) days following its receipt of such
notice, and (c) following the expiration of the thirty-day cure period,
SpectraSite sends a second written notice to Tritel indicating SpectraSite's
desire to terminate this Agreement.
11.2. TERMINATION FOR CONVENIENCE.
Either Tritel or SpectraSite may terminate this Agreement at any time
upon thirty (30) days' written notice to the other (a "Termination for
Convenience"). Upon a Termination for Convenience, SpectraSite shall be
compensated for any Services rendered but which have not been paid ("Unpaid
Services") on a time and materials basis as set forth in Exhibit B.
11.3. SURVIVAL.
Sections 5 and 7 and Sections 9 through 24 (together with all other
provisions of this Agreement that may reasonably be interpreted or construed as
surviving termination of the Term) will survive the termination of the Term.
SECTION 12. NOTICES.
All notices given hereunder will be given (and shall be deemed to have
been given upon receipt) in writing, will refer to this Agreement and will be
personally delivered or by registered or certified mail (return receipt
requested) to the address set forth below the parties' signatures at the end of
this Agreement. Any party may from time to time change such address by giving
the other party notice of such change in accordance with this Section 12.
SECTION 13. EVENT OF DEFAULT.
For the purposes of this Agreement, an "Event of Default" shall be if:
(i) At any time there shall be filed by or against SpectraSite in
any court a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee
of all or a portion of the property of SpectraSite, and within
twenty (20) days from the filing date SpectraSite fails to
secure a discharge; or
(ii) SpectraSite makes an assignment for the benefit of creditors or
petitions for or enters into an agreement or arrangement with
its creditors; or
(iii) SpectraSite materially fails to prosecute the Services in
accordance with the Acceptance Criteria, and therefore, fails to
complete the Services entirely on or before any date established
in the Process Schedule for partial, substantial or final
completion (except for delays for which SpectraSite is entitled
to additional time); or
8
<PAGE>
(iv) There is a breach of any of SpectraSite's representation or
warranties contained in this Agreement or required to accompany
any invoice rendered under this Agreement; or
(v) SpectraSite fails to supply sufficient labor, material and/or
equipment so as to complete the Services in accordance with the
Progress Schedule, unless such delay is excused in accordance
with Section 1.9; or
(vi) SpectraSite performs defective work and fails to correct
promptly and properly such defective work; or
(vii) Without limitation, SpectraSite fails to perform any material
provision of this Agreement.
SECTION 14. ASSIGNMENT.
SpectraSite may not assign this Agreement, in whole or in part, without
Tritel's prior written consent. Tritel may assigns its rights hereunder to 9(a)
any corporation or other entity resulting from any merger, consolidation or
other reorganization to which Tritel is a party, (b) any corporation,
partnership, association or other entity or person to which Tritel may transfer
all or substantially all of the assets and business of Tritel existing at such
time, or (c) any subsidiary of or entity under common control with Tritel.
Notwithstanding any such assignment, Tritel shall remain fully liable for the
performance of its duties hereunder. All the terms and provisions of this
Agreement will be binding upon and inure to the benefit of and be enforceable by
the parties hereto and their respective successors and permitted assigns.
SECTION 15. PERSONNEL.
The terms and conditions of this Agreement will be binding upon
SpectraSite's employees, agents, subcontractors and affiliates.
SECTION 16. WAIVERS.
No delay or failure by any party hereto in exercising or enforcing any
of its rights or remedies hereunder, and no course of dealing or performance
with respect thereto, will constitute a waiver thereof. The express waiver by a
party hereto of any right or remedy in a particular instance or will not
constitute a waiver thereof in any other instance. All rights and remedies will
be cumulative and not exclusive of any other rights or remedies.
SECTION 17. AMENDMENTS.
No amendment, waiver or discharge of any provision of this Agreement
will be effective unless made in writing that specifically identifies this
Agreement and the provision intended to be amended, waived or discharged and
signed by Tritel and SpectraSite. Each such amendment, waiver or discharge will
be effective only in the specific instance and for the specific purpose for
which given.
9
<PAGE>
SECTION 18. APPLICABLE LAW.
This Agreement and each of the documents referred to herein shall be
interpreted, construed, applied and enforced in accordance with the laws of the
State of Mississippi, without regarding to any rules governing conflicts of
laws. Any action to enforce arising out of, or relating in any way to, any of
the provisions of this Agreement may be brought and prosecuted only within such
court or courts located in the State of Mississippi as is provided by law; and
the parties consent to the jurisdiction of said court or courts located in the
State of Mississippi and the service of process by registered mail, return
receipt requested, or by any other manner provided by law.
SECTION 19. SEVERABILITY.
If any provision of this Agreement is held invalid, illegal or
unenforceable in any jurisdiction, for any reason, then, to the full extent
permitted by law (a) all other provisions hereof will remain in full force and
effect in such jurisdiction and will be liberally construed in order to carry
out the intent of the parties hereto as nearly as may be possible, (b) such
invalidity, illegality or unenforceability will not affect the jurisdiction
therefor will have the power to reform such provision to the extent necessary
for such provision to be enforceable under applicable law.
SECTION 20. ENTIRE AGREEMENT.
This Agreement and the Non-disclosure Agreement, including the exhibits
and schedules hereto and thereof, constitute the entire agreement between the
parties with respect to their subject matters, and all prior or contemporaneous
oral or written communications, understandings or agreements between the parties
with respect to such subject matters are hereby superseded in their entireties.
SECTION 21. DISPUTES.
21.1. AGREEMENT TO ARBITRATE.
All claims, disputes and matters in question arising out of, or
relating to, this Agreement or any claimed breach of this Agreement, except for
claims of SpectraSite which have been waived by its acceptance of final payment,
shall be decided by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then in effect unless the parties
mutually agree otherwise. This agreement to arbitrate shall be specifically
enforceable.
21.2. DEMAND FOR ARBITRATION.
Notice of demand for arbitration shall be filed in writing with the
other party to this Agreement and with American Arbitration Association. The
demand for arbitration shall be made within thirty (30) days after written
notice of the claim, dispute or other matter in question has been given, and in
no event shall it be made after the time when institution of legal or equitable
proceedings based on such claim, dispute or other matter in question would be
barred
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<PAGE>
by the applicable statute of limitations, whichever occurs first. The location
of the arbitration proceeding shall be Jackson, Mississippi.
21.3. AWARD.
The award rendered by the arbitrator(s) shall be final and judgment may
be entered upon it in accordance with applicable law in any court having
jurisdiction.
21.4. SAME ARBITRATORS.
At the election of Tritel, any arbitration proceeding instituted by
either party under this Agreement may be consolidated with any other arbitration
proceeding then or thereafter pending between either party and any other person
or entity if the respective arbitrations involve similar questions of fact or
law or arise out of any work done or services supplied for the design or
construction of the Project.
21.5. EXCEPTIONS.
This agreement to arbitrate shall not apply to any claim of
contribution or indemnity asserted by one party of this Agreement against the
other party and arising out of an action brought in a state or federal court or
in arbitration by a person who is under no obligation to arbitrate the subject
matter of such action with either of the parties to this Agreement, or who does
not consent to such arbitration.
SECTION 22. COUNTERPARTS.
This Agreement may be executed in two or more counterparts that
together shall constitute a single agreement.
SECTION 23. HEADINGS.
The headings contained in this Agreement are for ease of reference and
shall not affect the interpretation or meaning of this Agreement.
SECTION 24. PUBLICITY.
So long as this Agreement is in effect, neither SpectraSite, nor any of
its affiliates, officers, directors, employees or agents shall issue any press
release or otherwise make any public statement with respect to the existence of
this Agreement or the subject matter of this Agreement without the prior written
consent of Tritel.
SECTION 25. LIMITATION OF LIABILITY.
Except for the liquidated damages and other payment undertakings of
SpectraSite as set forth in Section 1.9, expenses of arbitration and awards of
attorneys fees and expenses, in no event shall SpectraSite be liable under this
Agreement for: (i) special incidental or consequential damages (including loss
of profits) regardless of legal theory advanced, whether foreseen or
11
<PAGE>
unforeseen; or (ii) an amount exceeding the price of Services rendered through
the date of any termination or expiration of this Agreement.
SECTION 26. FORCE MAJEURE.
In the event a party's performance of an obligation hereunder is
rendered impossible or commercially impractical (rather than simply delayed) due
to causes beyond its control and without its fault or negligence, including, but
not limited to, acts of God, war (including civil war), civil unrest, acts of
government (including moratoriums, changes in statutes, rules, ordinances or
regulations, or changes in the interpretation or application of statutes, rules,
ordinances or regulations), fire, floods, explosions, inclement weather,
epidemics, quarantine restrictions, strikes or labor unrest (of third parties
but not of such party), material shortage, or delays in transportation, such
party's performance of such obligation shall be excused.
The parties have executed this Agreement as of the date first set forth
above.
TRITEL COMMUNICATIONS, INC.
By:_________________________________
Jerry M. Sullivan, Jr.
Executive Vice President
Chief Operating Officer
ADDRESS:
1410 Livingston Lane
Jackson, Mississippi 39213-8003
Attn.: Jerry M. Sullivan, Jr.
SPECTRASITE COMMUNICATIONS, INC.
By:
--------------------------------
Name: Tracy E. Gill
------------------------------
Its: Vice President
------------------------------
ADDRESS:
SpectraSite Communications, Inc.
11 Corporate Hill Drive, Suite 100
Little Rock, Arkansas 72205
Attn: Tracy E. Gill
<PAGE>
EXHIBIT A
SCOPE OF WORK
Following is the Scope of Services for the Tritel PCS system build-out. These
outlined procedures are designed to reflect site acquisition from pre-deployment
through delivery by SpectraSite of an approved site to the construction group.
It is understood that this work shall be reimbursed on a time and materials
basis pursuant to the fee schedule and expense responsibility set out in Exhibit
B. It is further understood that this Scope of Work may be modified by mutual
written agreement of the parties as the scope of services required expands.
Services under this Agreement shall be rendered as, when and where requested by
Tritel subject to required advance notice provisions set forth in the Agreement
to which this Exhibit is attached.
I. PRE-DEPLOYMENT
SpectraSite shall coordinate strategic planning and procedure development for
infrastructure development and coordination of Tritel, RF, site acquisition and
construction as requested by Tritel. SpectraSite shall undertake any research
and preparation of analysis of real estate, zoning, community issues, existing
structures, municipal sites, etc. that Tritel shall request in the BTAs prior to
actual site acquisition. Prior to commencing this work, SpectraSite shall
prepare and Tritel shall acknowledge the scope of the work and the nature and
format of the deliverables to Tritel or its designee. The priority and timing of
this work shall be at Tritel's direction. SpectraSite shall provide suggested
format for communication of all deliverable information. Tritel shall approve
such format prior to the delivery. This work shall be performed on a time and
materials basis pursuant to Exhibit B.
II. INITIAL SEARCH
Receive search area from Project Director or equivalent. Review with RF engineer
if appropriate.
Review and identify zoning categories and boundaries within the search area.
Identify critical dates for zoning application filings and hearing dates.
Drive search area. Look for existing towers or other structures of appropriate
height in or around search area limits.
Identify appropriate property owners within the search area through research of
tax maps.
Contact any appropriate existing tower owners, or building top owners first.
Then contact remaining property owners.
Investigate all appropriate lease or purchase options. Provide copies of sample
lease or purchase documents where appropriate.
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<PAGE>
EXHIBIT A
III. SITE OPTION REPORT
Provide a Site Option Report to Tritel Director or equivalent. This memo should
include the following information on a minimum of two sites;
Regarding Zoning
Identify potential opposition issues.
Identify required approvals and associated application and hearing dates, etc.
Establish potential lease/purchase price and terms.
Contact name, phone number.
Topographic maps representing each potential site, preliminary GPS coordinates
and approximate elevation.
Proposed tower height and recommended type.
Site address and directions to site.
Property size.
Photographs of site and easements.
Utility location information.
Signed Option if possible at this time [ assuming Tritel is using the
Option/Lease or Purchase method of securing prospective properties]
Arrange site visits as necessary for team decision making.
IV. SITE SELECTION
Project Director will select a primary and an alternate site to be purchased (or
leased).
Proceed with negotiations for first and second site choices. Consult with
approved attorneys regarding any legal changes to document. Consult with Project
Director regarding significant deviations from approved business terms.
Request preliminary title review for primary site.
Coordinate with construction group to confirm necessary access easements for
primary site.
2
<PAGE>
EXHIBIT A
Submit lease/purchase contract package to Project Director for review and
signature. This package should include the following:
Lease/purchase contracts, and access.
Obtain final copy of title report and insurance for primary site. Coordinate any
curative measures as needed.
Environmental Phase I
FAA consultant study and FAA application (if necessary)
FCC tower registration (if necessary)
V. ZONING
Coordinate the completion and submission of appropriate applications for zoning,
special use permits, etc. for primary site.
Coordinate the organization of neighborhood meetings for addressing public
opposition as needed.
Coordinate preparation of appropriate presentation materials.
Coordinate other professional presentations as needed.
Coordinate attendance of necessary individuals at all zoning meetings.
VI. MONITORING TIMELINE
At least one weekly contact should be made with RF engineer to discuss site
options until site is approved. SpectraSite designed timeline will be used to
establish coordinated flow of project progress.
Close purchase or lease as necessary.
Notify Project Director (in written and in verbal form) when project is complete
and construction may begin.
VII. SITE INFORMATION PACKAGE
Prior to construction, provide Tritel with one copy of a Project Completion File
including:
Original lease/purchase agreement
Original easement agreements
3
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All correspondence
Site Option Report/photos, etc.
Survey
Geotechnical report
Environmental report
Title report and insurance policy
FAA consultant study
FAA approval
4
<PAGE>
EXHIBIT B
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
TRITEL COMMUNICATIONS, INC.
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
DAY RATES FOR SPECTRASITE PERSONNEL
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
REGIONAL MANAGER [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
VICE PRESIDENT PROJECT DESIGN [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
PROJECT MANAGER [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
AGENT MANAGER [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
FIELD AGENT [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
ZONING COORDINATOR [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
LEASE COORDINATOR [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
OPERATIONS ASSISTANT [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
FIELD IMPLEMENTATION MANAGER [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
FIELD IMPLEMENTATION COORD [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
FIELD SPECIALIST [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
TITLE/CLOSING MANAGER [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
PRECONSTRUCTION RPTS MGR [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
OPERATIONS CLERK [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
DATABASE PROGRAMMER [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
Tritel Communications, Inc.
- ----------------------------------------------------------------------------------------------------------------------------
SpectraSite Services
- ----------------------------------------------------------------------------------------------------------------------------
Expense Reimbursement (at actual cost)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Expense Direct
- ----------------------------------------------------------------------------------------------------------------------------
Reimbursement Expense
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cellular Phone and Pagers X
- ----------------------------------------------------------------------------------------------------------------------------
Cellular Phone and Pagers Service X
- ----------------------------------------------------------------------------------------------------------------------------
Expert Testimony (if necessary) X
- ----------------------------------------------------------------------------------------------------------------------------
Field Exps: maps, deeds, films/processing, etc. X
- ----------------------------------------------------------------------------------------------------------------------------
Lease Option Fees X
- ----------------------------------------------------------------------------------------------------------------------------
Mileage - Project Related X
- ----------------------------------------------------------------------------------------------------------------------------
Noise Assessment Studies X
- ----------------------------------------------------------------------------------------------------------------------------
Office Equipment X
- ----------------------------------------------------------------------------------------------------------------------------
Office Rent X
- ----------------------------------------------------------------------------------------------------------------------------
Office Supplies X
- ----------------------------------------------------------------------------------------------------------------------------
Overnight Mail Fees X
- ----------------------------------------------------------------------------------------------------------------------------
Photo Simulation Fees X
- ----------------------------------------------------------------------------------------------------------------------------
Recording Fees X
- ----------------------------------------------------------------------------------------------------------------------------
Telephone Service Cost X
- ----------------------------------------------------------------------------------------------------------------------------
Title Report Expenses X
- ----------------------------------------------------------------------------------------------------------------------------
Tower Stress and Foundation Analysis X
- ----------------------------------------------------------------------------------------------------------------------------
Travel & Living Costs for Infrastructure Psn. X
- ----------------------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
Zoning Filing Fees
- ----------------------------------------------------------------------------------------------------------------------------
Zoning Permit Fees X
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
#9152
REV. D
Rev. D
- --------------------------------------------------------------------------------
ACQUISITION AGREEMENT
ERICSSON CMS 8800 CELLULAR MOBILE TELEPHONE SYSTEM
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS..................................................2
ARTICLE 2 SCOPE OF AGREEMENT...........................................6
ARTICLE 3 TERM OF AGREEMENT............................................8
ARTICLE 4 PRICES.......................................................8
ARTICLE 5 TERMS OF PAYMENT.............................................9
ARTICLE 6 ORDERS AND SCHEDULING.......................................10
ARTICLE 7 ORDER DELAY/CANCELLATION....................................12
ARTICLE 8 INSTALLATION................................................12
ARTICLE 9 ACCEPTANCE TESTING AND ACCEPTANCE...........................13
ARTICLE 10 DELAY.......................................................15
ARTICLE 11 PURCHASER'S AND SELLER'S RESPONSIBILITIES...................16
ARTICLE 12 LICENSES, PERMITS AND APPROVALS.............................17
ARTICLE 13 WARRANTIES..................................................17
ARTICLE 14 CONFIDENTIAL INFORMATION....................................23
ARTICLE 15 CONTINUITY OF EXPANSION FUNCTIONALITY.......................24
ARTICLE 16 AMENDMENTS..................................................24
ARTICLE 17 TITLE; RISK OF LOSS.........................................24
ARTICLE 18 INSURANCE...................................................25
ARTICLE 19 SOFTWARE....................................................26
ARTICLE 20 TAXES.......................................................27
ARTICLE 21 INDEMNIFICATION AND LIMITATION OF LIABILITY.................27
ARTICLE 22 INTELLECTUAL PROPERTY RIGHTS INFRINGEMENT...................28
ARTICLE 23 DISPUTE RESOLUTION..........................................29
ARTICLE 24 TERMINATION AND DEFAULT.....................................30
ARTICLE 25 ADVERTISING.................................................32
ARTICLE 26 LATE PAYMENTS...............................................33
ARTICLE 27 PERSONNEL...................................................33
ARTICLE 28 ASSIGNMENT..................................................33
ARTICLE 29 NOTICES.....................................................33
ARTICLE 30 AUTHORITY AND COMPLIANCE WITH LAWS..........................34
ARTICLE 31 HEADINGS....................................................34
ARTICLE 32 GOVERNING LAW; SEVERABILITY.................................35
ARTICLE 33 NO WAIVER...................................................35
ARTICLE 34 ENTIRETY OF AGREEMENT; NO ORAL CHANGE.......................35
ARTICLE 35 ATTACHMENTS AND INCORPORATIONS..............................35
ARTICLE 36 FINANCING AND BOARD APPROVAL................................36
<PAGE>
ACQUISITION AGREEMENT
ERICSSON CMS 8800 CELLULAR MOBILE TELEPHONE SYSTEM
This Agreement (the "Agreement"), is made and effective as of December 30, 1998
(the "Effective Date"), by and between TRITEL FINANCE, INC., a Delaware
corporation, and TRITEL COMMUNICATIONS, INC., a Delaware corporation, with their
principal places of business in Jackson, Mississippi (jointly, "PURCHASER") and
ERICSSON INC., a Delaware Corporation acting through its Network Operators Group
with its principal place of business in Richardson, Texas ("SELLER").
ARTICLE 1 DEFINITIONS
As used herein:
(a) "Affiliate" means any individual, corporation, partnership, joint
venture, proprietorship, or other entity directly or indirectly owning,
owned by or under common ownership with either party to the extent of
more than fifty percent (50%) of the voting shares or controlling
interests owned beneficially by such entity or party, as the case may
be.
(b) "AT&T Standards" means those certain core features, quality standards
and technology requirements for Equipment and related Services and
Software utilized in Tritel PCS Markets as specified in that certain
Securities Purchase Agreement between Tritel, Inc., and AT&T Wireless
PCS, Inc. and certain other parties dated May 20, 1998.
(c) "Cause" means that degree of responsibility or causation equal to at
least 66.67% of the responsibility for or cause of an event on a
comparative basis.
(d) "Cell Site" generally refers to a single physical location and
enclosures thereof of one or more radio base stations (i.e., "cell(s)")
in the System.
(e) "Cell Site Configuration" means the Equipment, Software, Installation
and other applicable Services rendered hereunder at a Cell Site required
to operate and control a particular cell at a Cell Site.
(f) "Cell Site Configuration Engineering" means the engineering required, on
a site-specific basis, to establish the Cell Site Configuration
Installation specifications, including; preparing Equipment lists,
Equipment layout drawings, Equipment labels, cable ladder layout
drawings, and "as-built" drawings and Documentation. Cell Site
Configuration Engineering also includes the design for DC power
distribution for Cell Site Configurations.
(g) "Cell Site Facilities Engineering" means the engineering required to
design a specific Cell Site, including; property surveys, soil reports,
Cell Site layouts, drawings and specifications for the construction of
the Cell Site, shelters, towers, generators, grounding analysis, and all
other items required to make the Cell Site functional. Cell Site
Facilities Engineering does not include Cell Site Configuration
Engineering.
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(h) "Civil Work" means the labor and materials necessary in the performance
of demolition, construction and renovation work (e.g., roads, grading,
fencing, structural improvements, etc.) at the MSC location and at each
Cell Site to assure that each Cell Site and MSC location is ready for
Installation of the Equipment.
(i) "Civil Work Supervision" means the supervision of Civil Work.
(j) "Confidential Matters" means all information about the business and
financial matters (including costs, profits and plans for future
development, training materials, Documentation, methods of operation and
marketing concepts) and any other proprietary information relating to a
party hereto or its Affiliates and their respective operations,
businesses and financial affairs, that is obtained by the other party
hereto as a result of the working relationship between the parties
hereto with respect to the subject matter hereof, whether obtained prior
to or after the date hereof; provided, however, that Confidential
Matters shall not include information that (a) is or becomes generally
available to the public other than as the result of wrongful disclosure
by the recipient hereunder, its Affiliates or their respective
representatives, or (b) was available to the recipient or its Affiliates
or their respective representatives on a non-confidential basis prior to
disclosure hereunder, or (c) is independently developed by the recipient
hereunder, or (d) becomes rightfully available to the recipient from a
third party that is under no obligation to maintain such information as
confidential, or (e) is required to be disclosed through government
regulation or court order. Recipient shall have the burden of proving by
a preponderance of the evidence the applicability of any of the
foregoing exceptions.
(k) "Consent" means the prior written approval of a party to do the act or
thing for which the consent or approval is solicited, or the act of
granting such consent or approval, as the context may require, which
consent or approval shall not be unreasonably withheld, conditioned or
delayed.
(l) "Documentation" means the documentation for the System described in
Attachment E.
(m) "Equipment" means the equipment specified in Attachment A to this
Agreement and purchased from SELLER, and such other wireless
telecommunications equipment as SELLER or its Affiliates may hereafter
make available to PURCHASER and which PURCHASER hereafter orders from
SELLER under this Agreement. Equipment does not include subscriber
equipment, which shall mean mobile telephone handsets, mounting
hardwire, test equipment, antennas and similar subscriber equipment.
(n) "Facilities Preparation Services" means Civil Work, Civil Work
Supervision, Ground Plan Architectural Work, Structural Architectural
Work, and Utilities Work.
(o) "FCC" means the Federal Communications Commission or any successor
agency thereto.
(p) "Ground Plan Architectural Work" means the preparation of architectural
drawings necessary to obtain zoning permits and conditional use permits.
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(q) "In Revenue Service" means the commercial use of the System, or a
portion thereof, exclusive of operation for purposes of conducting
Acceptance Tests.
(r) "Initial Configuration" means the portion of the System, on a per market
basis, which is intended by the parties to be constructed, Installed and
operated as the primary phase of the System, as more specifically set
out in Attachment A. Initial Configuration does not include expansions
thereto (e.g., additional Cell Site Configurations or additional MSC
Configurations).
(s) "Installation" means the performance and supervision by SELLER of all
installation purchased from and performed by SELLER of Equipment and
Software and as further described in Article 8 and Attachment B.
(t) "MSC" means Mobile Switching Center, which generally refers to the
physical location and enclosures thereof.
(u) "MSC Configuration" means the Equipment, Software, Installation and
other applicable Services rendered hereunder at an MSC required to
operate and control the MSC Configuration as the switching function of
the System.
(v) "MSC Configuration Engineering" means the engineering required to
establish the MSC Configuration Installation specifications, including;
preparing Equipment lists, Equipment layout drawings, Equipment labels,
cable tray layout drawings, and "as-built" drawings and Documentation.
MSC Configuration Engineering also includes the design for DC power
distribution for MSC Configurations.
(w) "MSC Facilities Engineering" means the engineering required to design a
specific MSC, including; property surveys, soil reports, building
layouts, drawings and specifications for the construction of the
building, towers, generators, grounding analysis, and all other items
required to make the MSC functional. MSC Facilities Engineering does not
include MSC Configuration Engineering.
(x) "Network Element" means Equipment and Software required to perform
switching or network node functions for a System (e.g., Authentication
Center, Equipment Identity Register, Messaging System, Mobile Switching
Center/Visitor Location Register, Mobile Intelligent Network, Service
Signaling Point Home Location Register, Service Control Point, Signal
Transfer Point, MSC, Short Message Service, Mobile Data Network
Intermediate System, Mobile Data Base Station, Network Management
Server).
(y) "Notice" means a writing containing the information required by this
Agreement to be communicated to either party hereto, sent by (a)
registered or certified mail, postage prepaid, (b) personal delivery,
(c) confirmed air courier, or (d) by facsimile transmittal to such party
at the address provided herein.
(z) "Operations Support System Services" means a combination of hardware and
software platforms that provide tools for operating, maintaining,
analyzing and provisioning the System, as further described in
Attachment I.
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(aa) "Order" means PURCHASER's purchase order generated as detailed in
Article 6, which is accepted by SELLER, or any document that the parties
mutually agree upon as the vehicle for procuring Equipment, Software and
Services pursuant to this Agreement.
(bb) "Professional Services" means those services offered by SELLER relating
to System design, enhancement and optimization as set forth in
Attachment N.
(cc) "Software" means all software furnished hereunder including, but not
limited to, computer programs contained on a magnetic or optical storage
medium, in a semiconductor device, or in another memory device or system
memory consisting of (i) hardwired logic instructions which manipulate
data in central processors, control input-output operations, and error
diagnostic and recovery routines, and (ii) instruction sequences in
machine-readable code that control call processing, radio
infrastructure, peripheral equipment and administration and maintenance
functions. The term "Software" includes all Software Updates, Software
Enhancements, and Software Features.
(dd) "Software Enhancements" means modifications or improvements made to the
Software which improve performance or capacity of the Software, but
shall not include Software Updates.
(ee) "Software Features" means distinct programs which constitute additional
functions to the Software.
(ff) "Software Updates" means periodic updates to the Software issued by
SELLER to correct defects in the Software, but shall not include
Software Enhancements.
(gg) "Specifications" means the specifications and performance standards of
the Equipment, Software and the System as set forth in the SELLER's
Documentation. Specifications shall also include any specifications and
performance standards delivered to PURCHASER by SELLER in the future,
which relate to the System, Equipment or Software; however, no future
specifications or performance standards shall reduce, diminish or
otherwise adversely impact previously delivered specifications.
(hh) "Structural Architectural Work" means the preparation of all
architectural drawings and blueprints relating to the structural
specifications for the MSC and/or Cell Sites.
(ii) "System" means the Initial Configuration and all expansions thereto
purchased by PURCHASER from SELLER pursuant to this Agreement, including
all Equipment, Software, Installation and other Services purchased from
SELLER by PURCHASER hereunder relating to the System.
(jj) "System Support Services" means those services to be provided by SELLER
to PURCHASER for maintenance of Equipment and Software as described
further in Attachment D.
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(kk) "Services" means Cell Site Configuration Engineering, Cell Site
Facilities Engineering, Civil Work, Civil Work Supervision, Facilities
Preparation Services, Ground Plan Architectural Work, Installation,
Network Element Configuration Engineering, Network Element Facilities
Engineering, Network Services, RF Services, Structural Architectural
Work, Support System Services, Technical Education, Transmission
Services and all other services as SELLER provides or makes available to
its customers, and which are more fully described in Attachment N.
(ll) "Technical Education" means the training courses offered by SELLER as
set forth in Attachment C.
(mm) "Tritel PCS Markets" means those areas within the customer markets set
forth in Attachment K in which PURCHASER or its Affiliates has FCC
licenses to provide PCS services.
(nn) "Utilities Work" means the installation of electric and telephone
utilities at the MSC and Cell Sites.
Unless the context otherwise requires, the terms defined in Article I hereof or
herein shall have the meanings therein specified for all purposes of this
Agreement, applicable to both the singular and plural forms of any of the terms
defined herein. When a reference is made in this Agreement to a paragraph, such
reference shall be to a paragraph of this Agreement unless otherwise indicated.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The use of a gender herein shall be deemed to include the neuter,
masculine and feminine genders wherever necessary or appropriate. Whenever the
word "herein" is used in this Agreement, it shall be deemed to refer to the
Agreement and not to a particular paragraph of the Agreement unless expressly
stated otherwise.
ARTICLE 2 SCOPE OF AGREEMENT
2.1 Upon the terms and conditions herein set forth, PURCHASER hereby agrees
to purchase from SELLER, and SELLER hereby agrees to sell, deliver,
provide to PURCHASER and install in the Tritel PCS Markets, the Initial
Configuration of the System, including the Equipment and Software and
Installation therefor, as well as Documentation, Cell Site Configuration
Engineering, MSC Configuration Engineering, Operations Support System
Services, System Support Services, Professional Services and the other
Services described herein which may be ordered by PURCHASER as part of
the Initial Configuration. SELLER shall render such Services provided
that PURCHASER is in compliance in all material respects with its
obligations and requirements under this Agreement. At PURCHASER's
option, additional markets may be designated for inclusion within the
scope of this Agreement with SELLER's prior written Consent and
utilizing the same pricing as provided for the Initial Configuration of
the System.
2.2 The commitments of the Parties with respect to this Agreement or any
Order thereunder shall be expressly conditioned upon PURCHASER having
obtained and maintained an
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effective FCC license as aforesaid and financing for the Market Area
referenced in said Order.
2.3 During the Term of this Agreement, PURCHASER agrees to purchase a
minimum of [CONFIDENTIAL TREATMENT REQUESTED] of Equipment, Software and
Services from SELLER and to utilize SELLER as its exclusive Equipment
provider in the Tritel PCS Markets, for all Expansions of Equipment and
Software to the Initial Configuration. PURCHASER's minimum purchase
commitment and grant of exclusivity is conditioned upon (i) SELLER
continuing to make available to PURCHASER sufficient quantities of
Equipment and Software, under the terms and conditions of this
Agreement, to meet PURCHASER's needs, (ii) SELLER's compliance with this
Agreement in all material respects, (iii) SELLER's continued ability to
provide PURCHASER with first class quality, state of the art Equipment,
Software and Services, (iv) SELLER's compliance in all material respects
with any FCC requirements for its Equipment, Software and Services, and
(v) SELLER's ability to provide Equipment, Software and Services which
will enable PURCHASER to meet the AT&T Standards in all material
respects. For purposes of this Section 2.3, "state of the art" means
Equipment or Software, as applicable, which is the general functional
equivalent in features, size and performance with equipment offered by
any other PCS equipment vendor for sale in the United States.
2.4 SELLER shall, in accordance with the procedures set forth in Article 6,
make available to PURCHASER Cell Site Facilities Engineering, Facilities
Preparation Services, MSC Facilities Engineering, Professional Services,
and such other Services as SELLER may from time to time offer to its
customers.
2.5 SELLER hereby agrees to provide, upon request of PURCHASER, Technical
Education in accordance with Attachment C, System Support Services in
accordance with Attachment D and Installation for any Equipment and
Software purchased under this Agreement.
2.6 PURCHASER hereby engages Seller to provide Installation for any MSC
purchased under this Agreement.
2.7 SELLER will furnish PURCHASER, at no charge, one (1) set of
Documentation (CD-ROM) as set forth in Attachment E for each of
PURCHASER's MSC and Home Office locations.
2.8 Within a reasonable time after the Effective Date, SELLER shall, at no
expense to PURCHASER, establish a Key Account Management ("KAM")
organization. The KAM organization shall be located in offices in the
metro Jackson, Mississippi area and shall be staffed at levels mutually
agreeable to the parties hereto, and shall be provided to PURCHASER for
the Term of this Agreement.
2.9 All Equipment and Software purchased by PURCHASER hereunder, other than
Equipment purchased for repair and maintenance purposes, shall be new.
For purposes of this Section 2.9 "new" shall mean Equipment and Software
which has not been used In Revenue Service or for training or extended
testing.
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ARTICLE 3 TERM OF AGREEMENT
This Agreement shall commence on the Effective Date hereof and continue for a
period of five (5) years (hereinafter, the "Term") unless terminated on an
earlier date as provided herein, except as to those provisions which by their
express terms survive such termination.
ARTICLE 4 PRICES
4.1 The prices, fees and discount schedules for the Initial Configuration,
including the Equipment, Software, Installation, test equipment and
spare parts, are set forth in Attachment A. Any such prices not set
forth in Attachment A shall be no greater than SELLER's ATP Prices (as
defined in Attachment A) in effect during the time of this Agreement,
less any applicable discounts. SELLER represents, warrants and covenants
to PURCHASER that ATP Partner Prices are and shall, for the Term be no
greater than SELLER's United States list prices.
4.2 The prices, fees and discount schedules for Equipment, Software and
Services ordered by PURCHASER for expansions to the Initial
Configuration shall be those set forth in Attachment A, subject to the
price variation provisions contained in Attachment O. Prices for
Equipment, Software, Documentation and Services not set forth in
Attachments A, C, and D, if not otherwise set forth in this Agreement,
shall be no greater than SELLER's ATP Partner prices in effect at the
time of ordering by PURCHASER.
4.3 The unit prices of the Equipment are delivered prices, with the
Equipment delivered by common carrier to PURCHASER's job site.
Notwithstanding the foregoing, if the Equipment is delivered to SELLER's
storage facility prior to delivery to the job site, SELLER shall be
responsible for any ordinary common carrier charges to deliver the
Equipment from the storage facility to the job site. PURCHASER will be
responsible for any additional abnormal costs for delivery by private or
contract carriers (e.g., helicopter, cranes for high-rise buildings,
permits to close roads).
4.4 The prices, fees and applicable discount schedules for Operations
Support System Services are set forth in Attachment I.
4.5 The prices, fees and applicable discount schedules regarding Technical
Education are specified in Attachment C.
4.6 If applicable, the prices, fees and applicable discount schedules
regarding System Support Services is specified in Attachment D.
4.7 The prices, fees and applicable discount schedules regarding
Professional Services are set forth in Attachment N.
4.8 The prices of Cell Site Facilities Engineering, MSC Facilities
Engineering, and Cell Site Configuration Engineering (if Installation is
not furnished by or purchased from SELLER) shall be determined by SELLER
on a quote basis, but is subject to the application of the discounts
referred to in Attachment A.
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4.9 The price for Facilities Preparation Services shall be determined in
accordance with the procedure set forth in paragraph 6.4.
ARTICLE 5 TERMS OF PAYMENT
5.1 PURCHASER shall pay for the Initial Configuration Equipment and
Software, in cash, as follows:
(a) [CONFIDENTIAL TREATMENT RE QUESTED] of the mutually agreed-upon
estimate of the total price of the Initial Configuration
Equipment and Software shall be paid within thirty (30) days of
(i) the Effective Date, or (ii) the closing of the SELLER finance
facilities (described in Article 36), whichever is later, and
invoice therefor;
(b) An additional [CONFIDENTIAL TREATMENT REQUESTED] shall be paid
within thirty (30) days of delivery to the location(s) specified
in the applicable order within the Tritel PCS Markets and invoice
therefor;
(c) An additional [CONFIDENTIAL TREATMENT REQUESTED] shall be paid
within thirty (30) days of Acceptance of the Initial
Configuration as provided in paragraph 9.2 and invoice therefor;
(d) The balance shall be due thirty (30) days from the correction of
all Punch List items pertaining to such Network Element and
invoice therefor.
5.2 PURCHASER shall pay for the Initial Configuration Installation, in cash,
as follows:
(a) [CONFIDENTIAL TREATMENT REQUESTED] shall be paid within thirty
(30) days of Acceptance as provided in paragraph 9.2 and invoice
therefor;
(b) On a site-by-site basis, the balance shall be paid within thirty
(30) days from the correction of all punch list items and invoice
therefor.
5.3 PURCHASER shall pay the price in full for any Equipment and Software
ordered for expansions to the Initial Configuration, in cash, within
thirty (30) days after delivery and invoice therefor, unless any such
expansion is installed by SELLER as a significant expansion, then in
such case, within thirty (30) days after Acceptance and invoice
therefor.
5.4 PURCHASER shall pay the price in full of Installation ordered for
expansions to the Initial Configuration within thirty (30) days after
Acceptance of the Equipment and Software installed and invoice therefor.
5.5 PURCHASER shall pay for Operations Support System Services in accordance
with the terms set forth in Attachment I.
5.6 PURCHASER shall pay the price in full of each Technical Education course
within thirty (30) days after completion and invoice therefor. SELLER
hereby grants PURCHASER
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an education and training credit equal to [CONFIDENTIAL TREATMENT
Requested] to be used during the Term of this Agreement, but in no event
shall usage of the credit exceed [CONFIDENTIAL TREATMENT REQUESTED]
during the first year of the Term..
5.7 Following the period in which System Support Services are provided to
PURCHASER without charge, PURCHASER shall pay for System Support
Services, in arrears, within thirty (30) days after invoice therefor.
5.8 PURCHASER shall pay for all other Services, including Facilities
Preparation Services, Professional Services, Cell Site Facilities
Engineering, MSC Facilities Engineering, and Cell Site Configuration
Engineering (if Installation is not purchased from SELLER), within
thirty (30) days after completion and invoice therefor.
ARTICLE 6 ORDERS AND SCHEDULING
6.1 Attachment H sets forth all final engineering and preparatory details,
and the time schedule therefor, necessary for delivery and Installation
of the Initial Configuration. PURCHASER and SELLER shall be responsible
for the successful completion of their respective responsibilities as
set forth in Attachment F.
6.2 When PURCHASER desires to place an Order with SELLER for Equipment or
Software for an expansion or improvement of the Initial Configuration,
PURCHASER shall submit to SELLER the information reasonably necessary
for the furnishing by SELLER of a proposal. SELLER shall within fifteen
(15) working days, generate a proposal including documents corresponding
to separate Attachments A, F and H for each such request which proposal
shall include all applicable discounts. Upon acceptance of any such
proposal by PURCHASER, PURCHASER and SELLER shall be responsible for the
successful completion of their respective items according to the
schedule therein set forth.
6.3 When PURCHASER desires to place an Order with SELLER for Professional
Services, PURCHASER shall submit to SELLER all information in
PURCHASER's possession or any information requested by SELLER reasonably
necessary for the furnishing by SELLER of a proposal. Within fifteen
(15) working days, thereafter, SELLER shall generate a proposal
including a scope of work and schedule for each such request which
proposal shall include a staffing schedule and a "not to exceed" price.
Upon acceptance of any such proposal by PURCHASER, PURCHASER and SELLER
shall be responsible for the successful completion of their respective
items according to the schedule therein set forth.
6.4 (a) When PURCHASER desires to place an Order for any Facilities
Preparation Services, PURCHASER shall submit to SELLER all
information in PURCHASER's possession reasonably requested by
SELLER necessary for the furnishing by SELLER of a proposal.
SELLER shall within fifteen (15) working days, generate a
proposal for each Facilities Preparation Service, which bid shall
include the complete purchase price of such service, including,
without limitation, all costs of equipment, materials and
supplies, labor, transportation and other
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related costs, terms of payment, and completion dates for such
Services as well as a staffing schedule and a "not to exceed"
price. In the case of any Facilities Preparation Service
performed in accordance with this paragraph 6.4(a), SELLER shall
be responsible for the execution, delivery, and timely
performance of such Facilities Preparation Service. Upon
acceptance of any such proposal by PURCHASER, SELLER shall render
the applicable Facilities Preparation Services in accordance with
the schedule therein set forth.
(b) If PURCHASER rejects a proposal for Facilities Preparation
Services submitted by SELLER under paragraph 6.4(a) above,
PURCHASER may elect (i) to perform such Services itself, (ii) to
have such Services performed on its behalf by a direct
subcontractor of PURCHASER, or (iii) subject to SELLER's
approval, which may be granted or withheld in SELLERS reasonable
discretion, designate a third party subcontractor as the
subcontractor of SELLER to perform such Services.
(c) In the case of any Facilities Preparation Services performed
pursuant to clauses (i) and (ii) of paragraph 6.4(b) above,
SELLER shall have no responsibility whatsoever for such Services,
notwithstanding that such Services may have been performed in
accordance with suggestions from SELLER.
(d) In the case of any Facilities Preparation Services performed in
accordance with clause (iii) of paragraph 6.4(b) above, SELLER
shall be responsible for the execution, delivery, and performance
of such Services, but shall accept no responsibility for any
delays of the third party subcontractor unless the subcontractor
is selected or approved by SELLER. SELLER shall invoice PURCHASER
the amounts charged by such subcontractor plus a fee to be
mutually agreed upon by the parties, but not to exceed sixteen
percent (16%) of the subcontractor's price as compensation for
SELLER's role as prime contractor
6.5 Proposals submitted by SELLER pursuant to paragraphs 6.2 through 6.4 may
be accepted by PURCHASER by issuance of PURCHASER's Order referencing or
incorporating the proposal. SELLER shall acknowledge receipt of
PURCHASER's Orders within three (3) working days. Orders issued pursuant
to this Agreement shall be governed by and performed in accordance with
the terms and conditions of this Agreement, unless the parties mutually
agree otherwise in accordance with Article 16.
6.6 (a) Subject to Section 6.6(b), SELLER agrees to deliver Equipment
and Software and perform Installation in accordance with Orders
submitted by PURCHASER to SELLER, which Orders shall be in
accordance with SELLER's standard delivery and Installation lead
times being quoted at the time such Order is placed by PURCHASER
(or, if shorter, delivery and lead times set forth in Attachment
A), to SELLER's most favored customers under comparable
conditions, which lead times shall in no event be greater than
the lead times specified in Attachment A hereto.
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(b) All Orders that are within SELLER's delivery and Installation
lead times (as described in Section 6.6(a) above), and which are
otherwise in accordance with the terms of this Agreement, shall
be deemed automatically accepted upon receipt by SELLER. Should
SELLER receive an Order with lead times that are shorter than
SELLER's the above lead times, SELLER shall, within fifteen (15)
working days, indicate in writing to PURCHASER whether such
shortened lead times are acceptable. If SELLER shall deem a
shortened lead time unacceptable, the parties hereto shall
endeavor to agree upon lead times that are mutually acceptable.
Should SELLER not notify PURCHASER of its non-acceptance of a
shortened lead time within fifteen (15) working days of its
receipt of the Order containing the shortened lead time, such
Order shall be deemed accepted without any further confirmatory
action by either party.
6.7 No provisions or data on an Order or in subordinate documents (such as
shipping releases) or any form originated by PURCHASER or SELLER shall
be incorporated in this Agreement unless the provisions or data merely
supply information contemplated by this Agreement but do not vary the
provisions of this Agreement. Whenever any such provisions conflict with
this Agreement, this Agreement shall control unless the parties
expressly otherwise agree in writing.
ARTICLE 7 ORDER DELAY/CANCELLATION
7.1 By providing Notice at least forty-five (45) days prior to the scheduled
delivery of any Order or combination of Orders, PURCHASER may, without
penalty or additional cost direct in writing that SELLER's delivery of
such Order(s) be delayed by not more than one hundred twenty (120) days,
except that PURCHASER may exercise such delay directive one time only
during the Term of this Agreement. PURCHASER may at any time prior to
delivery of the applicable Equipment or Software, cancel, in whole or in
part, any Order other than (a) the Initial Configuration, (b) any Order
for an MSC Configuration, or (c) any Order after Installation of ordered
items has materially commenced, even if delivery of the entire Order has
not been completed. In the event of a cancellation permitted hereunder,
PURCHASER shall pay to SELLER Order cancellation charges in accordance
with Attachment Q. PURCHASER reserves the right, without penalty or
additional cost, to direct changes in the scheduled delivery location of
any Order(s) so long as such changes are communicated to SELLER at least
ten (10) working days prior to the scheduled delivery.
7.2 PURCHASER may, at any time prior, to their completion, cancel any
Services ordered hereunder which are optional and not part of the
Initial Configuration; provided, however, that PURCHASER shall pay
SELLER for all Services performed prior to such cancellation at the
prices set forth in Attachment A or as otherwise agreed.
ARTICLE 8 INSTALLATION
8.1 (a) As provided in Attachment F, either PURCHASER or SELLER shall
install the Equipment and Software at the sites to be selected by
PURCHASER so as to be ready for Acceptance Tests with regard to
the Initial Configuration in accordance
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with the procedures set forth in the applicable provisions of
SELLER's then current installation manual(s) and the time
schedule set forth in Attachment H.
(b) When Installation of Equipment or Software not comprising part of
the Initial Configuration of a System is ordered by PURCHASER
from SELLER, SELLER shall Install the Equipment and Software at
the sites to be selected by PURCHASER in accordance with (i)
Installation specifications prepared by SELLER, and (ii) the time
schedules set forth in the applicable Attachment H.
(c) SELLER shall perform Installation, activation of Software and any
other Services ordered hereunder, with regard to a System or
other systems networked to the System, so as to cause no
unreasonable interference with service to subscribers, System
performance, billing, administration or maintenance. SELLER shall
(i) advise PURCHASER whenever such Installation, activation of
Software or other Services will or are likely to cause such
interference to a System or such networked systems, and (ii) use
its reasonable best efforts to work with PURCHASER to prevent or
minimize such interference.
8.2 As provided in Attachment F, either PURCHASER or SELLER shall install
the System so as to cause no unreasonable interference with or
obstruction to lands and thoroughfares or rights of way on or near which
the Installation work may be performed. The party installing the
Equipment shall exercise every reasonable safeguard to avoid damage to
existing facilities, and if repairs or new construction are required in
order to replace facilities damaged by the party installing the
Equipment due to its carelessness or negligence, such repairs or new
construction shall be at the installing party's own expense.
ARTICLE 9 ACCEPTANCE TESTING AND ACCEPTANCE
9.1 Attached as Attachment J are descriptions of acceptance testing
("Acceptance Tests") to be conducted, and deliverables related thereto
(e.g., test results, inventory reports, Acceptance Certificates, initial
tests, RF call tests, RF tuning, handoff tests, border tests), regarding
Installation of the Initial Configuration Equipment and Software (and,
as applicable, regarding Installation of Equipment and Software added to
the Initial Configuration) to demonstrate that the Equipment and
Software installed by SELLER will operate in accordance with the
requirements of this Agreement and the Specifications. Such Acceptance
Tests shall include separate procedures for testing (i) Cell Site
Configuration Installation and integration, (ii) MSC Configuration
Installation and integration, and (iii) System radio frequency coverage,
radio network initial tuning and handoff parameters.
9.2 (a) SELLER shall notify PURCHASER as soon as it knows, but at least
ten (10) days before, the date on which Acceptance Tests shall
be conducted. Not more than once for each identical set of
Acceptance Tests and at least twenty (20) days before any
Acceptance Test is conducted, SELLER shall provide PURCHASER
with detailed test instructions, procedures and schedules
relating to the scheduled Acceptance Test. At the first
practicable date thereafter, SELLER and
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PURCHASER shall each sign off on any pretest forms provided as
part of the particular Acceptance Test being conducted. If
PURCHASER or its nominee does not attend the Acceptance Tests,
SELLER shall proceed with the tests and immediately forward the
test results to PURCHASER.
(b) If the Equipment, Software or the System, as a whole, comprising
the Initial Configuration does not fulfill the requirements of
the Acceptance Tests, SELLER shall, at its expense, correct the
defects as soon as practicable; provided, however, that SELLER
shall not be obligated to correct deficiencies in the System
Caused by PURCHASER's radio frequency design for the System.
SELLER shall also provide PURCHASER with detailed documentation
of the severity of any defect, the impact upon system
functionality and performance and the targeted date by which
SELLER expects to remedy the defect. The Acceptance Tests (or so
much of them as necessary) shall be recommenced immediately after
such correction in accordance with this Article 9.
(c) Upon the successful completion of any Acceptance Tests conducted
by SELLER, SELLER shall submit to PURCHASER an Acceptance
Certificate certifying (i) successful completion of the
Acceptance Tests, (ii) the Equipment and Software, to that stage
completed, have been installed in accordance with the
requirements of this Agreement and the Specifications, subject to
documented resolution of minor punch list items, and (iii) that
the System (or System segment) is ready to be placed In Revenue
Service. PURCHASER shall acknowledge same by signing the
Acceptance Certificate prior to the System (or System segment)
being placed In Revenue Service. At such time, punch list items
will be identified and the Equipment, Software or Installation
covered by such certificate shall be deemed "Accepted" (i.e.,
"Acceptance" shall have occurred). PURCHASER may ---------- add
bona fide (e.g., non-cosmetic) items to the punch list up to
fifteen (15) days after Acceptance.. Defects in components any
arising after Acceptance that are covered by Article 13 shall not
be considered punch list items. SELLER shall, as promptly as
reasonably practicable, complete and correct all punch list
items. Upon resolution of punch list items by SELLER, SELLER
shall submit to PURCHASER, and PURCHASER shall sign, a
certificate verifying that no further punch list items remain
unresolved. In the event of any dispute as to the results of any
Acceptance Tests, such dispute shall be resolved by a Third Party
Engineer selected pursuant to paragraph 23. 1.
(d) Only service affecting deficiencies identified in Attachment J,
in conjunction with this Article 9, shall be grounds for delay of
Acceptance of the System.
(e) PURCHASER's use of any part of the Initial Configuration
Equipment In Revenue Service prior to the in-service date(s) as
shown in Attachment H, or the Acceptance Date determined in
accordance with subparagraph (c) of this paragraph 9.2, shall
constitute Acceptance of such part of the Initial Configuration,
and the date PURCHASER first uses any item of Equipment In
Revenue Service shall be the Acceptance Date for such item of
Equipment. Equipment ordered for expansions to an Initial
Configuration shall, for purposes
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of Articles 13 and 17, be deemed to be Accepted by PURCHASER
upon delivery, or in the case of significant expansions
installed by SELLER, upon Acceptance.
ARTICLE 10 DELAY
10.1 (a) If Caused by the fault or negligence of SELLER, Installation
and Acceptance of the Initial Configuration does not occur within
the period stated in Attachment H (as such period may be extended
pursuant to the terms of this Agreement), PURCHASER shall be
entitled to, and SELLER shall pay to PURCHASER, damages in
accordance with this paragraph 10.1.
(b) The Parties agree that damages for delay are difficult to
calculate accurately and, therefore, agree to fix as liquidated
damages, and not as a penalty, an amount determined in accordance
with the table in paragraph 10.1(c). The amount of liquidated
damages shall be calculated by multiplying the applicable
percentage for each week or fraction of a week of delay times the
Equipment and Software charges which comprise or are to comprise
the Initial Configuration and which have not been placed In
Revenue Service within the period scheduled for Acceptance as set
forth on Attachment H as a result of such delay ("Delayed
Equipment and/or Software"). If any portion official Initial
Configuration is In Revenue Service, the percentage per week
amount shall be imposed only against the full price of all
Delayed Equipment and/or Software, but shall not in any event
exceed [CONFIDENTIAL TREATMENT REQUESTED] thereof. Liquidated
damages shall be in addition to PURCHASER's other remedies under
this Agreement, particularly Paragraph 24. If SELLER's delay
exceeds eight (8) weeks PURCHASER may, at its sole option,
terminate any exclusivity provisions of this Agreement.
(c) LIQUIDATED DAMAGE TABLE
Weeks Late (Full or Partial) Percentage
---------------------------- ---------------------------------------
0 through 2 [CONFIDENTIAL TREATMENT REQUESTED]
3 through 4 [CONFIDENTIAL TREATMENT REQUESTED]
5 through 6 [CONFIDENTIAL TREATMENT REQUESTED]
7 through 8 [CONFIDENTIAL TREATMENT REQUESTED]
9 and above [CONFIDENTIAL TREATMENT REQUESTED]
10.2 Any delay caused by PURCHASER shall entitle SELLER to:
(a) A day-to-day delay in performance of SELLER's obligations, or a
longer equitable adjustment if SELLER has reassigned Installation
personnel or suspended deliveries of Equipment as a result of
PURCHASER's delay; and
(b) Unless covered by Article 7, reimbursement of (i) any reasonable
out-of-pocket expenses incurred by SELLER for subcontractor labor
charges, extra storage or
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delivery charges, (ii) salaries of SELLER's Installation
personnel, and (iii) if applicable, capital costs on delayed
Equipment Caused by PURCHASER's delay or the resumption of work
following such delay; provided, however, that SELLER shall use
reasonable efforts to minimize such expenses by working around
delays caused by PURCHASER.
10.3 (a) Neither SELLER nor PURCHASER will be liable for nonperformance
or defective or late performance of any of their obligations
hereunder to the extent and for such periods of time as such
nonperformance, defective performance or late performance is due
to acts of God, war (declared or undeclared), unforeseeable acts
(including failure to act) of any governmental authority (de
jure or de facto), riots, revolutions, fire, floods, explosions,
sabotage, nuclear incidents, earthquakes, storms, sinkholes,
epidemics, strikes, (other than strikes of such party's own (or
its Affiliates' own) employees), or delays of suppliers or
subcontractors if no equivalent source for such supplies or
services can reasonably be obtained for the same causes.
(b) The party claiming the benefit of excusable delay hereunder
shall promptly notify the other of the circumstances creating
the delay and provide a statement of the impact.
ARTICLE 11 PURCHASER'S AND SELLER'S RESPONSIBILITIES
11.1 Attachment F is the responsibility matrix that details those obligations
for which SELLER and PURCHASER are respectively responsible.
11.2 The obligations as set forth in Attachment F shall be performed in a
timely fashion in accordance with the schedule set forth in Attachment
H, or with respect to items inadvertently omitted from Attachment F, in
a timely fashion on reasonable notice. Any delay by either party shall
be subject to Article 10 of this Agreement.
11.3 PURCHASER shall provide SELLER complete access to the System and agrees
that SELLER may, upon reasonable advance Notice to PURCHASER (and with
PURCHASER's Consent) and at reasonable times and only when necessary,
interrupt operation of the System while conducting testing or correcting
deficiencies. SELLER shall use all best efforts to minimize the length
and impact of any such interruption of operation.
11.4 Each party shall provide all information in its possession that is
reasonably necessary to properly install the System or as otherwise
required by either party to perform its obligations under this
Agreement.
11.5 PURCHASER shall be responsible for all site acquisition, zoning and
permitting.
11.6 PURCHASER shall be responsible for and shall provide security for
safeguarding the Cell Sites and MSC(s). This security shall be provided
prior to the commencement of any SELLER activities at such locations.
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11.7 SELLER shall be responsible and provide, at its expense, storage
facilities for Equipment delivered by SELLER under this Agreement until
the later of (i) completion of SELLER's installation activities relating
to the Initial Configuration or (ii) such time as PURCHASER provides
storage facilities.
ARTICLE 12 LICENSES, PERMITS AND APPROVALS
12.1 Any licenses, permits or approvals required by any Federal, state, or
other governing authority relating to the manufacture, type acceptance,
importation, safety or use of the Equipment throughout the United States
or any state shall be the sole responsibility and expense of SELLER. Any
licenses, permits or approvals required by any Federal, state or local
governing authority relating to use of the Equipment or System in a
specific locality shall be the sole responsibility of PURCHASER. Upon
request, the responsible party shall furnish evidence that such licenses
or permits have been obtained and are in force.
12.2 Each party shall be responsible for ensuring that it and its
subcontractors are and remain eligible under local laws to perform the
work under this Agreement in the various jurisdictions involved.
12.3 PURCHASER agrees to reasonably assist SELLER, at SELLER's expense, to
obtain and maintain (i) licenses,, permits or approvals for importation,
re-exportation of the Equipment and Software on a duty and customs free
basis and (ii) entry or work permits or visa required for personnel
engaged by SELLER to perform work under this Agreement.
ARTICLE 13 WARRANTIES
13.1 (a) SELLER warrants that, for a period of [CONFIDENTIAL TREATMENT
REQUESTED] from the date of Acceptance, (the "Warranty Period"),
Equipment and the Installation thereof shall conform with and
perform the functions set forth in the Specifications and shall
be free from defects in material or workmanship which impair
service to subscribers, System performance, billing,
administration or maintenance. If SELLER becomes aware of or is
notified in writing by PURCHASER of any such defects in material
or workmanship or nonconformity with Specifications within the
Warranty Period, SELLER shall, at its election and expense,
repair or replace any such defective Equipment or Installation.
Such repair or replacement includes material, labor and Services,
and shall, except as otherwise provided herein, be PURCHASER's
sole remedy and SELLER's sole obligation in the event this
warranty is breached. Any Equipment or Installation so repaired
or replaced shall likewise be covered by the warranty set forth
in this paragraph 13.1 for the remainder of the original warranty
period or ninety (90) days, whichever is greater.
(b) If PURCHASER claims a breach of warranty under this paragraph
13.1, it shall notify SELLER promptly in writing of the claimed
breach. If SELLER becomes aware of any breach of warranty it
shall notify PURCHASER promptly of such breach, the severity of
the breach and the expected resolution date of such breach.
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PURCHASER shall allow SELLER to inspect the Equipment or Software
at PURCHASER's location, or, upon SELLER's reasonable request,
return the Equipment to SELLER's U.S. repair facility, provided,
however, PURCHASER shall not be obligated to remove or return any
Equipment other than small circuit board components (excluding
radios) nor shall it be required to remove or return any item
which would materially interrupt service or other features of
PURCHASER's System unless SELLER provides and installs temporary
replacement items at SELLER's expense.
(c) During the Warranty Period, electronic circuit board components,
RBS subassemblies and other Equipment (which may be de-installed
and reinstalled by PURCHASER in the ordinary course of business)
will be repaired or replaced, with PURCHASER responsible for
fault isolation (except to the extent that PURCHASER could not
have reasonably been expected to isolate such fault without the
assistance of SELLER), removal of defective boards, subassemblies
or Equipment and replacement from spare stock (except to the
extent that such removal and replacement requires the specialized
expertise of SELLER), and packing and shipping to SELLER's U.S.
repair facility. PURCHASER will maintain a stock of spare board
components, subassemblies or other Equipment as recommended by
SELLER for this purpose. SELLER's recommendation shall be
accompanied by and based upon its mean time between failure
analysis regarding such board components, subassemblies and
Equipment, and such recommendation and supporting data shall be
updated no less than quarterly. In the event that PURCHASER
experiences board component, subassembly or Equipment failures
that materially exceed the number and frequency of such failures
contemplated by the spare board component, subassembly and
Equipment stock recommended by SELLER, at the request of
PURCHASER, SELLER shall supply to PURCHASER additional spare
board components, subassemblies and Equipment of each type so
depleted, as necessary to maintain an adequate emergency
replacement stock, without charge to PURCHASER, until
implementation of a permanent remedy. Upon implementation of such
remedy of (i) all excess items supplied under this paragraph
shall be returned to SELLER, and (ii) all in-service and spare
stocks of such items which are the subject of the corrections
contemplated by this paragraph 13(c) shall be updated, at no
charge to PURCHASER, to the revision level incorporating the
permanent remedy.
(d) In the event that, during the Warranty Period, PURCHASER
experiences failures of Equipment (other than electronic circuit
board components, RBS subassemblies or other Equipment which may
be de-installed and reinstalled by PURCHASER in the ordinary
course of business), which PURCHASER believes in good faith to be
excessive, PURCHASER shall bring such failures to the attention
of SELLER by giving written notice to SELLER under Article 29
hereof, and SELLER shall give high priority to the remedy of the
cause of the failures. If during the period prior to the
implementation of a permanent remedy, the supplying to PURCHASER
by SELLER of additional items of such Equipment is inappropriate,
SELLER agrees during such period to negotiate in
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<PAGE>
good faith for adjustments commensurate with the operational
and/or financial effect upon PURCHASER caused by such failures.
(e) Freight charges incurred in connection with SELLER's obligations
under this paragraph 13.1 shall be borne by SELLER, unless the
Equipment returned is not defective or otherwise not covered by
SELLER's limited warranty, in which case PURCHASER shall pay for
all freight charges between PURCHASER's point of origin and
SELLER's U.S. repair facility.
13.2 SELLER warrants that during the Warranty Period, the Software, Software
Updates, Software Enhancements and Software Features shall conform with
and perform the functions set forth in the Specifications, and shall be
free from defects in material and workmanship which impair service to
subscribers, System performance, billing, administration or maintenance.
If during the Warranty Period, SELLER becomes aware of or is notified
that the Software is defective or fails to so perform, SELLER shall
correct such defects or failure and ensure that the Software, Software
Updates, Software Enhancements and Software Features conform with, and
perform the functions set forth in, the Specifications. SELLER's
obligation under this warranty is limited to correction of any Software,
Software Update, Software Enhancement or Software Feature failures and,
except as otherwise provided herein, SELLER's performance thereof shall
be PURCHASER's sole remedy in the event this warranty is breached. For
additional Software purchased in accordance with Article 6, a new
Warranty Period shall apply as described above except that the new
Warranty Period shall only apply with respect to new functions (as
specified in the additional Specifications) and the new Warranty Period
shall begin on the date of Acceptance.
13.3 SELLER will return to PURCHASER the repaired or replaced Equipment or
provide the remedy for the defect in Software or Installation within
twenty (20) working days from the date PURCHASER makes a request for
service under this warranty to Equipment, Software or Installation not
materially impairing service with respect to subscribers, System
performance, billing, administration or maintenance.
13.4 SELLER agrees to commence work under this warranty on all Equipment,
Software or Installation defects materially impairing service to
subscribers, System performance, billing, administration or maintenance
as soon as practicable, but in no event later than eight (8) hours after
notification of such defect, and will cure such defect as promptly as
practicable.
13.5 SELLER shall maintain a Technical Assistance Center in the United States
or Canada, and during the relevant warranty period shall make such
support center available to PURCHASER twenty-four (24) hours per day
free of charge to PURCHASER. During the Warranty Period. SELLER shall
provide PURCHASER with a KAM organization at no additional charge to
PURCHASER. Upon the expiration of the Warranty Period. SELLER and
PURCHASER agree to negotiate, in good faith and within a reasonable time
period, a System Support Services Agreement based on a KAM organization
and including Hardware Repair and Replacement, Software Maintenance, and
Consultation Services, the prices for which shall not exceed the prices
specified in Attachment D.
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13.6 If any Equipment or Software is rendered inoperative as a result of a
natural or other disaster, SELLER will make all reasonable efforts to
supply at PURCHASER's expense, help locate backup or replacement
Equipment or Software for PURCHASER by using its reasonable best efforts
to obtain the waiver of any delivery schedule priorities and by making
replacement Equipment or Software available at PURCHASER's expense, from
the facility then producing such products, or from inventory.
13.7 SELLER's limited warranty under this Article 13 shall not apply to:
(a) damage or defects Caused by PURCHASER's negligence, including,
but not limited to:
(i) Exposure of Equipment or Software by PURCHASER to
environmental conditions other than those specified in
Attachment G, or use by PURCHASER other than in accordance
in all material respects with written instructions
furnished by SELLER;
(ii) Material modification by PURCHASER of Equipment or
Software without SELLER's written Consent;
(iii) Interaction with the System caused by PURCHASER's use of
equipment or software not purchased under this Agreement,
unless SELLER has represented in writing that such
equipment or software is compatible with the System;
(iv) Operation or servicing of the System by PURCHASER's
personnel or contractors who have not received Technical
Education from SELLER commensurate with the operational or
servicing tasks performed by such personnel.
(v) PURCHASER has not implemented, within ninety (90) days
from receipt, for fault preventive purposes, the Software
Updates in the System that SELLER supplies to PURCHASER
with from time to time during the Warranty Period,
provided, however, that such Software Update would have
prevented the damage or defect to which the warranty claim
relates.
(b) Any Equipment or Software damaged by accident or disaster,
including without limitation, fire, flood, wind, water, lightning
or power failure; or
(c) Incidental hardware normally consumed in operation or which has a
normal life inherently shorter than the term of this Agreement
(e.g., fuses, lamps, magnetic tape).
13.8 PURCHASER shall reimburse SELLER for SELLER's reasonable out-of-pocket
expenses incurred, at PURCHASER's request, in responding to and/or
remedying Equipment, Software, or service deficiencies not covered by
the warranties set forth
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herein or under a System Support Services Agreement between SELLER and
PURCHASER.
13.9 If SELLER purchases or subcontracts for the manufacture of any part of
the System or the performance of any of the Services to be provided
hereunder from a third party, the warranties given to SELLER by such
third party shall inure, to the extent applicable or permitted, to the
benefit of PURCHASER, and PURCHASER shall have the right to enforce such
warranties directly or through SELLER. The warranties of such third
parties shall not be in lieu of any warranties given by SELLER under
this Agreement. If PURCHASER independently purchases any third party
equipment or software to be used with or as part of the System,
PURCHASER agrees to obtain warranty or maintenance service solely from
such third party providers of equipment and/or software, and PURCHASER
will provide SELLER with proof of such maintenance support.
13.10 THE LIMITED WARRANTIES IN THIS ARTICLE 13 CONSTITUTE THE ONLY WARRANTIES
OF SELLER WITH RESPECT TO THE EQUIPMENT OR SOFTWARE, AND ARE IN LIEU OF
ALL OTHER WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. NO WARRANTIES ARE MADE BY SELLER ON
BEHALF OF ANY OTHER PARTY FROM WHOM EQUIPMENT MAY HAVE BEEN
INDEPENDENTLY PURCHASED BY PURCHASER. SELLER's warranty obligations
under this Article 13 shall not be enlarged, diminished or affected by,
and no warranty obligation or liability shall arise from SELLER's
performance of System Support Services or other advice or service made
in connection with the System.
13.11 With regard to Equipment or Software that is covered by contractual
warranty or extended warranty maintenance as of January 1, 2000,
("Covered Product"), SELLER warrants that the Covered Products will be
able to accurately process date data from, into and between the
twentieth and the twenty-first centuries, including leap year
calculations and correct handling of the date September 9, 1999,
provided that;
(i) all products (including software products) not delivered by or
licensed from SELLER under this Agreement and used with the
products, properly exchange date and data;
(ii) the products are used under normal conditions and in accordance
with the Specifications; and
(iii) PURCHASER has installed the latest software update or software
corrections offered or supplied by SELLER and creating functional
ability to handle conversion to the twenty-first century.
In the event of a breach of this warranty SELLER shall, if it receives
Notice before the 1st of July 2000, at its option and without undue
delay, correct or replace the non-compliant Covered Products, without
charge to PURCHASER, by providing PURCHASER with the latest product
software update or correction creating functional
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ability to accurately process date data (including, but not limited to,
calculating, comparing and sequencing) from, into and between the
twentieth and the twenty-first centuries, including leap year
calculations.
THE WARRANTY GIVEN IN THIS ARTICLE CONSTITUTES THE ONLY WARRANTY AND
OBLIGATION MADE BY SELLER WITH RESPECT TO THE COVERED PRODUCTS' ABILITY
TO ACCURATELY PROCESS DATE DATA FROM, INTO AND BETWEEN THE TWENTIETH AND
THE TWENTY-FIRST CENTURIES, INCLUDING LEAP YEAR CALCULATIONS AND ARE IN
LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING BUT NOT
LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE AND THE REMEDIES ABOVE ARE THE SOLE AND EXCLUSIVE
REMEDIES TO BE USED IN CASE OF A BREACH OF THE ABOVE WARRANTY. IN NO
EVENT SHALL SELLER BE LIABLE TO BUYER UNDER THIS WARRANTY FOR ANY
INACCURACIES, DELAYS, INTERRUPTIONS OR ERRORS AS A RESULT OF (I)
RECEIVING DATE DATA FROM ANY NON-SELLER PRODUCTS, SOFTWARE OR SYSTEMS IN
A FORMAT THAT IS INCONSISTENT WITH THE FORMAT AND PROTOCOLS ESTABLISHED
FOR THE COVERED PRODUCTS OR (II) ANY CHANGE, MODIFICATION, UPDATE OR
ENHANCEMENT MADE OR ATTEMPTED TO BE MADE TO THE COVERED PRODUCTS BY
PARTIES OTHER THAN BY SELLER, OR FOR ANY LOSS OF PRODUCTION, LOSS OF
USE, LOSS OF BUSINESS, LOSS OF DATA OR REVENUE OR FOR ANY SPECIAL,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER OR NOT THE
POSSIBILITY OF SUCH DAMAGES COULD HAVE BEEN REASONABLY FORESEEN. NOTHING
IN THIS WARRANTY SHALL BE CONSTRUED TO LIMIT ANY RIGHTS OR REMEDIES THE
BUYER MAY OTHERWISE HAVE UNDER OTHER WARRANTIES UNDERTAKEN BY SELLER
WITH RESPECT TO DEFECTS OTHER THAN THE ABILITY TO ACCURATELY PROCESS
DATE DATA. BUYER UNDERSTANDS AND AGREES THAT THE ABOVE MENTIONED
WARRANTY IS NOT APPLICABLE TO ANY OTHER GOODS OR PRODUCTS DELIVERED OR
PROVIDED BY SELLER THAT ARE NOT COVERED PRODUCTS.
13.12 In addition to and not in limitation of any other warranties provided
hereunder, SELLER warrants that the Equipment and Software will enable
the System to be operated in full compliance in all material respects
with all federal, state and local laws, regulations and codes,
including, without limitation, all FCC regulations, rules and policies.
13.13 SELLER shall comply with the legal requirements for advanced lawful
intercept under the Communications Assistance for Law Enforcement Act of
1994, as well as Enhanced 911 and TTY service requirements upon the
schedule required by law, including any extensions that may be granted
as provided below. The price for any features to implement the above
shall be commercially reasonable and shall be identified by SELLER as
the features are further along in the development process. If SELLER is
unable to meet the legally required implementation date for the above
matters, PURCHASER will seek a reasonable extension of such date upon
written request by
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SELLER. If granted such an extension, SELLER's failure shall not be
deemed to be a default of this Agreement. SELLER shall promptly
reimburse PURCHASER for its reasonable legal and other expenses in
requesting such extension, whether or not granted. Should PURCHASER be
fined or otherwise have a monetary forfeiture imposed upon it by a
governmental agency for PURCHASER's failure to meet the above
requirements where such failure is due to SELLER's inability to timely
deliver such feature, SELLER shall reimburse PURCHASER for the same.
ARTICLE 14 CONFIDENTIAL INFORMATION
14.1 (a) The parties hereto agree, except as may be required to comply
with any applicable law, regulation or order of any governmental
or other authority, including the trier of fact under Article 23,
to:
(i) maintain, or cause to be maintained, the confidentiality
of Confidential Matters of the other party and not
disclose, or permit to be disclosed, any such Confidential
Matters, unless authorized in writing by such other party;
(ii) not use, or permit to be used, any such Confidential
Matters, except in accordance with the scope of this
Agreement;
(iii) restrict or cause to be restricted, disclosure of such
Confidential Matters to its respective officers,
employees, and agents and those Affiliates and their
respective officers, employees and agents who need to know
such Confidential Matters in the performance of work
relating to the subject matter of this Agreement (it being
understood that such Affiliates and their respective
officers, employees and agents shall be informed of the
confidential nature of such Confidential Matters and shall
be directed to treat such Confidential Matters
confidentially and not use such Confidential Matters other
than for the purpose described above); and
(iv) take precautions necessary or appropriate to guard the
confidentiality of such Confidential Matters.
(b) If any party becomes obligated to disclose Confidential Matters
pursuant to an order of any governmental or other authority, such
party shall notify the other party so that such other party shall
have the opportunity to seek a protective order or other
appropriate remedy that will permit such party to avoid such
disclosure. In the event that such protective order or other
remedy is not obtained, such party will disclose only that
portion of the Confidential Matters as it is obligated to
disclose pursuant to such order, and will use all reasonable
efforts to obtain assurances that confidential treatment will be
accorded to any Confidential Matters so disclosed.
14.2 Notwithstanding the provisions of Article 23 of this Agreement the
parties agree that SELLER may enforce provisions of Article 19 and this
Article 14 regarding restrictions
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on use and transfer and obligations of confidentiality with respect to
the Software by an action for injunctive relief or other equitable
remedies.
14.3 Except as expressly provided herein, nothing contained in this Agreement
shall be construed or deemed to grant, either directly or indirectly or
by implication, any license under any existing or future intellectual
property rights of SELLER.
ARTICLE 15 CONTINUITY OF EXPANSION FUNCTIONALITY
15.1 For a period of four (4) years following the expiration of this
Agreement, SELLER shall make available for sale to PURCHASER, at
SELLER's then current prices, Equipment and Software to enable PURCHASER
to expand the System, which Equipment and Software will provide
equivalent functionality for and shall be fully compatible with the
System, or any other system supplied by SELLER to AT&T Wireless
Services, Inc. or its Affiliates or successors so long as PURCHASER
maintains an affiliation with AT&T Wireless Services, Inc. or its
Affiliates or successors.
15.2 SELLER may at any time cease production or purchase, as the case may be,
of any part of a System so long as SELLER maintains a sufficient
inventory of Equipment and Software to meet its obligations pursuant to
Section 15.1 above. In the event that such discontinuance of production
or purchase is in anticipation of migration to new generation Equipment
which is not compatible with that purchased by PURCHASER hereunder,
SELLER shall notify PURCHASER of its intent to discontinue production or
purchase, as the case may be, specifying the approximate number of such
items of Equipment, Software or other parts SELLER then has in
inventory, sufficiently in advance of the final production run or
purchase to allow PURCHASER to purchase any additional items of
Equipment, Software or other parts it may desire for inclusion in such
final production run or purchase.
ARTICLE 16 AMENDMENTS
The terms and conditions of this Agreement, including the provisions of the
Attachments, may be amended by mutually agreed contract amendments. Each
amendment shall be in writing and shall identify the provisions to be changed
and the changes to be made. Contract amendments shall be signed by duly
authorized representatives of SELLER and PURCHASER. Any acknowledgment form or
other form of SELLER or PURCHASER containing terms and conditions of sale or
purchase shall not have the effect of modifying the terms and conditions of this
Agreement, and all deliveries and Installation of goods and performance of
Services by SELLER shall be deemed to be only upon the terms and conditions of
this Agreement.
ARTICLE 17 TITLE; RISK OF LOSS
17.1 Title to each item of Equipment shall pass to PURCHASER upon delivery to
PURCHASER's job site. Prior to acquiring title to the Equipment,
PURCHASER shall not cause or permit the System or any portion of it to
be sold, leased or subjected to a lien or other encumbrance.
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17.2 Risk of loss to each item of Equipment shall pass to PURCHASER upon
delivery to PURCHASER's job site.
ARTICLE 18 INSURANCE
18.1 SELLER shall maintain and keep in force all risk insurance, in form and
substance and with insurers reasonably satisfactory to PURCHASER,
covering all Equipment delivered to PURCHASER the risk of loss to which
has not passed to PURCHASER, and shall furnish PURCHASER with proof that
such insurance has been obtained and is in force.
18.2 Upon risk of loss passing to PURCHASER, PURCHASER shall maintain and
keep in force all risk insurance, in form and substance and with
insurers reasonably satisfactory to SELLER, covering all Equipment
delivered to PURCHASER the title to which has passed to PURCHASER, and
shall furnish SELLER with proof that such insurance has been obtained
and is in force.
18.3 SELLER shall at all times while performing Services on PURCHASER's
premises carry insurance with limits not less than the limits described
as follows:
(a) Employer's General Liability - Limits $2,000,000.
(b) Comprehensive General Public Liability: $2,000,000 single limit
bodily injury and property damage combined; such coverage shall
include a broad form liability rider, completed operations
coverage rider and contractual liability rider.
(c) An umbrella policy with $1,000,000 single limit bodily injury and
property damage combined.
(d) Workmen's Compensation (Statutory limits in state or states in
which this Agreement is to be performed).
18.4 Upon request, each party shall provide the other with certificates of
insurance (i) evidencing the insurance to be carried under this Article
18 and in the case of the insurance required under Paragraph 18.3,
naming the other party as an additional insured, and (iii) including
provisions that such insurance policy(ies) shall not be subject to
cancellation, expiration or reduction without thirty (30) days written
notice to the other party.
18.5 Notwithstanding the requirements as to insurance to be carried, the
insolvency, bankruptcy or failure of any insurance company carrying
insurance for either party, or failure of any such insurance company to
pay claims accruing, shall not be held to waive any of the provisions of
this Agreement or relieve either party from any obligations under this
Agreement.
18.6 The parties waive all rights against each other and against their
separate subcontractors, and all other subcontractors for damages caused
by negligence, fire or other perils to the extent covered by liability
or any other property insurance purchased as required by this Agreement,
except such rights as they may have to the proceeds of such insurance.
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ARTICLE 19 SOFTWARE
19.1 Except as may be limited by the terms of this Agreement, SELLER grants
PURCHASER a perpetual, royalty-free Right-to-Use ("RTU") license for the
Software (including Software Updates, Software Enhancements and Software
Features) delivered to PURCHASER under this Agreement for which
PURCHASER has paid the appropriate license fees. Fees for any Software
licensed on a "pay-as-you-grow basis" or on an added functionality basis
will be calculated on an annual basis based on the same pricing criteria
as was used in determining the initial license fee (e.g., number of
sectors, switch reports, features, Network Elements, servers, or
subscribers). PURCHASER agrees to provide SELLER with information
necessary and appropriate for calculation of such fees or otherwise
agree to SELLER's right to obtain such information during the regular
course of its business, and SELLER agrees to limit the use of such
information to the calculation and invoicing of such fees. PURCHASER's
right to continued use of Software licensed on a pay-as-you-grow basis
or otherwise used In Revenue Service Will be contingent upon the payment
of appropriate fee adjustments within thirty (30) days of invoice
therefor, subject to any bona fide disputes regarding amounts due as a
result of threshold "pay-as-you-grow" fee adjustments.
19.2 PURCHASER acknowledges that the Software is the property and
confidential proprietary information of SELLER or third party licensors.
Title and ownership rights to Software, including any reproductions,
modifications or derivatives thereof, shall remain at all times with
SELLER or third party licensors. PURCHASER may not sell, assign,
transfer, license, or otherwise make available the Software to any third
party, except as provided herein, nor shall PURCHASER adapt or create
any derivative work using the Software or decompile or reverse engineer
the Software without the prior written Consent of SELLER. PURCHASER may
not copy or duplicate the Software, except that PURCHASER may make one
(1) copy of the Software for each of its MSC and its Home Office
locations for back-up or archival purposes, provided such copies bear
all copyright or other proprietary notices as are contained on the
original copy (or as SELLER may reasonably require from time to time).
PURCHASER shall not alter or remove any copyright or other proprietary
notices on or in copies of the Software. In no event may PURCHASER,
other than as set forth in paragraphs 19.4 and 28.2 hereof, sell,
assign, transfer, license, or otherwise make available any of the
Software to any person not purchasing the System, in whole or in part.
Except as expressly permitted in this Article 19 and in Article 28,
PURCHASER agrees not to disclose or cause to be disclosed the Software
to any person other than employees and contractors of PURCHASER duly
authorized to use the Software on PURCHASER's behalf and who have been
informed by PURCHASER of the use and disclosure restrictions set forth
herein.
19.3 The Software supplied under this Agreement shall not, without SELLER's
prior written Consent, which shall not be unreasonably withheld, be
implemented on or used to directly control hardware other than that
purchased under this Agreement, except for hardware which is capable of
interfacing with the System at a point of open interface.
19.4 PURCHASER may transfer this RTU Software license to any subsequent
Purchasers of all or part of the System (on a market by market basis)
from PURCHASER without
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further approval of SELLER provided the subsequent Purchasers are
purchasing markets or portions of PURCHASER's markets and are not direct
competitors of SELLER and further provided the subsequent Purchasers
agree in a writing delivered to SELLER to assume PURCHASER's obligations
set forth in this Agreement relating to the Software.
19.5 Modifications of the Software made by SELLER which constitute Software
Enhancements or Software Features will be made available to PURCHASER on
an RTU license basis at the prices set forth in Attachment A, and if not
therein set forth, at no greater than SELLER's then current ATP price,
including discounts therefor. Software Updates shall be provided to
PURCHASER without charge during the Warranty period. Thereafter,
Software Updates shall be made available to PURCHASER pursuant to
agreements for System Support Services, except any Enhancements released
within one hundred eighty (180) days of this Agreement shall be made
available to PURCHASER at no additional cost.
19.6 Notwithstanding the provisions of Article 23 of this Agreement the
parties agree that SELLER may enforce provisions of this Article 19
regarding restrictions on transfer and confidentiality of the Software
by an action for injunctive relief or other equitable remedies.
19.7 SELLER represents and warrants that the Software delivered to PURCHASER
with a System or with any Equipment, as the case may be, is all of the
Software reasonably necessary to use, operate or maintain the System or
Equipment, as the case may be.
ARTICLE 20 TAXES
The amounts to be paid by PURCHASER under this Agreement do not include any
state or local sales and use taxes, however designated, which may be levied or
assessed on the System or any component thereof, including, but not limited to,
Services. With respect to such taxes, PURCHASER shall either furnish SELLER with
an appropriate exemption certificate applicable thereto or pay to SELLER, upon
presentation of invoices therefor, such amounts thereof as SELLER determines it
is required to collect or pay. In addition, PURCHASER shall reimburse SELLER for
any property taxes incurred by SELLER with respect to the Equipment and Software
following Installation of such Equipment or Software but prior to the passage of
title thereof to PURCHASER. PURCHASER shall have no obligation to SELLER with
respect to other taxes, including, but not limited to, those relating to
franchise, net or gross income or revenue, license, occupation, other real or
personal property, and fees relating to importation of the Equipment and
Software.
ARTICLE 21 INDEMNIFICATION AND LIMITATION OF LIABILITY
21.1 SELLER and PURCHASER agree to indemnify and hold each other harmless
from and against all losses, claims, demands, damages (to person or
property), and causes of action (including reasonable legal fees)
resulting from the intentional or negligent acts or omissions, or strict
liability, of either party, its officers, agents, employees, or
subcontractors. If SELLER and PURCHASER jointly cause such losses,
claims,
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demands, damages, or causes of action, the parties shall share the
liability in proportion to their respective degree of causal
responsibility.
21.2 NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, IN
NO EVENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY, TORT
(INCLUDING BUT NOT LIMITED TO NEGLIGENCE OR INFRINGEMENT), SHALL SELLER
OR PURCHASER BE LIABLE UNDER THIS AGREEMENT FOR ANY CONSEQUENTIAL OR
INCIDENTAL DAMAGES OF ANY NATURE WHATSOEVER, INCLUDING LOST PROFITS OF
THE OTHER PARTY, BEFORE OR AFTER ACCEPTANCE.
ARTICLE 22 INTELLECTUAL PROPERTY RIGHTS INFRINGEMENT
22.1 SELLER agrees that it will defend, at its own expense, all suits and
claims against PURCHASER for infringement or violation of any patent,
trademark, copyright, trade secret or other tangible or intangible
property rights of any kind whatsoever, whether United States or foreign
(collectively, "Property Rights"), covering, or alleged to cover, the
Equipment, Software, or the System or any component thereof, in the form
furnished or as subsequently modified by SELLER or with SELLER's
Consent, and SELLER agrees that it will pay all sums, including, without
limitation, attorneys' fees and other costs, which, by final judgment or
decree, or in settlement of any suit or claim, may be assessed against
or incurred by PURCHASER on account of such infringement or violation,
provided (a) SELLER shall be given prompt written notice of all claims
of any such infringement or violation and of any suits or claims brought
or threatened against PURCHASER or SELLER of which PURCHASER has express
knowledge, and SELLER shall be given full authority to assume control of
the defense thereof through its own counsel at its expense and to
compromise or settle any suits or claims so far as this may be done
without prejudice to the right of the PURCHASER to continue the use, as
contemplated, of the Equipment, the Software or the System or any
component thereof so furnished; and (b) PURCHASER shall cooperate fully
with SELLER in the defense of such suit or claims and provide SELLER
such assistance as SELLER may reasonably require in connection therewith
provided that SELLER shall pay the actual expenses of PURCHASER in
providing such assistance. PURCHASER may in its discretion and at its
own expense participate directly or through its own counsel in the
defense of such suits or claims.
22.2 If in any such suit so defended, all or any part of the Equipment,
Software, or the System, or any component thereof is held to constitute
an infringement or violation of any other person's Property Rights and
its use is enjoined, or if in respect of any claim of infringement or
violation SELLER deems it advisable to do so, SELLER shall at its sole
option take one or more of the following actions at no additional cost
to PURCHASER: (a) procure the right to continue the use of the same
without interruption for PURCHASER; (b) replace the same with
non-infringing Equipment or Software that meets the Specifications; (c)
modify such Equipment or Software so as to be non-infringing, provided
that the Equipment or Software as modified meets all of the
Specifications; or (d) in the case of Equipment or Software not
essential to the operation of the System, and for which PURCHASER can
readily obtain competitive replacements,
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take back the infringing Equipment or Software and credit PURCHASER with
an amount equal to its price less a mutually agreeable allowance for
use. If SELLER fails to perform its obligations under this Section 22.2,
PURCHASER may, at SELLER's expense, take any of the foregoing actions on
behalf of SELLER or, if PURCHASER is unable to do so, exercise its
remedies under Section 24.1 hereof.
22.3 SELLER's indemnity under this Article 22 shall not apply to any
infringement caused by PURCHASER's modification of the Equipment and any
infringement caused solely by PURCHASER's use of the Equipment other
than in accordance with the Specifications and the purposes contemplated
by this Agreement, except as expressly authorized or permitted by
SELLER. PURCHASER shall indemnify SELLER against all liability and cost
of defense, including reasonable attorney's fees, for any and all claims
against SELLER for infringement based upon the foregoing.
22.4 The remedies stated in this Article 22 shall be the parties' exclusive
remedies for infringement or violation of any property rights. Except as
expressly provided in paragraph 22. 1, in no event shall either party be
liable to the other for money damages for infringement.
ARTICLE 23 DISPUTE RESOLUTION
23.1 If there is a disagreement relating to Installation and Acceptance, the
parties will attempt to negotiate a solution within fourteen (14) days
of notification of such disagreement. If no solution can be reached, the
parties shall select a third party engineer ("Third Party Engineer')
(whose fees and expenses will be shared equally by PURCHASER and SELLER)
who will, after conducting such examination or testing as he/she deems
necessary, render a decision in the matter by stating whether the
Equipment, Software or Installation in question shall be Accepted. If
the parties are unable to agree on the selection of the Third Party
Engineer, the Third Party Engineer will be selected by the then
President of the Institute of Electrical & Electronics Engineers. The
Third Party Engineer's decision shall be final and binding and neither
party shall appeal or otherwise contest it. Once a Third Party Engineer
is selected for resolving a dispute relating to Installation or
Acceptance, he/she shall be selected for the resolution of any further
disputes hereunder relating to Installation and Acceptance unless
otherwise agreed to by both parties or unless The Third Party Engineer
refuses to continue to serve in that function.
23.2 (a) Any controversy or claim arising out of or relating to this
Agreement for the breach hereof which cannot be settled by the
parties except for (i) disputes to be settled by a Third Party
Engineer under paragraph 23.1, or (ii) action for equitable
relief under Articles 19 or 28 which shall be resolved as
provided therein, shall be settled by arbitration in accordance
with the commercial arbitration rules of the American Arbitration
Association as set forth herein.
(b) Each party may select one arbitrator. Selection shall be
completed within ten (10) days of the receipt of a demand for
arbitration. If either party fails to select an arbitrator within
such ten- (10) day period, the one selected shall act as sole
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arbitrator. If two arbitrators have been selected, the two
arbitrators selected shall select a third within fifteen (15)
days after their selection. If they fail to do so, the third
arbitrator shall be selected by the American Arbitration
Association. The arbitrators shall set a date of hearing no later
than sixty (60) days from the date all arbitrators have been
selected.
(c) All proceedings shall be conducted in the English language.
(d) The arbitration shall take place at a location to be agreed upon
by the parties. If the parties are unable to agree, the
arbitrators shall select a location in New Orleans, Louisiana for
the arbitration, preferably, the regional office, if any, of the
American Arbitration Association.
(e) In any such arbitration proceeding the arbitrators shall adopt
and apply the provisions of the Federal Rules of Civil Procedure
relating to discovery so that each party shall allow and may
obtain discovery of any matter not privileged which is relevant
to the subject matter involved in the arbitration to the same
extent as if such arbitration were a civil action pending in a
United States District Court; provided, however, that each party
shall be entitled to no more than four (4) depositions upon oral
examination of no more than one (1) day in length each.
(f) The award of any arbitration shall be final, conclusive and
binding on the parties hereto.
(g) The arbitrators may award any legal or equitable remedy. The
arbitration award shall include an award of attorney's fees, in
the amount of such fees, to the prevailing party. Judgment upon
any arbitration award may be entered and enforced in any court of
competent jurisdiction.
(h) Either party to an arbitration hereunder may bring an action for
injunctive relief against the other party if such action is
necessary to preserve jurisdiction of the arbitrators or to
maintain status quo pending the arbitrators' decision. Any such
action called pursuant to this paragraph shall be discontinued
upon assumption of jurisdiction by the arbitrators and their
opportunity to consider the request for equitable relief pending
final decision in the arbitration.
ARTICLE 24 TERMINATION AND DEFAULT
24.1 (a) PURCHASER may, upon written notice to SELLER, terminate this
Agreement in whole or in part, at its option, without penalty:
(i) if the Nashville and Knoxville markets within the Initial
Configuration scheduled to be installed and completed as set
forth in the final Attachment H, in general, as opposed to Cell
Site Configuration Equipment at a specific site, (other than by
the fault of PURCHASER or due to an event specified in paragraph
10.3) has been rightfully rejected by PURCHASER and has not
thereafter been Accepted within [CONFIDENTIAL TREATMENT
REQUESTED] after such rejection; or (ii) if SELLER
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fails to perform its obligations under paragraph 22.2 and such
failure results in a judicial imposition of legal damages or
expenses which are not fully reimbursed by SELLER or injunctive
relief upon PURCHASER materially affecting its ability to provide
first class service on the System.
(b) In the event PURCHASER terminates this Agreement in accordance
with this paragraph 24.1, PURCHASER may at its option: (i) return
to SELLER, freight collect all Equipment delivered, in which
event SELLER shall refund to PURCHASER all amounts paid to SELLER
under this Agreement; or (ii) retain so much of the Equipment as
it elects and return to SELLER, freight collect, all other
Equipment, in which event SELLER shall refund to PURCHASER all
amounts paid in respect to Equipment returned by PURCHASER and
the related Installation charges and payment for Services
thereof.
24.2 (a) PURCHASER may, at its option and upon written notice to SELLER,
terminate this Agreement in whole or in part, if (i) if at any
time there shall be filed by or against the SELLER in any court a
petition in bankruptcy or insolvency or for reorganization or for
the appointment of a receiver or trustee of all or a portion of
the property of the SELLER or makes a general assignment for the
benefit of creditors or petitions for or enters into such an
agreement or arrangement with its creditors; (ii) SELLER Causes a
delay as defined in paragraph 10.1 of more than [CONFIDENTIAL
TREATMENT REQUESTED] in the Installation of an Initial
Configuration other than the first one referenced in paragraph
24.1 (a) above, (iii) if SELLER's Equipment Software and Services
materially fails to meet the AT&T Standards, or (iv) SELLER is in
default under any material terms of this Agreement, other than
those specified in paragraph 24.1 (a) (i) and (ii) above, and
action to correct such default is not commenced within
[CONFIDENTIAL TREATMENT REQUESTED] after receipt of Notice from
PURCHASER and such default is not thereafter cured within sixty
(60) days after commencement of correction, unless SELLER cannot
complete such cure within such period for reasons beyond its
control and SELLER is continuing to diligently pursue the cure,
in which case such default shall be cured no later than
[CONFIDENTIAL TREATMENT REQUESTED] after SELLER's original
receipt of Notice under this paragraph 24.2 (a).
(b) In the event PURCHASER terminates this Agreement in accordance
with paragraph 24.2 (a), PURCHASER may at its option return to
SELLER, freight collect, any specific items of Equipment
delivered or Software installed which is the subject of the
default in paragraph 24.2 (a) above, in which event SELLER shall
refund to PURCHASER all amounts paid to SELLER under this
Agreement with regard to such Equipment, Software and the
Installation thereof
24.3 SELLER may terminate this Agreement without any obligation to deliver
Equipment not yet delivered, or, at its option, temporarily suspend its
performance, without liability, under this Agreement, in the event that:
(a) PURCHASER is in default under any material terms of this Agreement,
except as provided for in Article 24.3(b), and correction is not
commenced within [CONFIDENTIAL TREATMENT REQUESTED] after receipt of
Notice from SELLER and such default is not thereafter cured within
[CONFIDENTIAL
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TREATMENT REQUESTED] after commencement of correction, unless PURCHASER
cannot complete such cure within such period for reasons beyond its
control and PURCHASER is continuing to diligently pursue the cure, in
which case such default shall be cured no later than one hundred fifty
(150) days after SELLER's original receipt of Notice under this
paragraph 24.3 or (b) PURCHASER materially breaches any confidentiality
agreement with SELLER, including the provisions of Article 14 and 19 or
otherwise materially fails to meet the provisions of Article 2.2, and
SELLER, while reserving all other remedies available under this
Agreement for such a breach, has provided PURCHASER with Notice of such
breach or (c) PURCHASER (i) applies for or consents to the appointment
of or the taking of possession by a receiver, custodian, trustee, or
liquidator of itself or of all or a substantial part of its property,
(ii) makes a general assignment for the benefit of its creditors, (iii)
commences a voluntary proceeding under the Federal Bankruptcy Code or
under any other law relating to relief from creditors generally, or (iv)
fails to contest in a timely or appropriate manner, or acquiesces in
writing to, any petition filed against it in an involuntary proceeding
under the Bankruptcy Code or under any other law relating to relief from
creditors generally, or any application for the appointment of a
receiver, custodian, trustee, or liquidator of itself or of all or a
substantial part of its property, or its liquidation, reorganization,
dissolution, or winding-up.
24.4 Except as provided above, if either party terminates this Agreement,
SELLER's obligations hereunder with respect to Equipment already
delivered, installed and not returned, and PURCHASER's obligations with
respect to payments for Accepted Equipment not returned, shall continue
in full force and effect.
ARTICLE 25 ADVERTISING
25.1 Neither SELLER nor PURCHASER shall publicly advertise or, except as
required by law, publish information concerning the entry into,
execution or delivery of this Agreement, its nature, or the terms and
conditions hereof, without the other party's prior written Consent;
provided, however, that either party or its Affiliates may refer
generally to the performance of this Agreement in its annual report to
shareholders, and PURCHASER may disclose this Agreement or information
related to this Agreement to its representatives, agents and lenders
involved with PURCHASER's debt and/or equity financing and may make any
public disclosures required by government regulatory agencies including,
but not limited to, the SEC, FCC and FAA. PURCHASER shall endeavor to
provide SELLER with reasonable advance Notice of any expected required
disclosure and consider in good faith SELLER's request to redact
portions of the Agreement prior to disclosure to such agencies.
25.2 Seller shall provide PURCHASER with an advertising allowance of
[CONFIDENTIAL TREATMENT REQUESTED] to assist PURCHASER in the promotion
of its System as well as the joint promotion of SELLER's participation
in the System. No more than one half (1/2) of such allowance may be used
by PURCHASER in the first year of the Term. The parties shall mutually
agree on the form and content of such advertising.
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ARTICLE 26 LATE PAYMENTS
All amounts payable under this Agreement which are past due shall accrue
interest from their due date at the rate of [CONFIDENTIAL TREATMENT REQUESTED]
per annum (or such lesser rate as may be the maximum permissible rate under
applicable law).
ARTICLE 27 PERSONNEL
Neither party shall actively solicit any employees of the other party or any of
its Affiliates who are assigned to perform work hereunder during the period of
such assignment and for one (1) year thereafter, without the Consent of the
party whose employee is so solicited. Such Consent is not required for responses
to advertisements placed or posted in periodicals, electronic bulletin boards,
or other media of general circulation.
ARTICLE 28 ASSIGNMENT
28.1 The parties may assign or transfer this Agreement to their respective
Affiliates. PURCHASER reserves the right to assign this Agreement to any
bona fide purchaser of the Tritel PCS Markets, or any portion thereof,
or to AT&T Wireless Services, Inc. or its Affiliates or successors.
Neither party may otherwise assign this Agreement, or any part of its
rights or obligations hereunder, without the other party's Consent
28.2 PURCHASER shall have the right to lease or license the use of the System
or any component thereof to any other cellular mobile telephone service
provider on a time-sharing or other basis. Such lease or license shall
not serve to expand or otherwise alter SELLER's warranty obligations
under this Agreement.
28.3 Notwithstanding the provisions of Article 23 of this Agreement, the
parties agree that either party may enforce provisions of this Article
28 regarding assignment by an action for injunction or other equitable
remedies.
ARTICLE 29 NOTICES
29.1 Any notice required under this Agreement shall be given to the
appropriate party, at the following addresses:
If to PURCHASER:
Tritel Communications, Inc.
1080 River Oaks Dr. -- Suite B-100
Jackson, Mississippi 39208
Facsimile: (601) 936-6045
Attention: Jerry M. Sullivan, Jr., Executive Vice President/Chief
Operating Officer
Tritel Communications, Inc.
112 E. State Street
Ridgeland, Mississippi 39157
Facsimile: (601) 898-6216
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Attention: David Walsh, Vice President-Program Development
Young, Williams, Henderson & Fuselier, PC
P.O. Box 23059
Jackson, Mississippi 39225-3059
Facsimile: (601) 355-6136
Attention: James H. Neeld, IV
and to those persons listed on Attachment P, if any.
If to SELLER:
ERICSSON INC., Network Operators Group
740 E. Campbell Road
Richardson, Texas 75081
Attention: Group General Counsel
Facsimile: (972) 583-1810
29.2 Either party may change the address to which notice to it shall be sent
by notifying the other party of the change and the new address on thirty
(30) days notice given in accordance with this Article.
29.3 Notice given under this Article 29 shall be deemed to have been given
upon receipt by the other party.
ARTICLE 30 AUTHORITY AND COMPLIANCE WITH LAWS
30.1 PURCHASER and SELLER represent and warrant that (a) all necessary
approvals and authority to enter into this Agreement and bind the
parties have been obtained, (b) the person executing this Agreement on
behalf of PURCHASER or SELLER has express authority to do so and, in so
doing, to bind PURCHASER or SELLER hereto, and (c) the execution of this
Agreement by PURCHASER or SELLER does not violate any provision of any
by-law, charter, regulation or any other governing authority of such
party. Each party agrees to furnish the other with such documents as
either party may reasonably request showing proof of authority in
accordance with this Article.
30.2 PURCHASER and SELLER shall comply with all applicable laws in the
performance of this Agreement, including the laws and regulations of the
United States Department of Commerce and State Department and any other
applicable agency or department of the United States regarding the
export or re-export of products or technology; and (b) indemnify each
other for any loss, liability or expense incurred as the result of
breach of this paragraph 30.2.
ARTICLE 31 HEADINGS
The headings given to the Articles herein are inserted only for convenience and
are in no way to be construed as part of this Agreement or as a limitation of
the scope of the particular Article to which the title refers.
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ARTICLE 32 GOVERNING LAW; SEVERABILITY
TIES AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW THEREOF. Whenever possible, each provision of
this Agreement shall be interpreted in such a manner as to be effective and
valid under such applicable law, but, if any provision of this Agreement shall
be held to be prohibited or invalid in any jurisdiction, the remaining
provisions of this Agreement shall remain in full force and effect and such
prohibited or invalid provisions shall remain in effect in any jurisdiction in
which it is not prohibited or invalid.
ARTICLE 33 NO WAIVER
The failure of either party to insist, in any one or more instances, upon the
performance of any of the terms, covenants or conditions of this Agreement, or
to exercise any right hereunder, shall not be construed as a waiver or
relinquishment of the future performance of any such terms, covenants, or
conditions or the future exercise of such right, and the obligation of the other
party with respect to such future performance shall continue in fall force and
effect.
ARTICLE 34 ENTIRETY OF AGREEMENT; NO ORAL CHANGE
This Agreement and the Attachments referenced herein constitute the entire
Agreement between the parties with respect to the subject matter hereof, and
supersedes all proposals, oral or written, all previous negotiations, and all
other communications between the parties with respect to the subject matter
hereof. No modifications, alterations or waivers of any provisions herein
contained shall be binding on the parties hereto unless evidenced in writing
signed by duly authorized representatives of both parties as set forth in
Article 16.
ARTICLE 35 ATTACHMENTS AND INCORPORATIONS
35.1 The following documents attached hereto, are hereby incorporated by
reference herein, and made a part of this Agreement with the same force
and effect as though set forth in their entirety herein (such documents
together with this Agreement are herein referred to as the "Agreement").
- ----------------------------------------------------------
ATTACHMENT TITLE/DESCRIPTION
- ----------------------------------------------------------
A Pricing
- ----------------------------------------------------------
B Installation
- ----------------------------------------------------------
C Technical Education
- ----------------------------------------------------------
D System Support Services
- ----------------------------------------------------------
E Documentation
- ----------------------------------------------------------
F Responsibility Matrix
- ----------------------------------------------------------
G Environmental Conditions
- ----------------------------------------------------------
H Time Schedule
- ----------------------------------------------------------
I OSS
- ----------------------------------------------------------
J Acceptance Tests/Certificate
- ----------------------------------------------------------
K Tritel PCS Markets
- ----------------------------------------------------------
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- ----------------------------------------------------------
ATTACHMENT TITLE/DESCRIPTION
- ----------------------------------------------------------
L AXE 10 Functions for CMS 8800
- ----------------------------------------------------------
M (Reserved)
- ----------------------------------------------------------
N Services
- ----------------------------------------------------------
0 Price Variation
- ----------------------------------------------------------
P Recipients of Notices to PURCHASER
- ----------------------------------------------------------
Q Order Cancellation Policy
- ----------------------------------------------------------
35.2 Except where otherwise noted, in the event of any conflict or
inconsistency among the provisions of this Agreement and the documents
attached and incorporated herein, such conflict or inconsistency shall
be resolved, by giving precedence to this Agreement, thereafter to the
Attachments (except Attachment E), and thereafter to Attachment E.. No
provisions or data on an Order or in subordinate documents (such as
shipping releases) or any form originated by PURCHASER or SELLER shall
be incorporated in this Agreement unless the provisions or data merely
supply information contemplated by this Agreement but do not vary the
provisions of this Agreement. Whenever any such provisions conflict with
this Agreement, this Agreement shall control unless the parties
expressly otherwise agree in writing.
ARTICLE 36 FINANCING AND BOARD APPROVAL
Pursuant to a letter agreement between SELLER and Airwave Communications, LLC
dated December 14, 1998, SELLER has committed to provide certain loan facilities
and financing payments to PURCHASER and certain investors in PURCHASER.
PURCHASER'S obligations hereunder are conditioned upon SELLER's fulfillment of
the terms of the Financing Commitment. Further, PURCHASER'S obligations
hereunder are also conditioned upon approval of this Agreement by PURCHASER'S
Board of Directors.
36
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
<TABLE>
<CAPTION>
<S> <C>
ERICSSON INC. TRITEL COMMUNICATIONS, INC.
Network Operators Group
By: By:
--------------------------------------- ---------------------------------------
Title: Executive Vice President & General Jerry M. Sullivan, Jr.
Manager Title: Executive Vice President & General
Manager
Date: Date:
------------------------------------- --------------------------------------
TRITEL FINANCE, INC.
By:
----------------------------------------
Jerry M. Sullivan, Jr.
Title: Executive Vice President & General
Manager
Date:
--------------------------------------
</TABLE>
37
<PAGE>
ATTACHMENT A - PRICING
ERICSSON INC. / TRITEL COMMUNICATIONS, INC. & TRITEL FINANCE, INC.
1 PRICING
1.1 "ATP PRICES"
AT&T Partnership (ATP) market prices are used as Seller's list prices for the
purposes of calculating Purchaser's Initial Configuration and expansion prices.
1.2 INITIAL CONFIGURATION
1.2.1 DEFINITION
Purchaser's Initial Configuration is defined as Phase IA in Attachment A.
The sales object level MSC configurations upon which the Initial Configuration
is priced are included in Attachment A.
All Initial Configuration pricing shall be subject to verification based on
Seller's ATP prices and based on the revised Initial Configuration as described
in Section 2.1 of Attachment A.
Base station models include Tower Mounted Amplifiers (TMAs), 2-hour battery
backup, RBS software, Self Contained Cell Site (SCCS) cabinet, cable sets, as
well as all required installation materials.
Switch pricing includes spares and power equipment with 8-hour battery backup,
as well as installation materials and cable sets.
1.2.2 DISCOUNTS
The following discounts are applied to Seller's ATP prices in order to calculate
the net prices for Purchaser's Initial Configuration:
RBS, including TMAs, power, battery [CONFIDENTIAL TREATMENT REQUESTED]
backup, spares, & RBS software
Self Contained Cell Site (SCCS) [CONFIDENTIAL TREATMENT REQUESTED]
cabinet, including cable sets
<PAGE>
MSC, including basic software, [CONFIDENTIAL TREATMENT REQUESTED]
power, battery backup, & spares
MSC optional software feature set [CONFIDENTIAL TREATMENT REQUESTED]
(defined according to Section 1.3)
With the exception of the SCCS, all discounts off of ATP prices are applicable
only to the Initial Configuration. The SCCS cabinet continues to receive the
[CONFIDENTIAL TREATMENT REQUESTED] discount off of ATP prices for the term of
the Agreement.
1.3 SOFTWARE PRICING
Purchaser's pricing for MSC software is based on Seller's CMS 8800 Version 5
software release. The pay-as-you-grow component of the MSC software is priced
according to Subscriber Concurrent Call (SCC) capacity. SCC is calculated
according to the procedure described in Seller's 1999 Budget Planning Guide for
ATP markets.
The MSC optional software feature set is defined in Attachment A and includes
all features necessary for Purchaser to achieve the same "look and feel" as AT&T
Wireless Services.
1.4 SERVICES PRICING
Ad hoc labor rates and Services pricing is included in Seller's 1999 Budget
Planning Guide for ATP markets.
1.5 PRICE ADJUSTMENTS
Purchaser's Equipment and Software purchases for which ATP prices have not been
firmly established shall be subject to later price adjustment, with
corresponding payment credit to Purchaser, by Seller once ATP prices have been
finalized.
2 PURCHASER'S OPTIONS
2.1 INITIAL CONFIGURATION CHANGE OPTION
Seller grants Purchaser the option to alter its Initial Configuration subject to
the following conditions:
o Purchaser may elect to change its Initial Configuration once, no later
than three months following the execution date, by giving Seller written
notice of the new configuration,
o Initial System discounts shall apply to the revised Initial Configuration,
o The dollar value of the change shall be limited to [CONFIDENTIAL TREATMENT
REQUESTED] of the value of the original Initial Configuration,
<PAGE>
o Purchaser's change option is limited to MSC and RBS Equipment and
Software.
Purchaser's Initial Configuration shall be re-calculated based on the change
option, and any invoicing shall be adjusted by Seller according to the revised
Initial Configuration.
2.2 MSC-2000 UPGRADE OPTION
Seller grants Purchaser the option to purchase MSC-5000 models for its Initial
Configuration although those models are not Generally Available (GA) at the time
they are required for installation. Seller will charge Purchaser for the
appropriate MSC-5000 models as part of the Initial Configuration and install
MSC-2000 models in the markets specified by the Purchaser and will upgrade those
nodes to MSC-5000 equivalents at no additional charge to Purchaser.
3 DELIVERY COMMITMENTS
3.1 LEAD TIMES
The following sections detail the maximum lead times required for RBS and switch
hardware as defined for the delay provisions of the Agreement. All lead times
given are stated in working days and assume that Purchaser has fulfilled its
obligations (site readiness, etc.) according to Seller's installation
specifications. Seller represents that the following lead times are no greater
than those offered to Seller's most favored customers under comparable
conditions.
Seller's lead time commitment for switch hardware is 120 days if forecasted and
180 days if not forecasted.
Seller's lead time commitment for base station hardware is 45 days if forecasted
and 90 days if not forecasted.
3.2 EQUIPMENT QUANTITIES
Seller agrees to make available to Purchaser for order and delivery during 1999
no less than six (6) MSCs and no less than six hundred (600) RBS 884 Macro 1900
base stations.
3.3 MSC-5000 AVAILABILITY
Seller represents to Purchaser that the estimated GA date for the MSC-5000 model
is July 15, 1999. However, in no event shall GA of the MSC-5000 model be later
than second quarter of 2000. Seller understands that a portion of Purchaser's
network deployment will be based on the MSC-5000's timely introduction.
<PAGE>
ATTACHMENT B
ACQUISITION AGREEMENT # 9152
TRITEL INC.
INSTALLATION
------------
<TABLE>
<CAPTION>
AXE SWITCH
- ----------
<S> <C> <C>
1. Installation
1.1 Unpacking of and Inventorying of Mechanical Parts and Cables (Package A)
1.2 Assembly and Installation of Exchange Framework (BYB 102/202) and Power
Plant; Check for fit and finish
1.3 Designation of Suites, Cabinets, Cableways, and Shelves
1.4 Assembly and Installation of Ancillary Equipment (as needed)
1.5 Assembly and Connectorizing of External Cabling
1.6 Installation of Internal Cabling
1.7 Connection of Commercial Power to Power Plant; Functional Test Power Plant
1.8 Installation of Equipped Magazines (Package B)
1.9 Install Cover Plates/Doors
2. Testing
2.1 Hardware/Functional Test of APZ
2.2 Test of Switching Network
2.3 Functional Test of Operation and Maintenance Functions
2.4 Test of Trunk Circuits
2.5 Test of Traffic Routing/Generation of Test Traffic
2.6 Test of Individual Multiple Positions
2.7 Test of Individual Trunks
2.8 Combined Operational Testing of APZ & APT with Traffic
2.9 Acceptance Testing
<PAGE>
3. Functional Test of Traffic Handling Functions in APT
3.1 Test of Traffic Routes
3.2 Test of Individual Multiple Positions
3.3 Test of Individual Trunks
3.4 Generation of Test Traffic
3.5 Combined Test
3.6 Operation Test
BASE STATIONS
1. Activities Before Shipping
1.1 Assembly of Base Station Configurations
1.2 Test of Base Stations and Preparation of Test Protocols
1.3 Preparation of Transport and Packing
1.4 Transport by Common Carrier to Cell Site
2. Activities at Cell Site
2.1 Unpacking and Checking Equipment for Correct Specifications and Possible
Damage
2.2 Assembly of Equipment
2.3 Cabling and Wiring
2.4 Connection to the DC Power Supply
2.5 Connection to Antenna Feeders
2.6 Connection to 4W Circuits to Switch
2.7 Test of Base Station Equipment Preparation of Base Station Final Test
Protocols
2.8 Connection of Base Station Equipment to Commercial Power within Room
2.9 Install Antennas on Tower
</TABLE>
3. SYSTEM TEST
Overall test carried out from MTSO with Initial Configurations of Cell Site
Configurations, as well as telco lines connected and mobile stations
operating. SELLER will interconnect and/or cross connect the equipment at
the POP to the circuits of the PSTN provided by PURCHASER within the same
building and the interconnection and/or cross connect at the POP of the
facilities between the MTSO Equipment, and each Cell Site Configuration. In
<PAGE>
the event analog circuits are used between the MTSO and the Cell Sites, the
required circuits will be supplied by PURCHASER.
<PAGE>
Attachment C
Acquisition Agreement #9152
Tritel Inc.
TECHNICAL EDUCATION
TECHNICAL EDUCATION CENTER STUDENT CERTIFICATE PROGRAM
The program is a competency development program with basic core courses and
several areas of concentration. At the present time, three areas for the CMS
8800 are available: MSC, RBS, and RF Engineering. These areas are available in
both the 850Mhz systems and the 1900 Mhz systems. Within each area of
concentration, multiple levels of technical competence are possible. The MSC
area has four levels and the RBS and RF areas have three levels each. One
important note about this program is that it is not intended to certify the
competence of anyone. This program is a method of providing a customized
training path for technicians and RF Engineers for the companies that utilize
Ericsson CMS 8800 systems. This program is NOT a substitute for and should not
be confused with the official Ericsson Standardized On-The-Job Training Program
or the Certification programs that Ericsson designs for it's customers. An
expanded list of CMS 8800 courses appears at the end of this Attachment C.
o LEVEL 1 Provides training required to perform basic routines and
administration under the guidance of a technician that has achieved
certificate level 3 through this certificate program.
o LEVEL 2 For the technician required to perform normal operation and
maintenance activities using standard Ericsson exchange documentation.
o LEVEL 3 For the technician who will diagnose and repair both hardware and
some software faults as well as perform extended operations and maintenance
functions.
o LEVEL 4 For the technician/engineer who is trained to be a trouble shooter
on both hardware and software as well as have a strong command of advanced
functions, features an system capabilities.
STEPS: To participate in the Certificate program the three steps listed
below must be followed;
1. Successfully complete at the courses identified (80% or better score
in each course). These required courses are listed in the Ericsson
course catalog specific to the CMS 8800 system.
2. Have the specified amount of work field experience verified by the
applicants
44
<PAGE>
supervisor on the certificate request form.
3. Submit an application for certificate at which time Ericsson will
notify the employee's supervisor or team leader of student competency
development certificate eligibility. If the employee has met all
requirements for the level requested, Ericsson will send to the
employee's supervisor.
NOTES:
1. Credit for passing courses will not be automatic. Students will be
evaluated via written quizzes, performance of lab exercises, and
observation of the student's ability to perform.
2. All instructors teaching concentration courses are required to be
certified to instruct the class. Instructor certification includes two
elements: Professional Certification and Technical Certification.
3. All courseware has been revised to include the new evaluation
criteria, as well as recent CNA improvements. Also, additional lab
exercises are added as needed.
4. In the event that a student wishes to waive a course that is required
for this program, his/her supervisor must submit a course description or
outline of an equivalent course plus a certificate of completion for the
substituted course. The Certificate office will determine the
eligibility of the substituted course descriptions or outlines.
PRICING:
All Ericsson Technical Education Center (E-TEC) courses are priced based on
Credit Units. The value of each Credit Unit is [CONFIDENTIAL TREATMENT
REQUESTED] USD each. The price for the Credit Unit remains the same whether the
course is conducted at the E-TEC facility in Richardson Texas or at the
customers location. The number of Credit Units for each course is based on the
extent of technical knowledge imparted during the training. The majority of the
courses are 10 Credit Units per day. This may vary at customer request if the
customer has asked specifically for a course that is shorter in duration but
contains the same information. It may also vary if the course is of such a high
technical level that it warrants special skills by the instructor. All courses
conducted at other then the E-TEC facility must be prefaced by a quote of costs
originated by the Ericsson manager setting up the class and signed by the
customer manager coordinating the course. In addition, the customer must pay for
all of the instructors expenses to include: airfare, rental car, hotel, meals
and incidentals. No courses will be scheduled until the Ericsson training
manager responsible for the course receives the customer signed quote from the
customer along with a purchase order number covering all of the expected costs
for the class.
45
<PAGE>
CMS 8800, 1998 COURSE OFFERINGS:
INTRODUCTION: The course offerings for CMS 8800 include curriculum designed
specifically for the CMS 8800 product line. Additional courses will be included
from the Ericsson product line as applicable.
(A) CMS 8800, 1998 Course/Price List
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
COURSE NAME # OF CREDIT END CUSTOMER
DAYS UNITS PRICE/$
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CMS 8800 Ericsson Cellular Overview 1 10 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
RBS 882M/DM Overview 1 10 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
CMS 8800 Digital Overview 1 10 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
CMS 8800 Digital Operation & Maintenance 3 30 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
CMS 8800 MSC Advanced Operation & Maintenance 10 100 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
AS 45/46 Features 3 30 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
Introduction To Cellular Digital Packet Data (CDPD) 1 10 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
CMS 8800 System Introduction 4 40 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
AS 94/34 Features 1 10 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
RBS 884 Overview 1 10 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
RBS 884 Macro Operations & Maintenance 5 50 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
CMS 8800 System Survey 5 50 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
RF Engineering 1 10 100 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
AS 100/101 Features 2 20 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
RF Engineering 2 10 100 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
CMS 8800 Measurement and Statistical Analysis for 4 40 [CONFIDENTIAL TREATMENT REQUESTED]
the Trunk and Switch Environment
- ----------------------------------------------------------------------------------------------------------------------------
CMS 8800 Measurement and Statistical Analysis for 5 50 [CONFIDENTIAL TREATMENT REQUESTED]
the RF and RBS Environment
- ----------------------------------------------------------------------------------------------------------------------------
RF Engineering 3 10 100 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
Multi-Line Fixed 5 50 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
Air Interface 5 50 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
CMS 8800 MSC Operations 10 100 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
RF Engineering 1, Accelerated 4 40 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
RF Engineering 2, Accelerated 5 50 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
RF Engineering 3, Accelerated 5 50 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
AS 100/101 O & M 2 20 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
CMS 8800 MSC Maintenance 10 100 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
MSC Operations (CBT) 10 100 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
RBS 882 Operation & Maintenance 5 50 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
RBS 882 Microcell Installation, Operation & Maintenance 5 50 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
RBS 884 Micro/Compact Installation, Operation and 5 50 [CONFIDENTIAL TREATMENT REQUESTED]
Maintenance
- ----------------------------------------------------------------------------------------------------------------------------
CMS 8800 RBS Basics 5 50 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
884 1900 Macro IO&M 5 50 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
AS 100/101 DCCH Seminar 3 30 [CONFIDENTIAL TREATMENT REQUESTED]
- ----------------------------------------------------------------------------------------------------------------------------
884 DBC Macro IO&M TBD
- ----------------------------------------------------------------------------------------------------------------------------
AS 123/124 Tech. Overview TBD
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
For a complete listing of all E-TEC CMS 8800 courses and a detailed description
of the Student Certificate programs, see the E-TEC Homepage on the Internet.
Revised 4/18/97
46
<PAGE>
47
<PAGE>
Attachment D
Acquisition Agreement # 9152
System Support Services
CMS 8800
Tritel Inc.
Revision PA3
System Services Contract
(48)
<PAGE>
SYSTEMS SERVICES CONTRACT
TABLE OF CONTENT
1 Heading 3
2 Preamble (Background) 3
3 Definitions 3
4 Scope of Contract 4
5 Services 5
6 Prices and Terms of Payment 5
7 General PURCHASER's Obligations 5
8 Delays 6
9 Warranty 6
10 Excluded Equipment 7
11 Term and Termination 7
ANNEX 1 CONTRACT DOCUMENTS
ANNEX 2 HARDWARE AND SOFTWARE
ANNEX 3A SERVICE PRODUCT SPECIFICATION FOR SW
MAINTENANCE
APPENDIX 1 SPECIFICATIONS OF VARIABLES FOR SW MAINTENANCE
MAINTENANCE
ANNEX 3B SERVICE PRODUCT SPECIFICATION FOR REPAIR &
REPLACEMENT
APPENDIX 1 SPECIFICATIONS OF VARIABLES FOR REPAIR &
REPLACEMENT
ANNEX 4A PRICES FOR SW MAINTENANCE
ANNEX 4B PRICES FOR HW MAINTENANCE
System Services Contract
(49)
<PAGE>
1. HEADING
This Contract is made and entered into on ....... 1998, between
Tritel Inc., a company with its principal place of business in Jackson,
Mississippi hereinafter called the "PURCHASER",
and
Ericsson Inc., a company with its principal place of business in Richardson,
TX, hereinafter called the "SELLER".
PURCHASER and SELLER may also hereinafter be referred to as the "Party", or,
collectively the "Parties".
2. PREAMBLE (BACKGROUND)
System Services Contract
(50)
<PAGE>
WHEREAS, PURCHASER has purchased a mobile telephone system from SELLER in
accordance with the Acquisition Agreement,
and
WHEREAS, PURCHASER would like to acquire Services for such system,
and
WHEREAS, SELLER would like to supply such Services to PURCHASER in
accordance with the terms and conditions of this Contract.
Now, therefore, in consideration of the mutual promises and the mutual
covenants herein contained, the Parties hereby agree as follows:
3. DEFINITIONS
The following expressions shall have the meaning hereby assigned to them
unless the context would obviously require otherwise.
"ACQUISITION AGREEMENT", means the contract entered into between the Parties
for the supply and installation of the System and shall include any
amendment thereto.
"CONTRACT", means this contract concluded between PURCHASER and SELLER
including all Annexes which are incorporated into the said Contract in
accordance with Annex 1, Contract Documents, as well as any Contract
Amendment.
"CONTRACT AMENDMENT", means a document duly signed by the Parties by which
any alterations, amendments or modifications of the Contract shall be
introduced in the Contract.
"SELLER", means Ericsson Inc.
"DATE OF ACCEPTANCE", means the date when the System or Part of the System
is accepted or deemed as accepted in accordance with the Acquisition
Agreement.
"HARDWARE", means such equipment included in the System as is specified in
Annex 2.
"NORMAL WORKING HOURS", means the time from 8.00 am to 5:00 p.m. local time
Monday to Friday, local and national holidays excluded.
"PROCEDURES MANUAL", means the manual describing the SELLER's and
PURCHASER's required procedures for requesting Services and answering
Services requests.
"PURCHASER", means ............. , and legal successors in title to the
PURCHASER and any assignee of the PURCHASER approved by the SELLER.
System Services Contract
(51)
<PAGE>
"SELLER'S EQUIPMENT", means such tools, instruments, test equipment and any
other item belonging to or procured by SELLER or its subcontractors as are
required for the execution of the Contract and not intended to be
incorporated into the System or otherwise acquired by PURCHASER.
"SERVICE(S)", means the Service Products specified in Annex 3.
"SOFTWARE", means any such computer program, software module or package or
any part thereof in binary code form and included in the System as is
specified in Annex 2.
"SYSTEM", means the Hardware and Software jointly forming the Mobile
Telephone System specified in Annex 2 and any additional system component
approved of in writing by SELLER for Services under this Contract.
"TERRITORY", means . . . . .
Additional definitions are to be found in each Service specification in
Annex 3.
Other capitalized expressions used in this Contract shall have the meanings
respectively assigned to them elsewhere in this Contract.
Words indicating the singular only also include the plural and vice versa,
where the context so requires. The headings of the Articles are for
convenience only and shall not affect their interpretation.
4. SCOPE OF CONTRACT
Upon the terms and conditions set forth in this Contract, the SELLER shall
supply, and the PURCHASER shall acquire and pay for Services for the System
acquired by the PURCHASER from the SELLER.
Unless modified, herein, the terms and conditions contained in the
Acquisition Agreement shall apply.
5. SERVICES
The SELLER shall offer the PURCHASER the Services specified in Annex 3.
PURCHASER agrees to purchase the services specified in Annex 4 at the prices
set forth, therein, and as modified from time-to-time by agreement of the
parties.
System Services Contract
(52)
<PAGE>
6. PRICES AND TERMS OF PAYMENT
The PURCHASER shall pay the prices for the Services specified in Annex 4.
Payments shall be made against the SELLER's invoice. Terms of payment are
within thirty (30) days after date of invoice.
7. GENERAL PURCHASER'S OBLIGATIONS
In order for the SELLER to be able to supply the Services to the PURCHASER,
the PURCHASER must conduct the following obligations and the obligations
stated in each Services specification :
i) The PURCHASER shall carry out the recommended operation and
maintenance of the System and seek to remedy all faults which can
reasonably be remedied and handle problems which can reasonably be
handled without expert assistance from the SELLER.
ii) The PURCHASER shall keep an operational logbook and record of faults
in accordance with the instructions received in the B-Module.
iii) The PURCHASER shall provide the SELLER with regular and accurate
statistical information regarding the performance of the System. The
information required is specified in the B-Module.
iv) The PURCHASER shall seek to ensure its maintenance personnel are
sufficient in number and are competent in order to carry out the
PURCHASER obligations stipulated in this Article 7. The personnel
should have satisfactorily completed the training equivalent to the
SELLER's recommended training path for operation and maintenance
personnel and they should have adequate on-site experience and
follow-up training.
v) The PURCHASER shall be responsible for the provision of all the
necessary consumables and spare parts needed during the conduct of
the Services.
vi) The PURCHASER shall appoint suitable personnel for the purpose of
liaison with the SELLER relating to the Services.
vii) The PURCHASER shall provide at no cost, the SELLER's service
personnel with operating supplies and consumables such as paper,
magnetic tapes, ribbons, cards, format tapes, disc cartridges and
such similar items as the PURCHASER would use during normal
operation.
viii) The PURCHASER shall at all time maintain a security back up of
PURCHASER generated data/information in the System.
System Services Contract
(53)
<PAGE>
ix) The PURCHASER shall during the term of this Contract keep the System
upgraded to the latest Software release level.
8. DELAYS
In the event that any of the Services, as defined in Annex 3, are not
executed within the respective times stipulated in this System Services
Contract, due to circumstances for which the SELLER is responsible, or
within any extended or postponed period, as the case may be, the PURCHASER
shall be entitled to an adjustment in price regarding these Services, the
amount of which shall be agreed upon between the Parties on a yearly basis.
It is understood that the total sum of the aforesaid adjustment, during each
year, in no event shall exceed a reduction of five (5) percent of the price
for the delayed Service in question during the corresponding year.
The aforesaid adjustment, or when applicable the price rebate, shall be full
and exclusive compensation for any delay in performing the Services or part
thereof. Applicable price rebate means the rebate of the price agreed upon
by the parties to apply if SELLER does not reach a certain performance
level.
9. WARRANTY
Provided that PURCHASER has met all obligations contained in Article 7, and
otherwise excluded by Article 10, the SELLER agrees to provide warranty
coverage as provided herein.
The SELLER shall, free of charge, remedy faulty repaired Hardware by
repairing such Hardware, without undue delay.
The above stated liabilities are limited to a period of three (3) months
from date of delivery by the SELLER to the PURCHASER of the repaired or
replaced unit.
10. EXCLUDED EQUIPMENT
System Services Contract
(54)
<PAGE>
The Service does not cover Hardware and Software damaged due to the
PURCHASER's or third parties misuse, packing, repair or attempted
modifications. Equipment not purchased through Ericsson is also not covered.
The Services shall not apply to any failure caused by modification of the
Hardware or Software without the SELLER's written approval.
Consumable parts, such as lamps, fuses, batteries etc. are excluded from
this Service(s).
11. TERM AND TERMINATION
This System Services Contract shall be effective upon the Date of Acceptance
of the System in accordance with the Acquisition Agreement. This contract
may be terminated at any time if the PURCHASER does not maintain the system
at the latest available release level.
The term of this Contract shall be automatically renewed for successive one
(1) year terms unless terminated by either Party in writing not later than
one hundred eighty (180) days prior to the expiration of the current term.
12. ANNEXES
The Contract Documents including all Annexes are specified in Annex 1
hereto.
IN WITNESS WHEREOF, the parties have executed the Agreement as of the date
first above written.
ERICSSON INC.
Wireless Communications Tritel Inc.
By: __________________________ By: ___________________________
Title: ______________________ Title: ________________________
Date: _______________________ Date: _________________________
System Services Contract
(55)
<PAGE>
ANNEX 1
CONTRACT DOCUMENTS
The Contract shall consist of the following documents, as amended from time
to time as provided herein,
a) The contract document
b) The Annexes:
Annex 1 Contract Documents
Annex 2 Hardware and Software
Annex 3a SW Maintenance
Annex 3b Repair and Replacement
Annex 4a Price SW Maintenance
Annex 4b Price HW Maintenance
c) Such documents as are incorporated by reference.
System Services Contract
(56)
<PAGE>
ANNEX 2
HARDWARE AND SOFTWARE
1. HARDWARE PARTS OF THE NETWORK ELEMENTS
MSC Mobile Service Switching Center
RBS Radio Base Station
HLR Home Location Register
SCP Service Control Point
2. SOFTWARE PARTS OF THE NETWORK ELEMENTS
MSC Mobile Service Switching Center
HLR Home Location Register
OSS Operation and Support System
MXE Message System
FOG File Operations Gateway
RBS Radio Base Station
System Services Contract
(57)
<PAGE>
ANNEX 3a
SERVICE PRODUCT SPECIFICATION FOR SW MAINTENANCE
1. INTRODUCTION
This document is a specification for the service product SW Maintenance. SW
Maintenance is the service for maintaining the System Software supplied by
the SELLER and specified in the Acquisition Agreement.
2. DEFINITIONS
In addition to the definitions in the Contract document, the following
expressions shall have the meaning hereby assigned to them unless the
context would obviously require otherwise.
"APPROVED CORRECTION", means a permanent and documented Software correction
dedicated as such by the SELLER.
"APPROVED CORRECTION FOR APPLICATION SYSTEM", means a package, consisting of
several Approved Corrections.
"CONSULTATION CALL-UP TIME", means the time between the PURCHASER's request
for consultation support and when the SELLER contacts the PURCHASER.
"CORRECTION NOTE FOR APPLICATION SYSTEM", means a set of updated Software
and/or Hardware units and its documentation. It consists of corrections and
may also include new functionality/feature.
"DOCUMENTATION", means the current documentation for the System.
"EMERGENCY CALL-UP TIME", means the time between the PURCHASER's request for
Emergency Telephone Support and the SELLER contacting the PURCHASER,
specified in Appendix 1.
"EMERGENCY CALL-OUT TIME", means the time between the PURCHASER's request
for Emergency On-Site Support and the SELLER's personnel leaving for the
Site, specified in Appendix 1.
"EMERGENCY SITUATION", means the situation described in Article 3.1.1.
"EMERGENCY SUPPORT", means the support specified in Article 3.1.
"EMERGENCY ON-SITE SUPPORT", means the support specified in Article 3.1.3.
System Services Contract
(58)
<PAGE>
"EXCHANGE", means the part of the System where the host processor APZ 211 or
APZ 212 or equivalent resides.
"NORMAL OPERATIONAL CONDITION", means that the System operates and performs
in accordance with the specification in the Acquisition Agreement or is
operating at a level acceptable to both Parties.
"PROCEDURES MANUAL", means the manual referred to in Appendix 1 hereto.
"SITE", means the actual location(s) where the System or Part of System is
installed.
"SOFTWARE UPGRADES", means enhancements to existing software as well as
availability of new features and functionality.
"SOFTWARE UPDATES", means corrections of the Software based on the SELLER's
and users fault reports that are issued as Software Updates by the SELLER. A
Software Update shall contain the appropriate load file, implementation
instructions and user documentation.
"TROUBLE REPORT", means the report issued by the PURCHASER and sent
electronically or on diskette to the SELLER for the purpose of indicating a
problem relating to the operation of the System.
"TROUBLE REPORT HANDLING", means the service specified in Article 3.2.
"TROUBLE REPORT ANSWER", means the SELLER's answer to the Trouble Report.
3. SW MAINTENANCE
The following SW Maintenance is available to the PURCHASER for the network
elements specified in Annex 2. SW Maintenance consists of the following four
(4) service components, further specified below:
i) Emergency Support
ii) Trouble Report Handling
iii) Consultation Support
iv) Software Update
3.1 EMERGENCY SUPPORT
The following Emergency Support is available to the PURCHASER in case of an
Emergency Situation (defined below). The Emergency Support specification is
divided into the following headings:
i) Emergency Situation
System Services Contract
(59)
<PAGE>
ii) Emergency Telephone Support
iii) Emergency On-Site Support
iv) Completion of Emergency Support.
3.1.1 EMERGENCY SITUATION
An Emergency Situation in the System is deemed to be at hand under the
following circumstances:
a) Complete Exchange/network element failure, i.e. an exchange or a
dependent support system (operation and maintenance function) stops
handling traffic and does not recover automatically
b) Major disturbance, i.e. the traffic handling capacity is reduced by
more than thirty percent (30%) in at least one Exchange/network element
c) Charging function stops working or is seriously affected
3.1.2 EMERGENCY TELEPHONE SUPPORT
In an Emergency Situation, the SELLER shall have a person with
appropriate skills and system knowledge to call the PURCHASER within the
Emergency Call-Up Time specified in Appendix 1 hereto. Such person shall
provide telephone support by providing answers and recommendations,
orally or by telefax, to solve the Emergency Situation with the aim of
restoring the System to Normal Operational Condition.
3.1.3 EMERGENCY ON-SITE SUPPORT
If the Emergency Situation is of such a complicated nature that it
cannot be reasonably solved through telephone support, the PURCHASER may
request that the SELLER provide Emergency On-Site Support by sending a
person with appropriate skills and system knowledge to the location
specified by the PURCHASER.
The SELLER's personnel shall leave for the Site within the Emergency
Call Out Time specified in Appendix 1 hereto.
Such person shall provide the following Emergency On-Site Support:
a) Analyze the Emergency Situation
b) Provide the PURCHASER with appropriate answers and recommendations to
solve the Emergency Situation with the aim of restoring the System to
Normal Operational Condition
System Services Contract
(60)
<PAGE>
c) Assist and advice the PURCHASER in carrying out such recommendations
upon PURCHASER's request.
3.1.4 COMPLETION OF EMERGENCY SUPPORT
Emergency Support shall be considered completed when an agreed solution
to the Emergency Situation has been reached or when the Emergency
Situation no longer is at hand, or if the PURCHASER does not accept to
follow the recommendations given by the SELLER.
The SELLER shall provide, the PURCHASER with a written report on the
Emergency Support supplied without undue delay.
3.2 TROUBLE REPORT HANDLING
The following Trouble Report Handling is available to the PURCHASER in
case of trouble in the System. The Trouble Report Handling specification
is divided into the following two (2) headings:
i) Trouble Report Classification
ii) Trouble Report Analysis/Answering.
3.2.1 TROUBLE REPORT CLASSIFICATION
Trouble Reports shall be classified as A, B or C by the PURCHASER
according to the classifications below. A Trouble Report is
automatically given priority B unless otherwise classified by the
PURCHASER. The classifications A, B and C are dependent on the severity
of the trouble and are defined below.
Class A: Fault resulting in an Emergency Situation.
Class B: i) System traffic handling capacity is reduced by less than
thirty percent (30%) in at least one exchange/network
element.
ii) Errors in the Documentation causing handling errors.
Class C: Minor errors in the Documentation.
3.2.2 TROUBLE REPORT ANALYSIS /ANSWERING
The SELLER shall analyze Trouble Reports and provide Trouble Report
Answers within the times stated in Appendix 1. The Trouble Report Answer
will be provided to the PURCHASER in accordance with the routines and
specifications stated in the Procedures Manual.
System Services Contract
(61)
<PAGE>
The SELLER shall provide status reports on Trouble Reports until a
Trouble Report Answer is issued.
3.3 CONSULTATION SUPPORT
The following Consultation Support for the System is available to the
PURCHASER. Consultation Support consists of the following two (2)
components further specified below:
i) Telephone Consultation
ii) Consultation Services at the SELLER's Location.
3.3.1 TELEPHONE CONSULTATION
In case of a request for consultation, the SELLER, as requested by the
PURCHASER, shall have a person with appropriate skills and System
knowledge, or a specialist, call the PURCHASER within the applicable
Call-Up Time specified in Appendix 1 hereto.
Such person shall provide telephone support by providing answers and
recommendations, orally, by telefax or electronic media, to questions
from the PURCHASER. The aim of this support is to assist the PURCHASER's
personnel in arriving at a reasonable understanding of the operation and
maintenance of the System.
The consultation will be limited to:
o Assistance with interpretation of Ericsson documentation
o Operational Instructions (OPI) that have been exhausted, and
indicates "consult expert"
o Faults that do not result in an alarm
o Alarms that do not have an associated Job Procedure (JP) or OPI
If a question cannot be answered immediately, the SELLER will inform the
PURCHASER within forty eight (48) hours when the question will be
answered.
3.3.2 CONSULTATION SERVICES AT THE SELLER'S LOCATION
In the case of a request for Consultation at the SELLER's Location to
handle a complex question concerning the System, the SELLER shall
provide a person, as requested by the PURCHASER, with appropriate skills
and system knowledge or a specialist, to answer questions and give
recommendations at the SELLER's Location with the aim of assisting the
PURCHASER's personnel in arriving at a reasonable understanding of the
operation and maintenance of the System.
System Services Contract
(62)
<PAGE>
The time for consultation at the SELLER's Location shall be agreed upon
on a case by case basis.
3.4 SOFTWARE UPDATE
The following Software Update service is available to the PURCHASER. The
Software Update service consists of the following two (2) service
components further specified below:
i) Specific Software Updates
ii) General Software Updates
3.4.1 SPECIFIC SOFTWARE UPDATES
When applicable, the SELLER shall provide the PURCHASER with Software
Updates, within a reasonable period of time in relation to the technical
implications of the case, resulting from Trouble Reports Answers
received as part of the Trouble Report Handling service.
3.4.2 GENERAL SOFTWARE UPDATE
The SELLER shall provide the PURCHASER with General Software Updates
when available from the SELLER.
General Software Updates may be one of two (2) types:
a) Approved Correction for Application System
b) Correction Note for Application System.
3.4.2.1 Software Updates are provided under the same software license
terms and conditions as stated in the Acquisition Agreement.
3.4.2.2 Software Updates are delivered in an indivisible package that may
contain other software programs (new functionality/features) in addition
to the Software Update. The PURCHASER may not in any way use the other
software programs unless the PURCHASER specifically requests and
purchases a licence to use such other software programs under the same
terms and conditions as stated in the Acquisition Agreement except
price.
3.5 SOFTWARE CONFIGURATION MANAGEMENT
Software configuration management can include the implementation of
software upgrades/updates.
3.5.1 Implementation of Software upgrades/updates
System Services Contract
(63)
<PAGE>
SELLER implements software upgrades/updates and ensures that the
installation is made correctly and in a timely manner. PURCHASER shall
make the appropriate network nodes available at the earliest convenient
moment, but no later than one month after the upgrade release, for such
software upgrade/update. Should implementation not be made within one
month due to network inaccessibility, then the SELLER shall not be
liable for faults that could have been avoided by the upgrade/update.
Implementation is made in all nodes of the purchasers network.
4. SW MAINTENANCE SERVICE REQUESTS AND PROCEDURES MANUAL
In order for the SELLER to be able to provide qualified SW Maintenance
service, the PURCHASER must provide the SELLER with all available data
and information when requesting the service.
The Procedures Manual describes activities related to the SW Maintenance
service.
SW Maintenance service requests by the PURCHASER shall be made in
accordance with the Procedures Manual. A SW Maintenance service request
by the PURCHASER which has not been made in accordance with the
Procedures Manual will be rejected by the SELLER. In such a case, the
PURCHASER must reissue and resubmit the request.
The SELLER shall promptly acknowledge that the service request has been
received from the PURCHASER.
5. PURCHASER'S OBLIGATIONS
In order for the SELLER to be able to provide the SW Maintenance service
to the PURCHASER, in addition to the General PURCHASER's Obligations
stated in the Contract, the PURCHASER is obligated to provide at no cost
to the SELLER:
i) Be responsible for providing the following items to the SELLER
including access to the System while undertaking Emergency On-Site
Support:
o Adequate I/O Devices/OSS terminals
o The possibility to connect a portable PC via a modem to the
System.
o A free and unbarred telephone
o A tele-facsimile machine
o The latest version of the System Documentation
o The latest version of the Documentation for the B and C modules
of the Exchange.
ii) Provide a representative of the PURCHASER to be present at the
PURCHASER's Site at all times when services are being performed by the
SELLER on Site.
System Services Contract
(64)
<PAGE>
iii) Implement Software Updates in the System within one (1) month from
receipt thereof.
iv) Follow the agreed procedures stated in the Procedures Manual.
v) Purchase all memory and hardware required for system upgrades and
updates.
6. APPENDIX
The parameters for the SW Maintenance service are specified in Appendix
1 hereto.
Service Product
Specification
SW Maintenance
SPECIFICATION OF VARIABLES FOR SW MAINTENANCE
EMERGENCY SUPPORT
Emergency Support availability: 24 hours per day, 365 days per year.
Call up (Emergency): 30 minutes.
Call out: 8 hours.
CONSULTATION SERVICE
Consultation Service availability: Normal Working Hours.
Call up (Consultation): 30 minutes.
Call up by person with specialist competence: one hour.
TROUBLE REPORT HANDLING
Lead-time Trouble Report Answers: Class A Trouble Reports 6 weeks
Lead-time Trouble Report Answers: Class B/C Trouble Reports 14 weeks
System Services Contract
(65)
<PAGE>
PROCEDURES MANUAL
Associated Procedures Manual is customer specific
System Services Contract
(66)
<PAGE>
ANNEX 3b
SERVICE PRODUCT SPECIFICATION FOR REPAIR & REPLACEMENT
1. INTRODUCTION
This document is the specification of the service product Repair &
Replacement. Repair & Replacement is the service for the supply of
Replacement Units for certain faulty Hardware in the System within a
specified time.
2. DEFINITIONS
In addition to the definitions in the Contract, the following
expressions shall have the meaning hereby assigned to them unless the
context would obviously require otherwise.
"BEYOND REPAIR" means a Faulty Unit is damaged or worn out to such an
extent that repair is not technically possible or the cost of repair
would exceed the price for a new Service Unit.
"EPIDEMIC FAILURES" means a cyclical repeatedly failure.
"FAULTY UNIT" means a Service Unit that does not fulfill the
Specification.
"LEAD TIME" means the time between the receipt of order and delivery as
stated in Appendix 1 hereto.
"PROCEDURES MANUAL" means the manual referred to in Appendix 1 hereto.
"REPLACEMENT UNIT" means a fault free Service Unit with the same product
code as a Faulty Unit. The revision state of the Replacement Unit may be
of the same or higher state than the Faulty Unit regarding the numeric
value. The character following the numeric value may be lower, i.e. the
functionality of it shall always be the same or better as that of the
Faulty Unit. The unit may be at SELLER's option new or a refabricated
unit.
"SERVICE UNITS" means PURCHASER's Hardware units (i.e., equipment)
specified in the Procedures Manual.
"SPECIFICATION" means the technical and functional specification of the
Service Units which is specified in the Acquisition Agreement.
3. REPAIR & REPLACEMENT
System Services Contract
(67)
<PAGE>
Repair & Replacement is the service for the delivery of Replacement
Units in exchange of Faulty Units, as further specified below.
4. DELIVERY OF REPLACEMENT UNITS
SELLER shall after receipt of an order, from PURCHASER placed in
accordance with the Procedures Manual, for each Replacement Unit
category, deliver a Replacement Unit to the PURCHASER within the Lead
Time stated in Appendix 1. Service Units are divided into two
categories, category 1 and category 2 as stated in the Procedures
Manual.
Delivery terms for Replacement Units shall be in accordance with
Appendix 1 hereto.
Risk of loss and damage to the Faulty Unit and title thereto shall pass
to SELLER when delivered in accordance with the delivery term stipulated
in this Article 4.
The accuracy for the Lead Time is 95% or more.
If a Faulty Unit in the System suffers from Epidemic Failure, the agreed
Lead Times does not apply. The Lead Time may in such case vary depending
on SELLER's workshop capacity. In such case the maximum Lead Time shall
not exceed six (6) months for either category of Service Units.
5. DELIVERY OF FAULTY UNITS
Delivery terms for Faulty Units shall be in accordance with Appendix 1
hereto.
Risk of loss and damage to the Faulty Unit and title thereto shall pass
to SELLER when delivered in accordance with the delivery term stipulated
in this Article 5.
If a Faulty Unit, classified as category 2 is deemed by SELLER to be
Beyond Repair, the PURCHASER shall within thirty (30) calendar days be
informed thereof and the Faulty Unit shall be returned to PURCHASER at
PURCHASER's risk and expense. In this case SELLER shall, if a
Replacement Unit is available, offer PURCHASER such a unit at the same
price as a spare part.
6. STATISTICAL INFORMATION
SELLER undertakes to issue quarterly reports containing delivery
performances and fault statistics regarding Service Units.
7. SERVICE REQUESTS AND PROCEDURES MANUAL
In order for the SELLER to be able to provide the Repair & Replacement
service, the PURCHASER must provide the SELLER with all available data
and information when requesting the service.
System Services Contract
(68)
<PAGE>
Repair & Replacement service requests by the PURCHASER shall be made in
accordance with the Procedures Manual. An order by the PURCHASER which
has not been made in accordance with the Procedures Manual will be
rejected by the SELLER. In such a case the PURCHASER must reissue and
resubmit a new order.
The Procedures Manual states the procedures to be followed by the
PURCHASER and the SELLER in the performance of this service. It shall be
regarded as a part of the Contract, and is stated in Appendix 1 hereto.
The Procedures Manual covers the following areas:
o Administrative procedures for ordering
o Contact list
o Address list
o List of Service Units
8. PURCHASER'S OBLIGATIONS
In order for the SELLER to be able to provide the Repair & Replacement
service to the PURCHASER, in addition to the General PURCHASER's
Obligations stated in the Contract, the PURCHASER is obligated to:
i) Undertake to treat Faulty Units as if they were functional units and
according to SELLER's standards to prevent additional damage to the
Faulty Units.
ii) Undertake to follow the procedures mutually agreed upon in the
Procedures Manual.
iii) Not make any modification or attempt to repair Service Units
without SELLER's written approval.
9. APPENDIX
The variables for the Repair & Replacement service are specified in
Appendix 1 hereto.
System Services Contract
(69)
<PAGE>
APPENDIX 1 to
Service Product
Specification
Repair &
Replacement
SPECIFICATION OF VARIABLES FOR REPAIR & REPLACEMENT
1. LEAD TIME
Lead Time for Service Parts category 1: 30 calendar days.
Lead Time for Service Parts category 2: 60 calendar days.
2. ORDERS RECEIVED
For Service Units category 1, orders are considered received by SELLER
when: Faulty Unit and correct documentation are in ERICSSON REPAIR
CENTER's possession.
For Service Parts category 2, orders are considered received by SELLER
when: Faulty Unit and correct documentation are in ERICSSON REPAIR
CENTER 's possession.
3. DELIVERY TERMS
Each party shall bear the cost of shipping replacement and faulty units
to the other party.
4. PROCEDURES MANUAL
The Procedures Manual is created jointly by SELLER and PURCHASER.
System Services Contract
(70)
<PAGE>
ANNEX 4a
PRICES FOR SW MAINTENANCE
1. SW MAINTENANCE FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
SERVICE CATEGORY PRICE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
SOFTWARE MAINTENANCE (BASIC) BASIC (INCLUDES)
1) Fault specification,
Isolation,
and solution
2) Software Updates/Upgrades
3) Emergency Support
4) Telephone Consultation
PLATFORM FEE (BASED ON NUMBER OF
MSC/HLR)
1 MSC/HLR [CONFIDENTIAL TREATMENT
REQUESTED]
2-4 MSC/HLR [CONFIDENTIAL TREATMENT
REQUESTED]
greater than 5 MSC/VLR [CONFIDENTIAL TREATMENT
REQUESTED]
SOFTWARE SUPPORT
MSC (Based on # of RBS connected to
MSC)
1-24 RBS [CONFIDENTIAL TREATMENT
REQUESTED]
25-50 RBS [CONFIDENTIAL TREATMENT
REQUESTED]
greater than 51 RBS [CONFIDENTIAL TREATMENT
REQUESTED]
HLR [CONFIDENTIAL TREATMENT
REQUESTED]
MXE [CONFIDENTIAL TREATMENT
REQUESTED]
AP [CONFIDENTIAL TREATMENT
REQUESTED]
CDPD MDBS 882 [CONFIDENTIAL TREATMENT
REQUESTED]
CDPD MDBS 884 [CONFIDENTIAL TREATMENT
REQUESTED]
OPTIONAL FEATURES
MSC [CONFIDENTIAL TREATMENT
REQUESTED]
OSS [CONFIDENTIAL TREATMENT
REQUESTED]
WIN [CONFIDENTIAL TREATMENT
REQUESTED]
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
CDPD Backbone [CONFIDENTIAL TREATMENT
REQUESTED]
System Services Contract
(71)
<PAGE>
SOFTWARE MAINTENANCE (ENHANCED) OPTION 1 (INCLUDES)
1) Consultation Service [CONFIDENTIAL TREATMENT
not included in BASIC REQUESTED]
Minimum: 12 hours on-site
support
Minimum: 1 hour telephone
support
OPTION 2 (INCLUDES)
1) Emergency On-Site Support [CONFIDENTIAL TREATMENT
REQUESTED]
Minimum: 12 hours on-site
support
SOFTWARE MANAGEMENT
CONFIGURATION (ENHANCED)
Software Updates Per System Basis
Software Upgrades Per System Basis
- -------------------------------------------------------------------------------------------------------
</TABLE>
2. PRICE CALCULATION FOR ADDITIONAL NETWORK ELEMENTS
The Additional Fee, for additional network elements added to the System,
will be effective and charged from the adjacent month after acceptance.
The charge is calculated for the rest of the year on a prorata basis for
the remaining months.
3. PRICE REDUCTION DURING THE SOFTWARE WARRANTY PERIOD
The Customer shall, during the Software warranty period under the
Acquisition Agreement, pay no fee for the basic SW Maintenance Services.
4. PRICE ADJUSTMENT CLAUSE
The prices stated above are subject to adjustment in accordance with the
Acquisition Agreement.
5. INVOICING
The charges will be invoiced on the date of Software warranty expiration
under the Acquisition Agreement and thereafter monthly in advance during
the terms of this Contract. Optional selections will be billed from the
date of purchase.
System Services Contract
(72)
<PAGE>
ANNEX 4a
PRICES FOR HW MAINTENANCE
1. HW MAINTENANCE FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
SERVICE CATEGORY PRICE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
HARDWARE MAINTENANCE (BASIC) BASIC (INCLUDES)
1) Repair and
Replacement
RBS 882 Analog transceiver [CONFIDENTIAL TREATMENT
REQUESTED]
RBS 882 Digital transceiver [CONFIDENTIAL TREATMENT
REQUESTED]
RBS 882 Micro transceiver [CONFIDENTIAL TREATMENT
REQUESTED]
RBS 882 Digital Micro transceiver [CONFIDENTIAL TREATMENT
REQUESTED]
RBS 884 transceiver [CONFIDENTIAL TREATMENT
REQUESTED]
RBS 884 Micro transceiver [CONFIDENTIAL TREATMENT
REQUESTED]
RBS 884 Compact transceiver [CONFIDENTIAL TREATMENT
REQUESTED]
MSC with 1 - 16 STCs (Small Node) [CONFIDENTIAL TREATMENT
REQUESTED]
MSC with 17 - 34 STCs (Medium Node) [CONFIDENTIAL TREATMENT
REQUESTED]
MSC with more than 34 STCs (Large Node) [CONFIDENTIAL TREATMENT
REQUESTED]
HLR [CONFIDENTIAL TREATMENT
REQUESTED]
MXE [CONFIDENTIAL TREATMENT
REQUESTED]
CDPD MDBS 882 [CONFIDENTIAL TREATMENT
REQUESTED]
CDPD MDBS 884 [CONFIDENTIAL TREATMENT
REQUESTED]
Fixed Cellular MLT [CONFIDENTIAL TREATMENT
REQUESTED]
Fixed Cellular SLT 0-50,000 SLT [CONFIDENTIAL TREATMENT
REQUESTED]
Fixed Cellular SLT [CONFIDENTIAL TREATMENT
REQUESTED]
HARDWARE MAINTENANCE (ENHANCED) OPTIONAL
Advanced Delivery Service 1) Repair and Per System Basis
Replacement
- -----------------------------------------------------------------------------------------------------
</TABLE>
System Services Contract
(73)
<PAGE>
2. HW MAINTENANCE FEE (OPTIONAL)
OPTIONAL HW MAINTENANCE SERVICE INCLUDES:
Repair and replacement, advanced delivery service. 2-Day Top 100
Critical Parts List
Price for Repair and Replacement, Advanced Deliver Service is as
follows:
$TBD
3. PRICE CALCULATION FOR ADDITIONAL NETWORK ELEMENTS
The Additional Fee, for additional network elements added to the System,
will be effective and charged from the adjacent month after acceptance.
The charge is calculated for the rest of the year on a prorate basis for
the remaining months.
4. PRICE REDUCTION DURING THE HARDWARE WARRANTY PERIOD
The purchaser shall, during the Hardware warranty period under the
Acquisition agreement , pay no fee for the H/W Maintenance Services.
5. PRICE ADJUSTMENT CLAUSE
The prices stated above are subject to adjustment in accordance with the
Acquisition Agreement.
6. INVOICING
The charges will be invoiced on the date of Hardware warranty expiration
under the Acquisition Agreement and, thereafter, monthly in advance
during the terms of this Contract.
System Services Contract
(74)
<PAGE>
ATTACHMENT E
ACQUISITION AGREEMENT #9152
DOCUMENTATION
CMS 8800 PRODUCT INFORMATION DEFINITION
INTRODUCTION
The CMS 8800 library is designed to be user-friendly so that relevant documents
will be at hand when and where they are needed.
The library provides the information needed to operate, maintain, check and
repair the system and its equipment in a proper and effective manner.
The contents and arrangement of the library are intended to show the correct
servicing of the system. The documentation is divided into modules covering
areas such as software, hardware etc. The documents are written for operators,
technicians and engineers who are experienced with similar equipment. The
documentation should be combined with Ericsson training courses that incorporate
the appropriate theoretical and practical applications.
This library description gives a summary of the customer library covering the
information needs for Ericsson's Cellular Mobile System CMS 8800.
Please note that the library is under development and changes in library
structure, contents and distribution media may take place in order to include
new functions and to make the library easier to use.
<PAGE>
13. LIBRARY STRUCTURE
The CMS 8800 system library is divided into five parts, Mobile Services
Switching Center (MSC) Library, Home Location Register (HLR) Library,
Radio Base Station (RBS) Library, Operation and Support (OSS) Library,
and External Vendor Libraries. Each library contains different kinds of
documents with varied information.
The grouping of documents into libraries, each forming an information
package, makes the library adaptable to the information requirements of
different users in an operating company.
--------
CMS
--------
---------- --------- --------- --------- ---------
Library Library Library Library Library
MSC HLR RBS OSS EXT
---------- --------- --------- --------- ---------
<PAGE>
To facilitate searching for information in paper-bound libraries, it is
more efficient to have the documents divided and grouped into modules
and submodules, which are electronically stored libraries. In this
description, however, it is used as an easier way to explain the ideas
behind the structure of the libraries. All types of modules are not
normally included in each one of the libraries. Below is a list of
modules existing today:
Module Designation
B Operation and Maintenance
C Office/Site Documents
D Descriptions for Functional Products
F Hardware Documents
K Power Supply Documents (Radio Base Station)
Modules and Submodules
In paper-bound libraries, each module can be composed of one or more
binders, depending on the amount and type of material covered by the
particular module.
Modules are composed of separate submodules related to specific topics.
These submodules are listed numerically beginning with the module letter
and 01.
At the beginning of each of the submodules, there is an index or list
detailing the subject matter covered. This index breaks down the
submodule into particular units of information.
The units of information contained in the submodules are in the form of
numbered documents.
Each module and the associated submodules deals with a specific type of
information, such as Maintenance, Operations, and Engineering.
DISTRIBUTION MEDIA
MSC and HLR AXE libraries
AXE libraries are distributed electronically on two different platforms:
DOCVIEW is the document viewing program which compacts the data
sufficiently for use on a PC hard disk. The entire AXE Operations and
Maintenance Library can be stored in 16 Mb. The DocView program works as
a companion to FIOL, the interface with the AXE. DocView and FIOL are
used simultaneously with a split screen. DocView is easy to learn and
fast to use. It is generally delivered on a CD ROM, but is not used as a
CD ROM product. DocView is intended to be a tool for the experienced, or
trained, user.
KRSWIN CD ROM is the document viewing program with a powerful searching
engine. Using Boolean operands (and, or, not), the user may search for
terms while combining terms. For example, "ETC and STR" will locate all
documents where both these terms are found. KRSWin is a windows product
<PAGE>
and is intended for use by the novice operator, or a switch engineer who
needs to perform research in great detail.
RBS library
The 884 Users Guide are available on KRSWin CD ROM. The balance of the
RBS information is distributed on paper.
OSS library
The distribution media is paper.
External Vendors library
The distribution media is paper.
AXE (MSC AND HLR) OPERATION AND MAINTENANCE MANUAL
The Operation & Maintenance Manuals are sometimes called the Job
Procedures Library. The AXE operators may be asked to perform tasks on
the AXE prior to training courses, or in an alarm/emergency situation.
The job procedure is a special document type which is an easy-to-use,
step-by-step, task-oriented, detailed explanation of how to carry out a
particular task. This information can be used in a way which enhances
in-service-performance goals for the end-user. Fewer mistakes are made
and tasks are completed efficiently the first time.
The Operation and Maintenance Manual is available on KRSWin CD ROM.
Thus, the reader can search for familiar terms to learn the tasks on his
own.
The job procedure is written on two competence levels. For the
experienced technician who knows the command and is familiar with the
procedure, a detailed flow chart is given. This flow chart gives
guidance and serves as a memory-aid for the experienced worker. For the
novice technician, the flow chart is a detailed description of what
actions should be taken and how the AXE will react to the activity.
Complete examples of syntax are provided. Warnings are also noted. This
level of detail provides the inexperienced technician with the
information to do any task as well or better than an experienced
colleague.
The information given is related to a specific AXE application system;
i.e., the contents are adapted to the equipment included and functions
for the system involved.
RADIO BASE STATION LIBRARY
These instructions are intended for use by customers who will install
and/or commission the base station. Included in this information is the
Ericsson know-how regarding methods and procedures for installation and
testing.
884 Users Guide
<PAGE>
This modern work guide is intended for use by end-user customers of all
competence levels. The typical radio technician would need this
information only when the new product is delivered. It can be used to
learn the new functions of the product and the new routines associated
with it.
The 884 Users Guide includes these sections:
o INTRODUCTION: This section describes the scope of the contents of
the information within.
o SYSTEM DESCRIPTION: This section contains descriptions of the
functional structure, the hardware architecture, and the hardware
and software interfaces for the base station. The manual also
contains a basic description of the CMS 8800.
o INSTALLATION: This section details activities required to install
and commission the radio. It is written in job procedure format.
o TEST AND VERIFICATION: This section contains information
describing the procedures for making an installation test and how
to perform a start of operation of the base station. It contains
lists of recommended test instruments, and test instructions for
hardware and function testing. The manual is a tool for the
commissioning staff.
o OPERATION & MAINTENANCE: This section describes the procedures
required for normal operation and maintenance of the base
station. The manual contains information for the administrative
routines, shipping and storage, repair orders, handling of spare
parts, inspection, and operation. The manual also contains
information covering checking or "fault-finding" and repair. The
manual is job-oriented in the same manner as the work-flow.
o TROUBLESHOOTING: This section is an aid in controlling and
troubleshooting equipment on site using a Personal Computer or
data terminal connected to the Input/Output Interface Magazine.
o GLOSSARY OF TERMS
o ACRONYMS AND ABBREVIATIONS
o SUPPORT INFORMATION
o APPENDIX: This section includes hard-to-remember charts and
tables, such as Fault Code Lists and Frequency Lists.
OSS - OPERATION AND SUPPORT SYSTEM - LIBRARY
The documentation for the OSS system is delivered in a customer library.
The library contains information describing the functions,
administrative routines, error handling, operational instructions,
installation instructions, software customization, acronyms, valid range
of value, etc. The presentation media is both paper modules consisting
of one or more binders, and on-line
<PAGE>
presentation. The on-line information may be cross-reference-linked to
other product information such as AXE or TMOS information. On-line OSS
information will be accessible using the Help function.
Introduction
The main principle for compiling a customer library is simply that each
library should contain the information needed to run the Operation and
Support System at the site where it is to be placed.
Module A: Introduction Manual
The Introduction Manual contains a general description of the functions
and the interfaces from the OSS to other systems. It also describes the
other modules in the set and the procedure for trouble reporting.
Module B: System Administration Manual
The System Administration Manual contains information for system
administration. It also contains instructions for software maintenance
such as administrative routines, corrective maintenance procedure, error
handling, advanced diagnostics, software reconfiguration, user interface
customization, security and authority management, and license keys
management. It describes recovery procedures for cases in which a link
goes down, the OSS server fails, or the AXE begins a restart. The B
module also describes the procedure to modify the system configuration,
and to identify, correct and report failures and defects within the
system.
Module D: Reference Manual
The Reference Manual provides an overview of the product which includes
general system capacity and limitations.
Module G: Installation Manual
The Installation Manual contains all instructions required to install
the OSS. It also describes the installation parameters, valid range of
value, etc.
Module H: Function Verification Manual (where applicable)
The Function Verification Manual contains instructions to be used by
novice operators.
Module M: Programming Manual (where applicable)
<PAGE>
The Programming Manual contains information on the application
interfaces needed for development or alteration of functions.
Module N: Market Adaptations Manual (where applicable)
The Market Adaptations Manual provides unique (site-specific)
information specific to each customer's application systems.
Module O: Operations Manual
The Operations Manual contains illustrations of the windows and examples
of OSS reports and how to analyze them.
PRODUCT INFORMATION THEORY AND PROCESSES
General Information
This information mainly describes the AXE (MSC and HLR)
documentation to show the principles, but the documentation for
most of the other units included in CMS 8800 is structured and
designed for use in a similar way.
Architecture
The system has modular architecture with top down design and
function modules on five levels. (See figure below.) Therefore,
each function block as well as each function unit has its own
product identity. Each is handled individually throughout the
life cycle of the product. That is, not only are the function
blocks and function units designed, engineered, documented, and
installed separately, they can also be operated, maintained, and
updated individually.
Modularity
Modularity regulates system organization, hardware design,
software design, and applications.
The entire system is a set of specified functions, realized at
the lowest level as function units to the highest level, the
total system.
The figure below shows the AXE modular architecture.
<PAGE>
-----------------------------------------------------------------------
System
Product
Level 1
-------------------
System Products
Level 2
--------------------------
Sub system
Level
---------------------------------
Function Block
Level
------------------------------------------
Function Unit
Level
Software Hardware
----------------------------------------------------
-----------------------------------------------------------------------
AXE Modular Architecture
<PAGE>
System A system is an organized collection of parts for a
completely functioning product, such as a telephone system, a
signaling system, or a cooling system.
The AXE System Level refers to the entire AXE system and
encompasses all subordinate modular levels. The APZ subsystem is
responsible for controlling the telephony applications switch
equipment. The APT subsystem is responsible for switching
telephone calls in the AXE.
EXAMPLE:
AXE Telephone Exchange System (System Product Level 1)
APZ Control System for AXE (System Product Level 2)
APT Switching System for AXE (System Product Level 2)
Subsystem
A subsystem is a logically limited part of a system. The
subsystem represents characteristics and well-defined main
functions within the system.
Both APZ and APT systems are divided into a number of
subsystems. ANZ consists of subsystems supporting the control
system; the ANT contains subsystems in support of telephony
applications. Some subsystems contain only software, others
contain both software and hardware.
EXAMPLE:
ANZ Central processing unit
ANT Subscriber switching stage
Function Block
A function block is a logically limited part of a subsystem. It
can be an independent product or a combination of hardware or
software product(s) and functional unit(s).
Each subsystem consists of individual Function Blocks. Each
function block has an interface to all other function blocks,
which is defined by discrete signals. Each function block is
made up of software or hardware function units that define
specific functions within individual function blocks.
EXAMPLE:
Data store
Fault handling
Input/Output device
Function Unit
A function unit is the smallest building block in the functional
structure. Function units can be either hardware or software.
The function units are used
<PAGE>
when a product in hardware or software must be divided into
smaller functionally related parts.
Magazines
The hardware function unit of a function block usually contains
several identical devices or circuits and some common equipment.
These hardware devices are implemented on printed circuit
boards. The boards are grouped together in board cages called
magazines.
Product code/Product identity
A product is identified by a unique product code and its
designation. The product code indicates the system's association
with the product, its location in the product hierarchy, its
function, and its relationship with other products. The figure
below shows a simplified product code in AXE.
AXE
Level 1
-----------------
APZ APT
Level 2
-------------------------
ANZ ANT
Sub System
--------------------------------
CNZ CNT
Function Block
---------------------------------------
CAA COA ROF BFD
Function Unit
---------------------------------------------
Simplified Product Code in AXE
System level 1 has the product code AXE. System level 2 has
product codes APZ for the control and APT for the switching
system. All subsystems in APZ have a product code ANZ (ANT is
used for APT). All function blocks in ANZ have a product code
CNZ (CNT is used for ANT).
Software units and function units have product codes CAA and
COA, respectively.
<PAGE>
Magazines and printed boards have the product codes BFD
and ROF, respectively.
Documentation Principles
The Ericsson document numbering system is built on a
close relationship between the products and their
associated documents. The system's hierarchy defines the
products at different levels. From a documentation point
of view, all products, from the top level (AXE, APT,
APZ) to the bottom level (individual circuit board) are
treated equally.
The numbering system classifies and groups the products
and documents according to their use, system
association, and content. Predefined basic numbers and
classes are registered in a database, and new items can
be registered as required. An individual identity number
consists of letters and digits combined according to the
rules of the numbering system.
An individual document number consists of two parts: a
decimal class and a product number. These parts are made
up of letters and digits, combined according to the
rules of the document numbering system.
The decimal class indicates the information content of
the document. A decimal class consists of four or five
numbers. A prefix can be attached to decimal class to
indicate a difference between individual documents,
without changing the meaning of the decimal class.
A product number indicates the system level for which
the document is written. A product number is made up of
a combination of letters and numbers. The letters
designate the system level, while the numbers identify
the product.
A product is identified by a unique product number and
its designation. The product number indicates the system
association of the product, its location in the product
hierarchy, its implementation (for example, software and
hardware), and its relationship with other products.
Note that this is a description of Ericsson's document
numbering system. That the document type is mentioned or
described in this part of the library description does
not imply that the document type is included in the CMS
8800 library.
Document Structure
The system hierarchy defines the products at different
levels. All products from top level (AXE, APT, APZ ) to
the bottom (individual circuit board) are treated
equally from a documentation identification point of
view.
For each product category, a document structure shows
the documentation required for the different phases the
product goes through, such as design and production. The
below figure shows the document structure for one
function block.
<PAGE>
[GRAPHIC OMITTED]
Document Structure for a Function block
The document survey is an important document. All other
documents belonging to a particular product are listed
on the survey. (See next figure.)
Note: Only those documents required for normal everyday
activities are supplied to the customer. The remainder
are internal proprietary documents.
The volume of documentation is considerable for complex
products. The amount of documentation that exists for a
particular product is not apparent from the product code
alone. The next figure shows all the information needed
for the APT system products level.
<PAGE>
[GRAPHIC OMITTED]
<PAGE>
ATTACHMENT F
ACQUISITION AGREEMENT # 9152
TRITEL INC.
CMS 88 RESPONSIBILITY MATRIX
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
PLANNING....................................................................... 3
200 Initial Planning & Design.
210 Radio Network Design
IMPLEMENTATION & TESTING OF
RBS............................................................................ 5
300 Base Station Site Search (site acquisition)
310 Base Station Site Lease (site acquisition)
320 RBS Engineering
330 Base Station Site Civil Construction
340 Installation of Outdoor RBS Equipment
350 Installation of Indoor RBS Equipment
360 RBS Network Element Test
370 Engineering Antenna System
IMPLEMENTATION & TESTING OF SWITCH (E.G. MSC, HLR).............................10
400 Switch Engineering
410 Data Transcript
420 Civil Construction & Site Acquisition for Switch Site
430 Switch Installation
440 Switch Network Element Testing
IMPLEMENTATION & TESTING OF NETWORK MANAGEMENT SYSTEMS (NMS) (E.G. OSS, SMAS) &
OTHER NETWORK ELEMENTS(E.G. MXE).........................14
500 Engineering of Seller's NMS Network Elements (e.g. OSS, SMAS)
510 Engineering of Seller's Other Network Elements (e.g. MXE)
520 Pre-Testing of Seller's NMS Network Elements (e.g. OSS, SMAS)
530 Installation of Seller's Other Network Elements (e.g. MXE)
540 Installation of Seller's NMS Network Elements (e.g. OSS, SMAS)
550 Testing of Seller's Other Network Elements (e.g. MXE)
88
<PAGE>
IMPLEMENTATION & TESTING OF
TRANSMISSION...................................................................15
600 Lease of Transmission & Data Communications Network
610 Transmission Engineering
620 Transmission Installation
630 Transmission Testing
640 Testing Data Communications Network
INTEGRATION &
ACCEPTANCE.....................................................................17
700 Integration of Seller's MSC, HLR, Network Elements & PSTN
710 Integration of Seller's NMS (e.g. OSS, SMAS) Network Elements
720 Integration of Seller's Other (e.g. MXE) Network Elements
730 Integration of Seller's RBS Network Elements
740 System Demonstration (for Network Elements delivered by Seller)
750 NMS Demonstration (for Network Elements delivered by Seller)
760 Initial Tuning
770 Commercial Acceptance
780 RF Optimization
790 Initial Configuration Acceptance
</TABLE>
89
<PAGE>
KEY
The Responsibility Matrix states different areas of activities within
the project and clarifies the division of responsibility between
Purchaser and Seller.
X = Purchaser's responsibility
B = Included in Seller`s Basic Package for Engineering, Installation
and Testing
O = Optional available from Seller at additional charge
O1 = Optional available from Seller at additional charge. Seller
responsible for everything
except Zoning, commercial power and Telco.
O2 = Optional available from Seller at additional charge. Seller
responsible for Civil Construction only.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
TASK PURCHASER SELLER REMARKS
R
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PLANNING
- -------------------------------------------------------------------------------------------------------------
200. INITIAL PLANNING & DESIGN
- -------------------------------------------------------------------------------------------------------------
1. Prepare "Market Requirement Questionnaire": ERICSSON PROVIDE
. - Plan and estimate overall number of basestations B TRITEL THE
. - Grade of service B DOCUMENT
. - Transmission routing, signaling, numbering, charging B
. - Services, operations, and maintenance plans B ERICSSON BRINGS
. - External interfaces defined B DT, ENG.,
. - Prepare radio network requirements document (only if B INSTALLATION
Seller is providing RF Network plan) AND JR INVITES
. - Develop reports from requirements document B THE RESOURCES TO
. - Obtain tools (software/hardware to create reports) B KICKOFF
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
2. Clarify requirements interrelated, if any, with other X
working networks.
90
<PAGE>
<CAPTION>
PURCHASER SELLER REMARKS
TASK R
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3. Answer Market Requirement Questionnaire (data base). X
- -------------------------------------------------------------------------------------------------------------
4. Review responses from Market Requirement Questionnaire. B
Recommend changes, or approve.
- -------------------------------------------------------------------------------------------------------------
5. Seller to supply "Exchange Requirement" data forms to B
Purchaser.
- -------------------------------------------------------------------------------------------------------------
6. Answer Exchange Requirement data forms. X
- -------------------------------------------------------------------------------------------------------------
7. Review responses from Exchange Requirement data forms. B
Recommend changes, or approve.
- -------------------------------------------------------------------------------------------------------------
8. Plan and estimate the Network Element(s) required to X
meet market and exchange data criteria.
- -------------------------------------------------------------------------------------------------------------
9. Determine number of hours of reserve required for X
emergency power (battery backup) for switch.
- -------------------------------------------------------------------------------------------------------------
10.Design emergency power based on item 200.9. Seller to B
supply design requirements to Purchaser.
- -------------------------------------------------------------------------------------------------------------
11.Define a minimum portion of the Initial Configuration X B
for Initial Tuning
- -------------------------------------------------------------------------------------------------------------
210. RADIO NETWORK DESIGN
- -------------------------------------------------------------------------------------------------------------
1. Prepare forecast of demand for service and location of
demand: X
. - Outline desired area of coverage via maps or software X
. - Show demographic information of area to be covered X
. - Define coverage areas that are designated "urban",
"suburban", and "rural" X
. - Designate estimated subscriber growth for coverage area X O
. - Design RF cellplan to be used.
- -------------------------------------------------------------------------------------------------------------
2. Develop coverage objectives. Prepare coverage plan to
meet objectives:
. - Define building coverage penetration requirement for X O
urban", "suburban", and "rural"
. - State time restraints to provide coverage of above areas X
and outline yearly marketing requirements through year
10.
- -------------------------------------------------------------------------------------------------------------
3. Prepare nominal cell plan using items 210.1 and 210.2. X O
- -------------------------------------------------------------------------------------------------------------
4. Provide search areas for cell sites as proposed by RF X
Engineering to site acquisition responsible.
- -------------------------------------------------------------------------------------------------------------
5. Perform feasibility study for and ranking of possible
site(s): X
. - Preliminary zoning review X
. - Preliminary site survey by RF Engineering X
. - Preliminary site survey by construction company(s).
- -------------------------------------------------------------------------------------------------------------
6. Select best site. Purchaser to notify the acquisition X B REVIEW ROOFTOPS
team.
- -------------------------------------------------------------------------------------------------------------
91
<PAGE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
TASK PURCHASER SELLER REMARKS
R
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
7. Identify, qualify and secure real estate for exchange X
and radio base station sites.
- -------------------------------------------------------------------------------------------------------------
8. Perform radio microwave analysis. If necessary, clear X
frequency band. Inform Seller of available frequencies
in relation to time schedule.
- -------------------------------------------------------------------------------------------------------------
9. Determine frequency plan based on results of item 210.8. X
- -------------------------------------------------------------------------------------------------------------
10.Document and distribute radio base station dependent
data. Identify the following cell site information: X O
. - Number of voice channels X O
. - Effective radiated power X O
. - Antenna radiation center above ground level (AGL) X O
. - Sector/omni antenna and orientations X O
. - Down-tilt angle (if used) X O
. - Frequency plan X O
. - Frequency hopping sequence (if used) X O
. - Site name, site code and number X O
. - Provide map coordinates of base stations X O
. - Create Cell Design Data (CDD) for each site
- -------------------------------------------------------------------------------------------------------------
11.Prepare FCC application of frequency use, adjacent X
channel use, and obtain coordination approval (see
ITEM300.2).
- -------------------------------------------------------------------------------------------------------------
12.Review network data sheets against equipment B
capabilities (e.g. ERP not achievable). Negotiate and
work-out discrepancies.
- -------------------------------------------------------------------------------------------------------------
13.Design and conduct cellplanning site survey e.g.:
. - Position relative normal grid X O
. - Space for antenna system including antenna separation X O
. - Nearby obstacles X O
. - Service area X O
. - Measurements (if necessary) of path loss and time X O
dispersion
- -------------------------------------------------------------------------------------------------------------
. IMPLEMENTATION & TESTING OF RBS
- -------------------------------------------------------------------------------------------------------------
300. BASE STATION SITE SEARCH (SITE ACQUISITION)
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
1. Provide to Purchaser site prerequisites specifications B
(size, floor loading, ceiling height, etc.).
- -------------------------------------------------------------------------------------------------------------
2. Submit application to FCC and local authorities (see X
item 210.11).
- -------------------------------------------------------------------------------------------------------------
92
<PAGE>
- -------------------------------------------------------------------------------------------------------------
TASK PURCHASER SELLER REMARKS
R
- -------------------------------------------------------------------------------------------------------------
3. Perform title search for selected sites and verify the X
site is available for lease.
- -------------------------------------------------------------------------------------------------------------
4. Identify microwave circuit(s) and other interfering X
objects that must be relocated.
- -------------------------------------------------------------------------------------------------------------
5. Provide information to Seller that a site is preliminary X B ERICSSON REVIEW
identified. Possible inspection will be performed at WITH TRITEL FOR
Seller's discretion CAPABILITY
OF BEING BUILT
- -------------------------------------------------------------------------------------------------------------
310. BASE STATION SITE LEASE (SITE ACQUISITION)
- -------------------------------------------------------------------------------------------------------------
1. Perform negotiation with site owners. X
- -------------------------------------------------------------------------------------------------------------
2. Approve and conclude lease contract. X
- -------------------------------------------------------------------------------------------------------------
3. Complete site data file and provide to civil construction
contractor:
- Preliminary site plan X
- Final title search results X
- Lease/purchase documents X
- FCC permits submitted and received X
- -------------------------------------------------------------------------------------------------------------
4. Complete site data file and provide to civil construction
contractor:
- RF Engineering data X
- Building permits X
- An engineering firm soil test if required X
- -------------------------------------------------------------------------------------------------------------
320. RBS ENGINEERING
- -------------------------------------------------------------------------------------------------------------
1. Perform joint site survey to determine layout for site, X B
including antenna system. Parties to agree on layout.
- -------------------------------------------------------------------------------------------------------------
2. Prepare site prerequisites specifications for site B
search (see item 300.1), and for civil construction
(see item 330.2)
- -------------------------------------------------------------------------------------------------------------
3. Prepare detailed installation design based on item 320.1. B
- -------------------------------------------------------------------------------------------------------------
4. Approve detailed installation design. X
- -------------------------------------------------------------------------------------------------------------
5. Prepare as built drawings after installation. B
- -------------------------------------------------------------------------------------------------------------
330. BASE STATION SITE CIVIL CONSTRUCTION
- -------------------------------------------------------------------------------------------------------------
1. Hire Architecture & Engineering (A/E) firm. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
2. Give Seller's requirements to A/E firm e.g.; size and B
weight of Seller's equipment, environmental
requirements, demarcation points to be located close to
basestations.
- -------------------------------------------------------------------------------------------------------------
93
<PAGE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
TASK PURCHASER SELLER REMARKS
R
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3. Obtain topographic survey of property (if tower/monopole X O1 & O2
is to be constructed).
- -------------------------------------------------------------------------------------------------------------
4. A/E firm will prepare complete site drawings (A&E). Drawings to include
but not limited to showing:
. - Equipment locations and details X O1 & O2
. - Electrical panel location and details X O1 & O2
. - Telco demarcation point and details X O1 & O2
. - Antenna descriptions, locations and details X O1 & O2
. - Coax locations and details X O1 & O2
. - Concrete support pads/steel platform structures and X O1 & O2
details X
. - Mounting devices (e.g.; threaded studs) if required for O1 & O2
the Seller's equipment X O1 & O2
. - Reinforcement of existing structures X O1 & O2
. - External alarms and details X B Ericsson to
. - Grounding system and details X B provide grounding
. - Lightning protection system and details X O1 & O2 spec. and
- Warning lights on tower X O1 & O2 lightning
- Special color on tower X O1 & O2 protection
. - Tower/monopole/coax bridge details (for tower/monopole X
sites, only) X O1 & O2 REQUIREMENTS.
. - Fences and details(for tower/monopole sites, only) X O1 & O2
. - Access road and details (for tower/monopole sites, only) X O1 & O2
. - Core drilling X O1 & O2
. - Fire protection system X O1 & O2
. - Heating, ventilating, air conditioning systems X O1 & O2
. - Lighting systems
- -------------------------------------------------------------------------------------------------------------
5. Approve site drawings. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
6. Provide copy of A&E drawings to Seller (or to Purchaser). X O1 & O2
- -------------------------------------------------------------------------------------------------------------
7. Acknowledge receipt of approved A&E Drawings. B
- -------------------------------------------------------------------------------------------------------------
8. Prepare and issue request for quotation for new tower or X O1 & O2
monopole (if tower/monopole is to be constructed).
- -------------------------------------------------------------------------------------------------------------
9. Select vendor for new tower or monopole and place order X O1 & O2
(if tower/monopole is to be constructed).
- -------------------------------------------------------------------------------------------------------------
10.Obtain soils report (if tower/monopole is to be X O1 & O2
constructed).
- -------------------------------------------------------------------------------------------------------------
11.Design foundation for tower or monopole (if X O1 & O2
tower/monopole is to be constructed).
- -------------------------------------------------------------------------------------------------------------
94
<PAGE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
TASK PURCHASER SELLER REMARKS
R
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12.Obtain structural analysis of existing tower or monopole X O1 & O2
with new equipment added (for existing tower/monopole
sites only).
- -------------------------------------------------------------------------------------------------------------
13.Order antenna support structure. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
14.Issue A&E drawings to contractors for quotes. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
15.Select contractor(s) X O1 & O2
- -------------------------------------------------------------------------------------------------------------
16.Furnish antennas, feeders and jumpers. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
17.Provide warehouse for civil construction items (if X O1 & O2
required)
- -------------------------------------------------------------------------------------------------------------
18.Obtain building permit. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
19.Obtain zoning approval. X
- -------------------------------------------------------------------------------------------------------------
20.Order commercial power. X
- -------------------------------------------------------------------------------------------------------------
21.Order Telco. X
- -------------------------------------------------------------------------------------------------------------
22.Prepare construction schedule and list milestones such X O1 & O2
as "joint site inspection" date and "site ready for
installation" date to Seller
- -------------------------------------------------------------------------------------------------------------
23.Prepare and distribute implementation schedule for B
Seller's "Installation and Testing".
- -------------------------------------------------------------------------------------------------------------
24.Construct site in accordance with approved A&E drawings X O1 & O2
in item 330.4. Construct tower/monopole with foundations
(for tower/monopole sites only).
- -------------------------------------------------------------------------------------------------------------
25.Provide security during construction. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
26.Provide Seller's (or Purchaser's) access to site during X O1 & O2
construction.
- -------------------------------------------------------------------------------------------------------------
27.Supervise site construction. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
28.For antenna systems:
. - Perform Voltage Standing Wave Radio (VSWR ) and Time X O1 & O2
Domain Reflectometer (TDR) test for all lines and
antennas. Check feeders are connected to right
antennas.
- -------------------------------------------------------------------------------------------------------------
29.Clean up site. X B WHO EVER MADE THE
MESS CLEANS IT UP
- -------------------------------------------------------------------------------------------------------------
30.Joint site inspection of civil construction X B
- -------------------------------------------------------------------------------------------------------------
31.Issue "Civil Site Acceptance Certificate". (X) B
- -------------------------------------------------------------------------------------------------------------
32.Turn site over to Seller's installation team. X
- -------------------------------------------------------------------------------------------------------------
33.Provide "As Built" drawings. X B
- -------------------------------------------------------------------------------------------------------------
34.Issue "Site Civil Exceptions List". X O1 & O2
- -------------------------------------------------------------------------------------------------------------
35.Resolve items on "Site Civil Exceptions List". X O1 & O2
95
<PAGE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
TASK PURCHASER SELLER REMARKS
R
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
36.Issue "Site Civil Exceptions List Certificate of (X) B
Completion".
- -------------------------------------------------------------------------------------------------------------
340. INSTALLATION OF OUTDOOR RBS EQUIPMENT
- -------------------------------------------------------------------------------------------------------------
1. Provide telephone line or equivalent as back-up B
(Cell Phones) communication link for technicians.
- -------------------------------------------------------------------------------------------------------------
2. Provide security during the installation phase (if X
necessary)
- -------------------------------------------------------------------------------------------------------------
3. Provide transportation from Seller's storage B
location/port/airport to site (coordinated by Seller).
- -------------------------------------------------------------------------------------------------------------
4. Provide crane or other necessary lifting equipment at B
site (coordinated by Seller).
- -------------------------------------------------------------------------------------------------------------
4.1 PROVIDING CRANE FOR ROOFTOP INSTALLATIONS PRICE TO BE X B
NEGOTIATED WITH PURCHASER, COORDINATION BY SELLER AND
PURCHASER
- -------------------------------------------------------------------------------------------------------------
5. Provide police escort and permits required to use crane B and possible
block traffic.
- -------------------------------------------------------------------------------------------------------------
6. Install and connect the RBS equipment with POWER & T1 & B WAVE GUIDE (2
PEOPLE AT SITE AND 1 PERSON AT MSC GENERALLY, DURATION 4 HOURS)
- -------------------------------------------------------------------------------------------------------------
7. During the implementation phase, provide and pay for X B RESPONSIBLE PARTY
repair to roads, lawns, roofs, etc., caused by possible PAYS FOR REPAIRS
damage or wear by crane and/or other lifting equipment
and trucks.
- -------------------------------------------------------------------------------------------------------------
8. Provide DETAIL report showing for which sites B
"installation" is complete. PROVIDE COMPLETED PUNCH LIST,
- -------------------------------------------------------------------------------------------------------------
350. INSTALLATION OF INDOOR RBS EQUIPMENT
- -------------------------------------------------------------------------------------------------------------
1. Provide telephone line or equivalent as back-up B
communication link for technicians.
- -------------------------------------------------------------------------------------------------------------
2. Provide security during the installation phase (if X
necessary)
- -------------------------------------------------------------------------------------------------------------
3. Provide transportation from Seller's storage B
location/port/airport to site (coordinated by Seller).
- -------------------------------------------------------------------------------------------------------------
4. Provide crane or other necessary lifting equipment at B BUYER WILL BE
site (coordinated by Seller). NOTIFIED OF
ADDITIONAL CHARGES
- -------------------------------------------------------------------------------------------------------------
5. Provide police escort and permits required to use crane B
and possible block traffic.
96
<PAGE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
TASK PURCHASER SELLER REMARKS
R
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
6. Install and connect RBS cabinet. B
- -------------------------------------------------------------------------------------------------------------
7. Connect AC power system, antenna system, and ground B
system to the cabinet. Antenna jumpers to be labeled.
AC power and ground system to be connected with pigtails.
. AC power and grounding pigtails to be provided by Purchaser. X
- -------------------------------------------------------------------------------------------------------------
8. Install the transmission equipment (Demark to RBS) X B
- -------------------------------------------------------------------------------------------------------------
9. Connect the transmission facility to the transmission. B
- -------------------------------------------------------------------------------------------------------------
10.Connect alarms to External Alarm Control Unit (EACU). B
- -------------------------------------------------------------------------------------------------------------
11.During the implementation phase, provide and pay for X B RESPONSIBLE PARTY
repair to roads, lawns, roofs, etc., caused by possible PAYS FOR REPAIRS
damage or wear by crane and/or other lifting equipment
and trucks.
- -------------------------------------------------------------------------------------------------------------
12.Provide report showing for which sites "installation" is B complete.
- -------------------------------------------------------------------------------------------------------------
360. RBS NETWORK ELEMENT TEST
- -------------------------------------------------------------------------------------------------------------
1. Perform test setup. B
- -------------------------------------------------------------------------------------------------------------
2. Perform main power test. B
- -------------------------------------------------------------------------------------------------------------
3. Perform internal alarm test B
- -------------------------------------------------------------------------------------------------------------
4. Perform external alarm test. B
- -------------------------------------------------------------------------------------------------------------
5. Perform battery backup test (if provided by Seller) B
- -------------------------------------------------------------------------------------------------------------
6. Load RBS software (unless already loaded from factory). B
- -------------------------------------------------------------------------------------------------------------
7. Provide test results from factory/warehouse B
- -------------------------------------------------------------------------------------------------------------
8. Perform test calls, 1 call per TRM, DTRM,and/or TRX. B
- -------------------------------------------------------------------------------------------------------------
9. Perform site specific inventory and status report of B
inventory result.
- -------------------------------------------------------------------------------------------------------------
10.After above tests are satisfactorily completed, inform B
Purchaser the network element is ready for acceptance
- -------------------------------------------------------------------------------------------------------------
11.Issue "Network Element Acceptance Certificate". X
- -------------------------------------------------------------------------------------------------------------
12.Provide report showing which sites are ready for RBS B
integration testing.
- -------------------------------------------------------------------------------------------------------------
13.Issue "Exceptions List Report" (ELR). B
- -------------------------------------------------------------------------------------------------------------
14.Resolve items on ELR. B
- -------------------------------------------------------------------------------------------------------------
15.Issue "Exceptions List Resolution Certificate". X
- -------------------------------------------------------------------------------------------------------------
370. ENGINEERING ANTENNA SYSTEM
- -------------------------------------------------------------------------------------------------------------
1. Specify number of voice channels required at site over X O
a specified planning period
- -------------------------------------------------------------------------------------------------------------
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2. Specify omni/sector and angle, effective radiated X O
power, and required height above ground. Specify
maximum transmission line loss that is acceptable.
Specify down-tilt angle (if used). Specify minimum
vertical angle. Supply building drawing to Vendor.
- -------------------------------------------------------------------------------------------------------------
3. Specify location of equipment or RBS location in X O
relation to antenna location.
- -------------------------------------------------------------------------------------------------------------
4. Calculate number of TRM, DTRM,and/or TRX units X O
required over planning period. Consider signaling and
control requirements.
- -------------------------------------------------------------------------------------------------------------
5. Based upon items 370.1 - 370.4 specify number and X O
type of antennas required and general transmission line
requirements.
- -------------------------------------------------------------------------------------------------------------
6. Review job for special requirements, e.g. fireproof X O
cables in elevator shafts, etc.
- -------------------------------------------------------------------------------------------------------------
7. Visit site and prepare final specifications for X O
antennas and transmission lines. Select vendor(s).
- -------------------------------------------------------------------------------------------------------------
8. Prepare drawings and instructions to riggers or X
installers (as per section 330, civil contractor will
install antenna system).
- -------------------------------------------------------------------------------------------------------------
. IMPLEMENTATION & TESTING OF SWITCH (E.G. MSC, HLR)
- -------------------------------------------------------------------------------------------------------------
400 SWITCH ENGINEERING
- -------------------------------------------------------------------------------------------------------------
1. Dimension switching system. PROVIDE GROUNDING B
REQUIREMENTS
- -------------------------------------------------------------------------------------------------------------
2. Project Manager creates a project file in ordering system. B
- -------------------------------------------------------------------------------------------------------------
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3. Floor plan engineering: ERICSSON WILL
. - Site visit by Plant Engineer. B DETERMINE
. - Assist Purchaser in selecting best building available. X B SPECIFIC ISSUES
. - When building is selected, provide input for X B AND
determining floorplan layout. INCLUDE TRANSPORT
B & EQUIPMENT
. - Provide floorplan layout. X B LAYOUT DETAILS
. - Determine site specific issues that will impact Plant (FOR DETAILS
Engineering effort, according to a site survey check X B WHICH HAVE BEEN
list. PROVIDED BY
. - Approve floorplan. TRITEL)
- -------------------------------------------------------------------------------------------------------------
4. Specify engineering package for mechanics (such as floor B
dependent items (FDI)).
- -------------------------------------------------------------------------------------------------------------
5. Production of C modules C01 and C02 documents, which B
contain allocation documentation, cabling tables, and
address and strapping information.
- -------------------------------------------------------------------------------------------------------------
6. The C modules are delivered to the installation crews. B
- -------------------------------------------------------------------------------------------------------------
7. "AS built" drawings are returned to Plant Engineering B
for updating customer documentation.
- -------------------------------------------------------------------------------------------------------------
8. Provides finalized C modules to Purchaser as part of B exchange library.
- -------------------------------------------------------------------------------------------------------------
410. DATA TRANSCRIPT
- -------------------------------------------------------------------------------------------------------------
1. Exchange requirement document:
. - Purchaser completes the exchange requirement forms and X
returns them to Seller for review and recommended
changes. B
. - Review exchange requirement forms. At the discretion of
Seller, a site visit may be required to work out
details in clarifying the Exchange Requirements
Document.
- -------------------------------------------------------------------------------------------------------------
2. Purchaser to provide cassette tape with professionally X
recorded messages (if not using Ericsson standard messages)
- -------------------------------------------------------------------------------------------------------------
3. Hardware allocation of switch network elements. B
Detailed dimensioning provided by switch engineering (see section 400).
- -------------------------------------------------------------------------------------------------------------
4. Output of Data Transcript (DT) files:
. - Call routing, end of selection, call treatments, size B
alterations, etc.
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5. DT is delivered to network element testing department B for incorporation
into the switch load.
- -------------------------------------------------------------------------------------------------------------
420. CIVIL CONSTRUCTION & SITE ACQUISITION FOR SWITCH SITE
- -------------------------------------------------------------------------------------------------------------
1. Hire Architecture & Engineering (A/E) firm. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
2. Provide Purchaser with MSC building fundamental OVERHEAD CABLING
information: B WILL WORK WITH
. - Switch floor plan layout and dimensions including power B NEW EQUIPMENT.
and battery B UNDER
. - Switch power consumption B FLOOR PREFERED.
. - Data to determine overhead or under floor cabling B TRITEL WILL NEED
preference X B BTU REQUIREMETNS.
. - Equipment weight to determine floor loading of potential
buildings
. - Air Conditioning requirements
. - Demarcation points to be located close to Purchaser's
equipment
- -------------------------------------------------------------------------------------------------------------
3. Select building that meets requirements in item 420.2. X
- -------------------------------------------------------------------------------------------------------------
4. Negotiate with building owners and sign finalized X lease agreement.
- -------------------------------------------------------------------------------------------------------------
5. A/E firm will prepare complete site drawings. Drawings
to include, but not limited to showing: X O1 & O2
. - Equipment locations and details X O1 & O2
. - Electrical panel location and details X O1 & O2
. - Telco demarcation point and details X O1 & O2
. - Coax locations and details X O1 & O2
. - Concrete support pads/steel platform structures and B
details. If necessary: any mounting devices e.g.;
threaded studs required for the Seller's equipment X O1 & O2
. - Reinforcement of existing structures X O1 & O2
. - External alarms and details X B
. - Grounding system and details (ERICSSON WILL PROVIDE X
GROUNDING REQUIREMENTS, SPECIFICATIONS AND GUIDELINES) X B
. - Lightning protection system and details X O1 & O2
. - Core drilling X O1 & O2
. - Fire protection system X O1 & O2
. - Heating, ventilating, air conditioning systems O1 & O2
. - Lighting systems
- -------------------------------------------------------------------------------------------------------------
6. Approve site drawings. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
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7. Provide copy of A&E drawings to Seller (or to Purchaser). X O1 & O2
- -------------------------------------------------------------------------------------------------------------
8. Acknowledge receipt of approved A&E drawings. B
- -------------------------------------------------------------------------------------------------------------
9. Issue A&E drawings to contractors for quotes. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
10.Select contractor(s) X O1 & O2
- -------------------------------------------------------------------------------------------------------------
11.Provide warehouse for civil construction items X O1 & O2
- -------------------------------------------------------------------------------------------------------------
12.Obtain building permit. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
13.Obtain zoning approval. X
- -------------------------------------------------------------------------------------------------------------
14.Order commercial power. X
- -------------------------------------------------------------------------------------------------------------
15.Order Telco. X
- -------------------------------------------------------------------------------------------------------------
16.Prepare construction schedule and list milestones such X O1 & O2
as "joint site inspection" date and "site ready for
installation" date to Seller
- -------------------------------------------------------------------------------------------------------------
17.Prepare and distribute implementation schedule for B Seller's
"installation and testing".
- -------------------------------------------------------------------------------------------------------------
18.Construct site in accordance with approved A&E drawings X O1 & O2
in item 420.5.
- -------------------------------------------------------------------------------------------------------------
19.Provide security during construction. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
20.Provide Seller's (or Purchaser's) access to site during X O1 & O2
construction.
- -------------------------------------------------------------------------------------------------------------
21.Supervise site construction. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
22.Test systems. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
23.Clean up site. It is essential that site is dustfree. X O1 & O2
- -------------------------------------------------------------------------------------------------------------
24.Joint site inspection of Purchaser's civil construction. X B
- -------------------------------------------------------------------------------------------------------------
25.Issue Civil Site Acceptance Certificate. (X) B
- -------------------------------------------------------------------------------------------------------------
26.Turn site over to Seller's installation team. X
- -------------------------------------------------------------------------------------------------------------
27.Issue "Site Civil Exceptions List". X O1 & O2
- -------------------------------------------------------------------------------------------------------------
28.Resolve items on "Site Civil Exceptions List". X O1 & O2
- -------------------------------------------------------------------------------------------------------------
29.Issue Certificate for completion of "Site Civil (X) B Exceptions List".
- -------------------------------------------------------------------------------------------------------------
430. SWITCH INSTALLATION
- -------------------------------------------------------------------------------------------------------------
0. Provide Switch Schedule X
- -------------------------------------------------------------------------------------------------------------
1. Provide telephone line or equivalent as back-up B
communication link for technicians.
- -------------------------------------------------------------------------------------------------------------
2. Provide security during the installation phase (if X B
necessary)
- -------------------------------------------------------------------------------------------------------------
3. Provide transportation from Seller's storage B
location/airport to site (coordinated by Seller).
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4. Provide crane or other necessary lifting equipment at B
site (coordinated by Seller).
- -------------------------------------------------------------------------------------------------------------
5. Provide police escort and permits required to use crane B
and possible block traffic.
- -------------------------------------------------------------------------------------------------------------
6. Install switch according to C-module. B
- -------------------------------------------------------------------------------------------------------------
7. Install DC power plant including batteries per K-module. B
- -------------------------------------------------------------------------------------------------------------
8. Connect AC power system, transmission system and ground B system.
- -------------------------------------------------------------------------------------------------------------
9. During the implementation phase, provide and pay for X B Party responsible
repair to roads, lawns, roofs, etc., caused by possible for damage pays
damage or wear by crane and/or other lifting equipment
and trucks.
- -------------------------------------------------------------------------------------------------------------
440. SWITCH NETWORK ELEMENT TESTING
- -------------------------------------------------------------------------------------------------------------
1. Provide access to building and worksites for Seller's X
designated testing staff.
- -------------------------------------------------------------------------------------------------------------
2. Prepare a checklist of what has been installed and B
what is left to be installed. ("C module" Check List,
and Material Discrepancy Report).
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
3. Software:
. - Deliver software. B
. - Load software. B
. - Perform tests according to H-module. B
- -------------------------------------------------------------------------------------------------------------
4. Hand over access to accepted transmission system(s). X
- -------------------------------------------------------------------------------------------------------------
5. Inform Purchaser "Network Element Ready for Acceptance" B
after above tests are satisfactorily completed.
- -------------------------------------------------------------------------------------------------------------
6. Issue "Network Element Acceptance Certificate". X
- -------------------------------------------------------------------------------------------------------------
7. Issue "Exceptions List Report" (ELR). B
- -------------------------------------------------------------------------------------------------------------
8. Resolve items on ELR. B
- -------------------------------------------------------------------------------------------------------------
9. Issue "Exceptions List Resolution Certificate". X
- -------------------------------------------------------------------------------------------------------------
. IMPLEMENTATION & TESTING OF NETWORK MANAGEMENT SYSTEMS
(NMS) (E.G. OSS, SMAS) & OTHER NETWORK ELEMENTS (E.G.
MXE)
- -------------------------------------------------------------------------------------------------------------
500. ENGINEERING OF SELLER'S NMS NETWORK ELEMENTS (E.G. OSS,
SMAS)
- -------------------------------------------------------------------------------------------------------------
102
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1. If NMS purchased, design and order Network Elements. B
- -------------------------------------------------------------------------------------------------------------
510. ENGINEERING OF SELLER'S OTHER NETWORK ELEMENTS (E.G. MXE)
- -------------------------------------------------------------------------------------------------------------
1. If other network element is purchased, design and order B
network element.
- -------------------------------------------------------------------------------------------------------------
520. PRE-TESTING OF SELLER'S NMS NETWORK ELEMENTS (E.G. OSS,
SMAS)
- -------------------------------------------------------------------------------------------------------------
1. If NMS purchased, supply hardware (NMS server). B
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
2. Supply workstations to the respective sites. X O
- -------------------------------------------------------------------------------------------------------------
3. If NMS purchased, configure NMS server hardware. B
- -------------------------------------------------------------------------------------------------------------
4. If NMS purchased, install NMS platform on server driver. B
- -------------------------------------------------------------------------------------------------------------
5. If NMS purchased, install NMS application on server B
hardware.
- -------------------------------------------------------------------------------------------------------------
6. If NMS purchased, pretest NMS system at Seller's B
location.
- -------------------------------------------------------------------------------------------------------------
7. Configure workstations. X B
- -------------------------------------------------------------------------------------------------------------
8. If NMS purchased, inform Purchaser "Network Element B
Ready for Acceptance" after above tests are satisfactory
completed.
- -------------------------------------------------------------------------------------------------------------
9. If NMS purchased, issue "Network Element Acceptance X
Certificate".
- -------------------------------------------------------------------------------------------------------------
10. If NMS purchased, issue "Exceptions List Report" (ELR). B
- -------------------------------------------------------------------------------------------------------------
11. If NMS purchased, resolve items on ELR. B
- -------------------------------------------------------------------------------------------------------------
12.Issue "Exceptions List Resolution Certificate". X
- -------------------------------------------------------------------------------------------------------------
530. INSTALLATION OF SELLER'S OTHER NETWORK ELEMENTS (E.G. MXE)
- -------------------------------------------------------------------------------------------------------------
1. If other network element purchased, provide B
transportation from Seller's storage location/airport to
site (coordinated by Seller).
- -------------------------------------------------------------------------------------------------------------
2. If other network element purchased, install system on B sites.
- -------------------------------------------------------------------------------------------------------------
540. INSTALLATION OF SELLER'S NMS NETWORK ELEMENTS (E.G. OSS,
SMAS)
- -------------------------------------------------------------------------------------------------------------
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1. If NMS purchased, provide transportation from Seller's B
storage location in Dallas to site.
- -------------------------------------------------------------------------------------------------------------
2. If NMS purchased, provide access to building and X
worksite for Seller's designated installation staff.
- -------------------------------------------------------------------------------------------------------------
3. If NMS purchased, install systems on sites. B
- -------------------------------------------------------------------------------------------------------------
550. TESTING OF SELLER'S OTHER NETWORK ELEMENTS (E.G. MXE)
- -------------------------------------------------------------------------------------------------------------
1. If other network element purchased, install software. B
- -------------------------------------------------------------------------------------------------------------
2. If other network element purchased, configure system. B
- -------------------------------------------------------------------------------------------------------------
3. If other network element purchased, test system. B
- -------------------------------------------------------------------------------------------------------------
. IMPLEMENTATION & TESTING OF TRANSMISSION
- -------------------------------------------------------------------------------------------------------------
600. LEASE OF TRANSMISSION & DATA COMMUNICATIONS NETWORK
- -------------------------------------------------------------------------------------------------------------
1. Supply appropriate transmission leased lines facilities. X
- -------------------------------------------------------------------------------------------------------------
2. Provide data communication network between applicable X
Network Elements e.g.; AXE, NMS, and other "Switching"
elements.
- -------------------------------------------------------------------------------------------------------------
3. Provide local/wide area network for communication X
between workstations and applicable Network Elements.
- -------------------------------------------------------------------------------------------------------------
610. TRANSMISSION ENGINEERING
- -------------------------------------------------------------------------------------------------------------
1. Perform transmission system analysis. X O
- -------------------------------------------------------------------------------------------------------------
2. Specification of transmission module for RBS grooming. X O
- -------------------------------------------------------------------------------------------------------------
3. Supply transmission interface requirements for network B
elements supplied by Seller (i.e. DS3, DS1, fiber and
others).
- -------------------------------------------------------------------------------------------------------------
4. Specify requirements for all transmission equipment X O
indicating suggested vendors (i.e. Tellab MUX, ATT
channel banks, ADC, CSU).
- -------------------------------------------------------------------------------------------------------------
5. Order appropriate transmission circuits and equipment. X O
- -------------------------------------------------------------------------------------------------------------
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6. Engineer installation specifications for the following: . DXU:
. - From DXU to DSX-1 panel, or point of interface - Seller X O
will supply cable.
. T1:
. - From DSX to the NIU (Network Interface Unit) - Purchaser X B
will provide cable.
. - All B
. SS7:
---
. - From AXE S7ST position to NIU - Seller will provide B
cable.(NEED TO KNOW 56K OR 64K
. Timing: B
------
. - From AXE position to clock distribution panel - Seller
will provide cable, GPS or Clock and distribution
panel. B
. MBLT, BT-4, S7BTC:
. - From switch to DSX-1 is done by Seller. Seller will B
provide termination assignments to Purchaser. X
. - All transmission equipment and guidelines on how to
install the equipment.
- -------------------------------------------------------------------------------------------------------------
7. Supply report to Seller with connectivity details of any X
equipment to be connected to Seller's equipment..
- -------------------------------------------------------------------------------------------------------------
8. Supply report to Seller with trunk and slot assignments. X
- -------------------------------------------------------------------------------------------------------------
9. Obtain telecom requirements for circuit termination. X
Copy same to Seller including need for hardware mounting
space and/or circuit wiring requirements.
- -------------------------------------------------------------------------------------------------------------
10.Define all demarcation points between transmission X O
sub-systems including those by carrier provider(s).
- -------------------------------------------------------------------------------------------------------------
11.Furnish transmission rack(s) at demarcation points in X O
item 610.10.
- -------------------------------------------------------------------------------------------------------------
12.Furnish equipment room/space for transmission including X
carrier-provider line connections. Copy layout to
Seller.
- -------------------------------------------------------------------------------------------------------------
13.Design floor and equipment layout for carrier-provider X O
line connections.
- -------------------------------------------------------------------------------------------------------------
14.Perform network studies including:
. - Border analysis. O
- -------------------------------------------------------------------------------------------------------------
15.Perform transport access engineering. X O
- -------------------------------------------------------------------------------------------------------------
620. TRANSMISSION INSTALLATION
- -------------------------------------------------------------------------------------------------------------
1. Install transmission equipment specified in section 610. X O
- -------------------------------------------------------------------------------------------------------------
105
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2. Furnish power to incorporate battery and A/C and D/C X O
power connection to equipment requirements for leased line.
Purchaser will provide a main integrated ground bar for all
transmission equipment. In addition, Purchaser (or Seller if
contracted for transmission) will provide cables and hardware
to connect power and ground from demarcation points (see
article 610.10).
- -------------------------------------------------------------------------------------------------------------
3. As a part of transmission design, furnish and install X O
cables, connectors, blocks and protectors (if required)
from network equipment to carrier-provider demarcation
points.
- -------------------------------------------------------------------------------------------------------------
630. TRANSMISSION TESTING
- -------------------------------------------------------------------------------------------------------------
1. Perform transmission testing of each subsystems installed
in section 620. Testing shall include:
. - Error bit rate X O
. - Jitter & wander X O
. - Synchronization X O
. - Compliance to manufacturers specifications X O
- -------------------------------------------------------------------------------------------------------------
2. Perform transmission testing of the total combination of
transmission subsystems / leased lines per each connection
between network elements and / or PSTN. Testing shall
include:
. - Error bit rate X O
. - Jitter & wander X O
. - Synchronization X O
- -------------------------------------------------------------------------------------------------------------
3. Perform testing of:
. - Echo cancellers B
. - SS7 equipment X B
- -------------------------------------------------------------------------------------------------------------
640. TESTING DATA COMMUNICATIONS NETWORK
- -------------------------------------------------------------------------------------------------------------
1. Perform transmission testing of each leased subsystem.
Testing shall include:
. - Error bit rate X
. - Jitter & wander X
. - Synchronization X
- -------------------------------------------------------------------------------------------------------------
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2. Perform transmission testing of the total combination of
all leased subsystems per each connection between Network
Elements. Testing shall include:
. - Error bit rate X B
. - Jitter & wander X B
. - Synchronization X B
- -------------------------------------------------------------------------------------------------------------
INTEGRATION & ACCEPTANCE
- -------------------------------------------------------------------------------------------------------------
700. INTEGRATION OF SELLER'S MSC, HLR, NETWORK ELEMENTS & PSTN
- -------------------------------------------------------------------------------------------------------------
1. Integration/testing to be performed according to the B
"H" module for switch. Other Network Elements provided
by Seller (e.g.; MXE) to be integrated/tested and
functionality demonstrated according to manuals for
these products.
- -------------------------------------------------------------------------------------------------------------
2. Inform Purchaser: "Network Element Integration Ready B
for Acceptance" after above tests are satisfactory
completed.
- -------------------------------------------------------------------------------------------------------------
3. Issue Certificate for Network Element Integration X
Acceptance
- -------------------------------------------------------------------------------------------------------------
4. Issue: "Exceptions List Report" (ELR). B
- -------------------------------------------------------------------------------------------------------------
5. Resolve items on ELR. B
- -------------------------------------------------------------------------------------------------------------
6. Issue "Exceptions List Resolution Certificate". X
- -------------------------------------------------------------------------------------------------------------
710. INTEGRATION OF SELLER'S NMS (E.G. OSS, SMAS) NETWORK
ELEMENTS
- -------------------------------------------------------------------------------------------------------------
1. If NMS purchased, establish communication between NMS B
and applicable Network Elements after successful
completion of tests in section 640.
- -------------------------------------------------------------------------------------------------------------
2. If NMS purchased, configure Network Elements for file B
transfer to NMS Network Elements.
- -------------------------------------------------------------------------------------------------------------
3. If NMS purchased, configure Network Elements for alarm B
routing.
- -------------------------------------------------------------------------------------------------------------
4. If NMS purchased, provide maps for NMS applications. X O
- -------------------------------------------------------------------------------------------------------------
5. If NMS purchased, establish communications between NMS X
server and workstations.
- -------------------------------------------------------------------------------------------------------------
6. If NMS purchased, inform Purchaser: "Network Element B
Integration Ready for Acceptance" after above tests are
satisfactory completed.
- -------------------------------------------------------------------------------------------------------------
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7. If NMS purchased, issue Certificate for Network Element X
Integration Acceptance
- -------------------------------------------------------------------------------------------------------------
8. If NMS purchased, issue: "Exceptions List Report" (ELR). B
- -------------------------------------------------------------------------------------------------------------
9. If purchased, resolve items on ELR. B
- -------------------------------------------------------------------------------------------------------------
10.If purchased, issue "Exceptions List Resolution X
Certificate".
- -------------------------------------------------------------------------------------------------------------
720. INTEGRATION OF SELLER'S OTHER (E.G. MXE) NETWORK ELEMENTS
- -------------------------------------------------------------------------------------------------------------
1. If other network element purchased, establish B
communication between other network element and
applicable network elements after successful completion
of tests in section 640.
- -------------------------------------------------------------------------------------------------------------
2. If other network element purchased, configure network B
elements for file transfer to other network elements.
- -------------------------------------------------------------------------------------------------------------
3. If other network element purchased, configure network B
elements for alarm routing.
- -------------------------------------------------------------------------------------------------------------
4. If other network element purchased, inform Purchaser: B
"Network Element Integration Ready for Acceptance" after
above tests are satisfactory completed.
- -------------------------------------------------------------------------------------------------------------
5. If other network element purchased, issue Certificate X
for Network Element Integration Acceptance
- -------------------------------------------------------------------------------------------------------------
6. If other network element purchased, issue: "Exceptions
B List Report" (ELR).
- -------------------------------------------------------------------------------------------------------------
7. If other network element purchased, resolve items on ELR. B
- -------------------------------------------------------------------------------------------------------------
8. If other network element purchased, issue "Exceptions X List Resolution
Certificate".
- -------------------------------------------------------------------------------------------------------------
730. INTEGRATION OF SELLER'S RBS NETWORK ELEMENTS
- -------------------------------------------------------------------------------------------------------------
1. Connect the RBS to the MSC. B
- -------------------------------------------------------------------------------------------------------------
2. Load frequency and other parameters into MSC prior to B
Network Element acceptance.
- -------------------------------------------------------------------------------------------------------------
3. Load frequency and other parameters into MSC after B
Network Element acceptance.
- -------------------------------------------------------------------------------------------------------------
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4. Perform and document that the following steps are completed
(see section 360):
. - Visual installation check of cabinet, AC mains, and B
antennas B
. - Power test including: AC mains, each PSU, battery
backup, power com loop B
. - Cabinet fans are operational (see section 360) B
. - External alarms are programmed and functional B
. - Cell configuration matches channel allocation document B
. - Channel number of TRM, DTRM,and/or TRX matches channel
allocation document B
. - MS call can be made on each time slot of each TRM,
DTRM,and/or TRX, and note call voice quality B
. - MS call on each sector and with each neighbor with the
following pertinent combinations: A-B, B-C, C-A
- -------------------------------------------------------------------------------------------------------------
5. Perform full integration test of Non-Seller provided X B
equipment.
(ERICSSON WILL BE INVOLVED IN SYSTEM WIDE TESTING)
- -------------------------------------------------------------------------------------------------------------
6. Identify any RF or other cell site problems that will B
affect subscriber quality, or ability for site to
achieve acceptance.
- -------------------------------------------------------------------------------------------------------------
7. Provide report identifying all sites that have been B
integrated and have passed all MS call test.
- -------------------------------------------------------------------------------------------------------------
8. Review test plans, agree to changes, and approve (see X B
section 730).
- -------------------------------------------------------------------------------------------------------------
9. Perform all test. B
- -------------------------------------------------------------------------------------------------------------
10.Inform Purchaser per base station: "Integration Ready B
for Acceptance" after above tests are satisfactory
completed.
- -------------------------------------------------------------------------------------------------------------
11.Issue Certificate for Integration Acceptance per X
basestation.
- -------------------------------------------------------------------------------------------------------------
12.Issue: "Exceptions List Report" (ELR). B
- -------------------------------------------------------------------------------------------------------------
13.Resolve items on ELR. B
- -------------------------------------------------------------------------------------------------------------
14.Issue "Exceptions List Resolution Certificate". X
- -------------------------------------------------------------------------------------------------------------
740. SYSTEM DEMONSTRATION (FOR NETWORK ELEMENTS DELIVERED
BY SELLER)
- -------------------------------------------------------------------------------------------------------------
1. The rules for system demonstration are described in the B contractual
agreement.
- -------------------------------------------------------------------------------------------------------------
2. Review test object list. X
- -------------------------------------------------------------------------------------------------------------
3. Issue test instructions. B
- -------------------------------------------------------------------------------------------------------------
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4. Review test instructions. X
- -------------------------------------------------------------------------------------------------------------
5. Perform system acceptance test in "H" module for AXE B
Network Elements.
- -------------------------------------------------------------------------------------------------------------
6. Inform Purchaser: "System Ready for Acceptance" after B
above tests are satisfactory completed.
- -------------------------------------------------------------------------------------------------------------
7. Issue System Acceptance Certificate. X
- -------------------------------------------------------------------------------------------------------------
8. Issue: "Exceptions List Report" (ELR). B
- -------------------------------------------------------------------------------------------------------------
9. Resolve items on ELR. B
- -------------------------------------------------------------------------------------------------------------
10.Issue "Exceptions List Resolution Certificate". X
- -------------------------------------------------------------------------------------------------------------
750. NMS DEMONSTRATION (FOR NETWORK ELEMENTS DELIVERED BY
SELLER)
- -------------------------------------------------------------------------------------------------------------
1. The rules for Demonstration are described in the B
contractual agreement.
- -------------------------------------------------------------------------------------------------------------
2. Review test object list. X
- -------------------------------------------------------------------------------------------------------------
3. Issue test instructions. B
- -------------------------------------------------------------------------------------------------------------
4. Review test instructions. X
- -------------------------------------------------------------------------------------------------------------
5. Perform functionality testing of NMS Network Elements B according to test
manuals.
- -------------------------------------------------------------------------------------------------------------
6. Inform Purchaser: "System Ready for Acceptance" after B
above tests are satisfactory completed.
- -------------------------------------------------------------------------------------------------------------
7. Issue System Acceptance Certificate. X
- -------------------------------------------------------------------------------------------------------------
8. Issue: "Exceptions List Report" (ELR). B
- -------------------------------------------------------------------------------------------------------------
9. Resolve items on ELR. B
- -------------------------------------------------------------------------------------------------------------
10. Issue "Exceptions List Resolution Certificate". X
- -------------------------------------------------------------------------------------------------------------
760 INITIAL TUNING
- -------------------------------------------------------------------------------------------------------------
1. Initial Tuning will be performed on a Minimum Portion of B
Initial Configuration and comprises:
. - Verify CDD parameters.
. - Verify site software and hardware.
. - Set up MS call on each TRM, DTRM,and/or TRX and document
voice quality.
. - Handover to each sector and primary neighbor of each
sector.
- -------------------------------------------------------------------------------------------------------------
770. COMMERCIAL ACCEPTANCE
- -------------------------------------------------------------------------------------------------------------
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1. Network Elements will be added to the system until a B
Minimum Portion of the Initial Configuration has been
reached as agreed upon in the contractual agreement. Each new
Network Element added after Commercial Acceptance will follow
Network Element Acceptance procedure.
- -------------------------------------------------------------------------------------------------------------
2. Inform Purchaser: Commercial Acceptance stage is B
reached
- -------------------------------------------------------------------------------------------------------------
3. Issue Commercial Acceptance Certificate. X
- -------------------------------------------------------------------------------------------------------------
4. Issue Exceptions List Report (ELR) B
- -------------------------------------------------------------------------------------------------------------
5. Resolve items on ELR. B
- -------------------------------------------------------------------------------------------------------------
6. Issue Exceptions List Resolution Certificate X
- -------------------------------------------------------------------------------------------------------------
780. RF OPTIMIZATION
- -------------------------------------------------------------------------------------------------------------
1. Review Channel Allocation Diagram (CAD) and compare X O
the data against the site acceptance test results.
- -------------------------------------------------------------------------------------------------------------
2. Analyze traffic data produced by the network. X O
- -------------------------------------------------------------------------------------------------------------
3. Determine sites or areas where optimization is X O
required.
- -------------------------------------------------------------------------------------------------------------
4. Determine what test are to be performed in field based X O
on integration test data and traffic data.
- -------------------------------------------------------------------------------------------------------------
5. Joint agreement on drive routes for optimization test X O
and number of hand off combinations required to
perform test (only if Seller is responsible for
optimization)
- -------------------------------------------------------------------------------------------------------------
6. RF team will be supplied with drivers and will X O
continuously drive the designated routes until required
data has been collected.
- -------------------------------------------------------------------------------------------------------------
7. Analyze raw data supplied by drive teams. X O
- -------------------------------------------------------------------------------------------------------------
8. Determine corrections to site parameters, or to site X O
hardware (such as antenna's to be down or up tilted, or
radiated power increased or decreased).
- -------------------------------------------------------------------------------------------------------------
9. Input DT changes, or make hardware alterations at a X O
negotiated number of site(s).
- -------------------------------------------------------------------------------------------------------------
10.Report results to RF engineering. X O
- -------------------------------------------------------------------------------------------------------------
11.If there are still problems repeat items 780.1 - 780.9 X O
during a negotiated time period.
- -------------------------------------------------------------------------------------------------------------
12.RF team will supply status reports as optimization X O
progresses.
- -------------------------------------------------------------------------------------------------------------
13.Inform Purchaser: "Optimization Ready for Acceptance" X O
after above tests are satisfactory completed.
- -------------------------------------------------------------------------------------------------------------
14.Issue Certificate for Optimization Accepted X
- -------------------------------------------------------------------------------------------------------------
111
<PAGE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
TASK PURCHASER SELLER REMARKS
R
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
15.Issue: "Exceptions List Report" (ELR). X O
- -------------------------------------------------------------------------------------------------------------
16.Resolve items on ELR. X O
- -------------------------------------------------------------------------------------------------------------
17.Issue "Exceptions List Resolution Certificate". X
- -------------------------------------------------------------------------------------------------------------
790. INITIAL CONFIGURATION ACCEPTANCE
- -------------------------------------------------------------------------------------------------------------
1. Inform Purchaser, initial configuration acceptance stage B
is reached. This stage implies that all Acceptance
Certificates are issued including Exceptions List
Resolution Certificates.
- -------------------------------------------------------------------------------------------------------------
2. Issue Initial Configuration Acceptance Certificate. X
- -------------------------------------------------------------------------------------------------------------
3. RF initial Tuning load testing and calls on quality achieved, B
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Rev. A
12/11/96
112
<PAGE>
ATTACHMENT G
ACQUISITION AGREEMENT #9152
Tritel Inc.
PART I - AXE ENVIRONMENTAL CONDITIONS
CONTENTS
- --------
1. General
2. Climatic State
3. Dust Filtering
4. Relative Humidity of Air
5. Corrosion
6. Air-Cooling
7. Floor Covering
8. Earthing
9. Sound Level
10. Vibrations
11. Radio Electric Disturbance
12. Over-Voltage Resistibility
13. Floor Load and Ceiling Height
113
<PAGE>
1. GENERAL
For all kinds of telephone exchange equipment, the environment of the
equipment is important for its reliability and performance. This
environment specification covers some of the most important requirements
for rooms used for operation of Ericsson telephone exchange equipment.
The aim of this specification is to ensure a good operating result and
long service life for the equipment.
2. CLIMATIC STATE
The climatic requirements for operation of telephone exchange equipment
are specified in Figure 1. The temperature and humidity are to be
measured 5.0 ft. (1.5 m) above the floor, and 1.3 ft. (0.4 m) from any
heat-radiating surface and when the equipment dissipates normal
operating power.
[GRAPHIC OMITTED]
Figure 1
TEMPERATURE AND HUMIDITY
CURVE 1 Covers the requirements during normal service conditions.
CURVE 2 Covers the limit for safe function.
CURVE 3 Covers the limit for non-destruction.
Environmental endurance requirements outside curve 1 are valid for 5% of
the working life of the exchange and for 0.5% outside curve 2.
114
<PAGE>
CLIMATE RANGES FOR I/O AVAILABLE IN AXE
RECOMMENDED RANGE(1) PERMITTED RANGE(2)
-------------------- ------------------
I/O UNIT T(F) RH(%) T( F) RH(%) T(F/H)
- ----------------------------------------------------------------------------
Siemens/PT80 68-86 20-80 32-113 10-90 -
Olivetti/ 68-86 20-80 41-104 20-95 -
TC 485
Display HP/ 68-86 20-80 32-122 5-95 -
2640 B
Magnetic Tape 68-86 40-65 Drive: 20-80 50
HP/7970 E-151 32-131
Tape:
normal
41-113
Cartridge Tape 68-86 40-65 Drive: 20-80 50
Drive DRI/5000 50-104
Crtg:
41-113
Magnetic Tape 68-86 40-65 Drive: 20-80 50
Teac/MT 1000 50-104
Crtg:
41-114
- -----
1 Range recommended by Ericsson.
2 Range according to I/O unit or tape equipment supplier.
- --------------------------------------------------------------------------------
3. DUST FILTERING
3.1 Rooms for Telephone Exchange Equipment (Except Magnetic
Tape Units)
The dust and powder content should normally not exceed
50 ug/m3. If the ventilation air contains dust or powder, it
should be filtered so that this value will not be exceeded. The
maximum permitted particle size in ventilated air is 10 microns.
3.2 Rooms for Magnetic Tape Units
115
<PAGE>
The dust and powder content should not exceed 50 ug/m3.
The air must be filtered so that the particle size in the
ventilated air does not exceed 4 microns for 90% of the dust and
powder content.
4. RELATIVE HUMIDITY OF AIR
Advantages of high humidity:
o reduction of static charge of dust particles, resulting in
reduced adhesion to contact surfaces.
o reduced electrical resistance in contacts yielding better
conductivity in the oxidized outer layers of contacts.
Disadvantages of high humidity:
o corrosion of metal surfaces.
o impairment of insulation resistance of cables.
Taking these various factors into account, the air humidity should be as
high as possible, but not so high as to cause corrosion or impaired
insulation.
Experience and tests have shown that the best results are obtained at a
relative humidity of 50-60% but may vary between 10-90%.
5. CORROSION
Humidity and temperature within the specified requirements will not
cause corrosion. Sulphur dioxide (SO2) with concentration as high as 5
ppm at 68oF 1013 mBar may cause corrosion on metal parts only in
combination with a relative humidity exceeding 60%.
6. AIR-COOLING
The components integrated in AXE exchanges are placed very close to each
other. This results in fairly concentrated heat. An air-conditioning
plant is normally required for removal of this heat.
Provided that the relative humidity requirement is met, exchange
equipments work without being specially affected by temperatures between
32-79oF.
Since regard must be paid to personnel requirements in general, the air
temperature should be kept between 64o - 79oF.
For calculation of the necessary capacity of an air-cooling plant,
attention should be paid not only to the outside temperature conditions,
but also to the sun through windows and walls and to the heat generated
by the equipment.
Rooms containing exchange equipment should be pressurized to prevent the
entry of dust.
The air-conditioning plant should provide all secure, continuous service
to the telephone exchange, (e.g., by means of adequate redundancy).
116
<PAGE>
7. FLOOR COVERING
When selecting the floor covering, consideration shall be given to
factors such as the frequency with which the units are moved across the
floor, loading, appearance, cost, etc.
Years of experience have shown that floor coverings such as vinyl are
most suitable because of their elasticity and resistance to wear under
high pressure. There are, however, many other materials that can be used
to cover the floor or the top surfaces of the raised floor panels such
as linoleum, or other laminated plastics.
Polyvinylchloride (PVC) is not suitable since it is not anti-static and
will emit corrosive gases in the event of fire.
Carpet-covered panels should also be avoided because they are normally
not anti-static.
Modern types of semiconducting floor are, however, recommended but it is
not a requirement for AXE.
8. EARTHING
The building shall be provided with an earth (earth electrode); the
resistance to earth should be 10 ohms or lower. The earthing shall be
connected to an earth collector bar, located in close proximity to Mains
Termination.
The earthing can consist of:
a. Earth plates buried close to Mains Termination to minimize the
path to the earth collector bar.
b. A wire buried around the building; the wire ends shall be
terminated in the earth collector bar.
c. Earthing in the foundation, in which case the contact between
the concrete and the earth provides the earthing. Connection to
the earth collector bar is effected over reinforcement bars of
special irons in the concrete. This earthing is comparatively
stable, and since the concrete is somewhat moist in the contact
with the earth, it will give satisfactory conductance. Foundation
earthings would be preferable in the AXE building concerned.
9. SOUND LEVEL
The sound level in the switch room depends on the background noise
caused by the air-conditioning system (optional) and the fans in the CP
shelf sections, approximately 55 dB (A).
The noise in the control room is mainly emanating from the typewriters,
approximately 55-65 dB (A).
10. VIBRATIONS
The AXE system is designed to operate safely at accelerations of 1 m/s2
within the frequency range 10 - 100 Hz.
117
<PAGE>
During transport the equipment will withstand vibrations of 5 m/s2 in
the range of 5 - 70 Hz during 500 h. Further within 1 - 5 Hz vibrations
with an amplitude of + 10 mm and 10 shocks of 300 m/s2 each with a
duration of 18 ms.
An unpacked unit (e.g., during repair) will withstand three shocks at
right angle towards a table surface in each of the most probable
directions of fall during normal handling.
Height of fall is 100 mm for units weighing less than 2 kg and 50 mm for
units exceeding 2 kg.
118
<PAGE>
11. RADIO ELECTRIC DISTURBANCE
Disturbances produced by the exchange follow the recommendation of
CISPR, i.e.,
o Within 150 - 500 kHz Max 10 mV
o Within 0.5 - 30 MHz Max 5 mV
Sensitivity of the exchange for received electromagnetic and magnetic
fields:
o The electric field must not exceed 1 V/m for the frequencies 0 -
1 GHz and 10 V/m for frequencies above 1 GHz.
o The magnetic field must not exceed 10,000 A/m for frequencies
below 1 kHz.
12. OVER-VOLTAGE RESISTIBILITY
Equipment exposed to an over-voltage may be damaged due to the presence
of too high voltage, current or power. The destruction limits are
generally strongly dependent on the duration of the over-voltage. When
specifying the over-voltage resistibility of an exchange, the different
types of lines that may be connected must be considered. In some cases,
these lines are equipped with over-voltage protectors (e.g., in the
MDF). The over-voltage resistibility against lightning surges must be
high enough to cover all surges below the upper static striking level
for the protector used. For surges having a short rise time, this static
limit may very well be exceeded before the protector strikes. In this
case, the surge passing to the exchange equipment will be cut off after
a few milliseconds, when the protector strikes. The peak voltage may,
however, reach considerably higher values than in the first case. The
exchange equipment is adequately provisioned for this situation.
If no protectors are provided, the lines concerned are assumed to be of
such a nature that the probability of encountering high over-voltages is
sufficiently small. The exact probability level depends to a large
extent on economic factors (e.g., maintenance costs, etc.) and must be
considered by the operator concerned in order to determine whether
over-voltage protectors should be provided or not.
The exchange equipment must have the capability to withstand
longitudinal as well as transverse over-voltages. Some components are
exposed to both types while others are only exposed to transverse
over-voltages. Transverse voltages arise if an over-voltage protector at
one of the wires in a speech path strikes and the protector at the other
wire does not strike.
As the destruction limits for different devices with regard to
over-voltages and currents may vary considerably, the actual limits for
the complete exchange can be expected to be dependent on the actaul
traffic case. The specification given must be interpreted as valid for
the worst case.
12.1 Lightning Discharges
The switching equipment is designed to withstand both the
over-voltages, A and B, given below:
A. Peak voltage 1,000 V
Front time 10 us
Time to half value 1,000 us
119
<PAGE>
The voltage may be of longitudinal or transverse type,
positive or negative with respect to earth. The voltage is
defined as an e.m.f. of double exponential shape and having a
source impedance of 100 ohms, resistive, or higher.
B. Peak voltage 1,500 V
Duration 2 us
The voltage may have any shape, longitudinal or
transverse, positive or negative with respect to earth. The
voltage is defined as an e.m.f. having an impedance of at least
100 ohms resistive during the course of the pulse and may be zero
ohms at the rear edge of the pulse.
13. FLOOR LOAD AND CEILING HEIGHT
13.1 Exchange Room
o The exchange is built with a section height of 2,250 mm
(~7 ft.). Required free ceiling height = 2,750 mm (~9
ft.).
o Floor load 4.25 kPa (0.6 lb/sq.in.) (low structure)
13.2 Control Room
o Required free ceiling height 2,400 mm (~8 ft.).
o Floor load 3 kPa (0.5 lb/sq.in.).
o Raised floor installation is not necessary.
NOTE: In case of centralized operation, the control room
may be excluded and the remaining I/O devices placed in the
exchange hall.
13.3 DC-Power Supply Room
o The power rack dimensions are width 2.952 ft. (900 mm),
depth 1.968 ft. (600 mm) and height 7.216 ft. (2,200
mm).
o The free height over the racks should be at least 3.28
ft. (1,000 mm) to provide space for the cable chute.
o Floor load .9 lbs./sq. in. (7.5 kPa.)
13.4 Battery Room
o Free ceiling height 8.856 ft. (2,700 mm.)
o Floor load 1.45 lbs./sq. in. (10 kPa.)
120
<PAGE>
PART II - RBS ENVIRONMENTAL CONDITIONS
CONTENTS
- --------
1. General
2. Climatic State
3. Relative Humidity of Air
4. Corrosion
5. Air-Cooling
6. Floor Covering
7. Earthing
.................................
1. GENERAL
This specification covers some of the most important requirements for
rooms used for operation of Ericsson radio base station equipment.
2. CLIMATIC STATE
The climatic requirements for operation of radio base station equipment
are specified in Figure 1. The temperature and humidity are to be
measured 5.0 ft. above the floor, and 1.0 ft. from any heat-radiating
surface and when the equipment dissipates normal operating power.
3. RELATIVE HUMIDITY OF AIR
Advantages of high humidity:
o reduction of static charge of dust particles, resulting in
reduced adhesion to contact surfaces.
o reduced electrical resistance in contacts yielding better
conductivity in the oxidized outer layers of contacts.
Disadvantages of high humidity:
o corrosion of metal surfaces.
o impairment of insulation resistance of cables.
Taking these various factors into account, the air humidity should be as
high as possible, but not so high as to cause corrosion or impaired
insulation.
Experience and tests have shown that the best results are obtained at a
relative humidity of 50-60% but may vary between 10-90%.
121
<PAGE>
4. CORROSION
Humidity and temperature within the specified requirements will not
cause corrosion. Sulphur dioxide (SO2) with concentration as high as 5
ppm at 68oF 1013 mBar may cause corrosion on metal parts only in
combination with a relative humidity exceeding 60%.
5. AIR-COOLING
Under special climate conditions, air conditioning is recommended. The
power supply must be then dimensioned accordingly.
6. FLOOR COVERING
When selecting the floor covering, consideration shall be given to
factors such as the frequency with which the units are moved across the
floor, loading, appearance, cost, etc.
Years of experience have shown that floor coverings such as vinyl are
most suitable because of their elasticity and resistance to wear under
high pressure. There are, however, many other materials that can be used
to cover the floor or the top surfaces of the raised floor panels such
as linoleum, or other laminated plastics.
Polyvinylchloride (PVC) is not suitable since it is not anti-static and
will emit corrosive gases in the event of fire.
Carpet-covered panels should also be avoided because they are normally
not anti-static.
Modern types of semiconducting floor are, however, recommended but it is
not a requirement for AXE.
7. EARTHING
The building shall be provided with an earth (earth electrode); the
resistance to earth should be 10 ohms or lower. The earthing shall be
connected to an earth collector bar, located in close proximity to Mains
Termination.
The earthing can consist of:
a. Earth plates buried close to Mains Termination to minimize the
path to the earth collector bar.
b. A wire buried around the building; the wire ends shall be
terminated in the earth collector bar.
c. Earthing in the foundation, in which case the contact between
the concrete and the earth provides the earthing. Connection to
the earth collector bar is effected over reinforcement bars of
special irons in the concrete. This earthing is comparatively
stable, and since the concrete is somewhat moist in the contact
with the earth, it will give satisfactory conductance.
Rev. 1995
122
<PAGE>
FIGURE 1
ENVIRONMENTAL SPECIFICATION FOR CELL SITE EQUIPMENT
[GRAPHIC OMITTED]
123
<PAGE>
Curve 1 Normal operation. 95% of operating time.
Curve 2 Requirements for safe operation.
Curve 3 Requirements for non-destruction. (No operation)
124
<PAGE>
ATTACHMENT H
ACQUISITION AGREEMENT # 9152
Tritel Inc.
Time Schedule (To Be Determined)
1
<PAGE>
ATTACHMENT I
ACQUISITION AGREEMENT # 9152
Tritel Inc.
OSS SUPPORT AGREEMENT
1. Hardware Support
1.1 During the Warranty Period, any third-party hardware equipment
purchased through SELLER for use in PURCHASER's OSS application
shall be warranted free of charge.
1.2 At the completion of the Warranty Period, PURCHASER shall either
purchase (i) an Extended Hardware Maintenance Agreement from
SELLER, or (ii) post-warranty support from the third party
providing the OSS hardware, and provide SELLER with proof of such
post-warranty support.
1.3 The prices SELLER charges for Extended Hardware Maintenance
support are set forth in Attachment A of the Acquisition
Agreement. These prices are subject to change on an annual basis.
1.4 Should additional third-party hardware purchased through SELLER
be added to the OSS system subsequent to the initial
installation, the Extended Hardware Maintenance Agreement will be
amended to include the new equipment.
2. Software Support
2.1 PURCHASER shall receive and be licensed to use all OSS Software
Enhancements during the Warranty Period. "Software Enhancements"
means modifications or improvements made to the System software,
not including new software features, which improve performance or
capacity of the software but which are not necessary to ensure
that the software operates according to the original
specification.
2.2 During the Warranty Period, SELLER will provide 24 hour telephone
assistance, fault tracking reporting and resolution, and
emergency software patches when required.
2.3 After expiration of the Warranty Period, PURCHASER may purchase
the support services set forth in 2.1 and 2.2 at the prices set
forth in Attachment A of the Acquisition Agreement. These prices
are subject to change on an annual basis.
2
<PAGE>
2.4 Upon request by PURCHASER, SELLER shall make available on-site
technical assistance at SELLER's standard rate then in effect.
3. Limits on Support Services
The parties agree that the limitations set forth in Article 13.4 of the
Acquisition Agreement shall apply to the warranty and post-warranty
support obligations of SELLER. In addition, SELLER may, without
liability to PURCHASER, terminate, or suspend performance of provisions
of the support services affected if in SELLER's reasonable judgment: (i)
the System is not maintained to two revisions prior to the latest OSS
Software Release level; or (ii) SELLER is not provided access to the
System and to such information and facilities as SELLER may reasonably
require in order to provide the Support Services.
4. Support Responsibilities of SELLER
4.1 SELLER may access OSS equipment and software for the purposes of
providing support services under the following conditions:
(i) SELLER shall notify PURCHASER in advance with a Work Order
stating the purpose of the work.
(ii) SELLER shall notify PURCHASER at least 48 hours in advance and in
writing of changes to distributed network naming services
configuration files (e.g.
tables) and X.25 addresses.
(iii) SELLER shall notify PURCHASER in writing with a Work Report
within 48 hours after completing any modifications made to
PURCHASER's files that involve the following:
o changes to .cshrc,.login, network configuration tables
and any file in the /etc directory
o changes to root directory structure
o changes to disk mounts
o changes to the OSS Authority database
o changes to the OSS X.25 control tables
o changes to installed software provided by SELLER
o addition and removal of OSS userids
o changes to IOG11 or adjunct processor parameters
o changes to Unix partitions
o changes to Unix kernel
(iv) SELLER shall notify the PURCHASER at least 24 hours in advance of
any network operations PURCHASER needs to perform to fulfill the
Work Order.
3
<PAGE>
Network operations include but are not limited to: scheduling of
network measurements and recordings, modifications to network
configurations, and collection of network configuration
printouts.
4.2 SELLER shall always use the same maintenance user identification
with root privileges provided by the PURCHASER to perform the
operations listed in 4.1(iii) above.
5. Support Responsibilities of PURCHASER
5.1 PURCHASER shall perform system management operations on systems
provided by SELLER according to practices outlined in the
documentation provided by SELLER or communicated in writing by
SELLER from time-to-time.
5.2 PURCHASER shall notify SELLER of any of the following changes
performed on systems provided by SELLER:
o changes made to NIS tables (includes host names and
TCP/IP addresses falling under files provided by SELLER)
o changes made to files in /etc directory
o changes to .cshrc, login of default userids provided by
SELLER
o changes to root directory structure
o changes to disk mounts
o changes to the OSS Authority Database for default
userids
o changes to the OSS Authority Database structure of
authority
o changes to the OSS X.25 control tables
o changes to installed software provided by SELLER
o removal of default userids provided by SELLER
o changes to IOG11 or adjunct processor parameters
o changes to Unix partitions on machines running systems
provided by SELLER
o changes to Unix kernel on machines running systems
provided by SELLER
o installation of additional software on Assets provided
by SELLER
o changes to passwords
5.3 PURCHASER shall provide to SELLER 24 hour access to the
maintenance user identification.
5.4 PURCHASER shall enable remote modem access to SELLER on a 7
day/24 hour availability basis.
5.5 PURCHASER shall perform routine hardware preventative
maintenance and cleaning; and, prior to requesting support from
SELLER, PURCHASER shall comply with all published operating and
troubleshooting procedures. If such
4
<PAGE>
efforts are unsuccessful in eliminating the malfunction,
PURCHASER shall promptly notify SELLER of the malfunction.
5.6 PURCHASER shall regularly back up data to the extent the OSS
hardware and software permits.
5.7 PURCHASER shall provide SELLER with (i) reasonable and safe
access to OSS systems; (ii) adequate working space and facilities
at the Installation Address; (iii) access to and use of all
facilities of PURCHASER necessary for SELLER or its
representatives to provide support services; and (iv) cooperation
in maintaining a site activity log.
5.8 PURCHASER will provide SELLER with updated system
configuration documentation as requested by SELLER showing the
location of all IOG-11, OSS server, OSS workstations, OSS
printers, X.25 Data Communications Network (DCN) hardware, and
other related equipment (both existing and future, where
appropriate). This documentation should also include
configuration and capacity of the LAN system as well as any
appropriate non-OSS software operating on the LAN.
5.9 PURCHASER will ensure the continued availability of an
operational LAN/WAN system that provides sufficient connections
and capacity to support the proposed OSS configuration. PURCHASER
will provide sufficient number of LIU-2 (or LIU-4) card
connections for each X.25 link which is to be connected to the
OSS network.
5.10 The examination, replacement, and handling of hardware
components can be hazardous. All related support tasks are to be
performed by qualified service personnel with the appropriate
technical training and experience to recognize these hazards
(e.g., electrostatic discharge) and observe all protection
procedures and precautions. PURCHASER agrees to use qualified
service personnel and to employ adequate safety precautions in
the performance of its obligations hereunder.
5.11 PURCHASER is responsible for providing a sufficient number
of professional system support staff for the purpose of
furnishing system and user support. All related software support
and system administration tasks are to be performed by qualified
service personnel with the appropriate technical training and
experience.
Rev. 7/19/96
5
<PAGE>
ATTACHMENT J
ACQUISITION AGREEMENT # 9152
Tritel Inc.
ACCEPTANCE TESTS
SCOPE
SELLER will perform Acceptance Tests to demonstrate that Equipment and Software
installed by SELLER is ready for commercial service.
Acceptance Tests are performed in the three areas below when Installation and
other related services for Equipment and Software are purchased from SELLER:
o RBS Tests
o Switch Tests
o RF Tests
1. RBS TESTS
Cell Site Configurations will be installed and tested in accordance with
applicable provisions of the most current version of SELLER's C-05 RBS
Installation Manual, and the RBS Commissioning Guide. Acceptance will be
performed in accordance with Section 3.2 of SELLER's Operations Policies
& Procedures Manual. The following documentation will be provided for
each Cell Site:
o Inventory Statement
o Test Data Forms
o Cell Site Acceptance Certificate
o Punch List Report (if needed)
o Punch List Resolution Certificate (if needed)
All sites are to be accepted prior to being placed into service. Punch
list items are to be cleared within sixty (60) days after commercial
service if possible.
2. SWITCH TESTS
All Switch Test Procedures are performed in accordance with the
instructions in the latest revision of AXE H-Modules.
o H-INST1 - General Pre-Test Documents & Procedures
o H-INST2 - Test of APZ Hardware
o H-INST3 - Test of APT Hardware
6
<PAGE>
o H-INST4 - Test of Exchange
o H-DEMO1 - Final Demonstration Procedures
The INST2, INST3 and INST4 Modules will be used to test and verify that
the hardware and data translations are installed and working properly.
Each Module contains a Test Result Report (check list) that will be
reviewed by PURCHASER during the Demonstration phase.
The DEMO1 Module contains all specific procedures that will be utilized
to demonstrate and certify that the switch will work under operative
conditions and is ready for commercial service. This Switch Acceptance
Process will examine the following areas for all new switch
installations, while some of these areas will be excluded for
expansions. This will depend upon the scope of each expansion project.
o APZ Demonstration Tests
o Call Demonstration Tests
o AXE Feature Profile Verification
o Material Inventory Verification
o Installation and Test Report Verification
This process will then be followed by the signing of the following
documents before the equipment is placed in commercial service.
Non-revenue affecting items will be placed on the Punch List Report and
scheduled for resolution after acceptance.
o Switch Acceptance Certificate
o Punch List Report (if applicable)
o Punch List Resolution Certificate (if applicable)
3. RF TESTS AND POST-CUTOVER VERIFICATION
3.1 RF tests are conducted to verify that the system RF coverage
is consistent with the established design of the system; that
calls can be executed from a cellular telephone within areas
where coverage has been predicted to be reliable; and that
handoff occurs in accordance with system parameters in the areas
of handoff boundaries.
RF tests will be conducted in accordance with the latest
revision of the RF Engineering Procedures:
o ERU/E910861 for RF Call Tests
o ERU/E910862 for Handoff Tests
o ERU/E921196 for Border Tests (if applicable)
Results consisting of data forms and handoff locations are
forwarded to the customer as the tests are conducted, during the
RF testing phase. The RF Acceptance Certificate will be presented
to PURCHASER for signature prior to cutover to certify that
7
<PAGE>
RF testing has been completed and the System (or System segment
which is the subject of the testing) is ready to be placed in
commercial service.
8
<PAGE>
3.2 The combined coverage, call and handoff verification is
conducted in a post-cutover environment to verify the conclusions
of the pre-cutover RF Tests (i.e. that the system RF coverage is
consistent with the established design of the system; that calls
can still be executed from a cellular telephone within areas
where coverage has been predicted to be reliable; and that
handoff occurs in accordance with system parameters in the areas
of handoff boundaries).
SELLER will propose to PURCHASER, and the parties shall
mutually agree on, the test routes to be driven prior to the
test.
The Combined Coverage, Call and Handoff verification is
performed in accordance with the then current revision of
Ericsson Engineering Practice, document ERU/E921179.
Results will be forwarded to PURCHASER in the form of a
standard report. This report will contain pertinent switch data,
test procedure summary information and a map overlay showing
specific problem areas along the agreed to test route.
3.3 As part of the acceptance testing immediately following
Installation of a new MTSO Configuration in an existing System,
SELLER will perform a drive test to verify that the newly defined
border cells are operating properly and that the intersystem
handoff function is working. SELLER and PURCHASER will mutually
agree to a test route and mutually agree upon handoff
combinations across the border The Interswitch Handoff Test will
verify system performance by initiating calls on each border cell
and tracing calls across interswitch handoff boundaries.
Rev. 1995
9
<PAGE>
#9152
12/29/1998
ATTACHMENT K
TRITEL PCS MARKETS
Bowling Green-Glasgow, Kentucky,
Corbin, Kentucky,
Lexington, Kentucky,
Louisville, Kentucky,
Madisonville, Kentucky,
Owensboro, Kentucky,
Somerset, Kentucky,
Atlanta, Georgia,
Chattanooga, Tennessee,
Cleveland, Tennessee,
Dalton, Georgia,
La Grange, Georgia,
Opelika-Auburn, Alabama,
Rome, Georgia,
Clarksville, Tennessee-Hopkinsville, Kentucky,
Cookeville, Tennessee,
Nashville, Tennessee,
Columbus-Starkville, Mississippi,
Greenville-Greenwood, Mississippi,
<PAGE>
Jackson, Mississippi,
Meridian, Mississippi,
Natchez, Mississippi,
Tupelo-Corinth, Mississippi,
Vicksburg, Mississippi,
Memphis, Tennessee (Montgomery County, MS Only),
Knoxville, Tennessee,
Anniston, Alabama,
Birmingham, Alabama,
Decatur, Alabama,
Dothan-Enterprise, Alabama,
Florence, Alabama,
Gadsden, Alabama,
Huntsville, Alabama,
Montgomery, Alabama,
Selma, Alabama,
Tuscaloosa, Alabama,
Biloxi-Gulfport-Pascagoula, Mississippi,
Hattiesburg, Mississippi,
Laurel, Mississippi,
McComb-Brookhaven, Mississippi,
Mobile, Alabama,
<PAGE>
APPLICATION SYSTEM 123/124 CN-A1
APT FUNCTION LIST
PAGE
----
1............................................................SUBSCRIBER SERVICES
.............................................................................15
2...........................................................ACOUSTIC INFORMATION
.............................................................................15
3......................................................TRAFFIC CONTROL FUNCTIONS
.............................................................................15
4.......................................................................CHARGING
.............................................................................15
5...................................................................TRANSMISSION
.............................................................................16
6............................................SUBSCRIBER LINE SIGNALING FUNCTIONS
.............................................................................16
7...........................................................TRUNK LINE SIGNALING
.............................................................................16
8..............................................................NETWORK FUNCTIONS
.............................................................................16
9........................................................NETWORK SYNCHRONIZATION
.............................................................................17
10....................................................MOBILE TELEPHONE FUNCTIONS
.............................................................................17
11...................................................................SUPERVISION
.............................................................................19
12...................................................TEST AND FAULT LOCALIZATION
.............................................................................20
13................................................................ADMINISTRATION
.............................................................................21
14..........................................................TRAFFIC MEASUREMENTS
.............................................................................22
15....................................................................STATISTICS
.............................................................................22
16............................................................NETWORK MANAGEMENT
.............................................................................23
17.......................................HOME LOCATION REGISTER/SERVICE CONTROL
.................................................................POINT (HLR/SCP)
.............................................................................23
18.................................................................FRAUD CONTROL
.............................................................................24
13
<PAGE>
THE CONTENTS OF THIS DOCUMENT ARE SUBJECT TO REVISION WITHOUT NOTICE DUE TO
CONTINUED PROGRESS IN METHODOLOGY, DESIGN, AND MANUFACTURING. ERICSSON SHALL
HAVE NO LIABILITY FOR ANY ERROR OR DAMAGES OF ANY KIND RESULTING FROM THE USE OF
THIS DOCUMENT.
INTEGRITY is a trademark of Tandem Computers Incorporated.
14
<PAGE>
14. SUBSCRIBER SERVICES
Call Waiting Call to a Mobile Subscriber
Equal Access for Mobile Subscriber
Fixed Call Barring
Interception Service
Message Waiting Indication
Mobile Telephone Calling Number Identification
Origination Call Access to IN Services
Priority
Subscriber Code Control Service Calls
15. ACOUSTIC INFORMATION
Acoustic Signals
Acoustic Signals USA-L(BT4)
Digital Announcement Services with Extended Features (AST-DR)
Digital Announcements Services, with Extended Features (ASTV2)
Digital Loss Pads
Recorded Announcement Digital Speech Storage (AST-DP)
Recorded Announcements Digital Speech Storage (AST-D4/D8)
16. TRAFFIC CONTROL FUNCTIONS
Analysis of A-Subscriber Number \
Analysis of B-Subscriber Number
Basic Call Setup
Call Supervision and Release
Connection of Echo Cancellers in
PLMN End of Selection Analysis
Handling of A-subscriber Number
Multipurpose Destination Codes
Own Area Code
Routing Analysis
Subscriber Categories
Supervision of the Register Holding Time
17. CHARGING
Call Record Formatter
Call Record Fields for Cellular Mobile System
Charging Analysis
Charging Data Output to Adjunct Processor
Charging Data Output to IOG
Charging for Abnormal Call Release
Event Charging
Immediate Call Itemization
Invocation of Immediate Call Itemization to CMS 8800
Mobile Charging in CMS 8800
15
<PAGE>
Source Filtering
Toll Ticketing
18. TRANSMISSION
Basic Functions in a Digital Group Switch with a Maximum of 64K
Multiple Positions
Basic Functions in the Digital Group Switch with a Maximum of 64K Multiple
Positions, Figures
Group Switch Manager
Looping of a 64-Kbps Channel
Maintenance Functions for the 1544-Kbps Digital Path Termination
Semi-permanent Connections, Administration
Transmission Characteristics for a 1544 Kbps Digital Path Termination
Transmission Characteristics for a 2048 Kbps Digital Path
Transmission Fault Control Function for 24-Channel PCM
19. SUBSCRIBER LINE SIGNALING FUNCTIONS
Functions at Interwork with PABX
Keyset Code Reception
Line Lockout Supervision of Analog Subscriber Lines
Subscriber Dialing Supervision
20. TRUNK LINE SIGNALING
Basic Register Signaling - USA
Function Block FAUS Signaling Fault Supervision on Trunk Circuits and CS/CR
Signaling System Dependent Conversion (SSC)
Supplementary Service Interworking - Different Signaling Systems
Supplementary Service Interworking - Restriction on Destination Basis
Terminating Traffic from Interexchange Carriers
Traditional Signaling (3/1914-ANS 331 20) (1914-ANS 535 06)
Trunk Line Signaling, 1Bit, 24 Channel PCM - USA
Trunk Side PBX Access (DID)
21. NETWORK FUNCTIONS
Access to Voice Mail Services in VMSC/PEG
Automatic Administration of HTR Destination List
Automatic Congestion Control
Automatic Number Identification Transfer Between Exchanges
Automatic Number Identification Transfer to Automatic Call Distributor/PABX
Automatic Roaming Using Global Title Addressing
CCD Hardware
Circuit Reservation
Circuit Selection Methods
Emergency Call Service
Equal Access Carrier Analysis
16
<PAGE>
Feature Group B and Feature Group D Access
Handling of Abnormal Conditions
IS-41 Intersystem Call Delivery Data Signaling
IS-41 Private Information Handling
Local Access to Automatic Visitors
Location Areas
MFJ Suppression of Busy Information
MFJ-NACN: Inhibition of Redirection Request
MTP Route Verification Test
Multi-Exchange Paging
Multi-Junctor User Functions
SCCP Route Verification Test
Signaling Protocols for 911 Services for PLMN Application
Subscription Areas
Unique Cell Location Information for Emergency Call, MRS
Virtual System Area Configuration
Voice Mail Retrieval for Mobile Subscribers
22. NETWORK SYNCHRONIZATION
Network Synchronization
Synchronization and Carrier Frequency Stabilization
Timing of a Digital Exchange
23. MOBILE TELEPHONE FUNCTIONS
Analog Control Channel Functions
Analog Voice Channel Functions
Autotuned Combiner, AMPS
Avoid Disturbed Digital Traffic Channels
Backup Channel Devices
Base Station Related Blocking Control
Best Server Selection
Call from a Mobile Subscriber
Call from, Call Access
Call Record Fields for Cellular Mobile System
Call to a Mobile Subscriber
Call Tracing at Small Restart in MRS
Call Tracing at Small Restarts
Channel Supervision, Digital
Clearing House Roamer Validation
Digital Control Channel Functions
Digital MS Power Regulation
Digital Traffic Channel Control
Directed Retry
DTMF Handling
Dynamic Allocation of Roamer Routing Number
17
<PAGE>
Exchange-Base Station Interface (Describing MSC-BS Interface Options,
Controlled by ERI)
Frequency Stabilization for Analog Equipment
Handoff
Handoff Data Signaling
Handoff Queues
Hierarchical Cell Structure
Idle Channel Supervision, Analog VC
Incoming Two-Stage Selection to Visitor
Interexchange Handoff
Locating
Locating of Digital Calls
Mobile
Management Information Coordination
Mobile Station Presence Verification
Mobile Telephone Activity Supervision
Mobile Telephone Multiparty Services
Mobile Telephone Overload Control
Mobile Telephone Reverse Control Channel Separation
Mobile Telephone Subscriber Activity Report
Mobile Telephone Subscriber Class Translation
Mobile Telephone Subscriber Service Handling
Mobile Telephone Supervision of the Connection to the MS
Mobile Telephone Time Supervision
Mobile Telephone Charging Areas
Mobile Telephony Co-Locatable HLR/MSC
Mobile Telephony Parallel Announcement During Routing
Mobile Telephony Per Call Activation/Deactivation of Calling Number
Identification Restriction
Mobile Telephony Serial Announcement Before Routing
Mobile Terminated Point-to-Point SMS
Mobile Terminated Short Message Services Delivery
MS Presence Verification - Digital
MSS Call Path Tracing for Mobile Subscribers
Multiple Access Handling: Store and Compare
Multiple Access Handling: Wait and Compare
Operator-Controlled Paging
Overlaid Cells
Paging
Paging Area Paging
Peripheral Equipment Gateway and Voice Mail Signaling
Program Loading of Base Station Device Processors
Radio Performance RBS 884-1900
Radio Performance RBS 884 High Power Base Station
Receiver Functions and Performance, AMPS
Receiver Performance, Digital
18
<PAGE>
Receiver Performance, RBS 882M
Receiver Performance, RBS 884
Receiver Performance, RBS 884C
Receiver Performance, RBS 884M
Redirection of Call to Mobile Subscriber
Registration
Registration Updating
Restricted Subscriber Handling
Roamer Port Misuse Protection
Routing of Call to Mobile Subscribers
Second Phone Same Number
Sequential Paging for Manual Roamers
SW and HW Information
System Access Handling
System Access Threshold
System Identification Data for Registration
System Ordered Rescan
Time Alignment
Transmitter Performance, Digital
Transmitter Performance, RBS 882M
Transmitter Performance, RBS 884
Transmitter Performance, RBS 884C
Transmitter Performance, RBS 884M
Transmission Radio Interface, TRI. A BS Functional Specification
Transmitter Functions and Performance, AMPS
Visited Mobile Switching Center Routing Data Provision Automatic Roaming
Visitor Register Handling
Vocoder Selection
Voice Channel Handling
24. SUPERVISION
All Circuits Busy on Routes
Blocking Supervision on Devices
Destination %OFL Supervision and Observation
Destination ASR Supervision and Observation
Destination Blocking
Digital Random Access Load Supervision
Disturbance Supervision of Trunk Circuits Analog Code Senders and Analog Code
Receivers
Disturbance Supervision on Routes
Logging Breaks in Semipermanent Connections
Measurement of Network Performance Data on Destinations
Measurement of Network Performance Data on Routes
Mobile Telephone Control Channel Disturbance Supervision
NM Counter Data Output
19
<PAGE>
Preference Service
Processor Load Control
Reading of Network Performance Data
Restriction of Accessible Outgoing Circuits
Restriction on Direct and Alternative Routing
Route %OFL Supervision and Observation
Route ASR Supervision and Observation
Seizure Quality Supervision
Seizure Supervision of Trunk Circuits and IWU
Devices Software File Congestion Supervision
Supervision
Temporary Alternate Routing
Time Supervision and Disconnection of Long Held Calls
25. TEST AND FAULT LOCALIZATION
Analysis Data Fault Handling
Audit Function, Registration of Software Irregularities (ROSI)
Call Path Tracing
Code Answer According to Code 102
Code Answer According to Code 103
Command Controlled Operation of Echo Suppresser and Attenuation Pads
Command-Controlled Access to Devices
Command-Controlled Test Calls
Connection Performance Test of Group Switch
Connection to Test Telephone
Continuous Monitoring
Disconnection of Time Supervision
Forlopp Handling in CMS 8800
Long Term Monitoring
Maintenance of Digital Group Switch a Maximum of 64K Multiple Positions
Maintenance of MJ Hardware
Maintenance of Switching Network Terminal
Manual Blocking and Deblocking of Devices and Subscriber Lines
Manual Continuity Check for Common Channel Signaling
Mobile Telephone Radio Disturbance Recording
Monitoring of Subscriber Lines and Trunk Lines
Operation of Relays in Devices
Predetermining of Switching Path
Progression Testing
Reading of Device State Information
Recording of Telephony Signals
Remote Measurements, ATME Measurements
Remote Measurements, ATME Recording Result Administration
Remote Measurements, ATME Restest Administration
Remote Measurements, ATME Responding
20
<PAGE>
Remote Measurements, Bit Error Ratio and Transmission of Bit Patterns
Remote Measurements, B-Number Translation
Remote Measurements, Delayed Measurement
Remote Measurements, Echo Return Loss Measurement
Remote Measurements, Immediate Measurement
Remote Measurements, Instrument Administration
Remote Measurements, Level Measurement
Remote Measurements, Noise Measurement
Remote Measurements, Programmed Interwork with Test Lines
Remote Measurements on Telephone Circuits
Remote Measurements, Singing Return Loss Measurement
Remote Measurements, Standard Adjustments of Instrument Data
Remote Measurements, Timeable Controlled Measurement
Remote Measurements, Transmission of Tones
Signaling Course Recorder
Supervision and Fault Handling
Terminating Test Calls
Test Functions for Base Station Related Equipment
Test of Channel Devices
Test Tone
26. ADMINISTRATION
Administration of B-Number Analysis Data
Administration of Call Path Tracing
Administration of Digital Group Switch with up to 64K Multiple Positions
Administration of End of Selection Analysis Data
Administration of Exchange Data
Administration of Exchange Data for Internal Number
Series Administration of Meter Pulse Data
Administration of Mobile Telephone Cells
Administration of Mobile Telephone Channel Devices
Administration of Mobile Telephone Cooperating Exchanges
Administration of Mobile Telephone Service Area
Administration of Response Programs
Administration of Roamer Routing Interrogation Code Translations
Administration of Routing Analysis Data
Administration of Routing Switch
Administration of Switching Network Terminal Data
Administration of Time Supervision Analysis Data
Administration of Visitor Register
Channel Equipment Coordination and Administration
Code Answer
Equal Access Carrier Analysis Administration
Equipment Position
Manual Administration of HTR Destination List
21
<PAGE>
Mobile Telephone Digit Analysis
Route Data Administration
Route Status Survey
Subscriber Data, Administration
Test Blocking Administration
Test Position Administration
Voice Path and Transmission Line Coordination and Administration
27. TRAFFIC MEASUREMENTS
Counters in the Measurement Data Base for Charging
Counters in the Measurement Data Base for GSS Set of Parts GS64K
Counters in the Measurement Data Base for GSS Set of Parts NS
Counters in the Measurement Data Base for GSS Set of Part SNT
Counters in the Measurement Data Base for Mobile Subscribers
Counters in the Measurement Data Base for the Announcement Service Terminal
Counters in the Measurement Data Base for the Traffic and Event Measurement
Counters in the Measurement Data Base for Traffic and Event Measurements
in the CCS Subsystem
Counters in the Measurement Data Base for Traffic Control
Counters in the Measurement Data Base for APT General Operation and
Maintenance
Counters in the Measurement Data Base in Multi-Junctor
Counters in the Measurement Data Base, General Concepts
Data Recording per Call
Measurement Data Base
Measurement Object Group Handler
Measurement Report File Output, Standard Format
Measurement Report Generator
Measurement Report Time Table
Mobile Telephone Cell Traffic Recording
Modified Measurement Report Generator
Recording of Voice Channel Handling
Statistics and Traffic Measurement
STS
Time Congestion Measurements on Routes
Traffic Character Measurement on Routes
Traffic Dispersion Measurements
Traffic Measurements on Routes
Traffic Measurements on Traffic Types
28. STATISTICS
ADC Authentication Statistics
Disturbance Statistics
IS-41 Signaling Protocol Statistics
Mobile Telephone Cell Traffic Statistics
22
<PAGE>
MT Signaling Protocol Statistics
Page Response Statistics
Paging Parameter Statistics
Radio-Related Call Release Information
Radio Environment Statistics
Service Quality Statistics
Traffic Observation
29. NETWORK MANAGEMENT
ANSI CCS Suppport for HLR Redundancy for CMS88
Control of Echo Canceller Loop for Mobile Subscribers
Exchange Input Load Observation
Exchange Input Load Supervision
NM Actions Sequence Control
Processor and Exchange Input Load Measurements
Processor Load Observation
Reading of Processor and Exchange Input Load
Remote Subsystem Inaccessible Alarm
Route Load Supervision and Observation
SCCP Overhead Converter
SS7 ISDN User Part Inter LATA
SS7 ISDN User Part Intra LATA
SS7 Message Transfer Part
SS7 Signaling Connection Control Part (SCCP)
SS7 Signaling Network Monitor
SS7 Signaling Network Trouble Notification
Traffic Restrictions on Route
30. HOME LOCATION REGISTER/SERVICE CONTROL POINT (HLR/SCP)
HLR/SCP SS7 Functionality
ANSI SS7 TCAP Platform
SS7 TCAP Interface to HLR
SS7 TCAP Load Management
HLR/SCP HLR Subscriber Functionality
HLR Administration of Peripheral Equipment
HLR Alternative Location Coordination
HLR Area Code Change Support
HLR Authentication
HLR Automatic Call Barring HLR C-Number Analysis
HLR C-Number Provision
HLR Call Barring Upon Fraudulent Activity Detection
23
<PAGE>
HLR Equal Access Pre-subscription
HLR Fraud Activity Detection
HLR Location Analysis and Call Delivery
HLR Location Updating
HLR Message Waiting Indicator
HLR Restoration Procedures
HLR Routing Determination
HLR Screening of Serial Number
HLR Short Message Service
HLR Subscriber Activity Handling
HLR Subscriber Activity Report
HLR Subscriber Class Characteristics
HLR Subscriber Class Groups
HLR Subscriber Data Administration
HLR Subscriber Default Profile Administration
HLR Subscriber Number Administration
HLR Subscriber Services Calls
HLR Support for Manual Roamers
HLR Support for Mobile Autonomous Registration Subscribers
HLR/SCP SCP Functionality
HLR Intelligent Network (IN) Services for PCS
Subscribers
HLR triggers in HLR
Service Script Interpreter (SSI)
Service Script Virtual Directory Number
SSI Basic Control Types
SSI Basic Control Types 1
SSI Basic Control Types 2
SSI Extended Number Analysis
SSI IS-41
SSI List Handling
SSI Number Analysis
SSI Reports
SSI Statistics Counters
SSI Traffic Simulation
SSI Voice Prompting
31. FRAUD CONTROL
ADC Authentication Procedure for Visiting Subscriber
All Teardown Administration
Fraudulent Activity Detection
Fraudulent Call Prevention
Screening of Serial Number
24
<PAGE>
Serial Number Barring
Tumbling ESN Barring
25
<PAGE>
APPLICATION SYSTEM 123/124 CN-A1
APZ FUNCTION LIST
PAGE
19. CONTROL SYSTEM FUNCTIONS..................................27
20. DATA COMMUNICATIONS FUNCTIONS.............................29
21. FILE FUNCTIONS............................................29
22. ALPHANUMERIC FUNCTIONS....................................30
23. ALARM FUNCTIONS...........................................30
26
<PAGE>
32. CONTROL SYSTEM FUNCTIONS
Adjunct Computer Subsystem APZ 212 20/2-42
Adjunct Processor Large Building Block - Tandem Integrity(TM) FT
APZ 212 20/2-42
Administration of Central Processor Stores
Administration of Function Codes
Administration of Interference Protection
Administration of Symbols for Central Software Units
Administration of System Information
Audit Functions Controller
Cache Memory Handling
Central Processor Test Functions, CPT
Command Interface for the Database APZ 212 20/2-20
Control Signaling Link
Counters in the Measurement Database for the Control System
Counters in the Measurement Database for the Support Processor
CP Repair Functions
Database General
Data Dictionary for Database APZ 212 20/2-20
Database Transaction Handling
Debugger for RPD/EMRPD
EMG Administration Functions
EMG Diagnostics
EMG EM Restart Dump Function
EMG Fault Detection Functions
EMG Recovery Functions
EMG Repair Functions
EMG Start Functions
EMRPD Hardware Functions
Executive System EMRP
Executive System STC
Executive System STR
Forlopp Management
Function Change and Software Handling in SP
Function Change in Central Processor
Function Change, Change of EM in EMG and Loadable RP
Handling of Hardware Faults
Handling of Software Faults
Initial Loading
Job Transfer Protocol
Load Protection in RP2
Loadable Microprogram
Loading Administration, Dynamic Store Allocation
27
<PAGE>
Loading and Removal of Central Software Units
Loading of EMRP, RP, and DP
Logging of Exchange Build Level Changes
MAS Support to Other Subsystems
Metering Maintenance Statistic, APZ
Operating System Functions for EMRPD
Operation and Maintenance in SPS
Output of Central Software Units
Output of Regional Programs
Output of Regional Programs, Backup Copy Function
Overload Protection (OLP), EMRPD
Processor Measurement
Product Administration, System Check at Insertion of Program
Program Change for Central Software Unit
Program Correction in EMRP
Program Correction in CP
Program Store Consistency Check
Program Test in EMRP
Program Test in EMRP with Simulated Link Interrupt
Protocol Signaling Link
Protocol Signaling Link, Flowchart
RP Administration Function
RP Alarm Function
RP Diagnostic Function
RP Error Detecting Function
RP Program Correction
RP Recovery Function
RP Repair Function
RP Restart Dump Function
RP Start Function
RPD Hardware Function
Size Alteration of Data Files
Size Alteration of Store
SP Exchange Data Administration
SP Gateway Communication
SP Restart Logging
SP System Parameter Handling
SP Trace System
Stand Alone Function APZ 212
Supervision of Utilization in Files and Memories
Support for Production and Installation
System Backup Copy and Restart Log
System Backup Copy in Main Store
System Calendar
System Limits
28
<PAGE>
System States and System Events
Test
Variable Output Support
Variable Output Service Function
33. DATA COMMUNICATIONS FUNCTIONS
AXE I/O Address and Routing Analysis
AXE I/O Closed User Group
AXE I/O Data Communication Priority
AXE I/O Data Communication Statistics
AXE I/O Direct Call Facility
AXE I/O HDLC (LAPB) Single Link Procedures
AXE I/O Interface for Modems
AXE I/O Interface for Packet Mode Terminal Access
Through a Switched Telephone Network
AXE I/O Interface for Terminals
AXE I/O Network User Services and Facilities
AXE I/O Permanent Virtual Circuit Facility
AXE I/O Selection by Name Facility
AXE I/O Subaddressing
AXE I/O Transport Protocol
AXE I/O V.25 BIS. Automatic Calling Facility
AXE I/O X.25 Interface
AXE I/O X.3 Pad
Direct File Output
Internet Transport Service APZ 211 11-318
Message Transfer Protocol, MTP
Modem for 2400 BPS. Synchronous on Leased Lines
Modem for 9600 BPS. Synchronous on Leased Lines
V-Series Synchronous Data Transmission through a General
Telephone Network Physical Layer
X-Series Synchronous Data Transmission through a Public
Data Network Physical Layer
34. FILE FUNCTIONS
3 1/2 inch Disk Storage Unit, Winchester, Micropolis, 2112s 1.05 GB SCSI-2
5 1/4 inch Disk Store Winchester, Micropolis 1558-15
5 1/4 inch Disk Storage Unit Winchester, Hitachi DK 511-8
5 1/4 inch Disk Storage Unit Winchester NEC D5652
5 1/4 inch Flexible Disk Unit TEAC FD-55GFV
5 1/4 inch Rewritable Optical Disk Drive RICOH R0-5060E
Command Log in AXE
Data Interchange Format on Flexible Disks
File Control APZ 211 11-285
29
<PAGE>
File Copying in FMS
File Names in AXE File Process Utility in FMS APZ 211 11-234
File Recovery Function in FMS
File Service Functions APZ 211 11-286
Hard Disk Function APZ 211 11-284
IBM Formatted Tape Labels in FMS
Infinite Sequential Files
Magnetic Tape Functions in FMS
Magnetic Tape Unit Start/Stop TEAC MT-1000
MT Labels for FMS
Search Function in FMS
35. ALPHANUMERIC FUNCTIONS
Asynchronous Terminal Interface for IOG11 APZ 211 11-282
Authority Check of Operators at Logon and Execution
AXE User Environment
Command Input
Hourly Status Report
Load Regulation of Man Machine Communication
Man-Machine Language AX
Modem for 2400 BPS Synchronous and Asynchronous, Switched or Leased Lines
Output of Alphanumerical Information on File
PC in AXE
Printer in AXE, Facit B3100 Special Version
Printer in AXE Facit 4511
Printer in AXE Siemens PT88S
Remote Operator Alarm
Repeat Notifications for Single Troubles
Routing of Printouts
Search in Transaction Log
Secure Dialback for Connection of Terminals
Standby Utilities for Alphanumerical Output
Transaction Log
TW in AXE, Texas Silent 703
TW in AXE, Facit 4511
TW in AXE, Facit 4440
VDU in AXE, Facit
4440 VDU in AXE, Tandberg 2230S
36. ALARM FUNCTIONS
Alarm and Attendance Signaling Towards OMC
External Alarms
30
<PAGE>
Operator Alarm
Revised 8/14/97
31
<PAGE>
ATTACHMENT M
ACQUISITION AGREEMENT # 9152
Tritel Inc.
Finance Term Sheet
NYLIB1/611897/3/99320/00000/flynnb/September 3, 1999 - 7:38 09/07/99
Tritel Inc. Acquisition Agreement 9152
1
<PAGE>
ATTACHMENT N
ACQUISITION AGREEMENT # 9152
TRITEL INC.
TABLE OF CONTENTS
SECTION PAGE
1. NETWORK PLANNING AND EXPANSION 2
2. NETWORK PERFORMANCE EVALUATION 2
3. NETWORK OPERATION CONSULTING 2
4. NETWORK MANAGEMENT SYSTEM CONSULTING 3
5. BUSINESS OPERATION CONSULTING 3
6. CIVIL CONSTRUCTION 3
7. SITE ENGINEERING 4
8. EQUIPMENT INSTALLATION AND COMMISSIONING 4
9. NETWORK OPTIMIZATION 4
10. OPERATION AND MAINTENANCE MANAGEMENT 6
11. NETWORK MANAGEMENT SYSTEM ADMINISTRATION 6
12. REMOTE NETWORK MONITORING 6
13. SYSTEM SUPPORT ..................................................5
14. OPERATION AND MAINTENANCE ASSISTANCE ............................6
15. COMPETENCE DEVELOPMENT PROGRAM ..................................6
NYLIB1/611897/3/99320/00000/flynnb/September 3, 1999 - 7:38 09/07/99
Tritel Inc. Acquisition Agreement 9152
1
<PAGE>
1. NETWORK PLANNING AND EXPANSION
Ericsson's Network Planning and Expansion Service provides initial radio
frequency (RF) design, network dimensioning, and expansion planning for wireless
systems. This service can be provided with customer defined levels of Ericsson
support.
Ericsson provides personnel with an in-depth knowledge of cell, frequency,
transmission, and network planning principles. Ericsson team members also have
the expertise for performing border, trunk, and signaling network analysis as
well as system capacity analysis.
In an effort to better meet current and future customer demands, Ericsson
engineers provide a plan which shows how, when, and where to configure the
wireless network for optimal performance.
2. NETWORK performance evaluation
Ericsson's Network Performance Evaluation (NPE) service provides an in-depth
analysis of coverage, capacity, efficiency, reliability, and quality of the
wireless network. In addition, NPE makes recommendations for improving the
performance of the system.
Ericsson's Network Performance Evaluation service evaluates the wireless system
at various levels of network configurations and traffic patterns. This service
is divided into several sections: An overall system performance analysis is
performed regularly on the entire network and is intended to focus on subscriber
issues related to service quality. The overall performance evaluation highlights
any problems found and provides a list of the most problematic cells in each
performance area. If required, a more detailed investigation can be performed
for the most problematic cells using the detailed problem analysis.
A performance evaluation can also be applied to specific nodes within the system
to ensure that areas such as power, grounding, or data transcripts are in
appropriate conditions. This evaluation becomes essential when planning
extensive expansions, updates, and/or enhancements to the wireless system.
3. NETWORK OPERATION CONSULTING
Ericsson's Network Operation Consulting service provides improvement
recommendations for Operations and Maintenance processes and procedures
The consulting service addresses the following areas:
o Documentation of current AXE operations and maintenance processes, practices,
and procedures
o Alarm management, shift hand-over and escalation procedures
o Power and synchronization areas
o OMC establishment, staffing and security issues
o Necessary methods and tools provisioning
o O&M Organization Planning and emergency support handling
o Subscriber feature related O&M training
2
<PAGE>
o
4. NETWORK MANAGEMENT System CONSULTING
Ericsson's Network Management System Consulting service provides recommendations
for the effective design and implementation of Network Management Systems (NMS).
o Analyzes requirements for the Network Management System, based on expected
network usage.
o Ericsson Network Management System Consultants focus on attaining high
system performance standards and efficient cost control.
5. BUSINESS OPERATION CONSULTING
Ericsson provides a consulting service which reviews business processes and
procedures and provides ideas for improvement. Business Operation Consulting
addresses areas such as subscriber administration, customer care, and billing
administration. Additionally, this service identifies new business possibilities
and opportunities.
Ericsson's Business Operations Consulting service provides information on areas
of business operation that are critical for revenue enhancing opportunities.
Some of these areas include:
o Customer care and subscriber administration procedures
o Fraud prevention activities in the network
o Issues related to churn --subscriber or employee
6. CIVIL CONSTRUCTION
Ericsson's Civil Construction Service provides general contracting and
management services for the construction and preparation of base station,
switching center, Network Management Center and other construction needs.
Ericsson coordinates all activities related to the civil construction of cell
sites, switch rooms, and network management centers serving as the general
contractor. The range of commitment encompasses areas such as:
o Customer approved site plans
o Site preparation and construction
o Construction/project management
o Provisioning and/or installation of equipment shelters
o Tower and monopole erection
o Electrical and telco installation
o Antenna and feeder installation
o Generator, environmental, and security installation
3
<PAGE>
7. SITE ENGINEERING
Erisccon's Site Engineering service provides site surveys, preparation, and
specifications for the physical layout and dimensioning of switch, radio, OSS,
and transmission equipment. This service is performed for new installations,
expansion of existing equipment, as well as for multi-vendor equipment.
Ericsson provides the customer with the requirements for site preparation,
space, building structures, environmental controls, and efficient equipment
layout. Ericsson also recommends optimal ways to implement an extension to an
existing installation -- taking into account factors such as spare positions in
existing cabinets, main distribution frames, digital distribution frames, and
power frames.
8. EQUIPMENT INSTALLATION AND COMMISSIONING
Erisccon provides a full range of installation services for Ericsson, as well as
third party equipment. This service ensures fast, professional installation and
commissioning work of switch, network, radio, OSS, transmission and other
Ericsson modules.
Ericsson manages the installation and commissioning of new equipment,
re-allocation and re-installation of existing equipment, and the dismantling of
obsolete equipment. There are three levels of service:
o INSTALLATION AND COMMISSIONING
o QUALITY ASSURANCE SUPERVISION
o INSTALLATION AUDITS
9. NETWORK OPTIMIZATION
Erisccon's Network Optimization Service implements improvements recommended by
Ericsson's Network Performance Evaluation, RF engineering, and other performance
improvement services. This service is designed to improve the performance and
quality of the operators wireless network.
Ericsson engineers translate optimization recommendations into system data
inputs for implementation into the wireless network. The activities that are
covered include:
o Baseline drive testing, data acquisition, and modification prior to
implementation of data changes
o Translation of planning and evaluation information to system data MML formats
and commands
o Preparation, distribution and implementation of customized cell design data
information and switch files
4
<PAGE>
10. OPERATION AND MAINTENANCE MANAGEMENT
Erisccon's Operation and Maintenance Management Service provides experienced
Ericsson personnel for the day-to-day handling of O&M activities. This service
provides a total turn-key solution to Ericsson wireless systems network O&M.
Ericsson's Operation and Maintenance Management Service is a long-term
commitment to the operator to manage their system operations. Ericsson places
personnel on-site and worldwide to access the various tools and expertise
available to ensure efficient O&M management.
The Operation and Maintenance Management responsibilities range from the
handling of field hardware to O&M of system processes.
11. NETWORK MANAGEMENT SYSTEM ADMINISTRATION
Erisccon's Network Management System Administration Service provides the
operator with an efficient solution for the operation and administration of
their Network Management System. The Network Management System Administration
service provides Ericsson system administration based on proven UNIX, database,
and NMS application operations and maintenance procedures. System administration
support is offered either locally or remotely. Remote administration is
available either by way of a dedicated high-speed link to the Ericsson Network
Management Center or through a modem connection. System administration duties
requiring physical activities such as connecting printers and workstations or
removing tapes from backup devices are provided via on-site support.
12. REMOTE NETWORK MONITORING
Erisccon's Remote Network Monitoring Service provides Ericsson's expertise in
site monitoring and alarm handling for base stations, switching centers, and
other network modes.
Utilizing Ericsson's Network Management System applications, engineers provide
proven NMS solutions for network monitoring. Remote Network Monitoring is
available via a dedicated high-speed link to the Ericsson Network Management
Center.
13. SYSTEM SUPPORT
Erisccon's System Support service includes consultation and 24 - hour emergency
service, software maintenance and hardware maintenance. This service provides:
o Provides assistance in resolution of operations and maintenance issues and
trouble report handling.
o 24-hour access to Emergency Support Team for rapid recovery of Network
Elements.
o Software Maintenance ensures Network Elements are kept current with all
software updates.
o Hardware Maintenance provides Return and Repair of Ericsson equipment.
5
<PAGE>
14. OPERATION AND MAINTENANCE ASSISTANCE
Erisccon's Operation and Maintenance Assistance service provides experienced
Ericsson personnel to assist with the operations & maintenance of the network.
Operation & Maintenance Assistance provides hands-on assistance or supervision
by experienced O&M personnel. These personnel are placed at the switches, radio
sites or Network Management Center's on a short or long term basis. Ericsson
resources are available to assist with support and O&M issues as well as:
o OSS administration
o Preventive maintenance
o Back-up procedures
o Alarm handling
o Trouble reporting
15. COMPETENCE DEVELOPMENT PROGRAM
Erisccon's Competence Development program provides courses to develop in-house
competence in operation and maintenance of wireless networks including:
o Career related training paths and courses for O&M professionals.
o Courses at Ericsson's international training centers, or on-site training
available.
o Provides an introduction to new features and network technologies.
o Hands-on review and job task competency verification.
Revised 10/22/96
ATTACHMENT O
ACQUISITION AGREEMENT # 9152
Tritel Inc.
Price Adjustment for Equipment and Software
Other than Initial Configuration
NYLIB1/611897/3/99320/00000/flynnb/September 3, 1999 - 7:38
Tritel Inc. Acquisition Agreement 9152
09/07/99
6
<PAGE>
Prices shall be adjusted at the beginning of each calendar year, and the prices
will be valid for orders received during the ensuing calendar year, pursuant to
the following formulas:
Equipment and Software ordered other than that covered by the Initial
Configuration is subject to this price adjustment according to the
following formula:
P = PO x (0.15 + 0.85 x M/MO)
Where
P = The adjusted price.
PO = Base price as stated.
M = The Producer Price Index for all commodities published monthly
by the Federal Bureau of Labor Statistics ("Index") valid for the
month of September in the current year.
MO = Same as M, but valid in September of the previous year.
8/1/95
7
<PAGE>
ATTACHMENT P
ACQUISITION AGREEMENT # 9152
Tritel Inc.
Recipients of Purchaser's Notices
8
<PAGE>
ATTACHMENT Q
ACQUISITION AGREEMENT # 9152
Tritel Inc.
ORDER CANCELLATION POLICY
Listed below are specific charges to PURCHASER which represent reasonable
non-recoverable costs actually incurred by Ericsson prior to or in connection
with the cancellation of such an order, including if applicable, labor charges
of Ericsson personnel, reasonable restocking charges, and shipping charges.
RBS EQUIPMENT (SUPPLIER - ERICSSON)
SITUATION CANCELLATION POLICY
- -------------------------------------------------------------------------------
o Order is cancelled before shipment
to requested customer site. 5 percent of order value
o Order is cancelled after shipment
to requested customer site but
before shipment is installed. 15 percent of order value
o Custom Orders (i.e., cable
construction) cancelled before
manufacturing has commenced on
that portion of the order.* 5 percent of order value
o Custom Order (i.e., cable
construction) cancelled after
manufacturing has commenced on
that portion of the order. 100 percent of order value
NOTE: On custom orders, for example, if 10 custom cables were ordered but
manufacturing has commenced on only 3 cables, a 100% charge will be levied
against 3 cables and a 5% charge will be levied against the remainder (7) of the
order.
SWITCH EQUIPMENT (SUPPLIER - ERICSSON)
Switch equipment refers to any AXE switching equipment order with the exception
of the ordering of an entire switch (i.e., Mini, 211, 212).
9
<PAGE>
SITUATION CANCELLATION POLICY
- --------------------------------------------------------------------------------
o Order is cancelled before ship-
ment to requested customer site. 5 percent of order value
o Order is cancelled after shipment
to requested customer site but
before shipment is installed. 15 percent of order value
SOFTWARE FEATURES
SITUATION CANCELLATION POLICY
- --------------------------------------------------------------------------------
o Order is cancelled before
application engineering
(i.e., station parameters or
data transcripting) has commenced. 5 percent of software order value
o Order is cancelled after application
engineering (i.e., station parameters
or data transcripting) has commenced. 10 percent of software order value
NOTE: All switch hardware associated with the software features is
subject to the cancellation charge listed for Switch Equipment.
DOMESTIC SUPPLIERS OTHER THAN ERICSSON
SITUATION CANCELLATION POLICY
- --------------------------------------------------------------------------------
o Ericsson orders materials from a
domestic supplier and the material
CAN be resold by the domestic sup-
plier to Ericsson or another vendor. 25 percent of order value
o Ericsson orders materials from a
domestic supplier and the material
CANNOT be resold by the domestic
supplier to Ericsson or another
vendor (i.e., specifically measured
coax cable for an antenna run). 100 percent of order value
Rev. 07/92
10
<PAGE>
Exhibit 10.27
================================================================================
SECURITIES PURCHASE AGREEMENT
by and among
AT&T WIRELESS PCS INC.,
TWR CELLULAR, INC.,
CASH EQUITY INVESTORS,
MERCURY PCS, LLC,
MERCURY PCS II, LLC,
MANAGEMENT STOCKHOLDERS
and
TRITEL, INC.
Dated as of May 20, 1998
<PAGE>
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of May 20, 1998, by and among
AT&T Wireless PCS Inc., a Delaware corporation ("AT&T PCS"), TWR Cellular, Inc.,
a Maryland corporation ("TWR") the investors referred to on Schedule I
(individually, an "Initial Cash Equity Investor" and, collectively, the "Initial
Cash Equity Investors"), Mercury PCS, LLC, a Mississippi limited liability
company ("Mercury I"), Mercury PCS II, LLC, a Mississippi limited liability
company ("Mercury II"), the individuals listed on Schedule II (individually, a
"Management Stockholder" and, collectively, the "Management Stockholders") and
Tritel, Inc., a Delaware corporation (the "Company"). AT&T PCS, TWR, the Cash
Equity Investors, Mercury I and Mercury II are sometimes referred to herein,
individually, as a "Purchaser" and, collectively, as the "Purchasers."
WHEREAS, AT&T PCS has been granted the PCS licenses described on
Schedule III (the "AT&T PCS Licenses") and TWR holds the PCS licenses described
on Schedule III (the "TWR Licenses");
WHEREAS, Mercury I and Mercury II have been granted the PCS licenses
described on Schedule IV (the "Mercury Licenses") and Mercury I has, pursuant to
the Central Alabama Agreement, agreed to acquire the PCS license described on
Schedule V (the "Alabama License");
WHEREAS, the Management Stockholders organized the Company by the
filing of a Certificate of Incorporation (the "Original Certificate"), and as of
the date hereof the Management Stockholders are the record and beneficial owners
of all of the issued and outstanding capital stock of the Company;
WHEREAS, the Management Stockholders have extensive experience and
expertise in the wireless telecommunications industry and have organized the
Company in order to construct and operate a mobile wireless telecommunications
system in the territory (the "Company Territory") described on Schedule VI;
WHEREAS, each of the Purchasers wishes to acquire securities of the
Company in consideration of contributions of cash and/or other property to the
capital of the Company, and the Company wishes to accept such contributions and
issue securities to each of the Purchasers, all on the terms and subject to the
conditions herein set forth; and
WHEREAS, the parties wish to amend and restate the Original
Certificate in its entirety in order to reflect, among other things, the
authorization of the securities being issued hereunder, and the parties wish to
enter into certain agreements relating to the parties' rights and obligations in
connection with the Company;
NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the parties agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
As used herein, the following terms have the following meanings (unless
indicated otherwise, all Section and Article references are to Sections and
Articles in this Agreement, and all Schedule and Exhibit references are to
Schedules and Exhibits to this Agreement):
"Additional Offering" has the meaning set forth in Section 6.13.
"Additional Purchaser" has the meaning set forth in Section 6.13.
"Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with that Person. For purposes of this
definition, "control" (including the terms "controlling" and "controlled") means
the power to direct or cause the direction of the management and policies of a
Person, directly or indirectly, whether through the ownership of securities or
partnership or other ownership interests, by contract or otherwise.
"Aggregate Commitment" means, with respect to each Cash Equity
Investor, the amount set forth opposite its name on Schedule I under the heading
"Aggregate Commitment."
"Alabama License" has the meaning set forth in the second recital.
"Alabama License Transfer" means the assignment by Central Alabama of
the Alabama License pursuant to the terms of the Central Alabama Agreement.
"Assumed Mercury Debt" has the meaning set forth in Section 2.8.
"AT&T Contributed Licenses" has the meaning set forth in Section 2.1.
"AT&T License Transfer" has the meaning set forth in Section 3.2(a).
"AT&T Party" means AT&T PCS, TWR and each Affiliate of AT&T PCS that is
a party to any of the Related Agreements.
"AT&T PCS" has the meaning set forth in the preamble.
"AT&T PCS Licenses" has the meaning set forth in the first recital.
"AT&T Retained Licenses" has the meaning set forth in Section 2.1.
"Bridge Loan Agreement" means the agreement between Mercury I and
Lucent, dated as of October 31, 1997, to provide a credit facility having
aggregate commitments of at
2
<PAGE>
least $15 million, as the same may be amended, modified or supplemented in
accordance with the terms thereof.
"Bridge Loan Documents" means the Bridge Loan 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.
"Cash Equity Borrower" means Mercury I, Mercury II and each Cash Equity
Investor that is a borrower under a Cash Equity Loan Agreement.
"Cash Equity Loan Agreements" means the agreements among each Cash
Equity Borrower, on the one hand, and the lenders referred to therein, on the
other hand, to be dated as of the Closing Date, to provide loans to Cash Equity
Borrowers in the aggregate amount of $75 million, as the same may be amended,
modified or supplemented in accordance with the terms thereof.
"Cash Equity Loan Documents" means the Cash Equity Loan Agreements 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.
"Cash Equity Investor" means an Initial Cash Equity Investor and, from
and after the date it executes a counterpart of this Agreement in accordance
with the terms of Section 6.13, any Additional Purchaser.
"Cash Equity Investor Contributions" means the Aggregate Commitments,
the Initial Capital Contributions and the Unfunded Commitments, in each case of
the Cash Equity Investors.
"Central Alabama" means Central Alabama Partnership, L.P. 132.
"Central Alabama Agreement" means the Asset Purchase Agreement, dated
as of March 4, 1998, among Mercury I, Central Alabama and the other parties
named therein.
"Central Alabama FCC Debt" has the meaning set forth in Section 2.8, as
the same is reduced in accordance with Section 6.14.
"Class C Common Stock" means the Class C Common Stock, par value $.01
per share, of the Company.
"Class D Common Stock" means the Class D Common Stock, par value $.01
per share, of the Company.
"Claim" has the meaning set forth in Section 8.6(a).
3
<PAGE>
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.1.
"Closing Price" shall mean, with respect to each share of any class or
series of capital stock for any day, (i) the last reported sale price regular
way or, in case no such sale takes place on such day, the average of the closing
bid and asked prices regular way, in either case as reported on the principal
national securities exchange on which such class or series of capital stock is
listed or admitted for trading or (ii) if such class or series of capital stock
is not listed or admitted for trading on any national securities exchange, the
last reported sale price or, in case no such sale takes place on such day, the
average of the highest reported bid and the lowest reported asked quotation for
such class or series of capital stock, in either case as reported on NASDAQ or a
similar service if NASDAQ is no longer reporting such information.
"Committed Pre-Closing Construction" means construction of facilities
in the Knoxville, Louisville and Nashville BTAs, including cell sites, radio
base stations and other equipment which, when activated and connected to a
switch, will provide PCS service that satisfies the build-out requirements for
MTAs including such BTAs set forth in 47 CFR Section 24.203.
"Common Stock" means, collectively, Voting Preference Stock, the
Tracked Common Stock, the Voting Common Stock and the Non-Voting Common Stock.
"Company" has the meaning set forth in the preamble.
"Company Territory" has the meaning set forth in the fourth recital.
"Confidential Information" means any and all information regarding the
business, finances, operations, products, services and customers of the Person
specified and its Affiliates, in written or oral form or in any other medium.
"Consents" means all consents and approvals of Governmental Authorities
or other third parties necessary to authorize, approve or permit the parties
hereto to consummate the Transactions and for the Company to operate its
business after the Closing Date as currently contemplated.
"Contributed Mercury Assets" has the meaning set forth in Section 2.3.
"Contributions" means, collectively, the AT&T Contributed Licenses, the
Alabama License, the Mercury Licenses, the Contributed Mercury Assets and the
Cash Equity Investor Contributions.
"Credit Agreement" means the agreement among the Company, the lenders
and the agents referred to therein, and any other parties who become lenders or
agents thereunder, to be dated as of the Closing Date, to provide a credit
facility having aggregate commitments of at
4
<PAGE>
least $525 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.
"Employees" has the meaning set forth in Section 6.11.
"Employment Agreements" means the Employment Agreements between each
Management Stockholder and an additional senior executive to be identified prior
to the Closing, which additional senior executive shall be reasonably
satisfactory to the Management Stockholders, AT&T and Cash Equity Investors
representing 66-2/3% of the Aggregate Commitment of all Cash Equity Investors,
on the one hand, and the Company, on the other hand, in substantially the form
of Exhibit O, each to be dated as of the Closing Date, as the same may be
amended, modified or supplemented in accordance with the terms thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Escrowed Cash" has the meaning set forth in Section 8.9.
"Escrow Holder" has the meaning set forth in Section 8.9.
"Escrowed Shares" means (i) collectively, 14,426,885 and 3,834,995
shares of Series C Preferred Stock issued to Mercury I and Mercury II,
respectively, pursuant to Section 2.5(b), and (ii) with respect to any Mercury
Investor Indemnitor, any such shares that are thereafter distributed or
transferred to such Mercury Investor Indemnitor, and in each case any securities
into which such shares are converted or exchanged.
"FCC" means the Federal Communications Commission or similar regulatory
authority established in replacement thereof.
"FCC Debt" means the indebtedness of Mercury I and Mercury II to the
United States Department of the Treasury, in the aggregate principal amount of
$73,348,800, together with accrued but unpaid interest thereon, incurred in
connection with its acquisition of Mercury Licenses, as the same is reduced in
accordance with Section 6.14.
"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.
5
<PAGE>
"Florida Licenses" means the "Mercury Licenses," as such term is
defined in the Option Agreement.
"Governmental Authority" means a Federal, state or local court,
legislature, governmental agency (including, without limitation, the United
States Department of Justice), commission or regulatory or administrative
authority or instrumentality.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning set forth in Section 8.6(a).
"Indemnifying Party" has the meaning set forth in Section 8.6(a).
"Initial Cash Contribution" means, with respect to each Cash Equity
Investor, the amount set forth opposite its name on Schedule I under the heading
"Initial Cash Contribution."
"Initial Cash Equity Investor" has the meaning set forth in the
preamble.
"Law" means applicable common law and any statute, ordinance, code or
other law, rule, permit, permit condition, regulation, order, decree, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority.
"License" means a license, permit, certificate of authority, waiver,
approval, certificate of public convenience and necessity, registration or other
authorization, consent or clearance to construct or operate a facility,
including any emissions, discharges or releases therefrom, or to transact an
activity or business, to construct a tower or to use an asset or process, in
each case issued or granted by a Governmental Authority.
"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.
"Lucent" means Lucent Technologies, Inc.
"Management Agreement" means the Management Agreement between the
Company and Tritel Management, LLC, in substantially the form of Exhibit A, to
be dated as of the Closing Date, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Management Stockholder" has the meaning set forth in the preamble.
6
<PAGE>
"Market Price" shall mean, with respect to each share of any class or
series of capital stock for any day, (i) the average of the daily Closing Prices
for the ten consecutive trading days commencing 15 days before the day in
question or (ii) if on such date the shares of such class or series of capital
stock are not listed or admitted for trading on any national securities exchange
and are not quoted on NASDAQ or any similar service, the cash amount that a
willing buyer would pay a willing seller (neither acting under compulsion) in an
arm's-length transaction without time constraints per share of such class or
series of capital stock as of such date, viewing the Company on a going concern
basis, as determined in good faith by the Board of Directors, whose
determination shall be conclusive; provided that, in determining such cash
amount, the following shall be ignored: (x) any contract or legal limitation in
respect of such shares, including transfer, voting and other rights, (y) the
"minority interest" or "control" status of such shares, and (z) any illiquidity
arising by contract in respect of such shares and any voting rights or control
rights amongst the stockholders; provided, further, that at the request of
holders of a majority of the Escrowed Shares originally issued, the
determination of Market Price as of the final Reconciliation Date for purposes
of Article VIII shall be made, at the Company's expense, by an investment
banking firm of nationally recognized standing selected by the Company.
"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.
"Mercury I" has the meaning set forth in the preamble.
"Mercury II" has the meaning set forth in the preamble.
"Mercury License Transfer" has the meaning set forth in Section 3.2(c).
"Mercury Licenses" has the meaning set forth in the second recital.
"Mercury Investors" means the Persons that beneficially own, directly
or indirectly, equity interests in Mercury I and/or Mercury II on the date
hereof and that are set forth on Schedule VIII.
"Mercury Investor Indemnitor" has the meaning set forth in Section
6.10(b).
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotations System.
"Network Membership License Agreement" means the Network Membership
License Agreement between the Company and AT&T Corp., in substantially the form
of Exhibit B, to be dated as of the Closing Date, as the same may be amended,
modified or supplemented in accordance with the terms thereof.
"New York Courts" has the meaning set forth in Section 10.6.
7
<PAGE>
"Non-Voting Common Stock" means the Company's Class B Non-Voting Common
Stock, par value $.01 per share.
"Old Common Stock" has the meaning set forth in Section 5.5(b).
"Old Mercury Expenses" means legal fees and related disbursements,
fines, settlements and judgments, in each case documented in reasonable detail,
payable by Mercury I or Mercury II in connection with the matters described on
Schedule 4.7 or 5.3(a).
"Old Mercury Note" means the promissory note, in the form set forth as
Exhibit P, evidencing the advances made by the Company to Mercury I and Mercury
II pursuant to Section 8.10.
"Old Mercury Stockholders" means, collectively, Mercury I, Mercury II
and the Mercury Investor Indemnitors, in each case in their capacity as holders
of Escrowed Shares.
"Option Agreement" means the Option Agreement, dated as of the Closing
Date, between the Company and Mercury II, pursuant to which the Company has an
option to acquire the Florida Licenses, in substantially the form of Exhibit N,
as the same may be amended, modified or supplemented in accordance with the
terms thereof.
"Original Certificate" has the meaning set forth in the fourth recital.
"Percentage Share" means, with respect to any Old Mercury Stockholder,
the percentage set forth opposite its name on Schedule VIII.
"Permitted Expenditures" means expenditures of the nature and up to the
amount set forth on Schedule 1.1.; provided, that such expenditures shall be for
general working capital or assets, properties or rights that are necessary or
advisable, in the good faith determination of the Company, in order to
facilitate the construction of PCS systems in the geographic areas within the
Company Territory.
"Permitted Liens" means (i) Liens arising in favor of sellers or
lessors for indebtedness and obligations incurred to purchase or lease fixed or
capital assets, provided that such liens secure only the indebtedness and
obligations created thereunder and are limited to the assets purchased or leased
pursuant thereto and the proceeds thereof; (ii) mechanic's and workmen's liens;
and (iii) statutory landlord liens.
"Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization, or other legal entity.
"POPs" means, with respect to any licensed area, the residents of such
area based on the most recent publication by Equifax Marketing Decision Systems,
Inc.
8
<PAGE>
"Preferred Stock" means the shares of Series A Preferred Stock, Series
C Preferred Stock, and Series D Preferred Stock being issued hereunder.
"Purchaser" has the meaning set forth in the preamble.
"Reconciliation Date" means the earliest to occur of (i) the fifth
anniversary of the Closing Date, (ii) the date of consummation of any merger,
combination or consolidation of the Company or any Subsidiary with or into any
other entity (regardless of whether the Company or such Subsidiary is the
surviving entity in any such transaction), if, after giving effect to such
transaction, Cash Equity Investors beneficially own less than 33% of the Common
Stock on a fully diluted basis, (iii) the date of consummation of any sale or
disposition of all or substantially all of the Company's assets and (iv) the
liquidation, dissolution or winding up of the Company; provided, that with
respect to any Mercury Investor Indemnitor, the Reconciliation Date means the
earlier to occur of (A) any of the foregoing or (B) any date after the second
anniversary of the Closing Date on which (x) there shall have been a settlement
or other final disposition in accordance with the applicable terms of Article
VIII of all of the matters listed on Schedule 4.7 and 5.3(a) and all other
matters in respect of which any Section 8.5 Indemnified Party has given timely
notice of a Section 8.5 Loss and (y) such Mercury Investor Indemnitor has
satisfied his or its Percentage Share of any Section 8.5 Losses in respect of
which a Section 8.5 Notice has been given in accordance with the proviso to the
last sentence of Section 8.5.
"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 Employment Agreements, Management
Agreement, Network Membership License Agreement, Option Agreement, Resale
Agreement, Roaming Agreement, Stockholders Agreement, the Old Mercury Note (and
the pledge agreement and other documents referred to therein), and the consent
of even date herewith of the members of each of Mercury I and Mercury II.
"Representatives" has the meaning set forth in Section 6.2(a).
"Resale Agreement" means the Resale Agreement between the Company and
AT&T Wireless Services, Inc., or an Affiliate thereof, in substantially the form
of Exhibit C, as the same may be amended, modified or supplemented in accordance
with the terms thereof.
"Restated Bylaws" means the Amended and Restated Bylaws of the Company,
in the form of Exhibit D, to be adopted as of the Closing Date, as the same may
be amended, modified or supplemented in accordance with the terms thereof.
"Restated Certificate" means the Amended and Restated Certificate of
Incorporation of the Company, in the form of Exhibit E, to be filed with the
office of the
9
<PAGE>
Secretary of State of the State of Delaware on the Closing Date, as the same may
be amended, modified or supplemented in accordance with the terms thereof.
"Roaming Agreement" means the Intercarrier Roamer Service Agreement
between the Company and AT&T Wireless Services, Inc., in substantially the form
of Exhibit F, to be dated as of the Closing Date, as the same may be amended,
modified or supplemented in accordance with the terms thereof.
"SBA" has the meaning set forth in Section 6.6(b).
"SBA Compliance Documents" has the meaning set forth in 7.3(c).
"SBIC" means a small business investment company licensed under the
SBIC Act.
"SBIC Act" means the Small Business Investment Company Act of 1958, as
amended.
"SBIC Holder" means each Purchaser that is an SBIC.
"SBIC Regulations" means the SBIC Act and the regulations issued
thereunder as set forth in 13 CFR 107 and 121, as amended.
"Section 8.2 Indemnified Party" has the meaning set forth in Section
8.2.
"Section 8.3 Indemnified Party" has the meaning set forth in Section
8.3.
"Section 8.4 Indemnified Party" has the meaning set forth in Section
8.4.
"Section 8.5 Indemnified Party" has the meaning set forth in Section
8.5.
"Section 8.5 Losses" has the meaning set forth in Section 8.5.
"Securities" means the shares of Preferred Stock and Common Stock being
issued hereunder, together with any shares of Preferred Stock or Common Stock
issued upon conversion of or delivered in substitution or exchange for any of
the foregoing.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" has the meaning set forth in Section 2.5.
"Series C Preferred Stock" has the meaning set forth in Section 2.5.
"Series D Preferred Stock" has the meaning set forth in Section 2.5.
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"Solvent" means, when used with respect to any Person, that at the time
of determination: (a) the fair market value of its assets is in excess of the
total amount of its liabilities (including, without limitation, contingent
liabilities), (b) the present fair saleable value of its assets is greater than
its probable liability for its existing debts as such debts become absolute and
mature, (c) it is then able and expects to be able to pay its indebtedness
(including without limitation, contingent indebtedness and other commitments) as
they mature, and (d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"Southern Farm" means Southern Farm Bureau Life Insurance Company.
"Stockholders Agreement" means the Stockholders Agreement, by and among
the Company, AT&T PCS, the Cash Equity Investors and the Management
Stockholders, as stockholders, in substantially the form of Exhibit G, to be
dated as of the Closing Date, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"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.
"Tracked Common Stock" means, collectively, the Class C Common Stock
and the Class D Common Stock.
"Transactions" means the transactions contemplated by this Agreement
and the Related Agreements.
"Transfer Taxes" has the meaning set forth in Section 3.3.
"Transferred Employees" has the meaning set forth in Section 6.11.
"TWR" has the meaning set forth in the preamble.
"TWR Licenses" has the meaning set forth in the first recital.
"Unfunded Commitment" has the meaning set forth in Section 2.2.
"Voting Common Stock" means the Class A Voting Common Stock, par value
$.01 per share, of the Company.
"Voting Preference Stock" means the Voting Preference Stock, par value
$.01 per share, of the Company.
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ARTICLE II
CONTRIBUTIONS; PURCHASE AND SALE
OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER
2.1 AT&T PCS and TWR Contributions. Upon the terms and subject to the
conditions hereof and in reliance upon the representations, warranties and
agreements herein contained: (a) AT&T PCS and TWR (as applicable) shall
partition and/or disaggregate each AT&T PCS License and TWR License to create,
as more particularly described on Schedule 2.1, (i) Licenses (the "AT&T
Contributed Licenses") providing in the aggregate the right to use 20 MHz of
authorized frequencies within the geographic area covered by the AT&T
Contributed Licenses, and (ii) Licenses (the "AT&T Retained Licenses") providing
in the aggregate the right to use the balance of the authorized frequencies
within such geographic area and the right to use the authorized frequencies
outside of such geographic area (but within the geographic area covered by the
AT&T PCS Licenses), and (b) at the Closing, AT&T PCS and TWR (as applicable)
shall contribute the AT&T Contributed Licenses to the capital of the Company (or
one or more wholly owned Subsidiaries of the Company designated by the Company).
2.2 Cash Equity Investor Contributions. (a) Upon the terms and subject
to the conditions hereof and in reliance upon the representations, warranties
and agreements herein contained: (i) effective upon the Closing, each Cash
Equity Investor hereby irrevocably commits, severally and not jointly, to
contribute to the capital of the Company an amount equal to its Aggregate
Commitment and (ii) at the Closing, each Cash Equity Investor shall contribute
to the capital of the Company an amount equal to its Initial Cash Contribution
and the Company shall accept such capital contribution. Each Cash Equity
Investor shall contribute to the capital of the Company an additional amount
equal to the excess of its Aggregate Commitment over its Initial Cash
Contribution in the amounts and on the dates specified on Schedule I (or such
earlier dates as may be established in accordance with the terms of the
Stockholders Agreement); provided that, in all events, (i) the aggregate amount
of the Initial Cash Contributions plus the additional capital contributions
actually made by Cash Equity Investors during the period commencing on the date
of formation of the Company and ending on December 31, 1998 shall be no less
than the Company's "operating losses," determined in accordance with generally
accepted accounting principles, for such period and (ii) the aggregate amount of
the Initial Cash Contributions plus the additional capital contributions
actually made by Cash Equity Investors during the period commencing on the date
of formation of the Company and ending on December 31, 1999 shall be no less
than the Company's "operating losses," determined in accordance with generally
accepted accounting principles, for such period.
The obligation of each Cash Equity Investor to make such additional
cash contributions in respect of its Aggregate Commitment in accordance with
this Section 2.2 and Section 3.10 of the Stockholders Agreement is sometimes
referred to herein as the "Unfunded Commitment." Nothing herein (including
without limitation, the proviso to Section 2.2 (a)) shall be construed to
require any Cash Equity Investor to make contributions in an aggregate amount in
excess of its Aggregate Commitment or later than the third anniversary of the
Closing Date.
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(b) Each Cash Equity Investor acknowledges and agrees that, if the
Closing occurs, its obligation to make capital contributions to the Company
after the Closing Date in respect of its Unfunded Commitment constitutes an
irrevocable and unconditional obligation, and shall not be subject to
counterclaim, set-off, deduction or defense, or to abatement, suspension,
deferment, diminution or reduction for any reason whatsoever. By way of
amplification, and not in limitation of the foregoing, each Cash Equity Investor
further acknowledges and agrees to fulfill its obligations in respect of its
Unfunded Commitment regardless of any claims it may have against any other
Person (whether or not related to the Transactions) and regardless of the
existence or non-existence of any facts or circumstances (whether or not such
facts and circumstances existed on the date hereof or the Closing Date or were
then known by it).
2.3 Mercury Contributions. Upon the terms and subject to the conditions
hereof and in reliance upon the representations, warranties and agreements
herein contained, at the Closing, each of Mercury I and Mercury II shall
contribute to the capital of the Company (or one or more wholly owned
Subsidiaries of the Company designated by the Company) the contracts and other
assets described on Schedule 2.3 (the "Contributed Mercury Assets") and the
Mercury Licenses and (if the Central Alabama Agreement shall not have been
assigned to the Company pursuant to Section 6.16) the Alabama License owned by
it.
2.4 INTENTIONALLY OMITTED.
2.5 Purchase and Sale of Securities at Closing. Upon the terms and
subject to the conditions hereof and in reliance upon the representations,
warranties and agreements herein contained, at the Closing, in consideration of
the Contributions, the Company shall issue, sell and deliver to the Purchasers
the following securities:
(a) to each of AT&T PCS and TWR, the number of shares set forth
opposite its name on Schedule VII of the following: (i) the Company's Series A
Convertible Preferred Stock, par value $.01 per share (the "Series A Preferred
Stock"), the terms of which are set forth in the Restated Certificate; and (ii)
the Company's Series D Preferred Stock, par value $.01 per share (the "Series D
Preferred Stock"), the terms of which are set forth in the Restated Certificate;
and
(b) to each Cash Equity Investor, Mercury I and Mercury II, the number
of shares set forth opposite its name on Schedule VII of the Company's Series C
Preferred Stock, par value $.01 per share (the "Series C Preferred Stock"), the
terms of which are set forth in the Restated Certificate.
Schedule VII also sets forth the shares of Common Stock, Voting Preference Stock
and Tracked Common Stock to be issued to the Management Stockholders pursuant to
Section 3.2(e).
2.6 Restrictive Legends. Each certificate representing Securities
(including Securities originally issued hereunder or delivered upon conversion
of the Preferred Stock or Common Stock, or delivered in substitution or exchange
for any of the foregoing) will bear a
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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."
2.7 Use of Proceeds. The Company shall use the net cash proceeds of its
sale of Securities hereunder solely (i) for capital and other expenditures
relating to the conduct of the Business (as defined in the Stockholders
Agreement) by the Company and its Subsidiaries, (ii) to repay the indebtedness
of each of Mercury I and Mercury II to the United States Department of the
Treasury and the other Assumed Mercury Debt, in each case pursuant to the terms
thereof, (iii) to pay fees and expenses incurred in connection with the
Transactions, and (iv) to fund borrowings under the Old Mercury Note.
2.8 Assumption of Mercury Indebtedness. Upon the terms and subject to
the conditions hereof and in reliance upon the representations, warranties and
agreements herein contained, on and as of the Closing Date, the Company shall
accept and assume the FCC Debt, the indebtedness to the United States Department
of the Treasury incurred in connection with the acquisition of the Alabama
License by Central Alabama (the "Central Alabama FCC Debt"), the indebtedness of
Mercury I and Mercury II pursuant to the Bridge Loan Documents and the other
indebtedness and liabilities described on Schedule 2.8 (collectively, the
"Assumed Mercury Debt"). The outstanding principal amount of each item of
Assumed Mercury Indebtedness, together with accrued and unpaid interest (if
any), as of March 31, 1998 is set forth on Schedule 2.8.
ARTICLE III
CLOSING
3.1 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
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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").
3.2 Closing Actions and Deliveries. Upon the terms and subject to the
satisfaction or waiver by the appropriate parties, if applicable, of the
conditions set forth in Article VII, to effect the purchase and sale of the
Securities and consummate the other Transactions, the parties shall on the
Closing Date take the following actions:
(a) AT&T PCS Contributions. Each of AT&T PCS and TWR shall execute and
deliver to the Company one or more instruments of assignment, substantially in
the form of Exhibit M, sufficient to assign the AT&T Contributed Licenses to the
Company (or one or more wholly owned Subsidiaries of the Company designated by
the Company) (such assignments being herein collectively referred to as the
"AT&T License Transfer").
(b) Cash Equity Investor Contributions. 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 Initial Cash Contribution, as set forth on Schedule I.
(c) Mercury Contributions. Mercury I and Mercury II shall execute and
deliver to the Company (or the applicable Subsidiary), (i) one or more
instruments of assignment, substantially in the form of Exhibit M, sufficient to
assign the Mercury Licenses and (if the Central Alabama Agreement shall not have
been assigned to the Company pursuant to Section 6.16) the Alabama License to
the Company (or one or more wholly owned Subsidiaries of the Company designated
by the Company) (such assignments being herein collectively referred to as the
"Mercury License Transfer"), and (ii) an Assignment and Bill of Sale, in form
reasonably acceptable to the Company, and such other good and sufficient
instruments of conveyance, transfer and assignment as shall be necessary or
appropriate to transfer to and vest in the Company (or the applicable
Subsidiary) the Contributed Mercury Assets with warranties of title consistent
with this Agreement.
(d) Assumption and Reimbursement of Indebtedness. The Company shall (i)
execute and deliver to each of Mercury I and Mercury II an instrument of
assumption, in form and substance reasonably satisfactory to Mercury I and
Mercury II, in respect of the indebtedness to be assumed by the Company pursuant
to Section 2.8 and (ii) pay to each of Mercury I and Mercury II an amount equal
to interest actually paid by such Person on such indebtedness through the
Closing Date as evidenced by documentation reasonably satisfactory to the
Company.
(e) Management Stockholder Equity. At or prior to the Closing, each
Management Stockholder shall exchange all of his or her Old Common Stock (which
shall be surrendered to the Company for cancellation) for the shares of Voting
Preference Stock, Voting Common Stock and Class C Common Stock set forth on
Schedule VII, and a senior executive to
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be identified prior to Closing shall subscribe for the shares of Voting Common
Stock set forth on Schedule VII.
(f) Delivery of Securities. The Company shall deliver: (i) to each of
AT&T PCS and TWR, certificates, duly executed by authorized signatories of the
Company, representing the shares of Series A Preferred Stock and Series D
Preferred Stock to be issued to AT&T PCS and TWR in accordance with Section 2.5;
(ii) to each Cash Equity Investor, and to each of Mercury I and Mercury II,
certificates, duly executed by authorized signatories of the Company,
representing the shares of Series C Preferred Stock to be issued to each of them
in accordance with the terms of Section 2.5; and (iii) to each Management
Stockholder, certificates, duly executed by authorized signatories of the
Company, representing the shares of Common Stock to be issued to each of them in
accordance with the terms of Section 3.2(e).
(g) Restated Certificate. Duly authorized officers of the Company shall
execute the Restated Certificate and cause it to be filed with the office of the
Secretary of State of the State of Delaware.
(h) Other Deliveries. The parties shall execute and deliver or cause to
be executed and delivered all other documents, instruments, opinions and
certificates contemplated by this Agreement or the Related Agreements to be
delivered at the Closing or necessary and appropriate in order to consummate the
Transactions contemplated to be consummated on the Closing Date.
3.3 Payment of Transfer Taxes. The Company shall pay or cause to be
paid at the Closing or, if due thereafter, promptly when due, all gross receipts
taxes, gains taxes (including, without limitation, real property gains tax or
other similar taxes), transfer taxes, sales taxes, stamp taxes, and any other
taxes, but excluding any Federal, State or local income taxes (collectively,
"Transfer Taxes"), payable in connection with the transfer of the Contributions.
ARTICLE IV
REPRESENTATIONS OF ALL PARTIES
Each of AT&T PCS and TWR (as to itself and each other AT&T Party), each
other Purchaser (as to itself), each of Mercury I and Mercury II (severally as
to itself), each Management Stockholder (severally as to himself, and jointly
and severally as to the Company, Mercury I and Mercury II, except that the
representations and warranties as to the Company set forth in (x) Section 4.5
are not being made by the Management Stockholders and (y) Sections 4.6 and 4.8
are being made by the Management Stockholders only as of the date hereof and not
as of the Closing Date), and the Company (as to itself and each of its
Subsidiaries), represents and warrants to each of the other parties that:
4.1 Organization and Standing. It is a corporation, limited liability
company, 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
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own, lease and operate its properties and to carry on its business as now being
conducted. 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 this Agreement and the Related Agreements. TWR is an
indirect wholly owned Subsidiary of AT&T Corp.
4.2 Power and Authority. It has the requisite power and authority (or,
in the case of the Management Stockholders, legal capacity) to execute, deliver
and perform this Agreement, each of the Related Agreements to which it is a
party and each other instrument, document, certificate and agreement required or
contemplated to be executed, delivered and performed by it hereunder and
thereunder to which it is or will be a party.
4.3 Due Authorization. The execution and delivery of this Agreement by
it and the consummation of the Transactions by it, including without limitation
the execution and delivery of the Related Agreements to which it is a party,
have been duly and validly authorized by its Board of Directors (or equivalent
body) and no other proceedings on its part which have not been taken (including,
without limitation, approval of its stockholders, partners or members) are
necessary to authorize this Agreement or to consummate the Transactions.
4.4 Enforceability. This Agreement has been duly executed and delivered
by it and constitutes its valid and binding obligation, and each of the Related
Agreements to which it is a party shall be duly executed and delivered by it at
(or prior to) the Closing and, upon such execution and delivery, shall
constitute its valid and binding obligation, in each case 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.
4.5 No Breach. As of the Closing, after giving effect to the
Transactions, it is not in breach of any obligation under this Agreement or any
of the Related Agreements.
4.6 Consents; No Conflicts. Neither the execution, delivery and
performance by it of this Agreement or the Related Agreements to which it is a
party nor the consummation of the Transactions will (a) conflict with, or result
in a breach or violation of, any provision of its organizational documents; (b)
subject to obtaining the Consents set forth on Schedule 4.6, 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 4.6) or the approval
of its board of directors, general partner, stockholders or similar constituent
bodies, as the case may be (other than any such approvals that have been
obtained), except in each case, where such breach, violation, default, Lien,
right, or the failure to obtain or give such
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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, except as set forth on Schedule 4.6, there
is no fact relating to it or its Affiliates that would be reasonably expected to
prevent it from consummating the Transactions or performing its obligations
under the Related Agreements or disqualify the Company from obtaining the
Consents (including without limitation, FCC Consent) required in order to
consummate the AT&T License Transfer and the Mercury License Transfer as
provided for in this Agreement.
4.7 Litigation. Except as set forth on Schedule 4.7, there is no action
(including court 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, which seeks
to prevent or challenge the Transactions, or which seeks to have an adverse
effect on the Company or its wholly owned Subsidiaries.
4.8 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 the
interest in the Company contemplated by this Agreement and the Related
Agreements will not cause the Company or its wholly owned Subsidiaries to be
ineligible under FCC rules to hold PCS licenses in general or the licenses to be
held by the Company's wholly owned Subsidiaries.
4.9 Brokers. Except for fees in the aggregate amount of $6,502,500 (as
such amount may be increased up to $375,000 in connection with an Additional
Offering) payable by the Company to the Persons set forth on Schedule 4.9, all
of which will be paid by the Company concurrently with the Closing, 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.
ARTICLE V
REPRESENTATIONS OF CERTAIN PARTIES
5.1 No Distribution, Etc. Each of the Purchasers and the Management
Stockholders represents and warrants as to itself that:
(a) 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).
(b) Investor Acknowledgments. (i) It is an "accredited investor" as
defined in Regulation D of the Securities Act. Its representatives have been
provided an opportunity to ask questions of, and have received answers thereto
from, the Company and its representatives
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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.
(ii) It has such knowledge and experience in financial and business
affairs that it is capable of evaluating the merits and risks of purchasing the
Securities it is purchasing hereunder.
(iii) It is not relying on and acknowledges that no representation is
being made by any other Purchaser, the Company or any of its officers,
employees, Affiliates, agents or representatives, or any Management Stockholder,
except for representations and warranties expressly set forth in this Agreement
and the Related Agreements, and, in particular, it is not relying on, and
acknowledges that no representation is being made in respect of, (x) any
projections, estimates or budgets delivered to or made available to them of
future revenues, expenses or expenditures, or future results of operations and
(y) any other information or documents delivered or made available to it or its
representatives, except for representations and warranties expressly set forth
in this Agreement and the Related Agreements.
(iv) In deciding to invest in the Company, it has relied exclusively on
the representations and warranties expressly set forth in this Agreement and the
Related Agreements and the investigations made by itself and its representatives
and its and such representatives' knowledge of the industry in which the Company
proposes to operate. Based solely on such representations and warranties and
such investigations and knowledge, it has determined that the Securities it is
acquiring are a suitable investment for it.
5.2 AT&T PCS and TWR Licenses. (a) AT&T PCS represents and warrants
that it is the authorized legal holder, free and clear of any Liens, of the AT&T
PCS Licenses, evidence of which is attached to Schedule III. The AT&T PCS
Licenses are, and on the Closing Date each of the AT&T PCS Licenses will be,
valid and in full force and effect. Except for proceedings affecting the PCS or
wireless communications services industry generally, including investigations by
governmental agencies of bidding practices of bidders in the FCC auctions of PCS
spectrum, there is not pending, nor to the knowledge of AT&T PCS, threatened
against AT&T PCS or against the AT&T PCS Licenses, any application, action
(including court action), petition, objection or other pleading, or any
proceeding with the FCC which questions or contests the validity of, or seeks
the revocation, non-renewal or suspension of, any of the AT&T PCS Licenses,
which seeks the imposition of any modification or amendment with respect
thereto, or which adversely affects the ability of the Company to employ the
AT&T Contributed Licenses in its business after the Closing Date. The AT&T PCS
Licenses are not subject to any conditions other than those appearing on the
face of the Licenses themselves and those imposed by FCC Law.
(b) TWR represents and warrants that it is the authorized legal holder,
free and clear of any Liens, of the TWR Licenses, evidence of which is attached
to Schedule III. The TWR Licenses are, and on the Closing Date each of the TWR
Licenses will be, valid and in full force and effect. Except for proceedings
affecting the PCS or wireless communications services
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industry generally, including investigations by governmental agencies of bidding
practices of bidders in the FCC auctions of PCS spectrum, there is not pending,
nor to the knowledge of TWR, threatened against TWR or against the TWR Licenses,
any application, action (including court action), petition, objection or other
pleading, or any proceeding with the FCC which questions or contests the
validity of, or seeks the revocation, non-renewal or suspension of, any of the
TWR Licenses, which seeks the imposition of any modification or amendment with
respect thereto, or which adversely affects the ability of the Company to employ
the AT&T Contributed Licenses in its business after the Closing Date. The TWR
Licenses are not subject to any conditions other than those appearing on the
face of the Licenses themselves and those imposed by FCC Law.
5.3 Mercury Matters. Mercury I, Mercury II and the Management
Stockholders represent and warrant, jointly and severally, that:
(a) Mercury Licenses. Each of Mercury I and Mercury II is the
authorized legal holder, free and clear of any Liens (other than Liens securing
the FCC Debt or Liens in favor of Southern Farm and Lucent that will be released
at or prior to Closing), of the Mercury Licenses set forth opposite its name on
Schedule V, true and correct copies of which are attached thereto. The Mercury
Licenses are, and on the Closing Date each of the Mercury Licenses will be,
valid and in full force and effect. Except as set forth on Schedule 5.3(a) and
for proceedings affecting the PCS or wireless communications services industry
generally, including investigations by governmental agencies of bidding
practices of bidders in the FCC auctions of PCS spectrum, there is not pending,
nor to its the knowledge, threatened against Mercury I, Mercury II or the
Mercury Licenses, any application, action (including court action), petition,
objection or other pleading, or any proceeding with the FCC which questions or
contests the validity of, or seeks the revocation, non-renewal or suspension of,
any of the Mercury Licenses, which seeks the imposition of any modification or
amendment with respect thereto, or which adversely affects the ability of the
Company to employ the Mercury Licenses in its business after the Closing Date or
seeks the payment of a fine, sanction, penalty, damages or contribution in
connection with the use of any Mercury License. The Mercury Licenses are not
subject to any conditions other than those appearing on the face of the Licenses
themselves and those imposed by FCC Law.
(b) Mercury Entities. Each item of Assumed Mercury Debt being assumed
by the Company is a bona fide obligation of Mercury I or Mercury II and the
amount set forth opposite each item on Schedule 2.8 is the outstanding amount of
principal and accrued and unpaid interest thereon as of March 31, 1998. Each of
Mercury I and Mercury II is Solvent after giving effect to the consummation of
the Transactions, including the Mercury License Transfer.
(c) Sources and Uses of Cash. The cash flow statements of each of
Mercury I and Mercury II set forth on Schedule 5.3(c) accurately reflect the
sources and uses of cash relating to the Mercury Licenses and the Contributed
Mercury Assets. At least $14 million of cash equity contributions to Mercury I
and/or Mercury II and the proceeds of all Assumed Mercury Debt has been applied
to Permitted Expenditures.
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(d) Title and Transferability. Mercury I or Mercury II, as applicable,
has, and upon the delivery of the transfer documents pursuant to Section
3.2(c)(ii), the Company (or the applicable Subsidiary) will have, good and
marketable title to, each of the Contributed Mercury Assets free and clear of
any Liens (other than Liens in favor of Southern Farm and Lucent that will be
released at or prior to Closing). Neither the execution, delivery and
performance by Mercury I or Mercury II of this Agreement nor the contribution of
the Contributed Mercury Assets or the assumption by the Company (or the
applicable Subsidiary) of the Assumed Mercury Debt will (a) 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 any note, bond, mortgage,
indenture, lease, agreement or other instrument, in each case which is
applicable to or binding upon it or any of the Contributed Mercury Assets or
Assumed Mercury Debt; or (b) require any Consent (other than those set forth on
Schedule 4.6) or the approval of its board of directors, general partner,
stockholders or similar constituent bodies, as the case may be (other than any
such approvals that have been obtained). The members of Mercury I that have
executed and delivered the unanimous consent of members dated as of the date
hereof, authorizing the consummation of the Transactions by Mercury I, are all
of the members of Mercury I, and, except for the equity interests owned by such
members, there are not on the date hereof nor will there be on or as of the
Closing Date, before giving effect to the Transactions, any outstanding equity
interests in Mercury I, or any existing options, warrants, calls, subscriptions,
or other rights, or other agreements or commitments, obligating Mercury I to
issue, transfer or sell any equity interests of Mercury I except for the Central
Alabama Agreement. The members of Mercury II that have executed and delivered
the unanimous consent of members dated as of the date hereof, authorizing the
consummation of the Transactions by Mercury II, are all of the members of
Mercury II, and, except for (i) the equity interests owned by such members, (ii)
convertible debt held by Southern Farm, (iii) the transactions contemplated by
Section 6.10, there are not on the date hereof nor will there be on or as of the
Closing Date, before giving effect to the Transactions, any outstanding equity
interests in Mercury II, or any existing options, warrants, calls,
subscriptions, or other rights, or other agreements or commitments, obligating
Mercury II to issue, transfer or sell any equity interests of Mercury II.
(e) Litigation. Except as set forth on Schedule 4.7, there is no action
(including court 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 transfer of the Contributed Mercury Assets, which seeks to prevent or
challenge such transfer, or which seeks to have an adverse effect on the
Contributed Mercury Assets.
(f) Projections. All financial projections furnished to the Cash Equity
Investors were based upon assumptions reasonably believed by Mercury I, Mercury
II or the Management Stockholders, as applicable, to be reasonable and fair as
of the date the projections were prepared in the context of history and current
and reasonably foreseeable business conditions of the Company. There is no fact
which Mercury I, Mercury II or the Management Stockholders, as applicable, has
not disclosed to the Cash Equity Investors in writing and of which any of its
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officers, directors or executive employees is aware (other than general economic
conditions) and which has had or would reasonably be expected to have a material
adverse effect upon the existing or expected financial condition, operating
results, assets, businesses, customer or supplier relations, employee relations
or prospects of the Company.
5.4 Capital Commitment. (i) Each Cash Equity Investor represents and
warrants that it has, and will have on the Closing Date and on any subsequent
date on which it is obligated to make a capital contribution, cash available to
it in an amount sufficient to make its Cash Equity Investor Contributions in
accordance with the terms of Section 2.2.
(ii) Each Cash Equity Borrower represents and warrants as follows:
(A) It intends to borrow pursuant to a Cash Equity Loan Agreement the
amount set forth opposite its name on Schedule 5.4.
(B) Prior to the Closing, it shall have delivered to each of the other
parties a true and correct copy of the Cash Equity Loan Documents to which it is
a party, together with all amendments and modifications thereto. Such documents
(including the exhibits and schedules thereto) shall comprise a full and
complete copy of all agreements between the parties thereto with respect to the
subject matter thereof and transactions related thereto, and there shall be no
agreements or understandings, oral or written, or side agreements not contained
therein that relate to or modify the substance thereof.
(C) As of the Closing Date, the Cash Equity Loan Documents to which it
is a party shall have been duly authorized by all necessary corporate action on
the part of such Cash Equity Borrower, shall have been validly executed and
delivered by such Cash Equity Borrower and shall be the legal, valid and binding
obligation of such Cash Equity Borrower, enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and may be subject to general principles of equity.
As of the Closing Date, the Cash Equity Loan Documents to which it is a party
shall be in full force and effect as to such Cash Equity Borrower, none of the
provisions thereof shall have been waived by any party thereto, and no "Default"
or "Event of Default" (as such terms are defined in the Cash Equity Loan
Agreements) shall have occurred and be continuing as to such Cash Equity
Borrower.
1.5 Representations as to the Company. The Company and (except for the
representations and warranties set forth in paragraphs (b)(ii), (c), (f)(ii)(B)
and (h) below) the Management Stockholders represent and warrant, jointly and
severally, and each Management Stockholder represents and warrants as to
himself, severally and not jointly, that:
(a) Newly Formed Company. The Company was organized on April 23, 1998,
and, since its organization has at no time carried on any activities or incurred
any liabilities or obligations other than in connection with its organization
and with the consummation of the Transactions.
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(b) Capitalization. (i) As of the date hereof and as of the Closing
Date, before giving effect to the filing of the Restated Certificate, the
authorized capital stock of the Company consists of 30 shares of common stock,
par value $.01 per share ("Old Common Stock"), of which 30 shares are issued and
outstanding, have been validly issued and are fully paid and non-assessable. As
of the date hereof and as of the Closing Date, before giving effect to the
Transactions, each of the Management Stockholders owns beneficially and of
record ten shares of Old Common Stock, free and clear of any Liens. There are
not on the date hereof nor will there be on or as of the Closing Date, before
giving effect to the Transactions, any existing options, warrants, calls,
subscriptions, or other rights, or other agreements or commitments, obligating
the Company to issue, transfer or sell any shares of capital stock of the
Company.
(ii) As of the Closing Date, after giving effect to the filing of the
Restated Certificate, the authorized capital stock of the Company will consist
of 775,000 shares of Voting Common Stock, 775,000 shares of Non-Voting Common
Stock, nine shares of Voting Preference Stock, 10,000 shares of Class C Common
Stock, 30,000 shares of Class D Common Stock, 200,000 shares of Series A
Preferred Stock, 275,000 shares of Series B Preferred Stock, 470,000 shares of
Series C Preferred Stock, and 80,000 shares of Series D Preferred Stock. As of
the Closing Date, after giving effect to the Transactions, there will be issued
and outstanding the shares of Preferred Stock and Common Stock set forth on
Schedule VII. The record and beneficial owners of such outstanding shares of
Common Stock and Preferred Stock, as of the Closing Date, after giving effect to
the Transactions, are set forth on Schedule VII. On the Closing Date, after
giving effect to the Transactions, there will not be any existing options,
warrants, calls, subscriptions, or other rights, or other agreements or
commitments, obligating the Company to issue, transfer or sell any shares of
capital stock of the Company, except pursuant to the conversion rights of the
outstanding Preferred Stock and Common Stock and the restricted stock plan
referred to in Section 6.10.
(c) Securities. The shares of Preferred Stock and Common Stock being
issued to the Purchasers hereunder, when issued and paid for pursuant to the
terms of this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will be free of any Liens caused or created by the Company,
except as set forth in the Stockholders Agreement and the Restated Certificate.
The shares of Common Stock or Preferred Stock, as the case may be, issued upon
conversion of the Preferred Stock and the Common Stock (other than the Voting
Preference Stock), when issued pursuant to the terms thereof, will be validly
issued, fully paid and nonassessable, and will be free of any Liens caused or
created by the Company, except as set forth in the Stockholders Agreement and
the Restated Certificate.
(d) No Undisclosed Liabilities; Subsidiaries. As of the date hereof and
as of the Closing Date, before giving effect to the Transactions, the Company
has no indebtedness or liability of any nature whatsoever, absolute or
contingent, liquidated or unliquidated, except indebtedness incurred on or after
the date hereof under the Bridge Loan Agreement and liabilities incurred by the
Company in the ordinary course of business in connection with Permitted
Expenditures. The Company owns all of the outstanding shares of capital stock of
each of its Subsidiaries, free and clear of any Liens, except Liens securing the
FCC Debt and Liens granted
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to the lenders pursuant to the Credit Documents and the Bridge Loan Documents.
Prior to the Closing Date, the Company shall furnish to each of the Purchasers a
complete list of its direct and indirect Subsidiaries indicating the
jurisdictions in which each such Subsidiary is organized or qualified to conduct
business.
(e) Offering of Securities; Subsequent Offering. (i) None of the
Company, any Management Stockholder or any Person acting on its behalf has
offered the Securities or any similar equity securities of the Company for sale
to, or solicited any offers to buy Securities or any similar equity securities
of the Company from, any Person, other than the Purchasers and a limited number
of other "accredited investors" (as defined in Rule 501(a) under the Securities
Act).
(ii) None of the Company, any Management Stockholder or any Person
acting on its behalf will, directly or indirectly, take any action which might
subject the offering, issuance or sale of the Securities to the registration and
prospectus delivery requirements of Section 5 of the Securities Act.
(iii) Assuming the accuracy of the representations and warranties of
the Purchasers contained in Sections 5.1(a) and (b), each of the offering and
sale of Securities under this Agreement to AT&T PCS, TWR, Mercury I, Mercury II
and the Initial Cash Equity Investors and the offering and sale of Securities to
the Additional Purchasers pursuant to the Additional Offering complies or will
comply with all applicable requirements of Federal and state securities laws.
The Additional Offering and the issuance and sale of shares of Series C
Preferred Stock pursuant thereto are transactions exempt from the registration
requirements of Section 5 of the Securities Act.
(iv) The offering documents, certificates, statements and other
materials furnished to any Additional Purchaser by or on behalf of the Company
will not contain any untrue statement of a material fact or omit a material fact
necessary in order to make the statements contained therein, in light of the
circumstance under which they were made, not misleading.
(f) Credit and Bridge Loan Documents; Cash Equity Loan Commitment. (i)
(A) Prior to the date hereof, the Company has delivered to each of the
Purchasers a true and correct copy of a commitment letter, dated May 20, 1998,
from TD Securities (USA) Inc., relating to a proposed $525 million senior
secured credit facility. Such commitment letter has been executed and delivered
by the financial institutions referred to above and the Company, is in full
force and effect and, as of the date hereof, such commitment letter has not been
modified or withdrawn. Prior to the date hereof, the Company has delivered to
each of the Purchasers a true and correct copy of the Bridge Loan Documents
together with all amendments and modifications thereto. Such documents
(including the exhibits and schedules thereto) shall comprise a full and
complete copy of all agreements between the parties thereto with respect to the
subject matter thereof and transactions related thereto, and there shall be no
agreements or understandings, oral or written, or side agreements not contained
therein that relate to or modify the substance thereof.
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(B) As of the date hereof, the Bridge Loan Documents have been duly
authorized by all necessary corporate action on the part of the Company, have
been validly executed and delivered by the Company and are the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and may be subject to general principles of equity.
As of the Closing Date, the Bridge Loan Documents are in full force and effect,
none of the provisions thereof have been waived by any party thereto, and no
"Default" or "Event of Default" (as such terms are defined in the Bridge Loan
Agreement) shall have occurred and be continuing.
(ii) (A) Prior to the Closing, the Company shall have delivered to each
of the Purchasers a true and correct copy of each of the Credit Documents,
together with all amendments and modifications thereto. Such documents
(including the exhibits and schedules thereto) shall comprise a full and
complete copy of all agreements between the parties thereto with respect to the
subject matter thereof and transactions related thereto, and there shall be no
agreements or understandings, oral or written, or side agreements not contained
therein that relate to or modify the substance thereof.
(B) As of the Closing Date, the Credit Documents shall have been duly
authorized by all necessary corporate action on the part of the Company, shall
have been validly executed and delivered by the Company and shall be the legal,
valid and binding obligation of the Company, enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and may be subject to general principles of equity.
As of the Closing Date, the Credit Documents shall be in full force and effect,
none of the provisions thereof shall have been waived by any party thereto, and
no "Default" or "Event of Default" (as such terms are defined in the Credit
Agreement) shall have occurred and be continuing.
(iii) Prior to the date hereof, it has delivered to each of the other
parties a true and correct copy of a commitment letter, dated May 1, 1998, from
the lender(s) referred to therein, relating to a proposed $75 million loan to
the Cash Equity Borrowers. Such commitment letter has been executed and
delivered by such lender(s) and the Company, is in full force and effect and, as
of the date hereof, has not been modified or withdrawn.
(g) Minimum Build-Out Plan. The Company's Minimum Build-Out Plan in
respect of the construction of a PCS system in the Company Territory is attached
as Schedule 5.5(g). Completion of the Minimum Build-Out Plan in accordance with
such Schedule will meet all applicable FCC requirements in respect of system
build-out, including those set forth in 47 CFR ss. 24.203.
(h) Small Business Matters. The Company, together with its "affiliates"
(as that term is defined in Title 13, Code of Federal Regulations, Section
121.103), is a "Small Business" and a "Smaller Business", in each case within
the meaning of the SBIC Act and the regulations
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thereunder, including Title 13, Code of Federal Regulations, Sections 107.50,
107.700, 107.710 and 121.301(c). The information regarding the Company and its
Affiliates set forth in the Small Business Administration Form 480, Form 652 and
Parts A and B of Form 1031 delivered at the Closing is accurate and complete.
Copies of such forms shall have been completed and executed by the Company and
delivered to each Purchaser which is an SBIC at the Closing together with a
written statement of the Company regarding its planned use of the proceeds from
the sale of the Securities. Neither the Company nor any Subsidiary: (i)
presently engages in, and none of them shall hereafter engage in, any
activities, or (ii) shall use directly or indirectly the proceeds from the sale
of the Securities for any purpose, which, in either case, a SBIC is prohibited
from engaging in or providing funds for by the SBIC Act and the regulations
thereunder (including Title 13, Code of Federal Regulations, Section 107.720).
(i) Litigation. There is no judgment, decree, injunction, rule or order
outstanding against the Company or any of its Subsidiaries which would limit in
any material respect the ability of the Company or any of its Subsidiaries to
operate their respective business in the manner currently contemplated.
(j) FCC Compliance. The Management Stockholders, in aggregate, satisfy
the financial requirements established by the FCC in 47 CFR ss. 24.720(b)(2) for
a "very small business."
ARTICLE VI
COVENANTS
6.1 Consummation of Transactions. Each party shall use all commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable and consistent with
applicable law to carry out all of their respective obligations under this
Agreement and the Related Agreements and to consummate the Transactions, which
efforts shall include, without limitation, the following:
(a) The parties shall use all commercially reasonable efforts to cause
the Closing to occur and the Transactions to be consummated in accordance with
the terms hereof, and, without limiting the generality of the foregoing, to
obtain all necessary Consents including, without limitation, the approval of
this Agreement and the Transactions by all Governmental Authorities and
agencies, including the FCC and any Consents necessary or advisable in the
reasonable judgment of AT&T PCS in connection with franchise laws applicable to
the execution, delivery and performance of this Agreement and the Related
Agreements or the consummation of the Transactions, and to make all filings with
and to give all notices to third parties which may be necessary or reasonably
required in order for the parties to consummate the Transactions.
(b) 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
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by AT&T PCS, TWR or the Company or any other party in connection with the
Transactions or otherwise to determine compliance with applicable FCC Rules.
(c) Upon the request of any other party, each party shall forthwith
execute and deliver, or cause to be executed and delivered, such further
instruments of assignment, transfer, conveyance, endorsement, direction or
authorization and other documents as may reasonably be requested by such party
in order to effectuate the purposes of this Agreement and the Related
Agreements.
(d) Each party shall use all commercially reasonable efforts to modify
the structure of the Transactions in such a manner that no franchise laws shall
be applicable to the relationship between AT&T PCS or TWR (or their respective
Affiliates) and the Company; provided that, no party shall be obligated to agree
to any modification that adversely affects such party. The Company acknowledges
that (i) the Company and AT&T PCS, TWR and their respective Affiliates do not
intend to create a franchise or business opportunity relationship; (ii) the
wireless telephones ("Telephones") if any, purchased by the Company from AT&T
PCS and its Affiliates and minutes for mobile wireless radiotelephonic service
("Minutes") purchased by the Company under the terms of the Roaming Agreement
are being sold at bona fide wholesale prices; (iii) the Company is not required
by this Agreement or the Related Agreements or as a matter of practical
necessity to purchase more than a reasonable quantity of Telephones or Minutes;
and (iv) none of AT&T PCS, TWR or any of their respective Affiliates has made
any representation to the Company that (A) the Company or its equity holders
will earn, or are likely to earn, a gross or net profit, (B) AT&T PCS, TWR or
any of their respective Affiliates has knowledge of the market that the Company
will operate in or that the market demand will enable the Company to earn a
profit, (C) there is a guaranteed market for the Company, or (D) AT&T PCS, TWR
or any of their respective Affiliates will provide the Company with locations or
assist the Company in finding locations for use or operation of its business.
The Company has been informed at least seven days prior to the execution of this
Agreement that AT&T PCS's and TWR's principal business address is, and AT&T
PCS's and TWR's agent for service of process is, c/o AT&T Corp., 32 Avenue of
the Americas, New York, New York 10013.
Nothing in this Agreement shall be construed to require the parties to
consummate the Closing if any regulatory approval would require that it (i)
divest or hold separate any of its assets existing as of the date hereof other
than as contemplated by this Agreement and the Related Agreements or (ii)
otherwise take or commit to take any action that limits its freedom of action in
any material respect with respect to any of its businesses, product lines or
assets.
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6.2 Confidentiality.
(a) Each party shall, and shall cause each of its Affiliates, and its
and their respective shareholders, members, managers, directors, officers,
employees and agents (collectively, "Representatives") to, keep secret and
retain in strictest confidence any and all Confidential Information relating to
any other party that it receives in connection with the negotiation or
performance of this Agreement, and shall not disclose such Confidential
Information, and shall cause its Representatives not to disclose such
Confidential Information, to anyone except the receiving party's Affiliates and
Representatives and any other Person that agrees in writing to keep in
confidence all Confidential Information in accordance with the terms of this
Section 6.2. Until the Closing, each party agrees to use Confidential
Information received from another party only (i) to evaluate its interest in
pursuing the Transactions and (ii) to pursue such Transactions, but not for any
other purpose. All Confidential Information furnished pursuant to this Agreement
shall be returned promptly to the party to whom it belongs upon request by such
party. Upon the Closing, the provisions of this Section 6.2 shall terminate and
the obligations of the parties in respect of Confidential Information shall be
governed by Section 7.12 of the Stockholders Agreement.
(b) The obligations set forth in Section 6.2(a) shall be inoperative
with respect to Confidential Information that (i) is or becomes generally
available to the public other than as a result of disclosure by the receiving
party or its Representatives, (ii) was available to the receiving party on a
non-confidential basis prior to its disclosure to the receiving party, or (iii)
becomes available to the receiving party on a non-confidential basis from a
source other than the providing party or its agents, provided that such source
is not known by the receiving party to be bound by a confidentiality agreement
with the providing party or the providing party's agents.
(c) To the fullest extent permitted by law, if a party or any of its
Affiliates or Representatives breaches, or threatens to commit a breach of, this
Section 6.2, the party whose Confidential Information shall be disclosed, or
threatened to be disclosed, shall have the right and remedy to have this Section
6.2 specifically enforced by any court having jurisdiction, it being
acknowledged and agreed that money damages will not provide an adequate remedy
to such party. Nothing in this Section 6.2 shall be construed to limit the right
of any party to collect money damages in the event of breach of this Section
6.2.
(d) Anything else in this Agreement or the Related Agreements
notwithstanding, each party shall have the right to disclose any information,
including Confidential Information of the other party or such other party's
Affiliates, in any filing with any regulatory agency, court or other authority
or any disclosure to a trustee of public debt of a party to the extent that the
disclosing party determines in good faith that it is required by Law, regulation
or the terms of such debt to do so, provided that any such disclosure shall be
as limited in scope as possible and shall be made only after giving the other
party as much notice as practicable of such required disclosure and an
opportunity to contest such disclosure if possible.
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6.3 Retained Licenses. AT&T PCS, TWR and their respective Affiliates
may use the AT&T Retained Licenses, and may market and sell to their customers
or others any services that use such Licenses permitted under applicable Laws,
in each case as it may determine, and may otherwise deal with and permit others
to deal with the AT&T Retained Licenses, except from and after the Closing Date
to the extent otherwise expressly agreed by any AT&T Party in any of the Related
Agreements.
6.4 No Further Commitment. The Cash Equity Investors and the Management
Stockholders have arranged for the Company to obtain financing under this
Agreement and will use all reasonable efforts to arrange for financing under the
Credit Agreement. It is anticipated that the Company, in consultation and
cooperation with the Cash Equity Investors, will have responsibility for
arranging for all of the additional debt and equity financing required by the
Company. Further, the Management Stockholders, in their capacity as officers and
employees of the Company, shall be responsible for conducting the day-to-day
operations of the Company, all under the control and supervision of the
Company's Board of Directors. In connection with the execution and delivery of
this Agreement, each of the Purchasers is agreeing to acquire Securities of the
Company and each of the Purchasers and certain of their respective Affiliates
are agreeing to enter into the Related Agreements to which each of them is a
party. The parties acknowledge and agree that, except to the extent expressly
set forth in this Agreement and such Related Agreements, none of AT&T PCS, TWR
or any of their respective Affiliates has any legal, contractual or other
obligation to acquire debt or equity securities of the Company, provide or
arrange for debt or equity financing required by the Company, provide services
to or otherwise assist the Company in connection with the conduct of its
business or in any other manner, refrain from exercising its rights under this
Agreement and the Related Agreements (including, without limitation, the right
to terminate the Network Membership License Agreement in accordance with its
terms) or refrain from competing, directly or indirectly, with businesses
conducted by the Company. Nothing herein shall be construed to relieve any
Person of its express contractual obligations under this Agreement and the
Related Agreements or from any common law obligation of good faith relating to
its performance of such contractual obligations.
6.5 Use of Proceeds. The Company shall use the proceeds of the sale of
Securities only for the purposes described in Section 2.7 and in the written
statement referred to in Section 5.5(g).
6.6 SBIC Regulatory Provisions. (a) The Company shall notify each SBIC
Holder as soon as practicable (and, in any event, not later than 15 days) prior
to taking any action after which the number of record holders of the Company's
voting stock 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.
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(b) Within 75 days after the Closing, the Company shall deliver to each
SBIC Holder a written statement certified by the Company's president or chief
financial officer describing in reasonable detail the use of the proceeds of the
sale of Securities hereunder by the Company and its Subsidiaries. In addition to
any other rights granted hereunder, the Company shall grant each SBIC Holder and
the United States Small Business Administration (the "SBA") access to the
Company's records for the purpose of verifying the use of such proceeds to the
extent required pursuant to SBIC Regulations.
(c) Promptly after the end of each fiscal year (but in any event prior
to February 28 of each year), the Company shall deliver to each SBIC Holder a
written assessment of the economic impact of each SBIC Holder's investment in
the Company, specifying the full-time equivalent jobs created or retained in
connection with the investment, the impact of the investment on the revenues and
profits of the business and on taxes paid by the business and its employees.
(d) During the one-year period commencing on the Closing Date, the
Company shall not engage in any activity which constitutes an ineligible
business activity (within the meaning of the SBIC Regulations as in effect on
the date hereof).
6.7 Regulatory Compliance Cooperation. In the event that any SBIC
Holder reasonably determines that it has a Regulatory Problem, to the extent
reasonably necessary, such SBIC Holder shall have the right to transfer its
Securities (and any shares of Common Stock issued upon conversion thereof) to
another Person without regard to any restrictions on transfer set forth in this
Agreement or in Section 4.1(c) of the Stockholders Agreement and without
complying with the provisions of Section 4.3 of the Stockholders Agreement, but
subject to the other provisions of the Stockholders Agreement and federal and
state securities law restrictions, and the Company shall take all such actions
as are reasonably requested by such SBIC Holder in order to (i) effectuate and
facilitate such transfer by such SBIC Holder of any Securities of the Company
then held by such SBIC Holder to such Person, (ii) permit such SBIC Holder (or
any of its Affiliates) to exchange all or any portion of voting Securities then
held by it on a share-for-share basis for shares of a class of non-voting
Securities of the Company, which non-voting Securities shall be identical in all
respects to such voting Securities, except that such non-voting Securities (or
Common Stock, as applicable) shall be non-voting and shall be convertible into
voting Securities (or Common Stock, as applicable) on such terms as are
requested by such SBIC Holder in light of regulatory considerations then
prevailing, (iii) continue and preserve the respective allocation of the voting
interests with 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.
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6.8 Certain Covenants. From and after the execution and delivery of
this Agreement to and including the Closing Date, each of AT&T PCS and TWR (as
to themselves and the AT&T Contributed Licenses), and Mercury I and Mercury II
(as to themselves, and the Mercury Licenses and Florida Licenses owned by them
and the Central Alabama Agreement) and each Management Stockholder (as to
himself, Mercury I and Mercury II and the Mercury Licenses and Florida Licenses
and the Central Alabama Agreement) shall:
(a) Comply in all material respects with all applicable Laws, including
all such Laws relating to the AT&T Contributed Licenses and the Mercury Licenses
and Florida Licenses, as the case may be, or their use;
(b) Use commercially reasonable efforts to maintain the AT&T
Contributed Licenses and the Mercury Licenses and Florida Licenses, as the case
may be, in full force and effect;
(c) Not (i) sell, transfer, assign or dispose of, or offer to, or enter
into any agreement, arrangement or understanding to, sell, transfer, assign or
dispose of any of the AT&T Contributed Licenses or the Mercury Licenses and
Florida Licenses, as the case may be, or any interest therein, or negotiate
therefor, or (ii) create, incur or suffer to exist any Lien (except for Liens
securing the FCC Debt, Liens in favor of Southern Farm and Lucent that will be
released at or prior to Closing and Liens securing debt incurred pursuant to the
Bridge Loan Agreement) of any nature whatsoever relating to any of the AT&T
Contributed Licenses or the Mercury Licenses or Florida Licenses, as the case
may be, or any interest therein. Without limiting the foregoing, none of AT&T
PCS, TWR, Mercury I, Mercury II or the Management Stockholders shall, and the
Management Stockholders shall cause Mercury I and Mercury II not to, incur any
material obligation or liability, absolute or contingent, relating to or
affecting the AT&T Contributed Licenses or the Mercury Licenses or Florida
Licenses, as the case may be, or their use;
(d) Give written notice to the other parties promptly upon the
commencement of, or upon obtaining knowledge of any facts that would give rise
to a threat of, any claim, action or proceeding commenced against or relating to
(i) it, its properties or assets, including the AT&T Contributed Licenses or the
Mercury Licenses or Florida Licenses, as the case may be, or their use, and
which could have a Material Adverse Effect on it or materially adversely affect
the Transactions, or (ii) the AT&T Contributed Licenses or the Mercury Licenses
or Florida Licenses, as the case may be, or their use;
(e) Promptly after obtaining knowledge of the occurrence of, or the
impending or threatened occurrence of, any event which could cause or constitute
a material breach of any of its warranties, representations, covenants or
agreements contained in this Agreement, give notice in writing of such event, or
occurrence or impending or threatened event or occurrence, to the other parties
and use commercially reasonable efforts to prevent or to promptly remedy such
breach;
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(f) Cause the other parties to be advised promptly in writing of (i)
any event, condition or state of facts known to it, which has had or could have
a Material Adverse Effect on it, or materially adversely affect the AT&T
Contributed Licenses or the Mercury Licenses or Florida Licenses, as the case
may be, their use, or the Transactions (other than proceedings affecting the PCS
or wireless communications services industry generally), or (ii) any claim,
action or proceeding which seeks to enjoin the consummation of the Transactions;
and
(g) Not amend, modify or supplement, or waive any rights under or
conditions to the Central Alabama Agreement, except pursuant to Section 6.16 or
with the prior written consent of AT&T PCS and Cash Equity Investors
representing 66-% of the Aggregate Commitment of all Cash Equity
Investors.
From and after the execution and delivery of this Agreement to and including the
Closing Date, Tritel shall not engage or agree to engage in any of the
transactions or actions referred to in Section 3.6(b) of the Stockholders
Agreement, except pursuant to Section 6.13, to the extent necessary to
consummate the Contributions or satisfy the conditions set forth in Article VII
or with the prior written consent of AT&T PCS and Cash Equity Investors
representing 66-2/3% of the Aggregate Commitment of all Cash Equity Investors.
6.9 Restricted Stock Plan. Prior to the Closing, the Company shall
establish a restricted stock plan, in form and substance satisfactory to Cash
Equity Investors representing 66-2/3% of the Aggregate Commitment of all Cash
Equity Investors, AT&T PCS and the Management Stockholders, which will provide,
among other things, that (a) shares of Voting Common Stock issued thereunder
will be subject to the vesting provisions and repurchase rights described in
Section 7 of and Schedule III to the Employment Agreement, (b) all of the shares
issued under the plan shall be allocated to Company employees on the Closing
Date, (c) any shares that are repurchased by the Company under the terms of the
plan shall be available for re-allocation to Company employees, and (d) any
shares that are not re-allocated to Company employees on the fifth anniversary
of the Closing Date shall be re-allocated to the Management Stockholders ratably
in accordance with the number of shares of Voting Common Stock being issued to
each of them hereunder.
6.10 Certain Mercury Transactions. (a) Prior to or concurrently with
the Closing, Mercury I, Mercury II and their securityholders will consummate the
transactions contemplated by the agreement, dated May 20, 1998, among such
Persons, copies of which have been furnished to the parties hereto.
(b) Prior to the Reconciliation Date, neither Mercury I nor Mercury II
shall distribute or otherwise Transfer (as defined in the Stockholders
Agreement) any Escrowed Shares or any other shares of Preferred Stock purchased
hereunder (or shares of Common Stock issued upon conversion of the Preferred
Stock) except: (I) a Transfer from one to the other; (II) in accordance with
Section 8.9(f), or (III) to a Mercury Investor that (x) elects by written notice
to Mercury I or Mercury II, as the case may be, copies of which notice shall be
furnished to the other parties, to receive its Escrowed Shares and/or other
shares and (y) executes and
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delivers to the other parties thereto a counterpart to each of the Stockholders
Agreement and the agreement among the Cash Equity Investors attached as Schedule
X to the Stockholders Agreement. By delivering such notice and accepting any
such Escrowed Shares or other shares, each Mercury Investor: (i) shall become a
"Mercury Investor Indemnitor" hereunder, (ii) agrees and acknowledges that such
Escrowed Shares continue to be subject to the provisions of this Agreement,
(iii) makes (as to itself as of the date of such distribution or transfer) the
representations set forth in Section 5.1, and (iv) agrees and acknowledges that
it shall succeed to the rights of Mercury I and/or Mercury II, as applicable,
hereunder, in respect of the shares distributed to it.
(c) Mercury I shall not amend the commitment letter of the lender
relating to the Cash Equity Loan Agreements without the prior written consent of
each of the Cash Equity Borrowers party hereto. The Company and Mercury I shall
use their best efforts to substantially comply with the terms of the Supply
Agreement dated October 31, 1997, between Mercury and the lender under the Cash
Equity Loan Agreements.
6.11 Certain Employees. (a) Effective immediately prior to the Closing,
MSM, Inc. shall (i) terminate (x) the employment of all of its active employees
other than those employees based in the cellular markets managed by MSM, Inc. on
the date hereof (the "Employees"), and (y) all employment agreements and other
employment arrangements with the Employees to which it is a party; and (ii) use
all reasonable efforts to cause all of the Employees to make available their
employment services to the Company and its Subsidiaries. Prior to the Closing,
the Company shall (or shall cause one its Subsidiaries to) make offers of
employment, effective as of the Closing Date and contingent upon the Closing, to
all of the Employees on terms and conditions which shall be in the Company's
exclusive discretion, except that such offers shall be at the same wage or
salary levels as currently in effect at MSM, Inc. The Employees who accept such
offers of employment effective as of the Closing Date shall be referred to
herein as the "Transferred Employees." Effective upon the Closing, MSM, Inc.
hereby irrevocably waives any and all confidentiality obligations relating to
the Contributions being made by Mercury which any Employee has to MSM, Inc. or
any of its Affiliates for the exclusive benefit of the Company and its
Subsidiaries.
(b) MSM, Inc. shall retain, and neither the Company nor any of its
Subsidiaries shall assume, any liabilities or obligations of MSM, Inc. or any of
its Affiliates relating to the Employees, any retired former Employees or any
other employees of MSM, Inc. or any of their employee benefits. From and after
the Closing, MSM, Inc. shall remain solely responsible for any and all benefit
liabilities in respect of the Employees, including the Transferred Employees and
their beneficiaries and dependents, relating to or arising in connection with or
as a result of (i) the employment or the actual or constructive termination of
employment of any such Employee by MSM, Inc. (including, without limitation, in
connection with the consummation of the transactions contemplated by this
Agreement), (ii) the participation in or accrual of benefits or compensation
under, or the failure to participate in or to accrue compensation or benefits
under, any "employee benefit plan," as defined in Section 3(3) of ERISA, or any
other employee or retiree benefit or compensation plan, program, practice,
policy or arrangement of MSM, Inc.
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or (iii) accrued but unpaid salaries, wages, or other compensation or payroll
items (including, without limitation, bonus, incentive and deferred compensation
but excluding ordinary accrued vacation, sick day and personal day compensation,
which shall be assumed by the Company). Without limiting the foregoing, MSM,
Inc. shall remain solely responsible for any and all benefit liabilities to or
in respect of the Transferred Employees or their beneficiaries or dependents
relating to or arising in connection with any claims, whether such claims are
asserted before, on or after the Closing Date, for life, disability, accidental
death or dismemberment, supplemental unemployment compensation, medical, dental,
hospitalization, other health or other welfare or fringe benefits or expense
reimbursements which claims relate to or are based upon an occurrence on or
before the Closing Date (including claims for continuing treatment in respect of
any illness, accident, disability, condition or confinement which occurs or
commences on or before the Closing Date).
(c) The Management Stockholders shall cause MSM, Inc. to perform its
obligations under this Section.
6.12 Pre-Closing Build-Out
(a) Promptly following the date hereof the Company shall commence, and
no later than 90 days after the date hereof the Company shall complete, the
Committed Pre-Closing Construction. All assets, properties or rights acquired in
order to complete the Committed Pre-Closing Construction shall be (i) necessary
or advisable, in the good faith determination of the Company, in order to
facilitate the construction of PCS systems in the applicable geographical area
following the Closing and (ii) assignable to AT&T PCS or TWR or its designee(s),
free and clear of Liens (other than Permitted Liens) and without penalty or cost
to effect such assignment other than penalties or costs that individually or in
the aggregate are not material in amount.
(b) If this Agreement is terminated in accordance with the terms hereof
prior to the Closing, if and to the extent requested by AT&T PCS or TWR, the
Company shall assign to AT&T PCS or TWR or its designee(s), free and clear of
all Liens (other than Permitted Liens), all of the Company's assets, properties
and rights relating to the Committed Pre-Closing Construction. In consideration
of such assignment, AT&T PCS, TWR or such designee shall reimburse the Company
in cash for its out-of-pocket costs paid to third parties (not to exceed
$5,000,000 in the aggregate), plus the Company's overhead expenses (not to
exceed $500,000 in the aggregate), in each case incurred in connection with the
Pre-Closing Construction.
6.13 Additional Cash Equity Investors.
(a) The Company shall offer (the "Additional Offering") to issue and
sell up to 10,000 shares of Series C Preferred Stock to up to fifteen additional
accredited investors reasonably acceptable to AT&T PCS and Cash Equity Investors
representing 66-2/3% of the Aggregate Commitment of all Cash Equity Investors.
The Company shall use its best efforts to complete the Additional Offering no
later than 60 days after the date hereof. The sale of Series C Preferred Stock
pursuant to the Additional Offering shall be on the terms and subject to the
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conditions of this Agreement applicable to the Cash Equity Investors, as the
same are modified and supplemented by the terms of this Section 6.13.
(b) Any offeree in the Additional Offering may commit to purchase no
less than 2,500 shares of Series C Preferred Stock by executing a counterpart of
this Agreement (together with any other materials the Company may require in
connection with the Additional Offering) and delivering the same to the Company
no later than the expiration date of the Additional Offering. Any offeree
electing to purchase shares pursuant to the Additional Offering is sometimes
referred to herein, individually, as an "Additional Purchaser" and,
collectively, as the "Additional Purchasers".
(c) Commitments to purchase shares of Series C Preferred Stock by
Additional Purchasers shall not reduce or otherwise affect the Aggregate
Commitment, Initial Cash Contribution and Unfunded Commitment of, and the number
of shares of Series C Preferred Stock to be purchased by, the Initial Cash
Equity Investors, except in connection with a reallocation among the Cash Equity
Borrowers as contemplated by Schedule VII.
(d) In the event that Additional Purchasers commit to purchase shares
of Series C Preferred Stock, the Company shall furnish to the Purchasers,
promptly (and in any event within five days) following the expiration date of
the Subsequent Offering: (i) an amended form of Schedule I, reflecting the
commitments of the Additional Purchasers and (ii) copies of all documents
executed and delivered by the Additional Purchasers in connection with such
Offering. From and after the date of such delivery, all references in this
Agreement to Schedule I shall be deemed to refer to such amended form of
Schedule I.
(e) At the Closing, each Additional Purchaser shall contribute to the
capital of the Company an amount equal to its Initial Cash Contribution and
shall fulfill all other obligations applicable to Cash Equity Investors.
(f) In the event that, after giving effect to the Additional Offering,
the aggregate amount of the Aggregate Commitment of all Cash Equity Investors is
less than $158 million, then, notwithstanding anything in this Agreement to the
contrary, neither the Company nor its Subsidiaries shall expend any funds in
connection with the construction or operation of a mobile communication system
in the McComb, MS, Laurel, MS, Dothan-Enterprise, AL and Florence, AL BTAs,
except (i) up to $2 million for the construction of a "highway build" in such
territory, or (ii) with the prior written consent of each of AT&T PCS and Cash
Equity Investors representing 66-2/3% of the Aggregate Commitment of all Cash
Equity Investors.
6.14 Return of Spectrum. No later than two business days prior to the
deadline to elect the "disaggregation option" referred to below, as the same may
be extended by the FCC, Mercury I shall have elected, and caused Central Alabama
to elect, the "disaggregation option" pursuant to the FCC's Order on
Reconsideration of the Second Report and Order, FCC 98-46 (released March 24,
1998), with respect to the C-Block Mercury Licenses and the Alabama License,
and, as a result thereof, the aggregate amount of the FCC Debt assumed by the
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Company at the Closing pursuant to Section 2.8 shall be reduced by $33.365
million and the aggregate amount of the Central Alabama FCC Debt shall be
reduced by $6.342 million.
6.15 Option Agreement. Upon the expiration of the six-month period
commencing on the date hereof, (i) if the Closing shall not have occurred, the
Option Agreement shall not be entered into at Closing and shall no longer be a
Related Agreement hereunder and (ii) if the Closing shall have occurred, the
Company shall terminate the Option Agreement (and, if applicable, the License
Acquisition Agreement contemplated thereby), in each case if the Company shall
have failed to obtain the written consent of AT&T PCS, which may be granted or
withheld in its sole discretion. At the Closing, in the event that the Option
Agreement is not executed, the Company will pay Mercury II an amount equal to
interest on indebtedness to the United States Department of the Treasury
attributable to the Florida Licenses accrued from the date hereof through the
date that AT&T PCS notifies the Company that AT&T PCS does not consent to the
execution of the Option Agreement (or, in the absence of such notice, 30 days
after such consent is requested in writing by the Company).
6.16 Central Alabama Agreement. Mercury I shall use its best efforts to
cause the Central Alabama Agreement to be amended, on substantially the terms
set forth on Schedule 6.16, within 30 days after the date hereof pursuant to
documentation in form and substance satisfactory to AT&T PCS and Cash Equity
Investors representing 66-2/3% of the Aggregate Commitment of all Cash Equity
Investors. Such amendment shall provide, among other things, that (i) Central
Alabama and each of its partners (if any) to whom shares of Series C Preferred
Stock are distributed on the Closing Date shall, on the Closing Date, and each
partner of Central Alabama to whom shares of Series C Preferred Stock are
distributed thereafter shall, on the date of such distribution, execute and
deliver to the other parties thereto a counterpart to each of the Stockholders
Agreement and the agreement among the Cash Equity Investors attached as Schedule
X to the Stockholders Agreement and (ii) by accepting shares of Series C
Preferred Stock, Central Alabama and each of its partners to whom shares of
Series C Preferred Stock are distributed makes (as to itself as of the Closing
Date or other date of distribution) the representations set forth in Section
5.1. At the request of the Company, Mercury I shall assign all of its right,
title and interest in and to the Central Alabama Agreement to the Company
pursuant to documentation in form and substance satisfactory to AT&T PCS and
Cash Equity Investors representing 66-2/3% of the Aggregate Commitment of all
Cash Equity Investors.
ARTICLE VII
CLOSING CONDITIONS
7.1 Conditions to Obligations of All Parties. The obligation of each of
the parties to consummate the Transactions contemplated to occur at the Closing
shall be conditioned on the following, unless waived by each of the parties:
(a) Any applicable waiting period under the HSR Act shall have expired
or been terminated.
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(b) The Consent of the FCC to each of the AT&T License Transfer, the
Alabama License Transfer and the Mercury License Transfer shall have been
obtained pursuant to a Final Order, free of any conditions materially adverse to
the Company or any of the Purchasers. For the purposes of this paragraph, "Final
Order" means an action or decision that has been granted by the FCC as to which
(i) no request for a stay or similar request is pending, no stay is in effect,
the action or decision has not been vacated, reversed, set aside, annulled or
suspended and any deadline for filing such request that may be designated by
statute or regulation has passed, (ii) no petition for rehearing or
reconsideration or application for review is pending and the time for the filing
of any such petition or application has passed, (iii) the FCC does not have the
action or decision under reconsideration on its own motion and the time within
which it may effect such reconsideration has passed and (iv) no appeal is
pending including other administrative or judicial review, or in effect and any
deadline for filing any such appeal that may be designated by statute or rule
has passed; provided however that, the Consent of the FCC to the Mercury License
Transfer shall be deemed to be a Final Order notwithstanding the pendency of any
of the proceedings set forth on Schedules 4.7 or 5.3(a), or any appeals
therefrom, so long as such proceedings or appeals would not be reasonably
expected, individually or in the aggregate, to result in the revocation,
non-renewal or suspension of, or an adverse effect on the ability of the Company
to employ, the Mercury Licenses.
(c) All Consents by any Governmental Authority (other than the Consents
referred to in paragraphs (a) and (b) above) required to permit the consummation
of the Transactions, the failure to obtain or make which would be reasonably
expected to have a Material Adverse Effect on the Company or any of the
Purchasers or to materially adversely affect the Transactions or its ability to
perform its obligations under the Related Agreements shall have been obtained or
made.
(d) 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 prohibit such consummation, or (ii) impair in
any material respect the operation of the Company.
7.2 Conditions to Obligations of Each Party. The obligation of each
party (the "receiving party") to consummate the Transactions contemplated to
occur at the Closing shall be further conditioned upon the satisfaction or
fulfillment, at or prior to the Closing, of the following conditions by each of
the other parties, unless waived by the receiving party:
(a) The representations and warranties of each party other than the
receiving party contained herein and in the Related Agreements shall be true and
correct in all material respects (except for representations and warranties that
are qualified as to materiality, which shall be true and correct), in each case
when made and at and as of the Closing (except for representations and
warranties made as of a specified date, which shall be true and correct as of
such date) with the same force and effect as though made at and as of such time,
except for inaccuracies in respect of the representations and warranties set
forth in Section 4.7, Section
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5.5(i), and the third sentence of each of Sections 5.2 and 5.3(a) (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 its ability to perform its obligations under the Related Agreements
or to materially adversely affect the Transactions.
(b) Each party other than the receiving party shall have performed in
all material respects all agreements contained herein or in the Related
Agreements required to be performed by it at or before the Closing.
(c) An officer of each party other than the receiving party shall have
delivered to the receiving party a certificate, dated the Closing Date,
certifying as to the fulfillment of the conditions set forth in paragraphs (a)
and (b) above as to the party delivering such certificate.
(d) Each party other than the receiving party shall have furnished the
receiving party with one or more opinions of counsel to the party furnishing the
opinion(s), each dated the Closing Date, in substantially the forms of Exhibits
H-1 through K-2, as applicable.
(e) Each of the Related Agreements shall have been executed and
delivered by the parties thereto (other than the receiving party) and shall be
in full force and effect.
(f) Each Cash Equity Investor (other than the receiving party) shall
have executed and delivered to the Company a Pledge Agreement, substantially in
the form of Exhibit L.
(g) All corporate and other proceedings of each party other than the
receiving party in connection with the AT&T License Transfer, the Mercury
License Transfer and the other Transactions, and all documents and instruments
incident thereto, shall be reasonably satisfactory in form and substance to the
receiving party, and each party other than the receiving party shall have
delivered to the receiving party such receipts, documents, instruments and
certificates, in form and substance reasonably satisfactory to the receiving
party, which the receiving party shall have reasonably requested.
7.3 Conditions to the Obligations of the Purchasers. The obligation of
each Purchaser to consummate the Transactions contemplated to occur at the
Closing shall be further conditioned upon the satisfaction or fulfillment, at or
prior to the Closing, of the following conditions, unless waived by each such
Purchaser:
(a) The terms, conditions and provisions of the Credit Documents shall
be satisfactory to such Purchaser in all material respects, including without
limitation provisions relating to principal amounts, rates of interest, terms of
mandatory and permitted prepayments, prepayment charges (if any), fees and
expenses, representations and warranties, affirmative and negative covenants,
conditions to disbursements of loan funds, defaults and remedies therefor, and
collateral, it being acknowledged that such terms, conditions and provisions
shall be deemed to be satisfactory to such Purchaser if they are in the
aggregate at least as favorable to the Company as the terms of the commitment
letter referred to in Section 5.5(f). The disbursements of loan funds
contemplated by the Credit Agreement to occur on the Closing Date shall be made
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in accordance with the terms thereof concurrently with the Closing and such
Purchaser shall have received such evidence thereof as it may request.
(b) On the Closing Date, counsel to each Purchaser shall have received
the legal fees and expenses required to be paid or reimbursed by the Company as
provided in Section 10.4 for statements rendered on or prior to the Closing
Date.
(c) For each SBIC Holder, the Company shall have prepared the Size
Status Declaration on Form 480, the Assurance of Compliance for
Nondiscrimination on Form 652 and the Portfolio Financing Report on Form 1031
(Parts A and B) (collectively, the "SBA Compliance Documents"), the Company
shall have duly executed and delivered the Forms 480 and 652 to each SBIC
Holder, and all of the information set forth in the SBA Compliance Documents
shall be true and correct in all respects. The Company shall have delivered a
list, after giving effect to the transactions contemplated by this Agreement,
of: (a) the name of each of the Company's directors, (b) the name and title of
each of the Company's officers and (c) the name of each of the Company's
stockholders and the number and class of shares held by each stockholder.
(d) The closing of the Alabama License Transfer, and the other
transactions contemplated in the Central Alabama Agreement, shall have been
consummated in accordance with the terms of the Central Alabama Agreement, and
such Purchaser shall have received such evidence thereof as it may request, and
Mercury I's rights under the Central Alabama Agreement shall have been assigned
to the Company pursuant to documentation satisfactory in form and substance to
the Purchasers.
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
8.1 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
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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.
8.2 Indemnification by Purchasers. Each Purchaser and each Mercury
Investor Indemnitor, severally and not jointly, shall indemnify and hold
harmless each other Purchaser, each other Mercury Investor Indemnitor, the
Company, each Management Stockholder and their respective Affiliates, and the
shareholders, members, managers, officers, employees, agents and/or the legal
representatives of any of them (each, a "Section 8.2 Indemnified Party"),
against any and all losses, damages, costs, expenses or liabilities, including
any amounts paid in satisfaction of judgments, in compromise, as fines and
penalties, and as counsel fees incurred by him or it in connection with the
investigation, defense, or disposition of any action, suit or other proceeding
in which any Section 8.2 Indemnified Party may be involved or with which he or
it may be threatened (collectively, "Losses"), in each case that arises out of
or results from (a) any representation or warranty of such indemnifying party
contained in this Agreement or any Related Agreement being untrue in any
material respect as of the date on which it was made or (b) any material default
by such indemnifying party or any of its Affiliates in the performance of their
respective obligations under this Agreement and any Related Agreement, except to
the extent (but only to the extent) any such Losses arise out of or result from
the gross negligence or willful misconduct of such Section 8.2 Indemnified Party
or its Affiliates.
8.3 Indemnification by the Management Stockholders. Each Management
Stockholder, severally and not jointly, shall indemnify and hold harmless each
Purchaser and the Company and their respective Affiliates, and the shareholders,
members, managers, officers, employees, agents and/or the legal representatives
of any of them (each, a "Section 8.3 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
Management Stockholder contained in this Agreement or any Related Agreement
being untrue in any material respect as of the date on which it was made or (b)
any material default by such Management Stockholder in the performance of his
obligations under this Agreement and any Related Agreement, except to the extent
(but only to the extent) any such Losses arise out of or result from the gross
negligence or willful misconduct of such Section 8.3 Indemnified Party or its
Affiliates; provided that the aggregate liability of each Management Stockholder
to indemnify Section 8.3 Indemnified Parties against Losses arising out of or
resulting from (x) the untruth in any material respect of any representation or
warranty as to the Company made by such Management Stockholder in this Agreement
or any Related Agreement, (y) any material default by such Management
Stockholder in the performance of his obligations under this Agreement or any
Related Agreement, shall (except, in the case of clause (y), 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 Management Stockholder) be limited to
the shares of Common Stock of the Company then held by such Management
Stockholder, and Section 8.3 Indemnified Parties seeking indemnification against
any Management Stockholder for such Losses hereunder shall not have recourse to
any other assets of such Management Stockholder.
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8.4 Indemnification by the Company. The Company shall indemnify and
hold harmless each of the Purchasers 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 or any Related Agreement being untrue
in any material respect as of the date on which it was made or (b) any material
default by the Company or any of its Affiliates in the performance of their
respective obligations under this Agreement and any Related Agreement, except to
the extent (but only to the extent) any such Losses arise out of or result from
the gross negligence or willful misconduct of such Section 8.4 Indemnified Party
or its Affiliates.
8.5 Indemnification by Mercury I, Mercury II, the Management
Stockholders and the Mercury Investor Indemnitors. Mercury I, Mercury II and the
Management Stockholders, jointly and severally, and each Mercury Investor
Indemnitor, solely to the extent of its Percentage Share of any Section 8.5
Losses, shall indemnify and hold harmless AT&T PCS, TWR, the Cash Equity
Investors and the Company, and their respective Affiliates, and the
shareholders, members, managers, officers, employees, agents and/or the legal
representatives of any of them (each, a "Section 8.5 Indemnified Party"),
against any and all losses, damages, costs, expenses or liabilities, including
any amounts paid in satisfaction of judgments, in compromise, as fines and
penalties, any counsel fees 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 (collectively, "Section 8.5 Losses"), in each case that
arises out of or results from (i) any representation or warranty of Mercury I
and Mercury II contained in Articles IV and V being untrue in any material
respect as of the date on which it was made or (ii) any of the matters referred
to on Schedules 4.7 or 5.3(a), except to the extent (but only to the extent) any
such Section 8.5 Losses arise out of or result from the gross negligence or
willful misconduct of such Section 8.5 Indemnified Party or its Affiliates;
provided that (x) the aggregate liability of each Management Stockholder to
indemnify Section 8.5 Indemnified Parties against Section 8.5 Losses shall be
limited to the shares of Common Stock of the Company then held by such
Management Stockholder, and Section 8.5 Indemnified Parties seeking
indemnification against any Management Stockholder for such Section 8.5 Losses
hereunder shall not have recourse to any other assets of such Management
Stockholder and (y) the aggregate liability of each Mercury Investor Indemnitor
to indemnify Section 8.5 Indemnified Parties against Section 8.5 Losses shall be
limited to his or its Escrowed Shares, and Section 8.5 Indemnified Parties
seeking indemnification against any Mercury Investor Indemnitor for Section 8.5
Losses hereunder shall not have recourse to any other assets of such Mercury
Investor Indemnitor. Notwithstanding anything herein to the contrary, no Section
8.5 Indemnified Party shall require any Mercury Investor Indemnitor to satisfy
any Section 8.5 Losses earlier than the Reconciliation Date; provided that any
Mercury Investor Indemnitor may satisfy its obligation in respect of any Section
8.5 Losses by making a cash payment to the applicable Section 8.5 Indemnified
Party equal to its Percentage Share of such Section 8.5 Indemnified Loss, plus
an amount equal to
41
<PAGE>
interest thereon at the rate of 10% per annum, compounded annually, from the
date a notice (the "Section 8.5 Notice") specifying the amount of such Section
8.5 Loss is given by the applicable Section 8.5 Indemnified Party to the Old
Mercury Stockholders.
8.6 Procedures.
(a) The terms of this Section 8.6 shall apply to any claim (a "Claim")
for indemnification under the terms of Sections 8.2, 8.3, 8.4 or 8.5. The
Section 8.2 Indemnified Party, Section 8.3 Indemnified Party, Section 8.4
Indemnified Party or Section 8.5 Indemnified Party (each, an "Indemnified
Party"), as the case may be, shall give prompt written notice of such Claim to
the indemnifying party (the "Indemnifying Party") under the applicable Section,
which party may assume the defense thereof, provided that any delay or failure
to so notify the Indemnifying Party shall relieve the Indemnifying Party of its
obligations hereunder only to the extent, if at all, that it is materially
prejudiced by reason of such delay or failure. The Indemnified Party shall have
the right to approve any counsel selected by the Indemnifying Party and to
approve the terms of any proposed settlement, such approval not to be
unreasonably delayed or withheld (unless such settlement provides only, as to
the Indemnified Party, the payment of money damages actually paid by the
Indemnifying Party and a complete release of the Indemnified Party in respect of
the claim in question). Notwithstanding any of the foregoing to the contrary,
the provisions of this Article VIII shall not be construed so as to provide for
the indemnification of any Indemnified Party for any liability to the extent
(but only to the extent) that such indemnification would be in violation of
applicable law or that such liability may not be waived, modified or limited
under applicable law, but shall be construed so as to effectuate the provisions
of this Article VIII to the fullest extent permitted by law.
(b) 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.
(c) 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.
(d) 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
42
<PAGE>
of Indemnified Parties: (i) AT&T PCS, TWR, their respective Affiliates, and the
shareholders, members, managers, officers, employees, agents and/or the legal
representatives of any of them; (ii) the Cash Equity Investors, their respective
Affiliates, and the shareholders, members, managers, officers, employees, agents
and/or the legal representatives of any of them; (iii) Mercury I and Mercury II,
their respective Affiliates, and the shareholders, members, managers, officers,
employees, agents and/or the legal representatives of any of them; (iv) the
Company, their respective Affiliates, and the shareholders, members, managers,
officers, employees, agents and/or the legal representatives of any of them; and
(v) the Management Stockholders and/or the legal representatives of any of them.
8.7 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.
8.8 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) for any claim arising
solely from any inaccuracy in the Company's representations and warranties set
forth in the last sentence of Section 5.5(h) 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.
8.9 Escrow and Reconciliation.
(a) The certificates representing all of the Escrowed Shares shall be
held in escrow by the Secretary of the Company as escrow holder (the "Escrow
Holder"), together with related stock powers executed in blank by the record
owners thereof. The Escrow Holder shall also hold in escrow the cash proceeds
("Escrowed Cash") from sales of Escrowed Shares permitted by paragraph (f)
below. The Escrow Holder shall not permit the transfer of such shares on the
books of the Company except in accordance with this Agreement and the
Stockholders Agreement, provided that the Escrow Holder shall be entitled to
rely upon written directions of the Board of Directors of the Company. The
Escrow Holder shall have no personal liability for any act or omission hereunder
while acting in good faith in the exercise of his own judgment. The Company
agrees to indemnify and hold Escrow Holder free and harmless from and against
any and all losses, costs, damages, liabilities or expenses, including counsel
fees to which Escrow Holder may be put or which he may incur by reason of or in
connection with the escrow arrangement hereunder.
(b) On or promptly following the Reconciliation Date, the Escrow Holder
shall distribute the Escrowed Shares and Escrowed Cash then beneficially owned
by each of the Old Mercury Stockholders as follows (subject to the terms of
paragraph (g) below):
(i) first, to the Company, an amount of Escrowed Cash of such Old
Mercury Stockholder equal to such Old Mercury Stockholder's Percentage Share of
the outstanding
43
<PAGE>
principal amount of the Old Mercury Note, plus accrued and unpaid interest
thereon and, if necessary, a number of Escrowed Shares of such Old Mercury
Stockholder having an aggregate Market Price equal to the balance of such Old
Mercury Stockholder's Percentage Share of the outstanding principal amount of
the Old Mercury Note, plus accrued and unpaid interest thereon;
(ii) second, to the Company and each other Section 8.5 Indemnified
Party (pro rata in proportion to their respective Section 8.5 Losses), an amount
of Escrowed Cash of such Old Mercury Stockholder equal to such Old Mercury
Stockholder's Percentage Share of the Section 8.5 Losses, plus an amount equal
to interest thereon at the rate of 10% per annum, compounded annually, from the
date of the applicable Section 8.5 Notice through the Reconciliation Date, and,
if necessary, a number of Escrowed Shares of such Old Mercury Stockholder having
an aggregate Market Price equal to the balance of such Old Mercury Investor's
Percentage Share of the Section 8.5 Losses, plus an amount equal to interest
thereon at the rate of 10% per annum, compounded annually, from the date of the
applicable Section 8.5 Notice through the Reconciliation Date; provided that no
Escrowed Shares or Escrowed Cash of any Old Mercury Stockholder shall be
distributed pursuant to this clause (ii) of Section 8.9(b) with respect to any
Section 8.5 Loss, if such Old Mercury Stockholder shall have theretofore
satisfied its obligation in respect of such Section 8.5 Loss in accordance with
the proviso to the last sentence of Section 8.5; and
(iii) third, to such Old Mercury Stockholder, the balance of his or its
Escrowed Shares and Escrowed Cash.
The distribution of the Escrowed Shares contemplated in this Section
8.9(b) shall be deferred to the extent necessary to determine the Market Price
of the Escrowed Shares.
(c) Promptly following the Reconciliation Date, the Escrow Holder shall
(i) if no Escrowed Shares are distributable pursuant to paragraph (i) or (ii) of
Section 8.9(b), deliver the certificates representing the Escrowed Shares to the
Old Mercury Stockholders, and (ii) if any Escrowed Shares are distributable
pursuant to paragraphs (i) or (ii) of Section 8.9(b), (x) cancel the
certificates held by the Escrow Holder representing Escrowed Shares, (y) cause
new certificates to be issued representing the number of Escrowed Shares
distributable to the Company or any other Section 8.5 Indemnified Party pursuant
to paragraphs (i) and (ii) of Section 8.9(b), which certificates the Escrow
Holder shall deliver to the Company or such other Section 8.5 Indemnified Party
(as applicable), and (y) cause new certificates to be issued representing the
balance of the Escrowed Shares, which certificates shall be distributed to such
Old Mercury Stockholder.
(d) Subject to the terms hereof, each Old Mercury Stockholder shall
have all the rights of a stockholder with respect to the Escrowed Shares while
they are held in escrow, including, without limitation, the right to vote the
Escrowed Shares and receive any cash dividends declared thereon. If, from time
to time, there is (i) any stock dividend, stock split or other change in the
Escrowed Shares or (ii) any merger or sale of all or substantially all of the
assets or other acquisition of the Company, all new, substituted or additional
securities to which
44
<PAGE>
such Old Mercury Stockholder is entitled by reason of his ownership of the
Escrowed Shares shall be immediately subject to this escrow, deposited with the
Escrow Holder and included thereafter as "Escrowed Shares" for purposes of this
Agreement.
(e) Legends. The share certificates evidencing the Escrowed Shares
shall be endorsed with the following legend (in addition to any legend required
to be placed thereon by Section 2.6, applicable federal or state securities laws
or the Stockholders Agreement).
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF THE SECURITIES PURCHASE AGREEMENT DATED AS
OF MAY 20, 1998, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY, WHICH PROVIDES, AMONG OTHER THINGS, FOR RESTRICTIONS ON
TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE."
(f) Until the Reconciliation Date, no Mercury Investor Indemnitor shall
Transfer (as such term is defined in the Stockholders Agreement) any of his or
its Escrowed Shares; provided that, subject to the restrictions on transfer
contained in the Stockholders Agreement, after the IPO Date (as defined in the
Stockholders Agreement) and notwithstanding the provisions of Section 6.10(b),
any Old Mercury Stockholder may sell any or all of his Escrowed Shares for cash
at the Market Price so long as the gross cash proceeds thereof are deposited
with the Escrow Holder, who shall at the request of such Old Mercury Stockholder
invest such funds in Treasury obligations or other cash equivalents that mature
not later than the fifth anniversary of the date hereof, to be held in escrow by
the Escrow Holder, and not to be released, except in accordance with the
foregoing provisions.
(g) Notwithstanding anything herein to the contrary, 100% of the
obligations of all Old Mercury Stockholders to be satisfied by distributions of
Escrowed Cash and/or Escrowed Shares pursuant to Section 8.9(b)(i) or (ii) shall
be satisfied, on the Reconciliation Date (as defined in clauses (i) through (iv)
of the definition thereof, without regard to the proviso to such definition),
first, out of any Escrowed Cash, and second, out of any Escrowed Shares held by
Mercury II, until all of such Escrowed Cash and Escrowed Shares shall have been
distributed.
8.10 Advances. The Company hereby irrevocably and unconditionally
commits, from time to time, upon ten business days' notice from Mercury I or
Mercury II, to make advances to Mercury I and Mercury II against Old Mercury
Expenses payable by Mercury I and Mercury II, which advances shall be evidenced
by the Old Mercury Note.
45
<PAGE>
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated, and the transactions
contemplated hereby abandoned, without further obligation of any party (except
as set forth herein), at any time prior to the Closing Date:
(a) by mutual written consent of the parties;
(b) by any party by written notice to the other parties, if the Closing
shall not have occurred on or before the date that is nine 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
(c) 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.
9.2 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.
(b) In the event of a termination of this Agreement pursuant to Section
9.1, all provisions of this Agreement shall terminate, except Sections 6.2 and
6.12(b) and Articles VIII and X.
(c) 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
10.1 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by written agreement of each of the parties.
10.2 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
46
<PAGE>
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.
10.3 Notices. All notices or other communications hereunder shall be in
writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by facsimile transmission, or by registered or
certified mail (return receipt requested), postage prepaid, with an
acknowledgment of receipt signed by the addressee or an authorized
representative thereof, addressed as follows (or to such other address for a
party as shall be specified by like notice; provided that notice of a change of
address shall be effective only upon receipt thereof):
If to AT&T PCS or TWR:
c/o AT&T Wireless Services, Inc.
5000 Carillon Point
Kirkland, Washington 98033
Attention: William W. Hague
Facsimile: (206) 828-8451
47
<PAGE>
With a copy to:
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attention: Corporate Secretary
Facsimile: (908) 953-4657
Friedman Kaplan & Seiler LLP
875 Third Avenue, 8th Floor
New York, New York 10022
Attention: Daniel M. Taitz
Facsimile: (212) 355-6401
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, New York 10112
Attention: Gregg S. Lerner
Facsimile: (212) 698-7825
If to a Cash Equity Investor, to its address set forth on Schedule I.
With a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Mark S. Wojciechowski
Facsimile: (212) 262-1910
If to Mercury I or Mercury II, to:
1410 Livingston Lane
Jackson, MS 39213-8003
Attention: William M. Mounger, II
Facsimile: (601) 362-2664
With a copy to:
Young, Williams, Henderson & Fuselier, P.A.
2000 Deposit Guaranty Plaza
Jackson, MS 39201
Attention: James H. Neeld, IV
Facsimile: (601) 355-6136
48
<PAGE>
If to a Management Stockholder, to him in care of the Company.
If to the Company:
1410 Livingston Lane
Jackson, MS 39213-8003
Attention: William M. Mounger, II
Facsimile: (601) 362-2664
With a copy to each other party sent to the addresses set forth in this
Section 10.3.
10.4 Expenses. The Company agrees, in the event the Transactions are
consummated, to pay, and save the Purchasers harmless against, the reasonable
fees and disbursements of counsel to each of the Purchasers in connection with
the preparation, negotiation, execution and delivery of this Agreement, the
Related Agreements, the Credit Documents, the instruments and documents executed
pursuant hereto or thereto or in connection herewith or therewith, and the
consummation of the Transactions.
10.5 Parties in Interest; Assignment. This Agreement is binding upon
and is solely for the benefit of the parties hereto (and, in the case of the
Section 6.10(b), the Mercury Investor Indemnitors) and their respective
permitted successors, legal representatives and permitted assigns. None of AT&T
PCS, TWR, the Company, any Cash Equity Investor, Mercury I, Mercury II or any
Management Stockholder may assign its rights and obligations hereunder without
the prior written consent of each of the other parties; provided, that:
(a) the Company shall have the right to assign its rights under this
Agreement to the lenders (the "Lenders") named in the Credit Agreement, as
security pursuant to the terms of the Credit Documents, it being understood that
as a result of any such assignment to the Lenders, after an event of default
under the Credit Agreement and the expiration of any applicable grace and cure
periods thereunder, the Lenders shall have the right, on behalf of the Company,
to enforce the obligation of each Cash Equity Investor to make capital
contributions to the Company in the amounts and on the dates specified on
Schedule I (or such earlier dates as may be established in accordance with the
terms of the Stockholders Agreement) and that, in connection with any such
assignment to the Lenders, the Lenders shall not assume any obligations of the
Company hereunder;
(b) AT&T PCS and TWR shall have the right to assign to AT&T Corp., or
to one or more direct or indirect wholly owned Subsidiaries of AT&T Corp., any
and all rights and obligations of AT&T PCS or TWR, as the case may be, under
this Agreement, provided, that such assignee shall have assumed in writing all
the obligations of AT&T PCS or TWR, as the case may be, hereunder and no such
assignment shall relieve AT&T PCS of its obligations hereunder; and
(c) any Cash Equity Investor may assign its rights and obligations
hereunder with the prior written consent of AT&T PCS, such consent not to be
unreasonably withheld, and any
49
<PAGE>
Cash Equity Investor may assign its rights and obligations hereunder to any
Affiliate, provided, that such assignee shall have assumed in writing all the
obligations of such Cash Equity Investor hereunder and no such assignment shall
relieve such Cash Equity Investor of its obligations hereunder.
10.6 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.
10.7 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.
10.8 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.
10.9 Entire Agreement. This Agreement and the Related Agreements,
including the exhibits and schedules hereto and thereto and the certificates and
instruments delivered pursuant to the terms of this Agreement and the Related
Agreements, embody the entire agreement and understanding of the parties hereto
in respect of the Transactions. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein or the Related Agreements. This
Agreement and the Related Agreements supersede all prior agreements and
understandings between the parties with respect to such Transactions.
10.10 Publicity. So long as this Agreement is in effect, the parties
agree to consult with each other in issuing any press release or otherwise
making any public statement with respect to the Transactions, and no party shall
issue any press release or make any such public statement prior to such
consultation, except as may be required by Law. No press release or other public
statement by the parties hereto shall disclose any of the financial terms of the
Transactions without the prior consent of the other parties, and no party shall
issue any press release or make any other public statement regarding the
Transactions prior to the Closing without the prior consent of the other
parties, in each case except as may be required by Law. A breach of the
provisions of this Section 10.10 by a party shall not give rise to any right to
terminate this Agreement.
50
<PAGE>
10.11 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.
10.12 Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
10.13 Authorized Agent of AT&T PCS. AT&T PCS hereby authorizes Wireless
PCS, Inc. as its agent, with full power to execute, in the name of and on behalf
of AT&T PCS, the Related Agreements to which AT&T PCS is a party and any and all
other documents that AT&T PCS is required to execute and deliver in connection
with the Closing, and to give and receive all notices, requests, consents,
amendments, demands and other communications to or from AT&T PCS hereunder or
thereunder. Each party hereto (other than AT&T PCS) shall be entitled to rely on
the full power and authority of Wireless PCS, Inc. to act on behalf of AT&T PCS
in accordance with this Section 10.13. Nothing contained in this Section 10.13
shall relieve AT&T PCS from complying with its obligations under this Agreement
or any of the Related Agreements to which it is a party.
* * *
51
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TRITEL, INC.
By:
--------------------------------------
Name: William M. Mounger, II
Title: President
AT&T WIRELESS PCS INC.
By:
--------------------------------------
Name: William W. Hague
Title: Senior Vice President
TWR CELLULAR, INC.
By:
--------------------------------------
Name: William W. Hague
Title: Senior Vice President
S-1
<PAGE>
Cash Equity Investors:
TORONTO DOMINION
INVESTMENTS, INC.
By:
Name: Martha L. Gariepy
Title: Vice President
ENTERGY WIRELESS COMPANY
By:
--------------------------------------
Name: William D. Bandt
Title: President and Chief Executive
Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By:
--------------------------------------
Name: Molly Fergusson
Title: Managing Director
S-2
<PAGE>
WASHINGTON NATIONAL INSURANCE COMPANY
By:
--------------------------------------
Name: Rollin M. Dick
Title: Executive Vice President
and Chief Financial Officer
UNITED PRESIDENTIAL LIFE
INSURANCE COMPANY
By:
--------------------------------------
Name: Rollin M. Dick
Title: Executive Vice President
and Chief Financial Officer
S-3
<PAGE>
DRESDNER KLEINWORT BENSON PRIVATE EQUITY
PARTNERS LP
BY: DRESDNER KLEINWORT BENSON PRIVATE
EQUITY MANAGERS LLC, AS ITS GENERAL
PARTNER
By:
--------------------------------------
Name: Alexander P. Coleman
Title: Authorized Signatory
S-4
<PAGE>
TRIUNE PCS, LLC
BY: TRIUNE CAPITAL, LP, AS GENERAL
PARTNER
BY: TRIUNE INC., AS GENERAL PARTNER
By:
--------------------------------------
Name: Kevin Shepherd
Title: President
S-5
<PAGE>
DC INVESTMENT PARTNERS
EXCHANGE FUND, L.P.
BY: __________________,
ITS GENERAL PARTNER
By:
--------------------------------------
Name:
Title:
FCA VENTURE PARTNERS I, L.P.
BY: __________________,
ITS GENERAL PARTNER
By:
--------------------------------------
Name:
Title:
CLAYTON ASSOCIATES, LLC
BY: __________________,
ITS MANAGING MEMBER
By:
--------------------------------------
Name:
Title:
S-6
<PAGE>
MERCURY PCS, LLC
BY: MSM, INC.,
ITS MANAGER
By:
--------------------------------------
Name: William M. Mounger, II
Title: President
MERCURY PCS II, LLC
BY: MSM, INC.,
ITS MANAGER
By:
--------------------------------------
Name: William M. Mounger, II
Title: President
-----------------------------------------
Management Stockholders:
-----------------------------------------
William M. Mounger, II
---------------------------------
E.B. Martin, Jr.
-----------------------------------------
Jerry M. Sullivan, Jr.
S-7
<PAGE>
TRILLIUM PCS, LLC
By:
--------------------------------------
Name: William M. Mounger, II
Title: Manager
S-8
<PAGE>
THE MANUFACTURERS' LIFE INSURANCE COMPANY
(U.S.A.)
By:
--------------------------------------
Name:
Title:
S-9
<PAGE>
SCHEDULE I
CASH EQUITY INVESTORS
---------------------
<TABLE>
<CAPTION>
SECOND
AGGREGATE INITIAL CASH FUNDING
CASH EQUITY INVESTORS COMMITMENT CONTRIBUTION 9/30/99
--------------------- ---------- ------------ -------
<S> <C> <C> <C>
Washington National Insurance Company $25,000,000 $16,666,667 $8,333,333
United Presidential Life Insurance Company 25,000,000 16,666,667 8,333,333
Trillium PCS, LLC 2,284,341 1,522,894 761,447
Dresdner Kleinwort Benson Private
Equity Partners LP 34,265,111 22,843,407 11,421,704
Entergy Wireless Corporation 20,000,000 13,333,333 6,666,667
Triune, Inc. 18,274,726 12,183,150 6,091,576
Toronto Dominion Investments, Inc. 5,000,000 3,333,333 1,666,667
General Electric Capital Corporation 2,500,000 1,666,667 833,333
DC Investment Partners Exchange Fund, LP 1,142,170 761,447 380,723
FCA Venture Partners I, LP 571,085 380,723 190,362
Clayton Associates, LLC 114,217 76,145 38,072
Mercury PCS II, LLC 3,811,154 3,811,154 -0-
Mercury PCS, LLC 14,337,196 14,337,196 -0-
--------------- --------------- --------------
TOTAL $152,300,000 $107,582,783 $44,717,217
</TABLE>
<PAGE>
SCHEDULE II
MANAGEMENT STOCKHOLDERS
-----------------------
William M. Mounger II 2.83%
E.B. Martin, Jr. 2.83%
Jerry M. Sullivan, Jr. 2.83%
TBD 1.50%
<PAGE>
SCHEDULE III
[SEE ATTACHED]
<PAGE>
SCHEDULE IV
MERCURY PCS I LICENSES
----------------------
- --------------------------------------------------------------------------------
MARKET NUMBER FREQUENCY BLOCK LICENSE DESCRIPTION
- --------------------------------------------------------------------------------
017 C Anniston, AL
- --------------------------------------------------------------------------------
044 C Birmingham, AL
- --------------------------------------------------------------------------------
108 C Decatur, AL
- --------------------------------------------------------------------------------
158 C Gadsden, AL
- --------------------------------------------------------------------------------
198 C Huntsville, AL
- --------------------------------------------------------------------------------
450 C Tuscaloosa, AL
- --------------------------------------------------------------------------------
MERCURY PCS II LICENSES
-----------------------
- --------------------------------------------------------------------------------
MARKET NUMBER FREQUENCY BLOCK LICENSE DESCRIPTION
- --------------------------------------------------------------------------------
042 F Biloxi, MS
- --------------------------------------------------------------------------------
415 F Selma, AL
- --------------------------------------------------------------------------------
115 F Dothan-Enterprise, AL
- --------------------------------------------------------------------------------
146 F Florence, AL
- --------------------------------------------------------------------------------
186 F Hattiesburg, MS
- --------------------------------------------------------------------------------
246 E Laurel, MS
- --------------------------------------------------------------------------------
269 F McComb, MS
- --------------------------------------------------------------------------------
302 F Mobile, AL
- --------------------------------------------------------------------------------
305 F Montgomery, AL
- --------------------------------------------------------------------------------
263 F Louisville, KY
- --------------------------------------------------------------------------------
052 F Bowling Green, KY
- --------------------------------------------------------------------------------
<PAGE>
License certificates for the following licenses issued to Mercury II have not
yet been received by Mercury II due to clerical errors in FCC debt documentation
furnished by the FCC which is being corrected by FCC administrative personnel in
cooperation with Mercury II's FCC counsel:
BTA# Name
---- ----
115 Dothan-Enterprise, AL
269 McComb, MS
<PAGE>
SCHEDULE V
ALABAMA LICENSE
---------------
- --------------------------------------------------------------------------------
MARKET NUMBER FREQUENCY BLOCK LICENSE DESCRIPTION
- --------------------------------------------------------------------------------
305 C Montgomery, AL
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE VI
COMPANY TERRITORY*
------------------
I. From Atlanta MTA BTA Market Designator
---------------- ---------------------
Carroll County, GA **
Haralson County, GA **
Opelika-Auburn, AL 334
Chattanooga, TN 076
Cleveland, TN 085
Dalton, GA 102
LaGrange, GA 237
Rome, GA 384
II. From Knoxville MTA
------------------
Knoxville, TN 232
III. From Louisville-Lexington-Evansville MTA
----------------------------------------
Louisville, KY 263
Lexington, KY 252
Bowling Green-Glasgow, KY 052
Owensboro, KY 338
Corbin, KY 098
Somerset, KY 423
Madisonville, KY 273
IV. From Memphis-Jackson MTA
------------------------
Montgomery County, MS ***
Jackson, MS 210
Tupelo-Corinth, MS 449
Greenville-Greenwood, MS 175
Meridian, MS 292
Columbus-Starkville, MS 094
Natchez, MS 315
Vicksburg, MS 455
- --------------------
* The Company Territory is more particularly described in the FCC applications
filed in connection with the transfer of FCC PCS Licenses to the Company.
** Carrol County and Haralson County are both located within the Atlanta BTA
(B024).
*** Montgomery County is located within the Memphis BTA (B290).
<PAGE>
V. From Nashville MTA
------------------
Nashville, TN 314
Clarksville, TN-Hopkinsville, KY 083
Cookeville, TN 096
VI. From Birmingham MTA
-------------------
Anniston, AL 017
Birmingham, AL 044
Decatur, AL 108
Dothan-Enterprise, AL 115
Florence, AL 146
Gladsden, AL 158
Huntsville, AL 198
Montgomery, AL 305
Selma, AL 415
Tuscaloosa, AL 450
VII. From New Orleans MTA
--------------------
Biloxi-Gulfport-Pascagoula, MS 042
Hattiesburg, MS 186
Laurel, MS 246
McComb-Brookhaven, MS 269
Mobile, AL 302
<PAGE>
SCHEDULE VII
SECURITIES TO BE ISSUED
-----------------------
[See Attached]
<PAGE>
SCHEDULE VIII
Mercury Investors Percentage Share
- ----------------- ----------------
Southern Farm Bureau Life Insurance Company 58.740986%
M3, LLC 10.855584%
McCarty Communications, LLC 7.795751%
DC Investment Partners Exchange Fund, L.P. 1.948938%
FCA Venture Partners I, L.P. 0.974469%
Clayton Associates, LLC 0.194894%
Mercury PCS, Investors, LLC 19.489378%
100%
<PAGE>
SCHEDULE 1.1
PERMITTED EXPENDITURES
----------------------
SIX MONTH OPERATING BUDGET
BEGINNING MAY 1, 19981
Civil Construction & Materials $4,250,000
Site Acquisition 3,475,000
RF Engineering 4,400,000
Plant Operating Expense 5,700,000
Sales & Marketing 2,200,000
General & Administrative 5,600,000
License Note Interest 2,875,000
-----------
TOTAL $28,500,000
GENERAL & ADMINISTRATIVE DETAIL
-------------------------------
Billing Vendor Start-Up Costs $1,400,000
Accounting and Other Software Costs 1,200,000
Computers/Office Equipment 750,000
Employee Salaries and Overhead 1,654,333
G&A Travel 300,000
G&A Legal/Accounting 300,000
-----------
$5,604,333
- ---------------
* Figures recited herein are subject to overages of up to 25%.
<PAGE>
SCHEDULE 2.1
DESCRIPTION OF AT&T
CONTRIBUTED AND RETAINED LICENSES
---------------------------------
[See attached]
<PAGE>
SCHEDULE 2.3
CONTRIBUTED MERCURY ASSETS
--------------------------
Contributed Mercury Assets shall mean all right, title and interest to all the
properties and assets related to the contributed licenses of every kind
(tangible and intangible) belonging to, owned or otherwise held by Mercury I and
Mercury II (except for those licenses owned by Mercury II which are being
retained and intercompany loans between Mercury I and Mercury II), including,
but not limited to:
(a) all tangible personal property;
(b) all accounts, notes and other receivables;
(c) cash and cash equivalents;
(d) all leases, subleases and rights thereunder;
(e) all agreements, contracts, security interests;
(f) approvals, permits, licenses, orders and similar right
obtained from governmental agencies which are assignable;
(g) books, records, specifications, promotional materials,
studies and reports; and
(h) intangibles.
<PAGE>
SCHEDULE 2.8
ASSUMED MERCURY DEBT
AS OF MARCH 31, 1998*
---------------------
Lucent bridge loan 5,000,000.00
FCC debt on C Block 63,890,000.00**
FCC debt on F Block 9,458,000.00
Accrued interest on FCC debt 6,713,000.00
Accrued interest on N/P to Lucent 183,000.00
Central Alabama FCC debt 12,144,000.00**
The Company will also assume all trade liabilities, payroll related
liabilities and other obligations incurred in the normal course of the business.
- --------------
* The liabilities assumed at Closing will be adjusted to reflect actual
liability balances outstanding on that date.
** This reflects 100% of the C Block debt. This amount will be reduced per FCC
regulations when part of the spectrum is returned.
<PAGE>
SCHEDULE 4.6
MERCURY CONSENTS
----------------
The execution, delivery and performance of the Agreement will or may
require the following consents, approvals and reviews:
1. The Federal Communications Commission.
Matters which could prevent Mercury from consummating the transactions
contemplated by this Agreement include:
A. Amarillo Celltelco and High Plains Wireless L.P. v. William M.
Mounger, II, E.B. Martin, Jr., Jerry Sullivan, Jr., Mercury Southern,
LLC and Mercury PCS II, LLC; No. 83, 268-A in the 47th District Court
in and for Potter County, Texas.
B. Applications for Review filed by High Plains Wireless, L.P.: In re
Application of Mercury PCS II, LLC for Facilities in the Broadband
Personal Communications Services in the D, E and F Blocks, Federal
Communications Commission File Numbers 00114CWL97, et al.
C. United States Department of Justice, Antitrust Division, Washington,
D.C.; Mercury PCS II, LLC, Civil Investigative Demand No. 16337.
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.
<PAGE>
SCHEDULE 4.7
LITIGATION
----------
See Items 1(A-C) under "Mercury Consents" on Schedule 4.6.
<PAGE>
SCHEDULE 4.9
BROKER'S FEES
-------------
Amsterdam Pacific LLC $ 2,375,000
TD Securities (USA) Inc. $ 3,507,500
Paul Bowden $ 120,000
Conseco Private Capital Group, Inc. $ 500,000
------------
$ 6,502,500
<PAGE>
SCHEDULE 5.3(A)
PROCEEDINGS AFFECTING MERCURY LICENSES
--------------------------------------
See Items 1(A-C) under "Mercury Consents" on Schedule 4.6.
<PAGE>
SCHEDULE 5.3(C)
MERCURY I AND MERCURY II
CASH FLOW STATEMENTS
--------------------
Mercury PCS and
Mercury PCS II
-----------------
Sources of cash:
Equity $ 14,400,000.00
-----------------
Lucent loan $ 5,000,000.00
Net Sources: $ 19,400,000.00
Uses of Cash:
FCC deposits $ 12,137,000.00
C Block interest $ 1,400,000.00
Deferred financing costs $ 1,137,000.00
Litigation Costs $ 950,000.00
Other operating costs $ 3,102,000.00
-----------------
Net uses: $ 18,726,000.00
Cash as of March 31, 1998 $ 674,000.00
=================
<PAGE>
SCHEDULE 5.4
CASH EQUITY LOANS
-----------------
$ AMOUNT OF CASH
CASH EQUITY INVESTORS EQUITY LOAN
- --------------------- -----------
Washington National Insurance Company United $12,500, 000
Presidential Life Insurance Company 12,500,000
Trillium PCS, LLC 1,284,341
Dresdner Kleinwort Benson Private Equity Partners LP 19,265,111
Triune PCS, Inc. 10,274,726
Mercury PCS, LLC 14,337,197
Mercury PCS II, LLC 3,811,154
DC Investment Partners Exchange Fund, LP 642,170
FCA Venture Partners I, LP 321,085
Clayton Associates LLC 64,217
<PAGE>
SCHEDULE 5.5(G)
MINIMUM BUILDOUT PLAN
---------------------
BUILDOUT SCHEDULE-YEAR 1
------------------------
ATLANTA MTA
- -----------
Cities: Chattanooga, Tennessee
Cleveland, Tennessee
Dalton, Georgia
Interstates/State Highways:
Portion of I-75 South from Chattanooga
Portion of I-75 North from Chattanooga
Portion of I-24 West from Chattanooga
Portion of I-59 South from Chattanooga
BIRMINGHAM MTA
- --------------
Cities: Huntsville, Alabama
Decatur, Alabama
Interstates/State Highways:
Portion of I-65 South from Decatur
Portion of I-65 North from Decatur
MEMPHIS/JACKSON MTA
- -------------------
Cities: Jackson, Mississippi
Vicksburg, Mississippi
Interstates/State Highways:
Portion of I-20 West from Jackson
Portion of I-20 East from Jackson
Portion of I-55 South from Jackson
Portion of I-55 North from Jackson
Portion of Highway 49 South from Jackson
<PAGE>
BUILDOUT SCHEDULE - YEAR 1, CONTINUED
-------------------------------------
KNOXVILLE MTA
- -------------
Cities: Knoxville, Tennessee
Interstates/State Highways:
Portion of I-40 West from Knoxville
Portion of I-40 East from Knoxville
Portion of I-75 North from Knoxville
NASHVILLE MTA
- -------------
Cities: Nashville, Tennessee
Interstates/State Highways:
Portion of I-40 East from Nashville,
Portion of I-40 West from Nashville
Portion of I-24 East from Nashville
Portion of I-24 West from Nashville
Portion of I-65 North from Nashville
Portion of I-65 South from Nashville
The buildout of the above referenced cities, interstates and state
highways represents the deployment of a wireless service network which
will be capable of providing a radio frequency signal level sufficient
to adequately service an estimated 2,954,700 pops within the license
area. The estimated pops recited hereinabove for the buildout during
year 1 represents 21.7% of the estimated total pops contained under the
terms of this agreement.
<PAGE>
BUILDOUT SCHEDULE - YEAR 2
--------------------------
BIRMINGHAM MTA
- --------------
Cities: Birmingham, Alabama
Montgomery, Alabama
Tuscaloosa, Alabama
Anniston, Alabama
Interstates/State Highways:
Portion of I-20 East from Birmingham
Portion of I-20 West from Birmingham
Portion of Highway 280 East from Birmingham
Portion of I-59 North from Birmingham
Portion of I-65 South from Montgomery
Portion of I-65 North from Montgomery
Portion of Highway 231 South from Montgomery
Portion of Highway 80 West from Montgomery
Portion of I-20 East from Tuscaloosa
Portion of I-20 West from Tuscaloosa
Portion of I-20 East from Anniston
Portion of I-20 West from Anniston
LOUISVILLE MTA
- --------------
Cities: Louisville, Kentucky
Lexington, Kentucky
Interstates/State Highways:
Portion of I-64 East from Louisville
Portion of I-64 West from Louisville
Portion of I-65 South from Louisville
Portion of I-65 North from Louisville
Portion of I-71 North from Louisville
Portion of I-75 North from Lexington
Portion of I-75 South from Lexington
Portion of I-64 East from Lexington
Portion of I-64 West from Lexington
<PAGE>
BUILDOUT SCHEDULE - YEAR 2, CONTINUED
-------------------------------------
MEMPHIS/JACKSON MTA
- -------------------
Cities: Hattiesburg, Mississippi
Meridian, Mississippi
Tupelo, Mississippi
Interstates/State Highways:
Portion of Highway 49 North from Hattiesburg
Portion of Highway 49 South from Hattiesburg
Portion of Highway 98 East from Hattiesburg
Portion of I-59 South from Hattiesburg
Portion of I-59 North from Hattiesburg
Portion of I-20 East from Meridian
Portion of I-20 West from Meridian
Portion of I-59 South from Meridian
NASHVILLE MTA
- -------------
Cities: Clarksville, Tennessee
Hopkinsville, Kentucky
Interstates/State Highways:
Portion of I-24 East from Clarksville
Portion of I-24 West from Clarksville
NEW ORLEANS MTA
- ---------------
Cities: Mobile, Alabama
Interstates/State Highways:
Portion of I-65 North from Mobile
Portion of I-10 East from Mobile
Portion of I-10 West from Mobile
Portion of Highway 98 West from Mobile
<PAGE>
BUILDOUT SCHEDULE - YEAR 2, CONTINUED
-------------------------------------
The buildout of the above referenced cities, interstates and state
highways represents the deployment of a wireless service network which
will be capable of providing a radio frequency signal level sufficient
to adequately service an estimated 3,882,900 pops within the license
area. The estimated pops recited hereinabove for the buildout during
year 2 represents 28.6% of the estimated total pops contained under the
terms of this agreement.
The estimated pops recited herein for the buildout for years 1 and 2
will constitute an estimated aggregate total of 6,837,600 pops within
the license area at the completion of the year 2 buildout or 50.3% of
the estimated total pops contained under the terms of this agreement.
<PAGE>
BUILDOUT SCHEDULE - YEAR 3
--------------------------
BIRMINGHAM MTA
- --------------
Cities: Gadsden, Alabama
Dothan, Alabama
Florence, Alabama
Interstates/State Highways:
Portion of I-59 North from Gadsden
Portion of I-59 South from Gadsden
Portion of Highway 231 North from Dothan
LOUISVILLE MTA
- --------------
Cities: Owensboro, Kentucky
Bowling Green, Kentucky
Glasgow, Kentucky
Madisonville, Kentucky
Corbin, Kentucky
Interstates/State Highways:
Portion of Audubon Parkway West from Owensboro
Portion of Western Kentucky Parkway East from Madisonville
Portion of Pennyrile Parkway North from Madisonville
Portion of Pennyrile Parkway South from Madisonville
Portion of I-65 North from Elizabethtown
Portion of I-65 South from Elizabethtown
Portion of I-75 North from Corbin
Portion of I-75 South from Corbin
NASHVILLE MTA
- -------------
Cities: Cookeville, Tennessee
Columbia, Tennessee
Interstates/State Highways:
Portion of I-40 East from Cookeville
Portion of I-40 West from Cookeville
Portion of I-65 North from Columbia
Portion of I-65 South from Columbia
<PAGE>
BUILDOUT SCHEDULE - YEAR 3, CONTINUED
-------------------------------------
MEMPHIS/JACKSON MTA
- -------------------
Cities: Columbus, Mississippi
Starkville, Mississippi
Greenville, Mississippi
Greenwood, Mississippi
Interstates/State Highways:
Portion of Highway 82 East from Columbus
Portion of Highway 82 West from Columbus
Portion of Highway 82 East from Starkville
NEW ORLEANS MTA
- ---------------
Cities: Gulfport, Mississippi
Biloxi, Mississippi
Pascagoula, Mississippi
Brookhaven, Mississippi
McComb, Mississippi
Laurel, Mississippi
Interstates/State Highways:
Portion of Highway 49 North from Gulfport
Portion of I-10 West from Gulfport
Portion of I-10 East from Gulfport
Portion of I-10 West from Biloxi
Portion of I-10 East from Biloxi
Portion of I-10 West from Pascagoula
Portion of I-10 East from Pascagoula
Portion of I-55 North from Brookhaven
Portion of I-55 South from Brookhaven
Portion of I-55 North from McComb
Portion of I-55 South from McComb
Portion of I-59 North from Laurel
Portion of I-59 South from Laurel
<PAGE>
BUILDOUT SCHEDULE - YEAR 3, CONTINUED
-------------------------------------
The buildout of the above referenced cities, interstates and state
highways represents the deployment of a wireless service network which
will be capable of providing a radio frequency signal level sufficient
to adequately service an estimated 1,484,700 pops within the license
area. The estimated pops recited hereinabove for the buildout during
year 3 represents 10.9% of the estimated total pops contained under the
terms of this agreement.
The estimated pops recited herein for the buildout for years 1, 2 and 3
will constitute an estimated aggregate total of 8,322,300 pops within
the license area at the completion of the year 3 buildout or 61.2% of
the estimated total pops contained under the terms of this agreement.
<PAGE>
BUILDOUT SCHEDULE - YEAR 4
--------------------------
Cities: Corinth, Mississippi
Natchez, Mississippi
Rome, Georgia
Selma, Alabama
Demopilis, Alabama
Opelika, Alabama
Auburn, Alabama
LaGrange, Georgia
Interstates/State Highways:
Additional portions of all interstates and highways listed
under years 1 and 2 buildout.
The buildout of the above referenced cities, interstates and state
highways, and expansion of existing cities listed in the buildout for
years 1 through 3, represents the deployment of a wireless service
network which will be capable of providing a radio frequency signal
level sufficient to adequately service an estimated 1,196,670 pops
within the license area. The estimated pops recited hereinabove for the
buildout during year 4 represents 8.8% of the estimated total pops
contained under the terms of this agreement.
The estimated pops recited herein for the buildout for years 1, 2, 3 and
4 will constitute an estimated aggregate total of 9,518,970 pops within
the license area at the completion of the year 4 buildout or 70.0% of
the estimated total pops contained under the terms of this agreement.
<PAGE>
BUILDOUT SCHEDULE - YEAR 5
--------------------------
Cities: The buildout for year 5 will encompass expansion of all
cities, where applicable, launched in the buildout for
years 1 through 4.
Interstates/State Highways:
Additional portions of all interstates and highways listed
under year 3 buildout.
The buildout of the above referenced cities, interstates and state
highways, and expansion of existing cities listed in the buildout for
years 1 through 4, represents the deployment of a wireless service
network which will be capable of providing a radio frequency signal
level sufficient to adequately service an estimated 1,359,853 pops
within the license area. The estimated pops recited hereinabove for the
buildout during year 5 represents 10% of the estimated total pops
contained under the terms of this agreement.
The estimated pops recited herein for the buildout for years 1, 2, 3, 4
and 5 will constitute an estimated aggregate total of 10,878,823 pops
within the license area at the completion of the year 4 buildout or
80.0% of the estimated total pops contained under the terms of this
agreement.
<PAGE>
SCHEDULE 6.16
CENTRAL ALABAMA AGREEMENT AMENDMENT TERMS
-----------------------------------------
Terms not otherwise defined herein shall have the meanings ascribed to
them in the Central Alabama Agreement. The amendment to the Central Alabama
Agreement to be executed shall effect the following:
FIXED PURCHASE PRICE The Purchase Price for the Purchased Assets
shall be fixed at $3,014,450, of which
$2,601,950 shall be paid in the form of the
issuance of equity of Mercury I (or Series C
Preferred Stock of the Company, if
applicable) and the $412,500 Cash Premium
shall be paid in cash. The Purchase Price is
based on Central Alabama's paid in capital
as of May 15, 1998 (adjusted to reflect
agreed modifications as shown on the detail
attached hereto). To the extent that Central
Alabama's paid in capital (with the same
modifications referred to above) exceeds
$2,601,950 as of the Closing Date (as
defined in the Central Alabama Agreement),
Mercury I or the Company, as applicable,
shall pay a cash purchase price adjustment
to Central Alabama equal to any excess.
However, no increase in Central Alabama's
paid in capital shall be taken into account
unless the Purchaser shall have approved the
contribution of additional equity or any
other transaction which would affect the
level of Central Alabama's paid in capital.
To the extent that Central Alabama's paid in
capital (with the same modifications
referred to above) is less than $2,601,950
as of the Closing Date (as defined in the
Central Alabama Agreement), the Cash Premium
portion of the Purchase Price shall be
reduced by an amount equal to the
difference. If the difference exceeds the
Cash Premium, the amount of equity of
Mercury I (or Series C Preferred Stock of
the Company, if applicable) to be issued to
Central Alabama shall be reduced
accordingly.
C-BLOCK SPECTRUM
DISAGGREGATION Central Alabama shall commit to elect the
"disaggregation option" pursuant to the
FCC's Order on Reconsideration of the Second
Report and Order, FCC 98-46 (released March
24, 1998), with respect to its C-Block BTA
B305 Montgomery, Alabama license no later
than two business days prior to the deadline
established by the FCC to make
<PAGE>
such election. This shall be an
unconditional commitment and Mercury I and
the Company shall be held harmless from any
claims or expense arising from or relating
to this election.
RESALE The rights granted to the Partners to resell
PCS services of Mercury I or the Company, as
applicable, shall be modified to: (i) be
limited to the specific geographic areas
designated for each partner as listed on the
attachment hereto; (ii) delete the "most
favored nation" terms provision; (iii) limit
the right to resell to the current Partners
and prohibit the assignment of the right to
resell; and (iv) provide that as to each
Partner, the right to resell shall terminate
on any change of control of each Partner.
Further, the right shall terminate in the
event any such right is deemed to conflict
with the exclusivity provisions of the
Stockholders' Agreement.
EXECUTION OF STOCKHOLDERS'
AGREEMENT Central Alabama and each of its partners (if
any) to whom shares of Series C Preferred
Stock or other securities of the Company are
distributed on the Closing Date shall, on
the Closing Date, and each partner of
Central Alabama to whom shares of Series C
Preferred Stock or other securities of the
Company are distributed thereafter shall, on
the date of such distribution, execute and
deliver to the other parties thereto a
counterpart to each of the Stockholders'
Agreement and the agreement among the Cash
Equity Investors attached as Schedule X to
the Stockholders' Agreement. Central Alabama
and each of its partners to whom shares of
Series C Preferred Stock or other securities
of the Company are distributed makes (as to
itself as of the Closing Date or other date
of distribution) the representations set
forth in Section 5.1 of the Stockholders'
Agreement.
CONTRACTS The lease of office space and the Executive
Employment Agreement dated October 1, 1996,
between Central Alabama and James E.
Campbell shall not form a part of the
Purchased Assets and neither Mercury I nor
the Company shall assume any liabilities
thereunder.
<PAGE>
ASSIGNMENT At the request of the Company, Mercury I
shall be permitted to assign all of its
right, title and interest in and to the
Central Alabama Agreement to the Company,
either prior to or following the Closing, in
form and substance satisfactory to the
Company, AT&T PCS and the Cash Equity
Investors.
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I
DEFINITIONS
ARTICLE II
CONTRIBUTIONS; PURCHASE AND SALE
OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER
2.1 AT&T PCS and TWR Contributions............................................11
2.2 Cash Equity Investor Contributions........................................12
2.3 Mercury Contributions.....................................................13
2.4 INTENTIONALLY OMITTED.....................................................13
2.5 Purchase and Sale of Securities at Closing................................13
2.6 Restrictive Legends.......................................................13
2.7 Use of Proceeds...........................................................14
2.8 Assumption of Mercury Indebtedness........................................14
ARTICLE III
CLOSING
3.1 Time and Place of Closing.................................................14
3.2 Closing Actions and Deliveries............................................14
3.3 Payment of Transfer Taxes.................................................16
ARTICLE IV
REPRESENTATIONS OF ALL PARTIES
4.1 Organization and Standing.................................................16
4.2 Power and Authority.......................................................16
4.3 Due Authorization.........................................................17
4.4 Enforceability............................................................17
4.5 No Breach.................................................................17
4.6 Consents; No Conflicts....................................................17
4.7 Litigation................................................................17
4.8 FCC Compliance............................................................18
4.9 Brokers...................................................................18
ARTICLE V
REPRESENTATIONS OF CERTAIN PARTIES
i
<PAGE>
5.1 No Distribution, Etc......................................................18
5.2 AT&T PCS and TWR Licenses.................................................19
5.3 Mercury Matters...........................................................19
5.4 Capital Commitment........................................................21
5.5 Representations as to the Company.........................................22
ARTICLE VI
COVENANTS
6.1 Consummation of Transactions..............................................26
6.2 Confidentiality...........................................................28
6.3 Retained Licenses.........................................................28
6.4 No Further Commitment.....................................................29
6.5 Use of Proceeds...........................................................29
6.6 SBIC Regulatory Provisions................................................29
6.7 Regulatory Compliance Cooperation.........................................30
6.8 Certain Covenants.........................................................30
6.9 Restricted Stock Plan.....................................................32
6.10 Certain Mercury Transactions.............................................32
6.11 Certain Employees........................................................33
6.12 Pre-Closing Build-Out....................................................34
6.13 Additional Cash Equity Investors.........................................34
6.14 Return of Spectrum.......................................................35
6.15 Option Agreement.........................................................35
6.16 Central Alabama Agreement................................................36
ARTICLE VII
CLOSING CONDITIONS
7.1 Conditions to Obligations of All Parties..................................36
7.2 Conditions to Obligations of Each Party...................................37
7.3 Conditions to the Obligations of the Purchasers...........................38
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
8.1 Survival..................................................................39
8.2 Indemnification by Purchasers.............................................39
8.3 Indemnification by the Management Stockholders............................40
8.4 Indemnification by the Company............................................40
8.5 Indemnification by Mercury I, Mercury II, the Management
Stockholders and the Mercury Investor Indemnitors.........................40
8.5 Percentage Share of any Section 8.........................................41
ii
<PAGE>
8.6 Procedures................................................................41
8.7 Registration Rights.......................................................42
8.8 Limit on Indemnity........................................................42
8.9 Escrow and Reconciliation.................................................43
8.10 Advances.................................................................45
ARTICLE IX
TERMINATION
9.1 Termination...............................................................45
9.2 Effect of Termination.....................................................45
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Amendment and Modification...............................................46
10.2 Waiver of Compliance; Consents...........................................46
10.3 Notices..................................................................46
10.4 Expenses.................................................................48
10.5 Parties in Interest; Assignment..........................................48
10.6 Applicable Law...........................................................49
10.7 Counterparts.............................................................49
10.8 Interpretation...........................................................49
10.9 Entire Agreement.........................................................49
10.10 Publicity...............................................................49
10.11 Specific Performance....................................................49
10.12 Remedies Cumulative.....................................................50
10.13 Authorized Agent of AT&T PCS............................................50
SCHEDULES
Schedule I -- Cash Equity Investors and Commitments
Schedule II -- Management Stockholders
Schedule III -- AT&T PCS and TWR Licenses
Schedule IV -- Mercury Licenses
Schedule V -- Alabama License
Schedule VI -- Company Territory
Schedule VII -- Securities Issued at Closing
Schedule VIII -- Mercury Investors and Percentage Shares
iii
<PAGE>
Schedule 1.1 -- Permitted Expenditures
Schedule 2.1 -- Description of AT&T PCS Contributed and Retained Licenses
Schedule 2.3 -- Contributed Mercury Assets
Schedule 2.8 -- Assumed Mercury Debt
Schedule 4.6 -- Consents
Schedule 4.7 -- Litigation
Schedule 4.9 -- Broker's Fees
Schedule 5.3(a) -- Proceedings Affecting Mercury Licenses
Schedule 5.3(c) -- Mercury I and Mercury II Cash Flow Statements
Schedule 5.4 -- Cash Equity Loans
Schedule 5.5(g) -- Minimum Build-Out Plan
Schedule 6.16 -- Terms of Central Alabama Agreement Amendment
EXHIBITS
Exhibit A -- Form of Management Agreement
Exhibit B -- Form of Network Membership License Agreement
Exhibit C -- Form of Resale Agreement
Exhibit D -- Form of Restated Bylaws
Exhibit E -- Form of Restated Certificate
Exhibit F -- Form of Roaming Agreement
Exhibit G -- Form of Stockholders Agreement
Exhibit H-1 -- Form of Opinion of Counsel to AT&T PCS
Exhibit H-2 -- Form of Opinion of FCC Counsel to AT&T PCS
Exhibit I -- Form of Opinion of Counsel to Cash Equity Investors
Exhibit J-1 -- Form of Opinion of Counsel to Mercury Entities
Exhibit J-2 -- Form of Opinion of FCC Counsel to Mercury Entities
Exhibit K-1 -- Form of Opinion of Counsel to Company and Management
Stockholders
Exhibit K-2 -- Form of Opinion of FCC Counsel to Company and Management
Stockholders
Exhibit L -- Form of Pledge Agreement
Exhibit M -- Form of Assignment
Exhibit N -- Form of Option Agreement
Exhibit O -- Form of Employment Agreement
Exhibit P -- Form of Old Mercury Note
<PAGE>
Exhibit 10.28
CLOSING AGREEMENT
THIS CLOSING AGREEMENT (this "Agreement") is made as of January 7,
1999, by and among AT&T Wireless PCS, Inc., a Delaware corporation ("AT&T PCS"),
TWR Cellular, Inc., a Maryland corporation ("TWR"), the cash equity investors
listed on the signature pages hereto (the "Cash Equity Investors"), Airwave
Communications, LLC (f/k/a Mercury PCS, LLC), a Mississippi limited liability
company ("Mercury I"), Digital PCS, LLC (f/k/a Mercury PCS II, LLC), a
Mississippi limited liability company ("Mercury II"), the management
stockholders listed on the signature pages hereto (the "Management
Stockholders"), certain members of Mercury I listed on the signature pages
hereto (the "Mercury Investor Indemnitors") and Tritel, Inc., a Delaware
corporation (the "Company").
Background. AT&T PCS, TRW, the Cash Equity Investors, the Management
Stockholders (other than William Arnett), and the Company are parties to that
certain Securities Purchase Agreement dated as of May 20, 1998 (the "Securities
Purchase Agreement"). Closing of the transactions contemplated by the Securities
Purchase Agreement is occurring as of the date hereof. In accordance with
Section 6.10(b) of the Securities Purchase Agreement, the Mercury Investor
Indemnitors have elected to receive a distribution of the Escrowed Shares. In
connection therewith, the parties desire to set forth their understandings
regarding certain matters set forth herein. Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Securities
Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing Background, the
mutual promises and agreements made herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be legally bound hereby, agree as follows:
1. Additional Purchasers. Pursuant to the Additional Offering, The
Manufacturers' Life Insurance Company (U.S.A.) agreed to invest an aggregate
amount of $10,000,000 and Triune PCS, LLC increased its commitment to invest to
$24,139,040. DC Investment Partners Exchange Fund LP and FCA Venture Partners I,
LP assigned their rights and interest as Cash Equity Investors in the Securities
Purchase Agreement to FCA Venture Partners II, LP, which has assumed all of
their obligations thereunder as Cash Equity Investors.
2. Name Changes. On June 22, 1998, Mercury PCS, LLC and Mercury PCS II,
LLC (signatories to the Securities Purchase Agreement) changed their names to
"Airwave Communications, LLC" and "Digital PCS, LLC", respectively.
3. Legal Structure. Pursuant to Section 5.5(d) of the Securities
Purchase Agreement, the Company hereby provides notice of the following matters.
Attached hereto as Exhibit I is a legal structure chart that depicts the
ownership of the Company's Subsidiaries. AirCom PCS, Inc. and QuinCom, Inc. have
been formed under the laws of the State of Alabama. All of the other
Subsidiaries have been formed under the laws of the State of Delaware. The
Company has been qualified to conduct business in the State of Mississippi.
Tritel Communications, Inc.
<PAGE>
("Tritel Communications") has been qualified to conduct business in the States
of Alabama, Kentucky, Mississippi and Tennessee. Tritel Finance, Inc. has been
qualified to conduct business in the States of Alabama, Kentucky, Mississippi
and Tennessee. Tritel Holding Corp. has been qualified to do business in
Mississippi.
4. Updating of Schedules. The following Schedules to the Securities
Purchase Agreement are replaced and updated as of the date hereof as set forth
in the corresponding Schedules listed below and attached hereto:
Schedule I Cash Equity Investors and Commitments
Schedule IV Mercury Licenses (Supplemented, not replaced)
Schedule V Alabama Licenses (Supplemented, not replaced)
Schedule VII Securities Issued at Closing
Schedule 1.1 Permitted Expenditures
Schedule 2.8 Assumed Mercury Debt
Schedule 4.7 Litigation
Schedule 5.3(a) Proceedings Affecting Mercury Licenses
Schedule 5.4 Cash Equity Loans
5. Certain Definitional Changes. The following definitions shall
supersede and replace the definitions of such terms (or shall add new defined
terms) that are contained in Article I of the Securities Purchase Agreement:
"Bridge Loan Agreement" means (i) from May 20, 1998 until December
14, 1998, the agreement between Mercury I and Lucent, dated as of
October 31, 1997, to provide a credit facility having aggregate
commitments of at least $15 million, as the same may have been
amended, modified or supplemented in accordance with the terms
thereof, and (ii) beginning December 15, 1998, the agreement between
Mercury I and Ericsson, dated as of December 15, 1998, to provide a
credit facility having an aggregate commitment of up to $28.5
million, as the same may be amended, modified or supplemented in
accordance with the terms thereof.
"Credit Agreement" means the agreement among Tritel Holding Corp., a
Delaware corporation that is a wholly-owned Subsidiary of the
Company, the lenders and agents referred to therein, and any other
parties who become lenders or agents thereunder, dated as of the
Closing Date, to provide a credit facility having aggregate
commitments of at least $550 million, as the same may be amended,
modified or supplemented in accordance with the terms thereof.
"Ericsson" means Ericsson Inc.
"Old Mercury Expenses" means (i) legal fees and related
disbursements, fines, settlements and judgments in each case
documented in reasonable detail, payable by Mercury I or II in
connection with the matters described on Schedule 4.7 or 5.3(a)
which, as of the Closing Date, totals $20,284.02, and (ii) interest
accrued and paid on Mercury II's indebtedness to the United States
Department of the
2
<PAGE>
Treasury with respect to the Florida Licenses which, as of the
Closing Date, totals $333,276.78.
6. Resale Agreement. For purposes of Section 7.2(f) of the Securities
Purchase Agreement only, the term "Related Agreements" shall exclude the Resale
Agreement, which shall not be executed on the date hereof, but rather shall be
executed and delivered in accordance with the provisions contained in Section
8.11 of the Stockholders' Agreement.
7. Employment of Executives. The Employment Agreements with each of the
Management Stockholders have been entered into by Tritel Communications, a
wholly owned indirect Subsidiary of the Company, as the employer of the
Management Stockholders.
8. Company Operations. It is contemplated that the operations of the
Company shall be conducted through wholly owned direct or indirect Subsidiaries.
However, certain documents executed, or to be executed, in connection with the
Closing (including, without limitation, the Stockholders' Agreement, the Network
Membership License Agreement, the Roaming Agreement and the Resale Agreement)
provide that the Company shall enter into agreements or conduct the Company's
operations. Notwithstanding the foregoing, the parties acknowledge and consent
that one or more of the Company's Subsidiaries have entered, or may enter, into
such agreements or conduct such operations. The parties hereto consent to such
Subsidiaries entering into such agreements or conducting such operations on the
condition that (i) such Subsidiaries shall at all times be direct or indirect
wholly-owned Subsidiaries of the Company, and (ii) the Company shall cause such
wholly-owned Subsidiaries to perform the obligations and conduct such operations
of the Company or such wholly-owned Subsidiaries, as the case may be, required
to be performed or conducted by the Company or such wholly-owned Subsidiaries,
as the case may be, under such agreements.
9. Consents to Pre-Closing Activities. The following transactions or
actions have been previously authorized by the board of directors of the Company
with the oral consent of authorized representatives of AT&T PCS, TWR and Cash
Equity Investors representing 66-2/3% of the Aggregate Commitment. AT&T PCS and
the Cash Equity Investors hereby ratify and confirm their consent to the
following transactions or actions taken by the Company (or any of its
Subsidiaries) which, pursuant to Section 6.8 of the Securities Purchase
Agreement, required the consent of AT&T PCS and Cash Equity Investors:
(a) the execution of RF engineering services contract with Galaxie
Personal Communications Services, Inc. d/b/a Galaxy Engineering
Services;
(b) the employment and compensation of employees in accordance with
resolutions adopted at the June 17, 1998, meeting of the directors
of the Company and reflected in the minutes thereof;
(c) the execution of site acquisition services contract with
SpectraSite Communications, Inc.;
(d) the lease of headquarters and possible switch space at the 111
Capitol Building;
3
<PAGE>
(e) the execution of a program and construction management services
agreement with Bechtel; and
(f) the execution of lease of office space at River Oaks Office Plaza,
Flowood, Mississippi, for customer service, billing and other
purposes.
10. Return of Spectrum. In accordance with the provisions of Section
6.14 of the Securities Purchase Agreement, Mercury I and Central Alabama elected
the "disaggregation option" pursuant to the FCC's Order on Reconsideration of
the Second Report and Order, FCC 98-46 (released March 24, 1998) with respect to
the C-Block Mercury Licenses and the Alabama Licenses.
11. Option Agreement. Notwithstanding the provisions of Section 6.15 of
the Securities Purchase Agreement, the Option Agreement is being entered into
simultaneously herewith.
12. Restated By-Laws. The form of Restated By-Laws attached as Exhibit
D to the Securities Purchase Agreement is amended, replaced and superseded in
its entirety by Exhibit A to the Stockholders Agreement executed simultaneously
herewith.
13. Capitalization. The authorized capital stock of the Company as of
the date hereof is reflected in the Restated Certificate of Incorporation of the
Company in the form attached as Exhibit B to the Stockholders Agreement executed
simultaneously herewith rather than as set forth in Section 5.5(b)(ii) of the
Securities Purchase Agreement. Exhibit E to the Securities Purchase Agreement is
amended, replaced and superseded in its entirety by Exhibit B to the
Stockholders Agreement executed simultaneously herewith.
14. Central Alabama. Mercury I has assigned all of its right, title and
interest in and to the Central Alabama Agreement to the Company and the Alabama
Licenses shall be transferred directly to AirCom PCS, Inc., an indirect
Subsidiary of the Company. The Central Alabama Agreement was previously amended
by Mercury I in accordance with the requirements of Section 6.16 of the
Securities Purchase Agreement.
15. Collateral Agency Agreement. Each party hereto, other than the
Company, that is a Mercury Indemnified Party, as defined in the Collateral
Agency Agreement attached hereto as Exhibit II:
(a) appoints the Company as its agent to execute, deliver and perform
on its behalf such Collateral Agency Agreement in the form of such
exhibit and pursuant thereto to appoint the collateral agent named
therein as its agent to hold any collateral specified therein and
(b) acknowledges that it shall be bound by such agreement, when so
executed, as if it were a party thereto.
This Section 15 shall inure to the benefit of the Company and each other party
to such Collateral Agency Agreement.
4
<PAGE>
16. Certain Mercury Transactions. The second sentence of Section
6.10(c) of the Securities Purchase Agreement is deleted in its entirety.
17. Mercury Investor Indemnitors. By executing this Agreement, each
Mercury Investor party hereto hereby elects to give written notice to Mercury I
and Mercury II that it elects to receive its Escrowed Shares and, effective upon
the transfer of ownership of such Escrowed Shares to a Mercury Investor
Indemnitor, such Mercury Investor Indemnitor joins in the execution of (i) the
Stockholders Agreement of even date herewith, and (ii) that certain Investors
Stockholders' Agreement by and among the Company, the Cash Equity Investors
(which, for purposes of such agreement, includes Mercury I and Mercury II) and
AT&T PCS of even date herewith, all in accordance with Section 6.10(b) of the
Securities Purchase Agreement.
18. License Transfers. In accordance with its rights under Sections 2.1
and 2.3 of the Securities Purchase Agreement, the Company hereby directs the
assignors thereof to transfer each license to the Company's indirect Subsidiary
designated below:
Subsidiary Call Sign Market No. Freq. Block
- --------------------------------------------------------------------------------
AirCom PCS, Inc. KNLF457 B305 C
AirCom PCS, Inc. KNLF604 B017 C
AirCom PCS, Inc. KNLF605 B044 C
AirCom PCS, Inc. KNLF606 B108 C
AirCom PCS, Inc. KNLF607 B158 C
AirCom PCS, Inc. KNLF608 B198 C
AirCom PCS, Inc. KNLF609 B450 C
ClearCall, Inc. KNLF287 B232 A
ClearWave, Inc. KNLF256 B290 B
ClearWave, Inc. KNLF256 B210 B
ClearWave, Inc. KNLF256 B449 B
ClearWave, Inc. KNLF256 B175 B
ClearWave, Inc. KNLF256 B292 B
ClearWave, Inc. KNLF256 B094 B
ClearWave, Inc. KNLF256 B315 B
ClearWave, Inc. KNLF256 B455 B
DigiCall, Inc. KNLG908 B042 F
DigiCall, Inc. KNLG918 B186 F
DigiCall, Inc. KNLG922 B246 E
DigiCall, Inc. KNLG925 B269 F
DigiCom, Inc. KNLG923 B263 F
DigiCom, Inc. KNLG909 B052 F
DigiNet PCS, Inc. KNLF286 B314 B
DigiNet PCS, Inc. KNLF286 B083 B
DigiNet PCS, Inc. KNLF286 B096 B
Global PCS, Inc. KNLF251 B263 A
Global PCS, Inc. KNLF251 B252 A
Global PCS, Inc. KNLF251 B052 A
Global PCS, Inc. KNLF251 B338 A
5
<PAGE>
Global PCS, Inc. KNLF251 B098 A
Global PCS, Inc. KNLF251 B423 A
Global PCS, Inc. KNLF251 B273 A
NexCom, Inc. KNLF221 B076 A
NexCom, Inc. KNLF221 B334 A
NexCom, Inc. KNLF221 B384 A
NexCom, Inc. KNLF221 B102 A
NexCom, Inc. KNLF221 B085 A
NexCom, Inc. KNLF221 B237 A
QuinCom, Inc. KNLG933 B415 F
QuinCom, Inc. KNLG912 B115 F
QuinCom, Inc. KNLG914 B146 F
QuinCom, Inc. KNLG927 B302 F
QuinCom, Inc. KNLG928 B305 F
The above license transfers are intended to be treated in the following manner
for federal income tax purposes:
(a) Each assignor thereof transferred their license to the Company in
exchange for securities of the Company pursuant to Section 351 of
the Internal Revenue Code of 1986, as amended (the "Code");
(b) The Company transferred each of the above listed licenses to
Tritel Holding Corp. solely in constructive exchange for
securities of Tritel Holding Corp. under Section 351 of the Code.
(c) Tritel Holding Corp. transferred the licenses listed below to
either Tritel A/B Holding Corp. or Tritel C/F Holding Corp., as
applicable, as designated below, solely in constructive exchange
for securities of Tritel A/B Holding Corp. or Tritel C/F Holding
Corp., as applicable, under Section 351 of the Code.
Tritel A/B Holding Corp.
-----------------------------------
Call Sign Market No. Freq. Block
- --------------------------------------------------------------------------------
KNLF287 B232 A
KNLF256 B290 B
KNLF256 B210 B
KNLF256 B449 B
KNLF256 B175 B
KNLF256 B292 B
KNLF256 B094 B
KNLF256 B315 B
KNLF256 B455 B
KNLF286 B314 B
6
<PAGE>
KNLF286 B083 B
KNLF286 B096 B
KNLF251 B263 A
KNLF251 B252 A
KNLF251 B052 A
KNLF251 B338 A
KNLF251 B098 A
KNLF251 B423 A
KNLF251 B273 A
KNLF221 B076 A
KNLF221 B334 A
KNLF221 B384 A
KNLF221 B102 A
KNLF221 B085 A
KNLF221 B237 A
Tritel C/F Holding Corp.
---------------------------------
Call Sign Market No. Freq. Block
- --------------------------------------------------------------------------------
KNLF457 B305 C
KNLF604 B017 C
KNLF605 B044 C
KNLF606 B108 C
KNLF607 B158 C
KNLF608 B198 C
KNLF609 B450 C
KNLG908 B042 F
KNLG918 B186 F
KNLG922 B246 E
KNLG925 B269 F
KNLG923 B263 F
KNLG909 B052 F
KNLG933 B415 F
KNLG912 B115 F
KNLG914 B146 F
KNLG927 B302 F
KNLG928 B305 F
(d) Tritel A/B Holding Corp. transferred the licenses designated as
being transferred to it under subparagraph (b) above to the
following Subsidiaries as designated below, solely in constructive
exchange for securities of such Subsidiary under Section 351 of
the Code.
7
<PAGE>
Tritel A/B Holding Corp.
---------------------------------------------
Subsidiary Call Sign Market No. Freq. Block
- --------------------------------------------------------------------------------
ClearCall, Inc. KNLF287 B232 A
ClearWave, Inc. KNLF256 B290 B
ClearWave, Inc. KNLF256 B210 B
ClearWave, Inc. KNLF256 B449 B
ClearWave, Inc. KNLF256 B175 B
ClearWave, Inc. KNLF256 B292 B
ClearWave, Inc. KNLF256 B094 B
ClearWave, Inc. KNLF256 B315 B
ClearWave, Inc. KNLF256 B455 B
DigiNet PCS, Inc. KNLF286 B314 B
DigiNet PCS, Inc. KNLF286 B083 B
DigiNet PCS, Inc. KNLF286 B096 B
Global PCS, Inc. KNLF251 B263 A
Global PCS, Inc. KNLF251 B252 A
Global PCS, Inc. KNLF251 B052 A
Global PCS, Inc. KNLF251 B338 A
Global PCS, Inc. KNLF251 B098 A
Global PCS, Inc. KNLF251 B423 A
Global PCS, Inc. KNLF251 B273 A
NexCom, Inc. KNLF221 B076 A
NexCom, Inc. KNLF221 B334 A
NexCom, Inc. KNLF221 B384 A
NexCom, Inc. KNLF221 B102 A
NexCom, Inc. KNLF221 B085 A
NexCom, Inc. KNLF221 B237 A
(e) Tritel C/F Holding Corp. transferred the licenses designated as
being transferred to it under subparagraph (b) above to the
following Subsidiaries as designated below, solely in constructive
exchange for securities of such Subsidiary under Section 351 of
the Code.
Tritel C/F Holding Corp.
---------------------------------------------
Subsidiary Call Sign Market No. Freq. Block
- --------------------------------------------------------------------------------
AirCom PCS, Inc. KNLF457 B305 C
AirCom PCS, Inc. KNLF604 B017 C
AirCom PCS, Inc. KNLF605 B044 C
AirCom PCS, Inc. KNLF606 B108 C
AirCom PCS, Inc. KNLF607 B158 C
AirCom PCS, Inc. KNLF608 B198 C
8
<PAGE>
AirCom PCS, Inc. KNLF609 B450 C
DigiCall, Inc. KNLG908 B042 F
DigiCall, Inc. KNLG918 B186 F
DigiCall, Inc. KNLG922 B246 E
DigiCall, Inc. KNLG925 B269 F
DigiCom, Inc. KNLG923 B263 F
DigiCom, Inc. KNLG909 B052 F
QuinCom, Inc. KNLG933 B415 F
QuinCom, Inc. KNLG912 B115 F
QuinCom, Inc. KNLG914 B146 F
QuinCom, Inc. KNLG927 B302 F
QuinCom, Inc. KNLG928 B305 F
19. Company Stock Option Plans. The board of directors of the Company
has adopted the Tritel, Inc. 1999 Stock Option Plan and the Tritel, Inc. 1999
Stock Option Plan for Nonemployee Directors in the forms attached as Exhibits
III and IV, respectively. All parties hereto, as shareholders of the Company,
hereby approve the adoption of such plans.
20. Consent to Assignment of Rights. The Parties hereto consent to the
assignment by the Company to Toronto Dominion (Texas), Inc., as Administrative
Agent for itself and on behalf of the Lenders named in the Loan Agreement, dated
as of January 7, 1999, among Tritel Holding Corp., the Company, the Lenders
named therein and Toronto Dominion (Texas), Inc. ("Toronto Dominion") pursuant
to the Assignment of Rights, dated as of January 7, 1999, among the Company and
Toronto Dominion (the "Assignment") of the Assigned Provisions (as defined in
the Assignment). Each Cash Equity Investor and other stockholder of the Company
agrees to be bound by all of the terms of the Assignment as if each such party
was a Stockholder named therein and a party thereto.
21. APPP. The Company agrees to execute a counterpart of the Affiliate
Phone Purchase Program Agreement substantially in the form attached as Exhibit V
with such changes therein as AT&T shall reasonably require.
22. Ericsson Supply Agreement. AT&T PCS and each Cash Equity Investor
party hereto consent to the Company's execution of that certain Acquisition
Agreement among Ericsson Inc., Tritel Communications and Tritel Finance, Inc.
effective December 30, 1998, (conditioned upon the approval of the boards of
directors of Tritel Communications and Tritel Finance, Inc.).
23. Central Alabama Partnership Joinder. Upon the transfer of ownership
of Series C Preferred Stock of the Company to Central Alabama Partnership, L.P.
132 ("CAP"), CAP shall be joined as a party to the Stockholders Agreement and
the Investors's Stockholders Agreement, and shall be treated under such
agreements as a Cash Equity Investor for all purposes thereunder.
24. Ericsson Loans. Pursuant to the Investor Loan Agreements and the
Ericsson Commitment Letter, the parties hereto who are borrowers under the
Investor Loan Agreements consent to the funding of the aggregate amount of
$75,000,000 representing the loan amounts to
9
<PAGE>
be funded under such Investor Loan Agreements directly to the Company on behalf
of such borrowers.
25. Miscellaneous. The provisions of this Agreement modify the
provisions of the Securities Purchase Agreement and any other document executed
in connection therewith; and it is intended that such modifications constitute
written amendments to the Securities Purchase Agreement or those documents, as
applicable. Except for the modifications and other agreements stated above, all
other terms and conditions, including as to governing law, of the Securities
Purchase Agreement shall remain the same and continue in full force and effect
and shall constitute the legally valid and binding obligations of the parties
hereto enforceable in accordance with their terms.
[SIGNATURES CONTAINED ON NEXT PAGE]
10
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed or consent this
Agreement to be executed by its duly authorized officers as of the date first
written above.
AT&T WIRELESS PCS INC.
By:
--------------------------------------
Name:
Title:
TWR CELLULAR, INC.
By:
--------------------------------------
Name:
Title:
TRITEL, INC.
By:
--------------------------------------
Name:
Title:
11
<PAGE>
CASH EQUITY INVESTORS:
TORONTO DOMINION INVESTMENTS, INC.
By:
--------------------------------------
Name: Martha L. Gariepy
Title: Vice President
ENTERGY WIRELESS COMPANY
By:
--------------------------------------
Name: Gary Fuqua
Title: President and Chief Executive
Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By:
--------------------------------------
Name: Molly Fergusson
Title: Managing Director
12
<PAGE>
WASHINGTON NATIONAL INSURANCE COMPANY
By:
--------------------------------------
Name:
Title:
UNITED PRESIDENTIAL LIFE INSURANCE
COMPANY
By:
--------------------------------------
Name:
Title:
13
<PAGE>
DRESDNER KLEINWORT BENSON PRIVATE EQUITY
PARTNERS LP
BY: DRESDNER KLEINWORT BENSON PRIVATE
EQUITY MANAGERS LLC, AS ITS GENERAL
PARTNER
By:
--------------------------------------
Name: Alexander P. Coleman
Title: Authorized Signatory
14
<PAGE>
TRIUNE PCS, LLC, A DELAWARE LIMITED
LIABILITY COMPANY
BY: OAK TREE, LLC, A DELAWARE LIMITED
LIABILITY COMPANY
TITLE: MANAGER
BY: TRIUNE INC., A DELAWARE CORPORATION
TITLE: MANAGER
By:
--------------------------------------
Name: Kevin Shepherd
Title: President
15
<PAGE>
FCA VENTURE PARTNERS II, L.P.
BY: CLAYTON-DC VENTURE CAPITAL GROUP,
LLC, ITS GENERAL PARTNER
By:
--------------------------------------
Name: D. Robert Crants, III
Title: Manager
CLAYTON ASSOCIATES, LLC
BY: ,
-------------------------------------
ITS MANAGING MEMBER
By:
--------------------------------------
Name:
Title:
16
<PAGE>
AIRWAVE COMMUNICATIONS, LLC (F/K/A
MERCURY PCS, LLC)
By: MSM, Inc., its Manager
By:
----------------------------------
Name: E.B. Martin, Jr.
Title: Vice President
DIGITAL PCS, LLC (F/K/A MERCURY PCS II,
LLC)
By: MSM, Inc., its Manager
By:
----------------------------------
Name: E.B. Martin, Jr.
Title: Vice President
17
<PAGE>
THE MANUFACTURERS' LIFE INSURANCE
COMPANY (U.S.A.)
By:
--------------------------------------
Name:
Title:
18
<PAGE>
TRILLIUM PCS, LLC
By:
--------------------------------------
Name: William M. Mounger, II
Title: Manager
19
<PAGE>
MERCURY INVESTOR INDEMNITORS:
SOUTHERN FARM BUREAU LIFE INSURANCE
COMPANY
By:
--------------------------------------
Name:
Title:
M3, LLC
By:
--------------------------------------
Name:
Title:
MCCARTY COMMUNICATIONS, LLC
By:
--------------------------------------
Name:
Title:
MERCURY PCS INVESTORS, LLC
By:
--------------------------------------
Name:
Title:
20
<PAGE>
DC INVESTMENT PARTNERS EXCHANGE FUND,
L.P.
BY: DC INVESTMENT PARTNERS, LLC, ITS
GENERAL PARTNER
By:
----------------------------------
Name: D. Robert Crants, III
Title: Manager
FCA VENTURE PARTNERS I, L.P.
BY: DC INVESTMENT PARTNERS, LLC, ITS
GENERAL PARTNER
By:
----------------------------------
Name: D. Robert Crants, III
Title: Manager
CLAYTON ASSOCIATES, LLC
BY: ,
-------------------------------------
ITS MANAGING MEMBER
By:
--------------------------------------
Name:
Title:
21
<PAGE>
MANAGEMENT STOCKHOLDERS:
-----------------------------------------
William M. Mounger, II
-----------------------------------------
E.B. Martin, Jr.
-----------------------------------------
Jerry M. Sullivan, Jr.
22
<PAGE>
EXHIBIT I
Legal Structure Chart
---------------------
TRITEL CORPORATE STRUCTURE
<TABLE>
<CAPTION>
---------------------------
TRITEL, INC.
Delaware Corp.
---------------------------
|
---------------------------
TRITEL HOLDING CORP.
Delaware Corp.
---------------------------
|
-----------------------------------------------------------------------------------------------
| | | |
- --------------------------- --------------------------- --------------------------- ---------------------------
<S> <C> <C> <C>
TRITEL A/B HOLDING CORP. TRITEL C/F HOLDING CORP. TRITEL COMMUNICATIONS, INC. TRITEL FINANCE, INC.
Delaware Corp. Delaware Corp. Delaware Corp. Delaware Corp.
- --------------------------- --------------------------- --------------------------- ---------------------------
| |
- --------------------------- ---------------------------
NEXCOM, INC. AIRCOM PCS, INC.
Delaware Corp. Delaware Corp.
- --------------------------- ---------------------------
| |
- --------------------------- ---------------------------
CLEARCALL, INC. QUINCOM, INC.
Delaware Corp. Delaware Corp.
- --------------------------- ---------------------------
| |
- --------------------------- ---------------------------
GLOBAL PCS, INC. DIGICOM, INC.
Delaware Corp. Delaware Corp.
- --------------------------- ---------------------------
| |
- --------------------------- ---------------------------
CLEARWAVE, INC. DIGICALL, INC.
Delaware Corp. Delaware Corp.
- --------------------------- ---------------------------
|
- ---------------------------
DIGINET PCS, INC.
Delaware Corp.
- ---------------------------
</TABLE>
23
<PAGE>
EXHIBIT II
COLLATERAL AGENCY AGREEMENT
See attached.
24
<PAGE>
EXHIBIT III
TRITEL, INC. 1999 STOCK OPTION PLAN
See attached.
25
<PAGE>
EXHIBIT IV
TRITEL, INC. 1999 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
See attached.
26
<PAGE>
EXHIBIT V
AFFILIATE PHONE PURCHASE PROGRAM AGREEMENT
See attached.
27
<PAGE>
Schedule I
CASH EQUITY INVESTORS AND COMMITMENTS
<TABLE>
<CAPTION>
AGGREGATE INITIAL CASH SECOND
CASH EQUITY INVESTORS COMMITMENT CONTRIBUTION FUNDING 9/30/99
--------------------- ---------- ------------ ---------------
<S> <C> <C> <C>
Washington National Insurance Company $25,000,000 $16,666,667 $8,333,333
United Presidential Life Insurance Company 25,000,000 16,666,667 8,333,333
Trillium PCS, LLC 2,000,000 1,333,333 666,667
Dresdner Kleinwort Benson Private Equity
Partners LP 30,000,000 20,000,000 10,000,000
Entergy Wireless Corporation 20,000,000 13,333,333 6,666,667
Triune, Inc. 24,139,040 16,092,694 8,046,346
Toronto Dominion Investments, Inc. 5,000,000 3,333,333 1,666,667
General Electric Capital Corporation 2,500,000 1,666,667 833,333
The Manufacturers' Life Insurance Company
(U.S.A.) 10,000,000 6,666,667 3,333,333
FCA Venture Partners II, LP 5,500,000 3,666,667 1,833,333
Clayton Associates, LLC 100,000 66,667 33,333
Digital PCS, LLC 2,976,401 2,976,401 -0-
- ---------------------------------------------------------------------------------------------------
Airwave Communications, LLC 11,163,079 11,163,079 -0-
----------- ----------- ----------
TOTAL 163,369,520 113,623,175 49,746,345
</TABLE>
28
<PAGE>
Schedule IV
MERCURY LICENSES
- --------------------------------------------------------------------------------
MARKET NUMBER FREQUENCY BLOCK LICENSE DESCRIPTION
- --------------------------------------------------------------------------------
017 C Anniston, AL
- --------------------------------------------------------------------------------
044 C Birmingham, AL
- --------------------------------------------------------------------------------
108 C Decatur, AL
- --------------------------------------------------------------------------------
158 C Gadsden, AL
- --------------------------------------------------------------------------------
198 C Huntsville, AL
- --------------------------------------------------------------------------------
450 C Tuscaloosa, AL
- --------------------------------------------------------------------------------
MERCURY PCS II LICENSES
- --------------------------------------------------------------------------------
MARKET NUMBER FREQUENCY BLOCK LICENSE DESCRIPTION
- --------------------------------------------------------------------------------
042 F Biloxi, MS
- --------------------------------------------------------------------------------
415 F Selma, AL
- --------------------------------------------------------------------------------
115 F Dothan-Enterprise, AL
- --------------------------------------------------------------------------------
146 F Florence, AL
- --------------------------------------------------------------------------------
186 F Hattiesburg, MS
- --------------------------------------------------------------------------------
246 E Laurel, MS
- --------------------------------------------------------------------------------
269 F McComb, MS
- --------------------------------------------------------------------------------
302 F Mobile, AL
- --------------------------------------------------------------------------------
305 F Montgomery, AL
- --------------------------------------------------------------------------------
263 F Louisville, KY
- --------------------------------------------------------------------------------
052 F Bowling Green, KY
- --------------------------------------------------------------------------------
29
<PAGE>
Schedule V
ALABAMA LICENSES
- --------------------------------------------------------------------------------
MARKET NUMBER FREQUENCY BLOCK LICENSE DESCRIPTION
- --------------------------------------------------------------------------------
305 C Montgomery, AL
- --------------------------------------------------------------------------------
30
<PAGE>
Schedule VII
SECURITIES ISSUED AT CLOSING
See attached.
31
<PAGE>
Schedule 1.1
PERMITTED EXPENDITURES
MAY 1, 1998 - NOVEMBER 30, 1998
(REFLECTS AMOUNTS ACTUALLY SPENT)
Site Acquisition $ 703,000
Plant Operating Expense 1,191,000
Sales & Marketing 313,000
General & Administrative 5,054,000
License Note Interest 2,707,000
-------------
TOTAL $ 9,968,000
GENERAL & ADMINISTRATIVE DETAIL
Billing/ Accounting/ Computers/ Other Software Costs $ 1,034,000
Office Equipment/ Furniture/ Leasehold Improvements 778,000
Rent, Utilities, & Misc Office Expense 175,000
Filing Fees 136,000
Employee Salaries and Related Expenses 1,888,000
G&A Travel 148,000
G&A Legal/Accounting/Consulting 895,000
-------------
TOTAL $ 5,054,000
=============
32
<PAGE>
Schedule 2.8
ASSUMED MERCURY DEBT
Ericsson Inc. debt 22,100,000.00
FCC debt on C Block 31,945,000.00
FCC debt on F Block 9,458,000.00
Accrued interest on FCC debt 1,320,000.00
Accrued interest on N/P to Ericsson Inc. 87,000.00
Note Payable to Airwave Communications, LLC 12,069,000.00
including interest by Digital PCS, LLC
The Company will also receive a Note Receivable Airwave Communications,
LLC holds from Digital PCS, LLC for $12,069,000. There is no net effect to the
Company.
The Company will also assume up to $10,000,000 of trade liabilities,
payroll related liabilities and other current liabilities incurred in the
ordinary course of the business, an estimate of which, as of November 30, 1998,
is set forth on Annex I of this Schedule 2.8.
33
<PAGE>
ANNEX I TO SCHEDULE 2.8
Assumed Mercury obligations
Estimated as of November 30, 1998
Vendor Amount
------ ------
Galaxy $3,686,000
WFI 2,077,000
Spectrasite 681,000
Global Mobility 56,000
Geotrans Wireless 369,000
Bechtel 844,000
Ikon 201,000
Legal Fees 187,100
Payroll 584,100
Cell/Switch site leases 73,200
Lease options 28,000
Office furniture & equipment 42,600
Equipment rentals 12,100
Office supplies 32,500
Telephone 55,400
Temp services 8,900
Recruiting & relocation 22,700
Office rent & utilities 45,900
Temporary living 12,400
Travel, meals & lodging expense 54,100
Accounting services 16,700
Professional services 99,000
Other 34,900
----------------------
$9,223,600
======================
34
<PAGE>
Schedule 4.7
LITIGATION
See Items 1(A-C) under "Mercury Consents" on Schedule 4.6
Also:
Edwin Welsh v. Mercury PCS, LLC, Mercury PCS II, LLC, MSM, Inc., Mercury
Wireless Management, Inc., William M. Mounger, II, Jerry Sullivan, and
E. B. Martin, Chancery Court of the First Judicial District of Hinds
County, Mississippi, Cause No. G97-561013.
The plaintiff, who had been an employee of Mercury Communications
Company prior to the FCC's C-Block PCS auction, filed the above
complaint individually and derivatively "as a beneficial shareholder" of
Mercury Wireless Management, Inc. ("MWM"). The plaintiff has claimed
wrongful termination of employment, breach of contract (including breach
of an alleged employment agreement), usurpation of corporate
opportunities, breach of fiduciary duties and other matters, and seeks
actual and punitive damages in an unspecified amount, as well as
attorneys fees and court costs. The plaintiff also seeks an order
requiring that the stock of MWM or the "Mercury company which owns the
PCS licenses" equal to 5% of Messrs. Mounger, Sullivan and Martin's
collective interests be issued to him. Further, he seeks an order
compelling the defendants to transfer all PCS licenses to MWM, and he
seeks to impose a constructive trust upon the PCS licenses in an amount
equal to 5% of the "collective interests" of Messrs. Mounger, Sullivan
and Martin.
35
<PAGE>
Schedule 5.3(a)
PROCEEDINGS AFFECTING MERCURY LICENSES
See Items 1(A-C) under "Mercury Consents" on Schedule 4.6.
See also Item 1 under "Litigation" on Schedule 4.7, as amended herein.
36
<PAGE>
Schedule 5.4
CASH EQUITY LOANS
$ AMOUNT OF
CASH EQUITY
CASH EQUITY INVESTORS LOAN
--------------------- ----
Washington National Insurance Company United $12,500,000
United Presidential Life Insurance Company 12,500,000
Trillium PCS, LLC 1,000,000
Dresdner Kleinwort Benson Private Equity Partners LP 15,000,000
Triune PCS, Inc. 12,069,520
Airwave Communications LLC 11,163,079
Digital PCS, LLC 2,967,401
FCA Venture Partners II, LP 2,750,000
Clayton Associates LLC 50,000
The Manufacturers Life Insurance Company (U.S.A.) 5,000,000
37
<PAGE>
EXHIBIT 10.35
CONSENT TO EXERCISE OF OPTION
HERETOFORE, Tritel, Inc., a Delaware corporation (the "Company"),
entered into an Option Agreement with Digital PCS, LLC ("Digital") pursuant to
which, inter alia, the Company acquired the sole, exclusive and irrevocable
right to acquire all, but not less than all, of the Mercury Licenses (the
"Option") owned by Digital. The Mercury Licenses are described and defined in
Exhibit "1" hereto; and
WHEREAS, by its terms, the Option expires as of May 20, 1999, unless
sooner exercised by the Company, and the Company desires to exercise the Option
but Section 7.13 of the Stockholders Agreement among AT&T Wireless PCS Inc., TWR
Cellular, Inc., Cash Equity Investors, Management Stockholders, and Tritel, Inc.
dated as of January 7, 1999 (the "Stockholders Agreement") requires the approval
of at least one of the Series A Preferred Directors in order for the Company to
exercise the Option, such Series A directors being elected by AT&T under the
circumstances stated in the Stockholders Agreement; and
WHEREAS, AT&T has indicated its willingness to give its agreement for
the Company to exercise the Option subject to an amendment to the Stockholders
Agreement, which Amendment would provide that Section 7.13 thereof be amended to
read as follows:
Section 7.13 Option Licenses. (a) Notwithstanding any other
provision of this Stockholders Agreement, except with the prior
written consent of AT&T PCS, the PCS Territory shall not include
the geographic area covered by the PCS Licenses (the "Option
Licenses") acquired by the Company pursuant to the Option
Agreement. By way of amplification and not limitation of the
foregoing, the Company and the Stockholders acknowledge and agree
that, unless and until such consent of AT&T PCS is hereafter
obtained, the term "Company Communications Services" shall not
include any mobile wireless telecommunications services or any
other telecommunications services provided using the Option
Licenses, and the term "Business" shall not include owning,
constructing or operating systems to provide Company
Communications Services (or any other telecommunications systems)
on frequencies licensed to the Company for Commercial Mobile Radio
Services pursuant to the Option Licenses.
(b) The Company further agrees that, except with the prior written
consent of AT&T PCS, it shall not (and it shall not permit its
Subsidiaries to) construct any telecommunications systems with
respect to the Option Licenses or take any other actions in
respect of, or incur or
<PAGE>
pay any costs or expenses relating to, the Option Licenses or the
territory covered by the Option Licenses (the "Option Territory"),
except that the Company and its Subsidiaries may: (i) perform its
obligations under and consummate the transactions contemplated in
the Option Agreement and the License Purchase Agreement annexed
thereto; (ii) take actions reasonably required to maintain
ownership of the Option Licenses (other than any applicable FCC
build-out requirements relating to the Option Territory),
including paying when due interest on and principal of the
existing indebtedness to the U.S. Department of Treasury related
to the Option Licenses; and (iii) if it determines to do so in the
future, dispose of the Option Licenses, and, in the case of (i),
(ii) and (iii), pay any reasonable out-of-pocket costs related
thereto; and
WHEREAS, AT&T, TWR, the Undersigned Management Shareholders, and the
Company believe that it will not be possible to consummate the amendment of the
Stockholders Agreement within the time within which the Company must exercise
the Option.
NOW, THEREFORE, it is agreed:
1. Subject to the terms and conditions of this Consent, AT&T and TWR
hereby consent to the exercise by the Company of the Option.
2. The Company hereby agrees to grant to an entity designated by AT&T
an exclusive and irrevocable option to acquire the Mercury Licenses, pursuant to
Option Agreements in the forms attached hereto as Exhibit "2".
3. The Company and the undersigned Management Shareholders agree to
exert their best efforts to cause Section 7.13 of the Stockholders Agreement to
be amended as hereinbefore provided, and until the Company and AT&T complete the
documentation required to evidence such amendments, the Company and the
undersigned Management Shareholders will not take any action inconsistent with
such amendments.
IN WITNESS WHEREOF, the Company, TWR, AT&T and the undersigned
Management Shareholders have executed this Consent effective as of the 20th day
of May, 1999.
TRITEL, INC.
2
<PAGE>
By:
---------------------------------
AT&T WIRELESS PCS, INC.
By:
---------------------------------
TWR CELLULAR, INC.
By:
---------------------------------
------------------------------------
William M. Mounger, II
------------------------------------
E. B. Martin, Jr.
3
<PAGE>
EXHIBIT 1
Aggregate Amount
BTA# Name Payable to FCC FCC Debt
---- ---- -------------- --------
154 ........... Ft. Walton, FL $ 1,683,582
340 ........... Panama City, FL 1,915,592
343 ........... Pensacola, FL 4,166,832
439 ........... Tallahassee, FL 4,808,342
159 ........... Gainesville, FL 1,104,092
58 ........... Brunswick, GA 699,090
467 ........... Waycross, GA 387,099
454 ........... Valdosta, GA 472,734
<PAGE>
EXHIBIT 2
OPTION AGREEMENT
OPTION AGREEMENT, dated as of May __, 1999, between TRITEL, INC., a
Delaware Corporation (the "Company"), and _______________________, a Delaware
limited liability company ("Optionee"). Capitalized terms used herein without
definition shall have the meanings assigned thereto in the License Purchase
Agreement referred to below. Unless otherwise indicated, all references to
Sections refer to Sections of this Agreement.
WHEREAS, the Company, Digital PCS, LLC (f/k/a Mercury PCS II, LLC), a
Mississippi limited liability company, William M. Mounger II, E.B. Martin, Jr.
and Jerry M. Sullivan, Jr., are parties to an Option Agreement (the "January
Option Agreement"), dated as of January 7, 1999, pursuant to which the Company
has an option to acquire the PCS Licenses referred to on Schedule I thereto, and
the Company wishes to exercise such option;
WHEREAS, pursuant to the terms of the Company's Stockholders Agreement,
dated as of January 7, 1999, among the parties hereto and the other stockholders
of the Company referred to therein, the Company is required to obtain the
consent of AT&T Wireless PCS Inc., a Delaware corporation ("AT&T"), and TWR
Cellular, Inc., a Maryland corporation and an affiliate of AT&T ("TWR"), to the
Company's exercise of such option, and the Company wishes to obtain such
consent;
WHEREAS, AT&T and TWR wish to grant such consent pursuant to a Consent,
dated the date hereof, provided, among other things, that the Company enter into
this Agreement, and the Company wishes to enter into this Agreement;
WHEREAS, after giving effect to the acquisition contemplated in the
January Option Agreement, the Company (or a subsidiary thereof) will be the
holder of PCS Licenses specified on Schedule I hereto (the "Tritel Licenses");
and
WHEREAS, the Company desires to grant to Optionee, and Optionee desires
to obtain, an option to purchase the Tritel Licenses on the terms and subject to
the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
other agreements contained herein, the parties hereby agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth herein, the
Company hereby grants to Optionee (or its designee) the sole, exclusive and
irrevocable right (herein referred to as the "Option") to acquire all of the
Tritel Licenses pursuant to the terms and conditions set forth in the License
Purchase Agreement attached hereto as Exhibit "A" (the
<PAGE>
"License Purchase Agreement"). In furtherance thereof, an authorized signatory
of the Company has duly executed the attached License Purchase Agreement.
2. Consideration for Option. In consideration for the Option, Optionee agrees to
pay when due all interest payable to the U. S. Department of Treasury in respect
of the Tritel Licenses that becomes due and payable prior to the expiration or
earlier termination by Optionee of this Option, and, if the Option is exercised,
thereafter during the period ending on the closing under or earlier termination
of the License Purchase Agreement in accordance with its terms.
3. Exercise of Option. Optionee (or its designee) may exercise the Option at any
time on or prior to November 20, 1999, by delivering written notice to the
Company to such effect together with the License Purchase Agreement duly
executed by an authorized officer of Optionee (or the designee thereof that is
specified in the exercise notice as the acquiring party thereto) and dated as of
the date of such exercise. For the purpose of determining the purchase price
payable pursuant to the License Purchase Agreement, set forth on Schedule I
hereto, opposite each Tritel License, is the aggregate amount payable to the FCC
in respect of such Tritel License and the FCC Debt payable to the U. S.
Department of Treasury in respect thereof as of the date hereof. Optionee may
terminate this Option at any time effective upon written notice to Tritel. At
any time prior to November 20, 1999, effective upon written notice to Tritel,
Optionee may extend the exercisability of this Option to April 20, 2000,
provided that, if this Option is so extended, Optionee may not exercise this
Option unless it concurrently exercises the Option between Optionee and Tritel,
dated as of the date hereof, relating to the following licenses: BTA #340
(Panama City, FL); BTA #439 (Tallahassee, FL); BTA #159 (Gainesville, FL); BTA
#58 (Brunswick, GA); BTA #467 (Waycross, GA); BTA #454 (Valdosta, GA).
4. Representations and Warranties of Parties.
(a) The Company, as to itself and each of its subsidiaries that acquires any
right, title or interest in or to the Tritel Licenses, and Optionee, as to
itself, represent and warrant to each other that:
(i) Organization and Standing. It is a corporation, limited liability
company, general partnership or limited partnership, as applicable, 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. 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 contemplated hereby or its
ability to perform its obligations under this Agreement.
(ii) Power and Authority. It has the requisite power and authority to
execute, deliver and perform this Agreement and, in the case of the Company, the
License Purchase Agreement, and each other instrument, document, certificate and
agreement required or
2
<PAGE>
contemplated to be executed, delivered and performed by it hereunder and
thereunder to which it is or will be a party.
(iii) Due Authorization. The execution and delivery by it of this
Agreement (and, in the case of the Company, the License Purchase Agreement), and
the consummation of the transactions contemplated hereby (and, in the case of
the Company, thereby) have been duly and validly authorized by its Board of
Directors (or equivalent body, as applicable) 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
(and, in the case of the Company, the License Purchase Agreement) or to
consummate the transactions contemplated hereby (and, in the case of the
Company, thereby).
(iv) Enforceability. This Agreement (and, in the case of the Company,
the License Purchase Agreement) have 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.
(v) No Breach. After giving effect to the transactions contemplated
hereby, it is not in breach of any obligation under this Agreement.
(vi) Consents; No Conflicts. Neither the execution, delivery and
performance by it of this Agreement (or, in the case of the Company, the License
Purchase Agreement) nor the consummation of the transactions contemplated hereby
(or, in the case of the Company, thereby) will (a) conflict with, or result in a
breach or violation of, any provision of its organizational documents, as
applicable; (b) subject to obtaining the Consents set forth on Schedule
4(a)(vi), 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(a)(vi)) or the approval of its board of directors, general
partner, members, stockholders or similar constituent bodies, as applicable
(other than approvals which 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 contemplated hereby.
(vii) Litigation. Except as set forth on Schedule 4(a)(vii), there is
no action (including court 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 contemplated hereby or to fulfill its obligations
under this Agreement, which seeks to prevent or challenge the transactions
3
<PAGE>
contemplated hereby, or which seeks to have an adverse effect on the Company or
its wholly owned Subsidiaries.
(viii) 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 contemplated hereby.
(b) Additional Representation and Warranty with respect to the Company and
the Tritel Licenses. The Company represents and warrants to Optionee that: (i)
after giving effect to its acquisition of the Tritel Licenses pursuant to the
License Purchase Agreement annexed to the January Option Agreement, (x) the
Company will be the authorized legal holder, free and clear of any Liens (other
than Liens securing the FCC Debt, the principal amount of which as of the date
hereof is set forth on Schedule I), of the Tritel Licenses set forth on Schedule
I, (y) the Tritel Licenses will be valid and in full force and effect, and (z)
the Tritel Licenses will not be subject to any conditions other than those
appearing on the face of the Licenses themselves and those imposed by FCC Law;
(ii) it complies with all eligibility rules issued by the FCC to hold broadband
PCS licenses, including without limitation the Tritel Licenses, the FCC rules on
foreign ownership and the CMRS spectrum cap; (iii) the amounts set forth on
Schedule I are accurate as of the date hereof; and (iv) except as set forth on
Schedule 4(b) and for proceedings affecting the PCS or wireless communications
services industry generally, including investigations by governmental agencies
of bidding practices of bidders in the FCC auctions of PCS spectrum, there is
not pending, nor to the Company's knowledge, threatened against the Company or
the Tritel Licenses, any application, action (including court action), petition,
objection or other pleading, or any proceeding with the FCC which questions or
contests the validity of, or seeks the revocation, non-renewal or suspension of,
any of the Tritel Licenses, which seeks the imposition of any modification or
amendment with respect thereto, or which adversely affects the ability of the
Company to employ the Tritel Licenses in its business after the date of its
acquisition thereof or seeks the payment of a fine, sanction, penalty, damages
or contribution in connection with the use of any Tritel License.
5. Covenants.
(a) 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 contemplated hereby.
(b) Each party covenants and agrees to comply with Sections 5.2 and 5.3 of
the License Purchase Agreement which is hereby incorporated by reference herein
with the same effect as if such provisions were set forth herein in full;
provided, that solely for purposes of this Section 5(b), each reference to
"Closing" or "Closing Date" in Sections 5.2(a) and 5.3 of the License Purchase
Agreement shall be deemed to mean November 20, 1999.
4
<PAGE>
6. FCC Approval. Notwithstanding anything contained in this Agreement to the
contrary, no transaction or action contemplated herein shall be consummated and
no interests or rights shall be transferred or exchanged prior to receiving FCC
approval with respect thereto to the extent such approval is necessary.
7. Amendment and Modification. This Agreement may be amended, modified or
supplemented only by written agreement of each of the parties.
8. 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.
9. Notices. All notices or other communications hereunder shall be in writing
and shall be given (and shall be deemed to have been duly given upon receipt) by
delivery in person, by facsimile transmission, or by registered or certified
mail (return receipt requested), postage prepaid, with an acknowledgment of
receipt signed by the addressee or an authorized representative thereof,
addressed as follows (or to such other address for a party as shall be specified
by like notice; provided that notice of a change of address shall be effective
only upon receipt thereof):
If to Optionee:
If the to Company: Tritel, Inc.
Attention: E. B. Martin, Jr.
1080 River Oaks Drive, Suite B-100
Jackson, Mississippi 39208
Fax No.: (601) 914-8282
10. 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.
11. 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 nonexclusive 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 contemplated hereby,
5
<PAGE>
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.
12. 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.
13. 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.
14. Entire Agreement. This Agreement, including the exhibits and schedules
hereto and the certificates and instruments delivered pursuant to the terms of
this Agreement, embody the entire agreement and understanding of the parties
hereto in respect of the transactions contemplated hereby. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to the transactions contemplated hereby.
15. Publicity. So long as this Agreement is in effect, the parties agree to
consult with each other in issuing any press release or otherwise making any
public statement with respect to the transactions contemplated hereby, and no
party shall issue any press release or make any such public statement prior to
such consultation, except as may be required by Law. No press release or other
public statement by the parties hereto shall disclose any of the financial terms
of the transactions without the prior consent of the other parties, except as
may be required by Law. A breach of the provisions of this Section 15 by a party
shall not give rise to any right to terminate this Agreement.
16. 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.
17. Remedies Cumulative. All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise or beginning of the exercise of
any thereof by any party shall not preclude the simultaneous or later exercise
of any other such right, power or remedy by such party.
6
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
TRITEL, INC.
By:
--------------------------------------
Name:
Title:
------------------------------
By:
--------------------------------------
Name:
Title:
7
<PAGE>
SCHEDULE 4(a)(vi)
TRITEL CONSENTS
The execution, delivery and performance of the Agreement will or may
require the following consents, approvals and reviews:
1. The Federal Communications Commission.
OPTIONEE CONSENTS
The execution, delivery and performance of the Agreement will or may
require the following consents, approvals and reviews:
1. The Federal Communications Commission.
<PAGE>
SCHEDULE 4(a)(vii)
A. Applications for Review filed by High Plains Wireless, L.P.: In re
Application of Mercury PCS II, LLC for Facilities in the Broadband
Personal Communications Services in the D, E and F Blocks, Federal
Communications Commission File Numbers 00114CWL97, et al.
B. Edwin Welsh v. Mercury PCS, LLC, Mercury PCS II, LLC, MSM, Inc.,
Mercury Wireless Management, Inc., William M. Mounger, II, Jerry
Sullivan, and E.B. Martin, Chancery Court of the First Judicial
District of Hinds County, Mississippi, Cause No. G97-56103.
<PAGE>
SCHEDULE I
TRITEL PCS LICENSES
License certificates for the following licenses issued to the Company
(or a subsidiary thereof) are pending approval of the transfer contemplated in
the January Option Agreement
Aggregate Amount
BTA# Name Payable to FCC FCC Debt
---- ---- -------------- --------
340 ........... Panama City, FL $ 1,915,592
439 ........... Tallahassee, FL 4,808,342
159 ........... Gainesville, FL 1,104,092
58 ........... Brunswick, GA 699,090
467 ........... Waycross, GA 387,099
454 ........... Valdosta, GA 472,734
<PAGE>
Exhibit A
- --------------------------------------------------------------------------------
LICENSE ACQUISITION AGREEMENT
between
TRITEL, INC.
and
----------------------
Dated as of ________, 1999
- --------------------------------------------------------------------------------
<PAGE>
LICENSE ACQUISITION AGREEMENT
LICENSE ACQUISITION AGREEMENT, dated as of ______________, 1999,
between TRITEL, INC., a Delaware corporation ("Tritel") and
_______________________, a ______________ [to be specified by Optionee in the
option exercise notice] (the "Company").
WHEREAS, Tritel or a wholly owned subsidiary thereof holds the PCS
licenses described on Schedule I (the "Purchased Licenses"); and
WHEREAS, Tritel and AT&T Wireless PCS Inc., a Delaware corporation
("AT&T") have entered into an Agreement dated as of May __, 1999 (the "Option
Agreement"), pursuant to which Tritel has granted to the Company an Option (as
such term is defined in the Option Agreement) to purchase the Purchased
Licenses; and
WHEREAS, pursuant to the Option Agreement, the Company has exercised
its Option to purchase (or designated a Person to purchase) the Purchased
Licenses on the terms and subject to the conditions herein set forth;
NOW, THEREFORE, in consideration of the promises 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):
"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.
"Claim" has the meaning set forth in Section 7.5.
"Closing" has the meaning set forth in Section 3.1.
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"Closing Date" has the meaning set forth in Section 3.1.
"Company" has the meaning set forth in the preamble.
"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 contemplated hereby and for the Company to
operate its business after the Closing Date as currently contemplated.
"FCC" means the Federal Communications Commission or similar regulatory
authority established in replacement thereof.
"FCC Debt" means the indebtedness of Tritel or a wholly owned
subsidiary thereof to the United States Department of the Treasury, in the
aggregate principal amount as of the date hereof set forth on Schedule 2.2,
incurred in connection with its acquisition of the Purchased Licenses.
"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 6.1(b).
"Governmental Authority" means a Federal, state or local court,
legislature, governmental agency (including, without limitation, the United
States Department of Justice), commission or regulatory or administrative
authority or instrumentality.
"HSR Act" means 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 7.4.
"Indemnifying Party" has the meaning set forth in Section 7.4.
"Law" means applicable common law and any statute, ordinance, code or
other law, rule, permit, permit condition, regulation, order, decree, technical
or other standard,
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requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority.
"License" means a license, permit, certificate of authority, waiver,
approval, certificate of public convenience and necessity, registration or other
authorization, consent or clearance to construct or operate a facility,
including any emissions, discharges or releases therefrom, or to transact an
activity or business, to construct a tower or to use an asset or process, in
each case issued or granted by a Governmental Authority.
"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 7.2.
"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.
"New York Courts" has the meaning set forth in Section 9.5.
"Option Agreement" has the meaning set forth in the second recital.
"Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization, or other legal entity.
"Representatives" has the meaning set forth in Section 5.2(a).
"Section 7.2 Indemnified Party" has the meaning set forth in Section
7.2.
"Section 7.3 Indemnified Party" has the meaning set forth in Section
7.3.
"Securities Act" means the Securities Act of 1933, as amended.
"Solvent" means, when used with respect to any Person, that at the time
of determination: (a) the fair market value of its assets is in excess of the
total amount of its liabilities (including, without limitation, contingent
liabilities), (b) the present fair saleable value of its assets is greater than
its probable liability for its existing debts as such debts become absolute and
mature, (c) it is then able and expects to be able to pay its indebtedness
(including without limitation, contingent indebtedness and other commitments) as
they mature, and (d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
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"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.
"Tritel" has the meaning set forth in the preamble.
"Purchased Licenses" has the meaning set forth in the first recital.
"Purchased License Transfer" has the meaning set forth in Section
3.2(a).
ARTICLE II
PURCHASE AND SALE OF LICENSES; PAYMENT OF CONSIDERATION;
CERTAIN RESTRICTIONS ON TRANSFER
2.1 Purchase and Sale of Licenses. Upon the terms and subject to the
conditions hereof and in reliance upon the representations, warranties and
agreements herein contained, at the Closing, Tritel shall sell, transfer,
assign, convey and deliver to the Company (or one or more wholly owned
Subsidiaries of the Company designated by the Company), free and clear of all
Liens (other than Liens of the United States Department of the Treasury securing
certain indebtedness to be assumed by the Company pursuant to Section 2.3), and
the Company agrees to purchase, acquire and accept from Tritel, the Purchased
Licenses.
2.2 Payment of Consideration. Upon the terms and subject to the
conditions hereof and in reliance upon the representations, warranties and
agreements herein contained, at the Closing, the Company agrees to pay to Tritel
in consideration for the Purchased Licenses, the amount equal to 110% of the sum
of (i) the aggregate amount payable to the FCC in respect of each Purchased
License, as set forth on Schedule 2.2 hereto, minus (ii) the Assumed Tritel
Debt, plus (iii) the aggregate amount of interest actually paid, including
suspended interest, prior to the Closing Date in respect of the Assumed Tritel
Debt (the "Purchase Price"). The Purchase Price shall be payable by wire
transfer of immediately available funds to an account designated by Tritel by
written notice given to the Company at least two Business Days prior to the
Closing Date.
2.3 Assumption of Indebtedness. Upon the terms and subject to the
conditions hereof and in reliance upon the representations, warranties and
agreements herein contained, on and as of the Closing Date, the Company shall
accept and assume the indebtedness of Tritel to the United States Department of
the Treasury incurred in connection with the acquisition of the Purchased
Licenses by Tritel (collectively, the "Assumed Tritel Debt"). The outstanding
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<PAGE>
principal amount of each item of Assumed Tritel Indebtedness, together with
accrued and unpaid interest (if any), as of the date hereof is set forth on
Schedule 2.2.
ARTICLE III
CLOSING
3.1 Time and Place of Closing. Upon the terms and subject to the
conditions hereof, the closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Friedman Kaplan & Seiler LLP, 875
Third Avenue, New York, New York 10022 on the fifth business day following the
date of receipt of the last Consent required by subsections (a) through (c) of
Section 6.1, 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").
3.2 Closing Actions and Deliveries. Upon the terms and subject to the
satisfaction or waiver by the appropriate party, if applicable, of the
conditions set forth in Article VII, to effect the purchase and sale of the
Purchased Licenses, the parties shall on the Closing Date take the following
actions:
(a) Assignment of Licenses and Assets. Tritel shall execute and deliver
to the Company (or the applicable Subsidiary), one or more instruments of
assignment, substantially in the form of Exhibit A, sufficient to assign the
Purchased Licenses to the Company (or one or more wholly owned Subsidiaries of
the Company designated by the Company) (such assignments being herein
collectively referred to as the "Purchased License Transfer").
(b) Payment of Purchase Price. The Company shall pay the Purchase Price
of the Purchased Licenses to Tritel in accordance with Section 2.2.
(c) Assumption and Reimbursement of Indebtedness. The Company shall (i)
execute and deliver to Tritel an instrument of assumption, in form and substance
reasonably satisfactory to Tritel, in respect of the indebtedness to the United
States Department of the Treasury to be assumed by the Company pursuant to
Section 2.3, less any amount of interest paid by the Company in respect of such
indebtedness under the Option Agreement, and (ii) pay to Tritel an amount equal
to (x) interest actually paid by Tritel on such indebtedness to the United
States Department of the Treasury through the Closing Date as evidenced by
documentation reasonably satisfactory to the Company, and (y) the principal
amount of the other indebtedness described on Schedule 2.2 and constituting
Assumed Tritel Indebtedness.
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(d) Other Deliveries. The parties shall execute and deliver or cause to
be executed and delivered all other documents, instruments, opinions and
certificates contemplated by this Agreement to be delivered at the Closing or
necessary and appropriate in order to consummate the transactions contemplated
hereby on the Closing Date.
3.3 Payment of Transfer Taxes. The Company shall pay or cause to be
paid at the Closing or, if due thereafter, promptly when due, all gross receipts
taxes, gains taxes (including, without limitation, real property gains tax or
other similar taxes), transfer taxes, sales taxes, stamp taxes, and any other
taxes, but excluding any Federal, State or local income taxes payable in
connection with the transfer of the Purchased Licenses.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Tritel (as to itself) and the Company (as to itself and each of its
Subsidiaries) represents and warrants to each other that:
4.1 Organization and Standing. It is a corporation, limited liability
company, 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. 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 contemplated hereby or its ability to perform
its obligations under this Agreement.
4.2 Power and Authority. 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.
4.3 Due Authorization. The execution and delivery of this Agreement by
it and the consummation of the transactions contemplated hereby 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 contemplated hereby.
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<PAGE>
4.4 Enforceability. 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.
4.5 No Breach. After giving effect to the transactions contemplated
hereby, it is not in breach of any obligation under this Agreement.
4.6 Consents; No Conflicts. Neither the execution, delivery and
performance by it of this Agreement nor the consummation of the transactions
contemplated hereby will (a) conflict with, or result in a breach or violation
of, any provision of its organizational documents; (b) subject to obtaining the
Consents set forth on Schedule 4.6, 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 4.6) 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 contemplated hereby. To its knowledge, except
as set forth on Schedule 4.6, there is no fact relating to it or its Affiliates
that would be reasonably expected to prevent it from consummating the
transactions contemplated hereby or disqualify the Company from obtaining the
Consents (including without limitation, FCC Consent) required in order to
consummate the Purchased License Transfer.
4.7 Litigation. Except as set forth on Schedule 4.7, there is no action
(including court 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 contemplated hereby or to fulfill its obligations under this
Agreement, which seeks to prevent or challenge the transactions contemplated
hereby, or which seeks to have an adverse effect on the Company or its wholly
owned Subsidiaries.
4.8 FCC Compliance. It complies with all eligibility rules issued by
the FCC to hold broadband PCS licenses, including without limitation the
Purchased Licenses, the FCC rules on foreign ownership and the CMRS spectrum
cap.
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4.9 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 contemplated hereby.
4.10 Tritel represents and warrants, to the Company that:
(1) Purchased Licenses. Tritel is the authorized legal holder, free and
clear of any Liens (other than Liens securing the FCC Debt), of the Purchased
Licenses set forth on Schedule I, true and correct copies of which are attached
thereto. The Purchased Licenses are, and on the Closing Date will be, valid and
in full force and effect. Except as set forth on Schedule 4.10 and for
proceedings affecting the PCS or wireless communications services industry
generally, including investigations by governmental agencies of bidding
practices of bidders in the FCC auctions of PCS spectrum, there is not pending,
nor to its knowledge, threatened against Tritel or the Purchased Licenses, any
application, action (including court action), petition, objection or other
pleading, or any proceeding with the FCC which questions or contests the
validity of, or seeks the revocation, non-renewal or suspension of, any of the
Purchased Licenses, which seeks the imposition of any modification or amendment
with respect thereto, or which adversely affects the ability of the Company to
employ the Purchased Licenses in its business after the Closing Date or seeks
the payment of a fine, sanction, penalty, damages or contribution in connection
with the use of any Purchased License. The Purchased Licenses are not subject to
any conditions other than those appearing on the face of the Licenses themselves
and those imposed by FCC Law.
(2) Tritel Debt; Solvency. Each item of Assumed Tritel Debt being
assumed by the Company is a bona fide obligation of Tritel and the amount set
forth opposite each item on Schedule 2.2 is the outstanding amount of principal
thereof as of the date hereof. Tritel is Solvent after giving effect to the
consummation of the transactions contemplated hereby.
(3) Transferability. Neither the execution, delivery and performance by
Tritel of this Agreement nor the assumption by the Company (or the applicable
Subsidiary) of the Assumed Tritel Debt will (a) 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 any note, bond, mortgage,
indenture, lease, agreement or other instrument, in each case which is
applicable to or binding upon it or any of the Assumed Tritel Debt; or (b)
require any Consent (other than those set forth on Schedule 4.6) 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).
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ARTICLE V
COVENANTS
5.1 Consummation of Transactions. Each party shall use all commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable and consistent with
applicable law to carry out all of their respective obligations under this
Agreement to consummate the transactions contemplated hereby, which efforts
shall include, without limitation, the following:
(a) The parties shall use all commercially reasonable efforts to cause
the Closing to occur and the transactions contemplated hereby 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 contemplated hereby by all
Governmental Authorities and agencies, including the FCC, and 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
contemplated hereby; provided that Tritel shall not make any filings with the
FCC regarding the Purchased Licenses without the prior review and approval of
the Company.
(b) 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 Tritel or the Company or any other party
in connection with the transactions contemplated hereby or otherwise to
determine compliance with applicable FCC Rules.
5.2 Confidentiality.
(a) Each party shall, and shall cause each of its Affiliates, and its
and their respective shareholders, members, managers, directors, officers,
employees and agents (collectively, "Representatives") to, keep secret and
retain in strictest confidence any and all Confidential Information relating to
any other party that it receives in connection with the negotiation or
performance of this Agreement, and shall not disclose such Confidential
Information, and shall cause its Representatives not to disclose such
Confidential Information, to anyone except the receiving party's Affiliates and
Representatives and any other Person that agrees in writing to keep in
confidence all Confidential Information in accordance with the terms of this
Section 5.2. Until the Closing, each party agrees to use Confidential
Information received from another party only (i) to evaluate its interest in
pursuing the transactions contemplated hereby and (ii) to pursue such
transactions contemplated hereby, but not for any other purpose. All
Confidential Information furnished pursuant to this Agreement shall be returned
promptly to the party to whom it belongs upon request by such party.
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(b) The obligations set forth in Section 5.2(a) shall be inoperative
with respect to Confidential Information that (i) is or becomes generally
available to the public other than as a result of disclosure by the receiving
party or its Representatives, (ii) was available to the receiving party on a
non-confidential basis prior to its disclosure to the receiving party, or (iii)
becomes available to the receiving party on a non-confidential basis from a
source other than the providing party or its agents, provided that such source
is not known by the receiving party to be bound by a confidentiality agreement
with the providing party or the providing party's agents.
(c) To the fullest extent permitted by law, if a party or any of its
Affiliates or Representatives breaches, or threatens to commit a breach of, this
Section 5.2, the party whose Confidential Information shall be disclosed, or
threatened to be disclosed, shall have the right and remedy to have this Section
5.2 specifically enforced by any court having jurisdiction, it being
acknowledged and agreed that money damages will not provide an adequate remedy
to such party. Nothing in this Section 5.2 shall be construed to limit the right
of any party to collect money damages in the event of breach of this Section
5.2.
(d) Anything else in this Agreement notwithstanding, each party shall
have the right to disclose any information, including Confidential Information
of the other party or such other party's Affiliates, in any filing with any
regulatory agency, court or other authority or any disclosure to a trustee of
public debt of a party to the extent that the disclosing party determines in
good faith that it is required by Law, regulation or the terms of such debt to
do so, provided that any such disclosure shall be as limited in scope as
possible and shall be made only after giving the other party as much notice as
practicable of such required disclosure and an opportunity to contest such
disclosure if possible.
5.3 Certain Covenants. From and after the execution and delivery of
this Agreement to and including the Closing Date, Tritel shall:
(a) Comply in all material respects with all applicable Laws, including
all such Laws relating to the Purchased Licenses or their use;
(b) Use commercially reasonable efforts to maintain the Purchased
Licenses in full force and effect;
(c) Not (i) sell, transfer, assign or dispose of, or offer to, or enter
into any agreement, arrangement or understanding to, sell, transfer, assign or
dispose of any of the Purchased Licenses or any interest therein, or negotiate
therefor, or (ii) create, incur or suffer to exist any Lien of any nature
whatsoever relating to any of the Purchased Licenses or any interest therein
(other than Liens securing the FCC Debt to be assumed by the Company pursuant to
Section 2.3). Without limiting the foregoing, Tritel shall not incur any
material obligation or liability, absolute or contingent, relating to or
affecting the Purchased Licenses or their use;
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(d) Give written notice to the Company promptly upon the commencement
of, or upon obtaining knowledge of any facts that would give rise to a threat
of, any claim, action or proceeding commenced against or relating to (i) it, its
properties or assets, including the Purchased Licenses or their use, and which
could have a Material Adverse Effect on it or materially adversely affect the
transactions contemplated hereby, or (ii) the Purchased Licenses or their use;
(e) Promptly after obtaining knowledge of the occurrence of, or the
impending or threatened occurrence of, any event which could cause or constitute
a material breach of any of its warranties, representations, covenants or
agreements contained in this Agreement, give notice in writing of such event, or
occurrence or impending or threatened event or occurrence, to the other parties
and use commercially reasonable efforts to prevent or to promptly remedy such
breach; and
(f) Cause the other parties to be advised promptly in writing of (i)
any event, condition or state of facts known to it, which has had or could have
a Material Adverse Effect on it, or materially adversely affect the Purchased
Licenses or their use or the transactions contemplated hereby (other than
proceedings affecting the PCS or wireless communications services industry
generally), or (ii) any claim, action or proceeding which seeks to enjoin the
consummation of the transactions contemplated hereby.
ARTICLE VI
CLOSING CONDITIONS
6.1 Conditions to Obligations of All Parties. The obligation of each of
the parties to consummate the transactions contemplated hereby to occur at the
Closing shall be conditioned on the following, unless waived by each of the
parties:
(a) Any applicable waiting period under the HSR Act shall have expired
or been terminated.
(b) The Consent of the FCC to the Purchased License Transfer shall have
been obtained pursuant to a Final Order, free of any conditions materially
adverse to the Company or Tritel, other than those applicable to the PCS or
wireless communications services industry generally. 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
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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.
(c) All Consents by any Governmental Authority (other than the Consents
referred to in paragraphs (a) and (b) above) required to permit the consummation
of the transactions contemplated hereby, the failure to obtain or make which
would be reasonably expected to have a Material Adverse Effect on the Company or
Tritel or to materially adversely affect the transactions contemplated hereby or
its ability to perform its obligations under this Agreement shall have been
obtained or made.
(d) 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 contemplated hereby or prohibit such
consummation, or (ii) impair in any material respect the operation of the
Company.
6.2 Conditions to Obligations of the Company. The obligation of the
Company to consummate the transactions contemplated to occur at the Closing
shall be further conditioned upon the satisfaction or fulfillment, at or prior
to the Closing, of the following conditions by each of the other parties, unless
waived by the Company:
(a) The representations and warranties of Tritel 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 Section 4.7 and the third sentence of Section 4.10
(disregarding any qualifications as to materiality contained therein) that in
the aggregate would not be reasonably expected to have a Material Adverse Effect
on Tritel or its ability to perform its obligations under this Agreement or to
materially adversely affect the transactions contemplated hereby.
(b) Tritel shall have performed in all material respects all agreements
contained herein required to be performed by it at or before the Closing.
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(c) An officer of Tritel 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 Tritel.
(d) Tritel shall have furnished the Company with opinions of counsel,
each dated the Closing Date, in substantially the forms of Exhibits B and C.
(e) All corporate and other proceedings of Tritel in connection with
the Purchased License Transfer and the other transactions contemplated hereby,
and all documents and instruments incident thereto, shall be reasonably
satisfactory in form and substance to the Company, and Tritel shall have
delivered to the Company such receipts, documents, instruments and certificates,
in form and substance reasonably satisfactory to the Company, which the Company
shall have reasonably requested.
6.3 Conditions to the Obligations of Tritel. The obligation of Tritel
to consummate the transactions contemplated to occur at the Closing shall be
further conditioned upon the satisfaction or fulfillment, at or prior to the
Closing, of the following conditions, unless waived by Tritel:
(a) The representations and warranties of the Company 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 Section 5.3 (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 its ability to
perform its obligations under this Agreement or to materially adversely affect
the transactions contemplated hereby.
(b) The Company shall have performed in all material respects all
agreements contained herein required to be performed by it at or before the
Closing.
(c) An officer of the Company shall have delivered to Tritel a
certificate, dated the Closing Date, certifying as to the fulfillment of the
conditions set forth in paragraphs (a) and (b) above as to the Company.
(d) The Company shall have furnished Tritel with an opinion of counsel,
dated the Closing Date, in substantially the form of Exhibit D.
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(e) All corporate and other proceedings of the Company in connection
with the Purchased License Transfer and the other transactions contemplated
hereby, and all documents and instruments incident thereto, shall be reasonably
satisfactory in form and substance to Tritel, and the Company shall have
delivered to Tritel such receipts, documents, instruments and certificates, in
form and substance reasonably satisfactory to Tritel, which Tritel shall have
reasonably requested.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
7.1 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 VII 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 VII.
7.2 Indemnification by Tritel. Tritel shall indemnify and hold harmless
the Company and its Affiliates, and the shareholders, members, managers,
officers, employees, agents and/or the legal representatives of any of them
(each, a "Section 7.2 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 7.2 Indemnified Party may be
involved or with which he or it may be threatened that arises out of or results
from (a) (i) any representation or warranty of such indemnifying party contained
in this Agreement (except, any of the matters referred to on Schedule 4.7 or
4.10(e)), or (b) any material default by such indemnifying party or any of its
Affiliates in the performance of their respective obligations under this
Agreement, except to the
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<PAGE>
extent (but only to the extent) any such Losses arise out of or result from the
gross negligence or willful misconduct of such Section 7.2 Indemnified Party or
its Affiliates.
7.3 Indemnification by the Company. The Company shall indemnify and
hold harmless Tritel and its Affiliates, and the shareholders, members,
managers, officers, employees, agents and/or the legal representatives of any of
them (each, a "Section 7.3 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 7.3 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 out of or result from the
gross negligence or willful misconduct of such Section 7.3 Indemnified Party or
its Affiliates.
7.4 Procedures.
(a) The terms of this Section 7.4 shall apply to any claim (a "Claim")
for indemnification under the terms of Sections 7.2 or 7.3. The Section 7.2
Indemnified Party or Section 7.3 Indemnified Party 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 VII to the fullest extent permitted
by law.
(b) 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.
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<PAGE>
(c) 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
VII, to undertake the defense, compromise or settlement of such Claim for the
account of the Indemnifying Party. Unless and until the Indemnified Party
assumes the defense of any Claim, the Indemnifying Party shall advance to the
Indemnified Party any of its reasonable attorneys' fees and other costs and
expenses incurred in connection with the defense of any such action or
proceeding. Each Indemnified Party shall agree in writing prior to any 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 VII.
(d) 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) Tritel, its
Affiliates, and the shareholders, members, managers, officers, employees, agents
and/or the legal representatives of any of them; and (ii) the Company and its
Affiliates, and the shareholders, members, managers, officers, employees, agents
and/or the legal represen tatives of any of them.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated, and the transactions
contemplated hereby abandoned, without further obligation of any party, except
as set forth herein, at any time prior to the Closing Date:
(a) by mutual written consent of the parties;
(b) by any party by written notice to the other parties, if the Closing
shall not have occurred on or before the date that is two years 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
(c) by any party by written notice to the other parties, if the
consummation of the transactions contemplated hereby shall be prohibited by a
final, non-appealable order, decree or injunction of a court of competent
jurisdiction.
8.2 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,
16
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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.
(a) In the event of a termination of this Agreement pursuant to Section
8.1, all provisions of this Agreement shall terminate, except Section 5.2 and
Articles VII and IX.
(b) Whether or not the Closing occurs, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Amendment and Modification. This Agreement may be amended, modified
or supplemented only by written agreement of each of the parties.
9.2 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.
9.3 Notices. All notices or other communications hereunder shall be in
writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by facsimile transmission, or by registered or
certified mail (return receipt requested), postage prepaid, with an
acknowledgment of receipt signed by the addressee or an authorized
representative thereof, addressed as follows (or to such other address for a
party as shall be specified by like notice; provided that notice of a change of
address shall be effective only upon receipt thereof):
If to Tritel: Tritel, Inc.
Attention: E. B. Martin, Jr.
1080 River Oaks Drive, Suite B-100
Jackson, Mississippi 39208
Fax No.: (601) 914-8282
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With a copy to: James H. Neeld, IV
Tritel, Inc.
1080 River Oaks Drive, Suite B-100
Jackson, Mississippi 39208
If to the Company:
With a copy to:
9.4 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.
9.5 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 contemplated
hereby, 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.
9.6 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.
9.7 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.
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9.8 Entire Agreement. This Agreement, including the exhibits and
schedules hereto and the certificates and instruments delivered pursuant to the
terms of this Agreement, embody the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated hereby. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such transactions contemplated hereby.
9.9 Publicity. So long as this Agreement is in effect, the parties
agree to consult with each other in issuing any press release or otherwise
making any public statement with respect to the transactions contemplated
hereby, and no party shall issue any press release or make any such public
statement prior to such consultation, except as may be required by Law. No press
release or other public statement by the parties hereto shall disclose any of
the financial terms of the transactions contemplated hereby without the prior
consent of the other parties, except as may be required by Law. A breach of the
provisions of this Section 9.9 by a party shall not give rise to any right to
terminate this Agreement.
9.10 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.
9.11 Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
------------------------------------
By:
---------------------------------
Name:
Title:
TRITEL, INC.
By:
---------------------------------
Name:
Title:
20
<PAGE>
Exhibit 10.36
- --------------------------------------------------------------------------------
LICENSE PURCHASE AGREEMENT
between
DIGITAL PCS, LLC
and
TRITEL, INC.
Dated as of May 20, 1999
- --------------------------------------------------------------------------------
<PAGE>
ARTICLE I
DEFINITIONS
ARTICLE II
PURCHASE AND SALE OF LICENSES; PAYMENT OF CONSIDERATION;
CERTAIN RESTRICTIONS ON TRANSFER
2.1 Purchase and Sale of Mercury Licenses and Other Mercury Assets ........5
2.2 Consideration for Mercury Licenses.....................................5
2.3 Consideration for Other Mercury Assets.................................5
2.4 Payment of Certain Expenses............................................6
2.5 Restrictive Legends....................................................6
ARTICLE III
CLOSING
3.1 Time and Place of Closing..............................................6
3.2 Closing Actions and Deliveries.........................................6
3.3 Payment of Transfer Taxes..............................................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Organization and Standing..............................................7
4.2 Power and Authority....................................................8
4.3 Due Authorization......................................................8
4.4 Enforceability.........................................................8
4.5 No Breach..............................................................8
4.6 Consents; No Conflicts.................................................8
<PAGE>
4.7 Litigation.............................................................9
4.8 FCC Compliance.........................................................9
4.9 Brokers................................................................9
4.10 ................................................................9
ARTICLE V
COVENANTS
5.1 Consummation of Transactions..........................................11
5.2 Confidentiality.......................................................12
5.3 Certain Covenants.....................................................13
5.4 Certain Mercury Transactions..........................................13
ARTICLE VI
CLOSING CONDITIONS
6.1 Conditions to Obligations of All Parties..............................14
6.2 Conditions to Obligations of the Company..............................15
6.3 Conditions to the Obligations of Mercury..............................16
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
7.1 Survival..............................................................17
7.2 Indemnification by Mercury and Mercury Investor Indemnitors...........17
7.3 Indemnification by the Managers.......................................18
7.4 Indemnification by the Company........................................18
7.5 Procedures............................................................19
7.6 Escrow and Reconciliation.............................................20
ARTICLE VIII
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TERMINATION
8.1 Termination...........................................................22
8.2 Effect of Termination.................................................22
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Amendment and Modification............................................23
9.2 Waiver of Compliance; Consents........................................23
9.3 Notices...............................................................23
9.4 Parties in Interest; Assignment.......................................24
9.5 Applicable Law........................................................24
9.6 Counterparts..........................................................24
9.7 Interpretation........................................................24
9.8 Entire Agreement......................................................24
9.9 Publicity.............................................................25
9.10 Specific Performance..................................................25
9.11 Remedies Cumulative...................................................25
SCHEDULES
- ---------
Schedule I -- Mercury Licenses
Schedule II -- Mercury Investors
Schedule 1.1 -- Permitted Expenditures
Schedule 2.1 -- Mercury Assets
Schedule 2.3 -- Other Mercury Debt
Schedule 4.6 -- Mercury Consents; Company Consents
Schedule 4.7 -- Mercury Litigation
Schedule 4.10 (a) -- Mercury FCC Proceedings
Schedule 4.10 (c) -- Cash Flow Statements
Schedule 4.10 (e) -- Litigation Affecting Other Mercury Assets
EXHIBITS
- --------
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<PAGE>
Exhibit A -- Form of Opinion of Counsel to Mercury
Exhibit B -- Form of Opinion of FCC Counsel to Mercury
Exhibit C -- Form of Opinion of Counsel to Company
Exhibit D -- Form of Assignment
-iv-
<PAGE>
LICENSE PURCHASE AGREEMENT
LICENSE PURCHASE AGREEMENT, dated as of May 20, 1999, between DIGITAL
PCS, LLC (f/k/a Mercury PCS II, LLC), a Mississippi limited liability company
("Mercury"), William M. Mounger, II, E.B. Martin, Jr. and Jerry M. Sullivan, Jr.
(individually a "Manager" and collectively the "Managers"), and TRITEL, INC., a
Delaware corporation (the "Company").
WHEREAS, Mercury has been granted the PCS licenses described on
Schedule I (the "Mercury Licenses"); and
WHEREAS, Mercury and the Company have entered into an Agreement dated
as of January 7, 1999 (the "Option Agreement"), pursuant to which Mercury has
granted to the Company an Option (as such term is defined in the Option
Agreement) to purchase the Mercury Licenses; and
WHEREAS, pursuant to the Option Agreement, the Company has exercised
its Option to purchase the Mercury Licenses on the terms and subject to the
conditions herein set forth;
NOW, THEREFORE, in consideration of the promises 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):
"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.
"Claim" has the meaning set forth in Section 7.5.
"Closing" has the meaning set forth in Section 3.1.
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"Closing Date" has the meaning set forth in Section 3.1.
"Common Stock" has the meaning set forth in the Securities Purchase
Agreement.
"Company" has the meaning set forth in the preamble.
"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 contemplated hereby and for the Company to
operate its business after the Closing Date as currently contemplated.
"Escrowed Shares" has the meaning set forth in Section 7.6.
"FCC" means the Federal Communications Commission or similar regulatory
authority established in replacement thereof.
"FCC Debt" means the indebtedness of Mercury to the United States
Department of the Treasury, in the aggregate principal amount of $12,189,890.40,
incurred in connection with its acquisition of Mercury Licenses.
"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 6.1(b).
"Governmental Authority" means a Federal, state or local court,
legislature, governmental agency (including, without limitation, the United
States Department of Justice), commission or regulatory or administrative
authority or instrumentality.
"HSR Act" means 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 7.5.
"Indemnifying Party" has the meaning set forth in Section 7.5.
"Law" means applicable common law and any statute, ordinance, code or
other law, rule, permit, permit condition, regulation, order, decree, technical
or other standard,
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<PAGE>
requirement or procedure enacted, adopted, promulgated, applied or followed by
any Governmental Authority.
"License" means a license, permit, certificate of authority, waiver,
approval, certificate of public convenience and necessity, registration or other
authorization, consent or clearance to construct or operate a facility,
including any emissions, discharges or releases therefrom, or to transact an
activity or business, to construct a tower or to use an asset or process, in
each case issued or granted by a Governmental Authority.
"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" means losses, damages, costs, expenses or liabilities,
including any amounts paid in satisfaction of judgments, in compromise, as fines
and penalties, and as counsel fees incurred by a Person in connection with the
investigation, defense, or disposition of any action, suit or other proceeding
in which any such Person may be involved or with which such Person may be
threatened.
"Managers" 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.
"Mercury" has the meaning set forth in the preamble.
"Mercury Investors" means the Persons that beneficially own, directly
or indirectly, equity interests in Mercury on the date hereof and that are set
forth on Schedule II.
"Mercury License Transfer" has the meaning set forth in Section 3.2(a).
"Mercury Licenses" has the meaning set forth in the first recital.
"New York Courts" has the meaning set forth in Section 9.5.
"Old Mercury Stockholders" has the meaning set forth in the Securities
Purchase Agreement.
"Option Agreement" has the meaning set forth in the second recital.
"Other Mercury Assets" has the meaning set forth in Section 2.1.
"Other Mercury Debt" has the meaning set forth in Section 2.3.
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<PAGE>
"Percentage Share" means a fraction the numerator of which is the
number of shares of Series C Preferred Stock distributed to any Person pursuant
to Section 5.4 hereunder and the denominator of which is the total number of
shares of Series C Preferred Stock issued hereunder.
"Permitted Expenditures" means expenditures relating to the Mercury
Licenses in an amount to be agreed by the Company, in its sole discretion.
"Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization, or other legal entity.
"Purchase Price" has the meaning set forth in Section 2.2.
"Reconciliation Date" has the meaning set forth in the Securities
Purchase Agreement.
"Representatives" has the meaning set forth in Section 5.2(a).
"Section 7.2 Indemnified Party" has the meaning set forth in Section
7.2.
"Section 7.2 Indemnifying Party" has the meaning set forth in Section
7.2.
"Section 7.2 Losses" has the meaning set forth in Section 7.2.
"Section 7.3 Indemnified Party" has the meaning set forth in Section
7.3.
"Section 7.3 Indemnifying Party" has the meaning set forth in Section
7.3.
"Section 7.4 Indemnified Party" has the meaning set forth in Section
7.4.
"Section 7.4 Indemnifying Party" has the meaning set forth in Section
7.4.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of May 20, 1998, by and among the Company, AT&T Wireless PCS
Inc., TWR Cellular Inc., Mercury, Mercury PCS LLC, the Cash Equity Investors
identified therein, and the Managers identified therein, as the same may be
amended, modified or supplemented in accordance with the terms thereof.
"Series C Preferred Stock" has the meaning set forth in Section 2.2.
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<PAGE>
"Solvent" means, when used with respect to any Person, that at the time
of determination: (a) the fair market value of its assets is in excess of the
total amount of its liabilities (including, without limitation, contingent
liabilities), (b) the present fair saleable value of its assets is greater than
its probable liability for its existing debts as such debts become absolute and
mature, (c) it is then able and expects to be able to pay its indebtedness
(including without limitation, contingent indebtedness and other commitments) as
they mature, and (d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"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.
ARTICLE II
PURCHASE AND SALE OF LICENSES; PAYMENT OF CONSIDERATION;
CERTAIN RESTRICTIONS ON TRANSFER
2.1 Purchase and Sale of Mercury Licenses and Other Mercury Assets.
Upon the terms and subject to the conditions hereof and in reliance upon the
representations, warranties and agreements herein contained, at the Closing,
Mercury shall sell, transfer, assign, convey and deliver to the Company (or one
or more wholly owned Subsidiaries of the Company designated by the Company),
free and clear of all Liens (other than Liens of the United States Department of
the Treasury securing FCC Debt), and the Company agrees to purchase, acquire and
accept from Mercury, the Mercury Licenses and the assets described on Schedule
2.1 (the "Other Mercury Assets").
2.2 Consideration for Mercury Licenses. Upon the terms and subject to
the conditions hereof and in reliance upon the representations, warranties and
agreements herein contained, at the Closing, the Company agrees (I) to pay to
Mercury in consideration for the Mercury Licenses, that number of shares of
Series C Preferred Stock, par value $.01 per share (the "Series C Preferred
Stock") as shall be equal to (x) the aggregate amount paid by Mercury to the FCC
in respect of the Mercury Licenses (including any interest paid by Mercury on
FCC Debt through the Closing Date but excluding the principal amount of, and
accrued interest on, the FCC Debt outstanding on the Closing Date), divided by
(y) One Thousand ($1,000) Dollars (the "Purchase Price"), and (II) to assume the
FCC Debt.
2.3 Consideration for Other Mercury Assets. Upon the terms and subject
to the conditions hereof and in reliance upon the representations, warranties
and agreements herein contained, on and as of the Closing Date, the Company
shall pay to Mercury, in consideration for the Other Mercury Assets, an amount
equal to the principal amount of indebtedness incurred by Mercury to fund the
cost of Permitted Expenditures together with all interest paid or accrued
thereon (collectively, the "Other Mercury Debt"). The outstanding principal
amount of each item of Other Mercury Debt, as of the date hereof is set forth on
Schedule 2.3.
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2.4 Payment of Certain Expenses. At the Closing (if any) the Company
shall reimburse Mercury, against delivery of customary invoices in reasonable
detail, for its legal fees and related expenses incurred in connection with the
preparation and filing of applications on Form 490 with the FCC necessary to
effect the Mercury License Transfer, provided, that the Company's reimbursement
obligation shall be limited to fees and expenses incurred through the date of
filing of the last of such applications.
2.5 Restrictive Legends. Each certificate representing shares of the
Series C Preferred Stock (including the shares originally delivered 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 (as defined in the Securities Purchase
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."
ARTICLE III
CLOSING
3.1 Time and Place of Closing. Upon the terms and subject to the
conditions hereof, the closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Rubin Baum Levin Constant &
Friedman, 30 Rockefeller Plaza, New York, New York 10112 at 10:00 a.m. on the
twelfth business day following the date of receipt of the last Consent required
by subsections (a) through (c) of Section 6.1, 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 VI
(the "Closing Date").
3.2 Closing Actions and Deliveries. Upon the terms and subject to the
satisfaction or waiver by the appropriate party, if applicable, of the
conditions set forth in Article
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VI, to effect the purchase and sale of the Mercury Licenses and the Other
Mercury Assets, the parties shall on the Closing Date take the following
actions:
(a) Assignment of Licenses and Assets. Mercury shall, and each Manager
shall cause Mercury to, execute and deliver to the Company (or the
applicable Subsidiary), (i) one or more instruments of assignment,
substantially in the form of Exhibit D, sufficient to assign the Mercury
Licenses to the Company (or one or more wholly owned Subsidiaries of the
Company designated by the Company) (such assignments being herein
collectively referred to as the "Mercury License Transfer"), and (ii) an
Assignment and Bill of Sale, in form reasonably acceptable to the Company,
and such other good and sufficient instruments of conveyance, transfer and
assignment as shall be necessary or appropriate to transfer to and vest in
the Company (or the applicable Subsidiary) the Other Mercury Assets with
warranties of title consistent with this Agreement.
(b) Payment of Purchase Price. The Company shall pay the Purchase Price
of the Mercury Licenses to Mercury in accordance with Section 2.2.
(c) Assumption and Reimbursement of Indebtedness. The Company shall
execute and deliver to Mercury an instrument of assumption, in form and
substance reasonably satisfactory to Mercury, in respect of the FCC Debt and
shall pay, or reimburse Mercury in respect of, the Other Mercury Debt.
(d) Other Deliveries. The parties shall execute and deliver or cause to
be executed and delivered all other documents, instruments, opinions and
certificates contemplated by this Agreement to be delivered at the Closing
or necessary and appropriate in order to consummate the transactions
contemplated hereby on the Closing Date.
3.3 Payment of Transfer Taxes. The Company shall pay or cause to be
paid at the Closing or, if due thereafter, promptly when due, all gross receipts
taxes, gains taxes (including, without limitation, real property gains tax or
other similar taxes), transfer taxes, sales taxes, stamp taxes, and any other
taxes, but excluding any Federal, State or local income taxes payable in
connection with the transfer of the Mercury Licenses.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
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Mercury (as to itself), each Manager (severally as to itself and
jointly and severally as to Mercury), and the Company (as to itself and each of
its Subsidiaries), represents and warrants to each of the other parties that:
4.1 Organization and Standing. It is a corporation, limited liability
company, general partnership or limited partnership, as applicable, 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. 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 contemplated hereby or its
ability to perform its obligations under this Agreement.
4.2 Power and Authority. It has the requisite power and authority (or,
in the case of the Managers, 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.
4.3 Due Authorization. The execution and delivery of this Agreement by
it and the consummation of the transactions contemplated hereby have been duly
and validly authorized by its Board of Directors (or equivalent body, as
applicable) 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 contemplated hereby.
4.4 Enforceability. 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.
4.5 No Breach. After giving effect to the transactions contemplated
hereby, it is not in breach of any obligation under this Agreement.
4.6 Consents; No Conflicts. Neither the execution, delivery and
performance by it of this Agreement nor the consummation of the transactions
contemplated hereby will (a) conflict with, or result in a breach or violation
of, any provision of its organizational documents; (b) subject to obtaining the
Consents set forth on Schedule 4.6, 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 4.6) or the approval of its
board of
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directors, members, general partner, stockholders or similar constituent bodies,
as applicable (other than approvals that 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 contemplated hereby. To its
knowledge, except as set forth on Schedule 4.6, there is no fact relating to it
or its Affiliates that would be reasonably expected to prevent it from
consummating the transactions contemplated hereby or disqualify the Company from
obtaining the Consents (including without limitation, FCC Consent) required in
order to consummate the Mercury License Transfer.
4.7 Litigation. Except as set forth on Schedule 4.7, there is no action
(including court 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 contemplated hereby or to fulfill its obligations under this
Agreement, which seeks to prevent or challenge the transactions contemplated
hereby, or which seeks to have an adverse effect on the Company or its wholly
owned Subsidiaries.
4.8 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.
4.9 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 contemplated hereby.
4.10 Mercury and each Manager, jointly and severally, represent and
warrant that:
(a) Mercury Licenses. Mercury is the authorized legal holder, free and
clear of any Liens (other than Liens securing the FCC Debt, Liens securing
indebtedness to the Company and Liens securing indebtedness of Mercury to
Airwave Communications, LLC that will be released on the Closing Date), of the
Mercury Licenses set forth on Schedule I, true and correct copies of which are
attached thereto. The Mercury Licenses are, and on the Closing Date will be,
valid and in full force and effect. Except as set forth on Schedule 4.10(a) and
for proceedings affecting the PCS or wireless communications services industry
generally, including investigations by governmental agencies of bidding
practices of bidders in the FCC auctions of PCS spectrum, there is not pending,
nor to its knowledge, threatened against Mercury or the Mercury Licenses, any
application, action (including court action), petition, objection or other
pleading, or any proceeding with the FCC which questions or contests the
validity of, or seeks the revocation, non-renewal or suspension of, any of the
Mercury Licenses, which seeks the imposition of any modification or amendment
with respect thereto, or which adversely affects the ability of the Company to
employ the Mercury Licenses in its business after the Closing Date or seeks the
payment of a fine, sanction, penalty, damages or contribution in connection with
the
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use of any Mercury License. The Mercury Licenses are not subject to any
conditions other than those appearing on the face of the Licenses themselves and
those imposed by FCC Law.
(b) Mercury Debt; Solvency. The FCC Debt and each item of Other Mercury
Debt being paid or assumed by the Company is, and on the Closing Date will be, a
bona fide obligation of Mercury and the amount set forth opposite each item on
Schedule 2.3 is the outstanding amount of principal thereon as of ________,
1999. Mercury is Solvent after giving effect to the consummation of the
transactions contemplated hereby, including the Mercury License Transfer.
(c) Proceeds of Debt. The cash flow statements of Mercury set forth on
Schedule 4.10(c) accurately reflect the sources and uses of cash relating to the
Mercury Licenses and Other Mercury Assets. The proceeds of all Other Mercury
Debt have been applied to Permitted Expenditures. The Other Mercury Assets
constitute all assets or rights purchased with the proceeds of Permitted
Expenditures.
(d) Title and Transferability. Mercury has, and upon the delivery of
the transfer documents pursuant to Section 3.2(a)(ii) the Company (or the
applicable Subsidiary) will have, good and marketable title to, each of the
Other Mercury Assets free and clear of any Liens (other than Liens securing
indebtedness to the Company and Liens securing indebtedness of Mercury to
Airwave Communications, LLC that will be released on the Closing Date). Neither
the execution, delivery and performance by Mercury of this Agreement nor the
purchase of the Other Mercury Assets or the assumption by the Company (or the
applicable Subsidiary) of the Other Mercury Debt will (a) 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 any note, bond, mortgage,
indenture, lease, agreement or other instrument, in each case which is
applicable to or binding upon it or any of the Other Mercury Assets or Other
Mercury Debt; or (b) require any Consent (other than those set forth on Schedule
4.6) or the approval of its board of directors, general partner, members,
stockholders or similar constituent bodies, as the case may be (other than
approvals that have been obtained).
(e) Litigation. Except as set forth on Schedule 4.10(e), there is no
action (including court 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 transfer of the Other Mercury Assets, which seeks to prevent or challenge
such transfer, or which seeks to have an adverse effect on the Other Mercury
Assets.
(f) No Distribution. Mercury is acquiring the shares of Series C
Preferred Stock to be acquired 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).
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(g) Investor Acknowledgments. (a) Mercury 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 acquisition of shares of Series C Preferred Stock, 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.
(h) Mercury has such knowledge and experience in financial and business
affairs that it is capable of evaluating the merits and risks of acquiring the
shares of Series C Preferred Stock it is acquiring hereunder.
(i) Mercury is not relying on and acknowledges that no representation
is being made by 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.
(j) In deciding to invest in the Company, Mercury has relied
exclusively on the representations and warranties expressly set forth in this
Agreement, investigations made by itself and its representatives and its and
such representatives' knowledge of the industry in which the Company proposes to
operate. Based solely on such representations and warranties and such
investigations and knowledge, it has determined that shares of Series C
Preferred Stock it is acquiring are a suitable investment for it.
ARTICLE V
COVENANTS
5.1 Consummation of Transactions. Each party shall use all commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable and consistent with
applicable law to carry out all of their respective obligations under this
Agreement to consummate the transactions contemplated hereby, which efforts
shall include, without limitation, the following:
(a) The parties shall use all commercially reasonable efforts to
cause the Closing to occur and the transactions contemplated hereby 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 contemplated
hereby by all Governmental Authorities and agencies, including the
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FCC, and 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 contemplated hereby; provided that Mercury shall not make any
filings with the FCC regarding the Mercury Licenses without the prior review and
approval of the Company.
(b) 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 Mercury or the Company or any other
party in connection with the transactions contemplated hereby or otherwise to
determine compliance with applicable FCC Rules.
5.2 Confidentiality.
(a) Each party shall, and shall cause each of its Affiliates, and
its and their respective shareholders, members, managers, directors, officers,
employees and agents (collectively, "Representatives") to, keep secret and
retain in strictest confidence any and all Confidential Information relating to
any other party that it receives in connection with the negotiation or
performance of this Agreement, and shall not disclose such Confidential
Information, and shall cause its Representatives not to disclose such
Confidential Information, to anyone except the receiving party's Affiliates and
Representatives and any other Person that agrees in writing to keep in
confidence all Confidential Information in accordance with the terms of this
Section 5.2. Until the Closing, each party agrees to use Confidential
Information received from another party only (i) to evaluate its interest in
pursuing the transactions contemplated hereby and (ii) to pursue such
transactions contemplated hereby, but not for any other purpose. All
Confidential Information furnished pursuant to this Agreement shall be returned
promptly to the party to whom it belongs upon request by such party.
(b) The obligations set forth in Section 5.2(a) shall be
inoperative with respect to Confidential Information that (i) is or becomes
generally available to the public other than as a result of disclosure by the
receiving party or its Representatives, (ii) was available to the receiving
party on a non-confidential basis prior to its disclosure to the receiving
party, or (iii) becomes available to the receiving party on a non-confidential
basis from a source other than the providing party or its agents, provided that
such source is not known by the receiving party to be bound by a confidentiality
agreement with the providing party or the providing party's agents.
(c) To the fullest extent permitted by law, if a party or any of
its Affiliates or Representatives breaches, or threatens to commit a breach of,
this Section 5.2, the party whose Confidential Information shall be disclosed,
or threatened to be disclosed, shall have the right and remedy to have this
Section 5.2 specifically enforced by any court having jurisdiction, it being
acknowledged and agreed that money damages will not provide an adequate remedy
to such party. Nothing in this Section 5.2 shall be construed to limit the right
of any party to collect money damages in the event of breach of this Section
5.2.
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(d) Anything else in this Agreement notwithstanding, each party
shall have the right to disclose any information, including Confidential
Information of the other party or such other party's Affiliates, in any filing
with any regulatory agency, court or other authority or any disclosure to a
trustee of public debt of a party to the extent that the disclosing party
determines in good faith that it is required by Law, regulation or the terms of
such debt to do so, provided that any such disclosure shall be as limited in
scope as possible and shall be made only after giving the other party as much
notice as practicable of such required disclosure and an opportunity to contest
such disclosure if possible.
5.3 Certain Covenants. From and after the execution and delivery of
this Agreement to and including the Closing Date, Mercury shall and each of the
Managers shall cause Mercury to:
(a) Comply in all material respects with all applicable Laws,
including all such Laws relating to the Mercury Licenses or Other Mercury Assets
or their use;
(b) Use commercially reasonable efforts to maintain the Mercury
Licenses in full force and effect;
(c) Not (i) sell, transfer, assign or dispose of, or offer to, or
enter into any agreement, arrangement or understanding to, sell, transfer,
assign or dispose of any of the Mercury Licenses or Other Mercury Assets or any
interest therein, or negotiate therefor, or (ii) create, incur or suffer to
exist any Lien of any nature whatsoever relating to any of the Mercury Licenses
or Other Mercury Assets or any interest therein (other than Liens securing the
FCC Debt to be assumed by the Company pursuant to Section 2.3). Without limiting
the foregoing, Mercury shall not incur any material obligation or liability,
absolute or contingent, relating to or affecting the Mercury Licenses or Other
Mercury Assets or their use;
(d) Give written notice to the Company promptly upon the
commencement of, or upon obtaining knowledge of any facts that would give rise
to a threat of, any claim, action or proceeding commenced against or relating to
(i) it, its properties or assets, including the Mercury Licenses or Other
Mercury Assets or their use, and which could have a Material Adverse Effect on
it or materially adversely affect the transactions contemplated hereby, or (ii)
the Mercury Licenses or Other Mercury Assets or their use;
(e) Promptly after obtaining knowledge of the occurrence of, or
the impending or threatened occurrence of, any event which could cause or
constitute a material breach of any of its warranties, representations,
covenants or agreements contained in this Agreement, give notice in writing of
such event, or occurrence or impending or threatened event or occurrence, to the
other parties and use commercially reasonable efforts to prevent or to promptly
remedy such breach; and
(f) Cause the other parties to be advised promptly in writing of
(i) any event, condition or state of facts known to it, which has had or could
have a Material Adverse
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Effect on it, or materially adversely affect the Mercury Licenses or Other
Mercury Assets or their use or the transactions contemplated hereby (other than
proceedings affecting the PCS or wireless communications services industry
generally), or (ii) any claim, action or proceeding which seeks to enjoin the
con summation of the transactions contemplated hereby.
5.4 Certain Mercury Transactions. Prior to the Reconciliation
Date, (as defined in the Securities Purchase Agreement) Mercury shall not
distribute or otherwise Transfer (as defined in the Stockholders Agreement)
any"Escrowed Shares" issued to it hereunder (or shares of Common Stock issued
upon conversion of the Series C Preferred Stock) except: (I) a Transfer from
Mercury to Airwave Communications, LLC, (II) in accordance with Section 7.6(f),
or (III) to a Mercury Investor that (x) elects by written notice to Mercury, as
the case may be, copies of which notice shall be furnished to the other parties,
to receive its Escrowed Shares and/or other shares and (y) executes and delivers
to the other parties thereto a counterpart to each of the Stockholders Agreement
and the agreement among the Cash Equity Investors (as defined in the Securities
Purchase Agreement) attached as Schedule X to the Stockholders Agreement. By
delivering such notice and accepting any such Escrowed Shares or other shares,
each Mercury Investor: (i) shall become a "Mercury Investor Indemnitor"
hereunder, (ii) agrees and acknowledges that such Escrowed Shares continue to be
subject to the provisions of this Agreement, (iii) makes (as to itself as of the
date of such distribution or transfer) the representations set forth in Section
5.1 of the Securities Purchase Agreement, and (iv) agrees and acknowledges that
it shall succeed to the rights of Mercury, as applicable, hereunder, in respect
of the shares distributed to it.
ARTICLE VI
CLOSING CONDITIONS
6.1 Conditions to Obligations of All Parties. The obligation of each of
the parties to consummate the transactions contemplated hereby to occur at the
Closing shall be conditioned on the following, unless waived by each of the
parties:
(a) Any applicable waiting period under the HSR Act shall have
expired or been terminated.
(b) The Consent of the FCC to the Mercury License Transfer shall
have been obtained pursuant to a Final Order, free of any conditions materially
adverse to the Company or Mercury, other than those applicable to the PCS or
wireless communications services industry generally. 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
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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; provided, however, that the Consent of the FCC to
the transactions contemplated hereby shall be deemed to be a Final Order
notwithstanding the pendency of any of the proceedings set forth in Schedule 4.7
or 4.10(a), or any appeals therefrom, so long as such proceedings or appeals
would not be reasonably expected, individually or in the aggregate, to result in
the revocation, non-renewal or suspension of, or an adverse affect on the
ability of the Company to employ, the Mercury Licenses.
(c) All Consents by any Governmental Authority (other than the
Consents referred to in paragraphs (a) and (b) above) required to permit the
consummation of the transactions contemplated hereby, the failure to obtain or
make which would be reasonably expected to have a Material Adverse Effect on the
Company or Mercury or to materially adversely affect the transactions
contemplated hereby or its ability to perform its obligations under this
Agreement shall have been obtained or made.
(d) 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 contemplated hereby or prohibit such
consummation, or (ii) impair in any material respect the operation of the
Company.
6.2 Conditions to Obligations of the Company. The obligation of the
Company to consummate the transactions contemplated to occur at the Closing
shall be further conditioned upon the satisfaction or fulfillment, at or prior
to the Closing, of the following conditions by each of the other parties, unless
waived by the Company:
(a) The representations and warranties of Mercury 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 Section 4.7 and the third sentence of Section
4.10(a) (disregarding any qualifications as to materiality contained therein)
that in the aggregate would not be reasonably expected to have a Material
Adverse Effect on Mercury or its ability to perform its obligations under this
Agreement or to materially adversely affect the transactions contemplated
hereby.
(b) Mercury shall have performed in all material respects all
agreements contained herein required to be performed by it at or before the
Closing.
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(c) Each Manager and an officer of Mercury 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
Mercury.
(d) Mercury shall have furnished the Company with opinions of
counsel, each dated the Closing Date, in substantially the forms of Exhibits A
and B.
(e) All member and other proceedings of Mercury in connection with
the Mercury License Transfer and the other transactions contemplated hereby, and
all documents and instruments incident thereto, shall be reasonably satisfactory
in form and substance to the Company, and Mercury shall have delivered to the
Company such receipts, documents, instruments and certificates, in form and
substance reasonably satisfactory to the Company, which the Company shall have
reasonably requested.
6.3 Conditions to the Obligations of Mercury. The obligation of Mercury
to consummate the transactions contemplated to occur at the Closing shall be
further conditioned upon the satisfaction or fulfillment, at or prior to the
Closing, of the following conditions, unless waived by Mercury:
(a) The representations and warranties of the Company 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 Section 4.7 (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
its ability to perform its obligations under this Agreement or to materially
adversely affect the transactions contemplated hereby.
(b) The Company shall have performed in all material respects all
agreements contained herein required to be performed by it at or before the
Closing.
(c) An officer of the Company shall have delivered to Mercury a
certificate, dated the Closing Date, certifying as to the fulfillment of the
conditions set forth in paragraphs (a) and (b) above as to the Company.
(d) The Company shall have furnished Mercury with an opinion of
counsel, dated the Closing Date, in substantially the form of Exhibit C.
(e) All corporate and other proceedings of the Company in
connection with the Mercury License Transfer and the other transactions
contemplated hereby, and all documents and instruments incident thereto, shall
be reasonably satisfactory in form and substance to Mercury, and the Company
shall have delivered to Mercury such receipts,
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documents, instruments and certificates, in form and substance reasonably
satisfactory to Mercury, which Mercury shall have reasonably requested.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
7.1 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 VII 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 VII.
7.2 Indemnification by Mercury and Mercury Investor Indemnitors.
Mercury, and the Managers, jointly and severally, and each Mercury Investor
Indemnitor, solely to the extent of its Percentage Share of any Section 7.2
Losses, shall indemnify and hold harmless the Company and its Affiliates, and
the shareholders, members, managers, officers, employees, agents and/or the
legal representatives of any of them (each, a "Section 7.2 Indemnified Party"),
against any and all losses, damages, costs, expenses or liabilities, including
any amounts paid in satisfaction of judgments, in compromise, as fines and
penalties, any counsel fees incurred by him or it in connection with the
investigation, defense, or disposition of any action, suit or other proceeding
in which any Section 7.2 Indemnified Party may be involved or with which he or
it may be threatened (collectively, "Section 7.2 Losses"), in each case that
arises out of or results from (i) any representation or warranty of Mercury
contained in Article IV being untrue in any material respect as of the date on
which it was made or (ii) any of the matters referred to on Schedules 4.7 or
4.10(a), except to the extent (but only to the extent) any such Section 7.2
Losses arise out of or result from the gross negligence or willful misconduct of
such Section 7.2 Indemnified Party or its Affiliates; provided that (x) the
aggregate liability of each Manager to indemnify Section 7.2 Indemnified Parties
against Section 7.2 Losses shall be limited to the shares of Common Stock of the
Company then held by such Manager and Section 7.2 Indemnified Parties seeking
indemnification against any Manager for such Section 7.2 Losses
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hereunder shall not have recourse to any other assets of such Manager and (y)
the aggregate liability of each Mercury Investor Indemnitor to indemnify Section
7.2 Indemnified Parties against Section 7.2 Losses shall be limited to his or
its Escrowed Shares, and Section 7.2 Indemnified Parties seeking indemnification
against any Mercury Investor Indemnitor for Section 7.2 Losses hereunder shall
not have recourse to any other assets of such Mercury Investor Indemnitor.
Notwithstanding anything herein to the contrary, no Section 7.2 Indemnified
Party shall require any Mercury Investor Indemnitor to satisfy any Section 7.2
Losses earlier than the Reconciliation Date; provided that any Mercury Investor
Indemnitor may satisfy its obligation in respect of any Section 7.2 Losses by
making a cash payment to the applicable Section 7.2 Indemnified Party equal to
its Percentage Share of such Section 7.2 Indemnified Loss, plus an amount equal
to interest thereon at the rate of 10% per annum, compounded annually, from the
date a notice (the "Section 7.2 Notice") specifying the amount of such Section
7.2 Loss is given by the applicable Section 7.2 Indemnified Party to the Old
Mercury Stockholders.
7.3 Indemnification by the Managers. Each Manager, severally and not
jointly, shall indemnify and hold harmless Mercury and the Company and its
Subsidiaries and their respective Affiliates, and the shareholders, members,
managers, officers, employees, agents and/or the legal representatives of any of
them (each, a "Section 7.3 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 7.3 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 Manager 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 Manager in the performance of his
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 7.3 Indemnified Party or its Affiliates; provided
that the aggregate liability of each Manager to indemnify Section 7.3
Indemnified Parties against Losses arising out of or resulting from (x) the
untruth in any material respect of any representation or warranty as to the
Company made by such Manager in this Agreement, (y) any material default by such
Manager in the performance of his obligations under this Agreement, shall
(except, in the case of clause (y), 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 Manager) be limited to the shares of Series C Preferred Stock
and Common Stock of the Company then held by such Manager, and Section 7.3
Indemnified Parties seeking indemnification against any Manager for such Losses
hereunder shall not have recourse to any other assets of such Manager.
7.4 Indemnification by the Company. The Company shall indemnify and
hold harmless each of the Managers, Mercury and their respective Affiliates, and
the shareholders, members, managers, officers, employees, agents and/or the
legal representatives of any of them (each, a "Section 7.4 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 7.4 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
-18-
<PAGE>
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 7.4 Indemnified Party or
its Affiliates.
7.5 Procedures.
(a) The terms of this Section 7.5 shall apply to any claim (a
"Claim") for indemnification under the terms of Sections 7.2, 7.3 or 7.4. The
Section 7.2 Indemnified Party, Section 7.3 Indemnified Party or Section 7.4
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 VII 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 VII to the fullest extent permitted
by law.
(b) 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.
(c) 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
VII, 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
-19-
<PAGE>
the extent that it shall be determined that he or it was not entitled to
indemnification under this Article VII.
(d) 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) Mercury and its
Affiliates, and the shareholders, members, managers, officers, employees, agents
and/or the legal representatives of any of them; (ii) the Managers and their
respective Affiliates, and the shareholders, members, managers, officers,
employees, agents and/or the legal representatives of any of them and (iii) the
Company and its Affiliates, and the shareholders, members, managers, officers,
employees, agents and/or the legal representatives of any of them.
7.6 Escrow and Reconciliation.
(a) The certificates for the shares of Series C Preferred Stock
representing the Purchase Price (collectively, the "Escrowed Shares") shall be
held in escrow by the Secretary of the Company as escrow holder (the "Escrow
Holder"), together with related stock powers executed in blank by the record
owners thereof. The Escrow Holder shall also hold in escrow the cash proceeds
("Escrowed Cash") from sales of Escrowed Shares permitted by paragraph (f)
below. The Escrow Holder shall not permit the transfer of such shares on the
books of the Company except in accordance with this Agreement and the
Stockholders Agreement, provided that the Escrow Holder shall be entitled to
rely upon written directions of the Board of Directors of the Company. The
Escrow Holder shall have no personal liability for any act or omission hereunder
while acting in good faith in the exercise of his own judgment. The Company
agrees to indemnify and hold Escrow Holder free and harmless from and against
any and all losses, costs, damages, liabilities or expenses, including counsel
fees to which Escrow Holder may be put or which he may incur by reason of or in
connection with the escrow arrangement hereunder.
(b) On or promptly following the Reconciliation Date, the Escrow
Holder shall distribute the Escrowed Shares to the Old Mercury Stockholders as
follows (subject to the terms of paragraph (g) below):
(i) first, to the Company and each other Section 7.2
Indemnified Party (pro rata in proportion to their respective Losses), an amount
of Escrowed Cash of such Old Mercury Stockholder equal to such Old Mercury
Stockholder's Percentage Share of the Losses, plus an amount equal to interest
thereon at the rate of 10% per annum, compounded annually, from the date of the
applicable Section 7.2 Notice through the Reconciliation Date, and, if
necessary, a number of Escrowed Shares of such Old Mercury Stockholder having an
aggregate Market Price (as defined in the Securities Purchase Agreement) equal
to the balance of such Old Mercury Investor's Percentage Share of the Losses,
plus an amount equal to interest thereon at the rate of 10% per annum,
compounded annually, from the date of the applicable Section 7.2 Notice through
the Reconciliation Date; provided that no Escrowed Shares or Escrowed Cash of
any Old Mercury Stockholder shall be distributed
-20-
<PAGE>
pursuant to this clause (i) of Section 7.6(b) with respect to any Loss, if such
Old Mercury Stockholder shall have theretofore satisfied its obligation in
respect of such Loss in accordance with the proviso to the last sentence of
Section 7.2; and
(ii) second, to such Old Mercury Stockholder, the balance of his or its
Escrowed Shares and Escrowed Cash.
The distribution of the Escrowed Shares contemplated in this Section
7.6(b) shall be deferred to the extent necessary to determine the Market Price
of the Escrowed Shares.
(c) Promptly following the Reconciliation Date, the Escrow Holder
shall (i) if no Escrowed Shares are distributable pursuant to paragraph (i) of
Section 7.6(b), deliver the certificates representing the Escrowed Shares to the
Old Mercury Stockholders, and (ii) if any Escrowed Shares are distributable
pursuant to paragraphs (i) of Section 7.6(b), (x) cancel the certificates held
by the Escrow Holder representing Escrowed Shares, (y) cause new certificates to
be issued representing the number of Escrowed Shares distributable to the
Company or any other Section 7.2 Indemnified Party pursuant to paragraphs (i)
and (ii) of Section 7.6(b), which certificates the Escrow Holder shall deliver
to the Company or such other Section 7.2 Indemnified Party (as applicable), and
(y) cause new certificates to be issued representing the balance of the Escrowed
Shares, which certificates shall be distributed to such Old Mercury Stockholder.
(d) Subject to the terms hereof, each Old Mercury Stockholder
shall have all the rights of a stockholder with respect to the Escrowed Shares
while they are held in escrow, including, without limitation, the right to vote
the Escrowed Shares and receive any cash dividends declared thereon. If, from
time to time, there is (i) any stock dividend, stock split or other change in
the Escrowed Shares or (ii) any merger or sale of all or substantially all of
the assets or other acquisition of the Company, all new, substituted or
additional securities to which such Old Mercury Stockholder is entitled by
reason of his ownership of the Escrowed Shares shall be immediately subject to
this escrow, deposited with the Escrow Holder and included thereafter as
"Escrowed Shares" for purposes of this Agreement.
(e) Legends. The share certificates evidencing the Escrowed Shares
shall be endorsed with the following legend (in addition to any legend required
to be placed thereon by the Securities Purchase Agreement, applicable federal or
state securities laws or the Stockholders Agreement).
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF THE LICENSE PURCHASE AGREEMENT DATED AS OF MAY
20, 1999, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY,
WHICH PROVIDES, AMONG OTHER THINGS, FOR RESTRICTIONS ON TRANSFER OF THE
SHARES REPRESENTED BY THIS CERTIFICATE."
-21-
<PAGE>
(f) Until the Reconciliation Date, no Mercury Investor Indemnitor
shall Transfer (as such term is defined in the Stockholders Agreement) any of
his or its Escrowed Shares; provided that, subject to the restrictions on
transfer contained in the Stockholders Agreement, after the IPO Date (as defined
in the Stockholders Agreement) and notwithstanding the provisions of Section
5.4, any Old Mercury Stockholder may sell any or all of his Escrowed Shares for
cash at the Market Price so long as the gross cash proceeds thereof are
deposited with the Escrow Holder, who shall at the request of such Old Mercury
Stockholder invest such funds in Treasury obligations or other cash equivalents
that mature not later than the fifth anniversary of the date hereof, to be held
in escrow by the Escrow Holder, and not to be released, except in accordance
with the foregoing provisions.
(g) Notwithstanding anything herein to the contrary, 100% of the
obligations of all Old Mercury Stockholders to be satisfied by distributions of
Escrowed Cash and/or Escrowed Shares pursuant to Section 7.6(b)(i) shall be
satisfied, on the Reconciliation Date (as defined in clauses (i) through (iv) of
the definition thereof, without regard to the proviso to such definition),
first, out of any Escrowed Cash, and second, out of any Escrowed Shares held by
Mercury, until all of such Escrowed Cash and Escrowed Shares shall have been
distributed.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated, and the transactions
contemplated hereby abandoned, without further obligation of any party, except
as set forth herein, at any time prior to the Closing Date:
(a) by mutual written consent of the parties;
(b) by any party by written notice to the other parties, if the
Closing shall not have occurred on or before the date that is two years after
the date hereof, provided that the party electing to exercise such right is not
otherwise in breach of its obligations under this Agreement;
(c) by any party by written notice to the other parties, if the
consummation of the transactions contemplated hereby shall be prohibited by a
final, non-appealable order, decree or injunction of a court of competent
jurisdiction; or
(d) by the Company in the event of the Company has terminated the
Securities Purchase Agreement pursuant to Section 6.15 thereof.
8.2 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,
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<PAGE>
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:
(a) In the event of a termination of this Agreement pursuant to
Section 8.1, all provisions of this Agreement shall terminate, except Section
5.2 and Articles VII and IX.
(b) Whether or not the Closing occurs, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses; provided, however,
that in the event of a termination of this Agreement pursuant to Section 8.1(d),
the Company shall pay to Mercury an amount equal to the interest that shall have
accrued on indebtedness to the United States Department of the Treasury
attributable to the Mercury Licenses during the period commencing on the date of
execution of the Securities Purchase Agreement through the date of termination
by the Company. The Company shall reimburse Mercury promptly after the
termination of this Agreement in respect of all or any portion of such interest
actually paid by Mercury to the United States Department of the Treasury. In the
event that all or any portion of such interest shall not have been so paid as of
such date of termination, the Company shall pay such interest to Mercury on the
date that such interest shall be due and payable to the United States Department
of the Treasury.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Amendment and Modification. This Agreement may be amended, modified
or supplemented only by written agreement of each of the parties.
9.2 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 9.2.
9.3 Notices. All notices or other communications hereunder shall be in
writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by facsimile transmission, or by registered or
certified mail (return receipt requested), postage prepaid, with an
acknowledgment of receipt signed by the addressee or an authorized
representative thereof, addressed as follows (or to such other address for a
party as shall be specified by like notice; provide that notice of a change of
address shall be effective only upon receipt thereof):
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<PAGE>
If to Mercury: 1080 River Oaks Drive, Suite B-100
Jackson, Mississippi 39208
Fax #601-914-8282
With a copy to: Wes Daughdrill, Esquire
Young, Williams, Henderson & Fuselier, P.A.
Post Office Box 23059
Jackson, Mississippi 39225-3059
Fax #601-355-6136
If to the Company: 1080 River Oaks Drive, Suite B-100
Jackson, Mississippi 39208
Fax #601-914-8282
With a copy to: Wes Daughdrill, Esquire
Young, Williams, Henderson & Fuselier, P.A.
Post Office Box 23059
Jackson, Mississippi 39225-3059
Fax #601-355-6136
With a copy to each other party to the Securities Purchase Agreement sent to the
addresses set forth in Section 10.3 thereof.
9.4 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.
9.5 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 contemplated
hereby, 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.
-24-
<PAGE>
9.6 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.
9.7 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.
9.8 Entire Agreement. This Agreement, including the exhibits and
schedules hereto and the certificates and instruments delivered pursuant to the
terms of this Agreement, embody the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated hereby. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such transactions contemplated hereby.
9.9 Publicity. So long as this Agreement is in effect, the parties
agree to consult with each other in issuing any press release or otherwise
making any public statement with respect to the transactions contemplated
hereby, and no party shall issue any press release or make any such public
statement prior to such consultation, except as may be required by Law. No press
release or other public statement by the parties hereto shall disclose any of
the financial terms of the transactions contemplated hereby without the prior
consent of the other parties, except as may be required by Law. A breach of the
provisions of this Section 9.9 by a party shall not give rise to any right to
terminate this Agreement.
9.10 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.
9.11 Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
-25-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TRITEL, INC.
By:
--------------------------------------
Name:
Title:
DIGITAL PCS, LLC (f/k/a Mercury PCS II,
LLC)
By:
--------------------------------------
Name:
Title:
-----------------------------------------
William M. Mounger, II
-----------------------------------------
E.B. Martin, Jr.
-----------------------------------------
Jerry M. Sullivan, Jr.
-26-
<PAGE>
SCHEDULE I
MERCURY LICENSES
- --------------------------------------------------------------------------------
Market Number Frequency Block License Description
- --------------------------------------------------------------------------------
154 F Ft. Walton, FL
- --------------------------------------------------------------------------------
159 F Gainesville, FL
- --------------------------------------------------------------------------------
340 F Panama City, FL
- --------------------------------------------------------------------------------
343 F Pensacola, FL
- --------------------------------------------------------------------------------
439 F Tallahassee, FL
- --------------------------------------------------------------------------------
58 F Brunswick, GA
- --------------------------------------------------------------------------------
454 F Valdosta, GA
- --------------------------------------------------------------------------------
467 F Waycross, GA
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE II
MERCURY INVESTORS
Southern Farm Bureau Life Insurance Company
M3, LLC
McCarty Communications, LLC
DC Investment Partners Exchange Fund, L.P.
FCA Venture Partners I, L.P.
Clayton Associates, LLC
Mercury PCS Investors, LLC
William M. Mounger, II
Jerry M. Sullivan, Jr.
E.B. Martin, Jr.
<PAGE>
SCHEDULE 1.1
PERMITTED EXPENDITURES
<PAGE>
SCHEDULE 2.1
MERCURY ASSETS
<PAGE>
SCHEDULE 2.3
OTHER MERCURY DEBT
<PAGE>
SCHEDULE 4.6
MERCURY CONSENTS
The execution, delivery and performance of the Agreement will or may
require the following consents, approvals and reviews:
1. The Federal Communications Commission.
Matters which could prevent Mercury from consummating the transactions
contemplated by this Agreement include:
A. Applications for Review filed by High Plains Wireless, L.P.: In re
Application of Mercury PCS II, LLC for Facilities in the Broadband
Personal Communications Services in the D, E and F Blocks, Federal
Communications Commission File Numbers 00114CWL97, et al.
B. Edwin Welsh v. Mercury PCS, LLC, Mercury PCS II, LLC, MSM, Inc.,
Mercury Wireless Management, Inc., William M. Mounger, II, Jerry
Sullivan, and E.B. Martin, Chancery Court of the First Judicial
District of Hinds County, Mississippi, Cause No. G97-56103.
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.
<PAGE>
SCHEDULE 4.7
MERCURY LITIGATION
See Items 1(A-B) under "Mercury Consents" on Schedule 4.6.
<PAGE>
SCHEDULE 4.10(a)
MERCURY FCC PROCEEDINGS
See Items 1(A-B) under "Mercury Consents" on Schedule 4.6.
<PAGE>
SCHEDULE 4.10(c)
CASH FLOW STATEMENTS
<PAGE>
SCHEDULE 4.10(e)
LITIGATION AFFECTING OTHER MERCURY ASSETS
<PAGE>
Tritel, Inc. and Predecessor Companies
Computation of Ratio of Earnings to Fixed Charges
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Period
from Six
inception Months Ended
to Years ended December 31, June 30,
December 31, --------------------------- ------------------
1995 1996 1997 1998 1998 1999
------------ -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Pretax income (loss) from continuing operations $(120) $(1,461) $(3,154) $(8,331) $(1,733) $(18,274)
Fixed charges, net of capitalized interest - - 1 833 5 7,840
----- ------- ------- ------- ------- --------
Earnings (120) (1,461) (3,153) (7,498) (1,728) (10,434)
===== ======= ======= ======= ======= ========
Fixed charges
Interest expense and financing cost - - - 722 - 7,334
Capitalized interest and discount 20 3,358 7,214 10,519 4,621 10,540
Interest factor on rental expense - - 1 111 5 506
----- ------- ------- ------- ------- --------
Fixed charges 20 3,358 7,215 11,352 4,626 18,380
===== ======= ======= ======= ======= ========
Deficiency of earnings to fixed charges $ 140 $ 4,819 $10,368 $18,850 $ 6,354 $ 28,814
===== ======= ======= ======= ======= ========
</TABLE>
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Tritel, Inc.:
We consent to the use of our report dated February 16, 1999 related to the
consolidated financial statements of Tritel, Inc. and Predecessor Companies as
of December 31, 1997 and 1998 and for each of the years in the three-year period
ended December 31, 1998 and for the period from July 27, 1995 (inception) to
December 31, 1998 included herein and to the reference to our firm under the
heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Jackson, Mississippi
September 7, 1999
<PAGE>
========================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
TRITEL PCS, INC.
(Exact name of obligor as specified in its charter)
Delaware 64-0896438
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
TRITEL, INC
(Exact name of obligor as specified in its charter)
Delaware 64-0896417
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
TRITEL COMMUNIATIONS, INC.
(Exact name of obligor as specified in its charter)
Delaware 64-0896042
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
TRITEL FINANCE, INC.
(Exact name of obligor as specified in its charter)
Delaware 64-0896439
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
111 E. Capital Street, Suite 500
Jackson, Mississippi 39201
(Address of principal executive offices) (Zip code)
-------------
12.75% Senior Subordinated Discount Notes due 2009
(Title of the indenture securities)
========================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29
UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust powers.
(Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration
Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration
Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed
with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit
6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published pursuant
to law or to the requirements of its supervising or examining authority.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 7th day of September, 1999.
THE BANK OF NEW YORK
By: /s/ MICHAEL CULHANE
--------------------------------
Name: MICHAEL CULHANE
Title: VICE PRESIDENT
<PAGE>
- ------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1999,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
ASSETS Dollar Amounts
In Thousands
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin . $ 5,597,807
Interest-bearing balances .......................... 4,075,775
Securities:
Held-to-maturity securities ........................ 785,167
Available-for-sale securities ...................... 4,159,891
Federal funds sold and Securities purchased under
agreements to resell ................................ 2,476,963
Loans and lease financing receivables:
Loans and leases, net of unearned
income ............................................ 38,028,772
LESS: Allowance for loan and
lease losses ...................................... 568,617
LESS: Allocated transfer risk
reserve .......................................... 16,352
Loans and leases, net of unearned income, allowance
and reserve ...................................... 37,443,803
Trading Assets ........................................ 1,563,671
Premises and fixed assets (including capitalized
leases) ............................................. 683,587
Other real estate owned ............................... 10,995
Investments in unconsolidated subsidiaries and
associated companies ................................ 184,661
Customers' liability to this bank on acceptances
outstanding ......................................... 812,015
Intangible assets ..................................... 1,135,572
Other assets .......................................... 5,607,019
Total assets .......................................... $64,536,926
LIABILITIES
Deposits:
In domestic offices ................................ $26,488,980
Noninterest-bearing ................................ 10,626,811
Interest-bearing ................................... 15,862,169
In foreign offices, Edge and Agreement
subsidiaries, and IBFs ........................... 20,655,414
Noninterest-bearing ................................ 156,471
Interest-bearing ................................... 20,498,943
Federal funds purchased and Securities sold under
agreements to repurchase ........................... 3,729,439
Demand notes issued to the U.S. Treasury .............. 257,860
Trading liabilities ................................... 1,987,450
Other borrowed money:
With remaining maturity of one year or less ........ 496,235
With remaining maturity of more than one year
through three years .............................. 465
With remaining maturity of more than three years ... 31,080
Bank's liability on acceptances executed and
outstanding ......................................... 822,455
Subordinated notes and debentures ..................... 1,308,000
Other liabilities ..................................... 2,846,649
Total liabilities ..................................... 58,624,027
EQUITY CAPITAL
Common stock .......................................... 1,135,284
Surplus ............................................... 815,314
Undivided profits and capital reserves ................ 4,001,767
Net unrealized holding gains (losses) on
available-for-sale securities ....................... (7,956)
Cumulative foreign currency translation adjustments (31,510)
-----------
Total equity capital .................................. 5,912,899
-----------
Total liabilities and equity capital .................. $64,536,926
===========
<PAGE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni
Alan R. Griffith Directors
Gerald L. Hassell
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TRITEL,
INC. AND PREDECESSOR COMPANIES FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001088383
<NAME> TRITEL, INC.
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-END> DEC-31-1998 JUN-30-1999
<CASH> 846 390,305
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,806 395,732
<PP&E> 13,923 61,468
<DEPRECIATION> (107) (782)
<TOTAL-ASSETS> 89,012 697,045
<CURRENT-LIABILITIES> 32,911 7,345
<BONDS> 51,599 445,086
0 69,109
0 160,008
<COMMON> 0 0
<OTHER-SE> (1,983) (31,914)
<TOTAL-LIABILITY-AND-EQUITY> 89,021 697,045
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 7,686 16,272
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 722 0
<INCOME-PRETAX> (8,331) (18,274)
<INCOME-TAX> 0 (6,036)
<INCOME-CONTINUING> (8,331) (12,238)
<DISCONTINUED> 0 0
<EXTRAORDINARY> (2,414) 0
<CHANGES> 0 0
<NET-INCOME> (10,745) (12,238)
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
</TABLE>
