<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 2, 1999
REGISTRATION NO. 333-82509
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 3 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
<TABLE>
<CAPTION>
<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>
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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)
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</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.
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<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 NOVEMBER 2, 1999
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
PAGE
----
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, Inc. and Tritel PCS 33
Business ...................................... 34
Government Regulation ......................... 54
Joint Venture Agreements with AT&T
Wireless ................................... 67
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
---------------------
- ----------
* 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 personal
communications services, called PCS, telecommunications markets in the
south-central United States. Our PCS licenses cover a population, called Pops,
of approximately 14.0 million people 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 have limited
operations and no significant revenues and we expect to have significant
operating losses in our initial stages of operations.
We have commenced commercial PCS service in the Jackson, Mississippi
market. We intend to commence commercial PCS service during 1999 and 2000 in
our major population and business centers as follows and to provide coverage to
approximately 80% of our Pops by the end of 2001.
EXPECTED
MARKET LAUNCH DATE 1998 POPS
------ ----------- ---------
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 Launched September 1999 657,800
Mobile, AL 2nd Quarter 2000 653,900
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.
1
<PAGE>
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.
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
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
|
|
|
TRITEL A/B HOLDING COPR.
Holding Company
Guarantor of Senior Bank Debt
|
Five License Subsidiaries Hold FCC A- and B- Block Licenses
|
Guarantors of Senior Bank Debt
TRITEL C/F HOLDING CORP.
Holding Company
Guarantor of Senior Bank Debt
|
Four License Subsidiaries Hold FCC C- and F- Block Licenses
|
Issuers of FCC Debt and Guarantors of Senior Bank Debt
TRITEL COMMUNICATIONS, INC.
Operating Company
Guarantor of Senior Bank Debt and High Yield Debt
TRITEL FINANCE, INC.
Equipment Leasing and Financing
Guarantor of Senior Bank Debt and High Yield Debt
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 $74.5 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 IN MOST OF OUR MARKETS 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, except
for the Jackson, Mississippi market, and, therefore, have no significant
revenues to fund expenditures. We have made cumulative cash expenditures
through June 30, 1999 of $105 million, consisting of primarily 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.
We are highly leveraged. As of June 30, 1999, we had $445.1 million of
total indebtedness outstanding, including debt owed to the FCC, $200.0 million
outstanding under our bank facility and $203.7 million of the original notes at
their accreted value. This indebtedness represented
9
<PAGE>
approximately 65.9% of our total capitalization at that date. At that date, we
also had $90.7 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.
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, AND THAT COULD CAUSE
US TO FAIL TO MEET OUR BUILDOUT PLANS OR SERVICE OUR DEBT
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.
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 ourselves.
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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.
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. These relationships are central to our
business plan. If any of these relationships were terminated, our business
strategy could be significantly affected, and, as a result, our operations and
future prospects could be adversely affected.
The AT&T Wireless agreements create an organizational and operational
structure that defines the relationships between AT&T Wireless and us. Because
of our dependence on these relationships, 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 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. This is because our business
strategy largely involves leveraging the benefits of our AT&T Wireless
affiliation and our membership in the AT&T Wireless Network.
THE INTERESTS OF AT&T WIRELESS MAY CONFLICT WITH THOSE OF TRITEL PCS AND THE
HOLDERS OF NOTES
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 Tritel's 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
The viability of our PCS business will depend upon, among other things,
our ability to compete, especially on 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.
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.
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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.
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. If
any of our equipment vendors fail to perform on schedule, we may not be able to
build out certain markets or provide PCS service in certain markets in a timely
and cost-effective manner.
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 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 in certain markets.
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.
IF WE FAIL TO BUILD OUT OUR PCS NETWORK ACCORDING TO OUR CURRENT PLAN AND
SCHEDULE, OUR GROWTH MAY BE LIMITED, OUR MARKET ENTRY MAY BE DELAYED, AND OUR
BUILDOUT COSTS MAY INCREASE
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 complete construction of 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.
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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, WHICH WOULD ADVERSELY AFFECT
OUR ABILITY TO BE COMPETITIVE AND MAY RESULT IN INCREASED COSTS TO ADOPT A NEW
TECHNOLOGY
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. 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 IS-136 TDMA technology employed
by us obsolete and, as a result, could have a material adverse effect on our
business and operating results. 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.
OUR DIGITAL PCS TECHNOLOGY MAY NOT GAIN CUSTOMER ACCEPTANCE, WHICH WOULD
ADVERSELY AFFECT OUR ABILITY TO BE COMPETITIVE AND MAY RESULT IN INCREASED
COSTS TO ADOPT A NEW TECHNOLOGY
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.
Three standards are 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 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.
THIRD-PARTY FRAUD WILL LIKELY CAUSE US TO INCUR INCREASED OPERATING COSTS
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,
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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.
CONCERNS THAT THE USE OF WIRELESS HANDSETS MAY POSE HEALTH AND SAFETY RISKS MAY
DISCOURAGE THE USE OF OUR PCS HANDSETS
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.
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.
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 by
requiring us to modify our operations or business plans in response to such
restrictions.
OUR FCC LICENSES MAY BE REVOKED UNDER CERTAIN CIRCUMSTANCES, AND THE LOSS OF
ANY FCC LICENSES COULD ADVERSELY AFFECT OUR BUSINESS AND OUR ABILITY TO PROVIDE
PCS SERVICE IN CERTAIN MARKETS
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.
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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, AND WE MAY INCUR INCREASED
COSTS TO COMPLY WITH NEW REGULATIONS
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.
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, WHICH COULD ADVERSELY AFFECT OUR BUSINESS AND OUR ABILITY TO
PROVIDE PCS SERVICE IN CERTAIN MARKETS
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.
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OUR SUBSIDIARIES' GUARANTEES OF THE NOTES MAY BE VOID UNDER CERTAIN
CIRCUMSTANCES, AND IF THEY ARE, OUR HOLDING COMPANY STRUCTURE LIMITS THE EXTENT
TO WHICH WE CAN USE THE ASSETS OF OUR SUBSIDIARIES TO SATISFY OUR OBLIGATIONS
UNDER THE NOTES
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. If a court voids the subsidiary guarantees, your
right as a holder of notes to participate in any distribution of the assets of
any of our subsidiaries upon the liquidation, reorganization or insolvency of a
subsidiary will be subject to the prior claims of that subsidiary's creditors.
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
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.
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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 $74.5 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 $312.1 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."
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, AND WE WILL NOT ISSUE REGISTERED NOTES TO YOU WITHOUT A
TIMELY AND PROPER TENDER.
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
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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, AND ILLIQUIDITY MAY
HINDER YOUR ABILITY TO SELL THE NOTES.
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 AND MARKET DATA
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.
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.
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.
19
<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
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
---------
Common Stock, par value -- $.01 per share; authorized 3,040,009 shares;
40,705 shares issued and outstanding ....................................... --
Deficit accumulated during the development stage ............................. (32,153)
---------
Total stockholders' equity ................................................. 139,133
=========
Total capitalization ...................................................... $ 674,887
=========
</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.
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 6,198 7,053
--------- -------- --------- ---------
Total operating expense ...... 12,574 1,760 17,348 29,922
--------- -------- --------- ---------
Operating loss ................ (12,574) (1,760) (17,348) (29,922)
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) (19,350) (32,416)
Extraordinary item --
Loss on return of spectrum..... (2,414) -- -- (2,414)
--------- -------- --------- ---------
Loss before income taxes...... (15,480) (1,733) (19,350) (34,830)
Income tax benefit ............ -- -- 6,448 6,448
--------- -------- --------- ---------
Net loss ..................... $ (15,480) $ (1,733) $ (12,902) $ (28,382)
========= ======== ========= =========
</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) 187,685
Intangible assets .................................. -- -- -- -- 62,299
Other assets ....................................... 3 186 1,027 1,933 42,877
------ ------- -------- --------- --------
Total assets ....................................... $4,944 $67,731 $102,513 $ 89,021 $749,279
====== ======= ======== ========= ========
Total current liabilities .......................... $3,425 $ 8,553 $ 8,425 $ 32,911 $ 7,788
Long-term debt ..................................... -- 53,504 77,200 51,599 (2) 444,643
Other non-current liabilities ...................... -- -- 8,126 6,494 67,047
Total Series A redeemable preferred stock .......... -- -- -- -- 90,668
Total stockholders' equity (deficit) ............... 1,519 5,674 8,762 (1,983) 139,133
------ ------- -------- --------- --------
Total liabilities and stockholders' equity ......... $4,944 $67,731 $102,513 $ 89,021 $749,279
====== ======= ======== ========= ========
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 $29.9 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 $12.9 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 $3.5 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 $6.4 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 aggreements 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
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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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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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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- 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.
- ----------
- - "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
GROWTH IN POPS
MARKET 1998 POPS 1990-1998 (%)
- -------------------------------------- ------------- ----------------
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%
=========== =====
- ----------
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 has commenced its PCS service in the Jackson and
Vicksburg, Mississippi market and anticipates commencing PCS service during
1999 and 2000 in the following markets:
EXPECTED
MARKET LAUNCH DATE 1998 POPS
- --------------------------------- ------------------------- ------------
Jackson and Vicksburg, MS Launched September 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
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
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will locate the towers, antennae and other equipment necessary for the
operation of its PCS system. 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
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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.
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>
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<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:
U.S. WIRELESS SUBSCRIBERS
DECEMBER 1985 -- DECEMBER 1998
SETNEW TABLE TO COME
WAIT FOR DATA FROM CUSTOMER SERVICE
<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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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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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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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 33 1/3% 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
September 30, 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 September 30, 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 ..................... 40 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
Dennis M. Watford ............... 50 Senior Vice President-Human Resources and
Administration
</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>
Dennis M. Watford. Mr. Watford has served as Senior Vice President-Human
Resources and Administration since August 1999, after joining Tritel, Inc. in
February 1999. Prior to joining Tritel, Inc., Mr. Watford was employed with
Chemfirst Inc. from 1983 to 1999, where he last served as Director of Human
Resources.
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. Upon an initial public
offering, the holders must sell to Tritel, Inc. the number of shares necessary,
based on the fair value of the stock, to reduce their total value of stock held
by an amount equal to the number of shares the holder initially received times
$1,000 per share (in essence, requires the holders to pay $1,000 per share for
their initial shares of stock). Also, in the event Tritel, Inc. does not meet
certain performance measurements, certain members of management will be required
to sell to Tritel, Inc. a fixed number of shares at $0.01 par per share. The
employment agreements provide that the equity to be received by the executive
officers is subject to the following vesting schedule:
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<PAGE>
<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, 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 restricted stock is subject to
the repurchase agreements as discussed under "Employment Agreements." 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.
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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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<PAGE>
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 75.0% 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 66 2/3% 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 66 2/3% 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
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<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
146
<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")
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<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
148
<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.
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<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 71,466 187,685
Intangible assets, net of amortization of $2,829 in 1999 .......... -- -- 62,299
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 89,021 749,279
======== ====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable .................................................... $ 5,000 22,405 --
Current maturities of long-term debt ............................. -- -- 443
Accounts payable, accrued expenses and interest .................. 3,425 10,506 7,345
-------- ------ -------
Total current liabilities ....................................... 8,425 32,911 7,788
-------- ------ -------
Non-current liabilities:
Long-term debt ................................................... 77,200 51,599 444,643
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 ............................................ -- -- 47,700
-------- ------ -------
Total non-current liabilities ................................... 85,326 58,093 511,690
-------- ------ -------
Total liabilities ............................................... 93,751 91,004 519,478
-------- ------ -------
Series A 10% redeemable convertible preferred stock ............... -- -- 90,668
Stockholders' equity:
Preferred stock, authorized 1,500,000 shares:
Series C, outstanding 184,233 shares at June 30, 1999 ........... -- -- 174,658
Subscription receivable for Series C preferred stock ............ -- -- (49,746)
-------- ------ -------
Total Series C preferred stock ................................. -- -- 124,912
-------- ------ -------
Series D, outstanding 46,374 shares at June 30, 1999 ............ -- -- 46,374
-------- ------ -------
Net preferred stock ............................................ -- -- 171,286
-------- ------ -------
Common stock, 30 shares issued and outstanding at December 31,
1998 ............................................................. -- -- --
Common stock issued and outstanding at June 30, 1999 --
Class A Voting, 33,582 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) (32,153)
-------- ------- -------
Total stockholders' equity (deficit) ........................... 8,762 (1,983) 139,133
-------- ------- -------
Total liabilities and stockholders' equity ..................... $102,513 89,021 749,279
======== ======= =======
</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 3,474 3,844
----- ----- ----- ------
12,574 1,760 17,348 29,922
------ ----- ------ ------
Operating loss ...................... (12,574) (1,760) (17,348) (29,922)
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) (19,350) (32,416)
Extraordinary item -
Loss on return of spectrum ......... (2,414) -- -- (2,414)
------- ------ ------- -------
Loss before income taxes ......... (15,480) (1,733) (19,350) (34,830)
Income tax benefit .................. -- -- 6,448 6,448
------- ------ ------- -------
Net loss ......................... (15,480) (1,733) (12,902) (28,382)
======= ====== ======= =======
</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 -- --
Accrual of dividends on Series A
redeemable preferred stock ............. -- -- --
Net loss ................................ -- -- --
--------- ------ -------
Balance at June 30, 1999 ................ $ 229,539 (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
Accrual of dividends on Series A
redeemable preferred stock ............. -- -- (4,347) (4,347)
Net loss ................................ -- -- (12,902) (12,902)
-- ------- ------- -------
Balance at June 30, 1999 ................ -- -- (32,153) 139,133
== ======= ======= =======
</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)
<PAGE>
<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) (12,902) (28,382)
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 3,474 3,844
Deferred income taxes ............... -- -- (6,448) (6,448)
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)
<PAGE>
<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 .................... $ -- -- -- -- -- 156,837 156,837
======= ====== ====== ====== ===== ======= =======
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 $ 90,668
Series D Preferred issued to AT&T Wireless ......................... 46,374 46,374 46,374
------ -------- --------
Total to AT&T Wireless in exchange for contributed assets .......... 137,042 137,042 137,042
------- -------- --------
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 $320,206
======= ======== ========
</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
$126,672,000 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.
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.)
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:
<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
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.)
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 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 Companies were organized as limited liability corporations
(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 Companies 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 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
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.)
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 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 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. 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:
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 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
per share plus declared but unpaid dividends plus an amount equal to
interest on $1,000 at the rate of 6 1/2% 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.
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
66 2/3% 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 for $0.01 per share.
The Class A and Class C common stock issued to management are restricted
shares subject to repurchase agreements which require the holders to sell to
the Company at a $0.01 repurchase price per share, the number of shares that
would be equal to $1,000 per share on specified "trigger Dates" including a
change of control, termination of employment, or the later of an initial
public offering or the seventh anniversary of the agreement. On the "Trigger
Date", the holders must sell to the Company the number of shares necessary,
based on the then current fair value of the stock, to reduce the number of
shares of stock held by an amount equal to the number of shares then held by
the holder times $1,000 per share (in essence, requiring the holder to pay
$1,000 per share for their shares of stock). Also, in the event the Company
does not meet certain performance measurements, certain members of management
will be required to sell to the Company a fixed number of shares at $0.01 per
share. At January 7, 1999 and June 30, 1999, management has determined the
stock because of the terms of the stock repurchase agreement to have a
nominal value; 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. Any increase in value over $1,000 per
share would be recorded as compensation expense under the agreements. At June
30, 1999, there was no material impact on pro forma net loss from applying
the fair value method in SFAS No. 123 "Accounting for Stock-Based
Compensation."
(11) INCOME TAXES
On January 7, 1999 the Company recorded a deferred tax liability of
$55,100,000 primarily related to the difference in asset bases on the
assets acquired from AT&T Wireless.
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.)
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 ............. $-- (5,592) (5,592)
State ............... -- (856) (856)
--- ------ ------
$-- (6,448) (6,448)
=== ====== ======
</TABLE>
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 ................................ $ (6,773)
Reduction (increase) resulting from:
State income taxes, net of federal income tax benefit ......... (629)
Nontaxable loss of Predecessor Company ........................ 954
--------
$ (6,448)
========
</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 .............. 23,829
FCC licenses book basis in excess of tax basis ................... 31,141
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 ........................... 65,350
-------
Net deferred tax liability ..................................... $47,700
=======
</TABLE>
At June 30, 1999, the Company has net operating loss carryforwards for
federal income tax purposes of $10,818,000 which are available to offset
future federal taxable income, if any, through 2019.
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.)
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.
(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,
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.)
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.
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.
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.)
(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.
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
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.)
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 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 fully 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 ................. 62,299 0 0
Deferred charges ............................... 0 29,938 0
Notes receivable ............................... 0 7,500 50
Investment in subsidiaries ..................... 193,691 110,405 0
Other long-term assets ......................... 0 228 0
-------- ------- ------
Total assets ................................. $258,009 616,850 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 ......................... 23,038 10 (5,504)
-------- ------- ------
Total liabilities ............................ 28,208 423,159 74,750
-------- ------- ------
Series A redeemable convertible preferred
stock ......................................... 90,668 0 0
-------- ------- ------
Stockholders' equity ........................... 139,133 193,691 (2,752)
-------- ------- ------
Total liabilities and equity ................. $258,009 616,850 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 ................. 187,685 0 249,984
Deferred charges ............................... 0 0 29,938
Notes receivable ............................... 0 0 7,550
Investment in subsidiaries ..................... 0 (304,096) 0
Other long-term assets ......................... 0 0 228
------- -------- -------
Total assets ................................. 187,685 (385,263) 749,279
======= ======== =======
Current liabilities:
Accounts payable, accrued expenses and
other current liabilities .................... 1,502 0 7,788
Intercompany payables ......................... 1,883 (81,167) 0
------- -------- -------
Total current liabilities .................... 3,385 (81,167) 7,788
Non-current liabilities:
Long-term debt ................................ 40,987 0 444,643
Accrued interest and dividends payable ........ 0 0 4,347
Deferred credit ............................... 0 0 15,000
Deferred income taxes ......................... 30,156 0 47,700
------- -------- -------
Total liabilities ............................ 74,528 (81,167) 519,478
------- -------- -------
Series A redeemable convertible preferred
stock ......................................... 0 0 90,668
------- -------- -------
Stockholders' equity ........................... 113,157 (304,096) 139,133
------- -------- -------
Total liabilities and equity ................. 187,685 (385,263) 749,279
======= ======== =======
</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 ............. 2,829 0 645
-------- ------ -------
2,831 44 14,471
-------- ------ -------
Operating loss ............................. (2,831) (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 ......... (2,754) 26 (16,620)
Income tax benefit (expenses) .............. 954 (10) 5,504
-------- ------ -------
Net income (loss) .......................... $ (1,800) 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 3,474
- ---- -----
2 0 17,348
- ---- ------
Operating loss ............................. (2) 0 (17,348)
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 (19,350)
Income tax benefit (expenses) .............. 0 0 6,448
--- ---- -------
Net income (loss) .......................... (2) 0 (12,902)
==== ==== =======
</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 (14,416)
---- ----- -------
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>
The condensed combining financial statements for 1998 of Tritel, Inc. and
the Predecessor Companies have been provided below to comply with the
current requirement to show consolidating data for guarantors and
non-guarantors for all periods presented. While Tritel, Inc. and its
subsidiaries were formed during 1998, their only activities in 1998 were
the acquisition of property and equipment approximating $1.5 million and
losses totaling $32,000. The assets of the Predecessor Companies and the
assets acquired from AT&T Wireless and Central Alabama were placed in
Tritel, Inc. and its subsidiaries during 1999. Therefore, the following
statements do not correspond with the current corporate structure and do
not show data by guarantor and non-guarantor relationship to the senior
subordinated discount notes.
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.)
COMBINING BALANCE SHEET
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
PREDECESSOR
COMPANIES TRITEL ELIMINATIONS COMBINED
------------ -------- -------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .................................... $ 845 1 -- 846
Due from affiliates .......................................... 1,817 -- (1,576) 241
Other current assets ......................................... 719 -- -- 719
--------- -- ------ ---
Total current assets .................................... 3,381 1 (1,576) 1,806
Property and equipment, net ................................... 12,263 1,553 -- 13,816
FCC licensing costs ........................................... 71,466 -- -- 71,466
Deferred charges, net of accumulated amortization ............. 1,933 -- -- 1,933
--------- ----- ------ ------
Total assets ............................................ $ 89,043 1,554 (1,576) 89,021
========= ===== ====== ======
LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable ................................................ $ 22,405 -- -- 22,405
Due to affiliates ............................................ -- 1,576 (1,576) --
Accounts payable, accrued expenses and interest .............. 10,496 10 -- 10,506
--------- ----- ------ ------
Total current liabilities ............................... 32,901 1,586 (1,576) 32,911
--------- ----- ------ ------
Non-current liabilities:
Long-term debt ............................................... 51,599 -- -- 51,599
Note payable to related party ................................ 6,270 -- -- 6,270
Accrued interest payable ..................................... 224 -- -- 224
--------- ----- ------ ------
Total non-current liabilities ........................... 58,093 -- -- 58,093
--------- ----- ------ ------
Total liabilities ....................................... 90,994 1,586 (1,576) 91,004
Contributed capital, net ...................................... 13,497 -- -- 13,497
Deficit accumulated during development stage .................. (15,448) (32) -- (15,480)
--------- ----- ------ -------
Total members' equity (deficit) ......................... (1,951) (32) -- (1,983)
--------- ----- ------ -------
Total liabilities and members' equity (deficit) ......... $ 89,043 1,554 (1,576) 89,021
========= ===== ====== =======
</TABLE>
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.)
COMBINING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PREDECESSOR
COMPANIES TRITEL COMBINED
------------ -------- -----------
<S> <C> <C> <C>
Revenues: .................................. $ -- -- --
--------- -- --
Operating expenses:
Plant expenses ............................ 1,918 21 1,939
General and administrative ................ 4,937 10 4,947
Sales and marketing ....................... 451 1 452
--------- ----- -----
Depreciation and amortization ............. 348 -- 348
--------- ----- -----
7,654 32 7,686
--------- ----- -----
Operating loss ............................. (7,654) (32) (7,686)
Interest income ............................ 77 -- 77
Interest expenses .......................... (722) -- (722)
--------- ----- ------
Loss before extraordinary item ......... (8,299) (32) (8,331)
Loss on return of spectrum ................. (2,414) -- (2,414)
--------- ----- ------
Net loss ............................... $ (10,713) (32) (10,745)
========= ===== =======
</TABLE>
COMBINING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PREDECESSOR
COMPANIES TRITEL COMBINED
------------ ----------- -----------
<S> <C> <C> <C>
Net cash used in operating activities .............................. (10,039) 1,543 (8,496)
------- ----- ------
Cash flows from investing activities:
Purchase of property and equipment ................................ (4,428) (1,542) (5,970)
Capitalized interest on debt used to obtain FCC licenses .......... (2,905) -- (2,905)
------- ------ ------
Net cash used in investing activities ............................ (7,333) (1,542) (8,875)
------- ------ ------
Cash flows from financing activities:
Proceeds from notes payable to others ............................. 38,705 -- 38,705
Repayments of notes payable to others ............................. (21,300) -- (21,300)
Payment of debt issuance costs and other deferred charges ......... (951) -- (951)
------- ------ -------
Net cash provided by financing activities ........................ 16,454 -- 16,454
------- ------ -------
Net increase (decrease) in cash and cash equivalents ............... (918) 1 (917)
Restricted cash and cash equivalents at beginning of year .......... 1,763 -- 1,763
------- ------ -------
Restricted cash and cash equivalents at end of year ................ 845 1 846
======= ====== =======
</TABLE>
Tritel, Inc. was formed during 1998. Therefore, the 1996 and 1997 combining
financial information is identical to the Consolidated Financial
Statements.
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.)
(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 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 FCC
licenses will be amortized on a straight-line basis over 40 years.
The following table summarizes the transaction with AT&T Wireless:
<TABLE>
<S> <C>
Assets acquired from AT&T Wireless, at recorded amounts:
PCS Licenses ......................................................... $ 126,672,000
License Agreement .................................................... 49,538,000
Roaming Agreement .................................................... 15,980,000
-------------
Gross assets acquired .............................................. 192,190,000
Deferred income tax liability assumed relating to above assets ........ (55,148,000)
-------------
Net assets acquired ................................................ $ 137,042,000
-------------
Series A Preferred Stock .............................................. $ 90,668,000
Series D Preferred Stock .............................................. 46,374,000
-------------
Total preferred stock issued to AT&T Wireless ......................... 137,042,000
=============
</TABLE>
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.)
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 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 will be amortized on a
straight-line basis over the ten-year term of the agreement.
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.)
(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
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 Roaming Agreement 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.
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.)
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.
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-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 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-35
<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. The restricted stock is
subject to the repurchase agreements as discussed in Note 10. Management has
determined the stock to have a nominal value; therefore, no amounts have been
assigned to the restricted stock. 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
F-36
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
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.
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.
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.
(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-37
<PAGE>
TRITEL, INC. AND PREDECESSOR COMPANIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED.)
No Series B Preferred Stock has been issued by the Company.
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-38
<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>
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.
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.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ----------- -------------------------------------------------------------------------------------------
<S> <C>
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+ Services Agreement by and between Tritel Communications, Inc. and Wireless Facilities,
Inc., dated July 1, 1999.
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.
10.21.1+ Addendum to June 1, 1998 Services Agreement, dated as of March 23, 1999.
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.
10.33 Master Site Agreement between Tritel Communications, Inc. and BellSouth Mobility Inc.,
dated July 2, 1999.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------
<S> <C>
10.34 Master Site Agreement between Tritel Communications, Inc. and BellSouth Mobility PCS, dated
March 10, 1999.
10.35+ Letter Agreement between Airwave Communications, LLC and Ericsson, Inc. dated
December 14, 1998.
10.36+ Consent to Exercise of Option between Tritel, Inc., AT&T Wireless PCS, Inc., TWR
Cellular, Inc. and Management Stockholders dated May 20, 1999.
10.37+ 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 previous filings 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.
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 November 1, 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
- ------------------------- and President November 1, 1999
William M. Mounger, II
/s/ E.B. Martin, Jr. Executive Vice President, Treasurer, Chief
- ------------------------- Financial Officer and Director November 1, 1999
E.B. Martin, Jr.
* Senior Vice President -- Finance (Principal
- ------------------------- Accounting Officer) November 1, 1999
Karlen Turbeville
</TABLE>
* By: /s/ E.B. Martin, Jr.
----------------------------
E.B. Martin, Jr.
Attorney-in-Fact
II-8
<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 November 1, 1999.
TRITEL, 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 and Chief Executive November 1, 1999
- --------------------- Officer
William M. Mounger, II
* President and Director November 1, 1999
- ---------------------
William S. Arnett
/s/ E.B. Martin, Jr. Executive Vice President, Treasurer, Chief November 1, 1999
- --------------------- Financial Officer and Director
E.B. Martin, Jr.
* Senior Vice President -- Finance (Principal November 1, 1999
- --------------------- Accounting Officer)
Karlen Turbeville
* Director November 1, 1999
- ---------------------
Scott I. Anderson
* Director November 1, 1999
- ---------------------
Alex P. Coleman
* Director November 1, 1999
- ---------------------
Gary S. Fuqua
* Director November 1, 1999
- ---------------------
Ann K. Hall
* Director November 1, 1999
- ---------------------
Andrew Hubregsen
* Director November 1, 1999
- ---------------------
David A. Jones, Jr.
</TABLE>
II-9
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------- ---------- ------------------
<S> <C> <C>
* Director November 1, 1999
- ---------------------
H. Lee Maschmann
* Director November 1, 1999
- ---------------------
Elizabeth L. Nichols
* Director November 1, 1999
- ---------------------
Kevin J. Shepherd
</TABLE>
* By: /s/ E.B. Martin, Jr.
----------------------------
E.B. Martin, Jr.
Attorney-in-Fact
II-10
<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 November 1, 1999.
TRITEL COMMUNICATIONS, 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 and Chief Executive November 1, 1999
- --------------------- Officer
William M. Mounger, II
* Executive Vice President, Treasurer, Chief November 1, 1999
- --------------------- Financial Officer and Director
E.B. Martin, Jr.
* Senior Vice President -- Finance (Principal November 1, 1999
- --------------------- Accounting Officer)
Karlen Turbeville
</TABLE>
* By: /s/ E.B. Martin, Jr.
----------------------------
E.B. Martin, Jr.
Attorney-in-Fact
II-11
<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 November 1, 1999.
TRITEL FINANCE, 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 and Chief Executive November 1, 1999
- --------------------- Officer
William M. Mounger, II
/s/ E.B. Martin, Jr. Executive Vice President, Treasurer, Chief November 1, 1999
- --------------------- Financial Officer and Director (Principal
E.B. Martin, Jr. Accounting Officer)
* Senior Vice President-Finance (Principal November 1, 1999
- --------------------- Accounting Officer)
Karlen Turbeville
</TABLE>
* By: /s/ E.B. Martin, Jr.
----------------------------
E.B. Martin, Jr.
Attorney-in-Fact
II-12
<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+ Services Agreement by and between Tritel Communications, Inc. and Wireless
Facilities, Inc., dated , 1999.
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.
10.21.1+ Addendum to June 1, 1998 Services Agreement, dated as of March 23, 1999.
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 Site Agreement between Tritel Communications, Inc. and BellSouth Mobility Inc.,
dated July 2, 1999.
10.34 Master Site Agreement between Tritel Communications, Inc. and BellSouth Mobility PCS, dated
March 10, 1999.
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.
10.37+ 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 previous filings 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.
<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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<PAGE>
(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.
4
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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.
5
<PAGE>
(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
6
<PAGE>
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 three hundred million dollars ($300,000,000.00) 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.
7
<PAGE>
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.
8
<PAGE>
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
9
<PAGE>
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
10
<PAGE>
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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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
33
<PAGE>
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.
34
<PAGE>
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
- ----------------------------------------------------------
35
<PAGE>
- ----------------------------------------------------------
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.
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<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
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<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
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<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
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<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.
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<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
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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
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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
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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.
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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
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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
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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
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<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
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<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.
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<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
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<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.
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<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]
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<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>
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<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
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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.
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- -------------------------------------------------------------------------------------------------------------
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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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- -------------------------------------------------------------------------------------------------------------
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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)
- -------------------------------------------------------------------------------------------------------------
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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
- -------------------------------------------------------------------------------------------------------------
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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.
- -------------------------------------------------------------------------------------------------------------
108
<PAGE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
TASK PURCHASER SELLER REMARKS
R
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
- -------------------------------------------------------------------------------------------------------------
109
<PAGE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
TASK PURCHASER SELLER REMARKS
R
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
- -------------------------------------------------------------------------------------------------------------
110
<PAGE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
TASK PURCHASER SELLER REMARKS
R
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
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Operator Alarm
Revised 8/14/97
31
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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
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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
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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
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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
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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
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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>
MASTER SITE AGREEMENT
THIS MASTER SITE AGREEMENT (hereinafter referred to as this "MSA"), is
made as of the 2nd day of July, 1999 (the "MSA Commencement Date"), by and
between BELLSOUTH MOBILITY INC, a Georgia corporation, and its successors and
assigns (hereinafter collectively referred to as "BellSouth") and TRITEL
COMMUNICATIONS, INC., a Delaware corporation, and its successors and permitted
assigns (hereinafter referred to as the "User").
WHEREAS, BellSouth is the owner of communications towers located on
property either owned, leased or licensed by BellSouth (individually, a "Tower",
collectively, "Towers");
WHEREAS, User is a provider of certain wireless digital communications
services in the United States as such services are more particularly defined in
Section 3 hereinbelow ("User's Wireless Business");
WHEREAS, BellSouth and User desire to enter into this MSA which will
establish the general terms and conditions whereby User will lease, sublease,
license or sublicense, as applicable, from BellSouth space on one or more of
BellSouth's Towers and ground space on BellSouth's land (real property owned,
leased or licensed by BellSouth with respect to each Site (as defined below)
hereinafter the "Property") for the construction of an equipment shelter or
cabinet(s) for the placement of User's communications equipment for operation of
User's Wireless Business;
WHEREAS, BellSouth and User will enter into a Site Agreement in form
and substance substantially similar to Schedule "I" attached hereto and by
reference made a part hereof (individually, a "Site Agreement"; collectively,
"Site Agreements") which will establish the terms for use of a specific Site.
NOW, THEREFORE, for valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereby agree as follows:
1. MSA. This MSA sets forth the general terms and conditions upon which
all Sites, as defined below, shall be leased, subleased, licensed or sublicensed
to User. It is understood that this MSA is limited to Sites in the states of
Alabama, Florida, Georgia, Indiana, Kentucky, Mississippi, and Tennessee. From
time to time during the term hereof, User and BellSouth may execute Site
Agreements in the form attached hereto as Schedule "I" and by reference made a
part hereof. Each Site Agreement shall identify a particular Site made subject
to this MSA and more fully set forth specific terms particular to that Site. In
the event of a conflict or inconsistency between the terms of this MSA and a
Site Agreement, the terms of the Site Agreement shall govern and control for
that Site.
2. Demise. Subject to the following terms and conditions, BellSouth
hereby agrees to lease, sublease, license or sublicense, as applicable, to User
certain space on one or more of BellSouth's Towers together with sufficient
space on the Property with easements for access and utilities. User's use of the
Tower and Property shall be limited to the Tower and Property, together with
easements for access and utilities described and depicted in Exhibit "A" to each
Site Agreement (the Property, the space upon BellSouth's Tower utilized by User
and any easements providing access and utilities to the Property are sometimes
referred to herein individually as a "Site" or collectively as "Sites"). With
respect to any Sites which User may desire to lease, sublease, license or
sublicense, as applicable, User shall give written notice to BellSouth at the
address provided in Section 27 hereof of such desire. After receipt of written
notice from User of such desire to add a Site to this MSA, BellSouth shall
provide User with a Site Application to be completed by User. Upon receipt by
BellSouth of the completed Site Application, together with any application fee
required by BellSouth, BellSouth shall evaluate the feasibility of
<PAGE>
utilization of each Site requested by User to be added to this MSA. Except in
extraordinary circumstances, as determined by BellSouth in its discretion, the
application fee generally will not exceed [CONFIDENTIAL TREATMENT REQUESTED] per
Site. The Site Application fee, once received by BellSouth shall in all
instances under this MSA be applied toward the first base rent payments due
under the applicable Site Agreement. BellSouth will use reasonable best efforts
to respond promptly to initial requests for a Site Application and to Site
Applications submitted by User. BellSouth may decline additional Sites for any
reason whatsoever. If BellSouth desires to lease or to license any Site to User,
BellSouth shall deliver to User three (3) completed, unexecuted counterparts of
a Site Agreement pertaining to such Site. User shall have a period of fifteen
(15) business days from User's receipt of such Site Agreement to execute and
return same to BellSouth. If User fails to return all counterparts of the Site
Agreement, properly executed and unmodified by User, together with the Site Cost
Reimbursement Amount (as defined herein) set forth in the Site Agreement, within
such fifteen (15) day period such Site Agreement shall immediately be deemed
null and void. Upon receipt of the properly executed, unmodified counterparts of
the Site Agreement, BellSouth will execute same and return a fully executed
original of the Site Agreement to User, whereupon the Site Agreement shall be
deemed to be added to this MSA.
3. Permitted Use. Subject to the terms of this MSA and the Site
Agreement for each respective Site, User shall be permitted the non-exclusive
right to install, maintain, operate, service, and subject to BellSouth's prior
written approval, which approval shall not be unreasonably withheld, conditioned
or delayed, modify and replace its communication equipment as more particularly
described on the User's Co-Location Application attached as Exhibit "C" to each
Site Agreement (the "Facilities") at such Site, including without limitation,
BellSouth's Tower, which Facilities shall be utilized for the transmission and
reception of wireless voice and data communications using digital communications
services technology. These shall be the only permissible uses under this MSA and
each Site Agreement, and User specifically acknowledges that microwave
facilities are not permitted uses.
4. Master Lease/License. A Site Agreement shall be subject and
subordinate to all of the terms and conditions of the agreement pursuant to
which BellSouth has rights in and to the Property (the "Master Lease/License"),
which are incorporated in the Site Agreement by reference and a copy of which
has been or will be delivered to User and attached to the Site Agreement as
Exhibit "A-l", subject to redaction of the financial terms set forth therein or
as otherwise required by confidentiality and nondisclosure provisions contained
therein. If applicable, BellSouth agrees to provide User with copies of all
amendments to, extensions of and renewal notices given pursuant to the Master
Lease/License, subject to redaction of the financial terms set forth therein or
as otherwise required by confidentiality and nondisclosure provisions contained
therein. BellSouth represents to User that as of the Execution Date of a Site
Agreement neither BellSouth nor BellSouth's Landlord ("Master Landlord") is in
default under the Master Lease/License.
5. Conditions Precedent.
(a) Conditions Precedent Based On Consent of Master Landlord. If
BellSouth is party to a Master Lease/License for a Site, the Site Agreement for
such Site shall be contingent upon BellSouth and/or User, as applicable, being
able to satisfy one (1) of the following conditions precedent within sixty (60)
days of the Execution Date of the Site Agreement, if required by the Master
Lease/License, in BellSouth's sole reasonable opinion.
(i) Notice to Master Landlord of [Sublease/License]. If notice to
the Master Landlord of the sublease, license or sublicense, is required by the
Master Lease/License, in BellSouth's sole reasonable opinion, BellSouth shall so
notify the Master Landlord and shall deliver, upon User's request, evidence of
such notification; or
2
<PAGE>
(ii) Consent of Master Landlord to [Sublease/License] of Tower
Space and Ground Space. BellSouth or User, at BellSouth's option, will obtain
the written consent of Master Landlord to BellSouth's [sublease, license,
sublicense] to User of Tower Space and Ground Space (as such terms are defined
in the Site Agreement), if required by the Master Lease/License, in BellSouth's
sole reasonable opinion;
(iii) Consent of Master Landlord to [Sublease/License] of Tower
Space and Master Landlord Leasing Ground Space to User. BellSouth or User, at
BellSouth's option, will obtain (aa) the written consent of Master Landlord to
BellSouth's [sublease, license, sublicense] to User of Tower Space, if required
by the Master Lease/License, in BellSouth's sole reasonable opinion, and (bb) a
written ground lease from the Master Landlord providing for the [lease/license]
of ground space from the Master Landlord to User for User's Ground Facilities
(as defined in the Site Agreement), upon terms and conditions acceptable to User
in User's sole and absolute discretion.
BellSouth and User shall cooperate with one another in efforts to obtain the
consent of the Master Landlord pursuant to Sections 5(a)(ii) and 5(a)(iii)
hereof.
If BellSouth or User is able to obtain the written consent of the Master
Landlord to BellSouth's sublease, license or sublicense to User of Tower Space
and Ground Space pursuant to Section 5(a)(ii), (aa) BellSouth or User shall
deliver to the other a copy of such written consent, (bb) the condition
precedent to BellSouth leasing Tower Space and Ground Space to User shall be
deemed satisfied, and (cc) the term "Leased Space" as used in the Site Agreement
shall mean Tower Space and Ground Space and the term "Facilities" as used in the
Site Agreement shall mean the Tower Facilities and Ground Facilities.
If BellSouth or User is able to obtain the written consent of Master Landlord to
BellSouth's lease to User of Tower Space (but not to BellSouth's sublease,
license or sublicense to User of the Ground Space) and BellSouth or User is able
to obtain a ground lease from the Master Landlord pursuant to Section 5(a)(iii)
hereof, (aa) BellSouth or User shall deliver to the other a copy of such written
consent, (bb) User shall deliver to BellSouth a copy of the certification as to
the ground lease or license from the Master Landlord to User in substantially
the form of Exhibit D attached to the Site Agreement, (cc) the condition
precedent set forth in Section 5(a)(ii) hereof shall not have been satisfied but
the condition precedent set forth in Section 5(a)(iii) hereof shall be deemed
satisfied, and (dd) the term "Leased Space" as used in the Site Agreement shall
mean Tower Space only and the term "Facilities" as used in the Site Agreement
shall mean Tower Facilities only. If BellSouth elects to obtain the ground lease
described in Section 5(a)(iii), then such ground lease shall be subject to
User's prior approval and User shall be responsible for the payment of
BellSouth's reasonable, documented costs in obtaining the ground lease and of
all rents and other sums due under the ground lease, as and when such sums are
due and payable.
If BellSouth or User is unable to satisfy the condition set forth in Section
5(a)(ii) or BellSouth or User is unable to satisfy the conditions set forth in
Section 5(a)(iii) within sixty (60) days of the Execution Date of the Site
Agreement, the Site Agreement shall automatically terminate and become null and
void, unless extended in writing by mutual consent of BellSouth and User. Upon
such termination, neither BellSouth nor User shall have any obligations to the
other except for any indemnity obligations, including without limitation,
environmental indemnity and tax obligations, arising prior to the date of
termination.
(b) Conditions Precedent to Site Commencement Date. Each Site
Agreement is further contingent upon User being able to satisfy the following
conditions prior to the Site Commencement Date (and all such conditions shall be
deemed satisfied upon the Site Commencement Date), as defined in the Site
Agreement:
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(i) Approvals. User obtaining, after the Execution Date of the
Site Agreement, all certificates, permits, licenses and other approvals that may
be required by any federal, state or local authorities (the "Approvals") to
permit User's intended use of the Leased Space. BellSouth shall cooperate, at
User's cost, with User in its effort to obtain such Approvals. In the event that
User notifies BellSouth that (aa) any application for an Approval is rejected,
(bb) an Approval is canceled, expires, lapses, or is otherwise withdrawn or
terminated for any reason whatsoever prior to installation of the Facilities by
User, or (cc) any application for Approval is not likely to be obtained or
approved, as determined in User's sole discretion, the Approvals shall be deemed
to not have been obtained by User.
(ii) Radio Frequency Propagation Test. User determining, in
User's sole discretion, that the results of any radio frequency propagation
tests are satisfactory, such that User is able to use the Leased Space for
User's intended use.
(iii) Utilities and Access. User determining, in User's sole,
reasonable discretion, that (aa) telephone and electric utilities are available
at the Leased Space or Tower of sufficient capacity to accommodate User's
Facilities and (bb) ingress and egress is available to and from the Leased Space
and to and from a publicly dedicated road.
(iv) Tower Capacity. User determining in User's sole, reasonable
discretion based on a Tower analysis satisfying the requirements of Section
10(ii) hereof that the Tower is of sufficient capacity to accommodate the load
requirements of User's Facilities.
(v) Title. User determining in User's sole discretion that the
status of title as to the Leased Space and easements granted herein are
acceptable to User.
(vi) Hazardous Substances. User determining in User's sole
discretion that the Leased Space and Property are free of all Hazardous
Substances, as defined in Section 15(b) hereof.
If any one (1) of the conditions set forth above will not be satisfied
as of the Site Commencement Date of the Site Agreement, User shall have the
right to terminate the Site Agreement by giving BellSouth written notice
thereof. If User elects to terminate the Site Agreement, the Site Agreement
shall terminate as of the date BellSouth receives such notice from User and
neither BellSouth nor User shall have any further obligation under this Site
Agreement except for any indemnity obligations and User's obligation to remove
its Facilities from the Property.
(c) Site Cost Reimbursement Amount. User shall pay a one-time site
cost reimbursement amount ("Site Cost Reimbursement Amount") to BellSouth, paid
by User to BellSouth not later than the execution and delivery of the Site
Agreement. Except in certain circumstances, as set out herein, the Site Cost
Reimbursement Amount generally will not exceed [CONFIDENTIAL TREATMENT
REQUESTED] per Site. BellSouth and User acknowledge and agree that the Site Cost
Reimbursement Amount reflects an equitable sharing of the capital costs incurred
by BellSouth with respect to the construction of the Tower and the ability of
User to locate its Facilities thereon. Consequently, the Site Cost Reimbursement
Amount is independent of and in addition to, and not in substitution or
reduction of, all or any part of the Base Rent specified in such Site Agreement,
or the fair market value of the rent applicable to such Site.
In the event that the Site Cost Reimbursement Amount is paid by User but the
Site Agreement does not reach the Site Commencement Date because of a failure of
a condition precedent described in Section 5 or such other reason described
herein, through no fault of User, BellSouth shall refund the Site Cost
Reimbursement Amount.
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6. Term.
(a) MSA Term. The MSA term shall begin on the MSA Commencement Date
and shall continue until midnight of the fifth (5th) anniversary of the MSA
Commencement Date, unless terminated earlier in accordance with the terms hereof
(the "Term"). The MSA shall renew automatically for one (1) additional period of
five (5) years unless either party sends notice to the other of its election not
to renew the MSA. Any such extension term shall be part of the "Term" as
described herein.
(b) Site Agreement Term and Renewal. The initial term of each Site
Agreement and any renewal terms are provided in each Site Agreement.
Notwithstanding the expiration of this MSA, the terms and conditions of this MSA
shall continue to apply to each Site Agreement until the Site Agreement Term,
including any renewal terms expires or terminates.
7. Rent.
(a) Base Rent. During the Initial Term of any Site Agreement, User
shall pay annual rent in equal annual installments in the amount set forth in
each Site Agreement, in advance on or before the Site Commencement Date and then
on each anniversary date of the Site Commencement Date. Except in certain
unusual circumstances, the annual base rent for the applicable Sites shall be
[CONFIDENTIAL TREATMENT REQUESTED] annually for each Site subject to this MSA.
Rent shall be payable by check, and checks shall be made payable to the order of
the BellSouth entity specified in the applicable Site Agreement and shall be
mailed to the address designated in the applicable Site Agreement.
(b) Taxes.
(i) Property Taxes. User shall be responsible for the reporting
and payment when due of any tax directly related to User's ownership or
operation of the Facilities and such reporting and payment shall be made
directly to the appropriate tax authorities.
(ii) Sales Taxes. BellSouth shall be responsible for billing,
collecting, reporting, and remitting sales taxes directly related to rent
payments received pursuant to this MSA and any Site Agreement, if any. User
shall be responsible for reimbursing BellSouth for all sales taxes billed
related to rent payments received pursuant to this MSA and any Site Agreement,
such reimbursement to be due and payable within thirty (30) days of BellSouth's
delivery to User of a written invoice and copies of paid tax receipts specifying
the payments made by BellSouth.
(c) Site Agreement Renewal Terms. If and when one or more of the
Site Agreement Renewal Terms (as defined in the applicable Site Agreement) are
exercised by the User, upon the commencement of each Renewal Term, the annual
rent for each Renewal Term shall increase by the percent set forth in such Site
Agreement over the annual rent for the immediately preceding term.
(d) Additional Facilities. If, after the installation of the
Facilities, User, with the prior written approval of BellSouth as required by
Section 10 hereof, modifies the Facilities by adding additional equipment to the
Tower which materially increases the size or structural or windload on the Tower
or is in a different location on the Tower than the Facilities such that
additional rent is payable pursuant to Section 10(vi) hereof, BellSouth and User
acknowledge that the rent for the Site shall be increased by an amount set forth
in the Site Agreement for each piece of additional equipment. If the Site
Agreement is silent on rent for additional equipment, BellSouth and User
acknowledge that the rent for the Site shall be increased by a mutually agreed
upon amount. In the event BellSouth and User cannot agree upon the increased
rent, the increase in rent shall be the fair market rental value for the
additional equipment placed on the Tower, which shall be determined by BellSouth
and User each designating,
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within thirty (30) days of the dispute, an independent MAI appraiser with
demonstrated experience appraising similar property and telecommunication uses
and shall be the average of the two appraisals prepared by the appraisers. Each
party shall pay the fees of its appraiser.
8. BellSouth to Locate on User's Towers. As additional consideration
for BellSouth's agreement to lease, sublease, license or sublicense, as
applicable, the Site to User, User hereby agrees to lease, sublease, license or
sublicense, as applicable, to BellSouth space on User's tower and ground space
adjacent to such tower for the construction and placement of an equipment
shelter or cabinet in the same geographic markets that User is leasing,
subleasing, licensing, and sublicensing from BellSouth (such tower and ground
space collectively referred to as a "Reciprocal Site") and shall be evidenced by
a site agreement and master site agreement, in substantially the same form as
the Site Agreement for BellSouth's Tower and Property and this MSA. In the event
User refuses to lease, sublease, license or sublicense, as applicable, a
Reciprocal Site to BellSouth, for reasons unrelated to User's capacity, zoning,
permits, RF interference (based upon standard and accepted engineering
principles) licenses and other required approvals, or environmental issues with
respect to such Reciprocal Site, BellSouth may elect to terminate any existing
Site Agreement with respect to a Site in the same geographic market as the
proposed Reciprocal Site refused by User in accordance with the provisions set
forth in Section 20(b) hereof.
9. Relocation of Facilities.
(a) With respect to any Site, BellSouth reserves the right to change
the location of User's Facilities at the Site upon sixty (60) days written
notice to User to accommodate the communications equipment (including a change
in frequency) of BellSouth. User shall relocate or remove the Facilities, at
BellSouth's expense, within sixty (60) days of receipt of any such notice by
User (provided, however, that if User has diligently pursued efforts to change
the location of User's Facilities on the Tower during such sixty (60) days but
has been unable to complete the same, User shall have an additional thirty (30)
days to complete the work); provided, however, if the relocated space is
unacceptable to User, in User's reasonable discretion, User shall have the right
to terminate the Site Agreement upon written notice to BellSouth, which
termination shall be effective the earlier of (i) the date set forth in User's
termination notice, or (ii) two hundred forty (240) days from User's receipt of
BellSouth's relocation notice. Upon such termination, the parties to the Site
Agreement shall be released from all duties, obligations, liabilities and
responsibilities under the Site Agreement except for any indemnity obligations,
including without limitation, environmental indemnity and tax obligations, and
User's obligation to remove the Facilities from the Property. In the event
BellSouth needs additional capacity at a Site for its equipment and there is no
space on the Tower in which to relocate User's Facilities, upon two hundred and
forty (240) days notice, BellSouth may terminate a Site Agreement, and
thereafter the Site Agreement shall be of no further force and effect, and
except for any indemnity obligations, including without limitation,
environmental indemnity and tax obligations, and User's obligation to remove the
Facilities from the Property, and BellSouth's obligation to reimburse User for
the book value (to be determined at the date of termination of the Site
Agreement) of any structural enhancements made by User to such Site, the parties
hereto shall be released from all duties, obligations, liabilities and
responsibilities under the Site Agreement.
(b) In the event of a termination under this Section 9 within the
Initial Term of the terminated Site Agreement, BellSouth shall also reimburse
User a pro rata portion of the Site Cost Reimbursement Amount applicable to such
Site Agreement based on a five-year proration of the full Site Cost
Reimbursement Amount. The amount reimbursed by BellSouth shall be equal to the
pro rata portion of the Site Cost Reimbursement Amount from the date of
termination to the expiration of the Initial Term. BellSouth shall deliver such
reimbursement to User within thirty (30) days of the termination date of the
Site Agreement.
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10. Installation, Modification and Relocation.
During the term of the Site Agreement, including any renewal terms,
User shall have the right, at User's expense, to install, and with BellSouth's
prior written approval, which approval shall not be unreasonably withheld,
delayed or denied, relocate and modify the Facilities on the Site. BellSouth
agrees that if User is simply modifying or replacing its Facilities at the Site,
and such replacement equipment shall not increase the wind load or structural
strain on the Tower, increase User's space at the Site, cause interference, or
change the frequency, BellSouth shall not condition approval on an increase in
base rent. User's installation, maintenance, relocation, modification, and
removal shall be in compliance with the following requirements:
(i) Facilities. With regard to a modification or relocation of
the Facilities, User shall provide BellSouth with an updated Exhibit "C" listing
all communications equipment to be located on the Site.
(ii) Tower Analysis. User shall submit to BellSouth a completed
Tower analysis, prepared by licensed structural engineer approved by BellSouth
(a) describing any and all installations, modifications, or relocations, as the
case may be, of the Facilities on the Tower, (b) including information
demonstrating continued compliance with the Tower manufacturer's warranty
requirements, if delivered to User, current EIA/TIA standards, other legal
requirements for the Tower, and any other information reasonably requested by
BellSouth and (c) demonstrating that the installation, modification, or
relocation, as the case may be, does not exceed the load capacity of the Tower.
The Tower analysis shall be based on all Facilities listed on Exhibit "C"
regardless of whether User does not intend to initially install all Tower
Facilities. If the Tower is a monopole, User, at User's cost, shall be
responsible for the installation of any platforms and cutting of portals
requited to install User's Tower Facilities; provided, however, User shall not
cut any portal in the Tower if the cutting of such portal would adversely affect
the manufacturer's warranty on the Tower, if any, or the integrity of the Tower.
If the Tower is structurally inadequate to accommodate User's proposed
installation, modification or relocation, User, subject to BellSouth's consent,
which consent shall not be unreasonably withheld or delayed, shall have the
right to structurally enhance the Tower to accommodate User's proposed
installation, modification or relocation of User's Tower Facilities, provided
User complies with the following additional requirements:
(1) Plans and Specifications for Structural Enhancement. User
shall submit to BellSouth all plans and specifications for structurally
enhancing the Tower, the proposed architect, engineer and/or contractor involved
in the structural enhancement, and a structural analysis demonstrating that the
Tower, as structurally enhanced, will accommodate all equipment located on the
Tower at the time of the structural enhancement and the proposed installation,
modification, or relocation of User's Tower Facilities, as the case may be, all
of which shall be approved by BellSouth, which approval shall not be
unreasonably withheld, conditioned or delayed. If no response is received from
BellSouth within forty-five (45) days of submission, the same shall be deemed
approved by BellSouth upon the expiration of said forty-five (45) days.
(2) Payment of Costs. User shall pay all costs incurred in
structurally enhancing the Tower including, without limitation, all material
costs, all architectural, engineering and contracting fees, all certificate,
permit, license and approval fees, and all actual, reasonable costs incurred by
BellSouth to review the plans and specifications and structural analysis.
(3) Ownership of Structural Enhancements. Upon completion of and
payment by User for the structural enhancements, such structural enhancements
shall become the property
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of BellSouth, and upon request, User shall promptly provide to BellSouth any
bills of sale or documentation evidencing BellSouth's ownership of said
enhancements.
(iii) Insurance. User shall provide BellSouth with insurance
certificates for each Site evidencing that the insurance required by Section 17
of this MSA is in full force and effect including, without limitation, worker's
compensation insurance and the insurance required of User's contractors and
subcontractors.
(iv) Compliance with Laws. User's installation, modification or
replacement of the Facilities on the Site and structural enhancement of the
Tower, if any, shall be in compliance with all applicable laws, regulations and
requirements of any federal, state or local authority, including without
limitation, OSHA work practice standards for performing said work. BellSouth, at
no cost to BellSouth, agrees to cooperate with User to obtain such compliance.
(v) Availability of Space. With regard to the relocation of the
Facilities, space on the Tower must be available at the levels, and/or space on
the ground must be available at the locations, to which User desires to relocate
and, if consent of the Master Landlord is required to relocate the Ground
Facilities, then such consent must be obtained prior to relocation.
(vi) Additional Rent. User shall pay BellSouth additional rent,
in an amount determined in accordance with the provisions of Section 7(d)
hereof.
(vii) Plans and Specifications; Contractor. User shall submit to
BellSouth (i) the plans and specifications, a detailed site plan and any other
construction documents setting forth the proposed construction, installation and
other work to be performed on the Site and Tower and (ii) the names of the
proposed contractors and subcontractors performing any such construction,
installation or other work, all of which shall be approved by BellSouth, such
approval not to be unreasonably withheld, conditioned or delayed. If no response
is received from BellSouth within forty-five (45) days, the same shall be deemed
approved. Following the completion of any installation, modification or
relocation, User shall provide to BellSouth, at User's expense, updated,
as-built drawings, initialed by User, documenting all installed Facilities on
the Site and conforming to the plans and specifications, site plan, and any
other construction documents approved by BellSouth. The as-built drawings shall
include an as-built survey locating the Site to a monument or the Tower (the
"As-Built Survey"). Upon receipt and provided the As-Built Survey conforms to
the plans and specifications, site plan and any other construction documents
approved by BellSouth, BellSouth shall initial the As-Built Survey.
(viii) Liens. User shall keep the Site, Tower, Property and
Facilities free from any liens arising from any work performed, materials
furnished or obligations incurred by or at the request of User in accordance
with the provisions of Section 16(c) hereof, with the sole exception of any
liens with respect to equipment financing obtained by User for such Facilities
provided that such equipment financing liens do not encumber, attach to or
affect, in any manner, BellSouth's or the Master Landlord's right, title or
interest in and to all or any part of the Towers or the Property.
(ix) Pre-construction Meeting; Other Construction Meeting. Prior
to commencing any installation and/or construction, a duly authorized
representative of User shall meet with a duly authorized representative of
BellSouth at the Tower site to mutually approve the construction methods and
procedures, such approval not to be unreasonably withheld, conditioned or
delayed by either party. BellSouth and User agree to cooperate with one another
in scheduling such pre-construction meeting. In addition, BellSouth and User
will meet during and upon substantial completion of construction to mutually
approve grounding and punch-list items, respectively, and BellSouth and User
agree to cooperate with one another in scheduling such meetings.
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11. Ingress and Egress.
(a) Upon the Execution Date of a Site Agreement, BellSouth hereby
grants to User, as well as User's contractors, subcontractors, agents,
affiliates, or employees, subject to the limitations set forth herein or in the
applicable Site Agreement, (i) the non-exclusive right to use the Tower, at
locations mutually agreed upon by User and BellSouth, for the term hereof for
ingress, egress, and access to the Tower Space adequate to service the Tower
Facilities and (ii) if the term " Leased Space" as used in the Site Agreement
includes Ground Space, a non-exclusive easement for the term hereof, for
ingress, egress, and access to the Leased Space, on a twenty-four (24) hours per
day, seven (7) days per week basis, across (aa) the Property in locations
mutually agreed upon by BellSouth and User and (bb) if the Property is leased or
licensed by BellSouth, across the property of the Master Landlord to the extent
and in the locations of the Master Landlord-granted ingress, egress and access
easements to BellSouth in the Master Lease/License. User or User's qualified,
insured contractors under User's direct supervision shall have access to the
Tower upon twenty-four (24) hours notice to BellSouth, which access shall be
subject to the accompaniment, at BellSouth's option, of BellSouth's field
personnel to provide an escort and/or supervision, and User shall reimburse
BellSouth for BellSouth's actual, reasonable costs related thereto within thirty
(30) days of BellSouth's delivery to User of a written invoice for such costs.
The foregoing notwithstanding, User shall have access to the Leased Space and
User's Facilities immediately and without notice in the event of an emergency,
and User shall notify BellSouth as soon as practicable of User's access during
such emergency. Other security measures required for a particular Site may be
set forth in the Site Agreement.
(b) Prior to the Execution Date of a Site Agreement, User may have
access to a Property and the Tower situated thereon only upon the execution and
delivery by BellSouth and User of an entry and testing agreement in form and
substance substantially similar to Schedule "II" attached hereto and by
reference made a part hereof (an "Entry and Testing Agreement") which will
establish the terms under which User may access the Property and Tower for the
"Permitted Activities," as defined in the applicable Entry and Testing
Agreement.
12. Utilities, Cable Runs. Upon execution of a Site Agreement,
BellSouth hereby grants to User the non-exclusive right to use the Tower for the
term hereof to place any cable runs on the Tower, at locations mutually agreed
upon in writing by BellSouth and User, in order to service or operate the
Facilities, subject to BellSouth's prior written approval of the design and
installation method and procedures, such approval not to be unreasonably
withheld, conditioned or delayed. If no response is received from BellSouth
within forty-five (45) days, the same shall be deemed approved. If the term
"Leased Space" as used in the Site Agreement includes the Ground Space, upon
execution of the Site Agreement, BellSouth hereby grants to User a non-exclusive
easement for the term hereof to place any utilities or cable runs on or bring
utilities across the Property and if the Property is leased or licensed by
BellSouth, the property of the Master Landlord to the extent and in the
locations the Master Landlord granted utility and cable run easements. User
shall pay the cost of all utility service necessary to install, maintain and
operate the Facilities. Where practicable, User shall install a separate meter
for User's use. If installation of a meter is not practicable, the parties shall
prorate such charges based on approximate actual use within thirty (30) days of
receipt by BellSouth of any invoice from an applicable utility company. User
shall obtain and pay the cost of telephone connections. Installation of
telephone service shall be in compliance with the procedures for installation
and maintenance of Facilities set forth herein.
13. User's Covenants. User covenants that from the Execution Date of a
Site Agreement, that the Facilities, and all installation, operation,
modification, relocation and maintenance associated therewith, will:
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(a) In no way damage BellSouth's Tower, Property, any other
structure or accessories thereto, any Prior User's, as defined below, equipment
or facilities or any Subsequent User's, as defined below, equipment or
facilities, normal wear and tear excepted. If damage, other than normal wear and
tear, occurs and such damage is caused by User, or User's employees, agents,
contractors, or subcontractors, then User shall be liable for repair or
reimbursement of repair for said damages;
(b) Not interfere with BellSouth's operation on the Tower or the
operations of any Prior User (as defined herein). For purposes hereof, a "Prior
User" shall mean any other user of the Tower that has submitted to BellSouth a
site application in good faith prior to the submission of User's Site
Application for such Tower, which site application serves as the basis for a
written agreement for the use of the Tower by such user. In the event BellSouth
determines, in its sole discretion based on standard and accepted engineering
practices, that User's Facilities are interfering with the operation of
BellSouth's or a Prior User's equipment, authorized frequency spectrum or signal
strength, upon the request of User, BellSouth shall provide User with a copy of
the report. User shall, within forty-eight (48) hours of notification, take all
steps necessary to eliminate the interference, with the exception of ceasing
User's operations. If User cannot eliminate or resolve such interference within
the forty-eight (48) hour period, BellSouth shall have the right to require that
User turn off its Facilities and only turn on its Facilities during off-peak
hours specified by BellSouth in order to test whether such interference
continues or it has been satisfactorily eliminated. In the event that User is
unable to resolve or eliminate, to the satisfaction of BellSouth, such
interference within thirty (30) days from the initial notification of such
interference, User will immediately remove or cease operations of the
objectionable Facilities and BellSouth shall have the right to terminate the
applicable Site Agreement. User shall not on any Site interfere with BellSouth's
use of the Site, the provision of services to BellSouth's customers, or the use
of the Site by other Prior Users. Such interference shall be deemed a material
breach of the Site Agreement.
(c) Not interfere with the maintenance of BellSouth's Tower and the
Tower lighting system;
(d) Keep the Facilities in a state of repair acceptable to BellSouth
in BellSouth's reasonable discretion;
(e) Identify the Facilities with metal tags fastened securely to its
bracket on the Tower and to each transmission line;
(f) Comply with all applicable rules and regulations of the Federal
Communications Commission ("FCC") and all federal, state and local laws
governing use of the Facilities on the Site;
(g) Comply with all applicable laws and ordinances and promptly
discharge or bond off any lien for labor or material within thirty (30) days of
filing same;
(h) Within thirty (30) days after the expiration or termination of a
Site Agreement, remove all Facilities from the Property and restore the Tower
and the Site to its original condition, normal wear and tear excepted. In the
event User has not removed the Facilities at the time of expiration or
termination of the Site Agreement, User shall pay rent at the then existing
monthly rate or on the existing monthly pro-rata basis if based upon a longer
payment term until such time as the removal of the Facilities is completed. In
the event User does not remove its Facilities within thirty (30) days after the
expiration or termination of the Site Agreement, BellSouth shall have the right
to remove and store the Facilities, at User's sole expense, and User shall
reimburse BellSouth for such expenses upon demand. If BellSouth removes the
Facilities, BellSouth shall not be responsible for any damage to the Facilities
during the removal and storage thereof unless caused by the gross negligence or
willful misconduct of BellSouth. Notwithstanding the foregoing, except as may be
required under any lease or license
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agreement pursuant to which BellSouth has rights in and to the Property, User
shall not be required to remove any utilities or concrete pads upon which User's
equipment shelters or cabinets may have been located upon the expiration or
termination of a Site Agreement;
(i) Upon the completion of the initial installation of the
Facilities on the Site, within thirty (30) days of the completion of the
relocation of the Facilities or installation of additional Facilities on the
Site and, for any year in which User has performed a site audit on the Site or
the Facilities or User's operations at the Site have changed or been modified,
by December 1 of each year throughout the term of the Site Agreement, User shall
provide BellSouth with the number of batteries, battery model numbers, battery
manufacturers, the number of cells in each battery and the amount of sulfuric
acid in User's batteries on the Site in order for BellSouth or if, the property
is leased or licensed by BellSouth, the Master Landlord, to file such
information with the Environmental Protection Agency ("EPA") and any state and
local authorities as required by applicable law. Further, within thirty (30)
days of User's receipt of a written request from BellSouth, User will provide
BellSouth with any other information and copies of documents relating to the
Facilities located on the Site which BellSouth or Master Landlord may be
required to file with the FCC, EPA or any other governmental agencies. User
agrees to indemnify and hold BellSouth harmless from any liabilities resulting
from any inaccuracies in such information or documentation delivered by User to
BellSouth or User's failure to provide BellSouth with such information or
documentation in accordance with the provisions of this Section 13(i);
(j) Be coordinated through BellSouth and User shall cooperate with
BellSouth,
(k) It is recognized that certain construction, such as the erection
of an antenna support structure, can have an effect on a given AM Signal Array
within certain parameters. This issue is addressed in Part 22 of the FCC Rules
and Regulations. A statement of this policy regarding structures erected or
modified by Commission Licensees in the vicinity of broadcast AM Stations is
found in the FCC Report No. CL-90-40, "Re-Publication of Standard Broadcast
Re-Radiation and Tower Construction Authorized Under Part 22 of the Rules." This
policy states that "Licensees and Permitees planning to construct or modify a
tower within 2 miles of a directional AM array or within .5 miles of a
non-directional AM tower should take certain precautions..." to protect the
array of said AM Station(s).
BellSouth has constructed its Towers in compliance with the rules and
regulations of the FCC. By User's collocation on any BellSouth Tower, User
accepts full responsibility (including financial responsibility) to take any and
all measures to cause User's facilities to comply with the FCC mandate as it
pertains to modifications of existing towers. After this mandate has been
satisfied, all documentation to substantiate compliance will be forwarded to
BellSouth for records maintenance.
In the event that the applicable Tower at any Site was fitted with a
detuning apparatus to protect the array of a given AM Station, User will be
responsible for following the procedure set forth below to ensure that the Tower
remains in compliance:
Prior to actual collocation on the existing BellSouth Tower, a
certified letter will be sent from User to the AM station(s) in
question advising said station(s) of the intent to collocate on the
BellSouth existing Tower. This document will reference that BellSouth
has detuned the structure with the installation of a detuning
apparatus; furthermore, the Tower will not be increasing in electrical
height and therefore this collocation will cause no further
perturbation to the AM Signal. A copy of this letter will be furnished
to BellSouth for record purposes. After the collocation has been
completed, User will ensure the proper working condition of the
detuning apparatus by retaining the appropriate BellSouth detuning
consultant to take proximity measurements of the Tower to adjust said
apparatus to include the new antenna. This course of action is
necessary
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because the detuning apparatus will need to be rendered inert during
the actual installation of any additional antennas to the structure.
Any costs involved in following this procedure will be the
responsibility of User.
If, due to User's collocation, it becomes necessary to modify the
actual height of the Tower, it will be the responsibility of User to retain a
detuning consultant and perform a partial proof of performance report and/or
install/modify detuning apparatus to ensure the integrity of a given AM Signal.
14. BellSouth's Covenants. BellSouth covenants that during the term of
a Site Agreement it shall:
(a) Maintain the Tower and surrounding area in a safe condition;
(b) Except as otherwise set forth in this MSA, take no action which
would adversely affect the User's proposed use of the Site;
(c) Upon User's payment of rent and performance of its covenants,
but subject to the terms of any Master Lease/License pursuant to which BellSouth
has rights in and to the Property, and subject to any prior lien or encumbrance
on the Property, ensure User's quiet use and enjoyment of the Site;
(d) Comply with all applicable rules and regulations of the FCC, the
FAA, and all federal, state and local laws governing the Tower and Property;
(e) Not permit any Subsequent User (as defined herein) to interfere
with the operation of User's equipment, authorized frequency spectrum, signal
strength or Facilities. For purposes hereof, a "Subsequent User" shall mean any
other user of the Tower that submits to BellSouth a site application for the use
of such Tower after the submission of User's Site Application for such Tower. In
the event BellSouth determines, in its sole discretion based on standard and
accepted engineering practices, that the Subsequent User is interfering with the
operation of User's equipment, authorized frequency spectrum, signal strength or
Facilities, BellSouth shall, within forty-eight (48) hours of notification, take
all steps reasonably necessary to eliminate the interference, with the exception
of ceasing the Subsequent User's operations. If the Subsequent User cannot
eliminate or resolve such interference within the forty-eight (48) hour period,
BellSouth shall take all steps reasonably necessary to require that the
Subsequent User turn off its facilities and only turn on its facilities during
off-peak hours specified by BellSouth in order to test whether such interference
continues or it has been satisfactorily eliminated. In the event that the
Subsequent User is unable to resolve or eliminate, to the satisfaction of
BellSouth, such interference within thirty (30) days from the initial
notification of such interference, the Subsequent User will immediately remove
or cease operations of the objectionable facilities. Notwithstanding the
foregoing, if the Subsequent User is a governmental entity, BellSouth shall have
the right to give the governmental entity five (5) business days notice prior to
BellSouth being required to take any actions required by this Section 14(e) to
cure such interference. BellSouth shall give such governmental entity written
notice of the interference within two (2) business days of BellSouth's
determination that such action is reasonably necessary. BellSouth's notice to
the governmental entity shall be deemed given on the day it is delivered by hand
or on the day it is deposited with an overnight courier or the United States
mail;
(f) Not permit any Prior User or Subsequent User to damage User's
Facilities or the Site, normal wear and tear excepted. If damage by BellSouth, a
Prior User, or Subsequent User, other than normal wear and tear, occurs to
User's Facilities or the Site, then BellSouth, shall be liable for repair or
reimbursement of repair for such damages caused by such party;
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(g) Use reasonable efforts not to violate or breach any term of the
Master Lease/License giving the Master Landlord the right, with the passage of
time and/or giving of notice, to terminate the Master Lease/License; deliver to
User copies of every notice of default, non-renewal or non-conformance received
from Master Landlord immediately upon receipt thereof by BellSouth, and User
shall have the right, but not the obligation, to cure any such defaults of
BellSouth within the periods afforded BellSouth under the Master Lease;
(h) Provide the Master Landlord with the information necessary to
enable the Master Landlord to comply with the reporting requirements of the EPA
or any other governmental agency; provided, however, BellSouth shall have no
obligation to provide the Master Landlord with information regarding the User's
Facilities if User has not provided BellSouth with such information in
accordance with the provisions of Section 13(i) hereof.
15. Compliance with Laws.
(a) FCC and FAA Compliance. BellSouth acknowledges that it is aware
of its obligations under Section 303 of the Communications Act of 1934 (47
U.S.C. 303), as amended, to maintain the painting and illumination of Towers as
prescribed by the FCC. BellSouth further acknowledges that it is aware that it
is subject to forfeitures assessed by the FCC for violations of such rules and
requirements. BellSouth further acknowledges that it, and not User, shall be
responsible for compliance with all Tower or building marking and lighting
requirements which may be required by the Federal Aviation Administration
("FAA") or the FCC. BellSouth shall indemnify and hold harmless User from any
fines or other liabilities caused by BellSouth's failure to comply with such
requirements. Further, should User be cited by either the FCC or FAA because a
Tower is not in compliance within the time frame allowed by the citing agency,
User may terminate the Site Agreement for such Tower immediately upon notice to
BellSouth, or, at User's option, cause the Tower to comply with FAA or FCC
requirements and BellSouth shall be responsible for reimbursing User for its
actual, reasonable costs incurred to bring the Tower into compliance with FAA or
FCC requirements. Notwithstanding the foregoing, if FAA or FCC compliance
requires the removal and/or relocation of the Tower, User's sole remedy shall be
to terminate the Site Agreement for such Tower. Upon such termination, the
parties to the Site Agreement shall be released from all duties, obligations,
liabilities and responsibilities under the Site Agreement except for any
indemnity obligations, including without limitation, environmental indemnity and
tax obligations, and User's obligation to remove the Facilities from the
Property.
(b) Hazardous Substances. BellSouth and User agree that they will
not use, store, dispose, or release any Hazardous Substances on the Property in
violation of any applicable federal, state or local law, regulation, or order.
"Hazardous Substances" means any hazardous material or substance which is or
becomes defined as a hazardous substance, pollutant or contaminant subject to
reporting, investigation or remediation pursuant to any federal, state or local
law, regulation or order; and any substance which is or becomes regulated by any
federal, state or local governmental authority; and any oil, petroleum products
and their by-products. BellSouth and User acknowledge that User, BellSouth,
Prior Users and Subsequent Users may each use diesel fuel and batteries in
appropriate small quantities from time to time to operate emergency back-up
generators provided that the transportation, delivery, storage, use and disposal
by User, BellSouth, a Prior User, or a Subsequent User, as the case may be, is
in compliance with all federal, state and local laws, regulations and orders.
BellSouth agrees to indemnify and save harmless the User against any and all
claims, liabilities, demands, causes of action, losses, damages, orders,
judgments, penalties, clean-up costs, costs and expenses including, without
limitation, attorneys fees and costs, arising from BellSouth's
misrepresentation, breach of warranty or breach of agreement contained in this
Section 15(b). User agrees to indemnify and save harmless BellSouth against any
and all claims, liabilities, demands, causes of action, losses, damages, orders,
judgments, penalties, clean-up costs, costs and expenses including, without
limitation, attorneys fees and costs arising from
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User's misrepresentation, breach of warranty or breach of agreement, contained
in this Section 15(b). The obligations of BellSouth and User to indemnify the
other pursuant to this Section 15(b) shall survive the termination or expiration
of this MSA and each Site Agreement.
(c) Phase I - Environmental Site Assessment. After the execution and
delivery by BellSouth and User of an Entry and Testing Agreement for a Site User
may perform a Phase I - environmental site assessment on the Property pertaining
to such Site provided such Phase I - environmental site assessment does not
involve any subsurface soils testing and further provided that User provides
BellSouth with a complete written copy of the Phase I - environmental site
assessment within ten (10) days of completion at no expense to BellSouth. Only
with BellSouth's prior written consent and subject to BellSouth's supervision
may User perform a Phase II - environmental site assessment on the Property.
(d) National Environmental Policy Act Compliance. Upon execution of
a Site Agreement, and except as provided in a Site Agreement, BellSouth
represents that the Tower and Property comply with the applicable provisions of
the National Environmental Policy Act, 47 C.F.R. Section 1.1301 et seq.
('NEPA'). BellSouth acknowledges that it, and not the User, shall be responsible
for compliance with all applicable provisions of NEPA. BellSouth shall indemnify
and hold harmless User from any fines or other liabilities caused by BellSouth's
failure to comply with NEPA. In no event shall BellSouth be responsible to User
for lost profits, market share or consequential damages. Further, should
BellSouth be cited for noncompliance with NEPA and fail to bring the Tower
and/or Property into compliance, User, in addition to any and all other remedies
available to User at law or in equity, may terminate this Site Agreement
immediately upon written notice to BellSouth, or, at User's option, cause the
Tower to comply with NEPA and BellSouth shall be responsible for reimbursing
User for its actual, reasonable costs incurred to bring the Tower into
compliance with NEPA requirements. Notwithstanding the foregoing, if NEPA
compliance requires the removal and/or relocation of the Tower, User's sole
remedy shall be to terminate the Site Agreement for such Tower. Upon such
termination, the parties hereto shall be released from all duties, obligations,
liabilities and responsibilities under this Site Agreement except for any
indemnity obligations, including without limitation, environmental indemnity and
tax obligations, and User's obligation to remove the Facilities from the
Property.
(e) User acknowledges and understands that BellSouth has installed
or will install certain signage and/or physical barriers pertaining to radio
frequency exposure from BellSouth's transmitter and other equipment. User 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 User's personnel
or contractors tamper with any such signage or barriers. User shall be
responsible for placement of signage or physical barriers at or near its
facilities at the Site in order to comply with applicable FCC radio frequency
exposure guidelines. BellSouth agrees that it shall cooperate with User in these
efforts and that BellSouth 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 BellSouth's personnel or contractors tamper with any such signage or
barriers. BellSouth and User 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.
16. Assignment or Subletting; No Liens.
(a) Assignment by User. User shall not assign, convey, or transfer
its interest in this MSA or any Site Agreement without first obtaining
BellSouth's written approval, which approval may not be unreasonably withheld,
conditioned, or delayed. User is not permitted to sublease or to license its
interest in this MSA or any Site Agreement. Notwithstanding the foregoing, User
has the right, without
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the necessity of obtaining BellSouth's consent, to assign this MSA or any Site
Agreement to a User Affiliate (as defined herein), provided that User notifies
BellSouth in writing of such assignment. For purposes hereof, "User Affiliate"
shall mean any entity which controls, is controlled by, or is under common
control with User or to any entity resulting from the merger or consolidation of
User, or to any person or entity which acquires substantially all of the assets
of User, provided that such assignee assumes in full all of the obligations of
User under this MSA and the Site Agreements that may be assigned.
(b) Assignment by BellSouth. BellSouth shall have the right to
assign this MSA or any Site Agreement to a BellSouth Affiliate (as defined
herein) or an assignee who purchases an MSA, RSA, BTA or MTA, as defined by the
FCC, or to any other party who expressly assumes BellSouth's obligations,
without User's prior approval, and shall notify User within a reasonable time of
any such assignment. For purposes of this MSA and the Site Agreements,
"BellSouth Affiliate" shall mean any entity which controls, is controlled by, or
is under common control with BellSouth, to any entity resulting from the merger
or consolidation of BellSouth, or to any person or entity which acquires
substantially all of the assets of BellSouth, provided that such assignee
assumes in full all of the obligations of BellSouth, under this MSA and the Site
Agreements that may be assigned.
(c) Liens. Except as provided in Section 10 (viii) hereof, User
shall keep the Property, the Tower, the Site and the Facilities free from any
liens arising from any work performed, materials furnished or obligations
incurred by or at the request of User. All persons either contracting with User
or furnishing or rendering labor and materials to User shall be notified in
writing by User that they must look only to User for payment for any labor or
materials. If any lien is filed against the Property, the Tower, the Site or the
Facilities as a result of the acts or omissions of User, its employees, agents
or contractors or subcontractors, User shall discharge it or bond it off within
thirty (30) days after User learns that the lien has been filed.
17. Insurance; Risk of Loss.
(a) User's Insurance. Prior to installation of the Facilities and to
having access to a Site and at all times during the term of a Site Agreement,
User shall provide proof of insurance for each individual Site, as outlined
below, satisfactory to BellSouth, and maintain the coverages specified below
during the term of a Site Agreement and until all Facilities are removed from
the Site following termination of a Site Agreement:
(i) Commercial General Liability Insurance with limits of not
less than $2,000,000 per occurrence and in the aggregate.
(ii) Workers' Compensation coverage in the statutory amount.
(iii) Employers Liability coverage with limits of not less than
$500,000 each accident, $500,000 each employee by disease and $500,000 policy
limit by disease.
(iv) Automobile Liability for Owned and Non-Owned Autos, Combined
Single Limit of $1,000,000.
(v) All Risk Insurance with Replacement Value coverage of User's
Facilities and personal property located on the Property.
(b) BellSouth's Insurance. At all times during the term of a Site
Agreement, BellSouth shall maintain insurance for such Site as outlined below:
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<PAGE>
(i) Commercial General Liability Insurance with limits of not
less than $2,000,000 per occurrence and in the aggregate.
(ii) Workers' Compensation coverage in the statutory amount.
(iii) Employers Liability coverage with limits of not less than
$500,000 each accident, $500,000 each employee by disease and $500,000 policy
limit by disease.
(iv) Automobile Liability for Owned and Non-Owned Autos, Combined
Single Limit of $1,000,000.
(v) All Risk Insurance with Replacement Value coverage of the
Tower and BellSouth's personal property located on the Property.
(c) Additional Insured. BellSouth shall be named as additional
insured on the policy listed in Section 17(a)(i) above. User shall be named as
additional insured on the policy listed in Section 17(b)(i) above. Additionally,
each party shall obtain a waiver of subrogation from its insurer on the policies
listed in Section 17(a)(i) and Section(b)(i) above. BellSouth and User may
satisfy this requirement by obtaining appropriate endorsements to any master or
blanket policy of liability insurance User or BellSouth, as applicable, may
maintain. No policy may be cancelable or subject to reduction of coverage except
after thirty (30) days prior written notice to BellSouth or User.
(d) Third Parties. User and BellSouth shall require their respective
contractors and subcontractors to carry workers' compensation insurance and
adequate liability insurance in conformity with the minimum requirements listed
above.
(e) Risk of Loss; Limitation of Liability. Notwithstanding anything
herein to the contrary, each party shall bear the risk of loss of or damage to
the respective personal property during the term of each Site Agreement except
to the extent caused by the negligence or willful misconduct of the other party.
Neither party shall be liable for any damage to the other party's personal
property except to the extent caused by a party's negligence or willful
misconduct. Notwithstanding anything herein to the contrary, the parties shall
not be liable for any consequential or incidental damages incurred by the other
party due to any malfunction, vandalism, acts of God (including, without
limitation, lightning, wind, rain, hail, fire or storms) or any other damage
resulting from any reason. In the event the Tower or other portions of the Site
are destroyed or so damaged as to be unusable, BellSouth or User shall be
entitled to elect to cancel and terminate the Site Agreement, or in the
alternative may elect to restore the Site, in which case User and BellSouth
shall remain bound hereby but shall be entitled to an abatement of rent during
the loss of use, if the User or BellSouth has not elected to cancel the Site
Agreement. In no event shall the leasehold or other interest created by the Site
Agreement be specifically enforceable and in no event shall either BellSouth or
User be responsible to any party for consequential damages, lost business
opportunities, profits or market share.
(f) Removal of Facilities. User's obligation to provide the
insurance coverages set forth in this Section 17 shall survive the expiration or
termination of the Site Agreement until the User's Facilities are removed from
the Property.
18. Indemnification. User does hereby agree to indemnify and save BellSouth
harmless from any and all claims, liabilities, demands, causes of action,
losses, damages, orders, judgments, penalties, costs and expenses, including
without limitation, reasonable attorneys fees and costs (i) for property damage
or personal injuries or death caused by the negligence or willful misconduct of
User, User's agents, employees, and contractors arising out of User's occupancy
of the Site or the installation,
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<PAGE>
maintenance, operation and removal of the Facilities, or (ii) resulting from the
User's breach of any term or condition of this MSA or a Site Agreement.
BellSouth does hereby agree to indemnify and save User harmless from any and all
claims, liabilities, demands, causes of action, losses, damages, orders,
judgments, penalties, costs and expenses, including without limitation,
reasonable attorneys fees and costs (i) for property damage or personal injuries
or death caused by the negligence or willful misconduct of BellSouth,
BellSouth's agents, employees, and contractors arising out of BellSouth's
occupancy of the Site or the installation, maintenance and operation of the
Facilities, or (ii) resulting from BellSouth's breach of any term or condition
of this MSA or a Site Agreement. The obligations to indemnify and hold harmless
set forth in this Section shall survive the expiration or termination of this
MSA and each respective Site Agreement.
19. Default.
(a) User's Default. Each of the following shall be considered a
default of a Site Agreement by the User:
(i) The failure to pay any rent or other charges required
pursuant to this MSA and the Site Agreement within thirty (30) days after
receipt of BellSouth's written notice of such failure;
(ii) The failure to cure, within (30) days after receipt of
BellSouth's written notice thereof, any breach of any other term of this MSA or
the Site Agreement, provided, however, that if such breach is not capable of
being cured within such period but User has undertaken efforts to cure such
breach, and such breach is capable of being cured, such thirty (30) day period
shall be extended for so long as User is diligently attempting in good faith, to
cure such breach, not to exceed an additional thirty (30) calendar days (except
for promises relating to interference as set forth in Section 13(b) hereof);
(iii) Abandonment of the Site ("Abandonment" being defined as
User not using the Site for sixty (60) consecutive days);
(iv) The failure of User to eliminate interference problems as
set forth in Section 13(b); or
(v) If (a) User gives notice to any governmental body of its
insolvency or pending insolvency or makes an assignment for the benefit of
creditors or takes any other similar action for the protection or benefit of its
creditors, or files an answer admitting the material allegations of, or
consenting to, or defaults in answering any pleading filed with respect to the
commencement of any case or proceeding respecting User under any bankruptcy or
insolvency law, or (b) any order for relief is entered against User in any case
in bankruptcy, any order, judgment or decree is entered against User by a court
of competent jurisdiction appointing a receiver, trustee, custodian or
liquidator of User or of all or a substantial part of its assets, and such
order, judgment, or decree continues unstayed and in effect for a period of
ninety (90) consecutive days, or any proceeding for the reorganization of a
party under, or for an arrangement under, any bankruptcy or insolvency law
applicable to User is commenced whether by or against User and not dismissed
within ninety (90) days from commencement thereof.
Upon default of a Site Agreement by User past any applicable cure period, in
addition to all other remedies provided at law or in equity, BellSouth may, at
its option:
(aa) elect to remove all of the Facilities by legal process,
thereby terminating the Site Agreement, and store the Facilities at User's
expense, payable upon demand by BellSouth.
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(bb) elect to treat the Site Agreement in full force and effect
and shall be entitled to collect the rent provided for hereunder.
Upon the termination of a Site Agreement pursuant to Section (aa) above, the
parties hereto shall be released from all duties, obligations, liabilities and
responsibilities under the Site Agreement except for indemnity obligations,
including without limitation, environmental indemnity and tax obligations, any
obligations arising prior to the date of termination, and User's obligation to
remove its Facilities from the Property. (b) BellSouth's Default. Each of the
following shall be considered a default of a Site Agreement by BellSouth:
(i) The failure to cure, within (30) days after receipt of User's
written notice thereof, any breach of any other term of this MSA or the Site
Agreement, provided, however, that if such breach is not capable of being cured
within such period but BellSouth has undertaken efforts to cure such breach, and
such breach is capable of being cured, such thirty (30) day period shall be
extended for so long as BellSouth is diligently attempting in good faith, to
cure such breach, not to exceed an additional thirty (30) calendar days (except
for promises relating to interference by a Subsequent User as set forth in
Section 14(e) which must be cured within the time frame set forth in Section
14(e) and except for any breach of the Master Lease/License which must be cured
within the time frames set forth in the Master Lease/License); or
(ii) The failure of BellSouth to eliminate interference problems
as set forth in Section 14(e). Upon default of a Site Agreement by BellSouth, in
addition to all other remedies provided at law or in equity, User may, at its
option:
(aa) elect to cure BellSouth's default, in which event User shall
have the right to offset any and all reasonable costs incurred in curing
BellSouth's default against any rent or other amounts due BellSouth; or
(bb) elect to terminate the Site Agreement as of the date of the
default and to recover from BellSouth all damages (except those for which
BellSouth is not liable under the terms of this MSA) incurred by User as a
result of such default. Upon such termination, the parties hereto shall be
released from all duties, obligations, liabilities and responsibilities under
the Site Agreement except for any indemnity obligations, including without
limitation, environmental indemnity and tax obligations, obligation to pay
damages, and User's obligation to remove the Facilities from the Property.
20. Termination.
(a) Termination of Site Agreement.
(i) Termination by User. Notwithstanding anything to the contrary
contained in this MSA, User shall be entitled to terminate a Site Agreement
after the Commencement Date, with written notice to BellSouth in the event:
(a) any Approval is canceled, expires, lapses, or is otherwise
withdrawn or terminated through no fault of the User while User is working
in the normal course of business to maintain all such Approvals; or
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(b) any notice by BellSouth of relocation of User's Facilities
pursuant to Section 9 hereof is unacceptable to User.
Any such termination by User shall be effective thirty (30) days after
receipt of written notice by BellSouth. Upon such termination, the Site
Agreement shall terminate and be of no further force and effect, an ' d
except for any indemnity obligations, including without limitation,
environmental indemnity and tax obligations, and User's obligations to
remove the Facilities from the Property, the parties hereto shall be
released from all duties, obligations, liabilities and responsibilities
under the Site Agreement.
(ii) Termination by BellSouth.
(a) In the event BellSouth's right to occupy the Property is
terminated at any time following execution of a Site Agreement as a result
of the termination or expiration of the Master Lease/License, the Site
Agreement shall automatically terminate upon the effective termination date
of the Master Lease/License and be of no further force and effect, and
except for any indemnity obligations and User's obligation to remove the
Facilities from the Property, the parties hereto shall be released from all
duties, obligations, liabilities and responsibilities under the Site
Agreement. It is specifically understood that BellSouth is under no
obligation to extend the term of the Master Lease/License, irrespective of
the term stated in the Site Agreement. The applicable Site Agreement shall
expire upon the expiration or termination of the applicable Master
Lease/License
(b) In the event BellSouth needs additional capacity at a Site
for its equipment, BellSouth may terminate a Site Agreement as provided in
Section 9 hereof. In the event User refuses to lease, sublease, license or
sublicense, as applicable, a Reciprocal Site to BellSouth, for reasons
unrelated to User's capacity, zoning, permits, RF interference (based upon
standard and accepted engineering principles) licenses and other required
approvals, or environmental issues with respect to such Reciprocal Site,
BellSouth may elect to terminate any existing Site Agreement in the same
geographic market as the proposed Reciprocal Site refused by User,
effective thirty (30) days after receipt by User of written notice. Upon
termination of any Site Agreement, such terminated Site Agreement shall be
of no further force and effect and the parties hereto shall be released
from all duties, obligations, liabilities, and responsibilities under the
terminated Site Agreement, except for indemnity obligations, User's
obligation to remove the Facilities from the terminated Site, and User's
obligations set forth in Section 13(h) hereof. In the event User does not
remove its Facilities from the terminated Site as provided in Section 9 or
Section 13(h) hereof, as applicable, BellSouth shall have the right to
remove and store User's Facilities, at User's expense.
21. Condemnation. If the whole of the Property or Site which are
subject of any Site Agreement or so much thereof as to interfere with the use
thereof shall be taken or condemned by any competent authority for any public or
quasi-public use or purpose, such Site Agreement shall terminate as of the date
when possession is taken at the election of either party. In such event,
BellSouth shall be under no liability to User resulting from such condemnation
and User shall be entitled to no part of any condemnation award except so much
thereof as the condemning authority expressly allocates to that portion of the
proceeds directly attributable to the value of User's Facilities on the Tower,
its leasehold interest in the Site, and moving or relocation expenses incurred
by User. BellSouth shall provide User with notice in writing of any actual or
threatened condemnation proceedings promptly after receiving notice thereof.
Upon such termination, the parties to the Site Agreement shall be released from
all duties, obligations, liabilities and responsibilities under the Site
Agreement except for any indemnity obligations,
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<PAGE>
including without limitation, environmental indemnity and tax obligations, and
User's obligation to remove the Facilities from the Property.
22. Mortgage by BellSouth. This MSA and each Site Agreement is and shall be
subject to a security interest or mortgage which might now or hereafter
constitute a lien upon the Site. This MSA and each Site Agreement is and shall
be subject and subordinate in all respects to any and all such mortgages on the
Site and to all renewals, modifications, consolidations, replacements and
extensions thereof. In the event any proceedings are brought for foreclosure or
in the event of the exercise of the power of sale under any mortgage covering
any Site, the User shall attorn to the purchaser upon any such foreclosure or
sale and recognize such purchaser as the lessor/licensor, as applicable, under
this MSA and the applicable Site Agreement(s); provided that so long as the User
is not in default hereunder, this MSA and the applicable Site Agreement(s) shall
remain in full force and effect, and User's use and occupancy pursuant to this
MSA and applicable Site Agreements shall not be disturbed.
23. Entirety. This MSA and Site Agreement, including all Schedules and
Exhibits hereto and thereto, constitute the entire agreement between BellSouth
and User and any modification to the MSA or Site Agreement, any Schedule or
Exhibits hereto or thereto, must, in order to be effective, be in writing,
signed by authorized representatives of each party.
24. Waiver. Failure or delay on the part of either party to exercise
any right, power, privilege or remedy hereunder shall not operate as a waiver
thereof; nor shall any single or partial exercise of any right under this MSA of
under a Site Agreement preclude any other or further exercise thereof or the
exercise of any other right.
25. Binding Effect. This MSA and the Site Agreements shall extend to
and bind the heirs, personal representatives, successors, permitted assigns, or
its successors in interest of the parties hereto.
26. Governing Law. This MSA and each Site Agreement and performance
hereunder and thereunder shall be governed, interpreted, construed and regulated
by the laws of the state where the Property and Site are located.
27. Notice. All notices hereunder shall be deemed validly given if sent
by certified mail, return receipt requested, or with a nationally recognized
courier which provides notice of receipt, postage fully prepaid, addressed as
follows, or to such other addresses as may be given from either party in writing
to the other:
BellSouth: BellSouth Mobility Inc.
1100 Peachtree Street, N.E., Eighth Floor
Atlanta, GA 30309
Attn: Real Estate Manager
with a copy to:
BellSouth Mobility Inc.
1100 Peachtree Street, N.E., Suite 910
Atlanta, GA 30309
Attn: Legal Department
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User: Tritel Communications, Inc.
1410 Livingston Lane
Jackson, Mississippi 39213
Attn: Ken Harris
28. Headings. Section headings in this MSA and in each Site Agreement
are included for the convenience of reference only and shall not constitute a
part of this MSA or the Site Agreement for any other purpose.
29. Brokerage. User warrants and represents to BellSouth that it has
not dealt with a real estate agent or broker with respect to this MSA or any
Site Agreement, and shall hold BellSouth harmless against all claims by any real
estate agent or broker claiming a commission hereunder or thereunder on behalf
of User. BellSouth warrants and represents to User that, except for GlobalComm,
Inc., it has not dealt with a real estate agent or broker with respect to this
MSA or any Site Agreement, and shall hold User harmless against all claims by
any real estate agent or broker claiming a commission hereunder or thereunder on
behalf of BellSouth.
30. Memorandum of Lease. At the request of User, BellSouth hereby
agrees to execute a memorandum or short form of lease (a "Memorandum of Lease"),
in form satisfactory for recording, and such Memorandum of Lease may be filed of
record by the User, at User's sole cost, including taxes or assessments incurred
in connection therewith. The parties understand and agree that this MSA and the
Site agreements shall not be recorded of record. User agrees to prepare, execute
and record, at its expense, a release, within thirty (30) days of expiration or
termination of a Site Agreement. In the event User fails to do so, BellSouth has
a contractual right as User's agent for this limited purpose to prepare, execute
and record such release and User shall reimburse BellSouth, upon demand, for all
expenses, including attorney fees and filing fees, incurred in connection
therewith.
31. Counterparts. This MSA and each Site Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
together shall constitute but one instrument.
32. Authority. Each party hereby represents and warrants to the other
that all necessary corporate authorizations required for execution and
performance of this MSA and each Site Agreement have been given and that the
undersigned officer is duly authorized to execute this MSA and each Site
Agreement and bind the party for which it signs.
33. Severability. If any term, covenant, condition or provision of this
MSA or the Site Agreement or any application hereof or thereof shall, to any
extent, be invalid or unenforceable, the remainder of this MSA and each Site
Agreement shall not be affected thereby, and shall be valid and enforceable to
the fullest extent permitted by law.
By: ___________________(Company Name)
------------------------
Consent and Agreed
------------------------
Date
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year first above written.
BELLSOUTH:
BELLSOUTH MOBILITY INC,
a Georgia corporation
By:_______________________
Name:_____________________
Title:____________________
Attest:___________________
Name:_____________________
Title:____________________
[AFFIX CORPORATE SEAL]
22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year first above written.
USER:
TRITEL COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ Kenneth F. Harris
-------------------------------
Name: Kenneth F. Harris
-----------------------------
Title: Director of Site Acquistion
----------------------------
and Property Administration
----------------------------
Attest: /s/ James H. Neeld
---------------------------
Name: James H Neeld, IV
----------------------------
Title: Secretary
----------------------------
[AFFIX CORPORATE SEAL]
23
<PAGE>
STATE OF ___________ )
)
___________ COUNTY )
I, a Notary Public for said County and State, do hereby certify that
__________________________ personally appeared before me this day and
acknowledged that he/she is ____________ Secretary of BELLSOUTH MOBILITY INC, a
Georgia corporation and that by authority and as the act of the corporation, the
foregoing instrument was signed in its name by its ___________ President, sealed
with its corporate seal, and attested by him/her as its ____________Secretary.
-------------------------------------------
Notary Public, State of ___________________
My Commission Expires:_____________________
[NOTARIAL SEAL]
24
<PAGE>
STATE OF MISSISSIPPI
COUNTY OF HINDS
I, LUCINDA SUSAN BANES, a Notary Public for said County and State, do
hereby certify that JAMES H. NEELD, IV personally appeared before me this day
and acknowledged that he is Secretary of TRITEL COMMUNICATIONS, INC., a Delaware
corporation, and that by authority and as the act of the corporation the
foregoing instrument was signed in its name by KENNETH F. HARRIS, its DIRECTOR
OF SITE ACQUISITION AND PROPERTY ADMINISTRATION, sealed with its corporate seal,
and attested by him as its Secretary.
-----------------------------
NOTARY PUBLIC
My commission expires:
- --------------------------------
<PAGE>
SCHEDULE "I" TO MASTER SITE AGREEMENT
-------------------------------------
SITE [LEASE/SUBLEASE/LICENSE/SUBLICENSE] AGREEMENT
--------------------------------------------------
THIS SITE [LEASE/SUBLEASE/LICENSE/SUBLICENSE] AGREEMENT (the "Site
Agreement") is made as of the latter signature date hereof (the "Execution
Date"), by and between BELLSOUTH MOBILITY INC, a Georgia corporation, its
successors and assigns (hereinafter referred to as "BellSouth") and TRITEL
COMMUNICATIONS, INC., a Delaware corporation (hereinafter referred to as
"User").
WHEREAS, the parties are party to the Master Site Agreement dated
_______________, 1999 (the "MSA");
WHEREAS, the parties desire that except as set forth in this Site
Agreement, the terms and conditions of the MSA shall govern the relationship of
the parties under this Site Agreement;
WHEREAS, BellSouth [IS THE OWNER OF] [AS LESSEE/LICENSEE,
LEASED/LICENSED FROM ___________ (THE "MASTER LANDLORD") PURSUANT TO THAT
CERTAIN LEASE/LICENSE AGREEMENT DATED ___________, 19__ (THE "MASTER
LEASE/LICENSE")], a copy of which is attached hereto as Exhibit "A-1", certain
real property located in _______________, _______________, as more particularly
described on Exhibit "A" attached hereto and incorporated herein by reference.
NOW, THEREFORE, for valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereby agree as follows:
1. MSA and Defined Terms. Unless otherwise defined herein, capitalized
terms shall have the meaning set forth in the MSA. The parties agree that except
as otherwise set forth herein, the terms and conditions of the MSA shall govern
the relationship of the parties under this Site Agreement and the MSA is
incorporated herein by reference. In the event of a conflict or inconsistency
between the terms of the MSA and this Site Agreement, the terms of this Site
Agreement shall govern and control.
2. Demise. BellSouth hereby [LEASES/SUBLEASES/LICENSES/SUBLICENSES] to
User and User hereby [LEASES/SUBLEASES/LICENSES/SUBLICENSES] from BellSouth the
following:
(a) Tower Space. [SUBJECT TO BELLSOUTH OR USER OBTAINING THE CONSENT
OF THE MASTER LANDLORD PURSUANT TO SECTION 5(A) OF THE MSA, IF REQUIRED BY THE
MASTER LEASE/LICENSE, IN BELLSOUTH'S SOLE REASONABLE OPINION,] [T]ower space on
BellSouth's Tower between the __________ (_) foot and __________ (_) foot level
(the "Tower Space"), for the placement of User's antenna array, platform,
cables, brackets, wires and accessories, as more particularly described on
Exhibit "C" attached hereto and incorporated herein by reference (the "Tower
Facilities"); and
(b) Ground Space. [SUBJECT TO BELLSOUTH HAVING GROUND SPACE ADEQUATE
TO ACCOMMODATE USER'S GROUND FACILITIES, AS HEREINAFTER DEFINED, AND BELLSOUTH
OR USER OBTAINING THE CONSENT OF THE MASTER LANDLORD PURSUANT TO SECTION 5(A) OF
THE MSA, IF REQUIRED BY THE MASTER LEASE/LICENSE, IN BELLSOUTH'S SOLE REASONABLE
OPINION] [G]round space containing _____ (_____)
BellSouth's Site Name: _______ User's Site Name: _______
Site Number: _______ Site Number:_______
<PAGE>
[ACRES/SQUARE FEET], as approximately shown on Exhibit "B" attached hereto and
incorporated herein by this reference and which will be more specifically shown
on the As-Built Survey, as defined in Section 10(vii) of the MSA, delivered by
User to BellSouth in accordance with Section 10(vii) of the MSA and which
As-Built Survey shall be attached to and become a part of this Site Agreement as
Exhibit "B" when initialed by BellSouth and User in accordance with Section
10(vii) of the MSA (the "Ground Space"), for the placement of equipment shelters
and cabinets, telecommunications equipment within such equipment shelters and
cabinets, concrete pads, cables, wires and accessories, as more particularly
described on Exhibit "C" attached hereto and incorporated herein by reference
(the "Ground Facilities"); together with
(c) Ingress and Egress. Subject to the limitations set forth in
Section II of the MSA (i) the non-exclusive right to use the Tower, at locations
mutually agreed upon by User and BellSouth, for the term hereof for ingress,
egress, and access to the Tower Space adequate to service the Tower Facilities
and (ii) if the term "Leased Space" as used herein includes Ground Space, a
non-exclusive easement for the term hereof, for ingress, egress, and access to
the Leased Space across [(AA)] the Property in locations mutually agreed upon in
writing by BellSouth and User [AND (BB) ACROSS THE PROPERTY OF THE MASTER
LANDLORD TO THE EXTENT AND IN THE LOCATIONS THE MASTER LANDLORD GRANTED INGRESS,
EGRESS AND ACCESS EASEMENTS TO BELLSOUTH IN THE MASTER LEASE/LICENSE.]
(d) Utilities, Cable Runs. BellSouth hereby grants to User the
non-exclusive right to use the Tower for the term hereof to place any utilities
and cable runs on the Tower, at locations mutually agreed upon in writing by
BellSouth and User, in order to service or operate the Facilities, subject to
BellSouth's prior written approval of the design and installation method and
procedures, such approval not to be unreasonably withheld or delayed. [IF THE
TERM "LEASED SPACE" INCLUDES THE GROUND SPACE, BELLSOUTH HEREBY GRANTS TO USER A
NON-EXCLUSIVE EASEMENT FOR THE TERM HEREOF TO PLACE ANY UTILITIES OR CABLE RUNS
ON OR BRING UTILITIES ACROSS THE PROPERTY AND IF THE PROPERTY IS LEASED OR
LICENSED BY BELLSOUTH, THE PROPERTY OF THE MASTER LANDLORD TO THE EXTENT AND IN
THE LOCATIONS THE MASTER LANDLORD GRANTED UTILITY AND CABLE RUN EASEMENTS].
3. Term/Site Commencement Date. Provided [THE APPLICABLE CONTINGENCIES
SET FORTH IN SECTION 5 OF THE MSA HAVE BEEN SATISFIED,] User has paid BellSouth
any required application fee, and the Site Cost Reimbursement Amount of
__________________________________________________ Dollars ($______), this Site
Agreement term shall begin on the earlier to occur of (i) the date when User
commences the installation of its Facilities on the Tower or (ii) forty-five
(45) days from the Execution Date, unless further extended by the mutual written
agreement of BellSouth and User [NOTE: IF SPECIFIC DATE IS TO BE INSERTED AS
COMMENCEMENT DATE, REPLACE (II) WITH: "(II) THE _____ DAY OF __________,
_____."] (the "Site Commencement Date"), and shall continue until the earlier to
occur of (i) midnight of the tenth (10th) anniversary of the Site Commencement
Date or (ii) the expiration or termination of the Master Lease/License (the
"Initial Term"). Within five (5) business days of User's commencement of the
installation of its Facilities on the Leased Space, User shall provide BellSouth
written notice of the date User commenced installation of its Facilities on the
Leased Space in the form of Exhibit "E" attached hereto. Provided [THE MASTER
LEASE/LICENSE REMAINS IN EFFECT AND HAS NOT EXPIRED OR BEEN TERMINATED, AND]
User is not in default, User shall have the option of extending this Site
Agreement for three (3) additional five (5) year terms (the "Renewal Terms").
Such renewal options shall be deemed automatically exercised without notice by
User to BellSouth unless User gives BellSouth written notice of its intention
not to exercise any such option at least ninety (90) days prior to the
expiration of the then current term, in which case, the term of the Site
Agreement shall expire at the end of the then current term.
BellSouth's Site Name: _______ User's Site Name: _______
Site Number: _______ Site Number:_______
2
<PAGE>
4. Rent/Renewal Terms. In addition to any required application fee and
the Site Cost Reimbursement Amount, which shall be paid by User to BellSouth in
accordance with the MSA, during the first five (5) years of the Initial Term,
User shall pay annual rent of [CONFIDENTIAL TREATMENT REQUESTED] in accordance
with the MSA. The first annual installment of base rent is due and payable not
later than the Site Commencement Date. For the sixth through tenth year of the
Initial Term, the annual rent shall be increased by [CONFIDENTIAL TREATMENT
REQUESTED] over the annual rent for the first five (5) years of the Initial
Term. Upon the commencement of each Renewal Term, the annual rent shall be
further increased by [CONFIDENTIAL TREATMENT REQUESTED] over the annual rent
then payable for the immediately preceding term. Unless otherwise directed in
writing by BellSouth, User shall forward all rental and other payments required
hereunder to:
BellSouth Mobility Inc
Attention: Treasury/Accounting Department
400 Northpark Town Center
Suite 290
1000 Abernathy Road
Atlanta, GA 30328
Recurring Invoice No. _____-___-___-___
5. Additional Rent. In addition to the rent set forth in Section 4
hereof, User hereby agrees to pay additional rent to BellSouth for any
additional equipment added to BellSouth's Tower after the installation of the
Tower Facilities set forth in Exhibit "C" hereto. Additional rent shall be
calculated based on a rental amount for each piece of additional equipment. Such
rental amounts are set forth below:
Equipment Rental Amount
--------- -------------
$
------------------ -----------------
$
------------------ -----------------
$
------------------ -----------------
$
------------------ -----------------
6. Hazardous Substances. [BELLSOUTH IS NOT AWARE OF, AND HAS NOT
RECEIVED NOTICE OF, THE DISPOSAL, RELEASE OR PRESENCE OF HAZARDOUS SUBSTANCES ON
THE PROPERTY IN VIOLATION OF ANY FEDERAL, STATE OR LOCAL LAW, REGULATION OR
ORDER.]
[7. NATIONAL ENVIRONMENTAL POLICY ACT COMPLIANCE. ADD PROVISION IF
BELLSOUTH HAS NOT COMPLIED OR IS IN THE PROCESS OF COMPLYING WITH NEPA.]
[8/9]. Notice. All notices hereunder shall be deemed validly given if
sent by certified mail, return receipt requested, or with. a nationally
recognized courier which provides notice of receipt, postage fully prepaid,
addressed as follows, or to such other addresses as may be given from either
party in writing to the other:
BellSouth's Site Name: User's Site Name:
----- -----
Site Number: Site Number:
----- -----
3
<PAGE>
BellSouth: BellSouth Mobility Inc
1100 Peachtree Street, N.E., 8th Floor
Atlanta, GA 30309
Attn: Real Estate Manager
with a copy to:
BellSouth Mobility Inc
I 100 Peachtree Street, N.E., Suite 910
Atlanta, GA 30309
Attn: Legal Department
User: Tritel Communications, Inc.
1410 Livingston Lane
Jackson, Mississippi 39213
Attn: Jean Harris
with a copy to:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
BellSouth's Site Name: User's Site Name:
----- -----
Site Number: Site Number:
----- -----
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
signature date set forth below.
User:
TRITEL COMMUNICATIONS, INC.
a Delaware corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Attest:
---------------------------
Name:
-----------------------------
Title:
----------------------------
[AFFIX CORPORATE SEAL]
Signature Date:
------------------
STATE OF ___________ )
)
___________ COUNTY )
I, a Notary Public for said County and State, do hereby certify that
________________________ personally appeared before me this day and acknowledged
that he/she is ____________ Secretary of Tritel Communications, Inc., a Delaware
corporation, and that by authority and as the act of the corporation, the
foregoing instrument was signed in its name by its ___________ President, sealed
with its corporate seal, and attested by him/her as its ____________Secretary.
-------------------------------------------
Notary Public, State of ___________________
My Commission Expires:
[NOTARIAL SEAL]
BellSouth's Site Name: _____ User's Site Name: _____
Site Number: _____ Site Number: _____
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
signature date set forth below.
BELLSOUTH:
BELLSOUTH MOBILITY INC,
a Georgia corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Attest:
---------------------------
Name:
-----------------------------
Title:
----------------------------
[AFFIX CORPORATE SEAL]
Signature Date:
------------------
STATE OF ___________ )
)
___________ COUNTY )
I, a Notary Public for said County and State, do hereby certify that
________________________ personally appeared before me this day and acknowledged
that he/she is ____________ Secretary of BellSouth Mobility Inc. a Georgia
corporation, and that by authority and as the act of the corporation and on
behalf of the partnership, the foregoing instrument was signed in its name by
its _________ President, sealed with its corporate seal, and attested by him/her
as its ____________Secretary.
-------------------------------------------
Notary Public, State of ___________________
My Commission Expires:
[NOTARIAL SEAL]
BellSouth's Site Name: _____ User's Site Name: _____
Site Number: _____ Site Number: _____
6
<PAGE>
EXHIBIT "A"
Site Description
Site Name: MSA/RSA/MTA/BTA:
-------------- -------------
Site Number: Site Address:
-------------- -----------------
Latitude:
--------------
Longitude:
--------------
Legal Description of Property:
- ------------------------------
Legal Description of Access Easement:
- -------------------------------------
Legal Description of Utility Easement
- -------------------------------------
BellSouth's Site Name: _____ User's Site Name: _____
Site Number: _____ Site Number: _____
7
<PAGE>
EXHIBIT "A-1"
MASTER LEASE/LICENSE AGREEMENT
(Subject to redaction)
BellSouth's Site Name: _____ User's Site Name: _____
Site Number: _____ Site Number: _____
8
<PAGE>
EXHIBIT "B"
User's Ground Space
BellSouth's Site Name: _____ User's Site Name: _____
Site Number: _____ Site Number: _____
9
<PAGE>
EXHIBIT "C"
User's Tower Facilities and Ground Facilities
[Attach User's Co-Location Application]
BellSouth's Site Name: _____ User's Site Name: _____
Site Number: _____ Site Number: _____
10
<PAGE>
EXHIBIT "D"
Certification as to Ground Lease
[Date]____
[BellSouth's or User's Name]
[BellSouth's or User's Address]
RE: Site Agreement from [BELLSOUTH'S OR USER'S NAME] to [BELLSOUTH OR
USER] at _________, _________
Dear _________:
Pursuant to the above referenced lease (the "Lease"), User hereby
certifies unto BellSouth that User has obtained from the Master Landlord, as
defined in the Site Agreement, a lease of a portion of the Master Landlord's
property, as more particularly described in Section 3(a)(ii) of the Site
Agreement, for ground space to accommodate [USER'S] Ground Facilities together
with easements for access, utilities and cables.
Sincerely,
[BellSouth or User]
BellSouth's Site Name: _____ User's Site Name: _____
Site Number: _____ Site Number: _____
11
<PAGE>
EXHIBIT "E"
Notice of Installation of User's Facilities
[Date]____
[BellSouth's Name]
[BellSouth's Address]
RE: Site Agreement from BellSouth to [USER] at
_______,_________
Dear _________:
Pursuant to Section _____ of the above-referenced _____, this letter
serves to advise you that [USER] commenced the installation of its Facilities on
the Leased Space on the above-referenced property on _______________, 19__,
which date shall be the Commencement Date, as defined in the above referenced
Site Agreement.
Sincerely,
[User]
BellSouth's Site Name: _____ User's Site Name: _____
Site Number: _____ Site Number: _____
12
<PAGE>
SCHEDULE "II" TO MASTER SITE AGREEMENT
--------------------------------------
ENTRY AND TESTING AGREEMENT
This Entry and Testing Agreement ("Agreement") is made as of the _____
day of _______, 1999, between BELLSOUTH MOBILITY INC, a Georgia corporation
("BellSouth"), and TRITEL COMMUNICATIONS, INC., a Delaware corporation
("Entrant"), concerning the following described property [leased] [owned] by
BellSouth ("Property"): [insert site address]
- --------------------------------------------------------------------------------
BellSouth currently owns and operates a communications tower (the
"Tower") on the Property. BellSouth and Entrant are in the process of
negotiating an agreement whereby Entrant will lease, sublease or license certain
portions of the Tower and the Property. In order for Entrant to determine the
viability and feasibility of the Property as a tower or antenna site, Entrant
desires to enter upon and inspect the Property and/or to locate temporarily
communications equipment on the Property to conduct short term radio propagation
tests; and
As an accommodation to Entrant, BellSouth is willing to grant
permission to Entrant, its employees, agents or contractors to enter upon the
Property solely to conduct such investigations, under the terms and conditions
stated herein. In consideration of the mutual covenants and agreements contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows.
1. BellSouth grants to Entrant, its contractors, agents, employees and
assigns a right of entry and license to enter upon the Property solely to
conduct and perform boundary surveys, Phase I environmental studies, and radio
propagation tests (the "Permitted Activities"). Entrant's entry rights are
specifically limited to the Permitted Activities and to the Property and shall
not include any other activities, including without limitation any construction
activities, on the Property or any other portion of the property surrounding the
Property. Entrant shall be responsible for any and all costs related to the
Permitted Activities, including any temporary installation, operation and
removal of equipment on the Property and the Tower. Any entry or activity on the
Tower by Entrant shall be coordinated in advance with BellSouth and shall be
subject to BellSouth's approval and supervision, at Entrant's cost.
2. Entrant agrees to comply with all local, state and federal laws,
rules and ordinances applicable to the Permitted Activities. Entrant further
agrees to exercise due care in the performance of all Permitted Activities on
the Property, and not to interfere with BellSouth's or any other party's
activities on the Property. Entrant shall promptly repair, at its cost, any
damage to the Property, the Tower, or any other property caused by the acts or
omissions of Entrant, its agents, employees, contractors or subcontractors.
3. Entrant shall indemnify and hold harmless BellSouth, its employees,
agents or contractors, from all claims, actions, damages, liability and expense,
including without limitation attorneys' fees and costs, in connection with
personal injury or property damage arising out of the acts or omissions of
Entrant, its employees, agents or contractors, including without limitation the
Permitted Activities, upon the Property, the Tower, or any other portion of the
property surrounding the Property. This indemnification shall survive the
expiration or termination of this Agreement.
BellSouth's Site: _____
<PAGE>
4. Entrant shall maintain, and shall have its contractors and
subcontractors maintain, adequate insurance coverage, as determined by
BellSouth. At BellSouth's request, Entrant agrees to provide certificates of
insurance evidencing such insurance coverage of Entrant, its contractors, or
subcontractors.
5. The term of this Agreement shall be from the Execution Date to the
earlier of (i) forty-five (45) days from the Execution Date or (ii) until
BellSouth and Entrant enter into a lease, sublease or license with respect to
the Property; provided, however, that BellSouth may immediately terminate this
Agreement in the event Entrant breaches any term of this Agreement.
6. In the event this Agreement expires or is terminated without the
existence of a fully executed lease, sublease or license, Entrant will
immediately remove any and all of its equipment from the Property -arid restore
the Property to its condition existing immediately prior to such entry.
7. This Agreement constitutes the entire understanding between the
parties with respect to the activities contemplated by this Agreement. All prior
agreements or understandings, whether oral or written, are superseded. This
Agreement may be amended only by a written document duly executed by the
parties. This Agreement is governed by the laws of the State wherein the
Property is located.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals as of the date first above written. BELLSOUTH:
BELLSOUTH MOBILITY INC,
a Georgia corporation
By:
----------------------------------------
Print Name:
-------------------------------
Title:
-------------------------------------
ENTRANT:
TRITEL COMMUNICATIONS, INC.
a Delaware corporation
By:
----------------------------------------
Print Name:
-------------------------------
Title:
-------------------------------------
BellSouth's Site: _____
2
<PAGE>
MASTER SITE AGREEMENT
THIS MASTER SITE AGREEMENT (hereinafter referred to as this "MSA"), is
made as of the 10th day of March, 1999 (the "MSA Commencement Date"), by and
between BELLSOUTH CAROLINAS PCS, L.P., a Delaware limited partnership, BELLSOUTH
PERSONAL COMMUNICATIONS, INC., a Delaware corporation, each doing business as
BELLSOUTH MOBILITY PCS, and their respective BellSouth Affiliates, successors
and assigns (hereinafter collectively referred to as "BellSouth") and TRITEL
COMMUNICATIONS, INC., a Delaware corporation, and its successors and permitted
assigns (hereinafter referred to as the "User").
WHEREAS, BellSouth is the owner of communications towers located on
property either owned, leased or licensed by BellSouth (individually, a "Tower",
collectively, "Towers");
WHEREAS, User is a provider of certain wireless digital communications
services in the United States as such services are more particularly defined in
Section 3 hereinbelow ("User's Wireless Business");
WHEREAS, BellSouth and User desire to enter into this MSA which will
establish the general terms and conditions whereby User will lease, sublease,
license or sublicense, as applicable, from BellSouth space on one or more of
BellSouth's Towers and ground space on BellSouth's land (real property owned,
leased or licensed by BellSouth with respect to each Site (as defined below)
hereinafter the "Property") for the construction of an equipment shelter or
cabinet(s) for the placement of User's communications equipment for operation of
User's Wireless Business;
WHEREAS, BellSouth and User will enter into a Site Agreement in form
and substance substantially similar to Schedule "I" attached hereto and by
reference made a part hereof (individually, a "Site Agreement"; collectively,
"Site Agreements") which will establish the terms for use of a specific Site.
NOW, THEREFORE, for valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereby agree as follows:
1. MSA. This MSA sets forth the general terms and conditions upon which
all Sites, as defined below, shall be leased, subleased, licensed or sublicensed
to User. It is understood that this MSA is limited to Sites in the 232 BTA
(Knoxville area). From time to time during the term hereof, User and BellSouth
may execute Site Agreements in the form attached hereto as Schedule "I" and by
reference made a part hereof. Each Site Agreement shall identify a particular
Site made subject to this MSA and more fully set forth specific terms particular
to that Site. In the event of a conflict or inconsistency between the terms of
this MSA and a Site Agreement, the terms of the Site Agreement shall govern and
control for that Site.
2. Demise. Subject to the following terms and conditions, BellSouth
hereby agrees to lease, sublease, license or sublicense, as applicable, to User
certain space on one or more of BellSouth's Towers together with sufficient
space on the Property with easements for access and
<PAGE>
utilities. User's use of the Tower and Property shall be limited to the Tower
and Property, together with easements for access and utilities described and
depicted in Exhibit "A" to each Site Agreement (the Property, the space upon
BellSouth's Tower utilized by User and any easements providing access and
utilities to the Property are sometimes referred to herein individually as a
"Site" or collectively as "Sites"). With respect to any Sites which User may
desire to lease, sublease, license or sublicense, as applicable, User shall give
written notice to BellSouth at the address provided in Section 27 hereof of such
desire. After receipt of written notice from User of such desire to add a Site
to this MSA, BellSouth shall provide User with a Site Application to be
completed by User. Upon receipt by BellSouth of the completed Site Application,
together with any application fee required by BellSouth, BellSouth shall
evaluate the feasibility of utilization of each Site requested by User to be
added to this MSA. Except in extraordinary circumstances, as determined by
BellSouth in its discretion, the application fee generally will not exceed
[CONFIDENTIAL TREATMENT REQUESTED] per Site. The Site Application fee, once
received by BellSouth shall in all instances under this MSA be applied toward
the first base rent payments due under the applicable Site Agreement. BellSouth
will use reasonable best efforts to respond promptly to initial requests for a
Site Application and to Site Applications submitted by User. BellSouth may
decline additional Sites for any reason whatsoever. If BellSouth desires to
lease or to license any Site to User, BellSouth shall deliver to User three (3)
completed, unexecuted counterparts of a Site Agreement pertaining to such Site.
User shall have a period of fifteen (15) business days from User's receipt of
such Site Agreement to execute and return same to BellSouth. If User fails to
return all counterparts of the Site Agreement, properly executed and unmodified
by User, together with the Site Cost Reimbursement Amount (as defined herein)
set forth in the Site Agreement, within such fifteen (15) day period such Site
Agreement shall immediately be deemed null and void. Upon receipt of the
properly executed, unmodified counterparts of the Site Agreement, BellSouth will
execute same and return a fully executed original of the Site Agreement to User,
whereupon the Site Agreement shall be deemed to be added to this MSA.
3. Permitted Use. Subject to the terms of this MSA and the Site
Agreement for each respective Site, User shall be permitted the non-exclusive
right to install, maintain, operate, service, and subject to BellSouth's prior
written approval, which approval shall not be unreasonably withheld, conditioned
or delayed, modify and replace its communication equipment as more particularly
described on the User's Co-Location Application attached as Exhibit "C" to each
Site Agreement (the "Facilities") at such Site, including without limitation,
BellSouth's Tower, which Facilities shall be utilized for the transmission and
reception of wireless voice and data communications using digital communications
services technology. These shall be the only permissible uses under this MSA and
each Site Agreement, and User specifically acknowledges that microwave
facilities are not permitted uses.
4. Master Lease/License. A Site Agreement shall be subject and
subordinate to all of the terms and conditions of the agreement pursuant to
which BellSouth has rights in and to the Property (the "Master Lease/License"),
which are incorporated in the Site Agreement by reference and a copy of which
has been or will be delivered to User and attached to the Site Agreement as
Exhibit "A-1", subject to redaction of the financial terms set forth therein or
as otherwise required by confidentiality and non-disclosure provisions contained
therein. If
2
<PAGE>
applicable, BellSouth agrees to provide User with copies of all amendments to,
extensions of and renewal notices given pursuant to the Master Lease/License,
subject to redaction of the financial terms set forth therein or as otherwise
required by confidentiality and non-disclosure provisions contained therein.
BellSouth represents to User that as of the Execution Date of a Site Agreement
neither BellSouth nor BellSouth's Landlord ("Master Landlord") is in default
under the Master Lease/License.
5. Conditions Precedent.
(a) Conditions Precedent Based On Consent of Master Landlord. If
BellSouth is party to a Master Lease/License for a Site, the Site Agreement for
such Site shall be contingent upon BellSouth and/or User, as applicable, being
able to satisfy one (1) of the following conditions precedent within sixty (60)
days of the Execution Date of the Site Agreement, if required by the Master
Lease/License, in BellSouth's sole reasonable opinion.
(i) Notice to Master Landlord of [Sublease/License]. If notice to
the Master Landlord of the sublease, license or sublicense, is required by the
Master Lease/License, in BellSouth's sole reasonable opinion, BellSouth shall so
notify the Master Landlord and shall deliver, upon User's request, evidence of
such notification; or
(ii) Consent of Master Landlord to [Sublease/License] of Tower
Space and Ground Space. BellSouth or User, at BellSouth's option, will obtain
the written consent of Master Landlord to BellSouth's [sublease, license,
sublicense] to User of Tower Space and Ground Space (as such terms are defined
in the Site Agreement), if required by the Master Lease/License, in BellSouth's
sole reasonable opinion;
(iii) Consent of Master Landlord to [Sublease/License] of Tower
Space and Master Landlord Leasing Ground Space to User. BellSouth or User, at
BellSouth's option, will obtain (aa) the written consent of Master Landlord to
BellSouth's [sublease, license, sublicense] to User of Tower Space, if required
by the Master Lease/License, in BellSouth's sole reasonable opinion, and (bb) a
written ground lease from the Master Landlord providing for the [lease/license]
of ground space from the Master Landlord to User for User's Ground Facilities
(as defined in the Site Agreement), upon terms and conditions acceptable to User
in User's sole and absolute discretion.
BellSouth and User shall cooperate with one another in efforts to obtain the
consent of the Master Landlord pursuant to Sections 5(a)(ii) and 5(a)(iii)
hereof.
If BellSouth or User is able to obtain the written consent of the Master
Landlord to BellSouth's sublease, license or sublicense to User of Tower Space
and Ground Space pursuant to Section 5(a)(ii), (aa) BellSouth or User shall
deliver to the other a copy of such written consent, (bb) the condition
precedent to BellSouth leasing Tower Space and Ground Space to User shall be
deemed satisfied, and (cc) the term "Leased Space" as used in the Site Agreement
shall mean Tower Space and Ground Space and the term "Facilities" as used in the
Site Agreement shall mean the Tower Facilities and Ground Facilities.
3
<PAGE>
If BellSouth or User is able to obtain the written consent of Master Landlord to
BellSouth's lease to User of Tower Space (but not to BellSouth's sublease,
license or sublicense to User of the Ground Space) and BellSouth or User is able
to obtain a ground lease from the Master Landlord pursuant to Section 5(a)(iii)
hereof, (aa) BellSouth or User shall deliver to the other a copy of such written
consent, (bb) User shall deliver to BellSouth a copy of the certification as to
the ground lease or license from the Master Landlord to User in substantially
the form of Exhibit D attached to the Site Agreement, (cc) the condition
precedent set forth in Section 5(a)(ii) hereof shall not have been satisfied but
the condition precedent set forth in Section 5(a)(iii) hereof shall be deemed
satisfied, and (dd) the term "Leased Space" as used in the Site Agreement shall
mean Tower Space only and the term "Facilities" as used in the Site Agreement
shall mean Tower Facilities only. If BellSouth elects to obtain the ground lease
described in Section 5(a)(iii), then such ground lease shall be subject to
User's prior approval and User shall be responsible for the payment of
BellSouth's reasonable, documented costs in obtaining the ground lease and of
all rents and other sums due under the ground lease, as and when such sums are
due and payable.
If BellSouth or User is unable to satisfy the condition set forth in Section
5(a)(ii) or BellSouth or User is unable to satisfy the conditions set forth in
Section 5(a)(iii) within sixty (60) days of the Execution Date of the Site
Agreement, the Site Agreement shall automatically terminate and become null and
void, unless extended in writing by mutual consent of BellSouth and User. Upon
such termination, neither BellSouth nor User shall have any obligations to the
other except for any indemnity obligations, including without limitation,
environmental indemnity and tax obligations, arising prior to the date of
termination.
(b) Conditions Precedent to Site Commencement Date. Each Site
Agreement is further contingent upon User being able to satisfy the following
conditions prior to the Site Commencement Date (and all such conditions shall be
deemed satisfied upon the Site Commencement Date), as defined in the Site
Agreement:
(i) Approvals. User obtaining, after the Execution Date of the
Site Agreement, all certificates, permits, licenses and other approvals that may
be required by any federal, state or local authorities (the "Approvals") to
permit User's intended use of the Leased Space. BellSouth shall cooperate, at
User's cost, with User in its effort to obtain such Approvals. In the event that
User notifies BellSouth that (aa) any application for an Approval is rejected,
(bb) an Approval is canceled, expires, lapses, or is otherwise withdrawn or
terminated for any reason whatsoever prior to installation of the Facilities by
User, or (cc) any application for Approval is not likely to be obtained or
approved, as determined in User's sole discretion, the Approvals shall be deemed
to not have been obtained by User.
(ii) Radio Frequency Propagation Test. User determining, in
User's sole discretion, that the results of any radio frequency propagation
tests are satisfactory, such that User is able to use the Leased Space for
User's intended use.
(iii) Utilities and Access. User determining, in User's sole,
reasonable discretion, that (aa) telephone and electric utilities are available
at the Leased Space or Tower of sufficient capacity to accommodate User's
Facilities and (bb) ingress and egress is available to and from the Leased Space
and to and from a publicly dedicated road.
4
<PAGE>
(iv) Tower Capacity. User determining in User's sole, reasonable
discretion based on a Tower analysis satisfying the requirements of Section
10(ii) hereof that the Tower is of sufficient capacity to accommodate the load
requirements of User's Facilities.
(v) Title. User determining in User's sole discretion that the
status of title as to the Leased Space and easements granted herein are
acceptable to User.
(vi) Hazardous Substances. User determining in User's sole
discretion that the Leased Space and Property are free of all Hazardous
Substances, as defined in Section 15(b) hereof.
If any one (1) of the conditions set forth above will not be satisfied
as of the Site Commencement Date of the Site Agreement, User shall have the
right to terminate the Site Agreement by giving BellSouth written notice
thereof. If User elects to terminate the Site Agreement, the Site Agreement
shall terminate as of the date BellSouth receives such notice from User and
neither BellSouth nor User shall have any further obligation under this Site
Agreement except for any indemnity obligations and User's obligation to remove
its Facilities from the Property.
(c) Site Cost Reimbursement Amount. User shall pay a one-time site
cost reimbursement amount ("Site Cost Reimbursement Amount") to BellSouth, paid
by User to BellSouth not later than the execution and delivery of the Site
Agreement. Except in certain circumstances, as set out herein, the Site Cost
Reimbursement Amount generally will not exceed [CONFIDENTIAL TREATMENT
REQUESTED] per Site. Notwithstanding the foregoing, in the event that User has
not commenced (for purposes of this paragraph "commenced" meaning the Site
Commencement Date has occurred and the first annual installment or rent has been
paid) at least twenty (20) Site Agreements on or before August 2, 1999, then
User shall pay to BellSouth a Site Cost Reimbursement amount of [CONFIDENTIAL
TREATMENT REQUESTED] for (i) each Site Agreement commenced as of August 2, 1999
and (ii) each Site Agreement commenced after August 2, 1999 until User has
commenced twenty (20) Site Agreements. The Site Cost Reimbursement Amount
payable pursuant to provision (i) in the preceding sentence shall be paid
immediately upon request of BellSouth, and the Site Cost Reimbursement Amount
payable pursuant to provision (ii) in the preceding sentence shall be payable in
the manner otherwise provided herein. BellSouth and User acknowledge and agree
that the Site Cost Reimbursement Amount reflects an equitable sharing of the
capital costs incurred by BellSouth with respect to the construction of the
Tower and the ability of User to locate its Facilities thereon. Consequently,
the Site Cost Reimbursement Amount is independent of and in addition to, and not
in substitution or reduction of, all or any part of the Base Rent specified in
such Site Agreement, or the fair market value of the rent applicable to such
Site. In the event that the Site Cost Reimbursement Amount is paid by User but
the Site Agreement does not reach the Site Commencement Date because of a
failure of a condition precedent described in Section 5 or such other reason
described herein, through no fault of User, BellSouth shall refund the Site Cost
Reimbursement Amount.
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6. Term.
(a) MSA Term. The MSA term shall begin on the MSA Commencement Date
and shall continue until midnight of the fifth (5th) anniversary of the MSA
Commencement Date, unless terminated earlier in accordance with the terms hereof
(the "Term"). The MSA shall renew automatically for one (1) additional period of
five (5) years unless either party sends notice to the, other of its election
not to renew the MSA. Any such extension term shall be part of the "Term" as
described herein.
(b) Site Agreement Term and Renewal. The initial term of each Site
Agreement and any renewal terms are provided in each Site Agreement.
Notwithstanding the expiration of this MSA, the terms and conditions of this MSA
shall continue to apply to each Site Agreement until the Site Agreement Term,
including any renewal terms expires or terminates.
7. Rent.
(a) Base Rent. During the Initial Term of any Site Agreement, User
shall pay annual rent in equal annual installments in the amount set forth in
each Site Agreement, in advance on or before the Site Commencement Date and then
on each anniversary date of the Site Commencement Date. Except in certain
unusual circumstances, the annual base rent for the applicable Sites shall be
(i) [CONFIDENTIAL TREATMENT REQUESTED] annually for the first fifteen (15) Sites
subject to this MSA; (ii) [CONFIDENTIAL TREATMENT REQUESTED] annually for the
sixteenth (16th) through thirtieth (30th) Sites (inclusive) subject to this MSA;
(iii) [CONFIDENTIAL TREATMENT REQUESTED] annually for each Site after the
thirtieth (30th) Site subject to this MSA. Rent shall be payable by check, and
checks shall be made payable to the order of the BellSouth entity specified in
the applicable Site Agreement and shall be mailed to the address designated in
the applicable Site Agreement.
(b) Taxes.
(i) Property Taxes. User shall be responsible for the reporting
and payment when due of any tax directly related to User's ownership or
operation of the Facilities and such reporting and payment shall be made
directly to the appropriate tax authorities.
(ii) Sales Taxes. BellSouth shall be responsible for billing,
collecting, reporting, and remitting sales taxes directly related to rent
payments received pursuant to this MSA and any Site Agreement, if any. User
shall be responsible for reimbursing BellSouth for all sales taxes billed
related to rent payments received pursuant to this MSA and any Site Agreement,
such reimbursement to be due and payable within thirty (30) days of BellSouth's
delivery to User of a written invoice and copies of paid tax receipts specifying
the payments made by BellSouth.
(c) Site Agreement Renewal Terms. If and when one or more of the
Site Agreement Renewal Terms (as defined in the applicable Site Agreement) are
exercised by the User, upon the commencement of each Renewal Term, the annual
rent for each Renewal Term
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shall increase by the percent set forth in such Site Agreement over the annual
rent for the immediately preceding term.
(d) Additional Facilities. If, after the installation of the
Facilities, User, with the prior written approval of BellSouth as required by
Section 10 hereof, modifies the Facilities by adding additional equipment to the
Tower which materially increases the size or structural or windload on the Tower
or is in a different location on the Tower than the Facilities such that
additional rent is payable pursuant to Section 10(vi) hereof, BellSouth and User
acknowledge that the rent for the Site shall be increased by an amount set forth
in the Site Agreement for each piece of additional equipment. If the Site
Agreement is silent on rent for additional equipment, BellSouth and User
acknowledge that the rent for the Site shall be increased by a mutually agreed
upon amount. In the event BellSouth and User cannot agree upon the increased
rent, the increase in rent shall be the fair market rental value for the
additional equipment placed on the Tower, which shall be determined by BellSouth
and User each designating, within thirty (30) days of the dispute, an
independent MAI appraiser with demonstrated experience appraising similar
property and telecommunication uses and shall be the average of the two
appraisals prepared by the appraisers. Each party shall pay the fees of its
appraiser.
8. BellSouth to Locate on User's Towers. As additional consideration
for BellSouth's agreement to lease, sublease, license or sublicense, as
applicable, the Site to User, User hereby agrees to lease, sublease, license or
sublicense, as applicable, to BellSouth space on User's tower and ground space
adjacent to such tower for the construction and placement of an equipment
shelter or cabinet in the same geographic markets that User is leasing,
subleasing, licensing, and sublicensing from BellSouth (such tower and ground
space collectively referred to as a "Reciprocal Site") and shall be evidenced by
a site agreement and master site agreement, in substantially the same form as
the Site Agreement for BellSouth's Tower and Property and this MSA. In the event
User refuses to lease, sublease, license or sublicense, as applicable, a
Reciprocal Site to BellSouth, for reasons unrelated to User's capacity, zoning,
permits, RF interference (based upon standard and accepted engineering
principles) licenses and other required approvals, or environmental issues with
respect to such Reciprocal Site, BellSouth may elect to terminate any existing
Site Agreement with respect to a Site in the same geographic market as the
proposed Reciprocal Site refused by User in accordance with the provisions set
forth in Section 20(b) hereof.
9. Relocation of Facilities.
(a) With respect to any Site, BellSouth reserves the right to change
the location of User's Facilities at the Site upon sixty (60) days written
notice to User to accommodate the communications equipment (including a change
in frequency) of BellSouth. User shall relocate or remove the Facilities, at
BellSouth's expense, within sixty (60) days of receipt of any such notice by
User (provided, however, that if User has diligently pursued efforts to change
the location of User's Facilities on the Tower during such sixty (60) days but
has been unable to complete the same, User shall have an additional thirty (30)
days to complete the work); provided, however, if the relocated space is
unacceptable to User, in User's reasonable discretion, User shall have the right
to terminate the Site Agreement upon written notice to
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BellSouth, which termination shall be effective the earlier of (i) the date set
forth in User's termination notice, or (ii) two hundred forty (240) days from
User's receipt of BellSouth's relocation notice. Upon such termination, the
parties to the Site Agreement shall be released from all duties, obligations,
liabilities and responsibilities under the Site Agreement except for any
indemnity obligations, including without limitation, environmental indemnity and
tax obligations, and User's obligation to remove the Facilities from the
Property. In the event BellSouth needs additional capacity at a Site for its
equipment and there is no space on the Tower in which to relocate User's
Facilities, upon two hundred and forty (240) days notice, BellSouth may
terminate a Site Agreement, and thereafter the Site Agreement shall be of no
further force and effect, and except for any indemnity obligations, including
without limitation, environmental indemnity and tax obligations, and User's
obligation to remove the Facilities from the Property, and BellSouth's
obligation to reimburse User for the book value (to be determined at the date of
termination of the Site Agreement) of any structural enhancements made by User
to such Site, the parties hereto shall be released from all duties, obligations,
liabilities and responsibilities under the Site Agreement.
(b) In the event of a termination under this Section 9 within the
Initial Term of the terminated Site Agreement, BellSouth shall also reimburse
User a pro rata portion of the Site Cost Reimbursement Amount applicable to such
Site Agreement based on a five-year proration of the full Site Cost
Reimbursement Amount. The amount reimbursed by BellSouth shall be equal to the
pro rata portion of the Site Cost Reimbursement Amount from the date of
termination to the expiration of the Initial Term. BellSouth shall deliver such
reimbursement to User within thirty (30) days of the termination date of the
Site Agreement.
10. Installation, Modification and Relocation.
During the term of the Site Agreement, including any renewal terms,
User shall have the right at User's expense, to install, and with BellSouth's
prior written approval, which approval shall not be unreasonably withheld,
delayed or denied, relocate and modify the Facilities on the Site. BellSouth
agrees that if User is simply modifying or replacing its Facilities at the Site,
and such replacement equipment shall not increase the wind load or structural
strain on the Tower, increase User's space at the Site, cause interference, or
change the frequency, BellSouth shall not condition approval on an increase in
base rent. User's installation, maintenance, relocation, modification, and
removal shall be in compliance with the following requirements:
(i) Facilities. With regard to a modification or relocation of
the Facilities, User shall provide BellSouth with an updated Exhibit "C" listing
all communications equipment to be located on the Site.
(ii) Tower Analysis. User shall submit to BellSouth a completed
Tower analysis, prepared by licensed structural engineer approved by BellSouth
(a) describing any and all installations, modifications, or relocations, as the
case may be, of the Facilities on the Tower, (b) including information
demonstrating continued compliance with the Tower manufacturer's warranty
requirements, if delivered to User, current EIA/TIA standards, other legal
requirements for the Tower, and any other information reasonably requested by
BellSouth and (c) demonstrating that the installation, modification, or
relocation, as the case may be, does
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not exceed the load capacity of the Tower. The Tower analysis shall be based on
all Facilities listed on Exhibit "C" regardless of whether User does not intend
to initially install all Tower Facilities. If the Tower is a monopole, User, at
User's cost, shall be responsible for the installation of any platforms and
cutting of portals required to install User's Tower Facilities; provided,
however, User shall not cut any portal in the Tower if the cutting of such
portal would adversely affect the manufacturer's warranty on the Tower, if any,
or the integrity of the Tower. If the Tower is structurally inadequate to
accommodate User's proposed installation, modification or relocation, User,
subject to BellSouth's consent, which consent shall not be unreasonably withheld
or delayed, shall have the right to structurally enhance the Tower to
accommodate User's proposed installation, modification or relocation of User's
Tower Facilities, provided User complies with the following additional
requirements:
(1) Plans and Specifications for Structural Enhancement. User
shall submit to BellSouth all plans and specifications for structurally
enhancing the Tower, the proposed architect, engineer and/or contractor involved
in the structural enhancement, and a structural analysis demonstrating that the
Tower, as structurally enhanced, will accommodate all equipment located on the
Tower at the time of the structural enhancement and the proposed installation,
modification, or relocation of User's Tower Facilities, as the case may be, all
of which shall be approved by BellSouth, which approval shall not be
unreasonably withheld, conditioned or delayed. If no response is received from
BellSouth within forty-five (45) days of submission, the same shall be deemed
approved by BellSouth upon the expiration of said forty-five (45) days.
(2) Payment of Costs. User shall pay all costs incurred in
structurally enhancing the Tower including, without limitation, all material
costs, all architectural, engineering and contracting fees, all certificate,
permit, license and approval fees, and all actual, reasonable costs incurred by
BellSouth to review the plans and specifications and structural analysis.
(3) Ownership of Structural Enhancements. Upon completion of
and payment by User for the structural enhancements, such structural
enhancements shall become the property of BellSouth, and upon request, User
shall promptly provide to BellSouth any bills of sale or documentation
evidencing BellSouth's ownership of said enhancements.
(iii) Insurance. User shall provide BellSouth with insurance
certificates for each Site evidencing that the insurance required by Section 17
of this MSA is in full force and effect including, without limitation, worker's
compensation insurance and the insurance required of User's contractors and
subcontractors.
(iv) Compliance with Laws. User's installation, modification or
replacement of the Facilities on the Site and structural enhancement of the
Tower, if any, shall be in compliance with all applicable laws, regulations and
requirements of any federal, state or local authority, including without
limitation, OSHA work practice standards for performing said work. BellSouth, at
no cost to BellSouth, agrees to cooperate with User to obtain such compliance.
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(v) Availability of Space. With regard to the relocation of the
Facilities, space on the Tower must be available at the levels, and/or space on
the ground must be available at the locations, to which User desires to relocate
and, if consent of the Master Landlord is required to relocate the Ground
Facilities, then such consent must be obtained prior to relocation.
(vi) Additional Rent. User shall pay BellSouth additional rent,
in an amount determined in accordance with the provisions of Section 7(d)
hereof.
(vii) Plans and Specifications, Contractor. User shall submit to
BellSouth (i) the plans and specifications, a detailed site plan and any other
construction documents setting forth the proposed construction, installation and
other work to be performed on the Site and Tower and (ii) the names of the
proposed contractors and subcontractors performing any such construction,
installation or other work, all of which shall be approved by BellSouth, such
approval not to be unreasonably withheld, conditioned or delayed. If no response
is received from BellSouth within forty-five (45) days, the same shall be deemed
approved. Following the completion of any installation, modification or
relocation, User shall provide to BellSouth, at User's expense, updated,
as-built drawings, initialed by User, documenting all installed Facilities on
the Site and conforming to the plans and specifications, site plan, and any
other construction documents approved by BellSouth. The as-built drawings shall
include an as-built survey locating the Site to a monument or the Tower (the
"As-Built Survey"). Upon receipt and provided the As-Built Survey conforms to
the plans and specifications, site plan and any other construction documents
approved by BellSouth, BellSouth shall initial the As-Built Survey.
(viii) Liens. User shall keep the Site, Tower, Property and
Facilities free from any liens arising from any work performed, materials
furnished or obligations incurred by or at the request of User in accordance
with the provisions of Section 16(c) hereof, with the sole exception of any
liens with respect to equipment financing obtained by User for such Facilities
provided that such equipment financing liens do not encumber, attach to or
affect, in any manner, BellSouth's or the Master Landlord's right, title or
interest in and to all or any part of the Towers or the Property.
(ix) Pre-construction Meeting, Other Construction Meetings. Prior
to commencing any installation and/or construction, a duly authorized
representative of User shall meet with a duly authorized representative of
BellSouth at the Tower site to mutually approve the construction methods and
procedures, such approval not to be unreasonably withheld, conditioned or
delayed by either party. BellSouth and User agree to cooperate with one another
in scheduling such pre-construction meeting. In addition, BellSouth and User
will meet during and upon substantial completion of construction to mutually
approve grounding and punch-list items, respectively, and BellSouth and User
agree to cooperate with one another in scheduling such meetings.
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11. Ingress and Egress.
(a) Upon the Execution Date of a Site Agreement, BellSouth hereby
grants to User, as well as User's contractors, subcontractors, agents,
affiliates, or employees, subject to the limitations set forth herein or in the
applicable Site Agreement, (i) the non-exclusive right to use the Tower, at
locations mutually agreed upon by User and BellSouth, for the term hereof for
ingress, egress, and access to the Tower Space adequate to service the Tower
Facilities and (ii) if the term "Leased Space" as used in the Site Agreement
includes Ground Space, a non-exclusive easement for the term hereof, for
ingress, egress, and access to the Leased Space, on a twenty-four (24) hours per
day, seven (7) days per week basis, across (aa) the Property in locations
mutually agreed upon by BellSouth and User and (bb) if the Property is leased or
licensed by BellSouth, across the property of the Master Landlord to the extent
and in the locations of the Master Landlord-granted ingress, egress and access
easements to BellSouth in the Master Lease/License. User or User's qualified,
insured contractors under User's direct supervision shall have access to the
Tower upon twenty-four (24) hours notice to BellSouth, which access shall be
subject to the accompaniment, at BellSouth's option, of BellSouth's field
personnel to provide an escort and/or supervision, and User shall reimburse
BellSouth for BellSouth's actual, reasonable costs related thereto within thirty
(30) days of BellSouth's delivery to User of a written invoice for such costs.
The foregoing notwithstanding, User shall have access to the Leased Space and
User's Facilities immediately and without notice in the event of an emergency,
and User shall notify BellSouth as soon as practicable of User's access during
such emergency. Other security measures required for a particular Site may be
set forth in the Site Agreement.
(b) Prior to the Execution Date of a Site Agreement, User may have
access to a Property and the Tower situated thereon only upon the execution and
delivery by BellSouth and User of an entry and testing agreement in form and
substance substantially similar to Schedule "II" attached hereto and by
reference made a part hereof (an "Entry and Testing Agreement") which will
establish the terms under which User may access the Property and Tower for the
"Permitted Activities," as defined in the applicable Entry and Testing
Agreement.
12. Utilities, Cable Runs. Upon execution of a Site Agreement,
BellSouth hereby grants to User the non-exclusive right to use the Tower for the
term hereof to place any cable runs on the Tower, at locations mutually agreed
upon in writing by BellSouth and User, in order to service or operate the
Facilities, subject to BellSouth's prior written approval of the design and
installation method and procedures, such approval not to be unreasonably
withheld, conditioned or delayed. If no response is received from BellSouth
within forty-five (45) days, the same shall be deemed approved. If the term
"Leased Space" as used in the Site Agreement includes the Ground Space, upon
execution of the Site Agreement, BellSouth hereby grants to User a non-exclusive
easement for the term hereof to place any utilities or cable runs on or bring
utilities across the Property and if the Property is leased or licensed by
BellSouth, the property of the Master Landlord to the extent and in the
locations the Master Landlord granted utility and cable run easements. User
shall pay the cost of all utility service necessary to install, maintain and
operate the Facilities. Where practicable, User shall install a separate meter
for User's use. If installation of a meter is not practicable, the parties shall
prorate such charges based on approximate actual use within thirty (30) days of
receipt by BellSouth of any invoice from an
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applicable utility company. User shall obtain and pay the cost of telephone
connections. Installation of telephone service shall be in compliance with the
procedures for installation and maintenance of Facilities set forth herein.
13. User's Covenants. User covenants that from the Execution Date of a
Site Agreement, that the Facilities, and all installation, operation,
modification, relocation and maintenance associated therewith, will:
(a) In no way damage BellSouth's Tower, Property, any other
structure or accessories thereto, any Prior User's, as defined below, equipment
or facilities or any Subsequent User's, as defined below, equipment or
facilities, normal wear and tear excepted. If damage, other than normal wear and
tear, occurs and such damage is caused by User, or User's employees, agents,
contractors, or subcontractors, then User shall be liable for repair or
reimbursement of repair for said damages;
(b) Not interfere with BellSouth's operation on the Tower or the
operations of any Prior User (as defined herein). For purposes hereof, a "Prior
User" shall mean any other user of the Tower that has submitted to BellSouth a
site application in good faith prior to the submission of User's Site
Application for such Tower, which site application serves as the basis for a
written agreement for the use of the Tower by such user. In the event BellSouth
determines, in its sole discretion based on standard and accepted engineering
practices, that User's Facilities are interfering with the operation of
BellSouth's or a Prior User's equipment, authorized frequency spectrum or signal
strength, upon the request of User, BellSouth shall provide User with a copy of
the report. User shall, within forty-eight (48) hours of notification, take all
steps necessary to eliminate the interference, with the exception of ceasing
User's operations. If User cannot eliminate or resolve such interference within
the forty-eight (48) hour period, BellSouth shall have the right to require that
User turn off its Facilities and only turn on its Facilities during off-peak
hours specified by BellSouth in order to test whether such interference
continues or it has been satisfactorily eliminated. In the event that User is
unable to resolve or eliminate, to the satisfaction of BellSouth, such
interference within thirty (30) days from the initial notification of such
interference, User will immediately remove or cease operations of the
objectionable Facilities and BellSouth shall have the right to terminate the
applicable Site Agreement. User shall not on any Site interfere with BellSouth's
use of the Site, the provision of services to BellSouth's customers, or the use
of the Site by other Prior Users. Such interference shall be deemed a material
breach of the Site Agreement.
(c) Not interfere with the maintenance of BellSouth's Tower and the
Tower lighting system;
(d) Keep the Facilities in a state of repair acceptable to BellSouth
in BellSouth's reasonable discretion;
(e) Identify the Facilities with metal tags fastened securely to its
bracket on the Tower and to each transmission line;
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(f) Comply with all applicable rules and regulations of the Federal
Communications Commission ("FCC") and all federal, state and local laws
governing use of the Facilities on the Site;
(g) Comply with all applicable laws and ordinances and promptly
discharge or bond off any lien for labor or material within thirty (30) days of
filing same;
(h) Within thirty (30) days after the expiration or termination of a
Site Agreement, remove all Facilities from the Property and restore the Tower
and the Site to its original condition, normal wear and tear excepted. In the
event User has not removed the Facilities at the time of expiration or
termination of the Site Agreement, User shall pay rent at the then existing
monthly rate or on the existing monthly pro-rata basis if based upon a longer
payment term until such time as the removal of the Facilities is completed. In
the event User does not remove its Facilities within thirty (30) days after the
expiration or termination of the Site Agreement, BellSouth shall have the right
to remove and store the Facilities, at User's sole expense, and User shall
reimburse BellSouth for such expenses upon demand. If BellSouth removes the
Facilities, BellSouth shall not be responsible for any damage to the Facilities
during the removal and storage thereof unless caused by the gross negligence or
willful misconduct of BellSouth. Notwithstanding the foregoing, except as may be
required under any lease or license agreement pursuant to which BellSouth has
rights in and to the Property, User shall not be required to remove any
utilities or concrete pads upon which User's equipment shelters or cabinets may
have been located upon the expiration or termination of a Site Agreement;
(i) Upon the completion of the initial installation of the
Facilities on the Site, within thirty (30) days of the completion of the
relocation of the Facilities or installation of additional Facilities on the
Site and, for any year in which User has performed a site audit on the Site or
the Facilities or User's operations at the Site have changed or been modified,
by December 1 of each year throughout the term of the Site Agreement, User shall
provide BellSouth with the number of batteries, battery model numbers, battery
manufacturers, the number of cells in each battery and the amount of sulfuric
acid in User's batteries on the Site in order for BellSouth or if, the property
is leased or licensed by BellSouth, the Master Landlord, to file such
information with the Environmental Protection Agency ("EPA") and any state and
local authorities as required by applicable law. Further, within thirty (30)
days of User's receipt of a written request from BellSouth, User will provide
BellSouth with any other information and copies of documents relating to the
Facilities located on the Site which BellSouth or Master Landlord may be
required to file with the FCC, EPA or any other governmental agencies. User
agrees to indemnify and hold BellSouth harmless from any liabilities resulting
from any inaccuracies in such information or documentation delivered by User to
BellSouth or User's failure to provide BellSouth with such information or
documentation in accordance with the provisions of this Section 13(i);
(j) Be coordinated through BellSouth and User shall cooperate with
BellSouth;
(k) It is recognized that certain construction, such as the erection
of an antenna support structure, can have an effect on a given AM Signal Array
within certain
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parameters. This issue is addressed in Part 22 of the FCC Rules and Regulations.
A statement of this policy regarding structures erected or modified by
Commission Licensees in the vicinity of broadcast AM Stations is found in the
FCC Report No. CL-90-40, "Re-Publication of Standard Broadcast Re-Radiation and
Tower Construction Authorized Under Part 22 of the Rules." This policy states
that "Licensees and Permitees planning to construct or modify a tower within 2
miles of a directional AM array or within .5 miles of a non-directional AM tower
should take certain precautions..." to protect the array of said AM Station(s).
BellSouth has constructed its Towers in compliance with the rules and
regulations of the FCC. By User's collocation on any BellSouth Tower, User
accepts full responsibility (including financial responsibility) to take any and
all measures to cause User's facilities to comply with the FCC mandate as it
pertains to modifications of existing towers. After this mandate has been
satisfied, all documentation to substantiate compliance will be forwarded to
BellSouth for records maintenance.
In the event that the applicable Tower at any Site was fitted with a
detuning apparatus to protect the array of a given AM Station, User will be
responsible for following the procedure set forth below to ensure that the Tower
remains in compliance:
Prior to actual collocation on the existing BellSouth Tower, a certified
letter will be sent from User to the AM station(s) in question advising
said station(s) of the intent to collocate on the BellSouth existing
Tower. This document will reference that BellSouth has detuned the
structure with the installation of a detuning apparatus; furthermore,
the Tower will not be increasing in electrical height and therefore this
collocation will cause no further perturbation to the AM Signal. A copy
of this letter will be furnished to BellSouth for record purposes. After
the collocation has been completed, User will ensure the proper working
condition of the detuning apparatus by retaining the appropriate
BellSouth detuning consultant to take proximity measurements of the
Tower to adjust said apparatus to include the new antenna. This course
of action is necessary because the detuning apparatus will need to be
rendered inert during the actual installation of any additional antennas
to the structure. Any costs involved in following this procedure will be
the responsibility of User.
If , due to User's collocation, it becomes necessary to modify the
actual height of the Tower, it will be the responsibility of User to retain a
detuning consultant and perform a partial proof of performance report and/or
install/modify detuning apparatus to ensure the integrity of a given AM Signal.
14. BellSouth's Covenants. BellSouth covenants that during the term of
a Site Agreement it shall:
(a) Maintain the Tower and surrounding area in a safe condition;
(b) Except as otherwise set forth in this MSA, take no action which
would adversely affect the User's proposed use of the Site;
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(c) Upon User's payment of rent and performance of its covenants,
but subject to the terms of any Master Lease/License pursuant to which BellSouth
has rights in and to the Property, and subject to any prior lien or encumbrance
on the Property, ensure User's quiet use and enjoyment of the Site;
(d) Comply with all applicable rules and regulations of the FCC, the
FAA, and all federal, state and local laws governing the Tower and Property;
(e) Not permit any Subsequent User (as defined herein) to interfere
with the operation of User's equipment, authorized frequency spectrum, signal
strength or Facilities. For purposes hereof, a "Subsequent User" shall mean any
other user of the Tower that submits to BellSouth a site application for the use
of such Tower after the submission of User's Site Application for such Tower. In
the event BellSouth determines, in its sole discretion based on standard and
accepted engineering practices, that the Subsequent User is interfering with the
operation of User's equipment, authorized frequency spectrum, signal strength or
Facilities, BellSouth shall, within forty-eight (48) hours of notification, take
all steps reasonably necessary to eliminate the interference, with the exception
of ceasing the Subsequent User's operations. If the Subsequent User cannot
eliminate or resolve such interference within the forty-eight (48) hour period,
BellSouth shall take all steps reasonably necessary to require that the
Subsequent User turn off its facilities and only turn on its facilities during
off-peak hours specified by BellSouth in order to test whether such interference
continues or it has been satisfactorily eliminated. In the event that the
Subsequent User is unable to resolve or eliminate, to the satisfaction of
BellSouth, such interference within thirty (30) days from the initial
notification of such interference, the Subsequent User will immediately remove
or cease operations of the objectionable facilities. Notwithstanding the
foregoing, if the Subsequent User is a governmental entity, BellSouth shall have
the right to give the governmental entity five (5) business days notice prior to
BellSouth being required to take any actions required by this Section 14(e) to
cure such interference. BellSouth shall give such governmental entity written
notice of the interference within two (2) business days of BellSouth's
determination that such action is reasonably necessary. BellSouth's notice to
the governmental entity shall be deemed given on the day it is delivered by hand
or on the day it is deposited with an overnight courier or the United States
mail;
(f) Not permit any Prior User or Subsequent User to damage User's
Facilities or the Site, normal wear and tear excepted. If damage by BellSouth, a
Prior User, or Subsequent User, other than normal wear and tear, occurs to
User's Facilities or the Site, then BellSouth, shall be liable for repair or
reimbursement of repair for such damages caused by such party;
(g) Use reasonable efforts not to violate or breach any term of the
Master Lease/License giving the Master Landlord the right, with the passage of
time and/or giving of notice, to terminate the Master Lease/License; deliver to
User copies of every notice of default, non-renewal or non-conformance received
from Master Landlord immediately upon receipt thereof by BellSouth, and User
shall have the right, but not the obligation, to cure any such defaults of
BellSouth within the periods afforded BellSouth under the Master Lease;
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(h) Provide the Master Landlord with the information necessary to
enable the Master Landlord to comply with the reporting requirements of the EPA
or any other governmental agency; provided, however, BellSouth shall have no
obligation to provide the Master Landlord with information regarding the User's
Facilities if User has not provided BellSouth with such information in
accordance with the provisions of Section 13(i) hereof.
15. Compliance with Laws.
(a) FCC and FAA Compliance. BellSouth acknowledges that it is aware
of its obligations under Section 303 of the Communications Act of 1934 (47
U.S.C. 303), as amended, to maintain the painting and illumination of Towers as
prescribed by the FCC. BellSouth further acknowledges that it is aware that it
is subject to forfeitures assessed by the FCC for violations of such rules and
requirements. BellSouth further acknowledges that it, and not User, shall be
responsible for compliance with all Tower or building marking and lighting
requirements which may be required by the Federal Aviation Administration
("FAA") or the FCC. BellSouth shall indemnify and hold harmless User from any
fines or other liabilities caused by BellSouth's failure to comply with such
requirements. Further, should User be cited by either the FCC or FAA because a
Tower is not in compliance within the time frame allowed by the citing agency,
User may terminate the Site Agreement for such Tower immediately upon notice to
BellSouth, or, at User's option, cause the Tower to comply with FAA or FCC
requirements and BellSouth shall be responsible for reimbursing User for its
actual, reasonable costs incurred to bring the Tower into compliance with FAA or
FCC requirements. Notwithstanding the foregoing, if FAA or FCC compliance
requires the removal and/or relocation of the Tower, User's sole remedy shall be
to terminate the Site Agreement for such Tower. Upon such termination, the
parties to the Site Agreement shall be released from all duties, obligations,
liabilities and responsibilities under the Site Agreement except for any
indemnity obligations, including without limitation, environmental indemnity and
tax obligations, and User's obligation to remove the Facilities from the
Property.
(b) Hazardous Substances. BellSouth and User agree that they will
not use, store, dispose, or release any Hazardous Substances on the Property in
violation of any applicable federal, state or local law, regulation, or order.
"Hazardous Substances" means any hazardous material or substance which is or
becomes defined as a hazardous substance, pollutant or contaminant subject to
reporting, investigation or remediation pursuant to any federal, state or local
law, regulation or order; and any substance which is or becomes regulated by any
federal, state or local governmental authority; and any oil, petroleum products
and their by-products. BellSouth and User acknowledge that User, BellSouth,
Prior Users and Subsequent Users may each use diesel fuel and batteries in
appropriate small quantities from time to time to operate emergency back-up
generators provided that the transportation, delivery, storage, use and disposal
by User, BellSouth, a Prior User, or a Subsequent User, as the case may be, is
in compliance with all federal, state and local laws, regulations and orders.
BellSouth agrees to indemnify and save harmless the User against any and all
claims, liabilities, demands, causes of action, losses, damages, orders,
judgments, penalties, clean-up costs, costs and expenses including, without
limitation, attorneys fees and costs, arising from BellSouth's
misrepresentation, breach of warranty or breach of agreement contained in this
Section 15(b).
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User agrees to indemnify and save harmless BellSouth against any and all claims,
liabilities, demands, causes of action, losses, damages, orders, judgments,
penalties, clean-up costs, costs and expenses including, without limitation,
attorneys fees and costs arising from User's misrepresentation, breach of
warranty or breach of agreement, contained in this Section 15(b). The
obligations of BellSouth and User to indemnify the other pursuant to this
Section 15(b) shall survive the termination or expiration of this MSA and each
Site Agreement.
(c) Phase I - Environmental Site Assessment. After the execution and
delivery by BellSouth and User of an Entry and Testing Agreement for a Site User
may perform a Phase I - environmental site assessment on the Property pertaining
to such Site provided such Phase I - environmental site assessment does not
involve any subsurface soils testing and further provided that User provides
BellSouth with a complete written copy of the Phase I - environmental site
assessment within ten (10) days of completion at no expense to BellSouth. Only
with BellSouth's prior written consent and subject to BellSouth's supervision
may User perform a Phase II - environmental site assessment on the Property.
(d) National Environmental Policy Act Compliance. Upon execution of
a Site Agreement, and except as provided in a Site Agreement, BellSouth
represents that the Tower and Property comply with the applicable provisions of
the National Environmental Policy Act, 47 C.F.R. Section 1.1301 et seq.
("NEPA"). BellSouth acknowledges that it, and not the User, shall be responsible
for compliance with all applicable provisions of NEPA. BellSouth shall indemnify
and hold harmless User from any fines or other liabilities caused by BellSouth's
failure to comply with NEPA. In no event shall BellSouth be responsible to User
for lost profits, market share or consequential damages. Further, should
BellSouth be cited for noncompliance with NEPA and fail to bring the Tower
and/or Property into compliance, User, in addition to any and all other remedies
available to User at law or in equity, may terminate this Site Agreement
immediately upon written notice to BellSouth, or, at User's option, cause the
Tower to comply with NEPA and BellSouth shall be responsible for reimbursing
User for its actual, reasonable costs incurred to bring the Tower into
compliance with NEPA requirements. Notwithstanding the foregoing, if NEPA
compliance requires the removal and/or relocation of the Tower, User's sole
remedy shall be to terminate the Site Agreement for such Tower. Upon such
termination, the parties hereto shall be released from all duties, obligations,
liabilities and responsibilities under this Site Agreement except for any
indemnity obligations, including without limitation, environmental indemnity and
tax obligations, and User's obligation to remove the Facilities from the
Property.
(e) User acknowledges and understands that BellSouth has installed
or will install certain signage and/or physical barriers pertaining to radio
frequency exposure from BellSouth's transmitter and other equipment. User 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 User's personnel
or contractors tamper with any such signage or barriers. User shall be
responsible for placement of signage or physical barriers at or near its
facilities at the Site in order to comply with applicable FCC radio frequency
exposure guidelines. BellSouth agrees that it shall cooperate with User in these
efforts and that BellSouth shall instruct its personnel and
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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 BellSouth's personnel or contractors tamper with any
such signage or barriers. BellSouth and User 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.
16. Assignment or Subletting, No Liens.
(a) Assignment by User. User shall not assign, convey, or transfer
its interest in this MSA or any Site Agreement without first obtaining
BellSouth's written approval, which approval may not be unreasonably withheld,
conditioned, or delayed. User is not permitted to sublease or to license its
interest in this MSA or any Site Agreement. Notwithstanding the foregoing, User
has the right, without the necessity of obtaining BellSouth's consent, to assign
this MSA or any Site Agreement to a User Affiliate (as defined herein), provided
that User notifies BellSouth in writing of such assignment. For purposes hereof,
"User Affiliate" shall mean any entity which controls, is controlled by, or is
under common control with User or to any entity resulting from the merger or
consolidation of User, or to any person or entity which acquires substantially
all of the assets of User, provided that such assignee assumes in full all of
the obligations of User under this MSA and the Site Agreements that may be
assigned.
(b) Assignment by BellSouth. BellSouth shall have the right to
assign this MSA or any Site Agreement to a BellSouth Affiliate (as defined
herein) or an assignee who purchases an MSA, RSA, BTA or MTA, as defined by the
FCC, or to any other party who expressly assumes BellSouth's obligations,
without User's prior approval, and shall notify User within a reasonable time of
any such assignment. For purposes of this MSA and the Site Agreements,
"BellSouth Affiliate" shall mean any entity which controls, is controlled by, or
is under common control with BellSouth Carolinas PCS, L.P. ("BSCP") or BellSouth
Personal Communications, Inc. ("BPCI"), to any entity resulting from the merger
or consolidation of BSCP or BPCI, or to any person or entity which acquires
substantially all of the assets of BSCP or BPCI, provided that such assignee
assumes in full all of the obligations of BellSouth, under this MSA and the Site
Agreements that may be assigned.
(c) Liens. Except as provided in Section 10(viii) hereof, User shall
keep the Property, the Tower, the Site and the Facilities free from any liens
arising from any work performed, materials furnished or obligations incurred by
or at the request of User. All persons either contracting with User or
furnishing or rendering labor and materials to User shall be notified in writing
by User that they must look only to User for payment for any labor or materials.
If any lien is filed against the Property, the Tower, the Site or the Facilities
as a result of the acts or omissions of User, its employees, agents or
contractors or subcontractors, User shall discharge it or bond it off within
thirty (30) days after User learns that the lien has been filed.
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17. Insurance: Risk of Loss.
(a) User's Insurance. Prior to installation of the Facilities and to
having access to a Site and at all times during the term of a Site Agreement,
User shall provide proof of insurance for each individual Site, as outlined
below, satisfactory to BellSouth, and maintain the coverages specified below
during the term of a Site Agreement and until all Facilities are removed from
the Site following termination of a Site Agreement:
(i) Commercial General Liability Insurance with limits of not
less than $2,000,000 per occurrence and in the aggregate.
(ii) Workers' Compensation coverage in the statutory amount.
(iii) Employers Liability coverage with limits of not less than
$500,000 each accident, $500,000 each employee by disease and $500,000 policy
limit by disease.
(iv) Automobile Liability for Owned and Non-Owned Autos, Combined
Single Limit of $1,000,000.
(v) All Risk Insurance with Replacement Value coverage of User's
Facilities and personal property located on the Property.
(b) BellSouth's Insurance. At all times during the term of a Site
Agreement, BellSouth shall maintain insurance for such Site as outlined below:
(i) Commercial General Liability Insurance with limits of not
less than $2,000,000 per occurrence and in the aggregate.
(ii) Workers' Compensation coverage in the statutory amount.
(iii) Employers Liability coverage with limits of not less than
$500,000 each accident, $500,000 each employee by disease and $500,000 policy
limit by disease.
(iv) Automobile Liability for Owned and Non-Owned Autos, Combined
Single Limit of $1,000,000.
(v) All Risk Insurance with Replacement Value coverage of the
Tower and BellSouth's personal property located on the Property.
(c) Additional Insured. BellSouth shall be named as additional
insured on the policy listed in Section 17(a)(i) above. User shall be named as
additional insured on the policy listed in Section 17(b)(i) above. Additionally,
each party shall obtain a waiver of subrogation from its insurer on the policies
listed in Section 17(a)(i) and Section (b)(i) above. BellSouth and User may
satisfy this requirement by obtaining appropriate endorsements to any master or
blanket policy of liability insurance User or BellSouth, as applicable, may
maintain. No policy may be cancelable or subject to reduction of coverage except
after thirty (30) days prior written notice to BellSouth or User.
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(d) Third Parties. User and BellSouth shall require their respective
contractors and subcontractors to carry workers' compensation insurance and
adequate liability insurance in conformity with the minimum requirements listed
above.
(e) Risk of Loss; Limitation of Liability. Notwithstanding anything
herein to the contrary, each party shall bear the risk of loss of or damage to
the respective personal property during the term of each Site Agreement except
to the extent caused by the negligence or willful misconduct of the other party.
Neither party shall be liable for any damage to the other party's personal
property except to the extent caused by a party's negligence or willful
misconduct. Notwithstanding anything herein to the contrary, the parties shall
not be liable for any consequential or incidental damages incurred by the other
party due to any malfunction, vandalism, acts of God (including, without
limitation, lightning, wind, rain, hail, fire or storms) or any other damage
resulting from any reason. In the event the Tower or other portions of the Site
are destroyed or so damaged as to be unusable, BellSouth or User shall be
entitled to elect to cancel and terminate the Site Agreement, or in the
alternative may elect to restore the Site, in which case User and BellSouth
shall remain bound hereby but shall be entitled to an abatement of rent during
the loss of use, if the User or BellSouth has not elected to cancel the Site
Agreement. In no event shall the leasehold or other interest created by the Site
Agreement be specifically enforceable and in no event shall either BellSouth or
User be responsible to any party for consequential damages, lost business
opportunities, profits or market share.
(f) Removal of Facilities. User's obligation to provide the
insurance coverages set forth in this Section 17 shall survive the expiration or
termination of the Site Agreement until the User's Facilities are removed from
the Property.
18. Indemnification. User does hereby agree to indemnify and save
BellSouth harmless from any and all claims, liabilities, demands, causes of
action, losses, damages, orders, judgments, penalties, costs and expenses,
including without limitation, reasonable attorneys fees and costs (i) for
property damage or personal injuries or death caused by the negligence or
willful misconduct of User, User's agents, employees, and contractors arising
out of User's occupancy of the Site or the installation, maintenance, operation
and removal of the Facilities, or (ii) resulting from the User's breach of any
term or condition of this MSA or a Site Agreement. BellSouth does hereby agree
to indemnify and save User harmless from any and all claims, liabilities,
demands, causes of action, losses, damages, orders, judgments, penalties, costs
and expenses, including without limitation, reasonable attorneys fees and costs
(i) for property damage or personal injuries or death caused by the negligence
or willful misconduct of BellSouth, BellSouth's agents, employees, and
contractors arising out of BellSouth's occupancy of the Site or the
installation, maintenance and operation of the Facilities, or (ii) resulting
from BellSouth's breach of any term or condition of this MSA or a Site
Agreement. The obligations to indemnify and hold harmless set forth in this
Section shall survive the expiration or termination of this MSA and each
respective Site Agreement.
19. Default.
(a) User's Default. Each of the following shall be considered a
default of a Site Agreement by the User:
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(i) The failure to pay any rent or other charges required
pursuant to this MSA and the Site Agreement within thirty (30) days after
receipt of BellSouth's written notice of such failure;
(ii) The failure to cure, within thirty (30) days after receipt
of BellSouth's written notice thereof, any breach of any other term of this MSA
or the Site Agreement, provided, however, that if such breach is not capable of
being cured within such period but User has undertaken efforts to cure such
breach, and such breach is capable of being cured, such thirty (30) day period
shall be extended for so long as User is diligently attempting in good faith, to
cure such breach, not to exceed an additional thirty (30) calendar days (except
for promises relating to interference as set forth in Section 13(b) hereof);
(iii) Abandonment of the Site ("Abandonment" being defined as
User not using the Site for sixty (60) consecutive days);
(iv) The failure of User to eliminate interference problems as
set forth in Section 13(b); or
(v) If (a) User gives notice to any governmental body of its
insolvency or pending insolvency or makes an assignment for the benefit of
creditors or takes any other similar action for the protection or benefit of its
creditors, or files an answer admitting the material allegations of, or
consenting to, or defaults in answering any pleading filed with respect to the
commencement of any case or proceeding respecting User under any bankruptcy or
insolvency law, or (b) any order for relief is entered against User in any case
in bankruptcy, any order, judgment or decree is entered against User by a court
of competent jurisdiction appointing a receiver, trustee, custodian or
liquidator of User or of all or a substantial part of its assets, and such
order, judgment, or decree continues unstayed and in effect for a period of
ninety (90) consecutive days, or any proceeding for the reorganization of a
party under, or for an arrangement under, any bankruptcy or insolvency law
applicable to User is commenced whether by or against User and not dismissed
within ninety (90) days from commencement thereof.
Upon default of a Site Agreement by User past any applicable cure period, in
addition to all other remedies provided at law or in equity, BellSouth may, at
its option:
(aa) elect to remove all of the Facilities by legal process,
thereby terminating the Site Agreement, and store the Facilities at User's
expense, payable upon demand by BellSouth.
(bb) elect to treat the Site Agreement in full force and effect
and shall be entitled to collect the rent provided for hereunder.
Upon the termination of a Site Agreement pursuant to Section (aa) above, the
parties hereto shall be released from all duties, obligations, liabilities and
responsibilities under the Site Agreement except for indemnity obligations,
including without limitation, environmental indemnity and tax obligations, any
obligations arising prior to the date of termination, and User's obligation to
remove its Facilities from the Property.
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(b) BellSouth's Default. Each of the following shall be considered a
default of a Site Agreement by BellSouth:
(i) The failure to cure, within thirty (30) days after receipt of
User's written notice thereof, any breach of any other term of this MSA or the
Site Agreement, provided, however, that if such breach is not capable of being
cured within such period but BellSouth has undertaken efforts to cure such
breach, and such breach is capable of being cured, such thirty (30) day period
shall be extended for so long as BellSouth is diligently attempting in good
faith, to cure such breach, not to exceed an additional thirty (30) calendar
days (except for promises relating to interference by a Subsequent User as set
forth in Section 14(e) which must be cured within the time frame set forth in
Section 14(e) and except for any breach of the Master Lease/License which must
be cured within the time frames set forth in the Master Lease/License); or
(ii) The failure of BellSouth to eliminate interference problems
as set forth in Section 14(e).
Upon default of a Site Agreement by BellSouth, in addition to all other remedies
provided at law or in equity, User may, at its option:
(aa) elect to cure BellSouth's default, in which event User shall
have the right to offset any and all reasonable costs incurred in curing
BellSouth's default against any rent or other amounts due BellSouth; or
(bb) elect to terminate the Site Agreement as of the date of the
default and to recover from BellSouth all damages (except those for which
BellSouth is not liable under the terms of this MSA) incurred by User as a
result of such default. Upon such termination, the parties hereto shall be
released from all duties, obligations, liabilities and responsibilities under
the Site Agreement except for any indemnity obligations, including without
limitation, environmental indemnity and tax obligations, obligation to pay
damages, and User's obligation to remove the Facilities from the Property.
20. Termination.
(a) Termination of Site Agreement.
(i) Termination by User. Notwithstanding anything to the
contrary contained in this MSA, User shall be entitled to terminate a Site
Agreement after the Commencement Date, with written notice to BellSouth in the
event:
(a) any Approval is canceled, expires, lapses, or is
otherwise withdrawn or terminated through no fault of the User
while User is working in the normal course of business to
maintain all such Approvals; or
(b) any notice by BellSouth of relocation of User's
Facilities pursuant to Section 9 hereof is unacceptable to User.
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Any such termination by User shall be effective thirty (30) days after receipt
of written notice by BellSouth. Upon such termination, the Site Agreement shall
terminate and be of no further force and effect, and except for any indemnity
obligations, including without limitation, environmental indemnity and tax
obligations, and User's obligations to remove the Facilities from the Property,
the parties hereto shall be released from all duties, obligations, liabilities
and responsibilities under the Site Agreement.
(ii) Termination by BellSouth.
(a) In the event BellSouth's right to occupy the Property is
terminated at any time following execution of a Site Agreement as a result
of the termination or expiration of the Master Lease/License, the Site
Agreement shall automatically terminate upon the effective termination date
of the Master Lease/License and be of no further force and effect, and
except for any indemnity obligations and User's obligation to remove the
Facilities from the Property, the parties hereto shall be released from all
duties, obligations, liabilities and responsibilities under the Site
Agreement. It is specifically understood that BellSouth is under no
obligation to extend the term of the Master Lease/License, irrespective of
the term stated in the Site Agreement. The applicable Site Agreement shall
expire upon the expiration or termination of the applicable Master
Lease/License
(b) In the event BellSouth needs additional capacity at a
Site for its equipment, BellSouth may terminate a Site Agreement as
provided in Section 9 hereof.
In the event User refuses to lease, sublease, license or sublicense, as
applicable, a Reciprocal Site to BellSouth, for reasons unrelated to User's
capacity, zoning, permits, RF interference (based upon standard and
accepted engineering principles) licenses and other required approvals, or
environmental issues with respect to such Reciprocal Site, BellSouth may
elect to terminate any existing Site Agreement in the same geographic
market as the proposed Reciprocal Site refused by User, effective thirty
(30) days after receipt by User of written notice. Upon termination of any
Site Agreement, such terminated Site Agreement shall be of no further force
and effect and the parties hereto shall be released from all duties,
obligations, liabilities, and responsibilities under the terminated Site
Agreement, except for indemnity obligations, User's obligation to remove
the Facilities from the terminated Site, and User's obligations set forth
in Section 13(h) hereof. In the event User does not remove its Facilities
from the terminated Site as provided in Section 9 or Section 13(h) hereof,
as applicable, BellSouth shall have the right to remove and store User's
Facilities, at User's expense.
21. Condemnation. If the whole of the Property or Site which are
subject of any Site Agreement or so much thereof as to interfere with the use
thereof shall be taken or condemned by any competent authority for any public or
quasi-public use or purpose, such Site Agreement shall terminate as of the date
when possession is taken at the election of either party. In such event,
BellSouth shall be under no liability to User resulting from such condemnation
and User shall be entitled to no part of any condemnation award except so much
thereof as the
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condemning authority expressly allocates to that portion of the proceeds
directly attributable to the value of User's Facilities on the Tower, its
leasehold interest in the Site, and moving or relocation expenses incurred by
User. BellSouth shall provide User with notice in writing of any actual or
threatened condemnation proceedings promptly after receiving notice thereof.
Upon such termination, the parties to the Site Agreement shall be released from
all duties, obligations, liabilities and responsibilities under the Site
Agreement except for any indemnity obligations, including without limitation,
environmental indemnity and tax obligations, and User's obligation to remove the
Facilities from the Property.
22. Mortgage by BellSouth. This MSA and each Site Agreement is and
shall be subject to a security interest or mortgage which might now or hereafter
constitute a lien upon the Site. This MSA and each Site Agreement is and shall
be subject and subordinate in all respects to any and all such mortgages on the
Site and to all renewals, modifications, consolidations, replacements and
extensions thereof. In the event any proceedings are brought for foreclosure or
in the event of the exercise of the power of sale under any mortgage covering
any Site, the User shall attorn to the purchaser upon any such foreclosure or
sale and recognize such purchaser as the lessor/licensor, as applicable, under
this MSA and the applicable Site Agreement(s); provided that so long as the User
is not in default hereunder, this MSA and the applicable Site Agreement(s) shall
remain in full force and effect, and User's use and occupancy pursuant to this
MSA and applicable Site Agreements shall not be disturbed.
23. Entirety. This MSA and Site Agreement, including all Schedules and
Exhibits hereto and thereto, constitute the entire agreement between BellSouth
and User and any modification to the MSA or Site Agreement, any Schedule or
Exhibits hereto or thereto, must, in order to be effective, be in writing,
signed by authorized representatives of each party.
24. Waiver. Failure or delay on the part of either party to exercise
any right, power, privilege or remedy hereunder shall not operate as a waiver
thereof; nor shall any single or partial exercise of any right under this MSA of
under a Site Agreement preclude any other or further exercise thereof or the
exercise of any other right.
25. Binding Effect. This MSA and the Site Agreements shall extend to
and bind the heirs, personal representatives, successors, permitted assigns, or
its successors in interest of the parties hereto.
26. Governing Law. This MSA and each Site Agreement and performance
hereunder and thereunder shall be governed, interpreted, construed and regulated
by the laws of the state where the Property and Site are located.
27. Notice. All notices hereunder shall be deemed validly given if sent
by certified mail, return receipt requested, or with a nationally recognized
courier which provides notice of receipt, postage fully prepaid, addressed as
follows, or to such other addresses as may be given from either party in writing
to the other:
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BellSouth: BellSouth Personal Communications, Inc.
1100 Peachtree Street, N.E., Eighth Floor
Atlanta, GA 30309
Attn: Real Estate Manager
with a copy to:
BellSouth Personal Communications, Inc.
1100 Peachtree Street, N.E., Suite 910
Atlanta, GA 30309
Attn: Legal Department
User: Tritel Communications, Inc.
1410 Livingston Lane
Jackson, Mississippi 39213
Attn: Ken Harris
28. Headings. Section headings in this MSA and in each Site Agreement
are included for the convenience of reference only and shall not constitute a
part of this MSA or the Site Agreement for any other purpose.
29. Brokerage. User warrants and represents to BellSouth that it has
not dealt with a real estate agent or broker with respect to this MSA or any
Site Agreement, and shall hold BellSouth harmless against all claims by any real
estate agent or broker claiming a commission hereunder or thereunder on behalf
of User. BellSouth warrants and represents to User that, except for GlobalComm,
Inc., it has not dealt with a real estate agent or broker with respect to this
MSA or any Site Agreement, and shall hold User harmless against all claims by
any real estate agent or broker claiming a commission hereunder or thereunder on
behalf of BellSouth.
30. Memorandum of Lease. At the request of User, BellSouth hereby
agrees to execute a memorandum or short form of lease (a "Memorandum of Lease"),
in form satisfactory for recording, and such Memorandum of Lease may be filed of
record by the User, at User's sole cost, including taxes or assessments incurred
in connection therewith. The parties understand and agree that this MSA and the
Site Agreements shall not be recorded of record. User agrees to prepare, execute
and record, at its expense, a release, within thirty (30) days of expiration or
termination of a Site Agreement. In the event User fails to do so, BellSouth has
a contractual right as User's agent for this limited purpose to prepare, execute
and record such release and User shall reimburse BellSouth, upon demand, for all
expenses, including attorney fees and filing fees, incurred in connection
therewith.
31. Counterparts. This MSA and each Site Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
together shall constitute but one instrument.
32. Authority. Each Party hereby represents and warrants to the other
that all necessary corporate authorizations required for execution and
performance of this MSA and each
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Site Agreement have been given and that the undersigned officer is duly
authorized to execute this MSA and each Site Agreement and bind the party for
which it signs.
33. Severability. If any term, covenant, condition or provision of this
MSA or the Site Agreement or any application hereof or thereof shall, to any
extent, be invalid or unenforceable, the remainder of this MSA and each Site
Agreement shall not be affected thereby, and shall be valid and enforceable to
the fullest extent permitted by law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year first above written.
BELLSOUTH:
----------
BELLSOUTH CAROLINAS PCS, L.P.,
a Delaware limited partnership (SEAL)
By: BellSouth Personal Communications, Inc.,
a Delaware corporation, its general partner
By: /s/ Bill C. Mayberry
-----------------------------------
Name: Bill C. Mayberry
---------------------------------
Title: Asst. Vice President Real Estate
--------------------------------
Attest: /s/ Mark Van Dyke
-------------------------------
Name: Mark Van Dyke
---------------------------------
Title: Asst. Secretary
--------------------------------
[AFFIX CORPORATE SEAL]
BELLSOUTH PERSONAL COMMUNICATIONS, INC.,
a Delaware corporation
By: Bill C. Mayberry
-----------------------------------
Name: Bill C. Mayberry
---------------------------------
Title: Asst. Vice President Real Estate
--------------------------------
Attest: Mark Van Dyke
-------------------------------
Name: Mark Van Dyke
---------------------------------
Title: Asst. Secretary
--------------------------------
[AFFIX CORPORATE SEAL]
27
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year first above written.
USER:
-----
TRITEL COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ Jerry M. Sullivan, Jr.
--------------------------------------
Jerry M. Sullivan, Jr.
Executive V.P./Chief Operating Officer
Attest:
-----------------------------------
Name:
-------------------------------------
Title:
------------------------------------
[AFFIX CORPORATE SEAL]
<PAGE>
STATE OF GEORGIA )
)
COUNTY OF FULTON )
I, a Notary Public for said County and State, do hereby certify that Mark Van
Dyke personally appeared before me this day and acknowledged that he/she is
Asst. Secretary of BELLSOUTH PERSONAL COMMUNICATIONS, INC., a Delaware
corporation, individually and as general partner of BELLSOUTH CAROLINAS PCS,
L.P., a Delaware limited partnership, and that by authority and as the act of
the corporation, individually and on behalf of the partnership, the foregoing
instrument was signed in its name by its Assistant Vice President, sealed with
its corporate seal, and attested by him/her as its Asst. Secretary.
----------------------------------
Notary Public, State of GA
My Commission Expires:
------------
[NOTARIAL SEAL]
STATE OF )
)
COUNTY OF )
Personally appeared before me, the undersigned authority in and for the said
county and state, on this 10th of March, 1998 within my jurisdiction, the within
named JERRY M. SULLIVAN, JR., who acknowledged that he is EXECUTIVE VICE
PRESIDENT/CHIEF OPERATING OFFICER of TRITEL COMMUNICATIONS, INC., a Delaware
corporation, and that for and on behalf of the said corporation, and as its act
and deed he executed the above and foregoing instrument, after first having been
duly authorized by said corporation so to do.
-----------------------------------
Notary Public
My Commission Expires:
- ----------------------------------
<PAGE>
SCHEDULE "I" TO MASTER SITE AGREEMENT
-------------------------------------
SITE [LEASE/ SUBLEASE/LICENSE/SUBLICENSE] AGREEMENT
---------------------------------------------------
THIS SITE [LEASE/SUBLEASE/LICENSE/SUBLICENSE] AGREEMENT (the "Site
Agreement") is made as of the latter signature date hereof (the "Execution
Date"), by and between , a [CORPORATION] [LIMITED PARTNERSHIP], its successors
and assigns (hereinafter referred to as "BellSouth") and TRITEL COMMUNICATIONS,
INC., a Delaware corporation (hereinafter referred to as "User").
WHEREAS, the parties are party to the Master Site Agreement dated ,
1998 (the "MSA");
WHEREAS, the parties desire that except as set forth in this Site
Agreement, the terms and conditions of the MSA shall govern the relationship of
the parties under this Site Agreement;
WHEREAS, BellSouth [IS THE OWNER OF] [AS LESSEE/LICENSEE,
LEASED/LICENSED FROM (THE "MASTER LANDLORD") PURSUANT TO THAT CERTAIN
LEASE/LICENSE AGREEMENT DATED , 19 (THE "MASTER LEASE/LICENSE")], a copy of
which is attached hereto as Exhibit "A-1", certain real property located in
, , as more particularly described on Exhibit "A" attached hereto
and incorporated herein by reference.
NOW, THEREFORE, for valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereby agree as follows:
1. MSA and Defined Terms. Unless otherwise defined herein, capitalized
terms shall have the meaning set forth in the MSA. The parties agree that except
as otherwise set forth herein, the terms and conditions of the MSA shall govern
the relationship of the parties under this Site Agreement and the MSA is
incorporated herein by reference. In the event of a conflict or inconsistency
between the terms of the MSA and this Site Agreement, the terms of this Site
Agreement shall govern and control.
2. Demise. BellSouth hereby [LEASES/SUBLEASES/LICENSES/SUBLICENSES] to
User and User hereby [LEASES/SUBLEASES/LICENSES/SUBLICENSES] from BellSouth the
following:
(a) Tower Space. [SUBJECT TO BELLSOUTH OR USER OBTAINING THE CONSENT OF
THE MASTER LANDLORD PURSUANT TO SECTION 5(A) OF THE MSA, IF REQUIRED BY THE
MASTER LEASE/LICENSE, IN BELLSOUTH'S SOLE REASONABLE OPINION,] [T]ower space on
BellSouth's Tower between the ( ) foot and ( ) foot level (the "Tower Space"),
for the placement of User's antenna array, platform, cables, brackets, wires and
accessories, as more particularly described on Exhibit "C" attached hereto and
incorporated herein by reference (the "Tower Facilities"); and
(b) Ground Space. [SUBJECT TO BELLSOUTH HAVING GROUND SPACE ADEQUATE TO
ACCOMMODATE USER'S GROUND FACILITIES, AS HEREINAFTER DEFINED, AND BELLSOUTH OR
USER OBTAINING THE CONSENT OF THE MASTER LANDLORD PURSUANT TO SECTION 5(A) OF
THE MSA, IF REQUIRED BY THE MASTER LEASE/LICENSE, IN BELLSOUTH'S SOLE REASONABLE
OPINION,] [G]round space containing ( ) [ACRES/SQUARE FEET], as approximately
shown on Exhibit "B" attached hereto and incorporated herein by this
Site Number:______ Site Number:______
<PAGE>
reference and which will be more specifically shown on the As-Built Survey, as
defined in Section 10 (vii) of the MSA, delivered by User to BellSouth in
accordance with Section 10 (vii) of the MSA and which As-Built Survey shall be
attached to and become a part of this Site Agreement as Exhibit "B" when
initialed by BellSouth and User in accordance with Section 10(vii) of the MSA
(the "Ground Space"), for the placement of equipment shelters and cabinets,
telecommunications equipment within such equipment shelters and cabinets,
concrete pads, cables, wires and accessories, as more particularly described on
Exhibit "C" attached hereto and incorporated herein by reference (the "Ground
Facilities"); together with
(c) Ingress and Egress. Subject to the limitations set forth in Section
11 of the MSA (i) the non-exclusive right to use the Tower, at locations
mutually agreed upon by User and BellSouth, for the term hereof for ingress,
egress, and access to the Tower Space adequate to service the Tower Facilities
and (ii) if the term "Leased Space" as used herein includes Ground Space, a
non-exclusive easement for the term hereof, for ingress, egress, and access to
the Leased Space across [(AA)] the Property in locations mutually agreed upon in
writing by BellSouth and User [AND (BB) ACROSS THE PROPERTY OF THE MASTER
LANDLORD TO THE EXTENT AND IN THE LOCATIONS THE MASTER LANDLORD GRANTED INGRESS,
EGRESS AND ACCESS EASEMENTS TO BELLSOUTH IN THE MASTER LEASE/LICENSE.]
(d) Utilities, Cable Runs. BellSouth hereby grants to User the
non-exclusive right to use the Tower for the term hereof to place any utilities
and cable runs on the Tower, at locations mutually agreed upon in writing by
BellSouth and User, in order to service or operate the Facilities, subject to
BellSouth's prior written approval of the design and installation method and
procedures, such approval not to be unreasonably withheld or delayed. [IF THE
TERM "LEASED SPACE" INCLUDES THE GROUND SPACE, BELLSOUTH HEREBY GRANTS TO USER A
NON-EXCLUSIVE EASEMENT FOR THE TERM HEREOF TO PLACE ANY UTILITIES OR CABLE RUNS
ON OR BRING UTILITIES ACROSS THE PROPERTY AND IF THE PROPERTY IS LEASED OR
LICENSED BY BELLSOUTH, THE PROPERTY OF THE MASTER LANDLORD TO THE EXTENT AND IN
THE LOCATIONS THE MASTER LANDLORD GRANTED UTILITY AND CABLE RUN EASEMENTS].
3. Term/Site Commencement Date. Provided [THE APPLICABLE CONTINGENCIES
SET FORTH IN SECTION 5 OF THE MSA HAVE BEEN SATISFIED,] User has paid BellSouth
any required application fee, and the Site Cost Reimbursement Amount of Dollars
($ ), this Site Agreement term shall begin on the earlier to occur of (i) the
date when User commences the installation of its Facilities on the Tower or (ii)
forty-five (45) days from the Execution Date, unless further extended by the
mutual written agreement of BellSouth and User [NOTE: IF SPECIFIC DATE IS TO BE
INSERTED AS COMMENCEMENT DATE, REPLACE (II) WITH: "(II) THE DAY OF
, ."] (the "Site Commencement Date"), and shall continue until the
earlier to occur of (i) midnight of the tenth (10th) anniversary of the Site
Commencement Date or (ii) the expiration or termination of the Master
Lease/License (the "Initial Term"). Within five (5) business days of User's
commencement of the installation of its Facilities on the Leased Space, User
shall provide BellSouth written notice of the date User commenced installation
of its Facilities on the Leased Space in the form of Exhibit "E" attached
hereto. Provided [THE MASTER LEASE/LICENSE REMAINS IN EFFECT AND HAS NOT EXPIRED
OR BEEN TERMINATED, AND] User is not in default, User shall have the option of
extending this Site Agreement for three (3) additional five (5) year terms (the
"Renewal Terms"). Such renewal options shall be deemed automatically exercised
without notice by User to BellSouth unless User gives BellSouth written notice
of its intention not to exercise any such option at least ninety (90) days prior
to the expiration of the then current term, in which case, the term of the Site
Agreement shall expire at the end of the then current term.
Site Number:______ Site Number:______
2
<PAGE>
4. Rent/Renewal Terms. In addition to any required application fee and
the Site Cost Reimbursement Amount, which shall be paid by User to BellSouth in
accordance with the MSA, during the first five (5) years of the Initial Term,
User shall pay annual rent of and No/100 Dollars ($ ) in accordance with the
MSA. The first annual installment of base rent is due and payable not later than
the Site Commencement Date. For the sixth through tenth year of the Initial
Term, the annual rent shall be increased by [CONFIDENTIAL TREATMENT REQUESTED]
over the annual rent for the first five (5) years of the Initial Term. Upon the
commencement of each Renewal Term, the annual rent shall be further increased by
[CONFIDENTIAL TREATMENT REQUESTED] over the annual rent then payable for the
immediately preceding term. Unless otherwise directed in writing by BellSouth,
User shall forward all rental and other payments required hereunder to:
BellSouth Personal Communications, Inc.
Attention: Treasury/Accounting Department
400 Northpark Town Center
Suite 290
1000 Abernathy Road
Atlanta, GA 30328
Recurring Invoice No.
5. Additional Rent. In addition to the rent set forth in Section 4
hereof, User hereby agrees to pay additional rent to BellSouth for any
additional equipment added to BellSouth's Tower after the installation of the
Tower Facilities set forth in Exhibit "C" hereto. Additional rent shall be
calculated based on a rental amount for each piece of additional equipment. Such
rental amounts are set forth below:
Equipment Rental Amount
$
------------------- -----------
$
------------------- -----------
$
------------------- -----------
$
------------------- -----------
6. Hazardous Substances. [BELLSOUTH IS NOT AWARE OF, AND HAS NOT
RECEIVED NOTICE OF, THE DISPOSAL, RELEASE OR PRESENCE OF HAZARDOUS SUBSTANCES ON
THE PROPERTY IN VIOLATION OF ANY FEDERAL, STATE OR LOCAL LAW, REGULATION OR
ORDER.]
[7. NATIONAL ENVIRONMENTAL POLICY ACT COMPLIANCE. ADD PROVISION IF
BELLSOUTH HAS NOT COMPLIED OR IS IN THE PROCESS OF COMPLYING WITH NFPA.]
[8/9]. Notice. All notices hereunder shall be deemed validly given if
sent by certified mail, return receipt requested, or with a nationally
recognized courier which provides notice of receipt, postage fully prepaid,
addressed as follows, or to such other addresses as may be given from either
party in writing to the other:
Site Number:______ Site Number:______
3
<PAGE>
BellSouth: [BELLSOUTH CAROLINAS PCS, L.P.]
[C/O]BellSouth, Personal Communications, Inc.
1100 Peachtree Street, N.E., 8th Floor
Atlanta, GA 30309
Attn: Real Estate Manager
with a copy to:
[BELLSOUTH CAROLINAS PCS, L.P.]
[C/O]BellSouth Personal Communications, Inc.
1100 Peachtree Street, N.E., Suite 910
Atlanta, GA 30309
Attn: Legal Department
User: Tritel Communications, Inc.
1410 Livingston Lane
Jackson, Mississippi 39213
Attn: Jean Harris
with a copy to:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
Site Number:______ Site Number:______
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
signature date set forth below.
User:
TRITEL CORPORATION, INC.
a Delaware corporation
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Attest:
------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[AFFIX CORPORATE SEAL]
Signature Date:
----------------------------
STATE OF )
)
COUNTY)
I, a Notary Public for said County and State, do hereby certify that
personally appeared before me this day and acknowledged that he/she is Secretary
of Tritel Communications, Inc., a Delaware corporation, and that by authority
and as the act of the corporation the foregoing instrument was signed in its
name by its President, sealed with its corporate seal, and attested by him/her
as its _______________ Secretary.
----------------------------------
Notary Public, State of___________
My Commission Expires:____________
[NOTARIAL SEAL]
Site Number:______ Site Number:______
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
signature date set forth below.
BELLSOUTH:
[NAME OF CORPORATION OR LIMITED PARTNERSHIP
HAVING THE FCC LICENSE]
[ , LIMITED PARTNERSHIP,]
BY: [NAME OF CORPORATE GENERAL PARTNER],
ITS GENERAL PARTNER
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Attest:
-----------------------------------
Name:
-------------------------------------
Title:
------------------------------------
[AFFIX CORPORATE SEAL]
Signature Date:
---------------------------
STATE OF________________________ )
)
COUNTY )
I, a Notary Public for said County and State, do hereby certify that
personally appeared before me this day and acknowledged that he/she is Secretary
of a and general partner of , a , and that by authority and as the act of the
corporation and on 0behalf of the partnership, the foregoing instrument was
signed in its name by its President, sealed with its corporate seal, and
attested by him/her as its Secretary.
-----------------------------------
Notary Public, State of
-----------
My Commission Expires:
------------
[NOTARIAL SEAL]
Site Number:______ Site Number:______
6
<PAGE>
EXHIBIT "A"
-----------
Site Description
----------------
Site Name: MSA/RSA/MTA/BTA:
------------------ ----------------------
Site Number: Site Address:
------------------ ----------------------0
Latitude:
------------------
Longitude:
------------------
Legal Description of Property:
- ------------------------------
Legal Description of Access Easement:
- -------------------------------------
Legal Description of Utility Easement:
- --------------------------------------
Site Number:______ Site Number:______
7
<PAGE>
EXHIBIT "A-1"
-------------
MASTER LEASE/LICENSE AGREEMENT
(Subject to redaction)
Site Number:______ Site Number:______
8
<PAGE>
EXHIBIT "B"
-----------
User's Ground Space
Site Number:______ Site Number:______
9
<PAGE>
EXHIBIT "C"
-----------
User's Tower Facilities and Ground Facilities
[Attach User's Co-Location Application]
Site Number:______ Site Number:______
10
<PAGE>
EXHIBIT "D"
Certification as to Ground Lease
[Date]
[BellSouth's or User's Name]
[BellSouth's or User's Address]
RE: Site Agreement from [BELLSOUTH'S OR USER'S NAME] to [BELLSOUTH OR
USER] at______________ ,________________
Dear
Pursuant to the above referenced lease (the "Lease"), User hereby
certifies unto BellSouth that User has obtained from the Master Landlord, as
defined in the Site Agreement, a lease of a portion of the Master Landlord's
property, as more particularly described in Section 3(a)(ii) of the Site
Agreement, for ground space to accommodate [USER'S] Ground Facilities together
with easements for access, utilities and cables.
Sincerely,
[BellSouth or User]
Site Number:______ Site Number:______
11
<PAGE>
EXHIBIT "E"
Notice of Installation of User's Facilities
[Date]
[BellSouth's Name]
[BellSouth's Address]
RE: Site Agreement from BellSouth to [USER] at
Dear
Pursuant to Section of the above-referenced , this letter serves to
advise you that [USER] commenced the installation of its Facilities on the
Leased Space on the above-referenced property on , 19 , which date shall be the
Commencement Date, as defined in the above referenced Site Agreement.
Sincerely,
[User]
Site Number:______ Site Number:______
12
<PAGE>
SCHEDULE "II" TO MASTER SITE AGREEMENT
ENTRY AND TESTING AGREEMENT
This Entry and Testing Agreement ("Agreement") is made as of the day of
, 1998, between BELLSOUTH PERSONAL COMMUNICATIONS, INC., a Delaware corporation,
d/b/a BellSouth Mobility DCS ("BellSouth"), and TRITEL COMMUNICATIONS, INC., a
Delaware corporation ("Entrant"), concerning the following described property
[leased] [owned] by BellSouth ("Property"): [insert site address]
BellSouth currently owns and operates a communications tower (the
"Tower") on the Property. BellSouth and Entrant are in the process of
negotiating an agreement whereby Entrant will lease, sublease or license certain
portions of the Tower and the Property. In order for Entrant to determine the
viability and feasibility of the Property as a tower or antenna site, Entrant
desires to enter upon and inspect the Property and/or to locate temporarily
communications equipment on the Property to conduct short term radio propagation
tests; and
As an accommodation to Entrant, BellSouth is willing to grant
permission to Entrant, its employees, agents or contractors to enter upon the
Property solely to conduct such investigations, under the terms and conditions
stated herein. In consideration of the mutual covenants and agreements contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows.
1. BellSouth grants to Entrant, its contractors, agents, employees and
assigns a right of entry and license to enter upon the Property solely to
conduct and perform boundary surveys, Phase I environmental studies, and radio
propagation tests (the "Permitted Activities"). Entrant's entry rights are
specifically limited to the Permitted Activities and to the Property and shall
not include any other activities, including without limitation any construction
activities, on the Property or any other portion of the property surrounding the
Property. Entrant shall be responsible for any and all costs related to the
Permitted Activities, including any temporary installation, operation and
removal of equipment on the Property and the Tower. Any entry or activity on the
Tower by Entrant shall be coordinated in advance with BellSouth and shall be
subject to BellSouth's approval and supervision, at Entrant's cost.
2. Entrant agrees to comply with all local, state and federal laws,
rules and ordinances applicable to the Permitted Activities. Entrant further
agrees to exercise due care in the performance of all Permitted Activities on
the Property, and not to interfere with BellSouth's or any other party's
activities on the Property. Entrant shall promptly repair, at its cost, any
damage to the Property, the Tower, or any other property caused by the acts or
omissions of Entrant, its agents, employees, contractors or subcontractors.
3. Entrant shall indemnify and hold harmless BellSouth, its employees,
agents or contractors, from all claims, actions, damages, liability and expense,
including without limitation attorneys' fees and costs, in connection with
personal injury or property damage arising out of the acts or omissions of
Entrant, its employees, agents or contractors, including without limitation the
Permitted
<PAGE>
Activities, upon the Property, the Tower, or any other portion of the property
surrounding the Property. This indemnification shall survive the expiration or
termination of this Agreement.
4. Entrant shall maintain, and shall have its contractors and
subcontractors maintain, adequate insurance coverage, as determined by
BellSouth. At BellSouth's request, Entrant agrees to provide certificates of
insurance evidencing such insurance coverage of Entrant, its contractors, or
subcontractors.
5. The term of this Agreement shall be from the Execution Date to the
earlier of (i) forty-five (45) days from the Execution Date or (ii) until
BellSouth and Entrant enter into a lease, sublease or license with respect to
the Property; provided, however, that BellSouth may immediately terminate this
Agreement in the event Entrant breaches any term of this Agreement.
6. In the event this Agreement expires or is terminated without the
existence of a fully executed lease, sublease or license, Entrant will
immediately remove any and all of its equipment from the Property and restore
the Property to its condition existing immediately prior to such entry.
7. This Agreement constitutes the entire understanding between the
parties with respect to the activities contemplated by this Agreement. All prior
agreements or understandings, whether oral or written, are superseded. This
Agreement may be amended only by a written document duly executed by the
parties. This Agreement is governed by the laws of the State wherein the
Property is located.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals as of the date first above written.
BELLSOUTH:
-----------------------------------
a
----------------------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
ENTRANT:
TRITEL COMMUNICATIONS, INC.
a Delaware corporation
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
<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
headings "Selected Consolidated Financial Data" and "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Jackson, Mississippi
October 4, 1999
